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

Summary

This video summarizes lessons from personal finance writer Ramit Sethi on conscious spending, automating finances, using credit cards responsibly, paying off debt, questioning financial 'experts', and defining what being rich means to you personally. Key lessons include forgetting budgets and instead spending consciously on needs, wants, savings, and investments based on percentages; automating transfers between salary, spending, savings, and investment accounts; tactics for paying off credit card debt quickly; the myth that financial 'experts' can predict markets; and that being rich encompasses more than just money.

Takeaways

• 😀 Forget traditional budgeting, instead use a 'conscious spending plan' with set percentages for expenses, investments, savings and guilt-free spending
• 💡 Automate finances for simplicity - set up automatic transfers to different accounts based on percentages
• 💳 Follow 6 credit card commandments: pay off regularly, get fees waived, lower APR, keep long term, get more credit, use rewards
• 🏦 Pay off credit card debt using methods like avalanche, snowball or lowering APR
• 🎓 To pay off student loans, pay extra each month and optimize payment plans
• 😕 Financial 'experts' can't predict markets and have biases - focus on your own financial results
• 😎 A rich life is about freedom and having enough money to support your needs
• 📝 Forget budgets that nobody sticks to, consciously spend percentages on needs, investments, savings and fun
• 🔁 Automating finances saves time managing money in long run
• 💰 Paying off debt opens ability to invest and gain financial freedom

Q & A

What is the key concept behind a 'conscious spending plan'?

A conscious spending plan involves allocating a certain percentage of your income to four major spending categories - fixed costs, long-term investments, savings, and guilt-free spending money.

What is the difference between being frugal and being cheap?

Frugal people care about value and try to get the lowest price but are willing to spend on things they truly care about. Cheap people only care about cost, affect those around them negatively, and are unreasonable.

How can you save time by automating your finances?

By setting up automatic transfers between your salary, current account, savings account, investments, and bill payments, you only need to spend around 3 hours a month managing your money.

What should you do if you miss a credit card payment?

Pay it off as soon as possible. Missing payments can badly damage your credit score and lead to higher interest rates, lower credit limits, and late fees.

How can paying extra help with student loan debt?

Paying just $50 extra per month can save you years of payments. It also gives you a psychological victory and allows you to start investing sooner.

What did the wine study reveal about experts?

57 wine experts were unable to tell that two wines were identical, one just colored red. This shows that expertise claims should be judged on results, not credentials.

What does the author say is key to using credit cards effectively?

Paying off your balance in full every month. Carrying a balance leads to expensive interest charges.

How can you negotiate down your credit card APR?

Tell your provider you've been paying on time and know of cards offering better rates. There's a good chance they'll lower your rate to keep you as a customer.

What does the author say an enriched life is about?

It's about having the freedom and money to support your needs while also doing what you enjoy.

What happened to James Altucher before he became a millionaire?

He lost his wife, couldn't pay his mortgage, gambled away money, failed at 17 businesses, suffered depression, and hit rock bottom.