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 Ladder of Personal Finance These are the six systematic steps you should take to invest. Each step builds on the previous one, so when you finish the first, go on to the second. If you can’t get to number 6, don’t worry—do your best for now. In Chapter 5, I’ll show you how to make this automatic so your system can run itself with just a few hours of work per year—but remember, opening these accounts and getting started is the most important step. Rung 1: If your employer offers a 401(k) match, invest to take full advantage of it and contribute just enough to get 100 percent of the match. A “401(k) match” means that for every dollar you contribute to your 401(k), your company will “match” your contribution up to a certain amount. For example, for easy math, let’s assume you make $100,000 and that your employer will 100 percent match your contribution up to 5 percent of your salary. This means that you’ll contribute $5,000 and your company will match it with $5,000. This is free money, and there is, quite simply, no better deal. Rung 2: Pay off your credit card and any other debt. The average credit card APR is 14 percent, and many APRs are higher. Whatever your card company charges, paying off your debt will give you a significant instant return. For the best ways to do this, see Five Steps to Getting Rid of Credit Card Debt in Chapter 1. Rung 3: Open up a Roth IRA (see The Beauty of Roth IRAs) and contribute as much money as possible to it. (As long as your income is $...