Ramit Sethi - a mustachian or a fraud?

[RiddleMB]

Note: I have nothing against mr Sethi, but his philosophy raise many questions to me, thus I'd like to hear the opinions of others on the matter.

I love listening to Tim Ferriss' podcasts. Recently , Tim interviewd Ramit Sheti. Never before had I heard about that guy, but he really impressed me during the interview, so I read more about him and his philosophy, which doesn't make any sense whatsoever!

First, he talks a lot about 401k, IRA and expenses automation. That is all good, but it is nothing new nor groundbreaking. Granted, I don't live in the US, so maybe things are done different, but even in my crappy 3rd world country, 401k and IRA - like programs are a must, and all deposits and expenses are automated anyway.
Besides, these two are great, when you are 60+. They don't help much if a person is planning to retire earlier.

Second, Ramit does mention that low-cost index funds are a great investment, but noware does he explain how much from the salary a person should aim to invest. I think that in one place he wrote 10%, which is better than nothing, but still low.

Third, his "guilt-free expense" idea and the way he looks down on frugal an FIRE people. I don't see how spending more is suppose to make people rich faster. I do agree that one should not skimp of important things, but extra luxury never adds happiness, nor contributes to financial freedom.

Fourth and lastly, out of curiosity I subscribed to Ramit's emails, and so far, got only promotion material for his books and courses, with bald statements to "make a business out of nowhere" and "stand out by spending more". Sounds and smells very fishy if you ask me. . .

Eager to read your opinions. Have I misunderstood anything? Would be glad for any light shedded.
Cheers!

[InterfaceLeader]

I've been on his mailing list for ages. He's very much in the 'earn more' rather than 'spend less' camp. His book was quite useful to me back when I was learning the fundamentals of personal finance though, and when he first started he had more frugality/personal finance stuff (I went on his Scrooge Strategy/Save £1k a month challenge, which has long gone I think)

In fairness, he's quite transparent about aiming for a certain type of affluent, ambitious person who wants to spend on luxury.

[Dave1442397]

His name is Ramit Sethi.

I just read the latest version of his book, I will teach you to be rich, and I thought most of his advice was very good. He actually saved me money, because while I had checked my 401(k) for fees, I had not realized how much of an effect the management fee has on my returns over time. I called and cancelled that right away.

He's not as hardcore as a lot of people on these forums, but that's not his aim. He's just explaining basic principals and showing people how they can improve their finances.

I looked at his site and it's mostly pitching his various financial products, but hey, if people want that, then fine.

[Bloop Bloop]

Saying "but extra luxury never adds happiness, nor contributes to financial freedom" is a sweeping generalisation that I would not hold too close to my heart.

Many luxury items are completely worthless, or only a marginal improvement on the non-luxury item (if an improvement at all). But to say that spending money on a non-essential good or service never contributes to financial freedom or adds happiness is silly. By your reasoning, we should all be living austere lives without any touch of indulgence.

Everyone has his or her own path to financial freedom - and I would be loath to call Sethi a fraud just because his values don't align with yours.

[LDoon]

Ramit is far from a fraud and has a lot in common with mustachian-ism.  Ramit recently did a podcast on Mad Fientist that was good and covers his take on FIRE (spoiler: he loves it).  Ramit explains that he views the world based on value, while some FIRE people's view is based on cost.  There is overlap and differences in those viewpoints.

As for the products, I'd say they're not a scam.  I purchased one 5+ years ago on job-hunting (resumes, interviewing, etc) and thought it was worth the $.  The content was not full of mind-blowing ideas but it was full of things that I was failing to do.  After the course, my resume writing and interviewing skills are better and have landed high-paying jobs.  So to me the course cost was worth it. 

Also, if I ever decide to pursue a side-hustle business, Ramit's course is something I may buy.  I personally have no idea what my side-hustle would be, and if paying money for a course gets me from simply thinking about it to actually starting a side-hustle, then that is worthwhile. 

[Zikoris]

There's nothing really WRONG with him, it's just a different focus than FIRE, which is totally fine - some people want to focus of making tons of money and living a very lavish lifestyle, and his stuff is probably a good guide to that. At the very least, I think if people followed his system they'd be better off than large chunks of the population.

I briefly subscribed to the email list, and quickly unsubscribed because I hate people trying to sell me shit.

[FLOW]

Not a mustachian, not a fraud.  But a great salesperson. 

For better or worse, he is basically one of those people who got rich on the Internet, by selling you a book called "How to get Rich on the Internet". 

[BicycleB]

Like most commenters so far, I think he's a little more than a guy who sold a book.

His business is selling how-to books, courses, coaching programs, etc on topics related to maximizing your personal wealth, especially by maximizing its impact upon you. Naturally he has a lot more direct selling than Mr. MMM, who simply puts a variety of ads in and around his site; Sethi directly sells his own products. From an economic perspective, it's arguably a more direct model. His products reach a wide range of price points. I would suggest that an MMM person start with the cheapest (the basic book), or consider the cheapest product that addresses your main need (side hustle, career improvement, etc).

The ads themselves include useful suggestions and examples. Notably, I have never seen a bad example from Sethi. My reading of his stuff is quite modest, but it's unusual to find any source where the suggestions appear to be consistently practical and of good quality.

I suspect that almost anything in his courses could be found somewhere else, but the question is a time vs money one. Whether it's worth it to pay for a $1000 course depends on whether you have, I guess, enough gumption to follow the suggestions well but not enough time to find them on your own. I think the majority of Mustachians would not be in both groups at once, but some could be (like @LDoon, obviously). The financial automation aspects you already get from this website and similar places, but for the side hustle or career building focus, his stuff could add value.

@RiddleMB, if you ever want to learn something beyond what you pick up from the ads themselves or the initial book, I suggest Googling the topic in question using search terms similar the examples in the ad, asking questions on forums related to the topic, and adgressively implementing the suggestions you find. That's a cheaper but slightly slower way to get most of the same info.

Re looking down on frugality, I disagree with him mostly, but there's a spectrum of wise choices about spending levels IMHO. He derides much of this spectrum because his desired spending is higher. He misses many of the DIY-to-strengthen-the-soul benefits, the Stoic part of Mustachianism that MMM espouses. But many MMMers don't go hard core Stoic either. Meanwhile some MMM members have trouble spending money even when it would expand their lives and their soul. For these members, the "guilt free spend" might be a good concept. Personally I entered MMM by setting a $3000/year play budget in return for a couple of simple improvements (like "pay off car loan"). The freedom to maximize joy up to that spend and feel no qualms was freeing.

So take him with a grain of salt. He's not Mustachian, but a strong proponent of an active thoughtful lifestyle that does overlap with the Way of the Mustache. My personal guess is that The Very Best Truth is somewhere near 60% MMM, 20% Ramit Sethi and 20% something about love and giving and social justice, but that's probably a personal conclusion. Probably everybody's different regarding their optimal mix.

To counteract Sethi's spendy ways, maybe read some Early Retirement Extreme. Then experiment with some Stoicism, and maybe a guilt free  joy spending budget that preserves some sturdy savings rate (50% or so). Whatever you choose, let us know what happens!

[FIREstache]

Not a mustachian, not a fraud.  But a great salesperson. 

For better or worse, he is basically one of those people who got rich on the Internet, by selling you a book called "How to get Rich on the Internet".

LOL.  He won't be getting any of my business!

[Telecaster]

I heard or read an interview with Ramit a while back (can't remember where sorry) where he said he used to preach more on the frugality side, don't buy excess stuff, kind of thing.  Then he realized you can't preach "don't buy stuff" if you are trying to sell stuff.   

That said, if you listen to him on Mad Fientist or Tim Ferris he's not a fraud.   The stuff he is peddling is stuff most people need to hear. 

[RiddleMB]

Wow! Very helpful answers - thank you all guys!

Well, maybe "a fraud" is too harsh of a word, but being in the internet, where every basement-living kid can start an "I will show you a revolutionary crazy way how to make money" blog, one can never be too cautious. I don't even take MMM's words 100% for granted, and always either test it myself or search for other sources for cross-info.

I guess that my mistake was in assuming that every Tim Ferriss guest who talks about index funds is frugal :/ For I first heard about Tim from his podcast with MMM to begin with. My bad.

BicycleB, I really like your answer. I guess that to me, the last 20% is Buddha or Seneca (credit to Tim on this one). The latter states clearly that, as a philosopher, one doesn't need to be too frugal to the point it causes inconvenience, but certainly not "x10 the spending on things you like" either.

Which brings me to the point, MMM has a great post on how luxury can be addicting and leads to a steep slope after which people start to feel they entitled to have all high quality stuff. As a guitar player I have a rule - never to spend over 1k$ on a music gear. Many years ago, before I encountered MMM's blog, I spent 2.5$ on a Custom Shop electric guitar. I just got a new job with a massive salary upgrade, and figured out that since I'm playing guitar for over 10 years now, I am allowed to have a high end craftsmanship guitar. guess what? After the honeymoon period finished, I realized this guitar doesn't make me anymore happy than my old Maxican 500$-ish guitar I had before. So following Ramit's advice, I would (personally) have bought a high-end hand wired amp, and another boutique guitar, and since I like traveling, I'd start flying business class and make more frequent trips, oh, and I also enjoy video games (fighting hard to stop it), so why not to treat myself with a high end RGB liquid cooling gaming desktop and a 4k screen. . . well hope that you got the point. I guess it is indeed sexier to preach "spend more and own your enjoyment" rather than "spend less and learn what really brings long term true enjoyment".

I'll listen to Ramit's interview on MAD Fientist, thanks for the advice!

[powskier]

Not a mustachian, not a fraud.  But a great salesperson. 

For better or worse, he is basically one of those people who got rich on the Internet, by selling you a book called "How to get Rich on the Internet".

+1

[RiddleMB]

Oh, almost forgot:

Those of you who are familiar with Ramit's philosophy - he says to create sub-account for savings (engagement ring, new car, new apartment, etc), but as far as I read, nowhere does he explain what is happening with the money. He doesn't say to put it into stocks or other funds, so does that money is suppose to lie idle and rot by inflation? Would appreciate if someone can explain this point.

[Spud]

He won’t be getting any of my business, at least not right now. But not because I don’t like him. I just don’t think there’s anything I can learn from him because I don’t want to start me own business. Not now anyway.

I’ve looked at some of his stuff previously, although not signed up for anything, and I can’t say that it inspires me.

To get more money in this world, it’s very simple. To put it in the terms used in The Millionaire Next Door (which I love and read a free PDF copy of) you can either:

1.   Improve your financial offence (earn more)

2.   Improve your financial defence (spend less)

3.   Do a combination of both 1 and 2.

Number 1 takes a lot of time, energy and potentially money to do. Retraining, hitting medium to long terms targets in your job, playing the political game in your work place for long enough, applying for new jobs and attending interviews, or perhaps the researching, planning and the implementation of starting your own business.

Number 2 takes virtually no time, energy or money to do. Spending less, ultimately saves you time, energy and money. The problem is, many people see spending less as meaning buying all the stuff they usually do, doing all the things they usually do, but looking for discounts, offers and other ways to get money off the price. Really, as we know, the best way to do this is not buy or do many of the things at all i.e. commuting, foreign holidays, fancy cars, expensive clothes, second homes and eating out. Not only can this make you rich and free up more time for you to pursue what makes you genuinely happy, but it also has the massive advantage of reprogramming your mindset so that you can live happily spending less money for the rest of your life. Nobody becomes Mustachian in order to be frugal, retire early and then flip the switch and become a massively extravagant over spender during their retirement. That would see them run out of money very quickly.

Trouble is, you can’t market and sell the fundamental principles of Number 2 very effectively. You can’t dress it up and make it seem sexy and appealing. It is what it is. It’s the Shocking Simple Math. How the hell could you come up with 300 page eBook on “Spend less than you earn and put most of the difference in an index fund after first ensuring that any tax advantaged accounts available to you are full.”

You can however make Number 1 sound sexy, especially when you get into the realm of people starting their own business, working from home, automating their income. Think of all the subjects you can cover, the research, the planning, the sectors of industry, the marketing your product or service, customer service, customer retention, diversification, new product development. Wow. Think of all the material you could produce on this subject to sell to people on the internet.

================================

Here’s a question for anyone who knows more about Ramit Sethi than me.

Does he, in any of his material, address the concept of lifestyle inflation?

I ask because lifestyle inflation is critical. To put it simply, MMM basically preaches lifestyle deflation. Spend less than you earn. Life below your means.

If Ramit never addresses this concept, anywhere, he’s doing people a disservice.

A mustachian who benefits from Ramit’s products might build a business of some kind and triple their income whilst totally avoiding lifestyle inflation. That would lead to an enormous increase in savings rate, and from there, everything is peachy.

But now imagine that a spendypants over spender who is drowning in debt gets the same product from Ramit, builds the same business and triple’s his income as well. Would there also be enough information in there to help them avoid lifestyle inflation?

I ask because if you gave most people on the planet triple the income, their savings rate wouldn’t alter one iota. Their lifestyle would just inflate further thanks to insane levels of spending.

Building a business is all well and good, but if it’s not getting you closer to a comfortable and secure retirement, and instead just feeds your insatiable desire to spend, spend, spend, because you worked so hard and you deserve it, and you can’t take the money with you when you die, and you could die tomorrow etc, then what’s the point?

It seems to me that if you have MMM’s philosophy as a foundation, Ramit’s stuff could be awesome. If you already struggling to consistently spend less than you earn, then it could just exacerbate the nightmare.

[Metalcat]

Wow! Very helpful answers - thank you all guys!

Well, maybe "a fraud" is too harsh of a word, but being in the internet, where every basement-living kid can start an "I will show you a revolutionary crazy way how to make money" blog, one can never be too cautious. I don't even take MMM's words 100% for granted, and always either test it myself or search for other sources for cross-info.

I guess that my mistake was in assuming that every Tim Ferriss guest who talks about index funds is frugal :/ For I first heard about Tim from his podcast with MMM to begin with. My bad.

BicycleB, I really like your answer. I guess that to me, the last 20% is Buddha or Seneca (credit to Tim on this one). The latter states clearly that, as a philosopher, one doesn't need to be too frugal to the point it causes inconvenience, but certainly not "x10 the spending on things you like" either.

Which brings me to the point, MMM has a great post on how luxury can be addicting and leads to a steep slope after which people start to feel they entitled to have all high quality stuff. As a guitar player I have a rule - never to spend over 1k$ on a music gear. Many years ago, before I encountered MMM's blog, I spent 2.5$ on a Custom Shop electric guitar. I just got a new job with a massive salary upgrade, and figured out that since I'm playing guitar for over 10 years now, I am allowed to have a high end craftsmanship guitar. guess what? After the honeymoon period finished, I realized this guitar doesn't make me anymore happy than my old Maxican 500$-ish guitar I had before. So following Ramit's advice, I would (personally) have bought a high-end hand wired amp, and another boutique guitar, and since I like traveling, I'd start flying business class and make more frequent trips, oh, and I also enjoy video games (fighting hard to stop it), so why not to treat myself with a high end RGB liquid cooling gaming desktop and a 4k screen. . . well hope that you got the point. I guess it is indeed sexier to preach "spend more and own your enjoyment" rather than "spend less and learn what really brings long term true enjoyment".

I'll listen to Ramit's interview on MAD Fientist, thanks for the advice!

Well...the spending you described above is totally legitimate if it's how you want to spend.

MMM isn't fundamentally right, Sethi isn't fundamentally right, NO ONE is fundamentally right. Some "gurus" will resonate with you and some won't. It's up to you to decide for yourself what works for *you*.

Remember, these guys are still just normal, fallible, silly people trying to make it in this crazy world and they really aren't saying anything even remotely new or insightful.

They're just normal dudes who have packaged common sense in marketable ways.

If you won't be genuinely more happy buying the fancy music gear, then don't buy the fancy music gear and don't bother listening to someone who tells you to buy the fancy music gear.

The words of these random dudes with marketable common sense are not lifestyle guides to be followed, they're just triggers for maybe thinking about things in different ways.

Only your own introspection can tell you how best you should live.

[Arbitrage]

Seems like if you're discussing Ramit Sethi and whether or not he's mustachian, you should probably add MMM's take for consideration:

https://www.mrmoneymustache.com/2011/11/06/book-review-will-this-guy-really-teach-you-to-be-rich/

[FLOW]

Seems like if you're discussing Ramit Sethi and whether or not he's mustachian, you should probably add MMM's take for consideration:

https://www.mrmoneymustache.com/2011/11/06/book-review-will-this-guy-really-teach-you-to-be-rich/

I like how Pete pokes fun at Sethi's advice to save only 10%: "...By planting the idea that you spend 90% of what you earn, and only save 10%, he’s automatically setting someone up for about a 50-year working career. Even if he moved another 10% from the other categories over to “Investing” to yield a 20% savings rate, you would have cut the career from 50 years down to 36."

In my opinion, that is the source of the biggest struggle Americans have with their money.  Somehow, it became normal (even laudable) to only save 5-10% of your money.  But that means most people are running alongside the edge of a financial cliff, so when a gust of wind comes along, or they lose their footing, they fall over the edge ...

Stop blaming the wind, and stop blaming the trail... it's your fault for running so close to the edge. Saving 5-10% should be seen as bat$hit crazy. 

[Spud]

There's actually a lot of gold from MMM in the comments section underneath that article which tackle's the issue pretty well:

I think that having people focus on increasing their income up to a certain point is very valid – I’d personally set the upper limit of usefulness as somewhere around $100k per person.

Once you’re there, you are already in a territory that lets you retire in well under 10 years, so focusing on even more income is only going to slice a very short time off of the financial independence race.

He suggests negotiating lower interest rates on the credit card, whereas I suggest never running a balance on a credit card.. to the point where if you have one, you go into hobo mode and move into someone’s basement until you get rid of that ridiculous debt.

Yeah, the biggest difference is in our definition of what is a “Big win”. A person earning 60k and spending 60k can take two paths.

Ramit: Work extra to start earning 80k, and make a few easy tweaks to start saving 8k per year

Mustache: Start by fixing your lifestyle so it costs 30k, and start saving 30k per year.

MEANWHILE, become great at your job and move up to also start earning 80k. Sure, let’s say it takes some effort to build your frugality muscle and you don’t start earning the 80k until a few years later than the Ramit way.

The Ramit follower still needs to generate passive income of 72k/year before he can retire. The Mustachian wins the race by many decades, because he is independent as soon as his investments are paying 30k/year.

There’s just no arguing which way is better, unless you are a Consumer Sukka that thinks spending $72,000 per person per year will make you happier than spending $30,000. (And once again, I’m spending $8k per person per year and live like a king).

That is so interesting! Before starting this blog, I didn’t even know that there was a group of people that thought investing was evil. Now I have heard this several times in emails and your comment.

I think people are getting the basic financial system (capitalism, which is not evil) mixed up with the actions of a powerful minority of large business owners and politicians (who have an unending level of greed for money, regardless of consequences to the environment or other people – which is evil).

Note that most business owners and politicians are not in this category – they are great people who just happen to work hard and end up earning lots of money for it. The most extreme example being Warren Buffett. But the actions of the crooks like the Enron guys and various characters in the news today ruin the reputation of businesspeople in the public’s eye.

Back to your investing question – what you need is BOOKS. You could start by checking out “A Random Walk Down Wall Street” from the library, and also read “Economics Explained”, which I reviewed earlier in this blog. For a really fun simple starter on stock investing, read “The Little Book that Beats the Market” – but be sure to also read the random walk one above as a counterbalance.

Sounds like a fair criticism, David. Ramit and I have slightly different target audiences.. but I will stand up for the under-25s and say there are many of them who DO get the concept of financial independence. Quite a few of them end up here.

The IWT personal finance ideas are definitely a good start. But I think if you let yourself hit a 15% savings rate and then just chase after increased income for the rest of your life, you’ll miss the whole point of being alive.

Now the NEWER Ramit stuff seems really good – general good psychological and business habits training. He’s a clever guy and I bet the courses are a lot of fun to take.

1) Most large blogs are large because they’re aiming at the middle of the Bell curve. They have the largest potential audience.

2) If they say something that’s too different from what people are ready to hear, people will stop reading.

3) The middle of the Bell curve knows practically nothing about finance.

This is why the major blogs rarely present a philosophy that can be differentiated from the prevailing consumer-careerism. It is why the teachings comprise a few tips. It’s why things must be presented as quick and easy solutions.

I Will Teach You to Be Rich doesn’t really teach anyone how to be rich unless a million dollars in 40 years is considered “rich”. Maybe the title is historically/accidental. (I sympathize with THAT problem.)

A more accurate title would be “I will teach otherwise clueless college graduates how to avoid dumb mistakes with their money.” Now don’t get me wrong. I think that’s a very useful thing to do. It is certainly needed and RS does it very well.

The fact that they will be working for the next 40 years is taken as a given [as is the case for most people]. If that notion was challenged, the blog wouldn’t be nearly as large as it is AND there’d be a very real likelihood that people would just discard the other notions and not even do simple things like opening a retirement account, saving at least some accessible money, and figuring out how not to pay overdraft charges every month (some ppl do that).

The way I see it, this is like the first step. Maybe some will then move on to other blogs and learn more “advanced” stuff. Talking about extreme early retirement is pretty much near the Terminus of the personal finance. Few will ever go that far and to go there they have to get through all the first stuff first.

[Spud]

When I read those entries that I dug out of the comment section, one in particular stands out to me. It's a line from Jacob's comment:

A more accurate title would be “I will teach otherwise clueless college graduates how to avoid dumb mistakes with their money.” Now don’t get me wrong. I think that’s a very useful thing to do. It is certainly needed and RS does it very well.

I can't help but thinking that teaching kids this stuff is the parents responsibility and nobody else's. I do however realise that when the parents of the "otherwise clueless college graduates" are, at best, little more than "older and still clueless college graduates" I can see why the pattern keeps repeating itself for generation after generation.

Sad.

More power to anyone who discovers MMM or ERE at an early age (25 or under) and really understands the philosophy it and applies it. They will have a wonderful life.

[RyanAtTanagra]

Ramit Sethi is still around?  That's a name I haven't heard in a long time.  Those getting upset at him for what he's teaching is I think misplaced.  He's Personal Finance 101.  He came about around the same time as Get Rich Slowly and The Simple Dollar, and preached the same type of stuff: don't carry too much debt, save a little bit for retirement, establish an emergency fund, etc.  IIRC he focused more on increasing income and not on clipping coupons, but basically similar stuff.  Coming at him from a mustachian perspective just doesn't make sense, because that's not what he's about.

Keep in mind the vast majority of people don't WANT to be mustachian, and moving into Personal Finance 101 territory via any of the dozens of people saying the same things but with different voices is a HUGE step up from where they would be otherwise, and where most people are.  If they want to move past 101 into 301 (MMM) or 401 (ERE), the information isn't hidden.  I found ERE from GRS or TSD and moved up from there, but most people just don't want to.  So we should praise the 101's for at least pulling people up that high.

[MaaS]

He's not as hardcore about spending as many around here -- but calling him a "fraud" is really harsh. His advice is solid and would move a vast majority of the population in a positive direction.

As a side note - his/his team's copy writing is some of the best I've ever seen. If you want to sell anybody anything, reading some of his emails is a good use of time.

[Bloop Bloop]

I don't know if Sethi's blanket recommendation is that you only save 10% of your income. If so, that's dumb. The 10% rule sounds more like a starting point (for further development - an attainable goal that sets you up for better gains) rather than a principle that is meant to be there to allow for rampant lifestyle inflation.

I think, as others have said, there is no right answer. Some people don't want nice things; some people genuinely want nice things; some people buy nice things simply out of social obligation or seeking status. We can probably agree that the third category of spending is undesirable, but the first and second categories are each defensible.

The one good take away I get from Sethi is that, if you're lucky to be in certain professional fields and if you're also lucky enough to be generally talented and clever, it takes less energy in the long run to double your income than to halve your expenses - assuming you don't have a huge amount of ridiculous expenses to begin with. This is because professional advantages tend to compound, and once you distinguish yourself you'll find it easier to keep going up the ladder just from accrued knowledge and networks.

I disagree with any Sethi-esque suggestion that your spending should be proportional to expenses though.

On the other hand, I disagree with MMM's suggestion that most people can happily "cap out" at $100k and that further gains are marginal.

[InterfaceLeader]

Ramit definitely doesn't cap out saving at 10%. He sent an email recently with his money rules, and the top three were:

1. Always have 1 year of emergency fund, cash.

2. Save 10% and invest 20% of gross income, minimum.

3. Pay cash for large expenses (engagement ring, wedding, dream honeymoon). 20% down, minimum, on a house.

[NorthernBlitz]

I only know Ramit from the two Tim Ferriss podcasts he's done (one recent, one a long time ago) and from the interview he had on the Mad Fientist's podcast.

The first time I heard him on Ferriss, I didn't like him much because I was more into the frugality part of MMM. Like Ferriss, he also suffers from having a super slimy sounding book (although I really value Ferriss 4 Hour Body and his Podcast).

Since I first heard Sethi on Ferriss' podcast, I've come to see MMM's message as being more similar to Sethi's than I first thought. Part of this was from MMM's own appearance on the Tim Ferriss show.

I think the message is probably something like:
"Think about the things that make you happy / actually improve your life. Ruthlessly cut spending on things that don't make you happy so that you can intentionally use your money on things that make the most impact improving your life."

I think the difference is that MMM's message is that time is the thing that we should all value most where Sethi's message seems to be more about giving individuals more leeway to choose the thing they feel is most important.

Given that, I think that Sethi's message is probably more what people do where MMM's is probably more something that's aspirational (especially since so many people don't think of the future at all). But for some of us, maybe that's flipped on it's head a bit (i.e. we focus too intently on the future, and not on the present).

That's why I thought Sethi's talk with Brandon (Mad Fientist) was really interesting. Brandon often says that he feels like he was too ruthless in his pursuit of FI and that his life started to feel a bit empty when he retired. He'll often talk about how he wishes he spent more time smelling the roses on the way to FI. Even now, he talks about how he worked too long, has too much money, but still feels the need to be super frugal and optimize everything.

For those of us who relentlessly pursue FI, I think there's a real danger of mistaking "intentionally spend on things you love and ruthlessly cut on things you don't" for "ruthlessly pursue the most frugal and optimized lifestyle for it's own sake". In that case, maybe hearing Ramit every once in a while isn't such a bad thing.

[NorthernBlitz]

Ramit definitely doesn't cap out saving at 10%. He sent an email recently with his money rules, and the top three were:

1. Always have 1 year of emergency fund, cash.

2. Save 10% and invest 20% of gross income, minimum.

3. Pay cash for large expenses (engagement ring, wedding, dream honeymoon). 20% down, minimum, on a house.

This was my impression from the podcasts I listened to. He was talking 30% minimum (up to ~50%) with Ferriss and Brandon.

From the sounds of it, I think Sethi grew up in a super frugal household. From that he probably learned the importance of frugality, but also saw that there can be a cost to having frugality be the ultimate goal.

His strategy seems to take some positives from both frugality and lavish spending. Probably a good way to go for people who are middle to upper middle class who don't have the goal of minimizing time at work.

If you like your job, you might prefer working ~ three decades at a 30% savings rate with an extra 20% of your income going to things you love instead of ~ 20 years with a 50% savings rate to buy an extra decade of FI. If you have the means, the answer there depends on personal preference.

[DadJokes]

First, he talks a lot about 401k, IRA and expenses automation. That is all good, but it is nothing new nor groundbreaking. Granted, I don't live in the US, so maybe things are done different, but even in my crappy 3rd world country, 401k and IRA - like programs are a must, and all deposits and expenses are automated anyway.
Besides, these two are great, when you are 60+. They don't help much if a person is planning to retire earlier.

I don't know about your third world country, but there are ways to access retirement funds earlier than 60 in the US.


I listened to an interview with Ramit on another podcast (I think Mad Fientist), and his message about spending money guilt-free is aimed at those who want to live a life of deprivation to achieve FI earlier. In that context, I think it's good advice, but it's certainly going to be taken out of context by others. Of course, we know that it doesn't cost a lot of money to live a fulfilled life, but that doesn't mean that it is wrong to ever buy anything nice, which I think is what his point is.

I certainly don't consider him "mustachian," but there is room for middle ground between FIRE and consumerist suckas, where guys like Ramit Sethi and Dave Ramsey fit in. If everyone followed his advice, at least 75% of the population would be better off financially than they currently are, so I consider that a good thing.

[Proud Foot]

Oh, almost forgot:

Those of you who are familiar with Ramit's philosophy - he says to create sub-account for savings (engagement ring, new car, new apartment, etc), but as far as I read, nowhere does he explain what is happening with the money. He doesn't say to put it into stocks or other funds, so does that money is suppose to lie idle and rot by inflation? Would appreciate if someone can explain this point.

I haven't read his book so I may be off base with regards to his philosophy towards this. Those items to create a sub-account for savings tend to be short term items. Yes over the long term you can get a higher return by investing (stocks) the money but the short term volatility make investing that money a bad choice. Dave Ramsey makes the suggestion to use a money market account to save for anything if you plan on using that money within the next 5 years. Over a 5 year period you will not lose much to inflation if saved in a high interest savings account.

[RiddleMB]

Just wanted to thank you all for your responses! You folks are awesome!

I very much enjoyed Ramit's interview with Mad Fientist, and he makes more sense to me now.

I don't think Ramit will be among my mentors when it comes to finance, for as Ryan said, his strategy makes little sense if you are already a mustachian.
I do think I was harsh calling him a fraud, but that was exactly my first impression of him.

The biggest thing I'll definetly take from all this is the following:

For those of us who relentlessly pursue FI, I think there's a real danger of mistaking "intentionally spend on things you love and ruthlessly cut on things you don't" for "ruthlessly pursue the most frugal and optimized lifestyle for it's own sake". In that case, maybe hearing Ramit every once in a while isn't such a bad thing.

Cheers!