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I will teach you to be rich

I finished "I will teach you to be rich" by Ramit Sethi. Here are some things he believes in:

1) Conscious spending. I call it "don't buy stuff that's not on the LIST" but instead of just applying it to grocery store trips he applies it to LIFE, you consider your priorities and what you want to spend on, then cut out the bullshit getting you down. He doesn't care if you go to starbucks every day as long as that's what your priority is.

2) Automation, which I call the "direct deposit method of budgeting"... I've done this since I was 20. Every paycheck was divided up. Did I sometimes cheat during the bad years and pay normal rent out of my savings? yeah, and I never felt good about it, but at least I was TRYING to divert my paychecks.

3) Swensen Allocation for portfolios. This is silly. It's this yale guy who says you should divide your investments into six different categories that nobody can ever remember. I know I went on an ETF shopping kick last year, but after that dust settled I like the Collins "simple path to wealth" logic. just pick a whole market fund and relax. Collins says you don't even need an international fund, because isn't every company pretty much international now? Seems legit.

Aside from that flaw, the book is funny, charming, and I agreed with probably 90% of it. Ramit Sethi is younger than me, egads! And crazy rich. go him. Is he judgey? Yes. He rails against people who "make excuses" in not-very-nice ways that I cringed at, but then I moved on to the real advice and appreciated it.

I think a lot about what finance book I would give to a young 20-something year old. This one might be a decent pick. One unique thing about it that I haven't seen in other finance book: career tips. It makes sense. There are two ways to have money: earn a lot, don't spend a lot. This book has sections about negotiating salaries and asking your boss for a raise.

Look, it sounds crazy, but in the corporate world, you will encounter colleagues who are doing their job and do not care to be better. Showing some heart can seriously get you ahead. Putting in extra time is nice too... but I have seen people work a lot of hours in unsmart ways that do not help them get ahead. This book has one simple section encouraging you to tell your boss, "I want to be a high performer. What's holding me back?" as a young entry level kid, I thought everybody asked this question. I was wrong.

He loves credit card points. He hates financial advisors. He hates evil banks, especially Wells Fargo. He hates the "noise" of the financial world complicating things and making us all feel like every day is up and down and you can't time anything right. He loves compound interest. He hates real estate!

Oh I do like that part too, finally an author who agrees with me that home ownership is not a magic wonderful financial decision, and a young person should not make it their primary financial goal. Set up a 401K first, please!

Unlike me though, he likes 30 year mortgages that you do not pay off in any kind of a hurry. Most everyone agrees with him. Nobody agrees with me, I liked paying extra on the principle every month. They say that was silly because I could have invested that money and gotten better returns, because my mortgage interest rate was good. Oh well.

Things I'm thinking that young healthy people should learn about finance:
1) How compound interest works
2) How the stock market goes steadily up, the majority of the time
3) How to tally up home ownership throw-away money (closing costs, taxes, insurance, interest, repairs)
4) How to compare that "purchases" line on a credit card statement your actual income
5) How to invest your Roth IRA in VTSAX
6) How to look around your house and realize all the crap in it used to be money
7) How to ask for a better raise

I'll keep working on this list. Someday I could write my own bestselling book, right? Well, except that I'm not that rich. But the book could get me there!



( 12 comments — Leave a comment )
Apr. 19th, 2021 01:28 pm (UTC)
Soooo I'm in my 20s and have never learned any of your 7 points, apart from #6. Haha. I always enjoy reading your finance posts (despite not always understanding everything in it), so I would totally buy your book! You could call it "How to Get Moderately Rich Starting in Your 20s." :D
Apr. 19th, 2021 02:31 pm (UTC)
oh thank you, I've gotten way too into it lately and I'm glad someone doesn't mind all the posts! I feel like most of my lj friends are retirees who are SET, and all the 20-somethings are just on youtube now. you are a rare livejournaller!
Apr. 19th, 2021 03:43 pm (UTC)
"How to look around your house and realize all the crap in it used to be money"

Apr. 19th, 2021 03:44 pm (UTC)
I'm glad you mentioned VTSAX. In my (former) professional circle, we point all the under-40s to the Vermont Saxophones (too many young kids are into active trading and crypto and other dumb stuff that wipes them out in short order, like checking their fund balances on a daily basis).

I have no problem with rushing a mortgage if you're going to stay put forever. Since Ramit's book revision, he's bailed on NYC (covid) and lives in.... California again? Upstate NY? I forget. Obviously, a mortgage provides less flexibility there.

And yes, I like how he focuses on supply-side of finance, and not just how deeply you can cut expenses.
Apr. 19th, 2021 04:10 pm (UTC)
Yeah, I've never really made money on a mortgage. Fortunately, I'm a good little saver!
(Deleted comment)
Apr. 19th, 2021 05:54 pm (UTC)
Yes. I am JUST now figuring this out.

One of the things that kept me from starting a 529 college fund for my kids was fear of losing money. As soon as I heard "you can lose money" I noped right out.

I was also afraid of investing at the wrong time. I knew the stock market went down sometimes, what if I bought during an "up" time instead of a "down" time?

Recently someone in a forum said they weren't going to invest at an "all time high". Now that I know better, I screengrabbed a chart of 20 years, and circled all the "all time high" peaks of the past. Those poor people lost money the next month, I bet they were nervous! But as long as they held on, look how they're doing now? AWESOME. All of them! I would give anything to get into the market at those prices!

Took me 40 years, and I'm lucky that my 401k was in some funds managed by people who'd figured it out. I just didn't think I could do it myself.

Bigger entry to follow, I'm sure.
(Deleted comment)
Apr. 19th, 2021 06:15 pm (UTC)
dang maybe you're in my generation? my parents skimmed the surface of responsible spending (don't get into credit card debt) but didn't get into details.

they believed, and still believe, that you should 1) avoid talking about money and 2) play the lottery.

my kid will have a Roth IRA when she gets her first paycheck, even if we only put $10 in it! it's just such a good idea!
(Deleted comment)
Apr. 19th, 2021 05:37 pm (UTC)
You should write a book with all of these things. I'm in my early 30's and am fascinated by all of the things I had no idea about. It's certainly a book that I would buy and read. I kind of wish this information was available to me a decade ago!
Apr. 20th, 2021 03:26 am (UTC)
Sounds like an interesting book but the judgmental edge is unfortunate. I always wonder how many people who might otherwise be helped by a book like this are turned off of listening to it at all by something like that.
( 12 comments — Leave a comment )

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