Ep 367: How To Get Rich ft. Ramit Sethi

in Nigeria, super super immigrant house school. It was like Nigeria in the house in like America every place else. And I can distinctly remember my older sister Karen going to school college. We went to Rutgers and coming back like one summer, maybe it was her freshman year, and her being like, cause, you know, we listened to my dad.

me step by step. I've had a manify money because she had like messed up all of her finances and she did cut co nive. Sorry to put your business on blast care because she listens, Oh well, girl, it was a long time ago. She did cut co nive.

was still in high school. I didn't I never thought about books on money, and I guess I probably thought about it was like for like I don't know old people, and she was so excited about it and showing me like little lines if you don't you know meat has quite the personality, so she would showing me different lines inside the book, and I was like really.

in two thousand and four. His goal was to reframe the way we think about money, so in two thousand and nine he published his book, his first book, I Will Teach You to Be Rich, which became in New York Times bestseller and cemented his reputation as a leading voice in personal finance. Ramat also hosts a popular podcast call I Will Teach You to Be Rich, which features real couples sharing real stories with real numbers from.

is real about them three dollars. I feel so bad for the late guy. I'm not gonna say his name because we're gonna shade him. But that poor Latte guy. I mean it was at the time, it seemed like a good idea.

it not because I had some grand master plan. It was that I was taken some of my scholarship money put in the stock market, lost half of it. Realized I wasn't as smart as I thought. And as I learned about money, and I was studying human behavior persuasion psychology, I started developing my own point of view on money. And so when I tried to teach my college friends about personal finance, they all were like, yeah, that sounds cool,

and then they would never show up. And this was free, free classes I was giving away and I did that for a year and a half. Nobody came. It was very demoralizing when you have something that you feel the world needs to hear but nobody is listening. And I realized this was a very pivotal moment. I could just give up. But I was a little arrogant, you know, I was a twenty year old kid. I go, they need to hear this. Maybe I'm not sharing it in the right way. Maybe college kids don't want to come

to events about money, even if they're free. And I later learned that's true. People don't like going to events about money makes them feel bad about themselves. So I

started a blog. Spent five years plus on the blog, every day writing, treating it like a lab, and by the time it came time to even think about doing a book, I had talked to hundreds of thousands of people and really refined this system for saving money automatically, for investing, even knowing how to calculate how much to save for a wedding or by buying a house or a car, and those things I was ready to share with the world.

built some relationships with people in the publishing industry. I had interned for Seth Godin, and so I made friends with his agent, and I called a lot of people and asked like, should I write a book? Should I not? And a lot of the advice. The same advice I give people now who are thinking about writing a book is I say, slow down, write a book when you're absolutely ready. When you feel like you have to write a book, be clear about why it's not so you can see your book in a bookstore. That is a

that's a sort of very surface level goal. I had something that I knew the world needed to hear. I had refined it over years. I didn't care about money from a book. In fact, I took a pretty small deal. My publishing deal for I Will Teach You to Be Rich first edition was quite modest. I chose a publisher that paid less, but I chose them because, just like me, they are known to invest for the long term. So

eighty percent of their sales come from the backlist. That's exactly what I wanted, and so that is how I decided to sell my book in two thousand and seven, and I started writing it for the next two years.

in a few months. So it wasn't the money. It was because I'd been approached prior, but it was also I just was like I didn't I wasn't really sure about what I wanted to say, and I didn't want to just be talking to be talking, and so finally I was ready to do my book. So one thing that you know, I don't know if you're I'm sure you know you're known for this is that you like to shake the table right for.

wealth gap and like how do we get here? And so for those who don't know the racial wealth gap, typically when they think the racial wealth gap, they're thinking the gap between white families and black families is right now, is like for every dollar white family has, a black family has, well, for every ten dollars white family has, a black family has one dollar, and figuring out like

how do we get here? And one of the components that they cite as being part of the reason why there is a racial wealth gap is a lack of home ownership in the black community, you know, and also too, not just lack of home ownership, but also that homes are devalued. Like just go look at Brooklyn, you know when it was like black people teaming there.

to grow wealth. So I'm just curious about, like, you know, just because as my studies, I'm doing research about like home ownership being cited as one of the reasons why there isn't wealth in black and brown communities. Like what is your theory on, like, you know, well you don't need home ownership. Is that because home ownership? Maybe that was the Well you tell me, Like, why is it that you push back on home ownership?

The reason housing is expensive is political. The reason healthcare is expensive is political. The reason you drive a big ass truck is political. It's not just that you like the truck and it's got a hemi engine. No, it's political. So when it comes to home ownership, I have a very strong point of view on home ownership and it's multifaceted, like home ownership is in this country. You know a lot of people they obsess over their marble island. Okay,

they obsess over what color their cabinets are. What they really should ask questions about is is why am I not allowed to build an adu or a granny unit in my backyard? Why is that not legally allowed? Why am I not allowed to build multiple stories if I want to? Why am I required to have a gigantic bat front yard that nobody uses, and I actually have to spend time and money to mow it. And by the way, what role did race play in all of these rules? Why is it that in America single family

homes are the American dream? Why is that? And most people have no idea, They never thought about this, They'd rather think about the color of their cabinets. So when you read books like The Color of Law, you realize that home ownership redlining, that home ownership has been a wedge to drive wealth for primarily white Americans in this country. Historically, it's not an accident. It was intentionally done so, and so freeways were created in poor communities and that has

lasting effects. Okay for a lot of people, probably not listening to this podcast, maybe listening to Joe Rogan, that would be shocking, and many of them simply deny it. Well, if you try hard, harder than you can make more money. I'm sick of that shit. We've all heard it. And if you actually understand history, if you've read a single history book, you know that that's not how it works. There's not bootstraps. When they're running a freeway through your

and intentionally dividing your neighborhood as they did for decades. Now, let's talk about home ownership as an investment, because that's a it's a related but different concept. In America, we're obsessed with home ownership. We believe that if you rent, you're a loser. We believe. We even have phrases borderline religious phrases, you're throwing money away on rent, you're paying your landlord's mortgage. I call them religious because they lack

any actual data. They're just words we repeat over and over and over until people actually start to believe them. Well, it turns out that home ownership is certainly one way that you can build wealth. Historically, in our country, it has been a very powerful way to build wealth. That's not simply because homes themselves are great investments. It's that when people in this country buy homes, they become Nimbi's

not in my backyard. They prevent more housing from being built, therefore artificially boosting the price and value of their house. And so they basically, like a diamond dealer, they limit how many diamonds flood on the market, they limit how many houses, and so they buy a house for two

hundred thousand dollars and the value goes up. If the market were actually free and we could build as much housing as is necessary, their house would look much more like Tokyo, where prices do not go way up, and instead housing is like any other commodity you buy, it depreciates, in my opinion, as the way it should. So the thing that people find controversial is that I say you should run the numbers on the biggest purchase of your life.

And sometimes renting can be a superior financial decision to owning house, which in my case it absolutely is no.

like three hundred thousand. I bought it for one eighty cash so I didn't have to worry about, like, you know, like renovating or whatever, and so.

know everyone's trying to gentrify Nework. And then I purchased another home a few like almost around the same time, directly from the city a tax ded for ten thousand dollars and I put one hundred and thirty into it and I recently just sold it for ninety five and so but those are not I tell people that, like, I mean, obviously that those deals are not available all the time. But I to your point, I try to

be patient because I have to run the numbers. I did not run the numbers on my first property when I was twenty five I bought a condo for two twenty it went up to two twenty five, and then I bought a two thousand and six, and then the market just crashed and I lost it to foreclosure. And so I learned from that, like oh, up until then, from two thousand and six to like five years ago, I was still renting until I found something that that was going to make sense for me, you know, to purchase.

the sky is green. They're like, wait, I will teach you to be rich. Guy rents and they're shocked. Why Because again, in our country, deep down, we believe that owning is for successful people and renting is for losers. And so when they look at me. They go, well, this guy has a show on Netflix, he's got this best selling book. How can he rent? That's a moment where they start to question some of the beliefs that have been passed on to us for generations. You got

to own a house, you gotta build equity. So let me tell you. When I was living in New York, I kept an extremely close eye on real estate values. Okay, a couple of things I want to share that might prize people. First off, my rent dropped four times in eleven years. Okay, yes, people in America think rent only goes up wrong. Just like the price of anything, rent is governed by supply and demand. But guess what. When I asked, they go, that's not possible. Rent never goes up.

I go, number one, do you keep a close eye on real estate values in your market? They go no? I go number two, do you actually negotiate? They go, what's that? I go, then, how the hell do you expect rent to drop? If you yourself are not actually negotiating. Your landlord doesn't just walk in and drop your rent? Why would they? You got to ask, and you got to have You got to be lucky in the sense that there has to be more supply, which there was in my case. And you know, you need to know

your numbers. So that's number one. The second is there is an apartment building right next to us, and it had this. There was a unit there, it had this, In fact, several units, same number of bedrooms, same square footage, same view, all of it. It was very similar. Let's just say that I was paying three thousand dollars a month in rent, just as a hypothetical example, it would have cost me two point two times as much to

own than it cost me to rent. So, in other words, it would have cost me over six thousand dollars a month to own that place when I factor in all the phantom costs, taxes, maintenance, interest, opportunity, cost of my down payment, all the things that people never consider. So you know what I did. I took the thirty four hundred dollars or so per month and I invested it, and I did that every month, and I made way

more money renting than I would have owning. So the point is not that one of us is doing it right or wrong. That's not the point. Point is you got to run the numbers. This is the biggest purchase of your life. You can't spend more time deciding what appetizer you're gonna get on Friday Night than understanding a multi hundred thousand dollars purchase. You've got to run the numbers.

I just thought that was so bananaus to me, They're like, honestly, I mean, why do you need to see it again?

fifty dollars purchase? Okay, yeah, you better imagine if we're going talking about a million dollar plus purchase, that I'm going to be spending a lot of time. We all should we should know what an amortization table is. Nobody knows what that is. Most people go, oh, I'm building equity. I go have you ever looked at the amortization table? Have you ever realized that in the first roughly ten

years of owning, you're primarily paying off interest? And when I post this on my social media, I actually show the chart. I showed a real example, real interest rates, real everything. And you know the reaction, People get mad at me. Why because in many ways it's religious. We don't want to think about the facts. We simply want to be reassured by father, government and father, mom and Pa telling us buying is the right decision. And I

reject that. I reject the idea that we should only buy because everyone tells us it's good and they use these handy dandy phrases. No, you got to actually know the numbers, and it may turn out that buying is great for a lot of people. Buying is a great decision for a lot of people. Renting is a great decision. You decide, but you need to know your numbers.

own money. Most people have quite simple financial situations, and there are very simple, amazing investments like target date funds that are phenomenal and simple and low cost. You set it up once and you automate it. You never have to think about it again, and you can become quite wealthy from things like a target date fund. Now, once

in a while, people do have complicated financial situations. They might have step children, they might have inheritance issues, whatever, and they want to get a second set of eyes. I don't mind it. I myself have hired a financial advisor. In my case, I hired one because I wanted them to look at my asset allocation and tell me if am I missing anything? Do I have any blind spots? So I don't mind if you hire a financial advisor.

I don't even mind if you pay a premium rate two hundred an hour, five hundred an hour, one thousand an hour. If you like them in they're qualified, pay it, but never a percentage. Yes, So what most people don't understand. If you have a financial advisor and you're watching or listening to this, go ahead and text your advisor, email them and say hey, I just want to know. Can you send me the fee schedule? What that means is how am I paying you? If you went to a restaurant,

of course, you know how you're paying. You're paying with your credit card. You know how you're getting charged. It's you know, twenty bucks for an entree or whatever. And that's that. What if you found out that the person mowing your lawn is charging you a percentage of your net worth or a percentage of your investable assets, that would be crazy. So how is it that it's okay for the financial advising industry to do so? And let me also share another shocking fact. One percent doesn't sound

like a lot. Oh one percent, somebody can look over my investments and keep an eye on it. One percent means that, over the course of your lifetime, you will spend about twenty eight percent of your returns in fees. That's shocking. That's hundreds of thousands of dollars. We have so many people preoccupied with a three dollars latte. Oh, I shouldn't get dessert, the cheesecake. I know I'm being good.

I shouldn't be good this week. Meanwhile, you're being bled dry for hundreds of thousands of dollars and you don't even realize it. I don't find that acceptable. Now, if you want to pay five hundred bucks an hour, or you want to spend five thousand dollars on a project based fee, I'm all for it. In fact, I would do that. I have a person who works for me and they offered me two options. Do I want to pay a high hourly rate or do I want to pay a percentage of the deal. I said, I'll pay

the hourly rate every day, every day. So I want to encourage you to find out if you are paying. If you have a financial advisor, how are you paying? It's often one percent and you can tell because they won't give a straight answer. And I don't want people to be paying AUM or Assets under management fees. I want you to be either managing your money yourself, or if you're paying a great advisor, pay him hourly or per project. That gets a lot of pushback, but I'm right.

you know. I wanted to understand, like what, where's the best place to place my assets in a way so I wouldn't have to work by the time I was a certain age and so Angelie was pivotal for me, and so I'm really grateful that I hired her, maybe I want to say, like four years ago, especially after

my husband suddenly passed away. I don't know what I would have done without Angelie because she knew where everything was, you know, Like he had a pension, which is very rare because he worked for the City of Newark, and so the paperwork for the pension is like you, it doesn't even make sense. It's Latin, but somehow she speaks Latin, so she knew, like even before they knew. She's like, no, you are supposed to get this. This is supposed to go for your stepdaughter. This is supposed to you know,

And so she just was. So it changed my tune about financial advisors because I was reluctant even to hire her because I just felt like, you're paying someone to do something you could probably do yourself. But you know, and I still think the average person, to real Meat's point, doesn't necessarily need one, or if you do, start with an hourly and just so you someone could look over your things and you could say, oh, thanks for that information.

So Angelie doesn't just look at my personal finance. I've also hired her to look at my you know, business things. She's kind of like a last set of eyes because she's a CPA as well, and so it allows me to use it as a business expense, so I don't even have to pay out a pocket for her, which is great. But yeah, so that wasn't to me like a I mean, I guess maybe financial advisors would be mad but I'm trying to think anything else. I see people because for me be on Twitter on fire, Okay,

he does not care. I love that because I am somebody who.

keeps me sharp. I do like to hear the other perspective, and it's true, Hey, maybe there are things I haven't considered. Maybe there are elements of an argument that I haven't considered, so I do want to hear that. What unfortunately turns out to be the case is I just typically hear from right wing anti vaxxers who think they're smart but have never actually, you know, looked at a number or a piece of data. So it becomes less interesting, although quite entertaining.

which I'm so glad. You know that they put their foot out there to say people want to see financial education, like on you know, on this bigger scale.

good at Twitter. I know email, like, I've been on the Internet for a long time, but I don't know anything about Hollywood, especially at the point where this email came in, so I actually didn't even believe it was from them. I went up to the from line and I clicked it so it would expand and said at Netflix dot com. And I was shocked because often the emails come from ambulance chasers and production companies and other folks, but this was directly from the network. So I took

it downstairs. I took my phone. I showed my wife and I was like, what do you like? I don't even know what to say. And she's awesome because she said, what do you think? And she just let me talk, and I kind of talked out loud, okay, And here's what I was feeling at the time. I was feeling number one, really surprised. I never ever planned to be a TV guy. Never. I never woke up saying I want to be famous or I want to be on TV. I just I like helping people live a rich life.

I like telling jokes online. I like my readers and my students. I love them, and I love my team. That's what I know. But I also know that I've been doing this for twenty years and I know my business pretty well. So at this point, it was it made me nervous to even contemplate doing something where I would lose some control, because once you do a show, it's out of your control, you know. But at the same time, it was like, Wow, I could take my

message to a massive audience. You know. I look around on the street, whether I'm in La, New York wherever, and most people don't know the concept of a rich life. They don't know how I talk about it, and I think they should. And so I said, all right, at least I'm gonna take the call. I'm gonna take the call, and I got on a call with them, and they were very pleasant, they were very flattering. They're like, we know your work. You know, we read your book in

the office. In fact, we hand it around. And I was like, let me stop you right there. Whatever deal we were going to do, the price just quadrupled. And they were laughing. But in my head, I was like, but I'm not kidding. So you know what, I realized the whole time, the whole time, starting from that call through even right now, I said, if I'm gonna do this, I'm gonna have funk. And if I'm having fun, everybody

else is having fun. And that's my motto. Now I'm forty years old, I'm gonna have fun doing big projects. And you know that shows. It shows when I'm on screen because I'm actually having fun with my guests, even when they're you know, being a little nutty, I'm having fun and then they're having fun. And that's that's where I think that I want to go, you know, with the work that I do.

And I remember going in. I was getting some pants made. I really love clothes, by the way, so I love spending money on clothes. I have a few things I call money dials, the things where I really love spending and turning that dial up. We all have money dials. One of mine is clothes. So I went in to get these pants made and I was They're like, okay, let's measure you. I'm like, listen, I'm gonna drop this much weight before the shooting, so I need you to

alter the like make sure that you adjust. And they looked at me like like kind of like pity. They're like, this guy's so delusionable. Oh my gosh, he really thinks he's gonna lose, Like and I was like, listen, just make the pants away. I'm saying, Okay, I know exactly what I'm gonna do because I'm a professional. I've done this before. I know what it takes. I have a trainer.

So I came back in a few months later. They had made the pants as I quested, and just to mess with them, I went in the fitting room and then I was like, oh my god, it doesn't fit at all, and everyone there's like eight people tailors, all these people from Italy, just to mess with them, and then I came out and it fit perfectly, So again I'm having fun. In terms of shooting, we shot principal

shooting for about four months. That was all around the country. Yeah, all around the country, fourteen hour days, very busy, very intense. I've never worked as intensely as on that. It was actually really fun, very exhilarating. And then we did about five months in post and then it was ready to go.

took to your point. I don't know how many people would have had this thing happen and not had anything ready or I was ready when And that was just a part.

And I'll tell you something else. You know, I've I lived in Europe for a long time, so people would recognize me if I was out on a Saturday I would definitely get recognized a few times. That number has exploded, so a lot of people coming up, but also the type of people coming up to me incredibly diverse. Incredibly I'm walking in the Lower east Side, I'm getting people

coming up to me. I'm walking on the Upper east Side, Upper West I'm getting different types of people coming up to me, people that I did not get coming up before. There's some people who are just never going to follow a newsletter or social media about money, but they'll watch it on How to Get Rich on Netflix, and so I'm thankful for that. And they're always They're always really nice,

they have the best stories, they're super thankful. They'll say like one it's like comical because I'll be walking with my wife and someone will be like thank you, and I'm like, that's like pretty dramatic, like all right, thank you. But it reminds me because I don't go up to celebrities. If I see anyone who I think is a celebrity, I'm like, oh, what am I gonna say? I don't want to be a door, so I just walk right past him. And on the only celebrity I ever went

up to was this guy Marcus Lamonis. He's on CNBC The Prophet and I like him a lot. And I saw him this at this burger place that I went to and I was like, oh my god, it's Marcus Lamonas. And my wife's like, you got to go take a picture with him. I'm like, no, I can't.

don't have that courage. So anyway, thanks to everyone who watches and listens and follows.

looked like me. And you know, we know what representation is and why it matters, but as a kid, you don't realize. You just internalize, like, oh, it's big white guys that have muscles. But me, I do spelling bees. Okay, And I did spelling bees and I dominated and that was great. But it wasn't until my twenties where I finally realized if I want to change my body, I can't. And I can learn how to eat differently and work out differently, and I can get help from friends and

trainers and stuff like that. So I think it's cool. I love seeing this Indian family come up and say hello and take a picture because their kids, who were probably twelve, see a guy they go this, this Indian guy's on TV. He looks like me, you know, he Maybe I can do that. Maybe the possibilities are bigger than what I had realized for myself. So to me, that's like a very very meaningful part of doing what I do.

being broad in this country. There are certain professions that can that can provide like safety for you or like you know, professional success for you. But you get to widen that scope and they can say there's wild success, you know in other areas.

They're net worth thirteen million dollars. Yeah, you get to actually listen in on couples with all over all of the socioeconomic spectrum, all different kinds talking about real money issues. That's called I Will Teach You to Be Rich. My book I Will Teach You to Be Rich. You can find that on Amazon, you can find it at any bookstore including Barnes and Noble. And then of course the show How to Get Rich that's on Netflix and you can stream that anywhere in the world.