WCI #301: I Will Teach You To Be Rich

This is the White Coat Investor Podcast where we help those who wear the white coat get a fair shake on Wall Street. We've been helping doctors and other high income professionals stop doing dumb things with their money since 2011.

This is White Coat Investor podcast number 301. I will teach you to be rich. If you are finding our podcasts informative and helpful, check out our website. Since 2011, we've been working hard to provide valuable personal finance and investing information. Through thousands of blog posts written by an array of authors, you can find information on how to manage your student loans, fix and avoid common financial mistakes, understand your retirement accounts, optimize your investments, find professional help at a fair price, get started investing in real estate and so much more, all at no cost to you. You can find out more about the courses we offer, the conferences we put on, the newsletters we provide, and interact with other WCI readers through our online forum. Head on over to whitecoatinvestor.com to start learning today. You can do this and the White Coat Investor can help. Well, Megan and I are here at White Coat Investor headquarters recording another podcast for you. I've actually been up for a long time already this morning. I got up at 5am this morning, just before 5 to go skiing. And you may ask, why would you get up at 5 o' clock in the morning to go skiing when the lifts don't open until 9:00'? Clock? Well, the reason why is we weren't taking a lift. So I got to see the sun rise this morning from the top of a peak that I had walked up, essentially skinned up for those of you in the know. And it was a beautiful morning, not a cloud in the sky, beautiful constellations, single digit temperatures, and by the time the sun came up at 7:30 or so, we were watching it dance off 10,000 foot peaks all around us. We climbed a peak called Rainbow Peak this morning and it was a great ski down all except for about 30ft where we had to kind of work our way down this cliff, band down this steep chute and make sure we didn't fall down that after that, beautiful powder turns and a great start to the day. So I hope your day today is as good as mine has been so far and if not, well, I hope it gets better. You're doing important work. If you're like me listening to podcasts, you only listen to them on your way into work, your way home, or while you're working out or whatever. Sometimes you have a bad day, bad workout maybe, and if nobody said thanks for what you're doing. Let me be the first. We have a great guest today, but before we get him on the line, he's a very dynamic guest. By the way, if you've never had a chance to listen to him or read any of his work, I think you'll be pleasantly surprised. As Megan just told me, we already just recorded the interview a few minutes ago. Now I'm doing this bit before the interview. She told me. I actually listened to the whole interview, which I thought was really great because she has to listen to him like three or four times as she's making the show notes and all that kind of stuff. And so that just goes to show just how wonderful of an interview it is. But we got a little bit of business before we get into it. The first thing we should do is the quote of the day. And today's comes from Melody Hobson who said the biggest risk of all is not taking one. And that's true. If you're really risk intolerant, sometimes you just need to take a step into the dark, beyond the line, where the light shows you exactly what you're stepping into. And it will make all the difference in your life. The next thing I want to tell you about, we have a webinar coming up this week. This is a webinar aimed at students. This is one of the things we do for students each year. You know, we do the Champions program. You've heard of that. And by the way, if you're a first year medical or dental student and haven't been given a book, please sign up to be the champion for your class. Whitecoatinvestor.com champion. We're basically trying to give a copy of the White Coat Investors Guide for Students to every first year student in the country. So if you haven't had one handed to you yet, it probably means somebody in your class has not signed up and you can be that hero to your class. But that's not what I'm talking about today. What I'm talking about today is this webinar we're gonna do this week on February 15th. Okay, on February 15th we're gonna do a webinar for students. You can sign up. Whitecoatinvestor.com student-webinar okay, I'm gonna get Andrew Paulson in here with me. You know Andrew, he's the one who comes on, gives updates about all the crazy stuff happening with student loans. Okay, well, student loans are near to medical and dental students. So we're going to be talking for significant amount of time about student loans during this webinar and all the crazy things that have happened this year and get you up to date on how you're supposed to be managing your student loans. But we're also going to be talking about all the other financial stuff that applies to students. And the reason we do this webinar is because I can't afford to come out and talk to all the student groups that want me to come out and talk to them for free. I know you can't afford to pay me anything to come out. You can't even afford to buy my plane ticket to come out. And frankly, I'm not willing to go out, do 50 of these a year that we get invited to. And so we compile them all into this one online webinar. Okay? And this is the talk I would give to you if Andrew and I were coming out to your medical school and we had an hour with you. This is it. This is what we'd talk about. And we'll answer your questions just like we would in person there. All right? We just can't. We don't have the time to come to every school in the country. You guys don't have any money to bring us out anyway. And yes, we're still trying to run a business, but this webinar is one of the ways in which we give back, okay? We don't expect to really make much of anything. Maybe a few of you will buy our book or something or go book a session with Andrew or something. But mostly, this is just a way for us to give back to students, okay? We do care about you. We know you can't afford to come to wcicon, okay? We know most of you can't even afford to buy our online courses. You can buy our books. You guys aren't that broke. But for the most part, we know most of the information you're getting from us is the stuff we give out for free. And so here you go. Here's some stuff for free. The stuff I wish somebody had sat me down as an MS.2 or an MS.4 and told me, hey, here's what you need to know about money at this stage of your life. Okay, well, let's get into the interview. You are going to love this interview. We'll get our guest on the line here. Our guest today on the White Coat Investor Podcast is Ramit Sethi, who is famous as a blogger, a podcaster, an author, a teacher may be the best way to think about what he does. Welcome to the White Coat Investor Podcast.

Thanks for having me.

It's exciting. It's always exciting to have somebody on here that has been doing this longer than me. There aren't a lot of you folks left, but it's great to have you on here. Coming up on now, two decades. Really?

Yeah.

Almost 20 years, which is pretty awesome. You may or may not believe this, but there might be somebody in my audience that doesn't know who you are. So let's start at the very beginning. Can you tell us a little bit about your upbringing and what it taught you about money?

My parents are immigrants from India, and we grew up in a pretty big family. And my mom stayed home with us most of the time, and my dad was working. And, you know, I remember a lot of little tidbits of lessons I learned with money. You know, we hardly ate out maybe once every six to eight weeks. And it was going to a place where we, of course, had a coupon. And when we took vacations, it was getting in the van, driving from Northern California to Southern California stop along the way, and my mom would have packed lunch and we would eat it, and, you know, those things. Now I look back and I am thankful that I was taught about frugality. And I was taught that, you know, there's usually you can find a way to do something. You may not have to spend a ton of money, but you can create pretty amazing memories. And I think those lessons were very helpful. I also have learned other lessons since then about when to spend extravagantly on things that I love, which I also love talking about. But those lessons were very powerful. You know, they helped me get into college. When my parents told me, look, you need to find scholarships, I did. I applied to 65 scholarships, paid my way through undergrad and grad school at Stanford. And while I was there, I was studying human psychology, social psychology, persuasion, and I was also learning about money. So I started trying to help my friends in college who'd be complaining about their third overdraft fee. And I'd say, look, I'll just teach you how this money stuff works. And of course, no kid in college really cares. They want to go out and drink beer, and so did I. They don't really want to learn about personal finance back then, but that was the genesis of what later became I Will Teach Interview Rich.

You know, a large part of my audience are the children of Indian immigrants. You know, so I think a lot of people can relate to this. You know, they. They tell me stories of their upbringing. They were told they could do whatever they Wanted as long as it was a doctor or lawyer.

Doctor or engineer.

Or an engineer. Yeah, yeah. Is that. Did you do any engineering work at Stanford at all, or was it all.

I'll tell you something. So my dad is an engineer, and since I was a little kid, he would buy me Legos and these big book of tell you why and all this stuff. I have no aptitude for it. I hate Lincoln Logs. I hate Legos. I hate puzzles. I just. I don't like them. I don't understand directions. So when I was a freshman, my dad had a lot of friends who worked at intel, and I was like, let me get a summer internship. So he said, send me your resume. And he's like, I'll send it to my friends at Intel. So he sends it to his friends, and he cc'd or bcc'd me. And you know that tingling you feel sometimes where you're just like, there's something weird going on here. I looked at that email, and for some reason, I was like, let me just click the attachment. Because he had attached my resume, My Indian dad changed my major to computer science, and he told all his friends, oh, my son is studying computer science at Stanford. I said, dad, I'm not studying computer science. I hate programming. But that's a classic Indian dad move. And, yeah, I think he, you know, I was not an engineer, so. But hopefully things have worked out already.

You know, there's a new house member that maybe will start blaming his parents about his resume changes. We'll see. All right, well, let's. Let's talk about the origin story. I mean, you started blogging in 2004. That makes you like Noah in the financial blogging world. I'm sure you weren't the first, but I can't think of anyone that was blogging about money before you were. Tell us about why you started and what's kept you going while so many others have come and gone over the last two decades.

Well, I think that it's pretty amazing to have watched multiple waves of different generations come into the financial world. I actually love seeing this whole new generation. For example, when I recently went to a financial conference and there were so many bloggers I had never heard of, and I love it. Way more diverse, way more international, way more focusing on different topics than we're ever focused on. In 2004, I started blogging because I was frustrated that my friends would not come to my free talks about money. And I think anyone who's ever been a teacher who feels they have something the World needs to hear often runs into this frustration. It's like, I'll teach you for free. And then I found myself convincing them to come. And I did that for a year and a half. I have pictures of empty conference rooms because, you know, people would be like, oh, yeah, this sucks. I'm so frustrated. And then they just wouldn't come. And I think it was a bit of cockiness of me being like a young kid who's like, the world needs to hear this. Why aren't they listening? And I think back then there were two paths. I could have given up or I could have adapted. And I'm fortunate I chose to adapt, which was, all right, I'm going to start a blog. I think these lazy college kids would rather learn about money from their dorm room instead of going to an event where they're going to feel bad about themselves. And I later learned that I had just stumbled across this insight because, you know, the older people get, the less likely they are to want to go into a room and learn about a 401K. You have some, some person who's 48 years old going into some conference room and realizing, oh, my God, I should have been doing this since I was 22. I'm embarrassed. What's my partner going to say? What are my colleagues going to say? Is it too late? And on and on and on. I also loved it because I was studying psychology. And one common mistake that I see with anyone talking about money is they over focus on, on the math and they under focus on the psychology. It's like, dude, another compound interest chart is not going to convince anybody to start investing. They already know that. And you know, this is true. This, this is very true in health as well. Showing people some chart about calories is not going to convince someone to change their behavior. Now, as I was kind of intuiting that I was also studying at the Stanford Persuasive Technology Lab and really learning how human behavior truly works. Well, guess what? It started to become very interesting to be able to treat my blog like an experimental laboratory and to see what actually motivates change, which is what has kept me going. I don't wake up in the morning excited about a Roth ira. I wake up in the morning excited to see how I can help people live a rich life. Even though most of us get stuck with choosing our credit card or we go investing feels like gambling. All those things. I've now come to love them instead of being frustrated by them.

The brand is awesome. For those who don't Know the brand we're talking about here is called I Will Teach you to Be Rich. That's the name of the book, that's the name of the website, that's the name of the podcast. It's a great brand. I've always loved it since I first heard about it. But I want to hear about its origin. Where did you come up with that?

I came up with it in my dorm room. I was sober too. I don't know why I picked this name, but I thought it was catchy. I'm a big fan of direct names that make a big promise and then over deliver. So I later created several digital courses. We have over 20 courses now. Some of them were called zero to launch. Find your dream job. All these things that are just very direct and clear as to what you're going to get. And with I Will Teach youh to Be Rich. Ever since day one, I knew that rich is about more than money. Now, of course, money is a small but important part of a rich life, but there's a lot more to it. And so, you know, when people hear the word rich, they often have this caricature view of what it is. It's like generated from the 70s or the 90s. Some guy riding around the back of a limo with a top hat, eating just gigantic silver platter on a huge table. I'm like, that's Richie Rich. That's not real. A rich life can be picking up your kids from school every afternoon. A rich life can be buying a $2,000 cashmere jacket or traveling three months a year, or going to yoga in the middle of the day. And so over time, I've really started to help people define their rich life and understand that your rich life is yours. It's not mine. It's not anybody else's. It is yours.

Let's talk for a few minutes about investing. And I suspect our investing philosophies align pretty well. You've often said that investing should be boring. Why should it be boring? And what does your portfolio look like?

Well, it should be boring because a lot of people, they choose investments for excitement. They choose it for emotional satisfaction. I'm like, if you're lonely, get a dog. Don't use your investment portfolio to fill a hole in your heart. It's never going to happen. So it should be boring. It should be like watching paint dry. That's exactly how I treat my investments. The entertainment comes from using your money to live a rich life. And this is what I suspect. You know, you have an audience which I suspect is a little over quantified. I have an audience that has been historically over quantum. They love their spreadsheets. I go, you nerd. Cell B16 is not the secret to your life. You got the numbers Right. You're 85% of the way there. Move on, turn the page. Your rich life is chapter two. Now it's about spending it and talking about your rich life with your family and traveling or donating or tipping. That's why I want people to really understand that investing is critical. It's super important. You and I both agree. Long term, low cost investments, maximize all your tax advantaged accounts, all of that. Totally. But it cannot be the end goal. Investing is just the means to what is more important, which is the rich life. In terms of my portfolio, it's super simple. And it's funny, I'm in this group of a bunch of people, like entrepreneurs who share their asset allocation. Recently, I mean, some of these asset allocations were absolutely mind blowing to me. It was like 65% alternative investments. I'm like, what the hell are you doing? Then I shared mine, which is essentially 90 10, basically, maybe even 95. Five equities, a little bit of bonds, cash. Done. Low cost funds, Vanguard funds. And I had some angel investments in the past. I sort of just. They're there. They're a small part of my portfolio. Done. They looked at me like I was a Martian. They go, wait, you have a 90:10 portfolio? So like how do you like pay yourself? I go, what the are you talking about? I have a business and I pay myself a salary. And I'm looking at them like you guys are insane. The leverage you have, the alternative investments. Have you guys ever heard of fees? Do you understand? And so we're looking at each other like we're each crazy. Meanwhile, I happen to think I'm right. But you know, everybody do what they want to do. That's why I think the more advanced you get with your money, the more you have to fight for simplicity.

Yeah, I want to say it again.

Because I want everyone here listening. The more advanced you get with your money, the more you have to fight for simplicity. Do you know how many crazy alternative investment opportunities I get? Pe, vc, hedge fund, friend's bar in Brooklyn? No, I'm not doing that. In fact, the bigger your portfolio gets, the more your most common answer should be no. I want to fight for simplicity. I don't want to sit there and have to calculate all these different fees. I go to sleep at night knowing I have a low cost Portfolio. I know how much enough is, and I'm on to the different part of my rich life.

Awesome. Well said. Very well said. I can't add a thing to it. So let's move on to the next subject. And I love when you say this, when you talk about this, you compare it to a Disney movie, right? In a Disney movie, somebody's coming to rescue you. But in life you say, nobody is coming to rescue you. What do you think? Should somebody be coming to rescue American retirement? Or should we really all be on our own with the second job as our own personal pension fund manager?

I do think that you can simultaneously acknowledge that we actually do need systemic change in a lot of different areas of American culture. A lot housing, healthcare, retirement we can talk about, but it has gotten a lot harder. And it's not just because people are lazy or they're spending more on avocados. That's not why we have the financial outcomes we're having. At the same time, you can acknowledge those needs for systemic change and you can take personal responsibility and say, I'm going to deal with the card. I'm going to play with the cards that I've been dealt. Maybe I'm not making $250,000 a year. Maybe housing is really expensive here. I hate that. I don't want people to not be able to afford basic housing. But this is what I'm playing with. So how can I try to win at the game that I was dealt with? And that's a really hard. It's a very nuanced discussion. I think that one of the things that I'm proud of with I Will Teach youh to Be Rich is over the course of 20 years, I've continued to fight to be nuanced about the material that I present. You can't simply go out to people and say, try harder. Pull yourself up by your bootstraps. That's not why we have these crazy different outcomes than we used to have 30 years ago, financially speaking. But at the same time, I often find, especially in the Internet comments, people saying, like, it's impossible for me to save at all. There's no way to get 7% returns. That's from the past. And I go, hey, you can actually, if you saved a little bit of money and automated it so you don't even see it, that money actually compounds into a tremendous amount down the line. You can actually negotiate your salary. There are techniques to do it. I teach them. And a lot of it, I teach for free. So I. It's a Nuanced argument, and I do believe that you can balance both of those things. But, yeah, I do think we need change. Absolutely. I'm a fierce advocate of more housing and a variety of different areas of healthcare, so I want both.

Yeah, agreed. Well said. Okay. You've said before that it's a tragedy for someone to be living a smaller life than they have to. What do you mean by that?

I mean the people who are listening to this podcast who accumulate a substantial portfolio, and yet they continue living their lives the exact way as they did when they were 22 years old. They eat at the same restaurants, they travel to the same places, they think the same way about money, and they believe it's a virtue. Oh, I'm keeping it real. I'm staying humble. I go, that's a tragedy to live a smaller life than you have to. I'll give you another example, and then I'm gonna tie it together. Sometimes I ask people on social media, what would you do if you won the lottery for $10 million? Do you know? Over half of people, they go, I do the exact same thing as I'm doing today. And they just wait for me to applaud them. Oh, you're so cool. You're so cool. I go, that sucks. With $10 million, you're doing the exact same thing you're doing now. To me, that's not virtuous. That's a lack of imagination. You're telling me you wouldn't eat at a different restaurant? You wouldn't travel somewhere different? You wouldn't buy different clothes? You wouldn't take somebody with you? You wouldn't become the biggest donor in your little hometown? No, you want to do the same thing. Why? And then I always say, why? And they go like this. Generational wealth. That's become the new answer. Instead of finding a purpose to actually use money, which is what it's for, they just go, I'm gonna pass it on to the next generation. What? A rich life is lived today and it's lived tomorrow. And if you cannot imagine what you would do with more money, then what is the purpose? You're just saving it for the sake of saving. This isn't DuckTales. We're not gonna swim in a vault with a bunch of gold coins. You should be using your money. So part of what I've started to do when I talk to couples on this on my new podcast, is I have people from all spectrums of the financial world. There's a couple with $825,000 worth of debt, unsure if they can even have kids. We have another couple. She's about to divorce him because he's so cheap. Net worth $13 million. And what you discover is that once you understand how money works, particularly if you have a high income, the money compounds. It starts to accumulate. But what is very hard to change is your money psychology. And so what a tragedy to accumulate millions of dollars, to have worked your entire life and to have never actually built the skill of spending your money meaningfully. That, in my opinion, is a tragedy.

Let's talk about some of the things you teach. You mentioned earlier 20 courses that are available on your website there at I Will Teach youh to Be Rich. I looked through these. The one I found most interesting was called how to Talk To Anybody. Who's that course for? And what do you teach in it.

That you found that one the most interesting? That's funny. That's. I mean, I love that course, but it's not one of our most major ones. You know, I created that because I have my YouTube channel. It's been around a while. I don't really. Until recently, I didn't really update it, but I kept my earliest videos. So you can see how I was on video. I was not good. Okay. The angle of my laptop was awful. I didn't know lighting. My hair was all messed up. And then I've gone on now the Today show and all these other places for media. I wanted to keep it because I think sometimes we see people with these fancy backgrounds and nice cameras, and we go, oh, they're just good at that. They're natural. And it's not true. Social skills are a skill. And when I think about succeeding in college or in life, I think that many, especially, you know, son of immigrant immigrants, I'm taught, get good grades, 94%. What'd you mess up? What went wrong? And I like that. I thrived under that. I like the pressure. But what I was not taught as much was the critical importance of. Of communication skills. It's true at work. It's true in personal relationships. It's true for anything we do. And we undervalue that a lot. In fact, I used to think that it was just, oh, that person's a natural. It's not true. So one of the things, the best things you can do is watch celebrities go on like the Tonight Show. This is the Olympics of social skills. You see people, they have to build rapport in about five, four minutes. They have to tell at least two amazing stories, and they have to do it dynamically. With a host who's trying to guide them to say something when they really want to say something else. Watch them study what they do. And when I talk about this, I emphasize to people like, how does this relate to money at all? Well, the answer is a rich life is bigger than money. A rich life has got to be, yes. Getting your investment set up, automating your finances, designing what your rich life is. But it's also got to be the ability to communicate with a partner, to be able to talk to people at work. And I think you and I and everybody who's worked anywhere knows, the more senior you get, everyone's going to have the technical skills, but it really differentiates if they are likable. And so it can be taught, it can be learned. And I was fortunate to learn it from a lot of talented teachers and mentors and. And I wanted to share some of what I learned.

Which one's your favorite course?

You can't ask me that. It's like asking your favorite kid. I'll tell you a couple that I really love. I love earnable, which helps people start a business, because you get people who usually have pretty good jobs, and they go, I want to start something on the side. I have this thing I don't know how to turn into a business, or I don't even have an idea. But I know that I want flexibility. That one I love. Another one I love is find your dream job. Because when I was at Stanford, I learned these inside techniques of interviewing. I had this little group of friends. We used to go and interview with companies and then come back and compare notes. What'd they say? How'd you respond? Da da da, da da. And we got really good. But this stuff is not taught even within Stanford. A lot of our friends did not talk about this kind of stuff. And so when I show people, for example, when you walk in an interview, your job is not to answer questions. If you assume that you already lost. When you walk in an interview and you're negotiating your salary, this is exactly what you say when they say that. And people go, holy. And often people finish that program, they get a $25,000 raise. You know, for a lot of people, that changes their entire socioeconomic status for generations. So those ones are more involved, they take more time, but they can completely change your life.

And which one has the most students? Which one have you sold the most of?

I think our business programs have been our most successful because just so many people want to start a business. So we've helped people Start businesses around everything from college admissions, fitness, personal styling, just all over the gamut. 50 industries. We also have these programs that are about mental improvement. So we have one called Success Triggers and this is that one plus Mental Mastery. They're fun little ones you put on in the background while you're making coffee in the morning. And they just give you a new way to think about, for example, money or hey, I'm trying this new thing and no one is coming to my talks. What am I supposed to do? How do I not give up? Or how do I know when I should give up? I like those because they're light. It's like eating a snack. And they just refocus you on thinking in a different way, thinking the way that winners think. I like this.

That's a good segue into the next topic I want to address, which is entrepreneurship. And a lot of your material seems aimed toward entrepreneurs encouraging entrepreneurship. I've got a daughter who just changed from being a pre med to being an entrepreneurship major.

Okay.

Do you think everyone should be an entrepreneur? Is it possible to be happy and successful without doing so? And how does one know if entrepreneurship is for them? And, and once they try it, how do you know when to set a business aside and move on to something else?

No, I don't think everyone should be an entrepreneur. And I think that sometimes we glamorize and valorize entrepreneurship while denigrating working a very good 9 to 5. There are a lot of people who find amazing meaning, get amazing benefits from working at a great job. A great job would be somewhere where you're paid well, where you're respected and where you are challenged. And a lot of people, I mean I have people who work at my company full time roles. Why do they do that? Because together we can have more impact than they could have alone. And that's fantastic. I do think that some people feel an urge and that urge could be I want to make more money. It could be I want to share this passion with the world, but I want to monetize it. Or it could just be I want flexibility. And I think that the best approach I like to see in those cases is keep your full time job and try this on the side. And hey, if it works now, you have options. Maybe you keep doing both. Maybe you can go part time or even quit. You have options. I think it's pretty risky to just completely leave your full time job and then start a business because businesses are tough. Sometimes they work, sometimes they take time and, and sometimes you have to know when to quit. In terms of knowing when to call the ball, a good guideline would be something like, okay, within six months, I want to be making $3,000 a month. I'm ballparking here. If I make $3,000 a month, that means I can make 5,000, which means 10,000, et cetera. Okay, so how many clients do I need to have reverse engineer it? And look, if you get to the end of three months or six months and you're making $2,600, I call that a win. But if you're making $260, it may be time to pack it in. You know, sometimes quitting is the very best thing you can do.

Yeah, that's good advice. Actually. Very similar to what I did as a white coat investor when I first started. I had even lower, an even lower bar though. I said, if I'm not making $1,000 a month, right, this is while I'm practicing medicine full time. This is not a high bar, right? If I'm not making $1,000 a month within two years, I'm going to quit. And I barely made it, really, you know, and now it's this empire that's touched all these lives all over the country and the world. But it was pretty touch and go there as far as ever becoming a successful business. It took a long time for me to figure out how to monetize a business. It was surprisingly hard.

I want to say I'm thankful that you stuck with it. I see your material a lot of places, not just on your site, which I've read many times, but, but on Reddit, which I think is a great barometer for word of mouth. And one thing that I really respect about the work that you've created is it's very credible, very researched, low hype, high value. And as we both know, in the financial world, it is very easy to make a lot of money hyping up some whole life insurance, you know, scam. They're all. In fact, I would argue they are the majority of what you read on social media. I was just reading this guy saying real rich people don't like 401ks and Roth IRAs. I'm like, what the. I'm rich and I love 401ks and Roth IRAs, and so do all of my students. So I think that is absolutely incredible that you have retained the integrity of what you teach. You've really focused on high earners, which I love. It's this beautiful niche of people who are ambitious and want to know what to do with their money. At this certain level, I just, I love what you do.

Yeah. The wonderful thing about it was that I was practicing medicine and didn't need the money.

Yes.

And so at no point along the way was I ever tempted to kind of sell out that way.

Totally.

You know, and obviously we try to make money. Right. It's a for profit business. We're trying to make money here and. But it sure is nice to be able to have basically an infinite Runway to get your business off the ground.

I feel the same way. You know, when I started, it was not a business. I didn't make money for years. I never intended to. When I finally did, I sold a $4.95 ebook and I had such low self confidence that I just said like, the PayPal thing will come to me and I will manually reply to the email and attach the file. I didn't even think I need to set up fulfillment. And over time, I think that what a gift to be able to say I don't need to make short term money. So in my case, we forbid anyone with credit card debt from buying our flagship programs like those two that I mentioned to you, Earnable and Dream Job. Those are expensive programs, thousands of dollars. And we tell them, if you have credit card debt, do not join. Use chapter one of my book. In fact, I'll give it to you for free. Pay off your debt. Trust me, you do not want to join anything for thousands of dollars. When you have 24.99% interest right now, pay it off. That's what I would do. And when you are done and you are financially comfortable, you have a little emergency fund and you are good, come back. We will be here. We've been here 20 years. We'll be here for 20 more. I'll tell you right now, that decision costs us millions of dollars per year. Most of those people never come back. But in my opinion, it's the right way to run the business. It's my way of running the business. And as a side benefit, the people who join our programs tend to get amazing results. That's because they're ready. They're financially ready, they're psychologically ready. They are ready. And what a joy to have students like that who are absolutely ready to succeed.

Yeah, absolutely. And of course, it generates more word of mouth. You know, I mean, in this business, the most valuable asset is trust.

Yeah.

You know, it's the trust of your audience, the trust of your students. And if you treat them well, they will continue to treat you well. And tell all their friends about you. So, yeah, all right, let's talk about our parents. You recently had an article published, I think you wrote it, about helping parents that might be in debt. And this is a particularly touchy subject for many Asian members of our audience, where there seems to be more of a cultural expectation of helping parents who sacrificed everything for their kids. What is your advice for helping parents that aren't doing very well financially?

Well, first of all, I deeply understand this because in Indian culture, this is a common thing. It's often multi generational living, especially in India. And there's not the same retirement system that we have here. People half joke that my kids are my retirement, but it's not actually a joke. So I get it. I also understand having grown up in America that we have a different culture. And so for people who are here, maybe first generation, it can be tricky. Not too many guides about this out there. So I talk about this in chapter nine of my book. I'll talk more here. First things first is actually having an uncomfortable series of conversations most people do not want to talk about. This culture is coded. It is never written down. Expectations are infinite, but they are implicit. And if you are living in America, that often makes people really uncomfortable. They're like, tell me the rules. They want to know the rule. They want an sop. Okay, so you have to figure out how to broach this with your parents. And it's going to be uncomfortable because kids like me have not talked about this with their parents. Mom, dad, I want to sit down and I want to understand where you are with your money. I know we haven't talked about this. I know this might be a little different for us. I don't mind if it's uncomfortable, but I just want to understand because I want you to feel comfortable with where you are today and where you're going. So what I'm doing there is acknowledging it's uncomfortable telling them what you want and telling them why. A lot of times you'll get blown off. Oh, we don't know. We'll have to look. Okay, fine. Be patient. You're not trying to get all the answers in one conversation. You have a long time. But you do need to be gently firm. You do need to understand what they think. And once you have some series of numbers, probably the people listening on this podcast are going to be quite surprised because you have to remember, if you're listening to this podcast, you're a nerd. You love personal finance. You're weird. Your parents are not like that. They didn't grow up listening to podcasts about personal finance. They didn't read a single personal finance book, probably. So you're going to discover things that you might not approve of. This is where it's tricky. You have a bit of a role reversal. The child is tempted to become the parent. I would discourage that. I would say, let's talk about what it means. What do you think when you think about what do you want to do in the next few years, in the next decade? And again, parents. I think a lot of Indian parents will find it very uncomfortable to get pinned down. That's okay. You don't have to pin them down. You just want to get a general sense for what they're talking about. But eventually, you will have to make some decisions. If you're the person, if you're the child who has more money than your parents, which I assume is likely on this podcast, you may decide that you want to simply just give them a monthly amount. You may decide that you want to simply pay off their house. There's a variety of ways you can do it. These are things that are not often talked about. They happen behind closed doors. But you may decide whatever works for you and your family. But I would try to be explicit about it. You don't have to worry about the house anymore. You are taken care of, that kind of thing.

And that's a good segue into the fact that relationships change as there's more money involved, as you become more financially successful, not just with your parents, but with friends, with siblings, with, you know, employees, with other doctors or professionals you may work with, your relationships change as you become more financially successful. You've told people to be aware of that. Can you talk for a little bit about the ways in which relationships change and whether they have to change and what you can do maybe to prevent that change and just mistakes that people make in regard to relationships as they build wealth.

I was at a conference and we had a breakout session about this exact topic. And one person told me a story I'll never forget. He said that he and his group of buddies from college, every year they would go and take a trip and they would basically rent. You know, they'd go to a hotel and they would just, like, camp or whatever they were going to do for a few days. And every year they would find something different. But they really enjoyed reconnecting. It started to get tough as they got into their late 20s because some of them had partners. Some of the partners did not want to stay at the equivalent of a motel. 6. And also by the time they were about 30, there were divergent incomes. You had a couple people working at hedge funds, you had some working at nonprofits. Became very tricky. So I'm sitting there completely transfixed because this is an absolutely fascinating topic for me. I go, what'd you do? He goes, the high earner has to have the high eq. You have to be extremely emotionally sensitive to what's going on, and it's the high earner's responsibility. So, for example, one year when he planned it, he wanted to do some nice excursion. He basically buried the costs inside of the planning. And he said, oh, I have these miles, so all of our rooms are going to get upgraded. Don't worry. It's all just three miles from work. And he would just pay for something off the books and not pass the cost along to everyone. He's like, you have to be willing in some cases, to have a white lie. But I said, so, how's it going now? And he basically said, it's really tough. Like, I'm not sure how long it's going to last. Because imagine you are working as a physician making, let's just say, $270,000 a year in whatever area you're in, and maybe you have a partner, and you both say, like, we don't want to stay at this type of hotel, but somebody else can't afford that. It's not as simple as saying, hey, let me pay for your upgrade. People do not like that. There are a host of emotions that come, even if it's your best friend, even if it's your sister or brother. So it becomes extremely complex. Some suggestions I can make are, first of all, relationships change. That's natural. Two, don't listen to the Internet. The Internet thinks that the minute you start making money, everyone's going to come with their hand out and say, hey, just pay me. In my experience, that is highly overrated. That's a bunch of spreadsheet nerds who are afraid of people finding out because they lack social skills. You can actually be really nice and you can acknowledge that you've been fortunate in your career. You can even treat people really well. And it doesn't have to become the case where everyone's just like, give me money. That rarely happens. And if it does, you should really take a look in the mirror. What behaviors am I engaging in that are causing people to come to me and ask for money? It's often the answer's right in front of you. Anyway. Some suggestions I would make would be be thoughtful about what the purpose is if you want to go on a luxury trip. I learned this myself. I was trying to plan a really nice luxury trip. The group could not, did not want to do it. And I asked a friend, like, I'm really frustrated. I thought this trip would have been awesome. It would have been amazing. And she said gently to me, she said, what's the purpose of it? Is it to go on this luxury trip or is it to spend time with these people? And that kind of caught me right here. And it made me realize, like, hey, I don't have to stay in this fancy place in order to spend quality time with them. So it's certainly. This is a challenging topic, but it's a real one for everybody listening here, one that you will very likely encounter.

Now, you've mentioned several times, spreadsheet nerds. You know, these are the optimizers in their financial lives rather than as satisficers. And. And the phrase you throw out a lot is the 85% solution. You know, similar to the Pareto principle, the 8020 rule. Can you give some examples of where someone might implement the 85% solution, especially somebody that has a natural tendency to be a spreadsheet nerd?

First of all, are we talking about your audience right now?

There are some in my audience to whom we are talking directly, absolutely.

I'm not going to name the percentage, but listen, I have a lot of them, too. I love making fun of them. People in the fire community, freaking nerds. Like, I love fire for, you know, encouraging people to really redefine what's important to them. And high savings rate. I love all that. But what has gotten you here, if you keep engaging in, it can turn toxic. And that is what we see. When I speak to multimillionaire couples who are still only going to places where they have frequent flyer miles, it drives me crazy. So I'll give you a couple of examples. Let's start with the simple one. Choosing a savings account. You're going to get right now, 3.5, 3.8% interest, fine. If you are switching banks to make an extra 0.15% interest, you've taken a wrong turn in life. Especially if you actually multiply out how much you're going to make on a $10,000 balance. It's like $2 a month. It's pointless. I recently spoke to a couple on my podcast and she was drawing money from her savings account and moving it around to different places. And I said, why are you doing that? It was messing up all the simplicity of the system, and it personally offended me because she was using my system but overcomplicating it. And she was like, well, I like the extra interest. I go, let's calculate it. She was making something like $3 or $4 a month in interest. And you know, this sounds so ridiculous to us, but so many of us do this in our life. We will drive an extra mile to get cheaper gas. We will agonize over the type of iPhone cover on Amazon for three hours, when the solution would be to just either buy the best one or buy all three of the best ones and just donate the extra two. So these are simple examples at the higher level. This is what I mean when I say the more successful you get. You have to fight for simplicity. It would be set rules for yourself. You should create your own 10 money rules and I'll share some of mine. But these, this means that every time I, I'm wondering, how much should I have in cash? I have a number. I set that decision many years ago. I don't need to think about it again. Every time I get on a flight, I know exactly the type of flight I'm going to take. I even know what seat I'm going to sit in. Every time my friend has a charity fundraiser, they go, hey, would you mind? I'm running a 5K. Here you go. Done. Your life should become more simple, not more complicated. Especially when you have more money and you've been successful, financially speaking. So 85% of the way, I call it the 85% solution. Get 85% of the way there and then move on with your life. You have more important things than optimizing.

You mentioned toxic money beliefs. What's a toxic money belief? What are the most common ones?

The most common one is, I can't afford it. You know why? Because we all grew up here and our parents say that we don't talk about money in this household. That's for rich people. Then there are other ones, like, I'm not good at money. I'm guessing a lot of people listening, maybe their partners have said something. You're the money person in the relationship. I'm not good at money. I'm not good at math. I don't think you necessarily have to be a mathematician to be good at money. But I do think you need to understand the basic language of finance. You need to understand what diversification means. You need to understand what low cost investing means. And I think the great irony here is that when I speak to people in their 40s their number one concern is always the same money. Always. And yet the very same people who have agonized and worried over money for the last 25 years have never read a single good book about personal finance. And to me, that is absolutely fascinating. What a fascinating quirk of human nature that the single thing we worry about most is available with clear answers for free at a public library or $7 on any bookstore. And we don't do it. And this is why I think that throwing compound interest charts at people is not going to change their behavior. They already know they should be saving and investing more. Something is stopping them. And I call these invisible scripts, these beliefs that are so deeply embedded in us that they are invisible. I'm not good at money. It's too late for me already. And on and on and on. That's why if you really pair the fluency in basic personal finance terms with psychology and money psychology, you can really get pretty amazing behavioral change.

Yeah, nobody goes into debt because they can't do basic addition and subtraction.

Exactly.

Absolutely. All right, well, our time is now short, but I wanted to give you the chance, a little bit of an open mic here. You have the ear of 45,000 or so high income professionals, mostly doctors. What have we not talked about that you think they should know?

This is not me asking questions about the healthcare industry. Okay, fine, let's put that aside. We'll do another episode on that. Maybe let's talk about money in an intimate partnership. I think this, to me, is one of the most interesting things about love and money. How do you, as a physician or somebody in the medical industry, how do you talk about money with your partner? My wife and I, when we met, you know, I was an entrepreneur. I'd been talking about money for 15 years at the time. And we started to get more serious and we started to discuss things like a prenup. And we started to discuss things like when we travel, where are we going to stay? And even things like do we buy a house, what kind of car? All those things. So I want to share a couple of things that happened because I wonder if they resonate. You know, the first is that it would have been really easy for me to be the money guy in our relationship. I knew money. I have a system for it. I told my wife that it was really important that we both do it together. And for everybody listening, I strongly encourage you to do this. We often think that money is like taking the trash out. You know, usually in an intimate partnership, one person tends to be the person who takes the trash out, maybe another washes the dishes. We all have our certain things we end up doing in a relationship. Money's not like that. It's much more like parenting, where both partners have to be involved. You cannot just delegate it to one. And I told my now wife, I said, look, it's really important that we do this together. First off, one day I'm going to die. It's not morbid. It's just a fact. I'm going to die. I don't want you to be left defenseless, especially against some 1.5% Aum predators coming after you. I don't need that. I want you to be a good steward of our money, and I want you to understand how this works so that you are just as good as I am. Number two, I need a partner, somebody to give me a second set of eyes. We get better results when we do it together. And third, it's just a lot more fun. It's more fun if you can dream about what you're going to use your money for together. And that was the genesis. That and our difficult prenup discussions for the podcast, where you can listen in on other couples discussing money. Sometimes one of them is an overspender, one of them is an over saver. Sometimes one of them grew up with money thinking that somebody else will take care of it, and now they don't have the skills to do it. Sometimes you have a multimillionaire who just cannot let go of frugality at all. That would be my encouragement to everyone listening here is to really think just like you've thought about your career, think about the role of money in your relationship. To me, it does not have to be a source of obligation. It doesn't have to be a source of stress. It can be a source of adventure, dreaming together, even generosity. And when you achieve that, that, to me, is a really important part of a rich life.

Yeah, well said. And when you can have that conversation before getting married about a prenup, you have learned to talk together about money. That's maybe an unsung benefit of a prenup, that it forces you to get on the same page before you tie the knot.

We would have never talked about money the way we talked about it without a prenup. Even me, who's written a book about money. So in that way, it was super, super helpful. Now, it was very difficult. It was challenging. You know, it started off great, and then it got difficult. We eventually went to see a therapist who was super helpful And I remember this therapist asked us a great question, maybe one that listeners here can ask in their own relationship. She said to us, what does money represent to you? And she pointed at me. I was like, oh, this is easy. It's growth. Like, I could literally see the compound interest in front of my eyes. 7% rule of 72, da, da, da, da, da. And then she turns to my wife and asked her. And my wife said, safety. I was like, what? What does that word even mean? Safety? Huh? And that actually exposed something quite profound, which was that we saw money entirely differently. Suddenly, things started to make sense, like why my wife wanted to have a certain amount in our checking account and why we approach these money decisions in two totally different ways. I think that hearing other couples and how they talk about money is something we've never been given the opportunity to do. The only way we know how couples talk about money is. Is from watching a TV show. But when you hear or on YouTube, you see the real couples on my podcast and how they talk, how they cry, how they laugh, their eye movements and eye rolls, you go, oh, my God, this is. This is absolutely amazing.

We've been talking with Ramit Sethi of I will teach you to be rich fame. You can learn more about him@iwillteachyoutoberich.com you can buy his book. It's available everywhere. Books are sold. You know, most people these days are buying them on Amazon, but I think there are other places you can buy it as well if you want to learn more about him. He also has a podcast if you like listening to him. And if you're listening to this, you probably like podcasts, so you can check that out. Same brand name. I will teach you to be rich. Ramit, thank you so much for coming on the white coat investor podcast today.

Thanks for having me. It's been a real pleasure.

All right, that was great. What a dynamic speaker. I hope you enjoyed that as much as we did. He's been doing this for a long time. Can you tell? Right? I mean, you think the white Coat investor has been around for a long time? It was started in 2011. He started doing this in 2004. There's, like, nobody doing this in 2004. Right. And so it's great to have the first mover advantage when you're building a business, but it's amazing having seen people come and go in this space for many years, to see someone that's still at it 20 years later, because, yes, you're answering the same questions over and over. Again to a lot of people and you must really love to teach and to help people in order to stay at it that long. So super impressed with him and what he's done and hopefully I can be as good for those in our niche in the high income professional niche as he has been to the general audience. If you are finding our podcast informative and helpful, check out our website. Since 2011, we've been working hard to provide valuable personal finance and investing information. Through thousands of blog posts written by and in a row of authors, you can find information on how to manage your student loans, fix and avoid common financial mistakes, understand your retirement accounts, optimize your investments, find professional help at a fair price, get started investing in real estate, and so much more, all at no cost to you. You can find out more about the courses we offer, the conferences we put on, the newsletters we provide, and interact with other WCI readers through our online forum. Head on over to whitecoatinvestor.com to start learning today. You can do this and the White Coat Investor can help. Don't forget for you students, sign up for the webinar whitecoatinvestor.com student webinars this week. It's February 15th. Okay, sign up. Attend it. If you don't attend it, I think we send you a video copy of it anyway. But attend it so you can ask your questions in real time. I would love to see you and to be able to present this information to you, I think it'll be really valuable. You know, the truth is, if you can get it early in your career, it's probably worth $2 million to you. So come on, February 15th. Earn $2 million. That's a pretty good hourly rate for a medical student. Thanks. For those of you giving us five star reviews and telling your friends about the podcast, a recent one came in from greenmed051 said. Terrific. No hype resource. The podcast is great for commutes, but make sure you combine it with the fantastic WCI webpage. They've got concise, clear articles on nearly any question you have. This is one of the single best financial literacy sources I've found in years. 5 stars. Thanks for that great review and for recognizing, just like Ramit did, that our goal is to cut out the hype, just give you the information and not abandon your trust, but to help you to become financially literate, financially successful so you can lead your rich life. Keep your head up, shoulders back. You've got this and we can help. We'll see you next time on the White Coat Investor Podcast the hosts of.

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