How Ramit Sethi, Morgan Housel, Robert Kiyosaki, others, changed my view of personal finance

In 2020, I made a New Year’s resolution to read at least one book on finance per month. Three years later, I’m still doing that. It’s one of the only New Year’s resolutions that has ever stuck, mostly because the benefits were enormous, real, measurable, and immediate. Below, I’ve compiled a list of the most notable lessons I’ve learned from several of those books, in no particular order, followed by a rating, which should serve as how much I’d recommend you read those books as well. 

I am not, for the record, giving out any financial advice. I am simply saying this is what I read, this is what’s worked for me, and these are the authors and titles I’ve found most useful.

 

I Will Teach You to be Rich, Ramit Sethi

• “F*** you, Wells Fargo!” That’s a direct quote from Ramit Sethi. I don’t have any personal qualms with Wells Fargo, or Bank of America, but Sethi hates them, and in his outrage, he pointed readers instead to Capital One 360, which has an APY of 3.30%. I keep virtually all my cash in a Capital One 360 account now – I still, I admit, have a Bank of America checking account to pay bills because I didn’t feel like switching my auto billing to a different account – and get a decent amount in interest per month. It was an easy decision, and now I have a teeny tiny passive income stream, which I like. So, instead of Fuck you, Wells Fargo, I simply say Thank you, Capital One.
• Your credit is everything: I had never once in my life given my credit score a first thought, much less a second one, before reading I will teach you to be rich. But Ramit Sethi – and basically every other author on this list – emphasized the importance of your credit score, which could wind up saving or costing you tens, if not hundreds, of thousands of dollars. For example, the average home price in the U.S. at the moment is $348,000. Let’s say you have a solid credit score, and that gets you an interest rate of 6%, which is about average right now. If you put down 20%, you’re left with a loan of $278,900. Amortized over 30 years, that comes out to $1,692 per month. Let’s say you have a bad credit score, and you secure a loan for the same amount – if you can secure one at all – but your interest rate is now 8%. Your monthly payment shoots up to $2,046 — $354 higher per month. Over 30 years, that’s $127,440 more for the same house than if you had a solid credit score that got you the six percent loan. It’s oversimplified math, but still: Credit is important.
• Keep your lattes: When I was poor — and I was — I pinched every single penny. When I was less poor, I still did so, and looked down on those who ordered Starbucks every day rather than making their own coffee. How could people rationalize wasting $3 every single day? But then I read I will teach you to be rich, and Sethi advocates for getting your lattes if you so want. The big thing is to avoid the big ticket expenses. If you can’t afford the luxury car, don’t buy it. Same goes for trips, clothes, jewelry and any other item that would put a massive dent on your credit card statement or bank account. You can pinch pennies, sure, and save where you can, but the biggest gains are made in not making the massive purchases that set you back.
• Cars are massive liabilities: I’ve never been a car guy. My first car was a Chevy Aveo. My second was a Honda Civic I still drive, and hope to still drive for the next 10 years at least. But Sethi made me even less of one. Cars are massive liabilities. When factoring in a monthly car payment, gas, maintenance, inevitable parking tickets, the occasional tow, and insurance, the average cost of owning a car in the U.S. is $10,728 per year. No thanks. I’ll take my 2016 Civic with 98,000 miles that’s been paid off for four years and drive that baby into the ground.
• What’s your definition of rich? Being rich or wealthy might look totally different to me than it would to you. To me, being rich looks like waking up and doing whatever I want to do, whenever I want to do it. It looks like writing, playing volleyball, and hanging out with my wife. It looks like being able to afford exit row seats on airplanes. To you, being rich might look like living in a luxury mansion, driving a Bugatti and eating at Nobu every night. It doesn’t matter. Once you figure out your definition of rich, you can reverse engineer it to make it happen. 

Rating: 10/10

Rich Dad, Poor Dad, Robert Kiyosaki

• Develop a passive income stream (or several): I like making money. If you’re reading this, I’d assume you do, too. I especially like making money when I did nothing active to make it, so I can do more of the things I love that don’t pay much, or any, money (like playing beach volleyball). Robert Kiyosaki introduced me to the concept of passive income, and since then, I’ve attempted to build out as many streams as possible. Books, YouTube videos, real estate, dividend-paying stocks, high-interest savings accounts are all forms of passive income I’ve since developed that have begun to compound.
• Invest in real estate: Real estate is the crowned jewel of passive income. Buy a house, rent it out, and rake the overflow cash after all the expenses have been paid. After reading Rich Dad, Poor Dad, I bought two rentals in Memphis, Tennessee and was blown away by how much money there is to be made in real estate, and most of that money is being made passively.
• Don’t say “I can’t afford it.” Ask “How can I afford it?” That little switch in mindset is such a game-changer. I do this mostly with investments — like real estate — than with luxury items, but you can apply it to a number of aspects in your life outside of money. (Don’t say that you can’t beat a team, ask how you might be able to, etc.). This particular nugget pairs well with Brandon Turner’s ‘Investing in real estate with no and low money down.’ 

Rating: 9/10

 

The Richest Man in Babylon, George S. Clason

• Pay yourself first: When we’re paid – or at least, whenever I was prior to reading this book – we take that money, pay off our bills, buy stuff, and save whatever is left over. Clason – and virtually every other author on this list, but he gets credit because The Richest Man in Babylon was one of the first books I read – argues you should do the opposite: Pay yourself first. Now, whenever I get paid, I take 15 percent and put it into my Capital One 360 account I mentioned above, and take another 10-12 percent and put it into an IRA, which I’ll get into in a bit. The result has been astounding.

Rating: 9/10

 

The Psychology of Money, Morgan Housel

• Don’t unnecessarily interrupt compounding: One of the most common stories you’ll read about in finance books and articles is Warren Buffet’s accumulation of wealth, and how 95 percent of it has come after his 65th birthday. That story, like any cliché, is bandied about because it’s true, and that truth is so damn convincing. I want to be rich like Warren Buffet. So do you. So don’t interrupt your compound interest by selling stocks before you should. Buy and hold and let time do the work for you.
• Sometimes you’ll do things that don’t make financial sense, but make sense for your mental health: The Millionaire Next Door – more on that below – came highly recommended, but I thought it was OK at best, namely because it doesn’t take into account the fact that its readers are human beings who don’t always want or need to operate via spreadsheet. Housel separates himself from the financial pack by acknowledging that it is 100 percent totally fine to make a decision that might not be the financially savvy one, but it’ll keep you sane. I’ll use myself as an example. In 2018, I had enough cash to pay off the rest of my $12,000 or so loan on my Honda Civic. The interest rate was lower than the return I could have expected had I taken the cash and dropped it into an index fund tracking the S&P 500. But that was the last of my debt, and I didn’t want to have any more debt, so I took the cash and paid off the car instead. The freedom I felt was amazing, and I haven’t taken on a penny of debt since. Was it technically the right move? No. But was it the right move for me? Yes. And that’s why Housel is awesome.

Rating: 10/10

 

Purple Cow, Seth Godin

• Make a remarkable product, and the rest will figure itself out: I think I’m a fair writer, but I’m an awful marketer. Seth Godin is, to me, the Michael Jordan of marketing, so I bought everything he wrote, and even took one of his online courses on marketing. Purple Cow presented my favorite option of marketing: Make something so remarkable that the world can’t help but become aware of it via word of mouth. The title is whimsical, but powerful: It makes you imagine a purple cow. If you were to see one in real life, you’d tell your friends about it. You’d take pictures of it and probably post it on social media. Other people would ask about where you saw this purple cow, because how many purple cows are there in the world? Then they would take pictures, post on social media, and tell their friends about it. And so the cycle goes. In any industry – business, athletics, politics, writing, acting, whatever – the cream will always rise to the top, so to speak. Want to market well? Create your industry’s version of the purple cow, and let word of mouth do the work.

Rating: 8/10

 

Good to Great, Jim Collins

• The business sweet spot: Something you love, something you’re good at, something you get paid to do: There’s a strangely polarizing debate going on today about whether you should chase your passions or your strengths. Why can’t your strengths and passions align? That’s what Jim Collins argues in Good to Great: The sweet spot for financial success is to find a job that is something we love, something we’re good at, and something we can get paid to do. I’ve found that with writing and talking and playing beach volleyball, and it has helped me live my own personal definition of rich (see Ramit Sethi above).
• Entrepreneurs’ jobs is to get the wrong people off the bus, get the right people on the bus, then get them in the right seats on the bus: I don’t have much more to add on that. It’s a sticky concept, and I think of it frequently when reading about teams and businesses. Like anything in life, it’s all about the people.

Rating: 8/10

 

Unshakeable, Tony Robbins

• Beware the financial advisor: Tony Robbins, like Morgan Housel and Robert Kiyosaki and Ramit Sethi, provided numerous warnings about financial advisors, and the obscene fees they can rake. But Robbins was the loudest about it. At the time, I was investing into my IRA via Northwestern Mutual, which takes relatively gargantuan fees – fees I had no idea how much they would wind up costing me down the road. After reading Unshakeable, I opened up an IRA via WealthFront, a robo advisor with minimal fees, and I sleep better at night.
• Invest in your 401k and IRA and leave it: This is similar to Morgan Housel’s advice to never interrupt the process of compounding money, but it comes with the added benefit of the tax benefits provided by IRAs and 401ks. IRA’s grow untaxed, since what you’re putting into them has already been taxed, while 401Ks reduce the income on which you can be taxed for that particular year. Once I’ve maxed out my IRA for the year, I begin adding into my 401k or save for real estate in my CapitalOne 360 account and I never touch either.

Rating: 8/10

 

Range, David Epstein

• Get good at a lot of things: We live in an age of specialists, and in an age where we think specializing is a good thing. David Epstein would argue the opposite, while also acknowledging that, yes, there is some benefit to being exceptional at a single topic. This book pairs well with Purple Cow, in that I believe the only way to really become a Purple Cow yourself is to combine a unique talent stack that makes you virtually one of a kind. President Trump, for example, was a Purple Cow, combining talents and skills in a way this country really hadn’t seen prior to his presidency. On a smaller scale, I’d argue my talent stack of generalist skills makes me something of a Purple Cow. How many other professional athletes do you know who also attended journalism school, have written five books, co-host a podcast, and commentate the biggest events of their sport? Not many. Do I wish my talent stack was in a more lucrative sport? Many times, yes. But the fact remains is that I’ve been able to find my Jim Collins sweet spot – something I’m good at, something I love, and something I get paid to do – because I’m a generalist. See how all of these books are beginning to blend together?

Rating: 9/10

 

Think and Grow Rich, Napolean Hill

• You’ll make most of your money by thinking, not by doing: Just as Warren Buffet is famous for his massively compounding wealth, he’s also famous for what he doesn’t do, and that’s work. He spends most of his time reading and sleeping and thinking. There are a lot of gems in this book, but it really begins, like all things, with the mind. Meditate on what it is you want to accomplish, and your mind will begin to reverse-engineer the path to get there.

Rating: 6/10

 

The Dip, Seth Godin

• It’s all about the direction: I recommend this book to every single beach volleyball player, almost all of whom wrestle with quitting on a yearly, if not daily, basis. Seth Godin’s book, which is called “the little book on quitting” breaks down when you should quit, and when you should grind through the tough times. My biggest takeaway was to ignore the immediate result, but to look at the directionality of your progress: Are you better at this point in the year than you were last? Are your skills improving? Prospects looking better? If so, carry on. If not, it might be time to switch.

Rating: 10/10

 

Conscious Capitalism, John Mackey

• Create a win for you, for your buyer, and for the environment: Traditional capitalism posits that a company will be successful if that it provides a product at a selling point that will make the buyer happy and the company sustainable. Mackey takes it one step further with Conscious Capitalism: The best companies create products at a selling point that make the buyer happy and the company sustainable in a manner that also helps the environment or your community. Delaney and I are big proponents of the concept of “voting with your dollar.” In my mind, where and how you spend your money tells me basically everything I need to know about you and what you value. So Delaney and I have adopted Conscious Capitalism, buying grass-fed meat or wild caught fish — we LOVE Butcher Box — and on Fridays we hit the farmer’s market. We’ve recently begun a plastic cleanse, removing as much plastic as we can from our house and buying with much more care than we used to. We try not to buy products from nefarious companies, or companies with affiliations we don’t like. We’re conscious about our dollars, where they’re going, and who they’re helping. That’s our kind of capitalism.

Rating: 5/10

 

The Four Hour Work Week, Tim Ferriss

• Delegate, delegate, delegate: The ironic thing about the Four Hour Work Week is that most of the people who read it – like Ferriss himself – probably put in 14-hour days and enjoy it in that masochistic way athletes enjoy lifting weights. I am one of them. But what I hate doing is work I don’t want to do. So I took a page out of Ferriss’ book and, whenever I had a project or assignment I didn’t want to do, or if Tri Bourne and I have something at SANDCAST neither of us wants to do, we delegate. Our time is our most precious commodity, and my free time in particular is when I’m able to come up with my most creative ideas and all of my best writing. If that’s bogged down by minutiae I could otherwise delegate, I’m not at my best. The investment of paying someone else to do it has a massive ROI on my mental sanity and my quality of work.

Rating: 10/10

 

The Millionaire Next Door, Thomas J. Stanley

• Be frugal: The path to becoming a millionaire is a bit like the path to growing your hair: If you don’t cut it, eventually it’s going to be pretty long. With money, if you don’t spend it, eventually you’re going to have a lot of it. That’s pretty much what you’ll read in The Millionaire Next Door, which I get, but I also think money is something you can use to live a lifestyle that is often worth the cost of not being a millionaire – see, again Ramit Sethi and how you should create your own version of rich, or Morgan Housel, and why you should allow yourself to spend money on things that might not make the most financial sense. I am not a millionaire, and I might not ever be one, but if I were to retire today, I’d probably still do everything I’m doing right now. In my mind, that makes me a very rich man.

Rating: 4/10