★ Rockstar Book Review: "I Will Teach You to Be Rich"

This is part of our Rockstar Book Review series. Be sure to check out all previous books we’ve covered!

"I Will Teach You to Be Rich" by Ramit Sethi

Who it’s for: Young adults under 30, written with young men in mind.

Readability: MEDIUM. Ramit writes in his own voice and has presented the material in a well-organized, predictable fashion, which makes the book easy to read and reference. What I liked about it: Ramit has organized the book both by theme and by step:

  • focusing the reader on “first things first” in getting their finances organized
  • getting started with investing the right way, and
  • changing our attitudes about the “why” behind saving.

The end of most chapters (1, 2, 3, 4, 5 & 7) includes a page of action steps for the reader to follow, complete with what to do and an estimate of how long the activity is likely to take. This type of summary is effective because the clearer the work and effort involved, the more likely we are to follow his advice. (As an aside, I did take action and double-checked some information on my credit card rewards.) The advice Ramit provides is based on solid personal finance principles, such as “pay yourself first”, automate your finances as much as possible, pay off consumer debt before you invest, and think of a home as a purchase first and investment second. And the reader is never left to wonder why Ramit thinks it’s the best way to go—he spells it out clearly. What I didn’t like about it: I expected this book to be fun (which it is) but I didn’t expect it to be crass*. I don’t see why selecting a bank for checking and savings accounts needs to be compared to selecting from a line up of strippers at a club (with the apparent similarity being that they both really want your money). The information is very good, as is the humor, but the cheap dirty jokes are unnecessary and trivialize the great advice provided. Unfortunately, that and its sexist undertones can turn off female readers. Also worth noting: The last section on relationships was awkward compared to the rest of the book. The scripts for conversations and the suggested actions didn’t seem as thought out as the others and it might have been better for the author to leave them out completely. Is it a surprise based on the above that I wouldn't call him a relationship expert when it comes to the opposite sex? *In truth, my spidey senses were tingling when I first picked up the book a few years ago and promptly stopped reading after the first few pages. J. Money convinced me to read it and, to my surprise, it's a good book content-wise. 

$7.84 @ Amazon // Free @ The Library ;)

"I Will Teach You to Be Rich" - Seriously Good Advice, Despite Its Unconventional Approach

Here’s the information and advice that makes this book unique. It:

  1. Helps us navigate service providers… and negotiate with them.
  2. Offers a primer on investing by debunking the myth of financial service expertise.
  3. Compares the benefit of paying down debt to investment returns in a systematic way.

More on each of these:

#1. Navigating Service Providers

IWTYTBR teaches us how to navigate service providers. Ramit provides the best advice I’ve seen so far in a general personal finance “how-to” book on how to negotiate with banks, credit card companies and utilities, to get the most out of every dollar we spend with them. He even goes as far as providing the play-by-play scripts we can use to call service providers and get a better deal.

For some reason, half my friends are afraid of talking to people on the phone and it ends up costing them lots of money. (pg. 63)

The author also addresses the need to consider the impact the use of their products can have on our credit score and why that matters; how much of a service is negotiable; and, how to decide whether a rewards card is the right way to go based on your behavior and spending habits. (Ironically, I was reading this book on a flight I'd purchased with my rewards miles. :))

#2. The Myth of Financial Expertise

If there’s an argument to stay away from actively-managed funds and financial advisors (other than fee-only), he covers them all. Ramit offers very clear advice on how to invest the funds we have at our disposal and explains why trusting “experts” is more likely to cost us money as opposed to make us money. He keeps his investing advice clear and in line with both our personal risk tolerance and how much we have available to invest.

Instead of enriching ourselves by saving and investing, most American households are in debt. And the wizards of Wall Street can’t even manage their own companies’ risk. Something’s not right here: Our financial experts are failing us. (pg. 144)

#3. Paying Down Debt vs. Investing

This is always a big issue for anyone who has debt and wants to save for the future. Even Melanie, the author of Dear Debt, had some regrets about not starting to invest while she was paying down debt (see her bonus interview at the end of that review). Ramit’s advice? Unless it’s very low-interest rate debt, such as current 30-year mortgage rates, focus on paying down debt first before worrying about investing, because that’s the best return you can hope for until your consumer debt is paid off… unless you have an employer match on a 401k (see Investment Ladder pg. 76-77).

The Bottom Line

Despite its 2009 publish date and some noted reservations, IWTYTBR is a book I’d recommend as a useful reference for anyone between 18-30 years of age because it’s complete, well organized, easy to follow, and offers solid advice.

Where you can find the book: Amazon ($7.84) Where you can find Ramit: IWillTeachYoutoBeRich.com

For other books that address most of the topics covered, I’d suggest The Automatic Millionaire by David Bach, The Wealthy Barber by David Chilton and The Simple Path to Wealth by JL Collins.

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