I Will Teach You To Be Rich: No guilt, no excuses - just a 6-week programme that works

by Ramit Sethi

▪ Savings goals (10%): £400/month ▪ Guilt-free spending money (20%): £800/month Brian’s problem is that £800 isn’t enough for his spending money. When he looks at what he spent for the last couple of months, he finds that he actually needs £1,050 every month for spending money. What should he do? Bad answer: Most people just shrug and say, “I dunno”, while stuffing their face with an English muffin and then logging onto Reddit to complain about the economy. They’ve never thought about getting ahead of their money, so this is totally foreign to them. Slightly better, but still a bad answer: Brian can decrease his contributions to his long-term investments and savings goals. Sure, he could do that, but it will cost him down the line. A better way is to tackle the two most problematic areas in his monthly spending: monthly fixed costs and guilt-free spending money. Good answer: Brian decides to pick his three biggest expenses and optimise them. First, he looks at his monthly fixed costs and realises that because he’s been consistently paying the minimum monthly payment on his credit card debt at 18%, he has £3,000 of debt left. Under his current plan, it will take him about twenty-two years and cost him £4,115 in interest to pay off his debt. But he can call his credit card company to request a lower interest rate (see page 40 for details). With his new lower credit card APR of 15%, it will take him eighteen years and he’ll pay £2,758 in interest. He saves fifty-three months ...