Well with Arielle Lorre - 213: How to Build Your Rich Life with Ramit Sethi

Episode Date: November 30, 2022

Ramit Sethi is a personal finance expert, entrepreneur and New York Times best-selling author of I Will Teach You To Be Rich. We chat about how to build a rich life, how to automate your money to work for you, why investing should be boring, why financial advisors might not be a good idea, how to efficiently pay off debt, renting vs. buying, how to shift shame and restrictive attitudes about money, what to do when the market is down and so much more.   Sign up for a FREE trial at shopify.com/blonde, all lowercase.   Visit athleticgreens.com/blondefiles for a FREE 1 year supply of immune-supporting Vitamin D and 5 FREE travel packs with your first purchase.   There's never been a better time to try Match. Download the Match app today.     Use code BLONDE15 for 15% off the full range at JSHealth Vitamins... Carefully formulated to care for you.     Go to littlewordsproject.com/BLONDE or enter BLONDE at checkout for 30% off your first order. It’s the best offer you can get, limited time only.     Produced by Dear Media.See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

The following podcast is a dear media production. When I was dating before I met my husband, I felt like I wasn't having very much luck. And somebody who I really admire in my life said to me that water seeks its own level. And that was a revelation for me because I realized that whatever I was going to attract was a reflection of how I was doing on the inside. And so I really started to focus on myself. And then I met my partner. So I've truly believed that the most important relationship is with yourself and Match agrees. So in a world where you can choose to do anything or anyone choose you first, because dating someone who knows what they want and won't settle for less is sexy as hell. And Match's latest study of over 5,000 U.S. singles says there's a new triple threat on the dating horizon, therapy, self-care, and emotional maturity. In fact, 87% of say it's very important for their partner to prioritize their mental health, and 81% report

they engage in self-care at least monthly. Two-thirds of singles want to better their mental health, including 71% of Gen Z and 75% of millennials. And two-thirds of singles are open to therapy, including 73% of young singles. So the statistics speak for themselves, and if you do you, you already know that the best relationships show up when you show up for yourself first. So there's never been a better time to try Match. You can download the Match app today. Hey, welcome to the Blonde Files podcast. I'm your host, Ariel Lorry, and I'm here to talk all things, wellness. From how to achieve optimal health and well-being to the best beauty tips and everything in between, no topic is off limits and I'm bringing it to you real and unfiltered. I know there is so much

information out there, so I'm here to help you navigate it all. Thanks for listening. Let's get into it. Hi, everybody. Welcome to the show. Have I got a treat for you today? This episode is for sure top three of all time for me because of the topic, money, which I've never covered on the show. And because my guest, Rameet Satie was just so fun. He's funny. He's charismatic. He's energetic. And he breaks down the often really daunting and complex topic of personal finances in a really simple, clear way. So I want to say ahead of this episode that we talk a little about my personal finances, which is uncomfortable for me because I just grew up not talking about money. And I think I just internalized somewhere along the way that talking about money is tacky. And then now kind of being

a public person and with my marriage and everything, there's the false assumption that I live off my husband, which has actually been a really great thing for me. It was a blessing in disguise because it lit a fire under my ass to really push myself and get myself in a position where I don't need anybody. I can have a comfortable life with or without him. And that's something that I'm really proud of, but there is still like just a lot of guilt and shame around the topic. You know, I want to be sensitive to other people and inclusive to all of the listeners, whatever the circumstances are for you personally. I think that there's some shame that I never learned and don't know much about how to manage finances and on and on. And I know that I'm not,

you know, alone in this. I'm sure we all have really layered feelings of, about money and about whatever our personal financial situation is because money and talking about money can still be sort of taboo. So Ramit calls me out on my attitude about money a little bit. I give him hives with my financial strategy, which I'm happy to report. I have since changed since recording this episode. I took his really simple practical advice and I moved a lot of my money to various investment funds. And I say that because I literally know nothing about money and what to do with it. And just off of this one hour conversation, I was able to set myself up in a way that I am automating my money. And you can do that if you have an extra $100 or if you have an extra $100,000.

You know, he really breaks it down in this episode. And I think you'll walk away feeling empowered. He answers a lot of your questions from whether to rent or buy. how to save, how to pay off debt, whether material investments are worth it, how to automate your money to work for you, what to do when the market is down, and so much more. So a little about Ramit. He started his website, I will teach you to be rich in 2004 when he was studying technology and psychology at Stanford. He then went on to grad school also at Stanford, and he was able to take his background of psychology and marry it with finances. And as a result, he has this really unique, refreshing approach to finances where it's not

restrictive. You know, he's not going to tell you to stop buying your favorite latte or avocado toast. So fast forward to now, over a million people read his material every month to learn how to use psychology and systems to live a rich life, including via his blog, his, newsletter, Instagram, Twitter, Facebook. He's also written in New York Times bestselling book on personal finance. I will teach you to be rich. It has over 7,000 reviews on Amazon. He also has a journal to accompany that now. So I know that you guys are probably doing your gratitude journal, maybe your five-minute journal in the morning. If you are trying to build your rich life,

I definitely recommend getting this. And his team and him have created 20 plus programs on making more money, finding your dream job, starting an online business, or mastering your inner psychology. Definitely go to his Instagram or Twitter, whatever you use the most, and start following him because he gives such great advice. And like I said, just from recording this episode, from reading his book, I have totally changed my approach to how I am saving and investing and making my money work for me. So that's enough from me. I hope that you guys love this episode.

I got to say this because it's been a while. But if you're enjoying the podcast, please rate and review if you haven't already. I've gotten some DMs from people saying that they want to, but they don't know how. So, well, I'll be totally honest. I don't know how to do it on Spotify. But if you're on Apple Podcasts, go to my podcast page and just scroll all the way down. And you can leave a review there. A tiny fraction of the actual listeners have left a review. So it would really help, as you guys know,

everybody in their mother has a podcast in this day and age. So it helps to keep it on the charts and keep it on the algorithm and all of that. So, okay, now I'm really going to stop talking. Enjoy Remyi Saiti. Testing, testing. Is it possible to turn this a little lower? Okay. Like, I already hear enough of myself every day. day. I'm like, I don't need more. I can work with this. You sure? Yeah, yeah, yeah. Otherwise, I blow my ears out. No, no, no, I'm good. You feel like you're shouting at yourself? I'm good. Let's do it. It's better. It's good. It works. Yes. Passing. Yeah. Yes, yes. One, two, three. Are we rolling? Are we going to include that part? Where I say, I've heard enough of myself. Let's get this show on the road.

All right. Welcome, Rameet. Thanks for having me. I'm really excited to talk to you. I was just telling you. I was just telling you that I am a total novice when it comes to finances, investing, saving, all of that. We'll see how much of my own situation I divulge in this podcast and I'm not going to make it all about myself, but I'm really excited to have you here. And when I first reached out to you, I told you, I have a wellness podcast and I've never talked about finances. And I feel like that is such an important part of your overall well-being, not just like having money to be happy. You know, that's obviously not what we're talking about here, but financial wellness and what is that and what does that look like.

Yeah, we have a healthy relationship with food, or at least we try to. We try to have a healthy relationship in our personal relationships, even at work. It's funny that not many people talk about a healthy relationship with money. And the primary way that people think about money is just a bunch of zeros or numbers on a spreadsheet, which is so boring. And, you know, people think, oh, the money guy's here to tell me all the things I can't spend my money on, which is the last thing I ever do. I want people to spend extravagantly on the things they love as long as they cut cost mercilessly on the things they don't. But I also want you to feel good about money.

And I speak to a lot of couples on my podcast. And it is striking because so many people believe if I just had $10,000 in the bank account or $100K, or I talk to people who have $10 million, they go, I just need $1 million more. finally I'll feel good about money. And I just look at point blank and I go, you're never going to feel good about money until you begin working on your money psychology. So that is really exciting to me. Let's get the basics down. Yes.

But let's also feel good about it and spend on the things we love. I would love for you to talk to my husband because my husband is astronomically wealthy. Anybody who knows who he is knows that. But he's of a different generation and a different mindset. And for him, he doesn't want for anything. He has everything he needs and wants, but we have such different attitudes when it comes to money. I am like very kind of frivolous. I'm like the example that you said of spending extravagantly on the things that I love.

Wait, why is that frivolous though? You said the word frivolous and you cut yourself off. Ooh, good catch. Is that your bag? Yeah. You think that bags are frivolous? Well, yeah. I mean, mm, I don't.

That kind of bag. Why? I don't want to say how much it costs. I want to know. Let's just get the numbers out on the table. Come on, it takes the power away when you actually talk about it. Oh, my God. I love, this is a great conversation where you go, oh, we might have to cut this.

I go, uh-uh. How much? Whoa. Okay, great. I can see why you say we might have to cut this. Fine. So if this is cut, none of this is going to make it in. But let me just say this.

You say, or you hinted that it's frivolous. Why? Because I think it's such an exorbitant amount of money to spend on a bag. Okay. And are you aware that there are a lot of people who feel it's frivolous to buy a $200 bag and a $2,000 bag? In your case, there's an extra zero there. So is it frivolous because it's a number? Or is it frivolous to you for some other reason? Because of the number. Ah, okay. So how about the people who think it's frivolous for a $200 bag? I guess it's all relative.

You have probably more wealth than they do. But here's what I would say. I would say, I don't don't love when people describe their own purchases as frivolous. And it not surprisingly tends to show up in terms of what women buy. Bags, clothes, makeup. You never hear a guy with his $80,000 truck going, don't's a frivolous purchase. No, what does he say? It's got a V6 hemi, bro. I need it to pull my work stuff. I go, what? How often do you pull that stuff? He goes, bro, twice a year. I go, you ever heard a U-Haul? And then that's the end of that conversation. I would rather people go, hey, I know my numbers cold. I know my savings rate. I know my asset allocation. I know my gilfrey spending number. Those three numbers, by the way, are words most people have never heard.

Instead, they agonize over these $3 questions like, oh, how much am I spending on coffee? I would rather they know their numbers cold. And they go, this is important to me. And I'm going to spend a lot on it. And I'm investing and I'm saving and I'm doing everything I need to do to be financially healthy. I don't want people feeling guilty about what they spend on. Spend it on the stuff you love. I like clothes. I spend a lot on them. I like travel. I spend extravagantly there. I don't really care about my car at this point in my life. So I don't. With the holiday season upon us, I'm sure we all have all kinds of festivities, parties, maybe some travel in there, just hectic, schedules. I don't know about you guys, but over the holiday weekend for Thanksgiving, I think

there were like two days there where I didn't eat anything of nutritional value, as we should during the holidays. You know, you got to just enjoy it. But that said, there are some little hacks that I have to get in some micro nutrients and vitamins and minerals and all of those things to support my body. And one of those is with athletic greens. In one scoop of AG1 from athletic greens, which I take with about eight ounces of water in the morning. You're absorbing 75 high quality vitamins, minerals, whole food source, superfoods, probiotics, and adaptogens to help you start your day right. This particular blend of ingredients helps to support your gut health, your nervous system, your immune system, energy, recovery, focus, even aging, all of the things. I truly look forward

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So it's super convenient. and it has so many benefits. And you're just going to want to have this in your routine, especially now that we're coming up on like flu and cold season as well. So to make it easy, Athletic Greens is going to give you a free one-year supply of immune supporting vitamin D and five free travel packs with your first purchase. All you have to do is visit athletic greens.com slash blonde files. Again, that's athletic greens.com slash blonde files to take ownership over your health

and pick up the ultimate daily nutritional insurance. Hi guys, my name is Sarah Nicole and I am the host of the papaya podcast, where each week we dish out some sweetness mixed in with some seeds of wisdom, all through candid conversations in a very real intangible way. I want everyone to know that they're not alone and that we share in these experiences called life. And sometimes when we get to know somebody else's story, it changes ours a little bit as well. So I want you to tune in with us on Mondays, subscribe, rate and review it,

and keep these conversations going with us. you can tune in behind the scenes at the papaya podcast and the Birds Papaya on Instagram as well. Can't wait to see you next week. Okay. So a lot of my listeners are in their 20s, 30s, and the majority of the people who sent in question said, I never learned about money and I don't know where to start. So if you can generalize for somebody in their 20s without knowing any of the context or anything, somebody who maybe is out of college, they are starting to make.

some money, maybe they have loans. Should they be investing or should they be saving? How much should they be saving? All of that. I'll give you some general guidelines. I like giving people specific numbers rather than it depends because there actually are some basic guidelines that we can use and then you can adapt it for your own needs. So I have something called a conscious spending plan and rather than a budget which nobody keeps, nobody likes and it always looks backwards, It's just depressing. I give you four numbers and I want you to think about where your money is going in the future. Because that's all that really matters. Where's your money going? The first one. The first category is fixed expenses. This should be 50 to 60 percent of your take home pay. So that would include all your housing costs, car, gas, insurance, cable, all that. This is where people get into trouble because people tend to overspend on housing costs and cars. And if you overspend there, you can't do anything else.

And that's why people are like, oh, should I buy this, like these bag of almonds. It's like the problem is not the almonds. Or the avocado toast. Yeah, that's like such a, that's what old people tell young people, not ever acknowledging that student loans are higher and housing costs and blah, blah, blah. So 50 to 60 percent, try to keep your number within that range. The next category is saving. A lot of people don't know why they save.

They go, I'm supposed to save my money. I go, why? They go, well, that's what I'm supposed to do. I go, what's the point of it? They go, mom told me to. I go, that's not really compelling. You save your money for a couple of reasons. One, you save it for an emergency fund.

You want to target roughly three to six months of minimal expenses. And two, you save for the money you're going to need between now and five years from now. So that would be things like you're going on a vacation. You should definitely be saving for that. You are going to make a down payment or buy a car. you should be saving for that. Anything longer than that, we move to the third category, which is investments. That's money you don't need for at least five years. And that's where the real wealth is created. I would recommend 5 to 10% for your savings of take home, 5 to 10% of your

investment, of your take home for investments. And finally, this is my favorite category of all guilt-free spending. So if it's a bag, if it's travel, I like hotels, whatever it may be for you, 20 to 35% of your take-home for guilt-free. spending. And you know why I really love that last category? Because I want to, every time I talk to somebody about money, I want to start with what is your rich life? And when they tell me, could be, I love to eat out. I love to treat my friends, whatever. I go, how does it feel when you do? It feels amazing. I go, do you ever feel guilty to go, yeah, I should be saving more? And so if you are already automatically saving money, automatically investing, then when you go out to a

restaurant and you order an extra round or you do something for your friends, you can do it guilt-free knowing that all the rest of your money is being taken care of. A lot of people asked me, how much should they have saved by the time they're like in their late 20s? This is, so when people ask this question, it's kind of like picking at a scab. They just want to feel a little pain. And I'm like, don't do it. Trust me, you got enough pain in your own financial life. Let's find a different way to entertain ourselves. That question is not a great question because it doesn't take into account if you had student debt, if you're helping an ill or elderly parent, if you live in Toledo or Los Angeles or New York. Do you want to live as a subsistence farmer when you're 40

or you want to travel to very expensive places? It's pointless. There are ways to know how much you're going to have. In fact, if you follow some of the stuff I talk about in my book, you will know the exact month and year that you'll be a millionaire. You'll know the exact month and year your debt will be paid off, you will know how much you will have at 50, 55, 60, even 40. But what I find is that when it comes to money, by the time you turn 40, it's the number one thing people worry about. And yet, I would guarantee the vast majority of people listening and watching this right

now have never picked up a single book about money. So they agonize and they ask all these weird questions. How much should I have by the time I'm 36? It's like, that's a stupid question. But we haven't taken even a single weekend to become conversant in the basic language of money. And I hope as you're hearing me talk, you realize it's not that scary. We're not talking about PE ratios. That's stuff you don't even need to know.

But things like, what is my savings rate? How much do I make and how much do I owe? These are basic things that we need to understand because if we want to be confident with money, we need to be competent. Something that I've heard you talk about before is a mistake that a lot of people make, or I don't know if you would call it a mistake. And that's in hiring a financial advisor, maybe even before they need one, because maybe somebody who doesn't understand finances, things, okay, well, I'm going to hire somebody and have them tell me what to do. And you talk about how much that adds up to over time, because that's me. I'm like, I don't want to do it. I want someone else to do it for me. Pay for the convenience. But I don't think people realize how much that can cost them. So can you. talk about that a little bit? It's quite shocking and it's so counterintuitive. So first of all, I understand the desire to want to hire people to do things that they're better at than I am. Hire somebody to change my oil and etc. So you think, oh, like I have somebody who mows my lawn, why don't I have somebody manage my money? That seems like a fair tradeoff. Okay. But what happens

is a lot of financial advisors charge something called AUM, assets under management. And the way that you'll know this is they charge you a percentage. Now, just imagine the person who mows your loaned charge you a percentage of your income. You'd be like, what? That makes no sense. I'll pay you 50 bucks. I'll even pay you $200. But why would you take a percentage of my income? Well, that's what financial advisors do. They take a percentage of the assets you're managing. Now, let me ask you this. One percent of your assets. Does that seem like a little or a lot? A lot. Okay, to you, because you're smart. You learn. The average person listening is going, That doesn't sound like that much.

1% and I don't have to worry about this ever again. Well, let me explain something that's going to blow your mind. That 1% fee over the course of your lifetime means that 28% of your returns go directly into that advisor's pocket. And if you calculate this out, which you can do right now, just search for compound interest calculator. Go on there. Plug in your age.

Plug in how much you're going to contribute per month. It's just a ballpark back of the napkin. And you'll discover that the amount you pay this advisor is in the hundreds of thousands of dollars. I remember this young woman, 31 years old on Instagram, she DMs me. She goes, Ramith, I heard what you said. I think I might be getting ripped off, but I'm not sure. I go, okay, tell me your numbers. She's paying like a one or 1.25% fee. She's making 80K a year, 31. I go, how much you're going to make over the course of your life? She was very uncomfortable assuming that she would make more. But if you're making 80K at 30, you're going to make more.

So we calculate the numbers. And I go, how much do you think you're paying this advisor between now and your retirement? She goes, like 30K. Seems fair to me. I go, you're paying them $315,000. This is how people get ripped off. And there are these huge phantom costs in our life. Meanwhile, most people are agonizing over the price of cheesecake. And I'm like, you're focusing on $3 questions. You should be focusing on $300,000 questions. So what is the conclusion if you want a little help? First of all, most people are a lot smarter than they think when it comes to money. You don't need to be a math genius. you can actually do this yourself. I would recommend get one or two good books, spend a weekend learning, open up your investment account, set it up automatically, you're 85% of the way there. If you decide you have a complex situation, you have stepchildren, you have a million dollar portfolio, you want a little help. Fine, you can hire an advisor. Pay them hourly, pay them project basis, but never ever pay them a percentage, a UM fee.

Got it. I was shocked when I heard that as well, and I'm sure a lot of people listening are too. I know so many of you listened to and loved my episode a few weeks ago with Jess Seppel, the founder of JS Health Vitamins. I've gotten so many DMs asking about the vitamins and which ones I like. So I thought I would give you guys a little bit of an intro. So what I love so much about JS Health vitamins is that their range of vitamin formulas are solution focused, meaning they are are designed to target your main health and beauty concerns. They are also created using the highest quality ingredients backed by science at a therapeutic dose, which means transformational results for your health and your confidence. And this is what they're known for. It's verified by tens of

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We kind of delve into all of these topics and connections and how supplementation can help support your body with issues related to the topics that I just listed. So again, go to jshealthvitamins.com and the code is blonde 15 at checkout for 15% off sitewide. Link will be in the show notes. I was talking to a friend recently. We were both going through kind of challenging times and we were having a really hard time staying present, staying grateful. And we said if only there was a way that we could like have a bracelet or something that we could touch to remind us to stay present. And there actually is exactly that. So Little Words Project is the original word bracelet brand founded on the belief of being

kind to yourself and to others. I made these really cute custom bracelets that have the words that we wanted to remind ourselves and they have so many different color ways and they're just so cute to stack or to wear on their own for yourself or for your friends. These also make a great gift for everybody on your list this holiday season and they're at an amazing price. And something that I love about little words is that they have a unique code on the tag that you can register on their website. So you can track where your bracelet goes as it inspires from wrist to wrist. So you can wear it. And then when you're done, you can pass it on and

you can track it, kind of like the sisterhood of the traveling pants, but for a bracelet. So little words are made to be worn, loved, and one day passed on to somebody who needs that word of encouragement more than you do. So if you want to empower yourself and spread kindness to others with the original word bracelet, I have a special offer for the blonde files audience. Just go to little words project.com slash blonde or enter blonde at checkout for 30% off your first order. This is the best offer you can get and it's for a limited time only. And like I said, you can take care of a lot of people on your holiday gift list. So again, that's little wordsproject.com. slash blonde for 30% off your first order. You can also find Little Words Project at Target, Nordstrom,

or one of their flagship stores. Thanks, Little Words Project. So could you take that 1% and put it somewhere where over that same amount of time, it would be making you that same amount of money back? And where should you put that? Yes, this is how real wealth is created. So let me first demystify how real wealth is created. A lot of people believe that millionaires become millionaires because of inheritance or they win the lottery. Some people believe it's because of an insurance settlement. I'm like, get real. Most people make money, and I'm talking about a lot of money through consistent investing. It's simple. There are a lot of millionaires who made it by working at a nine to five company and investing their money in their 401K. It's so boring, but that's how money should be.

You know how many people, they're like, oh, I want to trade this. I want to do that. I go, get dog. Get a life. Have some fun. But money is not for entertainment. Money's for living the rich life. But I don't need it to entertain me. So a good basic guideline is that if you invest your money in the S&P 500, just 500 large stocks, that you can get about a 7 to 8% return. That's every year. Some years it will go up 15%. Some years will go down 10%. But on average, seven or so percent. By the way, a lot of people are factoring, they're worried about inflation, that 7% factors inflation in. So it's post, it's sort of post inflation. That's a lot of money. That doesn't sound like a lot, but just to give you a sense, that means your money doubles every 10 years. And if you keep

adding money, it grows really fast. So in just the same way that that 1% fee equals 28% of your returns, a 7% return over time, over even 10, 15 years adds up to a ton of money. So, So every week on my podcast, I'm talking to people. Some of them have $800,000 a debt. Some of them have $13 million in the bank, and they're like cheap skates. They're all over the board. I talk to them. We talk about their childhood, and I'll calculate their numbers.

There's so many, they're like, oh, I'm so worrying. I don't know. It's never enough. Is it going to be, I go, okay, well, just tell me your numbers. We talk about all their numbers. It's so juicy. And I just plug it in. And they're like, wait, what did you say?

I go, yeah, you're already millionaires. It just takes a little time. It's like, let your Thanksgiving turkey just cook a little. You're already there. You got the turkey. But because people have never spent 10 seconds plugging these numbers in, they will go 30 years worrying about money, which just seems insane to me.

And if you're listening and you go, oh my God, I think I can take control this. You can. I want to go on your podcast and give you my numbers. Can I, can you and your husband come on? I don't think he would, but I would. I only take couples. They have to both come on.

I don't, yeah. And I'll tell you, sometimes it's, one person who applied and they're kind of dragging the other one. But now the podcast has gotten known more. So people kind of get what they're going into. But it is so fascinating to hear the difference in couples. Yes. I would love to do that.

Love to have him on. What was I going to ask you? It was about the SMP. So what percentage should people be investing and where else should they be putting it? It's a good question. Here's what I would tell a family member. I would tell them of every dollar that you take home, you should consistently be investing 10%.

So just to make the math really easy, let's say you make $50,000 take home every year. That means $5,000 a year you should be investing. Minimum, the more you invest early, the more it grows. And the numbers become absolutely crazy. They're actually incomprehensible. Like if you invest an extra $200 a month now, you have hundreds of thousands of dollars down the road.

What I would tell them, where do you put this money? Like, I'm sitting here talking about investing. Where does it go? Do I have to pick a stock? No. The thing that I would tell a family member is, I personally love target date funds. Let me explain what they are. They're really simple.

One fund, all you do is select the year that you're going to be 65. We just assume people are going to retire at 65. So if that's 2050, 2016, whatever. There's a fund called Vanguard, 2016, or Fidelity, 2016. And all you have to do is invest your money in that one fund. That's it. It automatically buys multiple stocks. It automatically rebalances, meaning as you get older, it becomes a little bit more conservative.

You know, we don't want granny losing 40% in a recession. But that's it. You don't have to check in. In fact, I recommend for my readers, they check in no more than once a month. A lot of them check in once every six months. You should not, I have no financial apps on my phone. Why would I? It's automatic. It runs. If I'm on vacation, it's still investing. If I'm at work, it's still investing. But it's just simple and it grows over time. I think people may have a misconception that you need to be checking in every day and trading this and that it's volatile and exciting and crazy. And I love how you talk about it and you say that it should be boring. Just like watching concrete dry. The fun stuff with money is living the rich life. It's, it's, it's, it's, it's, whether it's you solo or you with a partner, it's like, wow, what do we want to spend on?

How do we want to create this rich life? Do we like to eat out? What would it look like if we turn that money dial way up? And I love this concept of money dials. I ask people, what do you love to spend money on? And the answers are always consistent. The number one answer is eating out. Number two is health and wellness.

Number three is travel, and then there's like convenience and there's all these other ones. So I go, okay, what would it look like if you spent more on eating out. And then people always give me the same kind of like dumb joke. Ha ha ha, ha, I'd have to go on a diet because I would. And I'm like, oh, God, all right, I'll take your joke. What else? I go, are you going to really eat out four times a week? They go, yeah. And I go, what if you, would you eat at the

same restaurants? And it kind of strikes them. Oh my gosh, maybe I wouldn't only eat a Chipotle. Maybe I would go to we keep turning that dial up. Where else would you go? Would you maybe once a year do something special for a birthday or anniversary? Yeah, I never thought of that. Keep turning it up. Would you maybe go to another country once every five years? Yeah, I want to go to this omacase in Tokyo. And then finally, my favorite, who would you bring with you? And you can see them often start to cry. The idea that you can use money and turn the dial all the way up,

whatever level you want, is so powerful compared to our normal way of looking at the world through the lens of restriction. Yeah, I was just going to say, that was the word that I kept thinking of. I think a lot of people have this restrictive mindset around money and also a lot of shame, too. I'm sure that you encounter that all the time with people who come on your podcast. They feel ashamed for so many reasons. They feel ashamed that they don't know more. They feel ashamed that they don't believe they have enough, even though they don't even know if they have enough.

They don't know how to calculate it. And they feel ashamed that they can't get on the same page with their partner. And I just, I'll talk to them. And I understand the compassion needed because I have my own parts of life where I feel behind or I felt behind. I know growing up, I felt like everybody was present one day where they all learned how to deadlift. And I wasn't.

I was practicing spelling bees. And I dominated spelling bees. But I'm like, how did everybody learn this fitness thing? And I felt behind. I felt like maybe I'm not the kind of person who can become physically fit. And it took me a long time to unwind that identity. It's really deep inside of us. and to get help, the help of trainers and teachers and mentors.

And that is a lifelong journey. But with money, gosh, isn't it integral to what we do? It's money informs where we live. It informs what we wear. It informs what our relationship with our partner might look like, where our children might go to tennis camp or get a coach. I think that it's worth taking the time to learn how money works. Yeah, absolutely.

I think it's probably just so daunting. And I can say that because I've felt like that too. Or I'm just like, I don't know. I was never taught this. I never learned it anywhere. The ship has sailed. Never too late. No, it's so funny.

I mean, I get people, I just spoke to somebody the other day. She goes, am I? Is it too late? I go, do you think it is? She goes, oh yeah. I feel that the ship has sailed. Same words. I go, how old are you?

She goes 31. And I was like, oh, man. When people hear this, they're going to throw tomatoes at their phone. The fact is I hear people saying it's, It's too late at 31, 41, 51, 61, 61. And the fact is it does get harder over time. I can't lie, it gets harder. And because of the power of compounding, if you're starting to invest at age 60, it's very difficult.

But if you're listening to this right now and you're in your 20s, you have a golden ticket. If you're in your 30s, you have a golden ticket. Even if you're in your 40s, it's never too late, but it's certainly is much easier when you start early. Amazing. Did you hear that? That is another sale on Shopify, the platform trusted by millions of entrepreneurs to create their online store and so much more. Fun fact, I use Shopify to sell my digital cookbooks and I absolutely love it. And Shopify is amazing because they make it simple to sell to anyone from anywhere, whether you're selling, like I said, digital cookbooks or beauty products or fashion, whatever it is, you can start selling with Shopify and join the platform,

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own successful business and take it from me. There is no perfect time. This podcast, actually started as a side hustle. I had no clue what I was doing. I did everything myself for a year. I didn't make one penny off of it. And it grew into arguably the biggest part of my brand, definitely the most lucrative part of my brand by far. And it was a result of just starting, even though I had no clue what I was doing. So this is your sign. It's your turn to try Shopify for free and start selling anywhere. Sign up for a free trial at Shopify.com. com slash blonde, all lowercase. This is case sensitive. So B-L-O-N-D-E lowercase. Again, go to Shopify.com slash blonde to start selling online today. Shopify.com slash blonde. Okay, I want to get to some listener questions. A big one that we got was

renting versus buying. Oh, love it. Okay, all right. So let's just, let's just dissect the common things that we here thrown around. You're throwing money away on rent. Not true, but we hear it everywhere. You're paying your landlords rent. Oh, really? Do you use that same logic when you go to a restaurant? You're paying the restaurant owner's mortgage. No. Okay, so that's another one that makes no sense. Housing is the best investment of all. Maybe, but a lot of times not. Let me explain. So I rent by choice. I could go buy a place today. Why do I rent? Because in L.A. and previously where I lived in New York, and previously before that, in San Francisco, when I run the numbers, it makes zero financial sense to buy. How can that be? Well, let me explain. When you buy a house, people think, I bought the house for 300,000, I sold it for 700,000.

I made $400,000. I go, oh, God, here we go again. So when they do that very simplistic, childlike math, they neglect what I call phantom costs. These phantom costs are extremely expensive and counterintuitive, interest, taxes, transaction fees, maintenance, and those can eat into your profits. So a lot of people heard some myth, some story about grandma. Grandma bought a house for $300,000 in 1972 and she sold it, blah, blah, blah, blah. When you actually calculate how much Granny spent and her opportunity cost and you factor in inflation, you go, Granny made like a 1.1% return. You can get a 7% return in the S&P 500 over the long term. Granny literally lost millions of dollars. Now, here's my message. It's not, my message is not

that you should avoid buying a house. That's not my message. My message is you need to run the numbers on the biggest purchase of your life. And the simple fact that I say run the numbers on the biggest purchase of your life and people get furious at me tells you that in America, real estate is religion. Yeah. It's religion because we shout these pithy phrases that have no logic behind him and then people believe it deep down in their heart. And I go, that sounds great, but can we apply just a little bit of logic to the multi-million dollar purchase that you're going to make over the course of your life? They go, no, no, no, no, Rameith, you're stupid. That makes no sense. You're not building equity. So here's how I do it. I ran the numbers where I live,

makes no financial sense. Just to give you an example in Manhattan, let's pretend that my rent was $3,000. I looked at a building right next door, same view, same size, same bedrooms. It would have cost me about $6,200 a month. So from $3,000 versus $6,200 when I factor in all those fees, you know, I did, I took the $3,200 and I invested it. And I made more money renting than I would have done buying. People go, well, what about pride of ownership? What about children in a school district? Okay, those are all fair reasons, like to decorate, totally fair. But you have to calculate those separately.

What a lot of people do with housing is they make an emotional decision and then they just throw some logic at the wall. Well, you know, I really want to buy this house because of the school district. But also equity. I go, no, that is not how you calculate buy versus rent. So if you are thinking about buying, you need to search buy versus rent. rent calculator and you need to really understand the implications. A couple numbers that might shock you in the first roughly 10 years of owning, you're basically paying interest. Most people are like,

wait, I'm building equity. I'm like, not really. Look at what's called an amortization schedule. Most people never heard that word. Look it up. You need to know this stuff. Second, when you sell, buy or sell, you need to factor in all these transaction costs. Third, you are not necessarily paying those fees when you rent. A lot of people go remit. The landlord just passes those. fees on to the renter, I go, uh-uh. They pass it on if they can, but they can't simply charge whatever they want. The market determines what they. And finally, I want to send a clear message out to everybody. I don't want anyone to ever feel bad about renting. Young people especially, they feel this guilt. Like they're behind. And I go, look, you're listening to a multi-millionaire.

I hardly ever, I'm not the guy who's out on the boat, you know, taking pictures of myself, but for this one moment, I will tell you, people feel they've never heard. a wealthy person come out and say, I rent. I do. I do it by choice and I do it because I know how to run the numbers. So if your lifestyle says you prefer to rent so you can travel and be flexible, you don't know where you're going to be for the next 10 years, then rent. If you want to buy and you love it and you factored out the numbers and in some cases you go, hey, the numbers don't even pencil out, but I don't care. I want to buy. Then buy. But you need to understand the numbers for the biggest purchase of your life. Amazing. And I was going to say, again,

I feel like there's a lot of shame attached to that because like you said, it is like a religion. And I think that so many people just feel like they're behind or they've failed in some way if they're not homeowners. Yeah, you're not a failure if you rent. You know, there's a lot of reasons to rent. You can rent because you can't afford it. You can rent because you choose to have a flexible lifestyle. There's lots of things you can do. But I don't like hearing people feel bad because the National Association of Realtors, I fucking hate them.

they go around with all this propaganda that if you don't buy, you're a loser. That's not true. I hope the NAR is listening. I talk about them on a lot of podcasts. I don't think they like me very much. I think they do listen to the Blonde Files Podcasts. Yeah, NAR. I know this is your number one news source.

Well, now you heard it, Ramit Satie, calling out the NAR and its history of, well, it's got a lot of bad history. Look it up. What is the smartest way to pay off student loans and credit card debt and kind of different things there? Okay, so the, you know, it's funny, the smartest way to do it is to set up an automatic payment schedule and then just let it run. I often get emails and DMs from people. They're like, Rameit, I have this debt. And like, should I take, they have all these like cockamamie schemes. Should I take a balance transfer and do this and do that?

I go, you can if you want. But the real problem with the real solution to debt is making a payment plan and then automating it. So when I ask people, how much debt do you have? 90% of people do not know. They don't even know how much they owe. 95 plus percent of them do not know when their debt will be paid off. So if you have debt, student loan or credit card, first of all, it's not the end of the world. I've talked to people with 20K, I've talked to people with 800K of debt.

Both of them had solutions. Here's what I want you to do. Go online, search for debt payoff calculator. Plug in your numbers. And you are going to see when that debt will be paid off. Now, the first time you plug it in, you're going to be depressed. Oh my God, it's going to take me 20. years. Okay, play around with the numbers. Add an extra $100 a month. In many cases, adding $100 a month

can shave off years from your debt payoff schedule. And as you make more, you can put more towards your debt if you'd like. Okay, I like this one. What are some good material investments? Oh, is this like, what, the bag thing? Besides Ermes bag. And this was not my question. There's not, there's actually, I mean, okay, so there's people think art, in general, art is not a particularly great investment for a couple of reasons. It's highly illiquid, meaning you can't just buy it and sell it easily. And even people who have large art portfolios, if you look at the returns they got, they're really due to a couple of pieces of art in a 500 piece collection. Now, here's the question. How do you know which are the pieces that are

going to be profitable? You don't. Honestly, material investments tend not to be the greatest investment for a variety of reasons. You could say real estate if you choose to buy a house and rent it out as a landlord. But in general, I'll just tell you where I put my money. I don't buy land. I don't want land. I don't want to manage it. I buy index funds and I let them sit. And I know a lot of people go, that doesn't feel real to me. It's time to retrain your feelings about money. What do you mean by that? Well, a lot of people say, I don't feel like I have enough. And I'm sitting there looking at the amount they have in the bank, I go, you have a lot of money. You have more than you will ever need for the lifestyle you want. They go, but I don't feel that way. And what I say to them is, the way you

feel about money is highly uncorrelated with how much you have in the bank. So if you think you need $10,000 more, that's not going to change your feelings. In other words, you need to do two things to improve your overall relationship with money. First, you need to become competent so you know the basic language. You know how compounding works, debt payoff, all that stuff I talk about in my book. Second, you need to work on your money psychology. How do you describe yourself when you talk about money? Do you say, that's frivolous? We could work on that. Do you say, I don't feel like I have enough or it's too late? That's an area, just like with fitness and food and personal relationships that we've got to work on the way we talk about our relationship with money to improve our

relationship with money. Okay, so I'm going to talk about myself for a second. I do have a very kind of loose attitude about money because I've always been really spendy. And then it always comes back tenfold. And I save a lot. You save a lot means what? What percentage? Let's see. I'll try to do some fast math.

Probably 70% of... Wait, you save 70% of your income? Yeah. Okay. All right, keep going. Because about 20% goes back into my business. Maybe 30%. So maybe like 60%.

Yeah, I've saved a lot. Okay. And I just have it all. Is it just sitting in a savings account? Yeah. Multiple because I, you know, insurance. FDICU exceed the, okay. So I have like a bunch of different accounts.

I do have. I'm getting hives right now. Hold on. See this close to unibrow that I have? It's about to bridge right now and become one single unibrow. Yeah. This is really stressing me out. And guess what bank?

Bank of America or Wells Fargo. Are they a sponsor? No, no. I just don't want anyone stealing my day. What is it? Wells Fargo or Bank of America? I hate that. I know. It's not that I hate all these companies. We've only mentioned organizations that I hate. There are a lot of great ones. I name them in my book. I also name the ones I hate. I'm sure they love being in a million copy bestseller being named by name. But hey, don't do bad stuff. I won't name you. All press is good press, right? Not really. I don't agree with that. Okay, so your money's just sitting there. Yeah. Keep going. I do have SEP IRA. That's good. Yeah. Do you fund it? I just put a lump sum in there. Good. I just started it this year. And does it get invested once you put the money in there? Not yet. Okay. So it's just sitting there cash. It's basically a savings account. It's a good insight for everybody listening.

A lot of times people will set up something like a Roth IRA or a 401k and they're like, yes, I did it. And then they'll even transfer some money. Like, yes, I did it? And I go, hey, did you actually invest that money? And they go, huh? And I go, okay, okay. Once you send money into these investment accounts, you actually have to invest it. Otherwise, it just sits there, basically in cash. And, you know, sometimes people come to me, they're like, my money's been sitting in there for 10 years and I just realized I didn't invest it. I lost like a hundred thousand dollars in gains. I go, that sucks. Better you caught it now than 10 years from now. Okay, so is the question, what should you do with your money? Yes, what should I do? And I did get people who asked me like,

if I have an extra X amount of money, what should I do with it? Great. This is a common question. And I love it because if you have money sitting around, gosh, you have an amazing operating. opportunity. So, you know, I like to go by percentages, the ones from my conscious spending plan, it kind of gives you a guideline. I'll tell you what I don't like with money. I don't like making one-off random decisions. Oh, I got this tax refund. Oh, I got a bonus. Like, what should I do? I want all that stuff written down. And then the minute I get an extra $100 or $10,000, it just flows percentage-wise. In your case, you have all this money sitting around. If we were to actually calculate how much you're losing every year, it would be amazing. That would be an amazing moment for

the camera. You just see like sweat, just start dripping down your face. I'm already getting anxiety. I love it. I mean, you feel that and I feel amazing. I'm like, this is awesome. So, you know, the good thing is you've got money. So let's put it to work. Here's how I would think about it. I would keep three to six months just for yourself in case something ever went wrong and I would put the rest to work. Now, you can do it in two ways. One, you can just dump it all in a lump sum and invest all of it today. Research shows that two-thirds of the time, that's actually the better move. But a lot of people- What's the other one-third? The other one-third is when you basically average it in every month. So if you had $12,000, you could put $1,000 a month in. And to tell you

the truth, most beginning investors do it that way. Even though statistically they might not be making as much. In the grand scheme, it's not that important. The important thing is get your money in the market and get it earning for you. Now, right now, a lot of people are asking, well, the market's down. Should I wait? I go, let me explain something to you. When the price of toothpaste goes down, do you write to me, Rameet Satey and go, remit, the price of toothpaste drop 30%. Should I wait until it goes back up? No, of course not. If it's on sale, we're going to get it. Just as I said, I hate ad hoc decisions. Every month, my money is automatically invested.

It goes from my paycheck to investments. And whether the price is down or up, it doesn't matter. It always gets invested. That is the way I want you to be thinking about money. It's not about trying to time the market or figure out what's going on in the news. Nobody knows. Chapter 6 of my book explains to you how even the fanciest Wall Street investors lose 80% of the time versus what you or me or the average investor can get an index fund. So you don't need to ask these questions. You just

need to set up automation and your money will automatically get invested every month. Question. I don't know if you can answer this, but where do you like to go for that? For automation? Yeah. Like would I just go to Fidelity? Would I go to Vanguard? Yeah. So I personally love Vanguard. I think they're great. I think Fidelity is really good. Schwab is really good. All three of those companies are really good because they have low fees. And just as I explain with that 1% fee, you do not want to be paying fees because they compound. So any of those are great. These days, a lot of people are interested in robo advisors.

Those are also fine. They charge a little more. Personally, I don't find it useful. I wouldn't pay the extra amount. But if you're deciding between Vanguard, which is kind of ugly and a robo advisor, and you're like, hey, I really like the pretty app. All right, fine. It's not going to kill you.

Stay away from Robin Hood. they incentivize trading. That's the wrong behavior. You do not want that. And I like any of those companies I mentioned. They're good. I have no affiliation with them, by the way. Got it. Amazing. Well, we're out of time, but I had so much fun talking to you about this. I'll tell everybody about your podcast and your books and everything. Okay. So you can find me on my podcast. I will teach you to be rich where I interview couples ranging from hundreds of thousands of dollars in debt to over $10 million and there's tears and there's laughing and we talk about their childhood. It is, is quite voyeuristic. My book, I Will Teach to Be Rich and my new journal where you can actually

dream and design your rich life. All of these work together along with my website and newsletter to help you really create your rich life and then use your money to live it. I love the journal. Can I just say? Because, you know, we're all in this wellness thing. Everyone's doing their gratitude journals and they're this journal. Add this to your lineup. Totally. My goal was to give you the gift of the ability to dream with your money. And I think with money, we just feel guilty and behind and ashamed. But imagine sitting down your favorite cup of coffee and saying, what does my dream house look like? What do I want to spend more on this year with my partner? How do I want to be more generous? That is really what that journal lets you do. Amazing. I love it. Thank you so much

for coming on. Thanks for having me. I hope you enjoyed that episode. If you liked it, and if you like the show in general, please take a second to rate, review, and subscribe. It goes a long way, and it's actually the best way to support the show. Also, if you want to see more about each episode, you can head over to The Blonde Files podcast on Instagram. I'm always posting about each episode there, or over on my personal page at Ariel Laurie. Please note that this episode may contain paid endorsements and advertisements for products and services. Individuals on the show, may have a direct or indirect financial interest in products or services referred to in this episode.