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I Will Teach You to Be Rich by Ramit Sethi

Cameron Nuckols
11 min read
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Rating: 8/10
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High-Level Thoughts

This book follows a 6-week program so you can make real-time changes to your finances as you read. It covers credit cards in-depth and teaches other great financial secrets. I recommend reading The Simple Plan to Wealth first because I liked it more, but you will not waste your time reading this book. Some may even prefer it because of the structure that the book follows.

Key Takeaways

  1. Anyone can become rich if they know how to manage their finances.
  2. Credit cards have hidden (or unknown to most) benefits.
  3. Financial companies are willing to negotiate and work with you far more than you’d think.

Summary Notes

Being Financially Literate is Like Being Physically Fit

You don’t need to be an expert to be rich. Just as 99% of us only need to know two things to lose weight (eat less and exercise more), most people need to know few things to be rich.

The single most important thing you can do to be rich is to start early.

Most people complain that they didn’t learn these things in school or that the classes weren’t offered. In reality, most did have classes available and you didn’t sign up for them. But at least you’re starting now!

The 85 Percent Solution

Getting started today is more important than being an expert. It’s okay to make mistakes, but if you want extraordinary results then you can’t have ordinary actions. By the end of the book, you’ll know 85 percent of what you need to know about finances and that’s all you need to be rich.

There’s also one difference between being fit and being rich. When you’re rich, you get to spend extravagantly on the things you love and cut costs mercilessly on the things you don’t.

Conscious spending = Spending money on things you love and cutting costs of things you don’t.

His friend, Jim, called him one day to tell him he’d gotten a raise at work. On the same day, he moved into a smaller apartment. He didn’t care about where he lives, but he loves spending money on camping and biking.

Everyone Has a Different Definition of Rich Every person needs to define what rich means to them.

Ramit’s definition of rich:

  • Make career decisions because he wants to
  • Help his parents with retirement
  • Spend extravagantly on the things he loves and frugal about the things he doesn’t love (spend to visit family in New York, but not have a flashy sports car)
  • Start a scholarship fund for young entrepreneurs

Week 1: Credit Cards and Improving Credit History

  1. Get your credit report and credit score
  2. Set up your credit card
  3. Make sure you’re paying off your credit cards and handling them appropriately
  4. If you have debt, start paying it off

Credit Reports

Every person in the United States has a credit report. Your credit report gives lenders information about you, your accounts, and your payment history. Using this report, they will decide if they should loan you money for a new car or house. By law, you can obtain a free credit report once per year at

Credit Scores (Known as FICO scores)

Your credit score—a number between 300 and 850—represents your credit risk to lenders. The higher your score, the safer it is to loan you money.

Credit Cards

Avoid all credit card offers you receive in the mail. To remove yourself from their lists, visit Only use the cards you need, and don’t go card crazy.

Avoid cash-back cards because they often don’t pay you much cash. Instead, find a card that will reward you in a way that can save you more money. For example, travel points are great for those who travel and generally result in far more money saved than if they had a card with cash back.

If you have little to no credit, get a secured credit card. These are cards that need a small amount of collateral in a savings account, but they’re a great way to start building credit. After a few months of using one responsibly, you should be able to qualify for an unsecured credit card.

Lastly, follow these credit card rules:

  1. Pay off your credit card on-time
  2. Get all fees waived on your card - “It was a mistake and it won’t happen again, so I’d like to have the fee removed.”
  3. Negotiate a lower APR
  4. Keep your cards active for a long time
  5. Get more credit (only if you have no debt!)

Delinquent credit card payments will lower your credit score and cost you a tremendous amount in extra interest payments. You can bounce back, but it’s better to never miss a payment in the first place.

Asking your credit card company for more credit can help your credit score rise because your credit utilization score will be lower. It’s far easier than most realize if you stay up-to-date on your payments.

If you have debt, figure out how much you have and then calculate which you should pay off first. Negotiate down your APR and then pay off the card with the most APR first. Dave Ramsey teaches that you should pay off the card with the lowest amount first, but that’ll cost you more in the long run if that card has a higher APR than your others.

Rarely Known Credit Card Tricks
  • Most credit cards have automatic warranty doubling. What this means is that if you buy something with your credit card, it will be covered by your credit card company after the company’s warranty runs out. For example, if you buy an iPad and it breaks after Apple’s warranty expires, it will still be covered for an additional year.
  • When you rent a car, don’t let them convince you to get extra collision insurance. Your car insurance should already cover that, plus your credit card will usually back you up to $50,000.
  • An airline will charge you hefty fees if you need to rebook flights because of sickness or similar reasons. However, your credit card provides trip-cancellation insurance and will cover those charge fees for you.

Week 2: Set up Correct Bank Accounts

  1. Open a checking account (online checking account is optional) or assess the one you already have
  2. Open an online high-interest savings account
  3. Fund your online savings account

Banks make money by lending the money you give them to other people. Assuming that everyone pays like they’re supposed to, banks can make a fourteen-times return on their money.

Banks are often more important than the interest fee that they offer. You should look at three things when choosing a bank:

  1. Trust
  2. Convenience
  3. Features

Don’t be a rate chaser! You’ll make far more by concentrating on other things than changing interest rates. Some bank accounts worth looking at are Wealthfront, Marcus, HSBC Direct, ING Direct Orange Savings, and Schwab Bank Investor Checking.

Basic Bank Setup

Get a no-fee checking account at your local bank and a high-interest online savings account for free. If the bank resists giving you a no-fee checking account, walk out and find one that will.

If you want to go an extra step, you can get a high-interest online checking account as well.

Week 3: 401(k) Investment Account

  1. Open a 401(k) account
  2. Come up with a plan to pay off your debt
  3. Open a Roth IRA account and set up automatic payments

Compounding is mankind’s greatest invention because it allows for the reliable, systematic accumulation of wealth. ―Albert Einstein

Investing is the most effective way to get rich.

Investment Steps

  1. If your employer offers a 401(k) match, you should invest at least to the level they will match. That’s free money!
  2. Pay off any debt you have.
  3. Open a Roth IRA and invest as much as you can in that.
  4. If you have money left over, contribute as much to your 401(k) that you can.
  5. If you still have money left to invest, open a non-retirement account and put as much as you can there.


A 401(k) retirement account is for long-term investing. If you withdraw money before you’re 59 1/2 years old, you’ll incur penalties. When you switch jobs you can move them into an IRA account or leave them there. He recommends that you move them into an IRA.

Here are some of their benefits:

  • They instantly accelerate your money by 25 percent since it uses pretax money
  • Your employer match means free money to you
  • The money is automatically invested

Roth IRA accounts

Roth IRA investment accounts are similar to 401(k) accounts in that they’re long-term investments. You will be penalized if you withdraw money before you are 59 1/2 years old, but there are some exceptions. For example, you can withdraw the amount you invested (principal) at any time without penalties. You can also withdraw without penalties for a down payment on a home, funding education for family, and other emergency reasons. You will only qualify for those exceptions if you have had the account open for more than 5 years though.


Week 4: Figure out How Much You’re Spending

  1. Look at your paycheck and decide what your Conscious Spending Plan should look like
  2. Optimize your spending
  3. Pick your big wins
  4. Maintain your Conscious Spending Plan

The À La Carte Method

Cancel all subscriptions that you have and pay per use for the subscriptions you had. A good example would be paying to watch $1.99 episodes on iTunes instead of paying for hundreds of channels of cable that you never watch.

This method works well for three reasons:

  1. You’re probably overpaying already
  2. You are forced to think about what you are spending your money on
  3. You value what you have to pay for

The way to use the method is to calculate how much you’ve spent in the past month on subscriptions, cancel all those subscriptions, and then begin buying things à la carte. After one month of this, check how much you spent that month on those items and try and cut them down where you can.

Conscious Spending Plan

This involves putting your money into four main buckets: Fixed Costs, Investments, Savings, and Guilt-free Spending Money.

A good rule of thumb is to save 5-10% in Savings for your goals, and 20-35% for guilt-free spending money. The rest would be used to manage your fixed costs and investments.

Things You Can Do to Make More Money
  1. Negotiate a raise - Remember to prove your value to your employer
  2. Do freelance work

To find your annual salary, take your salary rate, double it, and add three zeros to the end.

Before you invest anything, make sure that you have at least three months of income in savings. This will protect should anything come up that takes away your income.

Week 5: Automate Your Infrastructure so Your Accounts Play Nicely Together

  1. List all your accounts
  2. Link your accounts together
  3. Set up your automatic money flow

The Curve of Doing More Before Doing Less

By setting your financial life on autopilot now, you will not have to worry about it in the future. You can go back to living your life while it all operates seamlessly in the background.

If you want to build wealth over your lifetime, the only sure way to do it is to get your plan on autopilot and make everything that’s financially important in your life automatic. ―David Bach, Author of The Automatic Millionaire

Connect all your accounts

  • You should set up your paycheck to automatically fund your 401(k) each month.
  • Make sure that your checking account is connected to your savings account and your investment account (Roth IRA).
  • Your credit card should be connected to your bills that you have been paying with your checking account.
  • Pay any bills that can’t be paid for by a credit card to your checking account.
  • Last, your credit cards should all be paid from your checking account.

Put All Bills on the Same Schedule

You can do this by calling and asking them to change the date of payment.

1st of the month: Ensure that you get paid on this day. 2nd of the month: Invest part of your paycheck in a 401(k). The rest will be sent to your checking account. 5th of the month: Automatic transfer to your savings account. 7th of the month: Auto-pay any bills that you have.

Week 6: Learn How to Invest

  1. Decide on your investment style
  2. Research investments
  3. Buy your funds

The more you can shovel into your system, the faster you’ll become rich. It’s never easier to do this than when you are in your 20s and 30s. But if you’ve invested money for a longer-term goal and have accomplished that goal, never be afraid to sell.

Financial Advisors

America believes in experts, but experts are often no better at predicting things than the general public. No experts know where the stock market is going, including Morningstar and Moody (companies that offer ratings on stocks you should buy).

You should avoid financial advisors. If you’re determined to get professional help, look at NAPFA. Their advisors are not commission based, so they want to help. They will not earn profits off their recommendations.


When you buy a bond, it’s as if you are loaning a bank some money. The nice thing about them is that you can choose how long the loan should last, and you know how much you’ll receive when it matures and pays out. Bonds are generally stable so they are used to decrease risk in one’s portfolio.


Mutual Funds and Index Funds

Mutual funds and index funds work similarly. Both are tools used to diversify investments in the market. Mutual funds are groups of stocks that can be purchased together that represent a certain group or class of stock. For example, one mutual fund might only invest in emerging technologies.

Index funds are funds that try and match the entire market. So if the stock market goes up, the index fund would also rise. Index funds were invented in 1975 by Jack Bogle and are known for being great investments.

Lifecycle Funds

Ramit says that Lifecycle Funds are the 85 percent solution. In other words, he’d recommend them for most people. What these funds do is automatically pick your blend of investments depending on your age. As a person grows older, the fund will shift investments to be more conservative (more in bonds, less in stocks). These are nice because they require zero work on your part other than initially funding them.

The Rule of 72

This is a fast trick to figure out if you can double your money. Divide 72 by the % return that you’re getting and that’s the number of years it will take to double your money. For example, if you are getting a 10% return in an index fund, it would take approximately 7 years to double your money (72 ÷ 10).

How to Pick Index Funds

  1. Look to minimize fees
  2. Make sure the fund fits into your asset allocation
  3. Look at returns the fund has had over the past 10-15 years

Dollar-Cost Averaging

This term is referring to when people invest set regular amounts over time instead of investing all their money at once. Some believe that this is a great way to invest because it will spread out the cost of funds when you buy them.

Extra Financial Tips

  • Create an emergency fund
  • The older you get, the more important it is to look into insurance
  • Plan for your children’s education - he recommends looking at a 529 account if you’re not in debt
  • Pay off the least amount due on student loans and invest the rest
  • Only buy a home if you plan on living there for 10 years or more
    • Buy with at least 20% down, a 30-year fixed-rate mortgage, and a total monthly mortgage payment that is no more than 30% of your gross pay
  • This is the tip of the iceberg. Keep learning about finance.

What Would I Change About the Book?

  1. I wouldn’t share the financial advice in the format of a 6-week program. That may work for some people, but it’s not something I was interested in.
  2. I would explain the difference between Roth IRA accounts and regular IRA accounts. He chooses the Roth for everyone, but it’s possible that some people would be better off investing in a regular IRA.
  3. I want more of an explanation behind the banks that he chose. Did he contact them and get paid to include them in this book? Or are they really the banks that he personally chooses and recommends?

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