I Will Teach You To Be Rich: No Guilt. No Excuses. No BS. Just a 6-Week Program That Works

Chapter 1 is about debt and credit cards. In the chapter’s first half, Sethi explains how to use credit cards to build credit; in its second half, he explains how to pay down debt. Sethi begins the chapter with a personal anecdote. As the child of South Asian immigrants, he has been trained in the art of bargaining. At the young age of 20-something, he negotiated for the lowest possible price on a car. The takeaway is that while most Americans feel that bargaining is cheap, Sethi wants his readers to become bargaining experts because it’s one of the most important ways that they can go on the offensive and fight big financial institutions. Sethi encourages readers to call their credit card companies and ask for lower fees so that they can “squeeze as many rewards and benefits out of [their] cards as possible” (24).

Most people are scared of debt because online commentators, personal finance advisers, and the media have instilled in us the idea that all debt is bad; but the media is interested more in clickbait than sound financial advice. Sethi advises readers to make the most of what credit cards offer—“a free, short-term loan” (26)—and shows readers how debt can help them to build credit, which enables them to save hundreds of thousands of dollars in interest rate fees.

He proceeds to define a credit report, which is a document that tracks credit-related activities, and a credit score, a number that represents an individual’s risk level to lenders. Since a good credit score can save readers tens of thousands of dollars over the course of their lifetimes, it’s worth paying attention to. A table shows how different credit scores affect how much somebody would pay on a 30-year mortgage.

He next enumerates rules for choosing a credit card and explains exactly how he squeezes every last reward out of his cards. Then he outlines “six commandments of credit cards,” the first and most essential of which is to “pay off your credit card regularly” (39). Making regular payments is the key, as Sethi expounds on the “awful consequences” of missing payments. The second commandment is to negotiate with companies to get fees waived, and Sethi includes a script for an imagined conversation between a reader and a credit card company representative. The rest of the commandments include negotiating for a low APR (annual percentage rate—the annual rate charged for a loan), keeping cards for a long time, and raising the credit limits on cards to lower your credit utilization rate.

Sethi follows his commandments with a section on mistakes to avoid, especially racking up a large credit utilization rate and getting sucked in by advertisements for 0% balance transfers. He advises against spending time chasing low rates. Sethi suggests doing some research, choosing a good card, and then spending time elsewhere.

Turning to the topic of debt more generally, especially student loans, Sethi asserts that Americans are in debt, and they don’t pay it off, even if they know they should. He makes a list of the stories that people tell themselves about money—or “invisible scripts”—to show not only how people get in their own way but how they can harness their own psychology to help themselves. He also includes a section responding to imagined counter-arguments about why people don’t have the resources to pay off their debt and save. Sethi’s take-away is that no matter how much readers make, they can always save and pay down debt. Start small and chip away at the problem month by month.

Because most Americans don’t even know how much debt they’re in, the crucial first step is discovering how much you owe and making a plan. Readers should investigate different rates and lengths of time to pay off their debt at bankrate.com. Once the plan is in place, automate it by having the money withdrawn automatically each month. He advises that readers pay off their debt as aggressively as they can, and he offers a table showing how much extra money someone would pay in interest over time by not paying debt aggressively. In accordance with the “85% Solution,” however, ultimately it doesn’t matter how long it takes to pay off, as long as there is a plan and progress is being made.

Sethi ends the chapter with a list of five steps to pay off credit card debt, testimonials from readers who have used his system, and a final list of “Action Steps” for Week 1 of his program: getting a credit report, finding and setting up credit cards (which includes negotiating down the APR), setting up automatic payments, and starting to pay down debt.

In Chapter 2, Sethi continues to advise readers on how to engage with big financial institutions—in this case, banks: “Since [bank accounts] are the backbone of your personal finance infrastructure, we’re going to spend a little time picking the right ones, optimizing them, and making sure you’re not paying unnecessary fees” (69). As in everything, Sethi prioritizes ease and automation. Once readers have set up and automated their bank accounts, their personal financial systems will run automatically.

The chapter’s opening sections criticize “Big Banks” for exploiting customers. Good banks offer good services and low fees; bad banks charge exorbitant fees, sell unnecessary products, and devise schemes to “screw you out of your money” (70). One of Sethi’s biggest complaints is financial institutions that take advantage of ordinary people. After unpacking the invisible scripts related to banking, he arms his readers to “play offense” with the Big Banks, and he directs them to open accounts with trustworthy institutions like Schwab and Vanguard.

Next, Sethi shows readers how to find and open advantageous savings and checking accounts, warning that checking accounts are banks’ primary instrument for levying unnecessary fees. Readers will need both a checking and a savings account. The most basic option is to open checking and savings accounts at any local bank. The next and most recommended option is to open a no-fee checking account at a local bank and a high-yield online savings account. The third option, “perfect for people who read things like Lifehacker and the 4-Hour Workweek” (79-80), is to open several accounts at different institutions to optimize interest rates and services. Sethi himself opts for the third choice, and he provides information about precisely which accounts he uses and how they work. He also warns readers against getting overwhelmed and paralyzed by options. He advises to prioritize trust, convenience, and features; readers should do some research, make a choice, and move on. Sethi then makes a list of accounts that he recommends, including the ones he uses, and he outlines the amount of time it should take readers to set up their accounts.

The next section focuses on how to optimize bank accounts by avoiding monthly fees and minimums. “Almost all bank fees are negotiable” (89), he writes, and he includes a script for a conversation between an imaginary reader and a bank representative in which the reader wins a reduction of fees. He also includes a transcript of a conversation he had with a Wells Fargo representative to negotiate a fee dismissal.

This chapter ends with action steps for the coming week: Open a checking account, open a high-interest savings account, open an online checking account if you choose, and then leave one and a half months of living expenses in your checking account and transfer the rest to your savings account.

In Chapters 1 and 2, Sethi shows readers how to set up their personal finance infrastructure: credit cards and checking and savings accounts. In Chapter 3, he adds the final piece—long-term investment accounts. Sethi begins Chapter 3 with an anecdote about the expectations of his South Asian parents, who would focus on the one A-minus on a report card filled with As. As his parents did with him, Sethi knows that his readers can always be doing more. Saving alone won’t build wealth because the returns are too small; investing compounds money over time. “You can earn around 8 percent per year over the long term by investing” (95), he writes. Even still, most Americans do not invest, or if they do, they use the wrong strategy. Sethi begins the lessons on investing with retirement accounts: 401(k)s and Roth IRAs.

As he does in earlier chapters, before Sethi tells readers what they should be doing, he explores why more people are not already doing it and the consequences of inaction. Most people erroneously believe that investing is about picking winning stocks and so, overwhelmed by their own ignorance or swamped with information, they do nothing. After enumerating the invisible scripts that prevent people from investing, Sethi admits that knowing how to invest “isn’t obvious. And that’s the problem. When it comes to money, it’s actually very easy to end up like most other people: You just … do nothing” (98).

The “boring” truth is that most millionaires accumulate wealth by controlling their spending and investing regularly— “not as sexy as winning the lottery, but much more realistic” (100). American culture encourages us to spend extravagantly, but real wealth is measured by how much money someone has saved and invested over time. Crucially, Sethi reports that despite the fact that Americans are spending more and going out more and have access to more information about money management than ever before, the American Psychological Association reports that “Americans today, compared to the 1950s, seem less happy” (101). We’re not managing our money well—“[a]bout one in four people who make $100,000-plus a year still report living paycheck to paycheck” (101).

The real problem is that most people “have naïve and often delusional ideas about money,” but Sethi’s book helps them “confront reality, take control, and realize that, yes, you can invest,” even if it’s only $50 a month: “Investing is the single most effective way to get rich” (102). Next to this statement is a table showing how much money somebody would have after one, five, and ten years of investing $10, $20, and $60.

Here Sethi introduces the metaphor of a “ladder,” the first rung of which is matching employer contributions to a 401(k). Sethi explains the benefits of the 401(k): the ability to invest pretax money, employer contributions that match your contributions, and automated investments. He then addresses common concerns about 401(k)s, most of which revolve around the inability to withdraw money before the age of 59.5.

Next, he addresses Roth IRAs, “simply the best deal I’ve found for long-term investing” (111). Another chart demonstrates the value of compounded interest in a Roth IRA. Unlike a 401(k), a Roth IRA invests post-tax money that can’t be withdrawn before the age of 59.5 but then is withdrawn without tax penalty. Sethi explains Roth IRA restrictions and provides instructions about how to open an account.

Sethi turns next to advice about choosing an investment brokerage firm. He lauds low-cost, low-minimum investment brokerages like Vanguard, Schwab, and Fidelity. As with banks, readers should do some research, make a choice, and move on with their lives. Finally, Sethi addresses the pros and cons of robo-advisors—companies that use algorithms to invest. Ultimately, Sethi advises against robo-advisors because the fees are not justified by the services.

Once readers have set up a 401(k) and a Roth IRA, if they really want to engage in advanced tax-free investing, they can use their HSA (health savings account). An HSA is an account offered with high-deductible health insurance plans that lets people put aside pre-tax money for medical expenses, and it allows them to invest money that is left over after medical expenses are paid.

Chapter 3 ends with an action list: Open a 401(k), plan to pay off your debt, open a Roth IRA and set up automatic payments, and find out if you’re eligible for an HSA and, if so, open one. Crucially, he tells readers not to make investment choices yet, just to set up the accounts.