Review: I Will Teach You to Be Rich

i willMany of you will probably remember the little debate between myself and Ramit Sethi a few weeks ago about the usefulness of frugality. Ramit stated that the best move a person can make is to focus on the “big five” – identify the five biggest way to save money in your life and make them happen. My position is a bit different – I believe there is a lot of value in digging into frugality and finding additional tactics that work for you.

More than anything, the “debate” outlined two things. First, Ramit and I have different tones and styles of writing. He’s far more brash and “loud” than I am (at least in terms of writing about personal finance) – and I think the two styles appeal to different people to an extent. Second, we also have different audiences. Ramit focuses on people who have likely never considered how to cut back their spending, while I tend to write for people who have already made that realization and are working through the implications of it.

Frankly, I’m glad Ramit is out there writing in his style, addressing his audience. He’s reaching people that I wouldn’t be able to reach (and vice versa), but we’re both largely sharing the same message: there is great benefit in turning your financial life around, and cutting spending is one big part of the puzzle.

This brings us to his book, I Will Teach You To Be Rich. All one has to do is glance at the cover to realize what you’re going to find inside. It’s full of Ramit’s style of brash writing, which covers the big issues of personal finance in a way that will greatly appeal to a specific audience – twenty- and thirtysomethings who want irreverent and in-your-face basic personal finance advice.

Is there worthwhile content inside, though? Let’s dig in and see what Ramit has to say.

Would You Rather Be Sexy or Rich?
What does “rich” mean to you? I somewhat addressed this question a few weeks ago. In the end, Ramit speaks the truth here – we all have different definitions of “rich” and, because of that, we all want to be “rich.” Most of his examples revolve around people with more material desires – a woman who enjoys buying jeans, a guy who loves to travel – but the message is still true. Before you can be “rich,” you need to figure out what “rich” means for you. (For me, incidentally, it means being able to securely support my family and involve them in a lot of fulfilling experiences.)

Optimize Your Credit Cards
Ramit’s first step is getting your credit cards in order, and the first part of that is getting your credit report and making sure it’s accurate. After that, set up a debt repayment plan to clear out this debt as quickly and efficiently as possible. The one piece of advice that might irritate some (though I do agree with it) is Ramit’s suggestion that everyone get a credit card, even if they don’t use it. Why? Establishing a credit history helps you in many ways, from lowering your insurance rates to helping you with job applications (since many jobs run a credit check on applicants).

Beat the Banks
Get a good checking account (one that doesn’t eat you alive with fees and pays a bit of interest) and a good savings account (one that pays a solid interest rate and has good customer service). Then set up an automatic savings plan to start putting money in your savings account – in other words, start building a real emergency fund. That’s Ramit’s advice here in a nutshell, and while it seems basic, it’s information that a surprising amount of people have never done. I should know – for many years, I had an awful checking account with a large bank that dinged me with tons of fees every month with no real benefit.

Get Ready to Invest
Here, Ramit basically orders the readers to open up a 401(k) and/or Roth IRA now, even if you’re not sure what to invest in. Start saving now – if you don’t know what investment to put your money in, put it in something very safe until you’re able to figure it out. The key is to start saving now – don’t worry about the investing choices. Why? If you get started now instead of a year from now, you’ve got a year’s worth of savings built up even if you haven’t done anything with it. Even if it’s just sitting there earning 2%, at least you’re saving and earning a bit – that’s far, far better than nothing, especially if you’re getting an employer match.

Conscious Spending
Most of this chapter focuses on the idea of a “conscious spending plan.” In a nutshell, a conscious spending plan means identifying what your “required” spending is – your housing, your food, your automobile, and other basic needs – then adding savings and investing on top of that, leaving 20-25% of your money “free” to be spent on non-essential things. This works very well if you have a strong income, but the advice doesn’t apply nearly as well to lower-income folks.

Save while Sleeping
Automate as much as you can. That’s Ramit’s message here. Get as many of your accounts linked as you can (using online banking tools) and make as many of your payments automatic as you possibly can. This drastically reduces the time involved with paying bills, plus it ensures that you won’t be late with payments. Even better, you can also add in automated savings here, treating them as another “automatic” bill, which makes it easy to save.

The Myth of Financial Expertise
Ramit’s chief argument here is that so-called “financial experts” rarely know significantly more than a well-motivated person can with a bit of research on their own. He cites several reasons for this, most notably that even the best financial experts can’t beat the market consistently (so why not just invest in an index fund and ride the market?). If you really need advice, seek out a fee-only financial planner who can help you get things in order, then handle most of the management yourself (it’s easy with all of the online tools available these days).

Investing Isn’t Only for Rich People
The internet has brought the tools for investing to the masses. You have access to tons and tons of information – everything from the very basics of investing all the way to reams of data on virtually every investment out there. Plus, you have plenty of tools to actually do the investing yourself. You can set up an investing account, research investments, and make your investing choices all from your computer. The excuse for not doing it isn’t lack of information or lack of tools – it’s up to you and you alone to take the first step in investing.

Easy Maintenance
Much like dieting and exercising, it’s easy to get started, but it’s much harder to do the maintenance needed over a long period of time. Thankfully, personal finance maintenance can be quite easy. Automate as much as you can, first of all. After that, maintenance mostly revolves around keeping an eye on things and making pretty infrequent decisions (such as rebalancing and, rarely, deciding to sell an investment). The more work you do up front, the easier maintenance becomes.

A Rich Life
The final chapter focuses on major life expensses: a car, a home, a wedding, an education, and so forth. The best solution for all of these is a simple one: plan ahead. The earlier you begin planning (and saving), the less you have to save and the easier the entire process becomes. Ramit also discusses some strategies for negotiating a salary. Even better, on page 240, the book features a two-page sidebar discussion written by me on how to utilize raises.

Is I Will Teach You To Be Rich Worth Reading?
I Will Teach You To Be Rich actually reminds me quite a lot of another good personal finance book I reviewed in the past, You’re So Money by Farnoosh Torabi. They both speak to a young audience with a fair dose of irreverence, humor, and brashness. They both often advocate a more consumer-oriented lifestyle than I enjoy. They’re both also written for a somewhat younger audience than I am, since they’re both targeting young, single professionals (Torabi specifically targets young female professionals, while Ramit seems to target both genders).

Yet I can easily see how I Will Teach You To Be Rich can bring personal finance to life for a person fresh out of college and looking to conquer the world. In fact, I Will Teach You To Be Rich would probably be my default “graduation gift” for a college student who needs to learn the basics of personal finance.

I Will Teach You To Be Rich is the perfect book for that audience. Other readers may be driven away by the tone or, in some cases, the simplicity of the advice, but, to put it simply, it’s pretty obvious the book isn’t written for you. Ramit has a pretty specific audience in mind and he hits it almost perfectly. Good work.

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  1. Rebecca says:

    It’s a paradox of our present time that, just when so many of the target audience is more in need than ever before of sound advice as found in this book, so few can afford to spend on such non-essentials. Of course, there’s always the library, but it’s fortunate that such excellent websites as The Simple Dollar, Queercents and GetRichSlowly.org have so much useful free info.

    Still, one of the best things I think that anyone can do is to try and get that younger generation focused early on the basics of frugal living. Just making them understand the 1st principle of “spend less than you make” can at least make them more open to trying some of the other tips for making their dollars last longer. Even if we can’t afford to buy them books. Just passing on a link by e-mail, every now and then, to something easy that may be helpful would still be an improvement over letting them go blindly into debt.

  2. Was there really a “debate” or was just that book promotion. I think there is room enough in the personal finance universe for both of you.

  3. Funker says:

    “I Will Teach You To Be Rich is the perfect book for that audience. Other readers may be driven away by the tone”

    Quite, THAT audience. Frankly, the tone of the name of the book alone drives me away. I read TSD because I need a book called “I Will Teach You How To Get Out Of Or Avoid Debt”; being ‘rich’ is neither on my agenda nor within my possibilities.

    Trent, keep on keeping on. Your posts are valuable, IMO, to a different set of people. Being in a position to help the more affluent to become rich is Ramit’s agenda. You’re both doing a service to your readers by providing opinion/advice. Thanks to you both :-)

  4. Bill McCollam says:

    Good review. I especially agree with Ramit’s first step on optimizing credit cards. Getting credit under control is critical. And there’s a couple of levels to this… defensive (chack balances, consolidate, pay off balances…) and offensive (put everything you can on your reward credit card (don’t be one of the ones subsidising the merchants. As posted:
    http://www.mccollam.com/jakeblog/2009/03/i-aint-got-no-money-honey/

  5. I think that it is great that you know who your target audience is, Trent. I do have to wonder why you reviewed this book on your blog when it doesn’t target the audience that you try to target.

    All in all, it does sound like a good book and I may check it out.

  6. Beth says:

    I think Trent makes an excellent point about audience. I think too many people fall into the trap of thinking that everything online or in book form is meant for one generic audience. It’s just not so.

    I wouldn’t buy this book for myself. (As a former reader of I will teach you to be rich, I learned a long ago that I’m definitely not Ramit’s target audience). However, thanks to this review I would buy it for my younger sibling who is just starting out.

    Thanks for the review, Trent.

  7. Nancy Dailey says:

    I am a subscriber of Ramit’s blog and your blog. You are being very nice to Ramit. I’m assuming it’s a professional courtesy, reviewing his book.

    This past week I received 3 emails in one day from him promoting his book. He’s on fire selling. His in-your-face style does appeal to some, but it turns into noise quickly. The problem I have with Ramit and many others who blog and write about personal finance is the “harm and rescue” undertones (I’ll tell you a story, freak you out, then I’ll rescue you with just-do-what-I-say advice). The evidence is clear – it doesn’t work for the majority of us who really need to treat our financial health the same way we do our physical health. More of the same (harm and rescue bombardments) is not going to equip younger generations with better financial skills. It will help sell more books though.
    Nancy Dailey, Ph.D.
    Dr Nancy: what I tell my kids about money

    P.S. I’m all for selling books. I’m a published author also.

  8. Trent, I read Ramit’s blog, too. Even though I’m older than you, I still figure he’ll have some insights and he is pretty funny. I enjoyed your review of his book. You have a respectful tone and you are straight-forward in your observations. I didn’t see this positive review as a professional courtesy, I just think you have a gracious outlook and you have always been good about pointing out the strong points of others…even if they are competitors.

    Nice job.

  9. Gabriel says:

    Thanks for the recommendation. I have to admit that, as an entrepreneur and budding money maker (I’m going to graduate college soon) – I appreciate his emphasis on earning. I’ll take a look at this!

  10. guinness416 says:

    I’m looking forward to reading this one (I’m on the wait list at the library, sorry Ramit). It sounds a bit raw-basics for me to be honest, but I do very much enjoy his humour and energy. The guy’s a good writer.

  11. Derek says:

    I’m with guinness416. While I don’t think I can justify buying this book, I know a lot of people who need this advice. I read the first chapter Ramit sent out and it was very well-written. I’m in his target market (25, single, somewhat-high salary, etc) and really enjoy his blog, but, I have most of this stuff set up already. However, if I could go back in time I would buy myself this book so I could’ve avoided some mistakes. Thanks for the honest review.

  12. MeekWoman says:

    Have you considered reviewing movies/documentaries? I just watched Maxed Out (2006) on Netflix, it was interesting. Heavily biased, but interesting. Movies/documentaries may appeal to a larger constituency.

  13. JT says:

    First off, I’m a subsriber to your blog Trent, and not Ramit’s even though I pop in and read it fairly regularly. Your writing style speaks more to me, and that’s why I’m a subscriber to your blog.

    Secondly…let me state that I am a thirtysomething that makes a pretty solid income…in the low six figures. I find Ramit’s advice to be basic stuff that I already KNOW…you don’t get to earning six figures in a Fortune 100 company if you don’t already know alot of the lessons that Ramit is peddling as novel. But for his younger audience, it may be worthwhile to hear. For me, I want (and need, to stay focused and not blow my money on stupid stuff as I’m often tempted to do…) to be reminded of what’s important in life (family, friends) and what RICH really means to you (for me…a life that is more mine than my employers’). Your writing reminds me of that all the time; Ramit’s doens’t tell me anything I don’t already know. And his incessant peddling of things to sell (Scrooge Strategy, his book) is a little offputting for a blog.

    So thanks for your fair review…but I think I already know which writer is most worth my time to listen to…you.

  14. Ramit Sethi says:

    Hey all, it’s Ramit (the author of the book).

    Trent, thanks for a great and thorough review. I really appreciate it, and I agree with us having different audiences.

    I just wanted to clarify one thing: While a lot of the book covers the basics, there are quite a few intermediate and advanced techniques, including automation (personal finance is not about willpower and trying harder), negotiation (literal call scripts to use against banks and credit card companies), and the psychology of investing. I spent two years writing it to make sure it wasn’t yet another boring personal-finance book.

    I’ve put up a whole bunch of excerpts to show you what I mean.

    Thanks for all the comments, too.

  15. Mike says:

    I still think he’s not one to be giving advice. I am his target audience and the guy sounds like a commercial for buy now pay later.

  16. @funker The title and the name of Ramit’s site is misleading. It sounds spammy but his advice is not. Read his site for 15 minutes and you’ll see that.

  17. Lenore says:

    Some of the wisest advice I ever heard (probably on Oprah) was to define what financial success means to you. That way you’ll know when you’ve achieved it and be able to relax and enjoy it. Otherwise it’s easy to get caught up in a greed cycle in search of a sense of security that will never seem to arrive.

    For me financial success would mean:
    1. Living in a lovely, paid off house of at least 1500 square feet.
    2. Driving an efficient car new enough to still be under warranty
    3. Eating my favorite foods at home and dining out whenever I wanted.
    4. Living “off the grid” with up-to-date appliances and affording all my other utilities.
    5. Hiring housekeeping and grounds maintenance help as needed.
    6. Having a home entertainment system with plenty of programming options.
    7. Wearing quality clothes and shoes but not necessarily designer labels.
    8. Acquiring antiques and beautiful things without cluttering my home.
    9. Attending several movies a month and a few live entertainment events per year.
    10. Pampering a half dozen pets.
    11. Exploring new hobbies and taking a trip every few years.
    12. Maintaining a handful of magazine and online subscriptions.
    13. Having excellent health coverage and getting weight loss surgery.
    14. Having a haircut and highlights every couple of months at a mid-range salon and getting laser hair removal.
    15. Having considerable savings and an adequate emergency fund in the bank.
    16. Giving to many charities and helping friends and family in need.

    Too much to ask for? Maybe, but it’s a middle to upper-middle class American existence, not copious luxury. As it is, I am actually:
    1. Living in a 750 square foot house with many maintenance and remodeling needs.
    2. Driving a 1994 clunker with no warranty.
    3. Eating mostly generic brands at home and fast food or the cheapest restaurants when out.
    4. Enslaved to the power company and stuck with depreciated, inefficient appliances.
    5. Cleaning my own house and having no landscaping beyond a teenager mowing my grass.
    6. Watching basic cable on a 10-year-old TV.
    7. Wearing secondhand, discount store or clearance rack clothes.
    8. Scavenging home decor from bargain bins and yard sales.
    9. Attending one movie a week and missing most live theater and concerts I’d like to see.
    10. Feeding 3 rescued cats generic food and taking them to clinics instead of the vet.
    11. Stuck with cheap pastimes and unlikely to travel unless I win a trip.
    12. Reading whatever magazines I can find online.
    13. Relying on Medicare and the hassles and stigma that go with it.
    14. Shaving every few days and getting one haircut a year at Great Clips or Fantastic Sams.
    15. Proud of the measley $300 I’ve socked away.
    16. Contributing $10 or so a few times a year to the charities dearest to my heart. Feeling powerless when friends and family struggle with financial disasters.

    I’m not complaining, though, because most of my basic needs are met, and I’m actually happy most of the time. Money can make life better in many ways, but it is not the solution or savior many think it to be. What matters most is enjoying life to the fullest, whatever your financial situation may be. The best things in life are free, the second-best are cheap, and the expensive aren’t always as great as they seem.

  18. I agree with writer’s coin. The whole branding of Ramit’s advice is just off. I’m worried the branding will keep some potential buyers and readers away from him. This bothers me because his writing style is both entertaining and sound.

  19. NRB says:

    The books was decent enough. I bought it friday and read it over the weekend.

    The only thing that really irritated me in the book was when he bashed “old white men”, as if being white has something to do with people giving bad or outdated advice?

    But I guess that’s the new multicultural society we live in.

  20. Ian P. says:

    Now if only I could find a book called “I Will Teach You to be Happy”.
    Unfortunately, most people want to be rich because they aren’t happy, and if they were to suddenly be rich, they still wouldn’t be happy.

  21. CPA Kevin says:

    I’ll pass on this one since by your review it sounds like I’ve already done everything he recommends.

  22. Carmen says:

    Having read this review, I am left wondering how Ramit’s book will help me to be rich? It all sounds like average person stuff, not rich person stuff, unless he means rich by global standards in which case any American or British person is “rich”. I don’t think the title fits the book at all, from the sounds of it.

    I also think the assumption re: TSD & debt isn’t necessarily correct. I have never had any debt, besides our mortgage. But I am interested in personal finance and enjoy Trent’s writing style. Although many of the articles don’t speak to me, some do. I also really like the comments section.

  23. Ken Montville says:

    “I Will Teach You To Be Rich”
    “I Will Teach You To Be Thin”
    “I Will Teach You To Be Attractive to Your Soulmate (of either sex)”
    “I Will Teach You To Beat the Stock Market”
    “I Will Teach You To Be Your Best You (Whatever That Is) ”

    Trent, I saw a review of this book on another PF blog and the blog author took offense when I suggested that someone of his caliber might be accepting a quid pr quo for promoting the book. So I will not suggest that here.

    You have written a thorough and thoughtful review. As an avid reader of many, many “self help” or “how to” books as well as an actual physical attendee at many, many conferences, seminars and workshops along these lines I can only think that this is yet another in a long line of “I Can Teach You How to ‘Make Me Rich’ – Buy This Book.”

    Hey, I’m all for capitalism and the American Way but peddling books with titles such as this one makes me want to run as fast as I can in the other direction.

  24. Kate says:

    I’m with a lot of the others here. I haven’t read this book, but having read your review, I’m not so certain that Ramit can “teach you to be rich” (can anyone?). But I think he does point out some important changes that anyone who is trying to live a more financially responsible lifestyle can make. By harnessing the power of small-making small changes in our day to day behavior- we really can transform our lives.

  25. Trent,

    Thanks for the review. What book do you recommend? Of course without the humor, brash, in your face style? I’m a 25 but also want to know about other useful material. Thanks in advance.

    -Mig

  26. Craig says:

    Read a few reviews and it really seems like this is something I have to get right away. Being in early 20′s and single, I need these tips and advice even if I have no debt and credit cards in line.

  27. Flexo says:

    Ian P.: That’s a great idea for a book! You should write it. I think most people do want to be happy but many may not know what that means to them.

  28. CPA Kevin says:

    Trent, why didn’t you mention you’re a guest writer in the book?

    From JD Roth’s book review:

    Each chapter includes a “guest” article from a prominent blogger, including Gina Trapani from Lifehacker (and now Smarterware), Trent Hamm from The Simple Dollar, Flexo from Consumerism Commentary, and yours truly.

    http://www.getrichslowly.org/blog/2009/03/23/book-review-i-will-teach-you-to-be-rich/

  29. Kathy says:

    Ha, I get both your newsletters and I’m still broke.
    Although when my daughter opens the pop tarts in the morning and only eats one of the two. I started putting the second one in a baggie for the next day instead of throwing it away like I usually do.

  30. Cathy says:

    Goodness people – haven’t you heard “Don’t judge a book by its cover(or title)”?

    Ramit is telling a lot of young people to spend less than they earn. Basic concepts that their parents failed to teach them as they are saddled with debt they can’t afford and a now non existent retirement. I am rooting for these young college grads to do better. Since their parents failed to teach them these skills, I’m glad someone like Ramit is speaking to them (and they are listening). Ramit’s book beat out the teen vampire books “Twilight” for crying out loud. That’s like the vampire Harry Potter.

  31. Carmen says:

    @ Cathy – I haven’t read Ramit’s book and don’t plan to. But I have read the Twilight series and thought they were brilliant! Far better than Harry Potter from my perspective, as a female (obviously!) adult. Harry Potter is most definitely more of a child’s book aimed at a younger audience of both genders, possibly with a skew to the masculine judging by my children’s friends who have read them (all boys!) I think of Rowling as the modern day Enid Blyton, writing outstanding kids books. Sadly I couldn’t finish the first one, having now tried 3 times.

    Interestingly I think the Potter movies are excellent, the Twilight one being a complete let down. Sigh. Or is that just in keeping with good books making poor movies and vice versa?

  32. Brian T says:

    Ramit is an excelent writer. I know that this site has a vocal target audience, but all the negative posts that are blindly biased are probably not necessary. I reviewed all his free chapters, if you don’t plan on purchasing the book I would recomend you check out those free posts. Ramin left a link in his above ‘responce’ post.
    Great point that that the book dose not teach you how to become rich, rich as in ‘instant millionare’. You should know that before purchasing the book. I’m 23, I have decent income, I have gained from both Trent and Ramit insights. This “target audience’ notion should be re-evaluated.

  33. Cathy says:

    @Carmen – I’m all for authors that encourages young people to read books! I was awed when the Harry Potter books came out, and I saw 6-10 year old kids eagerly pouring into these giant tomes. I haven’t read the Twilight series (the waitlist at the library is unreal!), but it’s similar with teens and college kids reading something on the bus rather than fiddling with an iPod.

    Love him or hate him, I think Ramit has a twitter-like style that the 20-somethings relate to. When I see 20-somethings talk about long term investment planning and savings, I’m floored. I think he has been influential among his generation. I disagree with him that counting lattes don’t matter, but I can’t begrudge him if he has an audience who is listening to his big picture advice.

  34. I think people need to actually think about the title of this book, before they bash it. There’s a difference between “I will teach you to BE rich” and “I will teach you to GET rich.” It’s about defining what “rich” means to you, and then setting goals and working toward them to achieve a rich life, according to your own definition. And that’s what we all really want out of life.

    (As for the side discussion on Twilight and Harry Potter… I’m on the 4th Twilight book, and the series just seems to be getting worse as I go. I hate it – I keep reading it because I was asked to write a chapter about it in an upcoming book. But frankly, I can’t find any redeeming characteristics. I think it provides a horrible role model for young girls, and that it glorifies male stalkers. Harry Potter, on the other hand, I found very entertaining, and enjoyed all of the tie-ins and references to classical literature.)

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