Insights from I Will Teach You To Be Rich by Ramit Sethi

You will feel rich if you “spend extravagantly on the things you love and cut costs mercilessly on the things you don’t.” For some,
splurging on high‐end gym clothes, a membership at a nice gym, and a few expensive in‐person exercise classes a month make them feel
richer than living in a huge apartment. Whatever your three to five things are, embrace them ‐ be unapologetically different. If someone
thinks it's ridiculous to spend what you spend on the few things or experiences you value most, that's their problem.

Once you identify the three to five things or experiences you want to spend extravagantly on, reframe your desire to save money in all
other areas as a positive quality by stating:

“I am frugal with X so I can freely spend on Y.”

For example, “I'm frugal at restaurants and bars so I can freely spend on live performances,” or “I'm frugal with hotels so I can freely
spend on experiences when I travel.” Such statements show you know what you want and are thoughtful with your money – hard not to
respect that. Take a few minutes to write down a few “frugal with X so that I can freely spend on Y” to clarify what matters to you and
become a more conscious consumer.

It’s paradoxical, but by allowing yourself to spend freely in a few areas you genuinely value, you tend to save more overall because you
don't feel deprived and buy unnecessary things to feel better. But spending extravagantly does not mean you have an unlimited budget.
Extravagant spending means spending freely within a framework that lets you feel like you can enjoy the things you love, guilt‐free and
without being reckless. Here are three spending frameworks I found to be immensely helpful:

1. Start cheap and end high‐end: Start with a low‐cost version of what you want and allow
yourself to buy more expensive versions with use. When I wanted to learn guitar, I started
with a $20 used guitar from my friend and only allowed myself to upgrade if I played it
consistently for 30 days. After 30 days, I upgraded to a $200 guitar that felt like a $1,000
guitar in comparison.
2. The envelope system: Each month, withdraw a predetermined amount of cash from your
bank account and place it in an envelope for each thing or experience you want to spend
extravagantly on (alternatively, load prepaid debit or gift cards). Spend the money in the envelopes guilt‐free. Once the money
is gone, you must wait until next month to resume spending.
3. The seven‐day rule: When you want to buy something in your extravagant spending domain, write an email that will bounce
back to your inbox in seven days describing what you want to buy and how badly you want it. When you receive the email seven
days later, ask yourself, “Is it still worth the money? Do I still want it as much as I did seven days ago?” If not, pass on the purchase
because if you are less enthusiastic seven days later, you won't care about it 30 days later.

If you tried cutting costs and putting in these frameworks but still feel like you don't have enough money to live a rich life, Ramit Sethi
suggests you cut costs to about 85% of optimal and then go on offense and negotiate more money into your life. When you start a new job,
you have an opportunity to negotiate a 5‐10% salary increase with a small amount of effort and quickly get yourself a few thousand dollars
in additional spending power. Here are four proven salary negotiation mindsets and tactics:

1. Go into a negotiation with a job offer from a different company. If the offer is from a
lesser company, don’t mention their name. Instead, just say, “I have another offer and I'm
looking for a higher salary.” If you have an offer from a rival company that pays well,
mention their name so the two companies get into a heated bidding war.
2. Create a plan to demonstrate how you'll contribute to the company's success. Research
projects the company is working on or might work on, and then detail how you can
become a critical resource on those projects. They will pay you more when they know
you’ll bring in more value.
3. Remember to keep the conversation cooperative and not combative. Your tone, demeanor, and language should all
communicate, “I'm excited to work with you and bring a lot of value to this team, but I'm a very valuable employee and I want to
make sure my compensation is fair.”

If the negotiation doesn't go as planned or you're not interested in finding a new job, here's exactly how you can negotiate a big raise in six
months:

1. In a performance review with your boss, ask, “What would be the three most impactful
things I could do to become a top performer?”
2. Create three six‐month goals based on their response. Then say, “If I hit these three goals,
would you peg me as a top performer?” After they say yes, conclude by saying, “If I do an
extraordinary job, I'd like to sit down to discuss a possible compensation adjustment, but
we can address that topic when the time comes. Sound good?”
3. Send a follow‐up email after the meeting detailing your six‐month goals and try to exceed
those goals.
4. Five months later, email your boss to set up a meeting 30 days out to discuss your performance and compensation (extra credit:
ask a coworker to send your boss an email detailing your contribution to a recent project).
5. Go to the meeting with the email detailing your initial goals, a list of recent accomplishments, your desired salary, and a list of
comparable salaries from salary.com. Be bold and stand your ground if there is pushback. You're not asking for a favor; you're
discussing fair compensation as a professional.

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