Ramit Sethi on Forbes.com

I think expertise is construed. It's about results. It's not about the fancy words that I use. So if you go and look at my site, I willteach and be rich.com, where I've been writing about personal finance for five years, you can see how much people are saving right there at the top right corner. You can also read any of the comments and you'll see people saying, oh, wow, I had $17,000 of debt two years ago and I've been reading that site and Now I have $5,000 saved up. So people are making moves. And it's not just about money. I want to emphasize that rich partly is about money, but it's also about living a rich lifestyle, whatever that means to you.

So the proof is partly in the results because people are actually saving money right now.

Yeah, they're doing more than saving a little. They're saving a lot.

So a lot of people right now are really concerned about credit cards. And recently Suze Orman has went on Oprah and said that people should just pay the minimums of their credit card bills. And I was wondering what your thought was on that strategy for conserving cash.

Well, I think the first thing to understand is people often think that they have a fixed amount of money that they have to spend. And that's true for a small percentage of people, but for a lot of people, they actually waste a lot more than they actually know. So there are small ways of rejiggering your spending so that you can save massive more amounts. For example, I talk about how to negotiate with your credit cards or more importantly, with your car insurance. And a lot of the people who followed my car insurance script when they called up the car insurance companies, they saved $700 a year. That 700 bucks, rather than only paying the minimum on your credit card, that you could actually do a few small tweaks in your life and you could get that extra money and put it in savings. So I agree in spirit that we need more savings, but I would first try to go for the big wins rather than getting into bed with the credit cards, because they're going to get you one way or another later on.

Okay, you bring up a topic that starts off one of the chapters. You tell people to negotiate like an Indian. What do you mean by that?

Isn't it obvious? So, you know, when I was a kid, I learned how to negotiate like an Indian because my parents taught me, right? They came from India. Everything they did was about negotiating. So they're very street smart. And negotiate like an Indian means don't take it lying down here. You know, we think that our financial companies do things to us, but actually it's a relationship that we have. Some banks pay between 300 and $1,500 to acquire U.S. as a customer. That means if we get a $30 overdraft fee, they're going to waive it because they don't want to lose us as a customer. Especially now when companies are hurting. The key phrase that you want to use is times are tough. Hey, Mr. Cable Company, I can't afford $70 a month. Times are tough. What can you do for me so I don't switch to another company? And these companies will lower your. They'll waive your overdraft fees, they'll waive your late fees. Sometimes they'll even lower your aprs.

Okay, I want to switch a little bit to investing in chapter six. You talk about the myth of financial expertise and you criticize the investment business somewhat with the investors obsession with five star funds. What do you mean by that? Now are you saying that we should all just be indexers?

Yeah, we should be indexers. The vast majority of people should be indexers. Instead, we look for alpha, which for most average investors fails to happen most of the time. And what I like to do is be realistic and say, look, I need to get 85% of the way there and then get on with my life. Indexing gets you very close to where you need to be. It follows the market, the costs are low and you don't have to worry about it for average investors. A lot of times we get really motivated. We say, yeah, I'm going to get alpha. I know all about asset allocation. Twelve months later it comes time to rebalance and what do we do? I'll do this in a couple months. So picking the index funds is a proven strategy that works. I like life cycle funds personally because most people are not going to rebalance their own collection of index funds. So what I recommend for young people is pick a life cycle fund that works for you. If you are more conservative, then pick a slightly different age group of a life cycle fund. But don't try to go for alpha.

Don't try to beat what do I do with $5,000. Your advice would be life cycle fund.

Yeah, I love that question. I get that question so much because the readers I write for, typically they're not trying to pay off $25,000 of debt. They've got a job. Maybe they even have 5k lying around. What do they do with it. So do they have a savings account? That would be one thing I would think about especially in these times when with Suze Orman I do agree with one thing. Get some savings. And you know, six months is a nice recommendation. A lot of people get intimidated by that because that may mean 18,000 to $20,000. You have to have. Well, you don't have to have that all at once. You can start putting 500 bucks a month in and it'll take you a few years to get there, but you get there. If you want to invest, pick a nice lifecycle fund, dollar cost average in and that's basically what you need to do. The beautiful part about that is it reduces all these investment choices to one thing. Funnel as much money as possible into your investments and let the rest be handled for you with a lifecycle funnel.

I think a lot of your book talks about ways to automate your personal finance. Do you have any, say, two resources that you can give our readers or our audience about great websites, say for automating your life?

One site I like is billshrink.com youm basically can go there and put in your cell phone information and it'll log into your account, scrape your info and say click. You know you're paying $110 for your cell phone each month, but you're actually only using this many minutes. So we recommend that you go and use this plan instead. That can actually save you hundreds of dollars a year. You can actually do that for your credit card as well. The other thing I would do is actually take a look at my system. I've written it up in detail and you can search for the psychology of automation building a bulletproof personal finance system. And I actually did a video where I showed people how to automate so that it's what I call the next hundred dollar principle. When $100, you get paid $100 from your paycheck, what happens to that money? You want to make sure that it's automatically being routed to your 401k, your Roth IRA, your savings accounts, maybe even sub savings accounts for buying shoes, whatever it may be so that when the money comes to you, it's guilt free. SPE.