Episode #35: Rich Life Chat with Ramit Sethi

Hi! This week, we are sharing our first interview episode with one of our personal heroes, Ramit Sethi. In this episode, we ask Ramit 10 questions from our listeners and there are some very good, vulnerable questions in there. We chat about COVID-19 pivots, what a rich life means to us, and more!

You can stream the episode here on the blog or on iTunesSpotifyGoogle PlayTuneInPocket Casts, and Stitcher. You can find the podcast posts archive here.

Show Notes:

-Here’s a link to Episode 8: Self Help Books That Changed Our Lives where I first fan-girled about Ramit’s book.

-Ramit’s book is I Will Teach You To Be Rich and is the best spot to learn more about any of the topics we discuss in this episode. Make sure you get the second edition.

-I mention in the episode that Ramit’s email list is excellent (sign up here). It really is—I’ve never been on an email list that taught me so much.

-We chat about Ramit’s epic wedding and honeymoon.

If you all enjoyed this episode, I’d love to hear more about your Rich Life values and goals! It made me so nervous in the episode to just SAY it all on the spot like that, but it also was such an inspiring exercise. I hope you do it too! xx- Elsie

Episode 35 Transcript

Elsie: You’re listening to the A Beautiful Mess podcast. This week, I’m interviewing one of my personal heroes, Ramit Sethi, author of I Will Teach You to Be Rich. If you have money guilt or goals that you can’t quite reach. I hope this episode will be an encouragement and an inspiration to you, we chat about COVID pivots, side hustles and how to find your own rich life. Ok, so I first mentioned your book, I Will Teach You To Be Rich in dpisode eight, which is self-help books that changed our lives and. OK. So welcome Ramit, everyone!

Ramit: Thank you very much for having me.

Elsie: All right. So I wanted to tell you a little bit about my childhood and how your book changed my life. So I was raised in the Midwest, in a middle class family. And I grew up in and way I love to call a Little Caesar’s Pizza childhood. It was not fancy, but very average. I didn’t feel poor. I didn’t feel rich. And I didn’t care about money. I never thought about money. It wasn’t a big subject in my life. And in fact, I felt like my first experiences with rich people or knowledge about millionaires was from movies. And they were more like villains than people, like I didn’t really get a chance to ever meet a nice kind millionaire until I was well into my 20s. So we started to have success in our 20s and kind of overnight went from earning a very low income to a very high income. And it was exciting, but also stressful. I dealt with a ton of shame and confusion and guilt for years because I didn’t know what to do with myself. I didn’t know how to act in front my friends. Should I try to hide it? Should I try to downplay it. Should I be proud? Should I be investing in all these things I don’t know what they are? I was just very confused and stressed by it all. And that is when I learned about your book, I Will Teach You to Be Rich, which was the perfect book title. Whenever I saw it, because I literally wanted someone to teach me how to be rich. And it really did change my life. The thing that was so magical from it was learning to define our money values. So my husband and I sat down together to find our values. And now we’re able to spend money without feeling guilty. And it actually brings us joy.

Ramit: Oh, my God. I love it. It’s so amazing to hear your your transition. First of all, I just want to say Little Caesars, I’m well familiar with it. Pizza! Pizza! What was it? Two large pizzas for five dollars, I think that was the deal. And I did not really like it, but when you have in our case, a family of six to feed, that was what you got.

Elsie: Honestly, a nostalgic part of my childhood.

Ramit: Yeah. Yeah. It’s like it’s like eating those frozen pizzas where they’re not really that good. But when you sit down at eat them it reminds you, wow, there was a time and a place where we — this was Joy.

Elsie: Yes.

Ramit: But I really love how you were so honest that when you started to earn more, you realized there are skills associated with making money and having money. And nobody really talks about some of those things.

Elsie: Right. It was so scary. And I didn’t know where to turn because all the education I had had up until that point was don’t have a credit card. Pay off your debts. But then once you’re to that point, what do you do next? So, yeah, the book really changed my life and helped me get on a positive path and create a healthy relationship with money.

Ramit: I’m so happy to hear that.

Elsie: We’re so happy to have you. Thank you. Thank you. Definitely one of our heroes.

Ramit: Oh, thank you so much. And also, just thank you for being an example that money can be positive, that having money doesn’t make you a villain, that in fact, being rich, you can be rich and incredibly generous. You can be rich and incredibly adventurous. And, you know, people have this phrase, especially in the middle class, where they say “money changes you”. You notice how I said that “money changes you” as if it’s a negative thing? Yeah, money changed me. It should. Money allowed me to dream bigger. It allowed me to write big checks to people and to be generous and to hire the best people as my teammates. Yeah. Money changed me. Money should change you, but it can change you in a direction that you choose. Like you sitting down with your husband, defining your values. I love that you took an active role in your money.

Elsie: Thank you. It was life changing, so I was hoping we could kind of start off by you explaining to our audience, what is the rich life concept? And how do you define that for yourself? Because I feel like it’s something that every single person, no matter where you are in life, can and should do.

Ramit: Yes. When we think about what rich means to us most. I ask people, what does rich mean to you? And they almost always give me three answers. One of them. OK. So one of them is a million dollars. And that’s almost a child like response. A million dollars. Because if you live in Nashville versus Manhattan, those are totally different amounts. If you are twenty two versus sixty two, those are completely different.

Elsie: So true.

Ramit: So it’s a very simplistic, reductionistic, almost childlike answer that we can kind of quickly move past a million dollars. The second one, they say, is I want to pay off all my debt. And I think to myself, if rich to you is waking up and being at zero, no wonder that’s not a motivator to you. Who wants to wake up and say, yeah, today I want to go from negative 10 to negative nine. That’s not motivational. And that’s actually quite a dim dream. And I think we understand that if you’ve been in debt, it can feel oppressive. But if your only dream is to get to zero, that’s not a dream that’s going to sustain you over the years it takes to pay off. And finally, people say, I want to do what I want when I want. And I kind of like that answer. So then I say to them, well, what do you want? And then they get extremely puzzled because no one has really thought about their rich life down to the specifics. So I want to give a few examples for people. And then maybe we can do a little exercise as to what your rich life is. OK. So when I started off early on, one of my rich life dreams was to be able to go to a restaurant and order appetizers without caring how much it costs. That’s like a ten dollar dream. But to me, it was so meaningful because growing up we hardly ever ate out. And when we did, it was a coupon. We used a coupon and we never, ever ordered appetizers. So for me now to be able to go to a restaurant and whoever I’m eating with, you know, oh, should I get this or that? And I’m like, just get both. We can do that. It is so amazing.

Elsie: Beautiful!

Ramit: Ten dollars. It’s so amazing. It’s so meaningful to me. Then my dream became when I moved to New York, I wanted to be able to hop into a cab instead of going on the subway if I needed to go somewhere for a meeting. So I didn’t come out of the subway dripping in sweat. Again, what is this, a 10, 20 dollar dream? But to me, it was meaningful, number one, because I don’t like to sweat when I’m going to a meeting. And number two, just to not have to worry about a three dollar or a ten dollar question. You can see that those are small numbers, but they meant something to me as I became more sophisticated with my money, a little bit more successful. The dreams got way bigger. I want to share these with you because I don’t think people share what rich is to them unapologetically. They equivocate. They minimize. They apologize. They say things like, well, you know, I’d like to have a nice house for my family. It doesn’t have to be a big house. And I’m like, what? Why don’t you say for my rich life, I want to have an incredible house. It’s going to be designed this way or we love to take the paddle boat out. So we’re gonna do it this way. No, we equivocate. We minimize, we add caveats. I don’t want to do that. What I did was my wife and I decided when we were going to after we got married, we were going to take a honeymoon and we had went out with some friends and they asked us where we were going. Our plan was, let’s do a seven or eight day safari. That was — we’ve never done that. That would be crazy. Let’s do it. And our friends said, that sounds amazing. And then these guys were a bit older than us. They said when we got married a long time ago, we took six months off. And at the time, my fiancee and I were looking each other like, what the hell? And then the next couple who we knew and we just thought they were normal people like us, just a little bit older. They were like, oh, yeah, we took a year off. We traveled the world. We were like WHAT?! So we walked out of that dinner and we looked at each other and we said. First of all, those people are crazy. I didn’t think that. I didn’t think who takes six months off? So we said this magical question to ourselves. What if what if we did that and we decided we’re not going to take six months off. But we run our own businesses. We have the flexibility if we want it. And so we took a long six weeks and independently for our honeymoon. We both kind of were writing down where do we want to go? Like what we’d want to do. And both of us separately came to the conclusion that we wanted to invite our parents with us for part of it. Now, our parents are both you know, they’re alive, they’re healthy. They love each other. And so we brought him along with us to the first stop, which was Italy. And we thought to ourselves, like, our parents have never traveled like this ever. We just told them, show up at the airport. That’s all you have to do. And we took them and we traveled with them in a way that they’ve never done. Everything was taken care of, handled. They could just sit back and enjoy it. And to me, that is really what the essence of a rich life is. It is being financially stable and comfortable yourself and then asking the questions, what is important to you? So you can spend extravagantly on those things and you can cut mercilessly on the things you don’t care about.

Elsie: I love it. I love it so much.

Ramit: Can we do a little exercise together? I want to hear more about your rich life.

Elsie: OK!

Ramit: OK. So this is gonna be fun, especially because you told me that you and your husband talked about values. I love this. All right. I want to ask you a couple of questions, and I want everyone listening to participate. OK, so my first question for you is, what is something you love to spend money on? Not just like but you truly love.

Elsie: Furniture. Furniture and rugs for sure. Sofas, rugs, home stuff.

Ramit: Love it. OK. I notice you didn’t miss a beat when you answered that. And I noticed you are smiling as you’re talking about rugs and furniture. Look at this. OK, so everyone here has something that we love to spend money on. It’s intuitive. We understand it and we know it. Now, why do you love spending on that?

Elsie: Well, our home is one of definitely one of my values and something that I feel like it’s like the gift that keeps giving. Every single day. Because we’re here with our young children. Right now, you know, during the quarantine, it’s extra special. And we actually moved a couple of weeks before the quarantine started. So being able to, like, set up our home kind of quickly and make some purchases and make it cozy was the greatest gift to me.

Ramit: Ok. I love that. And are you willing to share some amount that you’re comfortable sharing? Like, give us a sense. Are we talking about a hundred dollars? Are we talking about a million? Like, what are we talking about here, Ballpark?

Elsie: We’re talking about a million dollar for rug (laughs). Well, no, I mean, like I spent like more than ten thousand dollars on furniture a couple months ago because we had just moved and just sold our home. And I was like setting up quickly. And it was a huge gift. It felt like hashtag blessed. Like I’m able to setup our home quickly and buy the things they really love. Not like a filler piece, planning to replace it later. Things that are going to last. And yeah it was a wonderful feeling.

Ramit: OK. We’re going to continue with this. But I just want to pause and highlight something you just did, which is so amazing. Everybody listening. Did you notice what you just heard? You did not equivocate. You did not minimize. You said, no, I don’t need to buy a filler piece. I want to buy something I love and it makes me feel good. This is so rare to hear publicly talked about. People, especially in America, we have this weird, puritanical belief that you shouldn’t spend money on anything and that pain is a virtue and that you should be ultra frugalista for the next 80 years. And then maybe, just maybe you can enjoy life. Ironically, all the same people are out there spending on whether it’s fitness classes, organic meat, whatever. And they’re just not talking about it because they’re guilty. I love the way you said, look, this is important to us. And I’m going to buy something I like. Ok?

Elsie: Thank you. I really feel like setting those values gives you permission and then you feel proud to do it instead of ashamed or worried or stressed. It’s such a wonderful gift.

Ramit: It’s a gift. You’re right. And that is also why I can share unapologetically that I went on a very nice six week honeymoon. We took our parents and we did all this crazy stuff. And I’m not apologetic about it because I saved. And then we decided jointly what we were going to do. And it is something that is important to me. OK, so back to this exercise. We call those things money dials, the things that you love. Everyone’s got at least one. And the most common money dial is travel. That’s the most common answer, people say. The second most common is eating out. That’s a really common interest. The third is health and wellness, you know, fitness classes, types of food, etc.. And then there’s a steep decline. So furniture and I would say design is one style, etc. mine happens to be convenience. I spend a huge amount on building a life that is totally convenient for me and I love it. I actually want to spend more. So now let’s go to the second part of this, which is if you could quadruple your spending. On homewares, what would your life look and feel like?

Elsie: I feel like I already have that planned out. Honestly, I love home so much. So it would be it would be super fun. It would be the most fun shopping of my entire life.

Ramit: Tell me. Walk us through.

Elsie: Ah! Okay, so, Jonathan Adler everything, just like Jonathan Adler shrine in each room. And I would love to do lots of custom things with people who are artists, who are artists in their own fields, like in Jonathan Adler’s home he has this wall of handmade tile that was like specially made just for his home. And it blew my mind and I would love to do things like that someday.

Ramit: I love that. What would it feel like to be able to go through that process and then to walk into your home with a handmade wall of some local artisan that is meaningful to you?

Elsie: I feel like it would be so special to have a dream like that, that seems so big. And then for it to really happen and you wake up and see it every day.

Ramit: Amazing. OK. This is the essence of a money dial. It’s called a dial because just like a stereo dial, you can turn up your spending on the things that are important to you. And when I ask the question, what would it look and feel like if you could quadruple your spending? I have to tell you that your answer is extremely sophisticated compared to the usual answers I get. And I want to tell you why. So I had a reader of mine when I went on book tour in D.C. and his money dial was eating out. He loves to eat out different places. I said, what would it look like if you could quadruple your spending? He goes, Well, I’d gain a lot of weight because I eat out four times a week. And I said, hold on a second. That’s quite linear. Like to think if you spend four times, you’re just going to eat out four times a week.

Elsie: Yeah, four times the calories.

Ramit: Yeah. That’s so linear. That’s like a seven year old. Let’s get into it. I said, where would you go? And he thought about it. And now the entire room is quiet, just waiting for him to answer. He goes well. I have a list of Michelin starred restaurants that I want to go to. And I said to him, who would you take with you? And he looks up at me and he says, I would take my family because they’ve never been able to afford to eat at places like that. Now, that is a money dial. A money dial is where you can truly spend extravagantly on the things you love. In your case, you didn’t just say, well, I would buy four times the amount of sofas. No, you knew the brand. And then you went even further. You said, hey, let me dream big. I’ll get something custom made from a local artisan that is meaningful to me, that is truly thinking of what turning up your money dial means. Now, why do I talk about this and why how does this fit into a rich life? All of us listening right now can feel something as it relates to our money and our money dial. We all have something in our life that we love to spend money on. And almost none of us have ever thought about what it would feel like to spend more on it, because we are bombarded with messages that tell us, no, no, no, no lattes, no jeans, no vacations, no nothing. But if we start off from a place of yes, yes, I unapologetically love nice clothes, I’m not going to apologize. It’s not shallow. I love it. Now, what if I could actually spend more? What would that look like? Will that feel like? Who might I bring with me if that’s applicable? When we start from a place of yes then suddenly it becomes way easier to cut costs mercilessly on the things we don’t. That is the essence of the I Will Teach You To Be Rich “Rich life”.

Elsie: I think everyone’s going to be making their list now. So get out your journals and start making your list. OK, so we have some listener questions and I’m just going to try to rapid fire. So the first one is, what is your advice for those who need to pivot their business due to COVID job losses and closures?

Ramit: Ok, three steps for business owners. I have a lot of business owners who are in my community. We’ve helped to start and grow their businesses. The first piece of advice is you must believe your business is important. So many business owners are falling on their own helplessness right now. Nobody will buy my X, Y, Z services. You have to remember that for thousands of years, people have paid to clothe themselves, to entertain themselves. Number one, you need to believe your service is important. Number two, counterintuitively, you also need to accept that your business may not survive. And when you hold both of those two ideas, which is I believe my business is important. But I also know it might not survive. Then and only then can you truly make a plan, which is number three.

Elsie: That’s so powerful.

Ramit: So making your plan, adapting to the market. I have so many examples of business owners who responded to me on my social media and email list, things like that. And I said, what are you doing to adapt? And a lot of them are doing what they can. We have fitness instructors who have gone online. They’re not making as much as they used to, but at least they are giving it as good of a shot as they possibly can. And that is the key right now, which is to iterate fast, adapt and figure out what your market wants. If I were business owners after I went through that three step process, I would get on the phone with my top 20 customers and I would say, what’s going on your life? What what are you looking for help with? Is there any way I can support and you may just discover the next iteration of your business model right there.

Elsie: I’m going to do that with our blog sponsors after this. (laughs) So what are the most important ways that we can recession proof our personal finance for the future. So I feel like a lot of us are realizing now like that. You know, we have all these things lined up, but it’s not as solid as we thought it was. What should we be doing for the future? To have more security.

Ramit: Step one. I would say is really getting strategic about an emergency fund. Every one of us has heard this emergency fund thing, but nobody really takes it seriously. It’s like flossing. Yeah, yeah. I should have it, but I don’t really care. There is a way to create an emergency fund. In short, you can decide how long you need for a 12 month emergency fund. That’s really your minimum expenses. A lot of people think I make 60 K. Therefore, I need a 60 K emergency fund. It’s going to take me forever to save that. That’s not true. You don’t need as much as you make. You need less. The second is to automate it. So put money aside every month. If you are investing. And you don’t have a one year emergency fund, I would recommend you pause that a lot of people don’t know. You can call up your credit card companies. Your student loan companies, even your landlord’s right now. And you can say, hey, COVID19’s making it difficult for me. Can we work something out? A lot of my readers are getting a thousand or two thousand dollars waived with one phone call. And finally, to come out of this stronger, you’ve got to plan for the worst. But I think a lot of people are also neglecting to plan for the best. What if things go well? What if you’re able to save more? What if you maintain your job? What then? So let’s plan for the worst. But let’s also plan for the good and the best that could possibly happen.

Elsie: The next question is, what are ways to diversify your income if you have a nine to five job. So we talk a lot about how your business should be a table with four legs, four different income streams. And so, you know, if one unexpectedly goes away, like a lot of us — it happened to us this past month, then you still have other money coming in. But if you have a nine to five job, that’s a little more tricky.

Ramit: It’s tricky. But the principle is exactly the same, which is you want to diversify and you also want to build an asset, because over time, whether you’re at a nine to five or whether you’re a business owner, you want to have an asset that can continue generating income even as you sleep. So the most common asset for people who have a nine to five job is to put your money in a in the stock market. And again, this is not sitting here picking individual stocks and looking at PE ratios — all that’s bullshit. You can read my book, it’s very simple. You can do it automatically and you can spend about less than an hour, a month on all of your money. But the single most common way that Americans create an asset is their portfolio. And you can start off with 50 bucks a month. If you’re earning more, you can put a lot more in. OK. The second thing you can do if you have a nine to five job is to consider starting a side business. Let’s take right now, for example, you know, a lot of people. Oh, there’s no way I can do it. Nobody’s buying anything. That’s just a story they’re telling themselves. OK. And there are two types of people, the type of people that say, oh, my God, what if this doesn’t work out? Oh, I might look foolish. It might not work. Focusing on all the things that could go wrong. And the second type of person focuses on all the things that could go right. Wow. What if this worked? What if one person buys and maybe two can buy and then five and then one day I might actually be making more from this. One of my students. This is crazy. I love this. We have a program called Earnable We teach people how to start and grow their businesses. She does a painting class. You know those. You go for date night wine and painting. She does it online, like on Zoom. She she started it off and she launched it. She launched a virtual service during Coronavirus. I think the first time she sold it through Instagram, she made 100 bucks. That’s awesome. If you make one hundred, you can make a thousand. If you know how to dress well, you can help people do that. Think of all the parents right now who need help with their kids’ lesson plans. There are a million different ways you can start a side income. So those are the two ways your portfolio and your side income.

Elsie: Perfect answer. I think starting a side hustle is so inspiring and fun. So I like what you said about thinking of all the good things that can happen instead of what if it doesn’t work. Is now — this is the most popular question by a lot. Is now a good time or a bad time to start investing since the stock market is down?

Ramit: Ok. OK. This is an interesting question. So let me ask this question to everyone.

Elsie: You probably get this question like 50 times a day.

Ramit: I get it 50 times a day. And I’ve gotten it 50 times a day for the last 15 years. So if you hear the passion in my voice, then you’re going to understand. Let me ask everyone this question. You go to the grocery store today, the toothpaste that you really like is 30 percent off. You walk up to the aisle, you see the toothpaste, and it’s got a big sign, 30 percent off. How do you feel? Do you feel happy or do you feel depressed? Morose, nervous, anxious? Guilty. What do you say?

Elsie: Happy, feel happy.

Ramit: And so isn’t it ironic that when the market goes down for young investors who have a really long time horizon to invest 30, 40, 50 years, they start getting depressed and mopey. They turn into Eeyore! “Ooooh, the stock market drops seven percent. The world is over”. No, you should be — if you are young and you are long on America, which means you believe that in the long term, the market will continue to go up as it has for the last hundred years. Then you should say, That’s great. I’m in. And I want to add one more thing for people who who haven’t heard this phrase. You know, a lot of people, they try to time the market. Well, I’ll buy when it goes low, et cetera. I want to give people this crazy stat. There was an amazing study done on a decade of investing. And what they found is that if you were just invested regularly, you would make about 7.7%. That’s a just a general average. But if you missed the 10 best days of investing, your return would drop by over half. What does that mean? If you’re listening right now, that means your return over the course of your lifetime, you would lose hundreds of thousands of dollars if you missed the 10 best days of investing. So what is the lesson? Most people’s first reaction is, well, I better pick the 10 best days I need to become a stock picker. Wrong. That’s the wrong conclusion. The correct conclusion is it’s not about timing the market because nobody can predict what those 10 days are. It is about time IN the market. That means you should be investing every single month automatically, whether it’s 50 bucks or 5000 bucks. And then you should set it and forget it. All the research is in Chapter six in my book. You can see how this plays out over the years. And if you grew up eating Little Caesars and you thought, oh, like those rich people, that’s not for me. You know, I don’t have to wear a top hat and a monocle and all that. And rich people are evil. You you will see in Chapter six how you can mathematically predict how much money you will have. You can plug it into like three fields and you can plug it in. You can see when you will make a million dollars. You can see when your portfolio will actually make you more than your salary. Basically, for all the people complaining about money, most of them have never spent one weekend reading one book about money. So it’s time to get educated. That’s my message.

Elsie: Yes, for sure. And in our show notes, which are at abeautifulmess.com/podcast, we will be putting a link to the book to where you can join Ramit’s email list, which is excellent. And definitely some pictures from his fancy honeymoon because you just have to see. OK. The next question. I love this one because I relate with it. Budgeting does not work for me. What’s another strategy to get financially organized?

Ramit: Hey, listen, I feel the same way. I don’t want to sit there in excel and type in all these things for the next forty five years. It’s like hell.

Elsie: Thank you, ah!

Ramit: And like all the money advice and experts out there are telling you to budget and track every last penny. Do you think they do that? No. I know half the experts in the field. You know, they’re sitting there on TV. There is someone I’m not going to name. And this person goes and tells, you know, “here’s how to disable your oven light to save three cents per year”. Meanwhile, they’re wearing a one thousand dollar item on their body. It’s a little disingenuous to go tell everybody else to sit there and track Excel for the next 50 years and try to target three dollars savings. You know, most people are asking three dollar questions. They really should be asking. Thirty thousand dollar questions. How do I automate my investments? Am I using credit cards, right? How do I find a job and negotiate my salary, which I teach on my email list, and on and on and on. So for budgeting, the most common thing that people do with budgeting is they try to track what they spent on last month and then they feel horrible because their spending sucks. Yeah. Most of you are spending too much. We know that. You know that. I know that. We all know that. But they forget there’s only one problem with that, which is what about looking forward? If all you’re doing is tracking what you did last month and you suck at it, how long you think that’s going to last? It’s going to last about five weeks. And then you’re going to give up like everybody does. Instead, I talk in Chapter four about a conscious spending plan. So what I ask you to do right now is to just take a blank piece of paper and tell me of let’s just say you make one hundred dollars a month. Easy, easy math. Where do you want that money to go? Now, this is where it gets actually fun and interesting. OK. We got to put some towards rent. We’ve got to put some towards taxes and on and on. But now you actually get to say, hey, I actually like to eat out or I like to travel or I like to hire a personal trainer or eat this type of thing or send a gift. I want ten dollars to go towards that. Now you are using your money and being forward looking instead of simply tracking it. Which doesn’t give you anything. In other words, we don’t need information. We need to change our behavior. And so I would start by just taking a blank piece of paper, really simplifying it. Pretend you make one hundred dollars and decide where you want that money to go. And then you can use Chapter four to see how to take that piece of paper and get a little bit more strategic about it.

Elsie: Perfect. Yeah. I like how you talk a lot about focusing on big wins instead of small little bits of money. Because I find budgeting stressful and I don’t even have anything in my life where I use spreadsheets. So I’m just not going to do that.

Ramit: Yeah, me too, and it’s fine! I’m so glad you said that. Like, again, three dollar questions. People spend their entire lives chasing these three dollar questions, never realizing that even if they win, they lose. They wake up. The first thing they do is beat themselves up about their coffee purchase. If you actually ran the numbers, you’d realize. Cutting back three dollars doesn’t really even save you that much. You might as well fix, look at your investments you’re paying for. You’re paying some fat larded up fund one percent and losing hundreds of thousands of dollars invisibly. You don’t even know that. And you’re feeling guilty about a three dollar latte. Makes no sense. So get the big things right. There are about 10 big wins in life. Get those right. You can buy all the lattes and the dessert you want.

Elsie: I love it. Ok. The next question is, I’m 40 and I don’t have a four one K or retirement started. What should I do?

Ramit: You should start one. Of course, that would have been better to start it 20 years ago, but we can’t change that. Let’s just focus on what we can do today. So if you are 40. Yeah, you’re going to have to save more than you would have started at 20. But if you have the option to open up a 401K from your workplace, you should do it. Most people have the option to open up a Roth IRA. Now, if you don’t know what these things are, that’s what the book is for. It explains it. I want to give you the short version, which is basically the government gives you lots of options to legally minimize how much you pay in taxes. It’s almost like you’re running a race and someone’s giving a nice little nudge from behind and helping you move faster. And it’s totally legal. Of course, you would take advantage of it. So a 401K, A Roth IRA, even an HSA, That’s a health savings account. A lot of people don’t know that that can be an investment account. All these things can seem like a different language. That’s OK. One weekend reading I Will Teach You To Be Rich and you will understand it and your money will automatically go where it needs to go.

Elsie: It’s not too late, you can do it!

Ramit: It’s definitely not too late. And I want people to feel that that sense of like, hey, what happened in the past happened in the past. We can’t change that. Let’s start today and let’s not beat ourselves up. In fact, let’s start to get excited. What can we do with this money now? Yeah, let’s put some in our 401K. Let’s do this. Let’s start to earn more. And now money becomes a source of fun and adventure, not a source of stress and guilt.

Elsie: Ok, ready for a sad one.

Ramit: I’m ready.

Elsie: I’m on a single income. How do I match what my part what my partnered peers are able to do financially.

Ramit: What do you think is behind this question?

Elsie: The way I read it, I just wanted to give the person a hug and say, like, you don’t have to compare yourself to someone who has two incomes you should compare yourself to people have one income.

Ramit: I think that’s a hard message to hear. I think just emotionally, you know, we look at, let’s say, a double income household and they can, for example, buy, maybe rent or buy a bigger place to live in. They can take more extravagant vacations. They can eat out more. You know, there’s so many things that two incomes can do. I want to first say that, look, we’re all we’re all playing the game of life, starting from different places. OK? All of us. And I’m going to give an example. Like I was very fortunate to be born to two parents who are still married who are educated. And they moved here from India and they taught me the value of education. I was very fortunate. On the other hand, my family did not talk about anything relating to fitness at all. Growing up, like the word deadlift was not to be found in my family, even the word protein and carbs. Those words were absent. Like, we just simply did not. It was not part of our culture. All of us grew up with different, different skills. You know, I’m Indian. Of course, I dominate spelling bees. We talk about that every day. That’s what I do. I was built to dominate in that. But I certainly did not learn about, like I said, fitness and food stuff. If you have, if you were given advantages and all of us were in some way or another. Yeah. You should take advantage of that. We should use the resources we were given. But we should also know that there are systemic issues that are real. You know, some people have parents who had bad money habits. Some people went into severe debt. Some people grew up in socioeconomically disadvantaged places. And that leaves an impact for this person who’s asking a really honest question. Here’s what I would say. Number one, I’m not going to tell you not to feel bad because I believe we should feel what we are feeling. Embrace it as opposed to trying to deny it. The second thing I would say is that when you get to a place of comfort with your money, you will be able to unapologetically say, this is what I choose to spend on. And this is what I don’t care about. I’m going to give you an example from my life. Now, understanding that I have a business and I have grown my money over time. I love spending unapologetically on travel and convenience. Right. I have a personal trainer. I have a personal assistant. Those are very extravagant things that I’m able to do. However, my laptop that I run my entire business on is a 2012 MacBook Air.

Elsie: Same here!

Ramit: It’s almost a decade old. And it’s just not important to me to get something new because it still works and I enjoy it. I want this person on a single income to get to the point where they say number one: This is what I choose to spend on. This is what I don’t care about. And number two: if you are on a single income, remember, your pie is not fixed. If you want to earn more, you can negotiate your salary potentially. You can switch industries. Both things I teach. You can start a business. Another thing I teach. Most of us in America are raised to believe this is our pie. And it’s fixed. But when you start to expand it and say, whoa, I can use the CEO strategy from the book, I can earn more. I can do all these things. Suddenly the world becomes a potentially never ending pie.

Elsie: That’s amazing. OK, the next question is, I’m saving to buy a home in five years. Where should I keep that money as I save?

Ramit: I’ll give a short answer and a longer answer. Short answer. Keep it in a high yield savings account. It doesn’t even matter if the savings account is paying much interest or not. That’s not the point. You just want it in a savings account. So it’s liquid and you’re not exposing it to the potential ups and downs of the market. The second more, slightly more detailed answer is I would challenge everyone listening who has been propagandized to believe that buying a house is always the best investment you can make. And it’s often not. In Chapter nine I show you exactly why there is nothing wrong with renting. I want to repeat that for everyone listening. Don’t ever feel guilty about renting. There are lots of reasons to rent. There are a lot of lies around buying real estate. I bet a lot of people listening, their parents told them real estate’s the best investment. Do it for the tax deduction. You’re throwing money away on rent. You’re paying your landlord, blah, blah, blah. All these phrases. And in America, real estate is religion. But when you actually understand the numbers, you discover, hey, wait a minute, I gotta think twice about this. And maybe there are other places to make more money. Much easier.

Elsie: There are a lot of hidden cost in owning properties and a lot of things that can happen unexpectedly.

Ramit: Correct.

Elsie: All right. Well, we’re at the end of our questions, so I am going to ask you a silly question just for fun, because I know you’ve been quarantining and that means I don’t know about you, but for me, watching lots of TV, is there any TV show that you’ve marathoned recently and or a book you’ve been enjoying?

Ramit: Oh, my God. Great question. So I love really trashy reality TV. I love it.

Elsie: OK. Tell us everything.

Ramit: OK, so a 90 day fiancee is like, absolutely insane, this season. It is crazy. I can’t believe these people are real. So yes, my wife and I have marathoned that. And then I watch Shahs of Sunset, Vanderpump, basically all the trashy TV. Yeah. I’ve watched like every episode.

Elsie: Nice. High five.

Ramit: What’s yours?

Elsie: OK. What we’re watching this week is The Last Dance that in the documentary. Oh yeah. Yeah. Yeah. So it’s about 90s Chicago Bulls, most of it. And it’s a big part of my childhood. And I never had pump up tennis shoes, but I always wanted them.

Ramit: Yeah! They were too expensive. I remember those.

Elsie: Yeah. So anyway, I definitely am enjoying that. It’s it’s so great. Yeah. Ten out of ten. OK. So before we go, we are so inspired by your travel philosophy. So you talked about it a little bit in the beginning. How you did an extravagant honeymoon. And then I was also following you over the holidays when you did this gigantic trip to Japan and…Japan and India?

Ramit: Yes.

Elsie: Yeah. So tell us a little bit about how you prioritize this type of extremely lavish expense. And also, we want to hear more about taking your family along with you.

Ramit: Oh, this is my favorite thing to talk about. OK. So, you know, I I knew from my early 20s that eventually I would get married. And it’s not that I knew who I would get married to, but I just knew that I wanted to be married. And I also knew that in Indian culture, weddings are a big, big deal. OK. So I always kind of knew that because I started writing about money so long ago. One of the things I talk about is the difference between rich people and many others is that the rich plan for things before they need to. So I knew one day I’ll get married, I don’t know how old, but I’m going to start putting a little bit of money away in a sub savings account called Wedding. And when I shared this on my blog in like 2006, people thought it was bonkers. They’re like, dude, you’re. You’re not getting married anytime soon and you’re already saving for an engagement ring and all this stuff. But to me, it was. It’s like it’s like writing a will or planning for your funeral. Why be coy about it? We’re all gonna die. Like, let’s just take the emotion out of it and just be practical about it. We’re — let’s just plan for it. So that’s what I did. And to tell you the truth, I didn’t really love traveling that much in my 20s. Like, I was working and building my business and I loved it. Finally, for the honeymoon, I had started to travel more in my thirties. I had become more comfortable. My business could run without me. And so, as I said, my wife and I, we decided for our honeymoon we were gonna go there. Let let me tell you how we decided where to go. First of all, I suck at geography. So I found a site where you just type in all the locations and it maps out. And I was like, oh, my God. Yeah. I was like, wait, that country’s in South America. I didn’t even realize that. So I had to eliminate lots of places. And we ended up with four that we went to. We started in Italy. We took our parents there because it was…everybody loves cheese and it’s like, cool. You know, it’s awesome. From Italy. We went to Kenya where we went on a safari. First time ever. It was so crazy. Then we went to India and I had always wanted to go on my honeymoon because so many people in my family have gone. And I still have family in India. And we went to India traveling in a way that I’ve never traveled because, you know, when I’ve gone to India many times, I stay with my family. And it’s awesome. This time we were really kind of living the luxury experience. But also we would go to like a local woman’s house where she taught us how to make Rajasthani cuisine. So we were really doing the high-low. You know, we were going to the markets surrounded by people, but we were also, you know, staying at these amazing hotels.

Elsie: Yes, I love this. I remember when you were traveling over the holidays, you said something like, if you don’t like museums, don’t go to museums, like make a list of all the things you love. Because I think my husband, I kind of in that boat where we kind of hate museums and a lot of the like, typical things that you’re supposed to do on a. We didn’t really want to do so. But we always want to, you know, have like a big food experience and things like that. So that’s very inspiring to customize the trip to things that are so specific.

Ramit: Thank you. You know, when we ended up in Thailand and I was kind of posting the videos as I went, and then this year we did it again. We went to India, Japan. I’ll share a little bit about that philosophy, which is that when it comes to traveling, many of us, we operate in a world of should. I should go see these sites. I should go see this museum. And I do think there are some things you probably should see. But once we have committed to traveling together, we decided we’re going to pick places that we truly want to go and we’re gonna go deep. So, for example, in Japan, you know, we love design, but my wife is a stylist. She’s a personal stylist. I love design. So when you said home wares, I’m like, yeah. Let’s talk after about your favorites. And so, you know, we found ourselves — we scheduled a tour to be able to go privately into a 300 year old home that’s still in the same family. And we saw how they designed that home over time. We went to a local artisan who’s one of the few people left in Kyoto who makes personal notepads. And we learned how to do that ourselves. And to me, that was so meaningful. Of course, we’ll see a museum here or there. But I remember when we were kids, if we would go somewhere, we’d go to a museum for like six hours or seven hours. And by the end, you don’t even know what you’re seeing. And my buddy, he started a museum business. He told me, he said, remeet, if I go to a new museum, I’m spending 90 minutes max. And the first 30 minutes I’m spending in the cafe. I was like, what? What are you talking about? And he said, Remeet. I sit down. I take I get a cup of green tea. I take the map. I pick out two, maybe three exhibits I want to see. I see them and I leave. And I was like, what? Because, again, we as kids, if we ever went to some exhibit or Disneyland, which was almost never, it was the entire day beginning to end. And what my friend taught me was total abundance. It is to know we don’t have to see everything. Let’s see the things we love and we can always come back. And that truly blew my mind.

Elsie: I love that. All right. Well, thank you so much for joining our podcast today. Before we go, could you just tell our listeners where they can follow you?

Ramit: Yes, you can find my Web site at IWT.com That’s where you get on the newsletter. We send out awesome stuff on money, business, careers and psychology. I’m on Instagram @ramit and I am on Twitter @ramit as well.

Elsie: Wonderful. Well, thank you so much.

Ramit: Thanks, this was so fun.

Elsie: Thank you all so much for listening. We’re planning to invite more guests on the podcast as time goes on. So if you have a request or someone you would love for us to invite on, send it to us at podcasts at A Beautiful Mess dot com. Also, thank you to everyone who’s left us a review — we just noticed that we passed a thousand reviews, which is so crazy because his only episode thirty five. So thank you to every single one of you. And here is a review from McKayla Murphy. “I absolutely adore Elsie and Emma from Instagram. So this podcast was a no brainer. It is very well done and nice break from my true crime pods. I highly recommend.” Thank you, McKayla And thank you to everyone. We’ll be back next week.

 

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  • Thanks so much for this one! I listen to all of your podcast episodes and this one lead me to get Ramit’s book! I’m already halfway through it. I really enjoyed the conversation about where your money values are, it really made me stop and think about my spending habits.

  • loved this episode! so many interesting things to think about. quick question for elsie: why did you call the single person’s question sad? maybe there was part of it that you didn’t read aloud, but it sounded like a normal question for me. since the whole episode was about how to live a rich life and many different lifestyles were featured, it sounded like you were making a judgement on the person being single, rather than anything about their financial situation. but maybe it was an entirely different reason! i’d love to know what your thought process was.

    • Hey R, thanks for mentioning that. I felt the same way, why is it “sad” to be single. I’m not making a judgement on the comment, it’s just an interesting thing to say in the context of the conversation.

      • Hi! So I was saying that the comparison is sad (the comparison of incomes- to be specific- not relationships). I definitely do not think it’s sad to be single! XX

  • This episode was awesome! I had purchased Ramit’s book after listening to your self help book episode and finally cracked it open today- already negotiated a lower APR and bigger credit line. I can’t believe I’m finding myself LAUGHING while reading a finance book. This is what I’ve needed!!!

    • Awe that makes me so happy! I got so much out of it as well! XX

  • Hi, is it more helpful for listeners to listen on Spotify (versus iTunes or wherever else)? The guys on Reply All recently talked about how Spotify gives them the biggest boost, so I wanted to make sure I was listening wherever helped you out the most. Love the podcast! Been reading the blog since it started and love what you guys do.

    • Hi! That’s so interesting. I’ve never heard that before! Thank you for listening and for being so considerate :)) You’re the best!

  • Loved this episode! I wonder if you all are interested in the “early retirement” corner of finance, from folks like Tanja Hester (https://ournextlife.com/) or Mr. Money Mustache (the “FIRE” – Financial Independence, Retire Early – movement). The basic advice is similar (invest regularly in straightforward index funds, aggressively cut spending from things that don’t serve your goals), but the overall philosophy is a bit different. The goal is to become financially independent so you can do whatever you want with your life (including continuing to work if you love it), and everything else flows from that. They want readers to do a deeper evaluation of what actually makes us happy (i.e., freedom, health, and human relationships ultimately make us happier than nice vacations or fancy dinners). It’s helped me reframe my spending habits for sure!

    • Hi! I listened to Tanja’s book and enjoyed it so much. I am not interested in early retirement pretty much at all, but I learned so much from her about investing. 🙂

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