This is a review of Ramit Sethi’s I Will Teach You To Be Rich. I am participating in the Personal MBA project, and this is the second book that I have completed and compiled notes for. To read more about the project, click here for the PMBA manifesto.
Book Details
Title: I Will Teach You To Be Rich
Author: Ramit Sethi
Page Count: 266
First Published: 2009
Ramit Sethi, a 2005 Stanford graduate, is a personal finance aficionado extraordinaire. What a mouthful. I came across Ramit’s blog after scouring the Interweb for budgeting resources, and since then have become an avid follower of Ramit’s advice. He’s chock full of wisdom. In this book, Ramit guides readers through a 6-week program designed to optimize one’s personal finances.
What I Learned
In a nutshell, I learned how to optimize and track my personal finances. A lot I had heard before, a lot is common sense, but a lot was completely new material. Some of my favorite take-aways: how to negotiate with a credit card company; how a first-time, salaried professional should layer his or her investments, and how to automate one’s financial infrastructure. After reading this book, I not only felt more comfortable about my financial future, but I managed to get organized and pay off a $5500 student loan (only $44,712.78 to go!) after learning about how high my fixed interest rate was. Yes, the title could use some work, and yes, Ramit’s tone is sometimes a little hoity toity, but trust me, this text is worth your attention.
Notable Quotations
Insurance is almost never a good investment, despite what financial salespeople (or clueless parents) will tell you. So use it as a protection from downside risk–like for fires or accidental death when you have a family–but don’t think of it as a growth investment.
The average American wedding costs almost $28,000, which The Wall Street Journal notes, is “well over half the median annual income in U.S. households.”
Negotiating is 90 percent about mind-set and 10 percent about tactics.
When it comes to saving money, big purchases are your chance to shine–and to dominate your clueless friends who are so proud of not ordering Cokes when they eat out, yet waste thousands when they buy large items like furniture, a car, or a house.
Miscellaneous Notes
-reread the entire book every year
-it’s beneficial to be OCD about finances (tracking phone calls, designing Excel sheets, exhaustive research, etc.)
-the D in diversification stands for getting deep into a category, like buying different types of stocks, while the A in asset allocation is for going across all categories, like buying stocks, bonds, and CDs.
-asses and reallocate savings/investments every 1-2 years
-anytime you open an account, focus on minimizing unnecessary fees (negotiation is possible)
Have you read this book? What are your thoughts?
Elizabeth (2 comments) on July 9th, 2009
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Great to be able to access your blog here in China – lots of sites are blocked these days. Thx for the information on the personal MBA program, and I like your take on the book. Haven’t read it yet, but with your recommendation/those of friends, I’ll pick up a copy once back in Sydney.
(from a location independent artist/writer currently in Lijiang)
Nate (34 comments) on July 9th, 2009
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This sounds like a book that I can definately benefit from. I’m currently working on Escape From Cubicle Nation and The 4 Hour Work Week, but this might be an option once I’m done those. Thanks for sharing the review!
Nate´s last blog ..An interesting view of work
Alan (53 comments) on July 9th, 2009
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@Nate: I need to pick up a copy of EFCN. Curious to hear your thoughts once you finish.
@Elizabeth: A reader in China! So cool! I still can’t believe that so many sites are blocked…must be hard for an Internet surfer
Colin Wright (9 comments) on July 9th, 2009
4
GREAT book. I snagged a copy the day it came out and it has definitely taught me a lot about financing in general (though my favorite advice involved setting up a series of automated bank accounts, which is advice I followed to the T and have already noticed greater gains and ease of use from).
I agree that Ramit has a bit of an arrogant air about him, but I imagine it’s as much part of his branding as it is a part of him (and really, it kind of works for him…would you want to take financial advice from someone who wasn’t clearly confident and a little funny?).
Great review! Keep ‘em coming!
Colin Wright´s last blog ..How to Sell Your Stuff (Better)
jen laceda (11 comments) on July 10th, 2009
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Damn, I want to read this book! You’ve got me at “Insurance is almost never a good investment!” My parents took out this insurance policy on my life when I was younger (soon as I earned my 1st paycheque, they dumped payments on me). it was for some exorbitant amount, which is quite a freakin’ p.i.t.a. to pay each year!! I hate it paying premiums for it, but I kinda don’t want to waste it now that it’s been going on for so long….Have a great weekend, Alan!
jen laceda´s last blog ..My First Persian is from Jerusalem
Anil (8 comments) on July 11th, 2009
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I drop by Ramit’s blog occasionally and his advice is creative or common sense but always useful. It’s important to track your spending and only spend on the essentials. The problem is figuring out what the essentials are or aren’t (like most insurances).
Anil´s last blog ..Do You Want To Travel Around The World? [POLL RESULTS]
Andy (2 comments) on July 11th, 2009
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Nice review – have been looking for a book like this for a while, but never really know which to go for. Will check it out.
Thanks.
Laura (1 comments) on July 16th, 2009
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I really enjoyed the book and I have be a fan of his blog for a couple of years. I find many of Ramit’s thoughts on personal finance to be sound, especially his specific plans on how to set up your automatic deposits and transfers for freelance work.
If you have to distill Sethi’s method on getting rich, it’s automating a sustainable system. He is not looking for you to purge everything in your finances and have you live on beans and rice. He wants you to spend money on what you (not what others say you should) love and “cut costs mercilessly” on things you don’t care about.
Laura´s last blog ..Marketplace Whiteboard Explains Economic and Financial Topics