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I WILL TEACH YOU TO BE
RICH…..Starting Today!
Okay, okay! WE will
teach you to be rich….starting today!
My co-partner in crime is Ramit Sethi, the author of the
New York Times bestseller, I Will Teach You To Be Rich. While he has authored the book, I will be
doing the reading. I will be breaking
down theories and steps in the book, as well as providing real life examples
and cute little antidotes.
SPOILER
ALERT:
The key to
being rich (according to Ramit) is to set up accounts
at a reliable no-fee bank and then automate savings and bill payment, then know
a few things to invest in and let your money grow for 30 years.
MY
TAKE:
It takes a
bit (lot) more than that and I will make sure
to bring up any areas that Ramit tries to tip toe over.
I WillTeach You To Be Rich is broken up into 6 weeks of topics, followed by a set of
action steps. At the end of the 6 weeks,
if you follow all of the action steps, Ramit promises that you will be well on
your way to being rich…..if you are consistent and faint not. :-)
By the
way, this is my November/December read and I will be going through and
completing all 6 weeks of action steps by the end of the year. Feel free to join me each week while I
discuss the topic and action steps towards richness, indeed.
WEEK 1: OPTIMIZE YOUR
CREDIT……CARDS
While there are experts out there (Ahem…..Dave
Ramsey) that believe that debt is against the bad and that you avoid
it and a credit score at all costs. My
beliefs are more in-line with what is taught by Ramit.
If you do not know how to responsibly use debt, avoid it
like a plague (or get some discipline). However, if you are have the discipline to
use your card prudently and to pay off your credit card every month, it can
actually be a benefit.
Even if you have the money in your account, who wants to
have that ridiculous hold that hotels put on your account when you use your
debit card to reserve your room? When
you rent a car, who wants to pay that ridiculous insurance, when there are
really good credit cards out there with exceptional coverage? When you buy an expensive product and
something goes wrong, who wants to wait for the bank to put the money back into
your bank account? Who wants to pay for
an extended warranty, when there are credit cards out there who will give you
an extra year or two, just for making the purchase on their card? If I can save major money by utilizing the
benefits that only credit (not debit) cards
provide and I know that I am going to pay the full balance off that month, I
choose credit.
To optimize your credit you must do the following…..THIS
WEEK!
1.
Know what is on your credit report and know your
FICO score.
a.
Go to http://www.annualcreditreport.com
and receive a copy of 1 (or all three) of your credit reports for free. Make sure that they are accurate. Work to remove all negative credit history
over time.
b.
Get your credit score. You can purchase it from MyFICO and other
websites for a nominal fee, but I would suggest getting it for free. I monitor my credit score through Credit
Sesame, Credit Karma and one of my credit cards.
2.
Set up your credit cards
a.
Do you have an active credit card? If not, do your research and get one (unless, of course, you fall into that undisciplined category). If no one will have you, find a good provider
of secured credit cards that will report your payment history to the credit
agencies to help you build credit.
Otherwise, find a card with the most benefits that will fit your
lifestyle.
3.
Make sure you are handling cards effectively
a.
Set up auto pay to pay off the full balance each
month. Split the payments to match your
paycheck schedule, if necessary.
b.
Get fees waived and negotiate a lower APR, where
relevant.
c.
Become familiar with the benefits offered by
your card and make good use for them, when needed.
4.
Make a plan and start paying down debt (if applicable)
a.
I am a fan of the Snowball Method (as suggested by Dave Ramsey). List all of your debts from smallest to
largest. Pay the minimum on all the
debts, except the smallest debt. Based
on your budget, pay an additional amount on this debt each month. Once that debt is paid off, move to the next
smallest debt. In addition to the
minimum due that you had already been paying, roll the amount that you were
previously paying on the smallest debt over to the next smallest debt, and so
on and so on, until all of your debts are paid off.
b.
In addition to the snowball method, I am also a
proponent of the Snowflake Method. If
you get a side hustle, if you find a penny on the ground, if you get a bonus
check or tax refund, etc., etc……apply that extra money to the lowest debt.
*
Personally, we have paid off all of our credit
card debt and are currently working on obliterating some rather stubborn
student loans (long story…..don’t want to talk about it). Once that is complete, I fully plan to work
Dave Ramsey’s Baby Steps as outlined in his Total Money Makeover book. We never stopped our 401k contributions, as
he suggests, but that is because I did not think it was the best plan of
action. However, that’s another story
for another day.
I encourage you to go through the 4 steps listed above
with me. Let’s try to get rich together
and if it doesn’t work for us, we can all blame Ramit Sethi.
BUY BOOKS HERE:
I Will Teach You To Be Rich by Ramit Sethi
