This book is the only personal finance book anyone needs to really put together an airtight personal finance strategy, particularly those of us in our 20s-30s who only have a few years of income under our belts. Many have told me that they don’t have enough money to really get started with a cohesive personal finance plan that includes savings, retirement, and no credit card debt, and to them I say read this book and implement Ramit’s recommendations! If you feel like you already have your finances together, I still recommend reading this, because it surely includes some insight that you haven’t heard before.
My biggest takeaways from this book:
Look for the big wins, rather than obsessing over every penny of smaller expenses.
- Negotiate all bills (phone, cable, rent) and save hundreds of dollars a year (and/or diminish these bills by getting rid of services you don’t need, or moving to a cheaper place)
- Negotiate a higher salary / use your skills to make money on the side
- Heavily research and negotiate all large purchases (cars, homes, weddings) to save thousands on these items
All of these require some solid hours of work, but the returns are great. (I saved $240 in 15 minutes from our internet provider, and $200/year in 20 minutes on my cell phone by calling and negotiating.) By freeing up thousands of dollars doing these things, you can then enjoy life more and not feel guilty about spending on other things.
Automate your finances
I’ve done a lot of reading on the topic of personal finance over the years, and had a pretty good strategy in place, but a few times a year if an unexpected expense came up, I felt a little out of control. After taking Ramit’s advice and automating my savings more completely, I’m feeling really optimistic going forward.
I read an excerpt of this on Ramit’s blog in 2010, and even reblogged it, but it didn’t really sink in until I read the full chapter in this book. It’s about compartmentalizing every aspect of your spending, and automatically moving money into sub-savings accounts accordingly so it’s all planned in advance. For me, when things like suddenly needing to buy a new phone or a new laptop battery came up, I felt my master plan being all thrown out of whack when I had to pull money out of savings. With Ramit’s plan, I’ve added an “electronics upgrade fund” of 3% to my automated weekly savings, so I can spend from that fund when necessary, and not feel any guilt because I’ve already planned for it.
As I’ve started to talk about this book over the past few weeks, many have responded that they hate worrying about their finances, and this process sounds like too much work. The beauty is that it really does take some time and energy up front, but once it’s all planned and squared away, it pretty much takes care of itself so you can think about your finances less than ever and sleep well at night knowing that it’s in good shape.
In short, this book presents the only personal finance strategy that you will ever need to read and implement, because once you’re set up, everything will be so optimized that you won’t really benefit from anyone else’s ideas. Other books like The Wealthy Barber, which I’ve previously recommended, are great to get you in the right mindset about “paying yourself first” to save, but this book takes the next step of telling you exactly what to do to bring your finances to the right place. I wish I had read it years ago when I first heard about it.
It’s even available as an ebook for Nook or Kindle for just $10.