Ramit Sethi<\/p>\n\n\n\n
The Excact Credit Cards I Use<\/u><\/strong><\/p>\n\n\n\n If you\u2019re booking for travel or eating out, use a travel card to maximize rewards. For everything else, use a cash back card.<\/em><\/p>\n\n\n\n The card I use for travel and eating out is the Chase Sapphire Reserve. For everything else, I use an Alliant cash back card. And for business, I use a Capital One cash back business card. For extra benefits, I have an Amex Platinum card.<\/p>\n\n\n\n Margin Note: + Credit Report<\/em><\/p>\n\n\n\n The Best Accounts (Including the Ones I Use)<\/u><\/strong><\/p>\n\n\n\n Schwab Bank Investor Checking with Schwab One Brokerage Account<\/em> (schwab.com\/banking): This is the checking account I use. In my opinion, this is the single best checking account available. Schwab offers a stunningly good account with no fees, no minimums, no-fee overdraft protection, free bill pay, free checks, an ATM card, automatic transfers, and – best of all – unlimited reimbursement of any ATM usage.<\/p>\n\n\n\n Capital One 360 Savings<\/em> (capitalone.com\/bank): This is the savings account I use. It lets you create virtual sub-savings accounts, in which you can specify savings goals like an emergency fund, wedding, or down payment for a house.<\/p>\n\n\n\n The Ladder of Personal Finance<\/u><\/strong><\/p>\n\n\n\n Rung 5:<\/em> HSA: If you have access to a Health Savings Account (HSA), it can also double as an investment account with incredible tax features that few people know about. For more on HSAs, see page 120. If you\u2019ve completed Rung 4 and you still have money left over, take advantage of this account.<\/p>\n\n\n\n HSAs: Your Secret Investing Weapon<\/u><\/strong><\/p>\n\n\n\n The truth is that an HSA can be an incredibly powerful investment account because you can contribute tax-free money, take a tax deduction, and then grow it tax-free – it\u2019s a triple whammy. If you use this account correctly, you will earn hundreds of thousands of dollars.<\/p>\n\n\n\n Here are the things to be aware of: If you withdraw funds for non-qualified medical expenses before you\u2019re 65, you\u2019ll be charged a penalty. If you use your HSA funds for non-qualified medical expenses after age 65, it\u2019s taxable. Finally, some people see HSAs as such a good deal that they pay for as many medical expenses as possible out of pocket, since they prefer to let their HSA investments grow.<\/p>\n\n\n\n Do you see how powerful any one of these approaches can be? And do you see why an HSA can supercharge your investments? It\u2019s incredibly smart to \u201clayer\u201d these investing options on top of each other. Contributing to an HSA tax-free and investing the money you don\u2019t use eliminates the \u201cdrag\u201d of taxes on your growth, which compounds faster than in almost any other investment account.<\/p>\n\n\n\n If you have the ability and the funds, you should absolutely use an HSA for investments. Just be sure the HSA you open offers solid funds. A good rule of thumb is they should offer low-cost funds, ideally a target date fund or a \u201ctotal stock market\u201d fund. More on this in Chapter 7.<\/p>\n\n\n\n Forget budgeting. Instead, let\u2019s create a Conscious Spending Plan. What if you could make sure you were saving and investing enough money each month, and then use the rest of your money guilt-free for whatever you want? Well, you can – with some work. The only catch is that you have to plan where you want your money to go ahead of time<\/em> (even if it\u2019s on the back of a napkin). Would it be worth taking a couple of hours to get set up so you can spend on the things you love? It will automate your savings and investing and make your spending decisions crystal clear.<\/p>\n\n\n\n Spend on What You Love<\/u><\/strong><\/p>\n\n\n\n <\/u><\/strong>Conscious spending isn\u2019t about cutting your spending on everything. That approach wouldn\u2019t last two days. It is, quite simply, about choosing the things you love enough to spend extravagantly on – and then cutting costs mercilessly on the things you don\u2019t love.<\/p>\n\n\n\n Over the last three years, I\u2019ve become less guilty about buying lattes and buying lunch a few times a week because I am now conscious of where my money goes. I allocate up to $300 for eating out and coffee each month, and when I exhaust this, I turn to drinking instant coffee and packing my lunch. –James Cavallo, 27<\/p>\n\n\n\n Use Psychology Against Yourself to Save<\/u><\/strong><\/p>\n\n\n\n One of my readers makes $50,000\/year and, after working through some of my suggestions, realized 30 percent of her after-tax income goes to subscriptions. Subscriptions can be anything from Netflix to cell phone plans to your cable bill. They are a business’s best friend: They let companies make a predictable income off you – automatically.<\/p>\n\n\n\n What They\u2019re Doing Right<\/u><\/strong><\/p>\n\n\n\n Each of them pays themselves first, whether it\u2019s $500\/month or $2,000\/month. They\u2019ve built an infrastructure to do this automatically so that by the time the money ends up in their checking account, they know they can spend it guilt-free.<\/p>\n\n\n\n Here\u2019s the idea: A Conscious Spending Plan involves four major buckets where your money will go: fixed costs, investments, savings, and guilt-free spending money.<\/p>\n\n\n\n Categories of Spending<\/u><\/strong><\/p>\n\n\n\n<\/a>Chapter 2: Beat The Banks<\/h1>\n\n\n\n
<\/a>Chapter 3: Get Ready to Invest<\/h1>\n\n\n\n
<\/a>Chapter 4: Conscious Spending<\/h1>\n\n\n\n