I Will Teach You to Be Rich: No Guilt. No Excuses. No B.S. Just a 6-Week Program That Works.

by Ramit Sethi

The À La Carte Method takes advantage of psychology to cut our spending. Here’s how it works: Cancel all the discretionary subscriptions you can: your magazines, cable—even your gym. Then, buy what you need à la carte: Instead of paying for a ton of channels you never watch on cable, buy only the episodes you watch for $2.99 each from iTunes. Buy a day pass for the gym each time you go (around $10 or $20). The À La Carte Method works for three reasons: 1. You’re probably overpaying already. Most of us dramatically overestimate how much value we get from subscriptions. For example, if I asked you how many times a week you go to the gym, chances are you’d say, “Oh . . . two or three times a week.” That’s BS. In fact, one study showed gym members overestimate how much they’ll use their membership by more than 70 percent. Members who chose a monthly fee of about $70 attended an average of 4.3 times per month. That comes out to more than $17 per gym visit—when in reality they’d have been better off buying pay-as-you-go passes for $10 each. 2. You’re forced to be conscious about your spending. It’s one thing to passively look at your credit card bill and say, “Ah, yes, I remember that cable bill.” It’s quite another to spend $2.99 each time you want to buy a TV show—and when you actively think about each charge, your consumption will go down. 3. You value what you pay for. You place a higher premium on the things you pay for out-of-pocket than things via subscription. The Downsi...

Just break your take-home income into chunks of fixed costs (50–60 percent), long-term investments (10 percent), savings goals (5–10 percent), and guilt-free spending money (20–35 percent). How does it fit?

Start using the envelope system.

Link Your Accounts Now it’s time to link your accounts together so you can set up automatic transfers from one account to another. When you log in to any of your accounts, you’ll usually find an option called something like “Link Accounts,” “Transfer,” or “Set Up Payments.” These are all the links you need to make: ■ If you haven’t already done this, connect your paycheck to your 401(k), so it’s automatically funded each month. (I cover this in Do It Now: Setting Up Your 401(k).) ■ Connect your checking account to your savings account. ■ Connect your checking account to your investment account/Roth IRA. (Do this from your investment account, rather than from your bank account.) ■ Connect your credit card to any bills you’ve been paying via your checking account. (And if you’ve actually been paying bills by writing checks with a pen, please understand that man has discovered fire and combustible engines and join our modern times.) For example, if you’ve been paying your cable bill by check each month, log in and switch it so that the bill is paid by your credit card instead. ■ Some bills, like rent and loans, can’t be paid using a credit card. Link these regular bills to your checking account. (Do this by logging in to the company’s website and initiating the transfer from your checking account to the company.) ■ Set it up so that all your credit card accounts are paid from your checking account. (This is set up from your credit card’s “Transfer” or “Link Accounts” page.)

Anyway, Swensen suggests allocating your money in the following way: 30 percent—Domestic equities: US stock funds, including small-, mid-, and large-cap stocks 15 percent—Developed-world international equities: funds from developed foreign countries, including the United Kingdom, Germany, and France 5 percent—Emerging-market equities: funds from developing foreign countries, such as China, India, and Brazil. These are riskier than developed-world equities, so don’t go off buying these to fill 95 percent of your portfolio. 20 percent—Real estate investment trusts: also known as REITs. REITs invest in mortgages and residential and commercial real estate, both domestically and internationally. 15 percent—Government bonds: fixed-interest US securities, which provide predictable income and balance risk in your portfolio. As an asset class, bonds generally return less than stocks. 15 percent—Treasury inflation-protected securities: also known as TIPS, these treasury notes protect against inflation. Eventually you’ll want to own these, but they’d be the last ones I’d get after investing in all the better-returning options first. The

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Five Things You Should Never Do in a Negotiation 1. Don’t tell them your current salary. Why do they need to know? I’ll tell you: So they can offer you just a little bit more than what you’re currently making. If you’re asked, say, “I’m sure we can find a number that’s fair for both of us.” If they press you, push back: “I’m not comfortable revealing my salary, so let’s move on. What else can I answer for you?” (Note: Typically first-line recruiters will ask for these. If they won’t budge, ask to speak to the hiring manager. No recruiter wants to be responsible for losing a great candidate, so this will usually get you through the gatekeeper. If the gatekeeper insists on knowing, I recommend you play ball, realizing you can negotiate later.) And in New York, asking for your current salary is actually against the law. 2. Don’t make the first offer. That’s their job. If they ask you to suggest a number, smile and say, “Now come on, that’s your job. What’s a fair number that we can both work from?” 3. If you’ve got another offer from a company that’s generally regarded to be mediocre, don’t reveal the company’s name. When asked for the name, just say something general but true, like “It’s another tech company that focuses on online consumer applications.” If you say the name of the mediocre company, the negotiator is going to know that he’s got you. He’ll tear down the other company (which I would do too), and it will all be true. He won’t focus on negotiating, he’ll just tel...