I Will Teach You To Be Rich by Ramit Sethi - How You Become Rich ► Animated Book Summary

lesson one forget budgets budgeting has been the battleground for snobby personal finance writers have tried to shove a daily tracking system down everyone's throat because it sounds logical track your spending it's so simple there's only one catch nobody ever does it forget budgeting says remain let's create a conscious spending plan it involves four major spending categories you contribute a certain percentage of your income into each category fifty to sixty percent goes to fixed costs which includes your rent bills food taxes debt etc ten percent to your long term investments like your Superfund 401k Roth IRA a or a low-cost index fund five to ten percent to savings perhaps for a wedding a holiday or a down payment and twenty to thirty five percent to guilt free spending money on anything you want if you're struggling then use this as a theoretical guide otherwise focus on earning more money not saving you could negotiate a raise get a higher paying job or do some freelance work on the side the key to a successful plan is to be frugal not cheap there is a difference frugal people care about the value of something their frugality only affects them they think long term and try to get the lowest price but are willing to spend on items that they truly care about on the other hand cheap people care about the cost of something that cheapness affects those around them they think short term and are unreasonable and can't understand why they can't get something for free the researchers of The Millionaire Next Door found that 50% of the one thousand millionaires survey have never paid more than four hundred dollars for a suit or two hundred and thirty five dollars for a watch lesson to make your accounts work together automatically by spending a few hours upfront you can save ridiculous amounts of time over the long term here's how to automate your conscious spending plan remote claims that you only have to spend a mere three hours a month on managing your money once this is up and running you'll need a salary a current account a savings account and a credit card let's start with your salary assume this is a hundred thousand dollars or a hundred percent of your income before you even get paid five percent of this should automatically be put into your super fund on the first day of the month you can set this up by talking to your employer the remaining income is transferred to your current account for the fifth of the month we set up an automatic transfer of another five percent that goes into your investments whether that be a low-cost index fund or a personal pension plan set up another automatic transfer to send 5% to your savings account the remaining income should be set up to pay your fixed costs like bills in debt etc automatically from your current account call each of your providers and ask them to Bill you on the seventh day of the month the last step is to set it up so that your credit card account is paid from your current account you users for your guilt-free spending money take note that most of this automation can be set up online through your bank's website Remy recommends you have a buffer amount of money in your current account like say five hundred dollars just in case a transfer doesn't go right this system may sound complicated but it's simple once you get your head around it please comment below if you have any questions lesson three the six Commandments of credit cards 1 pay off your credit card regularly if you miss a payment your credit score can drop your card provider can raise the rate or lowered limit you can be charged late fee and just a range of horrible things number two kettle your Pheebs waived on your card pick up the phone and ask to have late fees removed say you've been a customer for X amount of years and you'd like the fee to be waived don't say can you remove this say I'd like to have this removed I know this can be uncomfortable but from the bank's point of view the cost of losing you as a customer is incredibly high so there's a good chance they will comply with your requests number three ask your credit card company to lower your annual percentage rate this is the interest your credit card company charges you if they ask why tell them you've been paying the full amount of your bill on time for the last few months and you know there are a number of credit cards offering better rates than you're currently getting in Rome it's experience this works half the time number four keep your cards for a long time and keep them active lenders like seeing this history the longer you hold an account the more valuable it is for your credit score number five get more credit this tip is only for people who have no debt and pay their bills in for each month if lenders can see that their competitors have given you credit and you have only haven't fully used your cut up to its limit they'll feel more comfortable about extending more credits you ring up and ask them and lastly number six use your rewards whether that's cash back or frequent flyer points less than four how to pay off that damn credit card debt 70% of Americans carry a balance and fewer than half are willing to reveal their credit card debt to a friend this shame means that those in debt often don't educate themselves on how to improve their financial situation only half Americans pay the minimum for their monthly payments Remmy is extremely adamant when he tells us that the single key to using credit cards effectively is to do what you can to pay off your credit card in full every month here are five steps to ridding yourself of credit card debt number 1 figure out how much debt you have to decide what to pay or first either use the snowball method or the Avalanche method I'll leave a link in the description below explaining what those are 3 negotiate down the annual percentage rate for decide where the money to pay off your credit cards will come from maybe that could come from reducing spending and prioritizing your debt it's not sexy but it works and 5 get started not next month not next week not tomorrow now lesson 5 how to pay off student debt roommate doesn't lie to us paying off student debt is tough paying a little extra each month can save you years of payment only do this once you've cleared more expensive debts try to pay at least $50 more each month it gives you a psychological victory and you'll be able to focus on investing sooner call your lender and ask them for help on how you could optimize your monthly payments by making one phone call you could save hundreds of dollars lesson six the myth of financial expertise in a 2001 study a researcher named Frederick brochet from the University of Bordeaux ran a study that shocked the wine industry he invited 57 wine experts to evaluate two wines one red one white after tasting the two wines the experts described the red wine as intense deep and spicy they described the white wine as lively fresh and floral but none of them realized that the wines were actually both white wine the red one had been colored with food coloring think about that for a second says remain 57 wine experts couldn't even tell they were drinking two identical wines all our lives we've been taught to look up to experts but ultimately ultimately expertise is about results you can have the fanciest degrees from the fanciest schools but if you can't produce all the results your expertise is meaningless any financial expert who attempts to predict the market are often no better than amateurs you cannot predict the future just because a fund manager got you an 80% return this year doesn't mean he can next year experts can show their good results but leave out their bad ones this is known as a survivorship bias and for all this you have to pay their exorbitantly high fees now for the final lesson a rich life isn't all about money Remmy urges us to ask two critical questions why do you want to be rich and what does being rich mean to you I know for me it's the freedom that money brings a rich life to me is one where I earn enough money on my own terms to support my basic needs and a little extra to allow me to travel as a location independent entrepreneur I'm not really a materialistic person so I don't desire many tangible things unless we're talking about books you can never have too many books anyways so what's your answer leave it in the comments below to summarize we learnt - forget budgets and make a conscious spending plan instead how to automate our bank accounts the six Commandments of credit cards how to pay off debt the Medford financial expertise and a rich life isn't all about money in the next video we're going to learn some pretty cool things from the one and only James all Torture forget the fact that James is a millionaire this guy's been to hell and back his lost his wife couldn't pay the mortgage to support his kids lost his friends gambled his money away failed at building 17 companies and suffered depression unreal I'll see you guys next week get keen

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Keywords: i will teach you to be rich, i will teach you to be rich ramit sethi, ramit sethi i will teach you to be rich, ramit sethi, how you become rich, OnePercentBetter, how to get rich, wealth, personal finance, personal finance basics, personal finance budgeting, personal finance for beginners, personal finance for college students

Id: cYJLNhVuvPo

Length: 9min 46sec (586 seconds)

Published: Wed Jul 13 2016