[Book Review] I Will Teach You To Be Rich
I Will Teach You To Be Rich
A great book on personal finance, the title is a bit of a turn off, but the content is real, and I had great results following his advice.
“One of the key differences between rich people and everyone else is that rich people plan before they need to plan.”
The book is broken into “Six Weeks of Action Steps”
WEEK 1:
You’ll set up your credit cards and learn how to improve your credit history (and why that’s so important).
I use Credit Karma to check in every quarter, and I get an email alert if any large changes happen. Ramit shows that having excellent credit can save hundreds of thousands of dollars over a life time on your mortgage, by being proactive in trying to up my score I have a 760+ Credit Score. There are also sections on how to get out of Credit Card debt which thankfully I have never been in.
Current Credit cards:
- Capital One Quicksilver: 1.5% cash back on everything, no annual fee and no foreign transaction fees. This was my first card as I had a Checking account with Capital one
- Chase Freedom: Rotating rewards, highlights are 5% back on Amazon and groceries, no annual fee
- Chase Sapphire Preferred: I got this card because I knew I had a large purchase coming up and wanted to get the sign up bonus. 95$ annual fee after the first year, but I did the math and the card is worth the fee with the amount of purchases I make on travel and dining.
In the last two years I have earned $2,000 in rewards.
Set up Autopay, this was a no brainier for me, automate whenever possible. I never miss a payment and check in every month to see that nothing on a high level looks wrong.
These are the factors that determine your Credit Score
- Credit card utilization
- Payment History
- Derogatory Marks
- Age of Credit History
- Total Accounts
- Credit Inquiries
Ramit then writes about paying off debt aggressively. For my student loans I set up autopay which reduced my interest rate by 0.25%. Also he shows how an extra $100 a month can save years off repayment.
WEEK 2:
You’ll set up the right bank accounts, including negotiating to get no-fee, high-interest accounts.
“We need to set up accounts at a reliable no-fee bank and then automate savings and bill payment.”
I switched from my normal “Smart” Saving account at .05% APY, to the Capital One 360 Savings at 0.75% (2016 Numbers). Also my Checking account went from 0% to .20% APY.
$10K at .05% over 5 years would show 25$ in growth, compared to $382 at .75%. A win of $70 a year for a 10 minute call sounds good to me.
WEEK 3:
You’ll open a 401(k) and an investment account (even if you have just $50 to start).
At work I’d always take full advantage of the match offered for the 401(k). I opened an IRA with Betterment as they have no minimum to start. A diversified portfolio, clean UI, and great customer service.
WEEK 4:
You’ll figure out how much you’re spending. And then you’ll figure out how to make your money go where you want it to go.
Use Mint! Find out where your money is going.
Negotiate a raise: Youtube Playlist. After a quarterly review I used the tactics in this book for a $10K salary raise.
Ramit is against the cut back on lattes to become rich strategy.
“Spend extravagantly on the things you love, and cut costs mercilessly on the things you don’t”
WEEK 5
You’ll automate your new infrastructure to make your accounts play together nicely.
Discussed above, I am a big proponent of Autopay.
WEEK 6
You’ll learn why investing isn’t the same as picking stocks – and how you can get the most out of the market with very little work.
More informational than directly actionable for me, would suggest reading “A random walk down wall street” for more on passive investments..
| Title | I will Teach You to be Rich |
| Author | Ramit Sethi |
| Genre | Personal Finance (Ranked #1) |
| Pages | 266 |
| Cost | $7.88 Kindle |
| First Published | 2009 |
| Reading Time | 4 Hours |
| Rating | Worth the buy; Pays for itself |
There is more information in this book like how to choose the best funds, buying your first car, planning for a wedding and other big ticket items. I enjoy Ramit’s style and he writes great content that’s free.
For more information see his blog at iwillteachyoutoberich.com
Amazon Link: I Will Teach You To Be Rich
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