We have reached the end of our look into I Will Teach You To Be Rich by Ramit Sethi. This last post is a breakdown of Ramit’s recommended Action Steps that you can take to begin working your way to the financial stability and riches you are seeking. He breaks the steps down, one week at a time, and suggest you follow these simple steps to change your life. Let’s get started!!!
The first thing you want to do is get your credit report and credit score. You can get this from FreeCreditReport.com. You also want to find a no-fee credit card that you can use, preferably one that has cash back rewards. You should set up automatic payments on this credit card every month, and PAY IT IN FULL!!! Lastly, identify your debt and start paying it off. Give up some of the luxuries you don’t really need and throw some extra money at your debt. You can build wealth a lot faster if you can get rid of bad debt.
If you don’t have a checking account, open one immediately. If you do have one, assess the one you have. What do they provide in overdraft protection? Are there any fees? Your checking account should not cost you anything and preferably offer some protection from possible overdrafts. You also want to open a high interest savings account. I know “high interest” may be a reach, but in these days, anything above 2% is considered “high interest,” so look for places that offer at least this percentage. You are more likely to find that with an online savings account rather than at the old brick and mortar banks. They have a lot of overhead to cover, so guess who pays for it…you!!! I personally use Marcus.com. Citi.com is currently offering 2.36% on newly opened savings accounts. I strongly encourage you to check out one of these two online accounts. Lastly, you want to make sure you set up automatic deposits into this savings account. You can make deposits from your checking account or maybe even your employer will put a portion of your paycheck into it via Direct Deposit.
If your employer offers a 401(k) plan, then make sure you are contributing. Most employers will match up to a certain percentage of your money, so you want to at least contribute the company match. That is free money just waiting to be picked up. You also want to consider opening a Roth IRA and set up regular deposits. There is typically a limit of how much can be deposited each year. For 2019, the most you can contribute is $6000. You have until April 15th of 2020 to hit this max, so you have about 9-10 months to divide that $6000 contribution into monthly deposits and hit that max. One quick warning, there are income limits with this, so if you are in the six figure range, quickly Google the income limits for Roth IRAs for 2019. You can use Vanguard.com to start your Roth IRA account.
Lastly, you want to take some time and come up with a good plan to pay off your debt. Yes, I know this was recommended in Week 1 and still is. It is different here because you now need to sit down, figure out all your debt and determine the best way to tackle it. If you have some time, research Debt Snowball or Debt Avalanche. These are two great ways to pay debt down. Determine how you want to pay off your debt, and focus on knocking it out!!!
Figure out your Conscious Spending Plan. We spoke about that three weeks ago. Get your paycheck, see where you are spending your money, and turn it into a Conscious Spending Plan. Find ways to optimize your spending and where you can save additional money. Any money saved from spending can be used to pay off debt or added to your savings account. Once you have your Conscious Spending Plan, maintain it and monitor it. Find ways it can be improved and adjust percentages accordingly.
Create a list of all of your accounts. You can use something as simple as Notepad, Excel, or Evernote. You could also use a free online service like Mint.com to review all of your accounts and see where your money is going. Record all the information about your accounts, money that flows into them and out of them. Record their purpose, how to access them online, and any other key notes you want to remember. The point here is to record it all in one place so you have one place to see everything. You should also link your accounts together. Use them for automate your money flow. Automate deposits and bill paying. Automate things and let them work for you. Sure you can keep an eye on them, but let them do all the work.
In this last week, you want figure out how you want to invest your money. Do you want to use Lifecycle Funds, Index Funds, or invest in individual stocks. Personally, I like Index Funds at Vanguard.com. They have some of the lowest fees out there and their customer support is the best I have ever experienced. Research what you want to invest in and then start investing. Automate deposits into these investments from your linked accounts. Use the Pay Yourself First approach and send money to investments and savings before you pay anything else. Just make sure you have enough left over to pay down debt and your required costs for living. Set these automatic investments and just check on them once in a while to see how they are growing!!!
I Will Teach You To Be Rich is a great book about how to start building your wealth. Anyone can pick up this book and easily follow what Ramit is saying. He breaks it down and makes it easy. These Action Steps are the last piece to the puzzle on how to get started. If you follow his suggestions, you will significantly improve your financial situation and be well on your way to riches. I have followed quite a bit of this advice and it has definitely made a huge difference. I would recommend you read the book, rather than just blindly following the suggestions though. The book gives you much more context and can help you feel more comfortable taking this journey.
You can pick up this book on Amazon via my affiliate link here: