712 Money Habits: How to Create a Rich Life with Ramit Sethi

TAKE CONTROL OF YOUR MONEY, TAKE CONTROL OF YOUR LIFE. Talking about money can be hard. Most people would rather talk about dying than money. It’s important to come up with a game plan. When you get organized with your finances, the stress starts to go away. Both high earners and people struggling with debt both need to be educated about money management. It’s not as complicated as you think. That’s why I’m excited to share this interview with a money guru who helped me get out of debt when I was younger: Rami Sathi. Ramit Sethi is a New York Times bestselling author of I Will Teach You To Be Rich and founder of GrowthLab.com. He studied technology and psychology at Stanford and has helped over a million people live a “Rich Life.” Ramit shares tools and strategies to make the most out of your money no matter how much you make. He argues that you can buy as many lattes as you want and still be financially successful by focusing on the bigger picture. Listen to Episode 712 to what to do with your money if you’re a high earner and how to develop a plan if you make less than 150K. This episode is for everybody. Some Questions I Ask: How do high earners manage their money? (8:50) What are the three things high earners should invest in? (21:30) Should you worry about the market going up or down? (25:50) What should you do with an extra million dollars lying around? (28:30) What about real estate? (31:20) How do you teach people to overcome the fear of wasting money on rent? (38:00) Where can you find a personal CFO? (43:00) Who are the mega-earners that you learn from? (44:00) Why is it hard for us to talk about money? (45:15) In This Episode You Will Learn: The three biggest questions high earners ask (10:30) About the D to C Principle (12:30) The different “money dials” that people use (15:00) The incorrect assumption people make about high earners (20:00) The mistake entrepreneurs often make (21:00) Why you should spend 5% of your money on “fun investments” (25:00) Why everyone should invest in Dollar-Cost Averaging (27:00) Why Ramit chooses to rent instead of buy (33:50) About the Ladder of Personal Finance (49:00) Get more from Lewis! Get my New York Times Bestselling book, Make Money Easy! Get The Greatness Mindset audiobook on SpotifyText Lewis AIYouTubeInstagramWebsiteTiktokFacebookX

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Lewis Howes?

  This is episode number 712 with New York Times bestselling author, Ramit Sethi. Welcome to the School of Greatness. My name is Lewis Howes, a former pro athlete turned lifestyle entrepreneur. And each week, we bring you an inspiring person or message to help you discover how to unlock your inner greatness. Thanks for spending some time with me today. Now let the class begin.

• 0:33Lewis Howes?

  Benjamin Franklin said, "An investment in knowledge pays the best interest." And Norman Vincent Peale said, "Empty pockets never held anyone back. Only empty heads and empty hearts can do that." I'm excited about this episode because we got my man, Ramit Sethi, on, who is a New York Times bestselling author of the book on personal finance called, "I Will Teach You to Be Rich," and the founder of GrowthLab.com. He's also got the site, IWillTeachYouToBeRich.com, which his information helped me get out of debt many years ago when I read his book. He's been a good friend of mine for about 10 years and just had some incredible times with him.

• 1:16Lewis Howes?

  I said, "We've got to have you come back on to talk about two different things." One, if you are making a lot of money right now, how do you maximize your money? How do you invest your money the right way? How do you save on the taxes? How do you do all those things if you're making over $150,000 a year in income? Or if you're in the millions range, how do you really maximize that growth? And also, if you're making under $150,000 a year on your salary or your small business income, what can you do to earn more? What can you do to get out of debt? How can you manage your finances better? How can you have complete freedom and complete control over all these things if you're at that stage as well? And we cover both of those. So I'm really excited to dive into both spectrums, no matter where you're at.

• 2:00Lewis Howes?

  If you're a big earner, we're going to cover that in the first half of the episode. And if you're under $150K right now a year, we're going to talk about that in the second part of the interview. And we really talk about- Why it's so hard to talk about money and the conversation starters you can start having with your friends, family and peers. So you don't feel bad talking about money. Also, knowing what your money dial is, how to turn up the money dial on the things you love and turn it down on the things you don't love and how to live a rich life by taking control of your finances and of your life. This and so much more. I'm super excited about this one. Make sure to share with your friends, lewishouse.com/712 and tag me on Instagram

• 2:43Lewis Howes?

  stories at Lewis Howes and at Ramit of the points that you enjoyed the most about this. Again, if you have a friend who is earning a lot of money and they don't know how to really take it to the next level and manage it better, send them this link. And if you have a friend who is making less than a hundred fifty thousand dollars a year in their small business or their income, then make sure to text them this and say, hey, there's some powerful insights for you right now. So you can earn more. All right, guys, I'm excited about this one. It's all about how to create your rich life, how to take control of your money and take control of your life as well with the one and only Ramit Sethi.

• 3:23Lewis Howes?

  Welcome everyone to the School of Greatness podcast. We've got my man Ramit Sethi in the house, brother. Good to see you, man. How are you? Very excited, man. I'm back in New York. It's always good to be here. I have so many memories of us like eight years ago, walking around the city. Yeah, basically eating kati roll. Kati roll, man. Oh, my gosh. I haven't been there in years. McDougal and Bleecker. Check it out. So good. So bad for you. Horrible. But so good. And just running around in Union Square, just like hanging out with street performers. Yeah, man. I miss you out here. I know, man. I gotta come out more often. I love it here. Ramit has been on the podcast before. We'll link that up. But I'm excited about this one. He's got a book that's 10 year edition coming out soon, but you can get the current edition. It's called I Will

• 4:05Lewis Howes?

  Teach You To Be Rich. No guilt, no excuses, no BS, just a six week program that works. And I always talk about how I got out of debt is with this book. I read it eight, nine years ago and I had college debt. I had some credit cards. I was still kind of like figuring out what do I do with my money and transferring it over and stuff like that. And I read this six week plan, got out of debt. Now, I had the cash to get out of debt as well, but I also just got structured with my life and my finances. And something crazy happens. When you get organized with your finances and your money, it's like the stress starts to go away, or there's new type of stress, which is like learning how to make more and learning how to manage it better once you have more. But the stress went away from feeling like I don't have the control in

• 4:50Lewis Howes?

  my life in this area. Because they don't teach you this in school.

• 4:52Ramit Sethi?

  No, they don't. And thank you for sharing that because, you know, I sit here and I write this book and I write my emails to my email list and my social posts, but it never gets old hearing a real person in front of me telling, telling me how they use the book to change their life.

• 5:09Lewis Howes?

  Game changer, man.

• 5:10Ramit Sethi?

  Yeah, I appreciate that. Because, you know, a lot of this money is not just money. Like, it's great that you can have $20,000 in your bank account, or many of my readers, they use this, it came out in 09, they did exactly what the book said, and now they have hundreds and hundreds of thousands of dollars, which is amazing. But I think the more meaningful part of it is they start to realize, wow, I can use money as a tool to create a rich life. Money doesn't have to be this thing that's bad. It doesn't have to be this thing that everyone tells me what I can't do. No lattes, no jeans, no nothing. I can actually use it. And if I want to fly business class, I can. If I want to buy something really nice for my parents, I can. And you start to almost open up your life and realize, oh, money's not holding me back. It's actually amplifying what I really want to do.

• 5:54Lewis Howes?

  I want to talk about two different things today. One, for those who are earning a lot of money, what should they be doing with their money? Because there's actually a new problem. Once you earn a lot of money, if it's just sitting in the bank, that's actually a bad thing, I think.

• 6:06Ramit Sethi?

  Totally. And nobody talks about it.

• 6:08Lewis Howes?

  Yeah, no one really talks about it. So there's a lot of high earners who are listening. So what are some of the things? And listen, there's a lot of things you can invest in. There's real estate, there's stocks, there's starting businesses, you can invest in other people.

• 6:20Ramit Sethi?

  There's Lewis Howes Conference.

• 6:22Lewis Howes?

  There you go. Yes, Summit of Greatness, you can invest in a lot of things. And then, so I want to talk about that. What do the high earners do with their money? How can they manage it at a high level? How can they save taxes? How can they do all these other things to really earn more and save more? And then also, for those in the, I guess, 100,000 and below range a year, what can they really be doing so they don't feel so stressed and overwhelmed about their money? Because They're probably a little bit in debt, using too many credit cards. Maybe they're buying too many things that they shouldn't be buying at that stage. And they're behind in their finances, or they feel overwhelmed. So I think I want to start with the high earners first. Because you've been good at teaching this to kind of like the sixty to a hundred fifty thousand dollar a year earner.

• 7:05Lewis Howes?

  This is kind of like, I think that book is kind of in that range. When you say maybe up to two hundred thousand.

• 7:09Ramit Sethi?

  I think so, but then what happened was the people who followed the advice.

• 7:13Lewis Howes?

  Started making more.

• 7:14Ramit Sethi?

  They're bawling. They have hundreds of thou- they're like, what do I do with all this money? I don't know what to do.

• 7:18Lewis Howes?

  And that's a challenge.

• 7:19Ramit Sethi?

  It's, it is a challenge because you can't really talk about it online.

• 7:22Lewis Howes?

  No.

• 7:23Ramit Sethi?

  You, you go on to Reddit and everyone's like, oh, I, you know, I rewarm my oatmeal nine times and I can get a lot out of it. It's like, I don't want to take advice from you oatmeal warmers.

• 7:31Lewis Howes?

  Right.

• 7:31Ramit Sethi?

  And then if you talk about it publicly, people are kind of like, dude, boo hoo, what a problem, what a jerk. And actually, you know, look, if you have been successful, if you followed a program, whether it's my program or anyone's program, you've invested, you've saved, you now have new challenges. And your, your biggest question is, what's next? Like, I sort of won, I won that game of personal finance, what's next?

• 7:57Lewis Howes?

  I'm not in debt.

• 7:58Ramit Sethi?

  I'm not in debt, so ninety-nine percent of advice doesn't apply to me. And people telling me, you know, I should, I should cut my pieces of bread in three to save. No, that doesn't apply to me because I have earned and saved a lot. So then, then you start to say, what's next? Am I missing something? And finally, and what I think is actually a highly advanced question is, what do I do with this money? Not, and, and this is a key thing I want everybody to pay attention to. Everyone teaches you how to save money, but almost no one teaches you how to spend it. So what do high earners do with their money? Why do some people spend money on business class tickets? I used to think it was stupid. Ho, ho, we're all getting to the same place anyway. And yet, as you earn more, you start to change your calculus of spinning. And hopefully, we can talk about some of that.

• 8:43Lewis Howes?

  You know, what's interesting is I used to, I used to sit in the back middle seat, coach, Southwest or like American, whatever. The cheapest flight is what I would look for. And now I look for only first class or business class. I should say business class. And I look for, can I get it for free? Can I get it with points?

• 9:01Ramit Sethi?

  Nice.

• 9:01Lewis Howes?

  As I don't want to pay still for it, but I do sometimes because like, for example, I just went on a trip to this event called 29029, which was you hike for 36 hours, the equivalent of Mount Everest. You go 22 miles high. It was in Vermont a couple of weeks ago, and I'm still recovering from it. My legs are sore still. And I said to myself before I went to this event, I was ran out of points. I was out of points, but I was like, I'm going to pay for a first class flight or business class because I don't think I'm going to be able to move my legs. And I'm going to be so uncomfortable in this five hour flight on the way back to LA. Like I need some space.

• 9:40Ramit Sethi?

  Yeah.

• 9:40Lewis Howes?

  And it's going to be worth the, the price for the flexibility and the freedom in that moment. I don't care if I could have bought a laptop with that money. That's why I used to think like, it's a thousand dollar for a flight. I can buy a laptop with that. Can buy a new iPhone. Now it's more for me about like, do I feel good? Am I recovered? Is it, am I going to feel good when I get home so I can work harder and earn more?

• 10:04Ramit Sethi?

  Yeah.

• 10:04Lewis Howes?

  And that's the way I think.

• 10:05Ramit Sethi?

  I love that. And I want to unpack a couple of things you just said in that example. First off, when anyone says, you know, I bought a business class ticket, notice the almost instinctive reaction. It's like, ugh, this, you know, what a show off and all these other things that come along with it. And I want to challenge people. I have this principle I call the D to C principle. And it, instead of being derisive and saying, oh, so stupid. That's ridiculous. I would never do that. I actually want to encourage everyone to be C, curious. Why would a guy like Lewis intentionally spend money on a business class ticket? And he earns good money. He has a lot of options. He must know something that I don't. And I want to understand why. So from D to C.

• 10:47Ramit Sethi?

  And if you start to take that perspective, especially on high earners and how they spend their money, all of a sudden you stop saying, that's ridiculous. Or if I had a million dollars, I would never do that. Instead, you say, why did that person spend on that? And I want to know. Maybe I don't agree. Maybe you become a multimillionaire and you don't want to spend on business class. You just don't care. But it's interesting that you do it and I'd like to know more.

• 11:09Lewis Howes?

  Yeah. That's the reason I did it for that. And on the way here, I actually didn't have points as well for this flight. All my points were used for booking first class tickets for the speakers at the Summit of Greatness. So I used it all on that. I didn't want to pay for another first class ticket. Or actually, I think they were full. So I said, okay, what's got the most legroom? So I always do exit row. I just upgrade a little bit to get the exit row and have that legroom.

• 11:32Ramit Sethi?

  I think the question we're all wondering, Louis, is

• 11:34Lewis Howes?

  I'm a giant though.

• 11:35Ramit Sethi?

  When are you going to get that private plane and then fly me out?

• 11:37Lewis Howes?

  It was funny. I was thinking about this actually last week. I was like, do I ever desire having a private jet?

• 11:42Ramit Sethi?

  Yeah.

• 11:43Lewis Howes?

  I don't know if I, I mean, listen, it'd be great to have so much money that you don't have to think about it. You can afford a jet and you don't feel bad about it. I think, sure, if I had that much money, I would do it. But what I care more about is knowing 20 people that have private jets.

• 11:57Ramit Sethi?

  Okay, so let's talk about this.

• 11:58Lewis Howes?

  And having free rides with them whenever I want to.

• 12:01Ramit Sethi?

  Yes, so

• 12:02Lewis Howes?

  That's what I like more.

• 12:03Ramit Sethi?

  And that is actually very revealing. So I want to share another principle we have, which is this concept of money dials. And money dial, if you think about 10 dials in front of you, and each of them represents a different area of life that people spend on. It turns out that each of us has one money dial that we love spending on. And what you just said is extremely revealing. Your money dial, I would be willing to bet, is relationships.

• 12:29Lewis Howes?

  Oh, yeah.

• 12:29Ramit Sethi?

  Okay, so I have a friend, Nick Gray. Nick Gray loves hosting people at his house. He, every day, he's trying a different party. He's testing stuff. He invites people over. He does all kinds of crazy stuff. He loves relationships. That's his money dial. And a money dial, the reason I say it's a dial is you, you start off, you know, maybe you have a couple of people out to dinner. And you, as you start to get more money and more success, you turn that dial until you're totally dialed in. You have the perfect appetizer. You have the perfect icebreakers. You have maybe friends who have jets. You're really turning that dial. There's other money dials. The most common one is frugality. Most people actually focus on cost above all else. And you can tell because when they buy something, what's the first thing they say? They look at the price.

• 13:14Ramit Sethi?

  They look at the price and they tell everyone else, I got this for 60% off. Ah. Okay, so that's. They brag about how discounted they got it. It becomes part of their identity. Whereas for you, dude, I see your photos. I see your conference. Your identity is about relationships. Now, there's a few others. There's wellness, which is more and more common. And you'll see people, they have the perfect diet. They have a chef. They, and I'm talking when they really dial it in. This is the point of it. They have a full-time trainer. Yeah. This is the point of an advanced personal finance, which is you don't have to have a trainer when you start off, right? You can, but you went and you searched for five hours. You found the perfect program. But as you have more money, you start to say, I want better results. I want faster results. And I have money. I'm going to throw it at the problem.

• 13:57Ramit Sethi?

  Mine, my money dial is convenience. Hmm. So I love convenience. And I wake up. Everything's delivered to you. Everything's delivered. I have a chef. When I leave to travel, I have this thing called a travel protocol that gets activated with my assistant. And my plants get watered. My email gets handled differently. I mean, it's like, I've been thinking about this for the last 15 years. I'm a psycho. But that's my money dial. And I love it. Like, so. So you'll pay a premium for that money dial. Exactly. But I could not care less about certain other money dials. Other common ones that a lot of people watching probably have or listening is travel. So at a basic level, people say, I like to travel. But imagine you've truly, truly become more advanced

• 14:42Ramit Sethi?

  and you've become more successful and you want to throw a lot of money at the problem because you value it. Suddenly, maybe you're going three months a year. Maybe you are leading excursions. I mean, there's, you can just expand your mind as to what you could possibly do beyond the typical eight days of vacation a year. So I share this with everyone because I like to challenge people to do something. Take a look at your spending from the last two to three months and ask yourself, what is my money dial? And your money dial is the thing that you love to spend money on. It's the thing that gives you joy and it's the thing you could spend endless amounts of time optimizing.

• 15:16Lewis Howes?

  And feel good about it.

• 15:17Ramit Sethi?

  And feel good about it. And so the reason, once you know your money dial, then it enables you to do two really cool things. One is you can cut back on stuff you don't care about. Okay. So if you just don't care about wellness, or if you just don't care about travel, that's okay. You can cut the spend to that. But I think the cooler thing is it allows you to take that money and now spend extravagantly on the thing you love, which is your money dial. So if you're Lewis, suddenly you don't mind throwing a lavish dinner for your friends with a performer and all kinds of crazy stuff because that's your money dial.

• 15:49Lewis Howes?

  Yeah.

• 15:49Ramit Sethi?

  No need to apologize for it. So for everyone, especially the advanced folks who have money, you, you gotta think now, you're at a different level. You're not just trying to cut your debt. You're not just trying to cut back. You actually can spend on the things you love. And that to me is really exciting.

• 16:04Lewis Howes?

  So figure out your money dial and spend more intentionally on those things as opposed to spending lots on everything.

• 16:11Ramit Sethi?

  Exactly.

• 16:11Lewis Howes?

  Yeah. Well, I mean, for me, it's funny you say that because I almost always pick up the check on every meal. It doesn't matter if it's a smoothie or like a few hundred dollar meal with a bunch of people. It's like, I always want to pick it up because I want to be investing in relationships. I don't even know where I learned that. I think I learned it because I was poor for a couple of years and people used to always pick up my tab and I felt bad.

• 16:33Ramit Sethi?

  Yeah.

• 16:34Lewis Howes?

  But I also felt like, man, they really took care of me and I want to make sure that everyone else feels like they're taken care of around me.

• 16:39Ramit Sethi?

  I feel that way when I was a college student. Everybody picked up my checks because I would invite a lot of people out like I'd email CEOs and just be like, I'm interested in what you do. Can we grab coffee?

• 16:48Lewis Howes?

  But I'm poor.

• 16:49Ramit Sethi?

  Yeah. And, and you know, it's, nobody will ever let a college kid pay for a meal.

• 16:52Lewis Howes?

  That's true.

• 16:52Ramit Sethi?

  Never. And I, and the truth is like, they had more money than I did too. But now I feel really fortunate that picking up a check, whether it's 10 bucks or a couple hundred bucks, makes no difference to me. But it can make the difference to somebody else.

• 17:05Lewis Howes?

  Absolutely. I love that, man. Yeah, the money dollar, but I'm also always trying to save.

• 17:11Ramit Sethi?

  Yeah.

• 17:12Lewis Howes?

  I'm willing to spend, but I want to save a lot if it's going to be expensive. I'm like, how, I'm always telling my assistant, like, look for the deal, look for the deal. Like, even if it's a thousand bucks, try to get it half off.

• 17:22Ramit Sethi?

  Okay, so that's.

• 17:23Lewis Howes?

  I'm willing to spend.

• 17:24Ramit Sethi?

  Yeah.

• 17:24Lewis Howes?

  But save me money, too.

• 17:25Ramit Sethi?

  Okay, so that's, that's a great point that I want to demystify a little bit about higherers. A lot of folks think that once you make 250K or 2.5 million, whatever the number is, that suddenly you're just throwing money around left and right. And that's not quite correct. It might seem like that because to spend, say, $7,000 for a business class international flight just seems like, oh, my God, that's so crazy. But I want you to get more nuanced. You're telling your assistant, I don't mind spending, but save.

• 17:54Lewis Howes?

  Yes.

• 17:55Ramit Sethi?

  What I do with my financial system is I set a target each year. This is how much money I'm going to save and invest. And those numbers are aggressive. There's, that's a lot of money.

• 18:04Lewis Howes?

  You're going hard.

• 18:04Ramit Sethi?

  Yeah, like every year.

• 18:05Lewis Howes?

  So like 10%, 30%?

• 18:07Ramit Sethi?

  Yeah, so anywhere between those ranges. And we have folks who.

• 18:09Lewis Howes?

  Of what you earn.

• 18:10Ramit Sethi?

  Correct. And, and then remember, whenever I make any unexpected income, let's say I did a speaking gig or something. Yeah, I might get myself some, I might go out to dinner, but the rest I'm just putting straight in investments. Okay, so that money grows aggressively. And I also want to remind everybody, especially the entrepreneurs watching, I know you have a lot of entrepreneurs. You wouldn't believe how many entrepreneur friends I know who have a good business and they don't invest at all. And that's a huge mistake.

• 18:34Lewis Howes?

  What should you be investing in if you have a good business?

• 18:36Ramit Sethi?

  Simple, low-cost, target date funds is a great way to go.

• 18:41Lewis Howes?

  Index funds?

• 18:42Ramit Sethi?

  Yeah, index funds.

• 18:43Lewis Howes?

  Yeah.

• 18:43Ramit Sethi?

  They, they get a little too smart for their own good. They say, I could just put that money in my business. And I always say, look, I'm glad you have a business that's throwing off tons of cash. That's awesome. Most businesses don't last 80 years. So be smart. Give yourself a small plan B. Put 5K a month, 10K a month, whatever's appropriate for your level of success.

• 19:03Ramit Sethi?

  And hey, maybe your business does really well. That's awesome. But maybe one day, something goes wrong. Always want to be prepared. You never want to have your back against the wall. So I just want to encourage everybody, whether you're making 250K or 2.5 million for the high earners here. Don't get too smart for your own good. Keep investing and saving.

• 19:21Lewis Howes?

  What are the three or four main things you invest in with that 10 to 30% a year? And does it change year to year?

• 19:28Ramit Sethi?

  Yeah, I'll kind of walk you through for the high earners and then we can talk about people 100K and less. So, once you have a certain amount of capital, you do have a few opportunities that you probably didn't have before. Everybody has this idea that, you know, the rich have all these crazy tax breaks and captive insurance and this and that. And I've looked into all that stuff, right?

• 19:49Lewis Howes?

  Building insurance companies and all these other things, right?

• 19:52Ramit Sethi?

  Yeah. Here's the truth. The truth is-

• 19:55Lewis Howes?

  Some stuff is a little sketchy, but yeah.

• 19:57Ramit Sethi?

  Definitely. And I'll say, my core values are that when it comes to things like taxes-

• 20:02Lewis Howes?

  I love your principle on this.

• 20:03Ramit Sethi?

  I'm very conservative. I'm like, dude, only in this country could I have been this successful.

• 20:08Lewis Howes?

  I love this mindset.

• 20:09Ramit Sethi?

  I'm happy to pay my taxes. It means that I had the opportunity to create something great. And if I pay an extra 5,000 or 30,000, it doesn't change my life at all. And I want to be able to give back to the society that enabled me to do what I do.

• 20:26Lewis Howes?

  That's a powerful mindset. And it gets you away from, you still want to optimize tax breaks that are out there, but it gets you away from trying to constantly look for some of the shortcuts or like schemes or something.

• 20:38Ramit Sethi?

  Yes, I've always found that the people, especially entrepreneurs who talk about tax breaks all the time, are typically the most unsuccessful ones. Two reasons. One, why are you talking about tax breaks instead of growing your business? And two, it's a very scarcity-driven mindset. Ooh, I only have this much that I have to protect, when really, you can just grow the pie and your taxes are simply a proportion.

• 21:01Lewis Howes?

  Make more.

• 21:01Ramit Sethi?

  Just make more. Now, yes, you do want to optimize and take advantage of all- Legal tax breaks. So as you earn more, you do have more opportunities. You have not only your 401k, you have all kinds of advanced IRA options. You have HSAs, you have a variety of things. But at a certain point, if you're making enough, you're going to max all of those out.

• 21:22Lewis Howes?

  Yeah. So what do you do when you max it all out?

• 21:23Ramit Sethi?

  So then the next step is to simply create a taxable account. It's just a typical non-retirement account, just at Vanguard or where I use Vanguard, whatever you want. And you just continue to invest. So that's one. And that's going to keep making you money over the long term. It's just you're not going to get those tax breaks from a 401k and IRA, et cetera. The other thing is, as you accumulate more and more assets, you're going to start to notice a lot of different people are going to come with opportunities. Dude, I get text messages from these crazies that are like, hey, I'm opening up a bar in Brooklyn. I'm like, I don't want your stupid bar. I'm not investing in that. I could burn my cash easier. But you're gonna, as you start to accumulate a lot, you're gonna want to do, have a little fun with your money when it comes to investing. So some people want to do crypto. I think a lot of these people are complete nut jobs.

• 22:08Lewis Howes?

  Crazy.

• 22:08Ramit Sethi?

  Look, you crypto-

• 22:09Lewis Howes?

  I put a little bit in there just to like have fun, but I was like, thank goodness I didn't put more in there. Because everyone's losing their money.

• 22:14Ramit Sethi?

  Exactly. And they're, you know, they're all, okay, I don't even want to get into crypto because I'm going to get a lot of angry emails. Hey, if you want to email me about your angry crypto opinions, just send it to [email protected]. Don't send it to me. But you know what? I like what you said. You took a little bit, you had some fun.

• 22:28Lewis Howes?

  Yeah, it's fun.

• 22:29Ramit Sethi?

  Five to 10%, once you've got all your other stuff automated, you've got your index funds locked down, HSA, your different accounts. I don't have any problem. I think you should take 5 to 10% and you should have some fun with it. For me, I did angel investing and I basically learned that I suck. My angel investing is not good.

• 22:45Lewis Howes?

  I haven't made any money from the investment.

• 22:47Ramit Sethi?

  My deal flow sucks. My choices were okay. Some hit, most didn't. I basically just wrote that money off. But it was fun and it allowed me to have an outlet.

• 22:55Lewis Howes?

  And you learned and you got to meet people and you, yeah.

• 22:58Ramit Sethi?

  Yeah. So if you want to do crypto, if you want to invest in somebody's bar, you want to do angel investing if you're qualified, et cetera, be my guest. But don't jump to that first. Get all your stuff automated. And at a certain point, the compounding is so insane. You will start to actually earn more from your investments than you will from your income, even if you're making 500K a year.

• 23:18Lewis Howes?

  From the index funds you're talking about, if you're investing in that. What if the market's going down or up? Should you even worry about that? Let's say you put a half a million in, it went up. Hundred thousand over a couple of years, but then it went back to the original investment. Should you be like, oh my gosh, I need to take this out?

• 23:33Ramit Sethi?

  Do not do that. I'll give you a real example.

• 23:35Lewis Howes?

  I just put two years of my money into this and it's still the same amount. I should have just left it in the bank.

• 23:39Ramit Sethi?

  No, you shouldn't have left it in the bank. Alright, so this happened to me just about two weeks ago. So the market went down and I hardly ever log. I log in about once a month to my investments. And really, you should not be checking your investments.

• 23:53Lewis Howes?

  I check every 10 years.

• 23:55Ramit Sethi?

  Once a month is good and like, don't, you're not a day trader. Okay, so, so I happened to log in and I saw that in the 11 days of that month, in one of my accounts, I had lost $75,000. Okay, so for everybody listening, yeah, how would you react if you lost $75,000 in 11 days?

• 24:14Lewis Howes?

  Most people would be freaked out.

• 24:15Ramit Sethi?

  They'd be freaked out. They would pull their money.

• 24:18Lewis Howes?

  Take the money out.

• 24:18Ramit Sethi?

  Yeah, which is exactly the opposite of what you should do. That, so everyone says this comment thing and they just roll their eyes, oh, buy low, sell high. But in reality, they actually buy high and sell low. So you know what I did? I did nothing. I logged in, I felt no emotion. It wasn't like my life is over. It was like watching someone offer me concrete to eat. Like I felt nothing. I'm like, nah, it's fine, whatever. I just closed the window. The key there is every month, my system is automatically investing. It's called dollar cost averaging. It's just automatically investing. And you should set the same thing up too. You shouldn't be paying attention manually. You shouldn't be sending a check. It just works automatically. And so I knew this month, the market is down.

• 25:02Ramit Sethi?

  And if you think about any other thing you buy, if the price of toothpaste goes down, you're happy. If the price of milk goes down, you're happy. The only time we get weird is when the price of the market goes down and then we're like, oh, let me pull all my money out. Bad move. The price went down. If you're young and you have a long time before you need the money, you're getting the market at a discount.

• 25:23Lewis Howes?

  You should get excited.

• 25:23Ramit Sethi?

  You should get excited. So I just said, great, it went down, fine, doesn't bother me. And I just closed the window and a few days later, my system will just purchase it again. So it's up, it's down, it doesn't matter in the short term. But over the long term, we know that the market tends to return about 7 to 8%. But it can go up, it can go down, and so you do not want to be paying attention in the short term.

• 25:45Lewis Howes?

  Let's say you've got a half a million to a million dollars, extra cash laying around. You've maxed out all your IRAs, you've got five to 10 grand a month going to your index funds, you've got, you've... Dabbled in the smaller investments and startups and you've kind of, you've done it all.

• 26:02Ramit Sethi?

  Yeah.

• 26:03Lewis Howes?

  Got a little bit in crypto, you've tried everything. What should you do with that extra million dollars a year?

• 26:08Ramit Sethi?

  Okay, great question. First off, this is like somebody saying to a fitness instructor, you know, I've done everything. What should I do next? And you know what that fitness instructor is gonna say? They're gonna say, when you say everything, what do you really mean? Like, show me, are you doing foam rolling? Are you doing this? Are you all balanced? For the person who's doing this, I'm gonna give you your answer, but I'm gonna first say, are you sure? Have you planned out, so you know that 10 years from now, you're gonna buy a house? Do you have a 20% down payment set aside? I do, and I have no plans to buy a house anytime soon. But I have 20% set aside for a house.

• 26:43Lewis Howes?

  For that moment, yeah.

• 26:44Ramit Sethi?

  Yeah, so I already planned for what I know is coming, even though I have no interest in it today. What about the first year of your kid's life? Do you have that set aside? What about XYZ? Are you taking care of your parents when they get older? One thing that I really love to do is talk about relationships. So I love to invite my family once a year for a big, big vacation, where we can all stay in a house and there's like a chef and all this stuff, and we can all be there and the kids can be playing. Is that something that's important to you?

• 27:10Lewis Howes?

  Cool.

• 27:10Ramit Sethi?

  Right, so plan for that. Now, if you've done all that stuff, you got your six-month emergency fund, you've got your investments automated on autopilot, and you still have money left over. You're in an awesome position, and now you can do a couple of things. One, if you want to keep growing that money, you can simply invest it in a non-retirement taxable account. And that money will grow like crazy. If you're putting in 10, 20K a month, that money will turn into massive amounts. And if you guys don't believe me, just go search for Compound Interest Calculator. Bankrate has a really good one. And plug in 20K a month for 10 years, and that's it. Just stop and watch what happens.

• 27:47Lewis Howes?

  What is that, 7, 8%?

• 27:49Ramit Sethi?

  Yeah, at 7% returns, and watch what happens. It becomes like a tsunami. You cannot stop it. So that's one. The other thing is if you want to invest in a little bit of fun stuff, if you're like, hey, I want to take 10% of this and invest in like this crazy investment, my buddy's starting a thing. Go ahead. Just be prepared to write it off. Maybe it works, maybe not. And then... From there, you should also remember a third thing, and nobody really talks about this. Maybe it's time to increase your quality of life. Maybe instead of staying in the middle backseat, it's time to upgrade to the exit row.

• 28:20Lewis Howes?

  Business class.

• 28:21Ramit Sethi?

  Business class, or maybe it's time to eat at a different restaurant. Maybe it's time to really think about your money dial and say, hey, I always claimed that wellness is important, and yet I'm still eating like the same old thing I used to eat 10 years ago. Maybe it's time to upgrade what I eat and where I work out and all that kind of stuff, my gear. You can do that. You've made it. You already won the basic game. So now you get to benefit from it.

• 28:44Lewis Howes?

  What about real estate? A lot of people, you're there, I hear people that are all in on real estate investment, or they're kind of like all in on the market.

• 28:51Ramit Sethi?

  Yeah, I think that real estate, so a lot of people are gonna hate me after I say this. I know you guys have all been told since you were like two years old, "Real estate's the best investment ever." And it turns out that's not really true. A couple of things that might surprise you.

• 29:02Lewis Howes?

  If you're buying one home.

• 29:03Ramit Sethi?

  If you're buying a house and living in it.

• 29:05Lewis Howes?

  If you're buying multiple units or buying multiple homes, and that's your business, it might be a better investment.

• 29:11Ramit Sethi?

  Correct. Let me make the distinction. So, most people in America are told that the American life, the American dream, is graduate from college, get married, buy a house, white picket fence, 2.5 kids, and you made it. And I think we all just have to look at people who are a little bit older than us to realize that might not be our American dream. We might want to travel more. We might want to work remotely. I mean, here we are on the middle of a weekday, chit-chatting and sharing it with millions of people. This is our dream. So, I want to challenge people to really question what you've been taught. That's number one. Number two. Most people who buy a house and live in it think that it is the best investment. But most people have never run the numbers.

• 29:52Lewis Howes?

  It's like my piggy bank.

• 29:53Ramit Sethi?

  Yeah, they think that. They don't understand that when you spend money on a house, you've incurred tons of phantom costs. You have taxes, you have maintenance, you have all kinds of things that you don't count. And if you actually factor all those numbers in, real estate often, in fact, many times, is not a great investment at all. It's a place to live, and you have these phrases like, "You're throwing money away on rent." It's not true. Your landlord's making a profit, otherwise they wouldn't do it. That's not true. Your landlord can't charge you whatever they want. They can only charge you what the market will bear. So if you search my name and real estate, you'll see all the numbers played out. Now, on the other hand, if you are a real estate investor and you're disciplined, that's a different story and that can be effective.

• 30:35Ramit Sethi?

  But mom and pop who are thinking that they bought their house in 1970 for $200,000 and now it's worth $600,000, they think they made $400,000, actually not. If they had taken that money and put it in the market, they would probably have much, much more.

• 30:51Lewis Howes?

  Really?

• 30:51Ramit Sethi?

  Yeah.

• 30:52Lewis Howes?

  Wow, and less headache?

• 30:53Ramit Sethi?

  Way less headache.

• 30:54Lewis Howes?

  Well, depending if they looked at their investment every week, maybe they'd be more stressed up, the level is going up and down.

• 30:59Ramit Sethi?

  Yeah, yeah, so, and listen, if you, I will buy a house one day. Okay, so I don't want anyone to think that I'm telling you never to buy a house.

• 31:06Lewis Howes?

  Yeah.

• 31:06Ramit Sethi?

  If you want to rent for the rest of your life, you absolutely can. Many people in New York, San Francisco and other high cost of living cities, they rent. No, there's no shame in that. I rent by choice. I could buy a place tomorrow, cash, and I choose to rent.

• 31:21Lewis Howes?

  Why do you choose to rent? After you've been here for 10 years and you've been renting the whole time.

• 31:25Ramit Sethi?

  Yeah, on purpose.

• 31:26Lewis Howes?

  And how much is that, do you think, over, over half a million dollars?

• 31:30Ramit Sethi?

  Oh, yeah, it's a lot of money.

• 31:31Lewis Howes?

  Well over.

• 31:32Ramit Sethi?

  I rent a nice place.

• 31:33Lewis Howes?

  Yeah.

• 31:33Ramit Sethi?

  Why do I do it? Because.

• 31:35Lewis Howes?

  Could've used that money in something else, you could've put it in a.

• 31:37Ramit Sethi?

  I did, I put it in the market and I made more.

• 31:40Lewis Howes?

  Because you didn't put it into a home.

• 31:42Ramit Sethi?

  Correct.

• 31:42Lewis Howes?

  Where it was a lot more money upfront.

• 31:44Ramit Sethi?

  It was more money upfront, I used that money instead, I put it in the market. But there's also other reasons too. I couldn't get for the amount I'm paying, where I live, if I were to buy a place in the same building or area.

• 31:55Lewis Howes?

  So much.

• 31:55Ramit Sethi?

  It would be four times more expensive. So that's the first. Second is maintenance. I'm gonna give you an example. I woke up one day and the doorman was knocking on my door. It's like 8:30 in the morning on a Saturday. He's like, sir, sir, do you mind if we come in and take a look at something? I said, okay. And we go into the living room and there's a pool of water just sitting there.

• 32:11Lewis Howes?

  In your apartment?

• 32:12Ramit Sethi?

  Yeah, on the floor. I said, whoa. And it had dripped down three levels. So I was like, oh my God, they're like, sir, go back to sleep. We'll take care of it. That day they came, they repaired the floors, not just of mine, the ceilings for the next two levels down. That's probably likely to have costed them, let's just say 50K, maybe 100K because it's Manhattan and it's a weekend service. Who knows? That's not my fee.

• 32:36Lewis Howes?

  You didn't pay for it?

• 32:37Ramit Sethi?

  No. And I, and I said, great, that's their problem. I'm going back to sleep, man. I got another hour of sleep here. So you don't have to believe me. You don't have to believe what someone else says. All you need to do is run the numbers. That is my only suggestion to you. Go to a buy versus rent calculator. Make sure you plug in all the fees, not just the taxes, the realtor fee. If you get a bigger place, you're probably going to get more furniture for it.

• 33:00Lewis Howes?

  The Howes or the, yeah, the lawn maintenance or trash service, whatever it is.

• 33:05Ramit Sethi?

  The, the key thing, I think, whether it's a house or investments, my point to you guys is take your money seriously. Once you take your money seriously and you put some time in it, whether it's this book or wherever you want to get your information, you're going to be better off for it. You don't want to delegate this to somebody else. I want you to understand it. And once you understand it and you automate it, you make a few good choices in life, you never have to worry about lattes or appetizers again.

• 33:30Lewis Howes?

  How'd you make the emotional shift when you started renting an expensive apartment? And you're like, man, if I added all this up after a year, that's close to a down payment on a nice house in the Midwest, or they can buy a whole house in the Midwest. You know what I mean?

• 33:43Ramit Sethi?

  Yeah.

• 33:44Lewis Howes?

  How do you emotionally rationalize that? Where you're not frustrated like, oh gosh, I just spent 10 years.

• 33:51Ramit Sethi?

  Yeah.

• 33:52Lewis Howes?

  Throwing this money away. Cause sometimes I feel that way. Sometimes like, man, I just spent a lot of money these last few years.

• 33:59Ramit Sethi?

  Well, let me ask you this.

• 34:01Lewis Howes?

  But I like the freedom and the flexibility of not having to incur all those other.

• 34:04Ramit Sethi?

  Yeah. What do you like to eat? You like strawberries?

• 34:06Lewis Howes?

  No.

• 34:07Ramit Sethi?

  Okay. What do you like to eat?

• 34:08Lewis Howes?

  Some good steak and veggies.

• 34:10Ramit Sethi?

  Okay steak. Well, once you, when you buy a steak and you eat it, do you feel like you just threw your money away on that steak?

• 34:17Lewis Howes?

  No, I enjoyed it.

• 34:18Ramit Sethi?

  But it's, where is it? I don't see it. Where's my investment?

• 34:21Lewis Howes?

  Right.

• 34:22Ramit Sethi?

  In fact, isn't it coming out in the toilet in a couple of hours?

• 34:25Lewis Howes?

  It is, yeah.

• 34:25Ramit Sethi?

  So what are we talking about here? You get value out of a steak, just like you get value out of renting. Now, if you want to incidentally build equity, that's great. But remember, you can also lose equity. Right now in Manhattan, do you know rents are down?

• 34:39Lewis Howes?

  Is it?

• 34:40Ramit Sethi?

  Yes, and so are prices of houses if you want to buy. They're going down every month.

• 34:44Lewis Howes?

  Wow.

• 34:44Ramit Sethi?

  A lot of people like, oh my God, it's so expensive. Sometimes, but sometimes it goes down 5%, 10%. Some of these neighborhoods are down 15%.

• 34:51Lewis Howes?

  No way.

• 34:52Ramit Sethi?

  Yeah, so a lot of people don't realize. In fact, I did a survey of my readers. I said, do you think it's possible for real estate to decrease? Over half of people said no. They had never even thought about it. So I want people-

• 35:04Lewis Howes?

  Remember 2008, 2009?

• 35:05Ramit Sethi?

  Memories are short. You would think they would remember, but they don't. I heard people, dude, they had three houses. They bought it. They were destroyed financially. They had, their credit was ruined. They had to give up these houses and their identity as an investor. And three years later, they're like, I think I want to buy another couple of houses.

• 35:20Lewis Howes?

  Wow.

• 35:20Ramit Sethi?

  It just goes to show, I'm not saying they're stupid. It's not that at all, because a lot of people have gone through this. It's the idea that the propaganda to buy a house or to follow a prescribed set of rules for the American dream is so powerful that even losing your own houses doesn't change people's perspective.

• 35:37Lewis Howes?

  So how do you teach people to overcome the emotional rationalization of blowing their money on rent?

• 35:44Ramit Sethi?

  Okay. It's funny-

• 35:46Lewis Howes?

  Besides that story you just told, which helps me.

• 35:48Ramit Sethi?

  I'll tell you what, I, I want to acknowledge that it's real because-

• 35:52Lewis Howes?

  It's a fear that people live with.

• 35:53Ramit Sethi?

  Yeah, and I'll, I'll give you an example. Like, I call it the handshake effect. And it's when people would come over to my apartment and for the first time, and they would say, wow, this is an amazing view. And then they always say the same thing in New York. Do you own this place? And we're like shaking hands, right? It's like, we just met, just met.

• 36:10Lewis Howes?

  How much you pay on this place?

• 36:11Ramit Sethi?

  Yeah, how much you pay? It's classic New York. And I say, no, I rent. And it's that moment where if I had said I bought, they would be like this.

• 36:20Lewis Howes?

  Pretty impressive.

• 36:21Ramit Sethi?

  Really cool, yeah. And you kind of get this

• 36:23Lewis Howes?

  Pride.

• 36:24Ramit Sethi?

  This pride. And then I, and then when I don't say that, they get really confused because this is the I will teach you to be rich guy. But also he rents and I thought renting is for people who can't afford it, but you know, they don't understand. And they give me this look and I realized that so many of us are looking for somebody to approve of us while we are shaking their hand, someone we don't even know.

• 36:47Lewis Howes?

  Wow.

• 36:48Ramit Sethi?

  And so instead of getting your approval from somebody you just met 10 minutes ago, or from your parents who probably are not the most sophisticated investors. If you're watching this show, you know, you talk about greatness and being great means choosing your own path. Sometimes you might choose to buy. I have no problem with that. If you ran the numbers and you consciously decide. Sometimes it means you don't. But if you want to live the life of greatness, you need to be comfortable making different choices than what other people expect.

• 37:15Lewis Howes?

  Hmm. Zing. I like it, man. Do you have like a spreadsheet? I'm just curious about how the way you think about your money. Do you have a spreadsheet or some type of system where you're kind of have all these things logically mapped out where you know exactly where all your money is going and where you want to put it in five or 10 years?

• 37:33Ramit Sethi?

  Yeah. In fact, it's even more, it's

• 37:36Lewis Howes?

  It's like scientific. It's like

• 37:37Ramit Sethi?

  Yeah, it's like Minority Report. Like I wake up and I just go

• 37:39Lewis Howes?

  Yeah, yeah.

• 37:40Ramit Sethi?

  No, this is what I did. So my money dial is convenience. Okay. So as I became more advanced, I realized it was time to put on a new lens.

• 37:49Lewis Howes?

  Ah.

• 37:49Ramit Sethi?

  And I think this is really important for people. Many people, when they're starting out, they think that growth is linear, that basically I'm dribbling the ball. I'm going to use a sports analogy.

• 37:58Lewis Howes?

  Sure.

• 37:58Ramit Sethi?

  And I'm on thin ice because I don't know anything about sports. You know, I dribble 10 times a minute and as I get faster, I'm going to dribble 20 times a minute. Okay, this is a horrible analogy, but just go with me. At a certain point, you're not just counting the number of dribbles. You're actually counting ball handling. You're, you know, you're counting whatever else you're doing. With money, it's the same. You're not just creating a more sophisticated spreadsheet as you grow. You're actually changing the way you think about money. So I'll tell you what I

• 38:25Lewis Howes?

  You're changing this, you're reinventing

• 38:26Ramit Sethi?

  You're not even using a spreadsheet. So I'll tell you what I did. I started off doing everything myself. And that's what's in this book. It shows you exactly how to go from, I don't even know where my money is going, or I have 5,000 bucks sitting in my savings account, to everything is running automatically and I spend less than 60 minutes a month on my investing. That's in the book. But what happens when you get to the next level? I'll tell you what I did. I realized that it wasn't a good use of my time to be manually tracking anything, even for 60 minutes a month, because things had become complex. I had multiple investments, I have a business.

• 39:00Lewis Howes?

  Different accounts, everything, yeah.

• 39:01Ramit Sethi?

  All that. So I found what I call a personal CFO. And what I did was I worked with them and I said, here is exactly what I invest in. Here are my core values. Here's how I want you to deliver me information once a month. So they created a, basically a dossier they hand to me every month. They send it and it's in the format that I want. Why? Because I'm the boss and they're, they're working for me. So it shows me a couple of core things. What's my net worth? What were any spending areas that I need to be aware of? I typically have two spending areas that I track that are more variable. Like sometimes I'll go out and buy more clothes. That's a variable area for me.

• 39:44Ramit Sethi?

  I said, look, I love cashmere, what am I gonna do? Okay. And then another one I think is eating out or travel. Aside from that, all my expenses are very stable. Like I spend the same amount on stuff. I've had the same apartment for 10 years. Like I'm not going crazy. I'm, I'd rather save my money and invest it and spend a little on the stuff I love. We talk for 15 minutes each month. And if anything needs to be changed, they handle it. So for a lot of people, the next step is not necessarily just doing what you're doing, but better. It's actually a whole different way of looking at the problem.

• 40:18Lewis Howes?

  Where does someone find a personal, what is it?

• 40:20Ramit Sethi?

  Personal CFO.

• 40:21Lewis Howes?

  CFO.

• 40:22Ramit Sethi?

  For a lot of people, the basic thing you can do to start with is to get a bookkeeper. And you know, we have this advanced personal finance course and we talk about how to find them. A bookkeeper is a good thing to start with if you've got a business or if you've got a few hundred thousand dollars a year coming in and you've just got a number of accounts and maybe you have kids and stuff like that. Okay, they can help you organize things. As you get more sophisticated, a personal CFO, which can be part-time or if you're really sophisticated, it can be full-time. They can help you do more sophisticated things. And they pair, they work directly with your accountant, your bookkeeper, all kinds of stuff.

• 40:55Lewis Howes?

  Got it. Okay. Interesting.

• 40:56Ramit Sethi?

  Yeah.

• 40:57Lewis Howes?

  Just go on Craigslist and look, see.

• 40:58Ramit Sethi?

  Yeah, you can do that. And the best place you do it is honestly, you ask your friends. Your friends who have sophisticated net worths.

• 41:06Lewis Howes?

  Right. Ask them what they're doing. Yeah.

• 41:07Ramit Sethi?

  Ask them.

• 41:08Lewis Howes?

  Interesting. Before we get into the The strategy for those who are making 150,000 a year and less on how they can really optimize everything, I'm curious, who are the high earners that you talk to for advice, privately, behind the scenes, in the special secret rooms, on the private jets? Who are those mega earners that you learn from?

• 41:30Ramit Sethi?

  I have a CEO group, a CEO council that I belong to, and we're really candid with each other about where we spend our money. Some of them are married, some of them are divorced. How does that play in relationships, all kinds of stuff? So that's one.

• 41:46Lewis Howes?

  Is it like a New York group or is it all over the world?

• 41:49Ramit Sethi?

  Yeah, it's distributed. We're all over the place.

• 41:51Lewis Howes?

  Talk online, you meet in person?

• 41:52Ramit Sethi?

  Both. We meet in person twice a year and we talk on the phone about once every month and a half. And I think that's important for everyone listening and watching, which is have a group of folks that are ambitious and that want to succeed. What's interesting is these guys aren't in my field at all. I actually prefer that. We're not talking about, you know, online stuff. That's not the point. We're talking about culture, we're talking about life, we're talking about relationships. I think that's great. I also have a lot of entrepreneurial friends who will share stuff just off the cuff, we're hanging out. And then finally, my audience, like a million readers a month, and they're emailing me the craziest stories.

• 42:29Lewis Howes?

  Really?

• 42:30Ramit Sethi?

  They're telling me everything. People, they crave talking about what's going on with money because no one else will.

• 42:36Lewis Howes?

  Wow.

• 42:37Ramit Sethi?

  And so I hear the best stories from my readers and that's what I get to kind of bring to everyone else.

• 42:41Lewis Howes?

  Why is it hard for us to talk about money? Why is it scary? Why don't we talk about it enough with our friends or family? Why is that?

• 42:50Ramit Sethi?

  There's one great study showing people would rather talk about their sex lives than their amount of credit card debt.

• 42:56Lewis Howes?

  I love that.

• 42:57Ramit Sethi?

  I think that's totally true.

• 42:58Lewis Howes?

  It's true.

• 42:59Ramit Sethi?

  100%. And think about what money means. It means that you were successful in this culture. And I am here, you know, people know me as the I will teach you to be rich guy. And I have always said, money is an important but small part of living a rich life. Just because you make more or less doesn't mean we're better friends. Not at all. Has nothing to do with that. But it is important for people to be in control of their money, whether they're making fifteen dollars an hour or fifteen thousand dollars an hour. And there are people I know who make that. So that just simply shows are you in control of your life at whatever level you are. It's embarrassing for people. They're never taught this. And then suddenly they graduate and they're supposed to know what tax withholding is

• 43:44Ramit Sethi?

  and what a 529 and 401k and all this crazy stuff is. Nobody taught it to them. So my goal here, the reason I'm talking about this is for people to feel more confident about their money, for them to take control and for them to stop being afraid and listening to random people giving them advice.

• 44:00Lewis Howes?

  Because I feel like it's hard when you're making a hundred fifty thousand or less. It's hard to talk about it and feel comfortable talking about it with your peers who are in the same category because everyone kind of feels embarrassed. I know I felt that way.

• 44:11Ramit Sethi?

  For sure.

• 44:12Lewis Howes?

  And if you stay in that space, it's going to be hard to get past it. So what's the conversation starter that someone who's making a hundred fifty K or less or very little, what's the conversation starter they can have with a peer or a family member or a parent or a friend or a coworker that's not going to throw someone off, but that's going to activate the conversation about money?

• 44:36Ramit Sethi?

  Okay, having the conversation, if you, most people don't want to. Most people don't want to, and that's okay. If you simply want to improve your own money, do that and you'll become a role model to other people. And I think that's probably the most effective way. But if you do want to have a conversation, you know what I would do, honestly, not to plug my own thing, get my book, get somebody else's book, it doesn't matter. Get a book and say, hey, I realize I need to learn about money.

• 45:01Lewis Howes?

  Read any book about money.

• 45:02Ramit Sethi?

  Any book, okay? And does anybody here want to join me? And let's do a little book.

• 45:08Lewis Howes?

  Ooh.

• 45:08Ramit Sethi?

  So suddenly it's not, it's not you and me talking about our money, which really reflects our value in this society. Okay, I use value in quotes. It's let's talk about this book, which is a third party in this dynamic. And we can say, I agree with this guy, I disagree, I really like.

• 45:26Lewis Howes?

  Let's try this.

• 45:27Ramit Sethi?

  Let's try this and like, let's see. So suddenly it becomes an experiment as opposed to you're worth X or my value is Y. And that's really something you can work on together.

• 45:37Lewis Howes?

  I like that, yeah. Bring something else into it, to the mix. Okay, let's talk about the hundred fifty thousand a year and under people. They've been working hard jobs, they've been trying to save their money, but it just seems like they haven't been able to get past. Whatever it is, 50 grand a year, 100 grand a year, 150K, they've been kind of stuck. Or they've crossed 100 grand a year and more problems have come to them because they're making more and spending more. And they feel more broke than ever because they have no clue what they're doing with their finances still. It's the end of the year, they're about to start a new year soon. And they feel overwhelmed or just clueless still about and educated about their money and what their options are for just being,

• 46:20Lewis Howes?

  having peace of mind, structure, organization, and knowing that they don't have to stress about it and they can go earn more. And it's going to pay off for them. What's a few simple things that they should be doing right now to have a checklist to do before the end of the year? To then crush for a whole 12 months moving forward?

• 46:40Ramit Sethi?

  All right, I'm going to give you something called the ladder of personal finance, which tells you where your money should go. Okay, this is just step by step, put your money here. And if you want to know all the details about it, you can check out the system.

• 46:53Lewis Howes?

  It's in the book too?

• 46:54Ramit Sethi?

  It's in great detail in the book.

• 46:56Lewis Howes?

  Got it.

• 46:56Ramit Sethi?

  All right, so if you've got some money lying around, what should you do with it? First of all, if you've got a 401K match at work, you should max that out. That's free money, take advantage of it. And if you're not sure what that means, go to your HR person and say, does this company match any 401K contributions? If they say yes, do what I said. Next, if you've got debt, pay it off, pay it off aggressively. You know, what's interesting is that most people in debt who I talk to don't actually know how much they owe. And that's shocking, you would think, of course they would know, no, they don't because who wants to proactive?

• 47:28Lewis Howes?

  Stare at their debt all day.

• 47:29Ramit Sethi?

  Yeah, and just feel bad about it. But you know what, you feel much better when you have a plan. And the number one question I ask folks when they tell me they have debt, I say, number one, do you know how much you owe? They never do. Number two, for the rare people who say, you know, 15,000 or 70,000, whatever, I say, what is your debt payoff date? You can actually plug it in, you can pay, plug in a debt payoff calculator online. You can map it all out and you will be able to know the exact month your debt will be paid off.

• 47:57Lewis Howes?

  Based on how much you're spending right now.

• 47:59Ramit Sethi?

  Based on how much you're contributing to that debt payoff. Now, you will be able to see that if you add an extra 50 bucks a month or 100 bucks a month, that thing will actually oftentimes shorten by years because of the interest. It doesn't matter if it's going to take you three months or four years to pay off your debt. It doesn't matter to me. What matters is that you know the date. Okay, so that's number two, pay off any debt you've got. Three, if you've got money left over, go to your Roth IRA. And if you can, max that out. That's a great tax advantaged account.

• 48:28Lewis Howes?

  It's a gross tax deferred, is that right?

• 48:30Ramit Sethi?

  Yeah, okay.

• 48:31Lewis Howes?

  So that's three.

• 48:31Ramit Sethi?

  That's three, okay. It's actually post-tax money. And then four, if you've still got money, you're going to go to, back to your 401K, which is another tax advantaged account. You're going to max that out. If you still got money, you're going to create a non-taxable, non-retirement account and just put your money in there. Now, there's a few other wrinkles to this. There's HSAs available. There's also your emergency fund that's talked about in the book and all these things are details. But that just shows you, when you've got money, this is where you go. There's a structured way of thinking about it.

• 49:02Lewis Howes?

  A ladder towards financial success.

• 49:04Ramit Sethi?

  Exactly. And if you follow the steps, it's almost like a waterfall. It just goes from step one to step two to step three. And your money's going where it needs to go automatically. And you will feel great. You'll feel great, which is so important. And also, you're going to look at your accounts and see debts going down. Investment and savings are going up. And all of a sudden, you wake up six months from now, and you're like, oh my God, I didn't realize I have that much saved in my savings account. That's because of the decision you made today.

• 49:31Lewis Howes?

  Let's say you're working a job, making decent money, but you're not really breaking through and you're struggling to earn more, to get out of that 50K a year type of range, maybe around there. And all your friends are making the same amount. All your peers are in the same boat. And everyone's stressed about money. And you hear someone say, well, you know, you may earn the average of the five people you spend the most time with. Should they cut all those five friends out of their life? Cause like, well, you know, my peers are holding me back. If they're having those negative conversations, or how can they start to level up?

• 50:04Ramit Sethi?

  Yeah.

• 50:05Lewis Howes?

  Without cutting people out of their life.

• 50:06Ramit Sethi?

  Yeah, I never encourage anyone to cut off their friends. And I think that's a common misconception that you have to close all the doors to your friends. Look, I've got friends from high school, junior high, that I still hang out with. And I'm not judging them based on their bank account. I don't even know how much they make or how much they're worth. That's not why I'm friends. But the average of the five people you're surrounded with, that is a very powerful idea. And instead of closing the door on the people you hang out with, why not open the door to some new people? Why not find people who go to your conference, for example, or who are on my site? People who are ambitious, who have gone through these programs and say, you know what? Can we set up a weekly check-in? It could be five minutes, it could be over text. But let's set up this check-in and just say, what'd you want to do last week? Did you execute? Why or why not?

• 50:51Ramit Sethi?

  Every week, 9:00 AM, Monday, let's do it. That's how you suddenly meet a group of people who are unapologetically ambitious. And that will change everything for you because instead of having to drag people to these self-development conferences and they say, that's weird, I don't want to do it. The people you actively seek out are going to be like, yeah, I'm in, let's do it.

• 51:10Lewis Howes?

  Let's do it, yeah.

• 51:11Ramit Sethi?

  And that's powerful.

• 51:11Lewis Howes?

  Yeah, so find the new communities that you can have these conversations with.

• 51:15Ramit Sethi?

  Yeah.

• 51:16Lewis Howes?

  And don't cut everyone out of your life, but just start having those conversations with people that are more aggressive.

• 51:21Ramit Sethi?

  Yeah, like, do you know what I told people to do on my Instagram account? So I told people, it's important to find other people who support you. A lot of you are waiting around for some like millionaire to fall out from the sky and invite you to their private group. It's never going to happen, never. Instead, why don't you start it yourself? And I said, go into my comments, write who you're looking for, and then invite someone to join you.

• 51:42Lewis Howes?

  I like that.

• 51:43Ramit Sethi?

  You don't need to wait, no one's coming to rescue you. It's not a Disney movie, nobody's coming, it's only you. So take control and go find someone and then build that together.

• 51:51Lewis Howes?

  Hmm, I like that.

• 51:53Ramit Sethi?

  All right, so Cody working on the cameras here asked a really good question. Does my opinion on investing in real estate change if you live in the Midwest? And I think the answer is, yeah, it can. The calculus on buying a house in the Midwest is different than cities like Manhattan, San Francisco, and LA. So, again, the message here is not, don't ever buy a house, but it's run the numbers to make sure that you're making the right financial decision.

• 52:19Lewis Howes?

  Because in Columbus, Ohio, you can buy a house for 200 grand.

• 52:22Ramit Sethi?

  Yeah.

• 52:22Lewis Howes?

  And a nice one.

• 52:23Ramit Sethi?

  There you go.

• 52:24Lewis Howes?

  It may be better to do that just to have the peace of mind of your own space, or whatever it may be.

• 52:28Ramit Sethi?

  Yeah.

• 52:28Lewis Howes?

  So.

• 52:29Ramit Sethi?

  So, another question from Cody here, great one. What is my opinion on Dave Ramsey's concept of the debt snowball? So, I think Dave Ramsey is really good for people who are in debt. That's not really the folks that I speak to that often, but I think he does a great job with them. And what he talks about is, the debt snowball is encouraging people to pay off their highest balance first, right? Their highest balance. So, if you have four different credit cards, you're paying off the one with the highest balance. Whereas, the mathematically correct answer is to pay off the credit card with the highest interest rate. So, he's actually taking advantage of a peculiar quirk of human psychology, which is that we want to see a win, right? We want to get a win.

• 53:13Ramit Sethi?

  And it doesn't matter if we're paying a little extra in interest. Once you get that first credit card paid off, you're going to want to do the next one, and it's going to snowball. I happen to think it's actually really smart. And one of the reasons that I think my book has done well is that it factors in human psychology.

• 53:31Lewis Howes?

  Yeah.

• 53:31Ramit Sethi?

  So, I'm not telling you in the book, don't spend money on lattes. In fact, I want you to spend as much money as you want on lattes.

• 53:37Lewis Howes?

  I'm gonna get one right after this.

• 53:38Ramit Sethi?

  Exactly. Get your credit right, negotiate your salary, get a good job, automate your money. You could buy 10,000 lattes, it doesn't make any difference at all. And so, whether it's the debt snowball, or whether it's earning more, whether it's automating your money, you want to make sure that this advice is something you're actually going to follow. And that means you need to bake in psychology.

• 53:55Lewis Howes?

  Yeah, I love it. And if you guys want to learn more about how to earn more, about how to negotiate, whether it be rates or other different things. And other things that Ramit talks about, then post an Instagram story right now and tag at Lewis Howes and at Ramit and say, yes, I want more of this. And we'll do a follow-up interview sometime in the future, talking about how to earn more, how to build a side hustle, how to do all those different things and negotiate rates better as well. So post that in the Instagram stories right now, at R A M I T and at Lewis Howes and let us know and connect with us. Final thoughts, man. What's your definition of greatness?

• 54:35Ramit Sethi?

  And my definition of greatness is deciding what kind of life I want to lead and then creating it unapologetically, even if it means making different choices than other people.

• 54:46Lewis Howes?

  Hmm, that's good. That's good.

• 54:48Ramit Sethi?

  What's yours?

• 54:49Lewis Howes?

  Greatness is discovering the unique gifts and talents within you, pursuing your dreams and using those gifts and making an impact on the maximum number of people in that pursuit.

• 55:02Ramit Sethi?

  Love it. Wow.

• 55:03Lewis Howes?

  That's mine.

• 55:03Ramit Sethi?

  Powerful.

• 55:04Lewis Howes?

  Did I ask you your three truths before? I'm not sure if I asked you this in the last time you were on, but I'm gonna ask you again.

• 55:09Ramit Sethi?

  Okay.

• 55:09Lewis Howes?

  If you could only share three lessons with the world, you've got all these books and programs and courses on so many different things, but if you had to take all that with you and no one had access to it anymore, you can only write down three lessons or principles or truths, and this is all the world would have of your information left in physical form, what would be your three truths?

• 55:35Ramit Sethi?

  Man, you're putting me on the spot here.

• 55:36Lewis Howes?

  I know.

• 55:36Ramit Sethi?

  I like it.

• 55:37Lewis Howes?

  No prep, no prep.

• 55:37Ramit Sethi?

  Okay, I like it.

• 55:38Lewis Howes?

  Three principles or truths for the world on anything, life, anything.

• 55:42Ramit Sethi?

  Wow. Okay, my first one would be you can create a rich life through planning and unconventional choices. My next one would be that you've got something to say and the world needs to hear it. And the third one would be, you could probably eat spicier food than you think. I guarantee that.

• 56:04Lewis Howes?

  I've had some spicy food with you. That's good, man. Well, I acknowledge you, man. I appreciate our friendship. I've known you for what, eight, nine years?

• 56:11Ramit Sethi?

  Yeah, long time.

• 56:12Lewis Howes?

  It's been, it's been such a fun journey and I'm excited for all the many fun times ahead. But again, I would not be debt free as fast as I was without your book. So again, I appreciate you as always. I always talk about this. Make sure you guys get a copy. I Will Teach You To Be Rich, Powerful Game Plan. If you guys are looking to get out of debt, but also a lot of the things that we didn't cover are in here. So check it out. Tag us on Instagram, at Ramit, at Lewis Howes. Thanks again, man. Appreciate you.

• 56:39Ramit Sethi?

  This was awesome.

• 56:39Lewis Howes?

  Appreciate you.

• 56:46Lewis Howes?

  There you have my friends. Do you feel richer in your life already? Do you feel richer in your mind? Do you feel like you've got some tools, some strategies, some insights to help you take control of your finances and of your life? If so, then make sure to share this with a friend. Again, if someone who is a high earner, send this to them. If someone who is struggling to earn more, send them the link, lewishowes.com/712. Text it to them right now. Message them on social media. Get this out to your friends. Do something right now to support your friends in educating them to learn more so that you can start having these conversations with them about money as well. Again, the full video interview and all the resources and links and information is back

• 57:29Lewis Howes?

  on the show notes at lewishowes.com/712. If you're new here, click the subscribe button on Apple Podcasts, on Spotify, wherever you're listening to this podcast, click the subscribe button. We've got powerful interviews and episodes just like this every single week with the most influential people in the world on how to take your life, health, relationships, and wealth to the next level. It's all about living a great life. And I'm super glad that Ramit shared with us his wisdom and his insights on this episode. I love you guys so very much. This movement of greatness about expanding our minds, expanding our hearts, expanding our, our love for education, for learning, for growth in ourselves and the people around us.

• 58:12Lewis Howes?

  That's what this is all about, with this movement of greatness. And it doesn't matter where you're at in your journey. You could be struggling and feel like you're at the bottom right now. And it's great that you're here. It's great that you're here because your willingness to learn, your willingness and desire to get better, to improve, to take action on things that aren't working for you is what inspires me. So keep taking action, keep showing up, continue doing things in your own life that are going to improve your situation and support the people around you. That's what this is about, doing things together. And I'm so glad that you've joined me in this journey of inspiring greatness in the world. I love you so very much. And as always, you know what time it is.

• 58:55Lewis Howes?

  It's time to go out there and do something great.