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There’s an Italian concept called “sprezzatura,” which means “a certain nonchalance, so as to … make whatever one does or says appear to be without effort.”

It’s basically making everything look effortless.

Think about the people in college who would walk into an exam saying, “Ugh! I barely studied for this!” then get a 94%. That’s the idea.

For example:

  • Super fit person: “Oh, I just try to watch what I eat and take a walk every day”
  • Person with amazing skin: “I just drink lots of water!”
  • Person with well-behaved kids: “I just try to spend time with them”

Growing up, I would see these successful people and wonder how they did it. But if you asked them, they would give you these frustratingly vague responses. It seemed like they were just naturally lucky.

In reality, I learned that’s not true.

Every successful person has a repertoire of secret habits they’ve honed over years of practice. They’ll rarely tell you what the habits are, though. (What’s most incredible is that lots of times,  they don’t even realize their own habits!)

My dream was to understand these secret habits.

And my first challenge was cracking the code of sprezzatura — the idea that being the best is just an accident.

In Italy, they applied sprezzatura to fashion. Look at the photos here and notice the “studied carelessness” of the unbuttoned collar, the crooked tie bar, the flipped sleeve (more on men’s sprezzatura style).

In America, we apply this concept everywhere because we want success to seem effortless, nonchalant, casual. Over time, I’ve come to appreciate this. But I also believe this concept of effortless success is destructive. If you look at someone and they give you an offhand answer (“I just watch what I eat!”), it makes success seem like it’s just due to genetics or pure luck.

The reality is that Top Performers practice a carefully coordinated set of secret habits that they rarely talk about.

I’ll show you three examples here.

Celebrities who go on talk shows know exactly what they’re going to say
THE MYTH: Celebrities are naturally charming and come up with amazing stories for late-night talk shows.

THE REALITY: Comedian Martin Short is widely regarded as one of the best talk show guests ever. Here’s what he does before he goes on a talk show.

“What I do for a typical talk-show appearance, and I’m not exaggerating, is I’ll send in something like 18 pages ahead of time,” Short said, adding that he then spends at least ninety minutes speaking with a show’s producer, cutting down his proposed material and shaping it into a conversation he’ll have with the host. What looks almost like an organic chat on TV is really a tightly choreographed two-man bit, with Short doing, as he puts it, “an impersonation of myself being relaxed.”

How “clueless” Facebook mastered optics
THE MYTH: Facebook is a company of nerds who only know about computers.

THE REALITY: They are a massive corporation that knows how PR and optics work.

The truth behind celebrity fitness
THE MYTH: Celebrities are just “naturally” fit.

THE REALITY: They follow incredibly rigorous programs for fitness, nutrition, sleep, and skin care. But the way they talk about it, you would never know.

Read any fitness article and you’ll find mouthwatering photos of eggs and fruit and comments like “I never deprive myself.” The amount of mental machinations in obscuring the effort that celebrities put into fitness (especially women’s fitness) is unreal. And it’s actually completely rational — because if they actually talked about what it truly takes to look like that, people would hate them.

Here’s an example called “The surprisingly normal diet Gal Gadot ate to become Wonder Woman.”

Surprisingly normal! Hmm…

The first photo is a beautiful photo of eggs and fruit. Looks delicious! I could do that!

Then salmon and kale! Yum!

Avocado toast is up next! I love it!

And of course, water. Lots of water.

But wait. What’s this buried way, way down the article?

“Before filming, Gal Gadot spent six hours a day in the gym.”

Oh…

Luckily, there’s a way for the average American to look like Gal. The article says, “InStyle recommends ‘do[ing] 30 seconds of push-ups followed by a 30-second plank hold’ four times every day in order to get Gadot’s guns.”

Right. 30-sec planks and you’ll get her arms.

You know it’s not true. I know it’s not true. But after collectively hearing more and more celebrities lie about their fitness routines, we all start to share a collective wink and move on with our day. After a while, the wink goes away and transforms to the belief that “they” can somehow magically do it … but we can’t.

In reality, if you see a Top Performer — someone with an incredible body, someone who has a profitable business, someone who oozes charm — they have a set of secret habits and skills they’ve honed over time (here’s an example of a model’s Sunday routine).

Most of us didn’t have the benefit of growing up surrounded by Olympic athletes, people with six-figure jobs, or world travelers. So we miss out on learning about these things until it’s too late.

And even when we do learn about these secret habits, we don’t want to do them. (Do you REALLY want to count your macros? Or spend months doing customer research?)

At the core, this is what my team and I try to do every day: uncover the subtle, not-so-obvious habits and actions that make someone a Top Performer and share them with you. And along the way, introduce you to the other weird people, like you, who want to do the same thing.

That’s why we write about invisible scripts, how to talk to anyone, how to build habits that stick, and even social skills — we want to help you close the gap with all of the Martin Shorts and Gal Gadots of the world who have decades of experience and an army of helpers.

If you’re curious, I wrote more on the secret habits of Top Performers here.

I’m glad you’re along for the ride.

The inexact science of how Top Performers make everything look easy is a post from: I Will Teach You To Be Rich.

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One of my favorite things to read is /r/personalfinance.

Here are seven of my favorite posts from the sub — and what YOU can learn from them.

7 valuable Reddit personal finance posts 1. “Paying rent isn’t throwing away money.”

If I ever go bald, know it’s because I tore my hair out every time I heard people say this.

From the /r/personalfinance thread:

While it is true that when you buy a home a portion of your monthly mortgage payment will be going to principal, and therefore you are paying yourself in some ways, however, the cost of home ownership is significant. Some of the lesser known costs include the lack of flexibility, stress, the risk of home price declines, home maintenance, real estate taxes, and HOA fees.

These are also known as phantom costs — the expenses you don’t normally consider when you buy a house.

OP also offers a great mental reframing of rent, saying, “As human beings, there are several things we need to survive, including food and shelter. Paying money for rent is no more a ‘waste’ of money than paying for food is.”

For more, be sure to check out my article on real estate investing myths and my post on how to buy a house.

2. “Your parents took decades to furnish their house.”

It’s easy to look at someone successful and compare yourselves to them. You start feeling like you aren’t doing enough to reach your own goals and might try to rush things to achieve their level of success.

In reality, the most successful people devoted a lot of time and energy into getting to where they are — and you should do the same.

That’s what’s at the heart of this thread about the importance of patience when it comes to your goals:

If you’re just starting out, remember that it took your parents decades to collect all the furniture, decorations, appliances, etc you are used to having around. It’s easy to forget this because you started remembering things a long while after they started out together, so it feels like that’s how a house should always be.

It’s impossible for most people starting out to get to that level of settled in without burying themselves in debt. So relax, take your time, and embrace the emptiness! You’ll enjoy the house much more if you’re not worried about how to pay for everything all the time.

So whether you’re saving for your wedding or trying to get out of debt, know that these things take time and that’s okay. Once you stop worrying about trying to accomplish your goals quickly, you can focus your mental energy on the things you can control to accomplish your goals.

3. “I found out a coworker with the same job is making twice as much as me.”

A fascinating story about a research assistant who finds out she’s being paid MUCH less than a coworker who joined six months after she got the job.

When she raised the issue to management, her boss tried pulling some corporate trickery that’s common with bad companies:

One week later she called me into her office. She absolutely berated me for thinking I could move into the coordinator position for which I was already doing the work, and complained about my work performance. Last month I had an evaluation, and received very high praise for my performance, and there has not ever been complaints about my performance in the past. All in all, I assume she was making excuses not to increase my pay.

Eventually, she was able to find a job at another place that offered her more than she was currently earning — which led to a bidding war between her old boss and her new employer (aka the best position you could possibly be in as a job seeker).

A few lessons for job seekers from this post:

  • Negotiate mercilessly. OP could have just shrugged her shoulders and kept quiet when she found out she could be earning more — BUT she didn’t. She addressed the issue and now has two different companies vying for her work. That’s why it’s always in your best interest to negotiate your salary even if you think you’re earning enough.
  • Adopt an abundance mindset. It’s easy to take any job offer that comes your way — especially when money’s tight. OP had two job offers and knew that if one didn’t work out, the other would be there for her. This is also known as an abundance mentality, and it can be a powerful mental shift for the way you approach finances.
  • Know your worth. The first step to any salary negotiation is knowing how much you’re worth. While websites like Glassdoor or PayScale can help you get a good sense of this, talking to people in your field about their earnings can give you a sense of what you should be making (like OP did). So don’t be afraid to ask. Top Performers do all they can to know what they’re worth.

Be sure to check out my article on how to negotiate your salary and the Briefcase Technique for more.

4. What to do when a loved one dies.

When tragedy strikes, you find yourself asking questions you’ve never even considered before. This /r/personalfinance thread tries to answer one of those questions: How do I handle my finances when someone I love dies?

While the post deals with money accounts and estate issues beautifully, it also goes into the more lesser known parts of dealing with death, like where to get an urn:

The funeral home won’t tell you this, but you don’t have to buy things like urns and whatnot from them. I chose to, because the prospect of receiving a plastic baggie with my husband’s ashes that I would have to deal with was horrifying. A friend bought an urn for his father’s ashes on Amazon. There are options that are cheaper than the funeral home, but I chose to pay the obscene markup so that I wouldn’t have to deal with the logistics.

Overall, it’s a great read for anyone — even if you haven’t suffered any personal tragedies. It’s an excellent perspective on life, death, and where our finances fit in between it all.

5. “We decided not to buy a bearded dragon.”

For some, a Rich Life means a new car, ordering appetizers at restaurants, or paying off their debt. For others, it’s a desert lizard chilling out in a reptile aquarium in their living room.

Or at least that’s what one Reddit user thought when he got ready to buy a bearded dragon for his son’s birthday. When he ran the numbers though, he realized that the investment he’d be making into the pet would be much more than he bargained for.

[We] learned it needs expensive UV bulbs that last about 6 months and are about $40 each. Also the electricity cost the run this heat 24 hours can be a drain on the electric bill.

Also the beardie needs to go to the vet every 6 months for a checkup. And finally, food. They have a very diverse diet and can eat up to $15 per week in foods. So I did a total cost analysis for a beardie that lives 12 years and it turned out to be a whopping $10,000.

This is a great example of figuring out what fits into your Rich Life. I’m a big believer in spending on the things you truly love and ignoring the rest. So if you believe that a bearded dragon will help you live your Rich Life, by all means buy that lizard!

However, if you find that the benefits of caring for a reptile native to sweltering deserts for a decade aren’t worth the money and energy, don’t worry about it. Your Rich Life is what YOU make of it.

Also LOL at this robotically cold statement from a commenter: “It’s about ROI on the pet. Dogs are more fulfilling companions than a lizard. At least that’s the case with OP.”

6. What to do when you lose everything in a fire.

Sometimes we do all we can to prevent disaster — but it ends up happening anyway. Case in point: Losing everything you own in a fire like this OP.

One former insurance worker offered their incredibly insightful advice on how the insurance company is going to approach the situation and what OP should do to get the most out of his claims.

The biggest takeaway: Use the truth to your advantage. The commenter then used an example of how one guy used his situation to net him a five-figure insurance claim.

I remember one specific customer … he had some old, piece of shit projector (from mid-late 90s) that could stream an equally piece of shit consumer camcorder. Worth like $5 at a scrap yard. It had some oddball fucking resolution it could record at, though — and the guy strongly insisted that we replace with “Like Kind and Quality” (trigger words). Ended up being a $65k replacement, because the only camera on the market happened to be a high-end professional video camera (as in, for shooting actual movies). $65-goddam-thousand-dollars because he knew that loophole, and researched his shit.

This goes to illustrate a big point when it comes to anything insurance related: Do your research. Once you know the rules of the game you’re playing (whether it be taxes, insurance, or salary negotiations), the better positioned you are to win.

7. Explain it like I’m 18/22/30/40.

These threads are the perfect place to start if you’re completely new to the world of personal finance (aside from IWT of course).  

These guides break down important themes for your personal finance journey at different stages of your life. They are:

  • ELI18. For when you’re out of the house for the first time and wouldn’t recognize a 401k if it walked up to you and slapped the fidget spinner out of your hand. Great advice on topics like opening bank accounts, applying for a credit card, and even finding a roommate.
  • ELI22. So you’ve graduated college and are out in the “real world.” Scary right? This post makes it a little less scary by providing a solid introduction to taxes, contributing to retirement, and paying off your student loans.
  • ELI30. When you’re 30, a whole new crop of financial questions start coming up. How do I handle money when I get married? How do I buy a house? I have a dog … that’s like taking care of a baby right? This comprehensive post helps answer a few of those questions.
  • ELI40. The name of the game at 40 and beyond is retirement — rather, it’s making sure your investments are best positioned for when you retire. This post is a great primer on planning for the future and beyond.
Why I LOVE /r/PersonalFinance

You probably wouldn’t say anything if a friend or coworker tells you about a money decision you don’t agree with (racking up credit card debt, buying a house with little income, etc.). But if you saw the same issues on Reddit personal finance, you’d let the world know exactly how you feel about their issues and what you’d do instead.

It’s this level of honesty that helps us see how people really use money — and how to use it yourself.

Whether you’re in your forties planning out your retirement or you’re still in high school trying to figure out what to do with your paycheck, I’m glad you’re here.

I want to give you something that can help you take your personal finances to the next level:

The Ultimate Guide to Personal Finance

In it, you’ll learn how to:

  • Master your 401k: Take advantage of free money offered to you by your company … and get rich while doing it.
  • Manage Roth IRAs: Start saving for retirement in a worthwhile long-term investment account.
  • Spend the money you have — guilt-free: By leveraging the systems in this book, you’ll learn exactly how you’ll be able to save money to spend without the guilt.

Enter your info below and get on your way to living a Rich Life today.

7 helpful posts from /r/personalfinance is a post from: I Will Teach You To Be Rich.

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There’s an old joke:

Two fish are swimming in a pond when an older fish starts swimming the other way towards them. When the older fish passes them, he nods and says, “Good morning! How’s the water?” The two fish swim for a while before one of them looks to the other and asks, “What the hell is water?”

Invisible scripts.

Invisible scripts are truths so ubiquitous and deeply embedded in society that we don’t even realize they’re guiding our attitudes and behavior. Like water to a fish, they surround us even if we don’t know it.

This is a topic that doesn’t get discussed often. Mostly because invisible scripts are revealing. And the things they reveal might be some tough pills to swallow.

But, c’mon, this is IWT. We’re going to talk about them.

Invisible scripts and how to find them

Can you think of a belief you have that’s pre-written by your societal values?

For example, in Indian culture, parents will sacrifice virtually everything for their child to succeed. I remember watching a Bollywood movie with my mom (because I’m a great son) and watching a scene where the poor parents give their only air conditioning unit to their son while he studies.

In the movie, young Indian men put aside their “passions” for a stable job, which they can use to support their families. They have little interaction with women before marriage. Anything non-engineering/medical is looked down upon.

We all nod at this saying, “Ah yes, those passionless Indian automatons.” That is until we look at ourselves in the mirror.

Think about some of the biggest ones you might have heard:

  • You need to go to college to be successful.
  • After college, you need to get married, buy a house, and raise a nuclear family with 2.5 kids and a dog.
  • You need to find a 9-to-5 job and grind away in an office until it’s time to retire.

See what I mean? They’re called “invisible scripts” for a reason — and if you don’t realize they’re there or ignore them, they become traps ensnaring you into something you didn’t necessarily even want to do just because you thought you had to.

They’re usually so subtle they’ll pass through your mind completely undetected — all the while influencing what you think, say, and do. That’s what makes them so dangerous.

And invisible scripts don’t have to be “negative” or “false” either. In fact, there are some that you might really believe in even after realizing that they’re invisible scripts.

That’s okay as long as you realize any invisible script you adopt has the power to shape your life tremendously — especially when it comes to money. Over time, certain negative scripts become traps, and their power to hold you back increases significantly.

After years of research, and hundreds of thousands of data points from talking to readers like you, I’ve discovered four specific invisible scripts that most frequently hold us back from a Rich Life. I want to show you them now and give you strategies for destroying them one-by-one.

Invisible script #1: “I don’t have any money so I can’t go to college.”

A while back, I started watching the show “Friday Night Lights.” As someone who hates sports, doesn’t even know what sports season it is, and STILL doesn’t understand how football is scored, I am impressed with myself for watching this show.

Anyway, it depicts a small Texas town and its love of football. True to form, I ignore the football parts and focus on analyzing the meta-messages. I know, I am really fun at parties.

“Friday Night Lights” explained a lot of things that have puzzled me about American culture. For example, in one episode, the dad spends his daughter’s college money, prompting her to say, “Now I can’t go to college!”

I was confused. Huh? You don’t have money saved, so you can’t afford college? What?

Unfortunately, this is what most Americans believe: That if you don’t have money, you can’t go to college. This belief is reflected in our culture (TV shows), our educational system (high school counselors), and even our businesses (banks that promote 529s with fear tactics).

Of course, it’s simply not true. If you don’t have money, you can still go to college if you know where to look.

SOLUTION: Apply for scholarships, loans, and grants.

My family didn’t have a lot of money when I grew up, and I went to one of the top universities in the country via scholarships (how I won $100,000+ of scholarships). But even if I hadn’t done that, there were still MANY options:

  • Student loans (no, they are not uniformly evil, despite what everybody says)
  • Grants
  • Work-study/part-time job, etc.

In fact, the cultural script of “No money = no college” is even more absurd when you actually know how college admissions and financial aid work. If you are poor — but you’re skilled enough to get admissions — most top universities will pay for your entire education. This is why you should apply to the best universities you can, regardless of money.

Yet “Friday Night Lights” reflects our cultural values, which are so deep-seated that we don’t even blink. No money = no college. Of course!

But that’s just an assumption — like so many of the invisible scripts that guide our lives.

Invisible script #2: “I need to ‘figure things out’ before I decide to earn more money.”

We think more information alone will change everything.

It’s human nature. Think about the people in your life (it could be you!) who obsessively research a product before buying it, or read thousands of articles on a hobby before picking it up … but never get to it because they’re so overwhelmed by information.

This is also called “paralysis by analysis.” And we even hear this invisible script from professors and so-called experts. “Give people information so they can make the right decision.”

We internalize the idea that information alone will help us make a change. So we start saying things like, “I need to do some research” or “I need to figure some things out before I start …”

The truth is if we wait on information alone we never take action to accomplish our goals. We already know what we need to do. Do you think that an overweight person doesn’t know they need to eat less and work out more? Do you think someone in debt doesn’t know they need to stop overspending?

When consuming more information doesn’t work, we shift our attention to new learning tactics. But there’s one thing we forget: By focusing on tactics, we’re still doing the same things we have been doing all this time.

What are we missing?

SOLUTION: Get out of “research mode” and take action.

The belief that we need more information prevents us from taking action and learning from real and painful mistakes.

As we get older, we stop exposing ourselves to areas like this where we might fail. Instead, we read blog after blog about the topic to give ourselves the feeling that we’re doing something.

So how do you finally get off the sidelines and take action?

I like to use a technique Jeff Bezos, CEO of Amazon, uses: Regret-Minimization Framework.

Whenever you come upon a task or a goal you want to accomplish, ask yourself, “Will I regret not trying this when I’m 80 years old?”

Top Performers know success isn’t just about tactics or more information. They don’t lean on the same “mental crutches” most people use. And neither should you.

Invisible script #3: “I don’t have a business idea.”

One of the best ways to increase your earning power is to start a side hustle. In my course, Earn1K, I’ve taught thousands of students how to successfully create a side income stream that brings in at least $1,000 per month (and often much more).

Still, one of the most common invisible scripts people fall into is “I don’t have a business idea.”

Usually, this psychological barrier comes in one of several varieties:

  • “I have no idea what skills I have that people would pay for.”
  • “I have lots of great ideas, but I’m not sure how to even start turning them into money.”
  • “Every idea that I think of has already been done somewhere else. I need something ‘original.’”
  • “I start idea after idea, but I never follow through. What should I do to stick with one idea?”

If you’ve ever tried to start a side business, then ran into one of these traps, you’re not alone. But how do you overcome them?

SOLUTION: Ask yourself the three questions.

There are three questions you can ask yourself that’ll give you great ideas for side hustles once you answer them.

They are:

  1. What knowledge have I acquired? Major in Spanish? Great at woodworking? Are you an accomplished guitarist? People will pay you money for you to teach them those skills too.
  2. What do I do on a Saturday morning? Great question to see what you’re passionate about. We all have things we love to do on Saturday mornings before everyone else is awake. Are you at the gym training? Reading dating advice blogs? Working on your car? These are all viable side hustles!
  3. What challenges have I overcome? You can actually turn your most vulnerable and painful moments into a great freelancing gig. Did you struggle to lose weight for years before figuring out how to get in shape? Are you an introvert who’s learned to overcome shyness to be more sociable? Find an answer to this question and you’ll find a profitable idea.

Try answering those questions and come up with 15-20 answers. Once you do, you’ll have 15-20 side hustle ideas you can start today.

If you’re still struggling, below are my best resources on side hustles:

Invisible script #4: “I’ll never get a raise/find a job in this economy!”

Ever since the 2008 housing crisis, it seems like the media is always telling us that we should feel lucky to have any job at all. And if you don’t have one, well you’re S.O.L.

Most of us accept this. We believe that companies don’t have money to give us a job or a raise. We believe that even asking for something like that will have you laughed out of a manager’s office.

And many fall prey to this for two reasons:

  • It’s easier. If we accept that there’s a force out of our control (i.e., the economy) dictating whether or not we get a raise or a job, we feel much less pressure to put in the effort of making more money. We cocoon ourselves in it, hoping that we’ll somehow emerge on the other side as some kind of money-making butterfly — when that’s not the case.
  • It appeals to the lowest common denominator. The mass media produces fear for the lowest common denominator. I don’t give a damn about them. I’m not writing this for people who are okay with their 3% cost-of-living raise and shuffle back to their cubicles, thankful they have a job at all.

The truth is there’s a lot companies don’t want you to know.

SOLUTION: Put yourself in the company’s shoes.

I’ve been on both sides of the negotiating table many times. I’ve negotiated my compensation as an employee and consultant, and I’ve had my staff negotiate against me.

Let me share the biggest insight from having those two very different perspectives: $5,000 means less to a company than it means to you.

Let’s assume your current salary is $60,000. That means your company is paying around $100,000 “fully loaded,” when they include taxes, health insurance, benefits, furniture, and everything else. And that’s just for junior people!

If your company employs 10+ people, they’re likely doing at least seven figures in revenue — often many, many times that. $5,000 is nothing to a large, medium, or even small company! They do not want to lose you over a few thousand dollars. That’s pocket change to them.

Companies spend an average of approximately $6,000 recruiting new college graduates. As you get more and more senior, that number increases. Factor in training and onboarding, and your company has already spent well over $10,000 just in hiring you.

Keeping their business running is far more important than counting pennies to them — and for most companies, that’s exactly what $5K or $10K is equivalent to.

Curious about the exact words to use when asking for a raise? Watch this video where I reveal the exact, word-for-word script.

How to Ask For a Raise The Right Way, with Ramit Sethi - YouTube
Invisible scripts prevent us from earning more

Do you see the invisible scripts that guide our lives?

Here are some others:

  • “I should follow my passions”
  • “I should hook up with a lot of people before I settle down”
  • “I work hard, so I deserve this nice apartment”
  • “My kids should take care of themselves after they graduate from college”

Each of these scripts is so deeply embedded in our culture that we don’t realize they’re there. They prevent us from doing the things we love and living our Rich Life.

I’m not going to let that happen to you. To help, my team and I have worked on something for you:

The Ultimate Guide to Making Money

In it, I’ve included my best strategies to:

  • Create multiple income streams so you always have a consistent source of revenue.
  • Start your own business and escape the 9-to-5 for good.
  • Increase your income by thousands of dollars a year through side hustles like freelancing.

Download a FREE copy of the Ultimate Guide today by entering your name and email below — and start earning more today. 

How to identify invisible scripts that control our lives is a post from: I Will Teach You To Be Rich.

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Knowing how much car you can afford is the first step to buying one.

Also, water is wet.

If you’re confused about how much you should spend, don’t worry. Just use this rule-of-thumb: Spend no more than 10% of your gross monthly income on your car expenses. That includes things like the car payment, interest, insurance, and even gas.

Of course, the 10% rule isn’t exactly a one-size-fits-all solution. That’s why I want to take a deeper look at buying a car — and show you tactics to get the most out of your car negotiations.

  • 20/4/10 rule for how much car you can afford
  • A different look at buying a car
  • Dos and Don’ts of car purchases
  • How to buy the car you want with conscious spending
  • Earn more money for your dream car
Find how much car you can afford with 20/4/10

I love financial back-of-the-napkin tricks. They can help you roughly answer hairy finance questions quickly so you don’t slave over calculations and waste time.

The 20/4/10 is a good example of one. It can help you get solid starting numbers to help your car buying decisions.

Here’s how it works:

  • 20% down payment on the car.
  • 4-year car loan or less.
  • 10% or less of your gross monthly income goes towards car expenses including gas, insurance, DMV fees, repairs, parking/speeding tickets, and interest payments.

Imagine you want to purchase a new car for $30,000 and you earn roughly $50,000 a year. That means you need to put at most a down payment of $6,000 (20% of the cost) and spend no more than $417 a month (10% of your income) on expenses for it.

A different look at buying a car

It’s funny. People make a huge effort to save on things like clothes and eating out — but when it comes to BIG purchases like buying a house or a car, they make awful decisions and erase any savings they’ve made.

How many times have you seen someone sink a bunch of money into a flashy luxury car with with a bunch of unnecessary additions … only for them to end up trying to sell it with a few years?

What they fail to take into consideration is TIME. More specifically, how long you plan to keep the car before you sell it. It doesn’t matter how good of a deal you get on a new car. If you sell it after just a few years of owning it, you’ve lost money.

That’s why it’s important that you pick a reliable car, maintain it, and drive it for as long as humanly possible. It’s only when you finish paying off the car that the real savings start.

Also, by taking good care of your car over the long-term, you save even MORE money on it — and you’ll have a great car. And there are a few solid indicators to what makes a good car:

  • Reliability. When I bought my car, above all, I wanted one that wouldn’t break down. I have enough stuff going on in my life, and I want to avoid repair issues that cost time and money as much as possible. Because this was a high priority, I was willing to pay more for it.
  • A car you love. Long time readers know I’m a big fan of conscious spending (more on this later). For me, I knew I’d be driving the car for a long time, so I wanted to pick one I really enjoyed driving.
  • Resale value. One of my friends bought a $20,000 luxury car, drove it for about seven years, and then sold it for 50% of the price. That means she got a fantastic deal.
  • Insurance. The insurance rates for a new and used car can be pretty different. Even if they’re only slightly different (say, $50/month), that can add up over the years.
  • Fuel efficiency. Gas prices seem to always be in a state of flux. Consider a fuel-efficient, or even hybrid, car. Gas mileage is an important factor in determining the long-term value of a car.
  • Down payment. This is crucial. If you don’t have much money for the down payment, look to getting a used car. If you put down $0, your interest rate will be much higher. Don’t do this.
  • Interest rate. The interest rate on your car loan depends on your credit score. That’s why you want to make sure your credit score is in top shape when you finally apply for the loan.

If you truly want to get the best deal out of your car purchase, you’re going to have to negotiate IWT style.

How to negotiate the price of your car

Negotiate mercilessly with dealers. And if you’re not willing to negotiate, learn how to.

I’ve never seen as many people make bad purchasing decisions as when they’re in a car dealer’s office. If you’re NOT there to play hardball, dealers are going to see that and take advantage of you. It’s their job to do that. And they have years of practice before you ever walk in the door.

Luckily, you have one powerful chip in your stack: the dealer’s quotas.

The best time to buy a car is in December. That’s the month when dealers all over the country are desperate to hit their annual quotas.

This gives you an advantage when you come in to negotiate a car in that month.

Here’s another tip: Have the dealers fight over you.

When I decided to get a car in my last year in college, I contacted over a dozen dealerships, told them exactly what kind of car I wanted, and said I’d go with the lowest price offered to me.

And guess what? The offers came in like an AVALANCHE. I remember brewing up a cup of tea, and watching my fax machine (Don’t make fun — this was a while ago!) light up as different car dealerships tried to convince me to buy from them. It resulted in a bidding war that led to me landing a car $2,000 under invoice.

Try that technique out for yourself. Also make sure you practice and study up for the negotiation. Here are some of my best resources about that:

Also be sure to check out my video on buying a car below.

Ask Ramit: Should You Trade In Your Car and Buy a New One? - YouTube
The dos and don’ts of buying a car

When you start your car buying journey, be sure to keep in mind my four dos and don’ts about buying a car:

DO buy for the long haul

A lot of people want to prioritize how a car looks over anything else. What color is it going to be? Two-door or four? Can a spoiler be too big?

Never.

But you should really prioritize getting a good, reliable car that you’ll be able to drive around for at least 10 years.

Why? Cars are a long-term investment. This isn’t like a pair of shoes you’re going to wear for a year or two before getting a new pair. A car costs a HUGE amount of money. You’re going to want to get one that lasts a why since it’s only going to get worse and less valuable over time.

Here’s a complicated graph explaining this.

DO find deals for graduates

Plenty of dealerships have great programs for recent grads looking for new cars. These often come in the form of rebates or specialty financing.

Two ways to find these deals:

  • Google it. This should really be the first step to anything. Do a simple Google search for recent-graduate car incentive program. Actually, I’ll just do it for you. You’ll also want to specify your city to see your local deals.
  • Ask the dealer. When you’re negotiating with your dealership, be sure to ask them what they offer in the way of new graduate car incentives.
DON’T think you need a used car

Buying used isn’t the only way to save money on a car. Over the long term, a new car might actually end up saving you money if you:

  1. Pick the right new car
  2. Negotiate a low price
  3. Drive it for a long time

I’d rather you get a new car that’s reliable than purchasing a used car that’ll break down sooner.

DON’T break from your budget

Set a realistic goal budget for your car and don’t go over it. Other expenses will come up — maybe car related, maybe not. You don’t want to end up struggling because you can’t afford your monthly car payment.

You don’t have to worry about stretching, though, if you have one thing in place: A Conscious Spending Plan.

How to save money for a car

You can make sure you have even more money to get the car of your dreams by implementing a Conscious Spending Plan.

The typical way people look at saving money for a big purchase like a car typically goes like this:

  • Step 1: Stop purchasing the things we love like lattes to save money.
  • Step 2: Spend money anyway on other things.
  • Step 3: Go back to buying lattes.
  • Step 4: Feel bad. Repeat first step.

That’s where the Conscious Spending Plan comes in. This is the exact same system my friend has used to spend five grand a year on shoes.

I can feel your eye-rolling judgement through the computer screen now. How can anyone in their right mind spend so much on shoes each year?

Well consider this:

  1. She makes a healthy salary.
  2. She doesn’t spend much on other things.
  3. She has a system in place that allows her to know exactly how much she can spend each month.

But most importantly: She just LOVES shoes.

And her system allows her to buy 10 to 15 pairs of shoes each month — each of them costing around $300 – $500 a pair.

After investing in her 401k and paying off her fixed monthly payments like rent and utilities, why wouldn’t she use her money to buy the things she loves?

You can use the same system to buy a car. Imagine being able to walk into the dealer and driving off the lot in the car of your dreams, resting easy in the fact that you were able to pay for it.

That’s why I want to offer you a free chapter of my New York Times best-selling book I Will Teach You To Be Rich.

In it, you’ll find the exact system you can use that’ll help you both earn more money and start saving for an awesome car.

Enter your information below and get the chapter for free today.

Find out how much car you can afford with 20/40/10 rule is a post from: I Will Teach You To Be Rich.

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New Year’s resolutions are kind of like a drunk uncle. You know you shouldn’t take him too seriously … but you can’t help but laugh and play along when he comes around once a year.

It’s become popular for people to make fun of New Year’s resolutions (they never work!) in an almost gleeful way (why don’t these fake January people get out of my gym??), but few people understand WHY these resolutions don’t work.

The reason is simple: They’re too broad.

When we have a goal like “I want to get healthy,” we set ourselves up for failure because we don’t know where to start.

I know because I used to do the same thing. Back when I was first growing my business, I was in the middle of writing my book and just feeling overwhelmed.

One of my friends asked me, “What’s your number one goal?”

I told him, “I want to be a best-seller, but I also want to generate $X million in revenue and I want to do this publicity and blah blah blah —” He cut me off and said, “Cut the BS. What’s your number one goal?”

Again, I hedged. But he pushed me and forced me to get crisp. Finally, I said, “I want this book to be a New York Times best-seller.”

There it was. We hate giving ourselves constraints because it feels limiting. It feels like we’re giving something up, and that’s exactly what it felt like in that moment.

However, it’s also freeing at the same time. Once I actually said that I wanted to become a New York Times bestselling author out loud, it became crystal clear what I needed to do in order to achieve my goal. I focused all of my attention on those things.

If you want to become successful — in any area of your life — you have to have that kind of focus.

I want to show you how to set goals that’ll give you focus. At IWT, we have THOUSANDS of students who have had their lives changed because we showed them how to set good goals. We know the exact systems to do this and now we want to show you how.

Why New Year’s resolutions fail

A while back, I asked some of my students how they felt after claiming they were going to do something … and then NOT doing it.





I wasn’t surprised at all. While researching one of my courses, I discovered that we would rather continue doing something that doesn’t work than try something new that COULD work — but also could fail. In other words, we’d rather KNOW we’ll fail in a familiar way than fail in a new way.

That sounds insane … but think back to your resolutions from last January. Did you follow through? Do you even remember what they were? Yet how many of us were tempted to make more resolutions this year?

Three more examples:

SAVING ON POINTLESS EXPENDITURES: This is why you see people constantly trying to cut back on lattes or other pointless savings goals … and when it fails, they resolve to “try harder” next time. Code words: “I did all the right things … and look how it turned out.”

WORKING OUT INCORRECTLY: This is also why you see people who’ve been working out for years but don’t really show any visible changes. It’s scary for them to admit that perhaps they’ve been working out wrong for years — and that while it makes them feel “good,” they are not getting the results they want. Code words: “I’m not the kind of person who can lose that kind of weight” or “Lift weights? I’m a girl. I don’t want to get huge!”

SENDING OUT 100+ RESUMES: We have people who send out 100 resumes, then complain about the economy. They never understand that there’s an entire game being played around them, and Top Performers are snatching the best jobs away before average candidates ever see them. Code words: “The Baby Boomers and immigrants stole my jobs … I guess I just need to send out another 50 resumes and wait and see.”

So yes, we want to change, but don’t know HOW to do it. So we do what’s easy, and what the media tells us to do: Make a New Year’s resolution!

Here’s why New Year’s resolutions fail:

  • They’re unspecific. We say “I want to get healthy this year” but when faced with the birthday parties in March, the overtime in June, and the family vacation in August, that goal falls by the wayside.
  • They’re unrealistic. “I want to go the gym 5x/week.” Really? You averaged twice a month last year. Setting unrealistic, highly aspirational goals is a quick way to guilt and failure.
  • They’re based on willpower, not systems. We say, “I want to walk more” instead of parking our car 10 minutes away. We say, “I want to stop messing around and go to sleep earlier” instead of testing different ways of falling asleep (like leaving our laptop in the other room, unplugging our TV, quietly covering our partner’s face with a pillow, etc.). Hey, it’s a test.

But here’s the most haunting part of all: Failing at our resolutions has implications. We start to distrust ourselves. If you’ve set the same resolutions for 5 years, and you never follow through, what makes you think you’ll be different this year?

And yet every year, we set yet another one (because that’s all we know), saying things like, “Ok, this year I’m going to buckle down” and “I’m gonna get serious about ____ this time,” but as we say it, in the back of our heads we KNOW we’re not actually going to do it.

Having a goal isn’t enough. We need a plan and a system.

Enter the SMART Objective.

SMART Objectives: The cure to inferior goals

The SMART goal is the be-all, end-all solution to vague goals that get you nowhere.

SMART stands for specific, measurable, attainable, relevant, and time-oriented. And with each element in SMART objectives, you’re going to want to ask yourself a set of questions that’ll help you develop a winning goal.

  • Specific. What will my goal achieve? What is the precise outcome I’m looking for?
  • Measurable. How will I know when I’ve accomplished the goal? What does success look like?
  • Attainable. Are there resources I need to achieve the goal? What are those resources? (e.g., gym membership, bank account, new clothes, etc.)
  • Relevant. Why am I doing this? Do I really WANT to do this? Is it a priority in my life right now?
  • Time-oriented. What is the deadline? Will I know in a few weeks if I’m on the right track?

Let me show you the difference between SMART and BAD goals:

I asked some students to share their goals for the week:

These seem like good goals, but they are actually terrible.

Then I gave them some feedback, and they got much better after that.



These new goals work because they employ the SMART Objective. Here, let’s break one down:

You can see how being specific, being realistic, and using systems can help you actually achieve your goals.

If you want to improve your health or find a job that pays you 25% more, hope and willpower aren’t going to cut it. Just like they didn’t cut it last year. Or the year before.

You need a system. Let’s practice building that today.

TO DO TODAY:

I want you to set a SMART Objective for something you want to accomplish THIS WEEK — and then I want you to do it.

You can start by turning a crappy goal you already have into a good one. Here are some more examples of this:

BAD GOAL: I want to be fit.

SMART GOAL: I’m going to run for 15 minutes a day for the next 3 months.

###

BAD GOAL: I want an internship that’s rewarding.

SMART GOAL: I want to intern at an independent publishing house focused on fiction in San Francisco this summer.

###

BAD GOAL: I want to be rich.

SMART GOAL: I’m going to invest 5% of my paycheck into a low-cost, diversified index fund every single month.

###

Do you see the difference between the SMART goals and the bad, vague ones? When you get specific, you know exactly what you want and the measure by which you can achieve it.

Become a Top Performer

To be a Top Performer, you need to be able to set successful goals and establish good habits.

After all, successful people don’t just stew in their guilt. They systematically attack it and identify winning habits to avoid it in the future.

That’s why my team and I created the Ultimate Guide to Habits. In it you’ll learn:

  • How to set goals — the RIGHT way. Most people don’t know how to set good goals. They just think of something they want and then start “trying” to make it happen. When they don’t get what they want, they’re left wondering what went wrong. I’ll teach you the best way to set and reach your goals.
  • Creating a functional habit loop. Have you ever wondered why it’s so tough to make little changes in your life? And why some people seem to be able to do it with ease? I’ll teach you a simple system that makes forming and keeping new habits effortless.
  • How to make any habit last forever. Most are often left wondering, “Why did I lose my motivation?” I’ll teach you why relying on motivation is a loser’s game — and what to do if you ever get off track.

Imagine 30 days from today, jumping out of bed early with tons of energy. You actually LOOK FORWARD to the day — no more feeling frazzled or guilty for not doing enough the previous day — because of the new “peak performance” tools you’re using now.

Maybe you want to start eating healthier, or cook a meal once a week. Maybe you want to start a business, or even just read one book a month.

No problem. Start small. Pick one or two things to use these powerful techniques on, and watch what happens.

Just sign up below and I’ll send you a free copy of the Ultimate Guide to Habits right away.

Why New Year’s resolutions fail is a post from: I Will Teach You To Be Rich.

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Income producing assets are investments that allow you to make money passively.

They’re great for supplementing your regular income — and many investors use them so they can pay all of their life expenses.

So income producing assets can give you freedom and control since you can worry MUCH less about money coming in. That means being able to work when and how you want — not because you have to in order to pay rent or buy groceries.

While it seems like a fantasy someone imagined while sitting in their cubicle, it’s entirely possible. People have done it before. And with a little bit of research, dedication, and sweat equity, you can earn money passively through income producing assets, too.

We want to show you how.

Income producing asset definition

An income producing asset allows you to generate revenue consistently and passively.

Though, an income producing asset that’s 100% passive is incredibly rare. Any investment you make is going to take a bit of work up front. This is pure 80/20 though. Once you set up your investments, they’ll continue making money for you as long as you want them to.

7 income producing asset ideas to start today

Below are seven income producing assets that you can invest in to start earning you passive income.

I’ve split the list up into two ways: Safe and risky. The former are assets I consider to be more conservative and proven that you can start investing in. The latter are a bit more aggressive — but can yield great results if done right.

Without further ado …  

Safe income producing assets

These are conservative, low-risk income producing assets. The trade-off to its low volatility though is that you won’t earn as much as more aggressive assets. It’s still a good idea to have a few of these in your portfolio to ensure proper diversification.

1. Certificates of Deposit (CDs)

A certificate of deposit, or CD, is a low-risk financial investment offered by banks.

How they work is simple: You loan the bank money for a set amount of time known as a “term length” and you gain interest on the principal during this time.

A typical term length is anywhere from three months to five years. During this time, you won’t be able to withdraw your money without taking a penalty hit. BUT it’s pretty much assured that your money is growing at a fixed rate.

The interest rate varies on how long you are willing to invest for. The longer you loan money to the bank, though, the more you can earn.

And since CDs are insured by the FDIC up to $250,000, they’re incredibly low risk.

But there are a few drawbacks:

  • Inflation. The average inflation rate in the U.S. over the past 60 years is 3.7% — which stands on the high end for most CD interest rates. This means you can actually lose money if you keep your money in CDs because of inflation.
  • Low aggressiveness. If you’re young, that means you can stand to be a lot more aggressive with your investments (because you have more time to recover from any losses). Your potential for growth is much higher. This allows you more wiggle room to invest in riskier assets and potentially earn more money.
  • Length of investment. You might not be able to part with your cash for a long time — especially if you have other financial goals in the near future (buying a home, vacation, weddings, etc.).

If you want a low-risk investment that ensures you peace of mind, CDs might be for you.

2. Bonds

Much like CDs, bonds are like IOUs. Except instead of giving it to a bank, you’re lending money to the government or corporation.

And they work similarly to CDs as well — which means they’re:

  • Extremely stable. You’ll know exactly how much you’ll get back when you invest in a bond.
  • Guaranteed a return. You can even choose the amount you want a bond for (one year, two years, five years, etc.).
  • Smaller in their returns, especially when compared with aggressive investments like stocks.

If you want to know exactly how much you’re getting back, bonds are a great investment.

For more check out our article on bonds here.

3. Real estate investment trusts (REITs)

The U.S. Congress established real estate investment trusts, or REITs, in 1960 to give people the opportunity to invest in income producing real estate.

REITs are like the mutual funds of real estate. They’re a collection of properties operated by a company (aka a trust) that uses money from investors to buy and develop real estate.

They’re a fantastic choice if you want to get involved with real estate investing but don’t want to make the commitment of purchasing or financing property. Like with most blue-chip stocks (more on those later), REITs pay out in dividends.

REITs also focus on a variety of different industries, both domestic and international. You can invest in REITs that build apartments, business buildings, or even healthcare facilities.

(NOTE: There are some taxable implications for REITs.)

In all, they are a straightforward way to get involved with real estate without having to eat the upfront cost of buying property. To get started, go to your online broker and purchase a REIT like you would a typical investment.

One I suggest? The Vanguard REIT ETF (VNQ). This is Vanguard’s ETF fund that tracks a REIT index from MSCI Inc, a noted investment research group.

If you don’t know how to do that, that’s okay! Check out our article on mutual funds to find out exactly how you can open one.

Risky income producing assets

The following are riskier investments that might require more active management on your part. The earning potential for these investments is high. If you put the time and effort into these assets, you might find yourself with a nice sum of money to show for it.

1. Dividend yielding stocks

Some companies pay out earnings to their shareholders each quarter via dividends. These are known as “blue-chip stocks” and tend to be reliable and able to weather most economic downturns.

Many investors like to add a few dividend paying securities via blue-chip stocks in their portfolio to ensure that they receive earnings consistently throughout the year. And while some like to hand pick individual shares to invest in, you can get started by investing in index funds that specialize in high-yielding dividends.

A few suggestions below:

  • Vanguard Dividend Appreciation Fund (VDAIX)
  • Vanguard High Dividend Yield Index Fund (VHDYX)
  • Vanguard Dividend Growth Fund (VDIGX)
  • T. Rowe Price Dividend Growth Fund (PRDGX)

2. Property rentals

Renting out property seems simple enough:

  1. Buy a house or apartment building.
  2. Rent out the rooms to tenants for a nominal fee.
  3. The rental checks come in like gangbusters each month while you sip piña coladas and make passive income.

Hell, that DOES sound awesome — but it’s also a complete oversimplification. In fact, renting out property is anything but relaxing. That’s because you’re responsible for all facets of the building you’re renting out as the owner. That includes repairs, maintenance, and chasing down tenants who don’t pay you rent.

And god help you if they do miss a rent payment. If that happens, you’ll have to find another way to pay your monthly mortgage payment.

You CAN make money from renting out properties (many people do!). It’s just that doing so can negatively affect your finances in a BIG way. Check out our house poor article for a good example of that.

If you’re interested in purchasing properties to rent out, be sure to check out our article on buying a house for more.

Luckily, with the rise of services like Airbnb, you can just rent out a spare room in your house and not worry about buying a separate apartment unit. You simply sign up for the platform and take advantage of short-term rentals. You’ll still have to deal with certain pains of property management but you’ll be able to leverage property you already own (e.g., spare bedroom in your house).

3. Peer-to-peer lending

Also known as “crowdlending,” peer-to-peer (P2P) lending allows investors to essentially act like a bank. You loan money to others via a peer-to-peer lending platform (such as Lending Club), and later they pay you the money back with interest.

Unlike a bank though, the person seeking the loan doesn’t have to deal with financial background checks or incredibly high interest rates due to things like bad credit history.

P2P lending isn’t without risks though. In fact, relying on someone with crappy credit to pay back a loan might be one of the riskiest financial investments you make. But if you’re willing to devote yourself more to learning about the platform and use money you don’t mind losing, it could be a very fruitful financial investment.

4. Creating your own product

This is one of my favorite ways to make money. Not only is it low cost but it’s also easily scalable — meaning the sky’s the limit for your earning potential.

And you don’t need engineering or carpentry skills to create your own product either. In fact, you probably use products every day that you can create too:

  • E-books
  • Online courses
  • Podcasts
  • Webinars
  • Whatever!

These digital information products are perfect ways to earn money without sacrificing overhead.

BUT they come at a cost: Your time and energy. Not only do you actually have to create the product, you also have to make sure that the product will sell.

That’s why we’ve devoted our sister site, GrowthLab, to helping entrepreneurs create, grow, and scale their businesses. Check out the site today for more information on how you can get started with information products too.

Earn more money today

Income producing assets are a great way to supplement your income through your investments.

If you want to learn how to make even more money, my team and I have worked hard to create a guide to help you earn more today:

The Ultimate Guide to Making Money

In it, I’ve included my best strategies to:

  • Create multiple income streams so you always have a consistent source of revenue.
  • Start your own business and escape the 9-to-5 for good.
  • Increase your income by thousands of dollars a year through side hustles like freelancing.

Download a FREE copy of the Ultimate Guide today by entering your name and email below — and start earning more today.  

7 income producing assets to invest in today is a post from: I Will Teach You To Be Rich.

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The perfect credit score is 850 — and it’s a lot easier to hit (or come pretty damn close to) that number than you think.

Trying to get a perfect credit score is also a great financial goal to have, right up there with:


Pictured: The (obscenely) Rich Life.

That’s why we talked to three people with perfect credit scores. They gave us their history, the credit cards they use, and what they’ve done to attain perfection.

Later, we’ll also give you a system on how YOU can get a great credit score.

First, let’s take a look at what makes up your credit score — and why that matters.

What is the perfect credit score?

The perfect credit score is anywhere between 800 and 850.

That’s based on a range developed by a data company called FICO [Fair Isaac Corporation].

NOTE: There are other credit score ranges out there (one even goes as high as 900). But the most commonly used one is FICO.

Their scores are between 300 and 850. Your individual number is determined by information found on your credit report.

And there are three major credit bureaus that provide these reports (Equifax, Experian, and TransUnion). So you can have three different credit scores at any time. Granted, the scores won’t often differ that much from each other.

The following pieces of information determine your actual score (courtesy of Wells Fargo):

  • 35% payment history. How reliable you are. Late payments hurt you.
  • 30% amounts owed. How much you owe and how much credit you have available, or your “credit utilization rate.” And the formula for it is simple: (how much you owe) / (total credit available).
  • 15% length of history. How long you’ve had credit. Older accounts are better because they show you’re reliable.
  • 10% how many types of credit. If you have more lines of credit open, the better your score will be.  
  • 10% account inquiries. How many times you have or a lender has checked your credit background.

850 is technically the perfect credit score … but any score between 800 and 850 is often said to be “perfect” as well.  

How? Take a look at the chart below:

Things like approval for loans and credit cards and interest rates won’t differ when your score is in the 800s.  

Also, it’s very rare to get 850. In fact, only one in nine Americans has a credit score of 800 or higher. And just 1% have a credit score of 850 (Source: USA Today).

3 lessons from perfect credit scores

It’s not impossible though. You CAN attain a perfect credit score through surprisingly simple systems.

That’s why we talked to three people within this perfect credit score range and had them break down how they got their perfect credit scores.

Allow me to introduce you to them now:

Meet Randall, the finance teacher

Randall has a credit score of 842. He lives with his wife and toddler just southwest of Salt Lake City in the town of Herriman, Utah. There, he does God’s work as a high school finance teacher.

Meet Derek, the manager

Derek has a credit score of 829 but his credit used to be … well, less than perfect. “I used to think that credit cards were a sucker’s bet,” he explains. “So I paid bills using checks or auto-debit. While my credit score didn’t look terrible, I had essentially no credit history apart from utility bills and a couple bank accounts.”

This all changed one day when he needed to buy a car. “I needed to get a car loan of a pretty modest amount,” he says. “NOPE, not without a crazy interest rate. My score wasn’t bad, but the lack of history was a serious problem. So I applied for a decent credit card, just to see where the floor was. That was declined. At that point I started reading up on how to build up great credit.”

Meet Harry, the product marketer

Harry has a credit score of 830. He got his start building credit early in high school when his parents put him on as an authorized user on their credit card.

“They told me something I’ll never forget,” he recalls. “‘Credit is a tool. Treat it like a loaded gun.’”

After speaking with the three of them, I’ve distilled their insights into three lessons to help anyone improve their credit score:

Perfect credit score lesson #1: Start small and scale

Randall, the teacher:

“I got a credit card when I turned 18 and didn’t know exactly what I was doing with it. My parents both filed bankruptcy twice so I learned exactly what NOT to do from them.

“Then in college, I turned into a dollar-to-dollar Excel spreadsheet kind of guy … I have my whole personal finance system automated to pay off my card each month and I keep my accounts active — even the card I had when I was 18. Then one day, I realized I had a credit score in the 800s.” 

Derek, the manager:

“I went to my bank and got a secured credit card of $500. Then I had it auto-pay out of my checking account. I paid all bills on time, no exceptions.

“I also set an alert to remind me every six months to request an increase on my spending limits on my credit cards. Once I had over $100k in available credit, my utilization was always rated ‘Excellent’ on my credit monitoring app so I stopped worrying about it.”

Harry, the marketer:

“When I went from 20 accounts opened in my lifetime to 22, that was the magic number that pushed me over the edge to have a near-perfect score. I think it also helped that I started building credit in high school when my parents made me an authorized user.” 

Perfect credit score lesson #2: Be boringly consistent

Randall, the teacher:

“I mean this in the nicest way possible: If you just don’t be a dumbass, your credit is going to be great. Don’t buy shit you don’t need and pay your bills, then you’ll have a good credit score. That’s what I did and I got a great credit score because of it.”

Harry, the marketer:

“If you do the basic stuff — automated finances, getting and building credit each month — you’ll have to wait a few years but it will eventually work out. For me, I don’t even care about what my credit score is. I don’t care at all. Right now, I’m focused on work, and my family, and everything else. The credit score doesn’t even come up on my radar when I do my financial planning.”

Perfect credit score lesson #3: Focus on the 80/20

Randall, the teacher:

“Pay off at least some of your statement each month. Don’t get me wrong. You should do all you can to pay your credit card statement in full. But if you don’t have enough money for one reason or another, you should still pay a small amount. Some payment is better than nothing when it comes to your credit score.”

Derek, the manager:

“Implement a schedule for everything. This takes a while. Bills have to be paid, credit needs to be increased, etc. I set recurring reminders on my smartphone and implement autopay.”

Harry, the marketer:

“As long as you’re making automated payments each month and you have a low credit utilization ratio, none of the rest really matters.”

How to get a perfect credit score

What do you notice about our three perfect credit score holders’ answers?

A perfect credit score takes time. You won’t get it right away — especially if you’re just starting to build credit.

Like Harry said, though, this is all 80/20. The small amount of work you put in now will pay off in spades later.

And you don’t need to do anything crazy either. In fact, here are four steps that’ll help you move the needle on your credit score:

  1. Get rid of your debt
  2. Hold onto your cards
  3. Decrease your credit utilization rate
  4. Automate your finances
Step 1: Get rid of your debt

Debt is one of the BIGGEST barriers preventing people from living a Rich Life. That’s why if you want to be able to start focusing more of your energy on earning more money and investing, you need to delete your debt.

For Ramit’s full system on getting out of debt for good, check out our article on the five steps to get out of debt fast.

If you want even more insights on getting out of debt, check out Ramit’s old video on negotiating your debt.

How to Negotiate Your Debt, with Ramit Sethi - YouTube
Step 2: Hold onto your cards

You’ll notice some of our perfect credit score holders above have held onto cards for decades. That’s because 15% of your credit score is determined by your credit history.

If you close a credit card account, you’re also closing that credit history.

The amount of credit cards you have open also affects your credit utilization rate — which is VERY important to attaining a perfect credit score.

There will be times when you need to close a credit card for one reason or another. But know that your score is going to take a hit while it readjusts to your new credit history.

Pro tip: If you’re planning on applying for major loans (car, home, etc.), don’t close a credit card within six months of it. You want as much credit as possible for those situations.

So keep your cards open and put a recurring charge on the ones you don’t use that often. This shows that your card is active and keeps your credit history healthy.

Step 3: Decrease your credit utilization rate

Your credit utilization rate impacts 30% of your credit score since it impacts the amount you owe.

And the formula for it is simple:

(how much you owe) / (total credit available)

Unlike your credit score, the lower THIS number is, the better.

Let’s look at an example: If you carry $1,000 debt across two credit cards with $2,500 credit limits each, your credit utilization rate is 20% ($1,000 debt / $5,000 total credit available).

If you close one of the cards, suddenly your credit utilization rate jumps to 40% ($1,000 / $2,500). But if you paid off $500 in debt, your utilization rate would be 20% ($500 / $2,500) and your score would not change.

When your credit utilization rate is low, it shows lenders that you don’t typically spend all the money you have available in your credit — which means you likely won’t default and they won’t lose money.

You can improve your credit utilization in two ways:

  1. Don’t carry a lot of debt on your credit cards.
  2. Increase the amount of credit available to you.

We’ve already hit the first part — so let’s take a look at a script to help you negotiate your credit limit with your card company:

YOU: Hi, I’d like to request a credit increase. I currently have $5,000 available and I’d like $10,000.

CC REP: Uh … why?

YOU: I’ve been paying my bill in full for the last 18 months and I have some upcoming purchases. I’d like a credit limit of $10,000. Can you approve my request?

CC REP: Okay. I’ve put in a request for an increase. It should be activated in about seven days. Anything else I can do for you?

Ramit suggests requesting a credit limit increase every six to 12 months. Only do this if/when you’re out of debt though.

Step 4: Automate your finances

This is IWT’s proven system that:

  • Gets you out of debt
  • Helps you save for anything
  • Earns you money

The best part? You do all of this passively. That means there’s no hassle of moving your money around, and no pain from seeing your money part from you.

And since 35% of your credit score is determined by your payment history, it’s important to automate your system so you pay your bill on time and in full each month.

For more information on how to automate your finances, check out Ramit’s 12-minute video where he goes through the exact process with you.

Automating Your Finances in 12 Minutes, with Ramit Sethi - YouTube

You should ideally be paying off your entire credit card balance each month, but if you can’t, you can still improve your score by paying at least the minimums, on time, every month.

Get the first chapter of “I Will Teach You to Be Rich” for FREE

Take the time to start improving your credit score using the four systems outlined above — and to help you even more, I’d like to offer you something: The first chapter of Ramit’s New York Times best-seller “I Will Teach You to Be Rich.”

It’ll help you tap into even more perks, max out your rewards, and beat the credit card companies at their own game.

I want you to have the tools and word-for-word scripts to fight back against the huge credit card companies. To download it free now, enter your name and email below.

Perfect credit score: 4 steps to 850 is a post from: I Will Teach You To Be Rich.

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Your credit rating (or credit score) gives lenders an idea of how risky you are to lend to.

Credit score

What it means

800 – 850

Great.

740 – 799

Good.

670 – 739

Okay.

580 – 669

Bad.

300 – 579

OMG.

If your credit score is high, expect great interest rates on home loans, near-universal approval for credit cards, and an awesome dating life (it’s true: a higher dating score predicts a better dating life).

If it’s low … well, don’t worry. Because we’re going to show you a system to change that.

What’s the credit rating scale?

The credit rating scale is a measure that helps lenders determine whether or not they should lend you something.

Your credit score affects interest rates, credit card approvals, and even things like whether or not you’ll get approved to rent apartments.

While there are different kinds of credit rating scales for individuals, the most commonly used one is the FICO score. FICO stands for Fair Isaac Corporation. They’re a data company that founded the credit scoring system back in the late-eighties.

Their scores are on a range between 300 and 850 and are determined by information found on an individual’s credit report. And there are THREE major credit bureaus that provide these reports:

  1. Equifax
  2. Experian
  3. TransUnion

This means you can have three different credit scores at any time. Granted, the scores won’t typically differ that much from bureau to bureau.

The following pieces of information determine your actual score (courtesy of Wells Fargo):

  • Payment history: 35%
  • Amounts owed: 30%
  • Length of credit history: 15%
  • How many types of credit in use: 10%
  • Account inquiries: 10%  

Remember: The higher your score, the better it is for you.

Why does it matter?  

Here’s a credit score chart with ranges courtesy of Experian — and what they mean for you:

Credit score          

What it means

800 – 850

Great! This is a fantastic place to be for your credit score. You should have no issue securing a home loan at low interest.

740 – 799

Good. Not perfect but certainly not bad either. Your interest rates will still be solid and you’ll still be able to secure things like credit cards, loans, and apartment rentals.

670 – 739

Okay. Though not terrible, you should still try to do what you can to improve your score.

580 – 669

Bad. This is when you should start worrying since now you’re considered a “subprime borrower.” You might be denied a home mortgage outright and interest rates will be high.

300 – 579

OMG. Abandon all hope ye who enter here. You’ll likely be denied for any loans and won’t be able to open up new credit cards.

So if you’re planning on taking out a loan or attaining credit of ANY kind, you’re going to want to make sure your credit score is in check. If you don’t, you might find yourself saddled with high interest rates and being denied simple loans.

How do I check my credit rating?

To check your credit score, you’ll need to travel thousands of miles through the nine levels of hell, Mordor, Siberia in the winter, AND make it past the topiary maze from “The Shining” before solving a series of riddles from a sphinx who will tell you your credit score in a dead language.

Oh wait, I’m sorry. That’s a typo. I meant checking your credit score is incredibly simple. In fact, there are a TON of sites out there that’ll give you your credit score for free.

Two good ones we suggest: Credit Karma and Mint.

Head to these sites and follow their instructions. Be prepared to enter basic info about yourself (name, DOB, social security #, etc.).

If you find that your credit score is great, congrats! Do all you can to maintain that score (we get to that below).

If your credit score is low though, have no fear. Here’s a system that’ll help you improve your credit score.

How to improve your credit score

Improving your credit score is all about 80/20 — do a small amount of work now and it’ll pay off in spades later.

And you don’t need to do anything crazy either. In fact, here are five keys that’ll help you move the needle on your credit score:

  1. Delete your debt
  2. Keep your cards
  3. Negotiate your limit
  4. Automate your pay
1. Delete your debt

Debt is one of the BIGGEST barriers preventing people from living a Rich Life. That’s why if you want to be able to start focusing more of your energy on earning more money and investing, you need to delete your debt.

You can do this using Ramit’s five-step system on getting out of debt fast.

Though there are a lot of nuances to this, here’s three quick tips from the system:

  • Find out how much you owe. Though it seems obvious, a lot of people hide from their statements each month and don’t actually know how much they owe. This is playing right into the hand of credit card companies who want you to be in debt. Don’t do this. The first step to getting rid of your debt is being real with yourself. Find out exactly how much money you owe.
  • Decide what to pay off first. Though some people believe you should pay off your debt with the lowest balance first, Ramit actually suggests you pay off the debt with the highest interest rate first. Doing so will save you more money down the road and can be psychologically beneficial when you see the biggest drain on your money go away.
  • Tap into “hidden income.” There are a lot of different ways you can pay off your debt. One of our favorite ways is by tapping into hidden income to free up some money. This is money that you can negotiate from areas like your insurance, phone bill, or even your rent.

For the full system, check out our article on the five steps to get out of debt.

If you want even more insights on getting out of debt, check out Ramit’s old video on negotiating your debt.

How to Negotiate Your Debt, with Ramit Sethi - YouTube
2. Keep your cards

A lot of people erroneously believe that they need to get rid of their credit cards to improve their score. After all, credit cards are the reason people get bad credit scores. It would stand to reason that closing the accounts improve it … right?

Wrong. So very, very wrong.

Why? Because 15% of your credit score is determined by your credit history. So if you close accounts, you close that history.

This also negatively impacts your “credit utilization rate” (more on that later).

Of course, there are going to be times when you just need to close a credit card (travel hacking, interest rates too high, etc.). That’s fine so as long as you also make sure you’re not applying to a major loan within six months of closing it.

You want as much credit as possible when you apply for loans.

In general though, keep your cards open and put a recurring charge on them. This shows that your cards are active and keeps your credit history healthy.

3. Negotiate your limit

Your credit utilization rate impacts 30% of your credit score since it impacts the amount you owe.

And the formula for it is simple:

(how much you owe) / (total credit available)

Unlike your credit score, the lower THIS number is, the better.

Let’s look at an example: If you carry $1,000 debt across two credit cards with $2,500 credit limits each, your credit utilization rate is 20% ($1,000 debt / $5,000 total credit available).

If you close one of the cards, suddenly your credit utilization rate jumps to 40% ($1,000 / $2,500). But if you paid off $500 in debt, your utilization rate would be 20% ($500 / $2,500) and your score would not change.

When your credit utilization rate is low, it shows lenders that you don’t typically spend all the money you have available in your credit — which means you likely won’t default and they won’t lose money.

You can improve your credit utilization in two ways:

  1. Don’t carry a lot of debt on your credit cards.
  2. Increase the amount of credit available to you.

We’ve already hit the first part — so let’s take a look at a script to help you negotiate your credit limit with your card company:

YOU: Hi, I’d like to request a credit increase. I currently have $5,000 available and I’d like $10,000.

CC REP: Uh … why?

YOU: I’ve been paying my bill in full for the last 18 months and I have some upcoming purchases. I’d like a credit limit of $10,000. Can you approve my request?

CC REP: Okay. I’ve put in a request for an increase. It should be activated in about seven days. Anything else I can do for you?

Ramit suggests requesting a credit limit increase every six to 12 months. Only do this if/when you’re out of debt though.

4. Automate your payments

Let’s talk about my FAVORITE subject in the world: Automating your personal finance.

This is IWT’s proven system that does a number of awesome things:

  • Gets you out of debt.
  • Helps you save for anything.
  • Earns you money.

The best part? You do all of this passively. That means there’s no hassle of moving your money around, and no pain from seeing your money part from you.

And since 35% of your credit score is determined by your payment history, it’s important to automate your system so you pay your bill on time and in full each month.

For more information on how to automate your finances, check out Ramit’s 12-minute video where he goes through the exact process with you.

Automating Your Finances in 12 Minutes, with Ramit Sethi - YouTube

You should ideally be paying off your entire credit card balance each month, but if you can’t, you can still improve your score by paying at least the minimums, on time, every month.

Improve your credit score = Big Win

Take the time to start improving your credit score using the four systems outlined above — and to help you even more, I’d like to offer you something: The first chapter of Ramit’s New York Times best-seller “I Will Teach You to be Rich.”

It’ll help you tap into even more perks, max out your rewards, and beat the credit card companies at their own game.

I want you to have the tools and word-for-word scripts to fight back against the huge credit card companies. To download it free now, enter your name and email below.

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I want to show you an actual email someone sent me to ask for something that had me clamoring to call them.

With emails like these, I hope you appreciate the mental fortitude it takes to not go insane every day of my life.

But instead of just mocking the people who read my blog, I want to talk about the very best ones — the people who know how to politely reach out to VIPs and get a response.

The #1 key to asking for what you want politely

A lot of people think success is just a matter of “figuring it out” and reading a few books.

Top Performers know that they can leapfrog everyone else by getting personal advice from people who’ve already been through the fire. Ask any successful person how a mentor/advisor/expert has helped them, and they won’t be able to stop talking.

So how do you ask an elite level performer/VIP for help with something in a way that will actually get a positive response? Maybe it’s to get a recommendation for a job … or to get invited backstage to meet your favorite band … or even to get some advice on a tricky business situation.

The answer is to shift your focus from a “me” perspective to a “you” perspective. For example, years ago, I was hanging out with Charlie Hoehn, who’s worked with me and a lot of thought leaders like Tim Ferriss.

He told me how working behind the scenes has taught him about how to work with these kinds of people. “Everyone wants something from you guys,” he said. “Now I know how to stand out. Just don’t ask for anything! Actually add some value first.”

This “you first” approach is how I’ve been able to get the advice of best-selling authors, superstar CEOs, and all kinds of fascinating people.

Let’s take a look a look at that in action.

How to write a polite email asking for something

Here’s an email I received from a reader a while back. I called him within 60 seconds of reading it. See if you can find out why:

The reader was polite, considerate of my needs, and sold me on the benefits of working with him.

Let’s break down the anatomy of this email, though, so I can show you exactly why it works.

Step 1: Focus on the recipient

Remember: Your message to the important person should be focused on THEM. That’s the key to any polite email that hooks the reader in.

The reader above did this with a snappy and eye-catching subject line: I want to work for you for free.

YES. You have my attention.

He goes on lavishing me with compliments while sharing an example of how my advice has helped him.

What do you notice about that? It’s a genuine compliment. He’s not giving me superficial niceties like, “Your blog is cool” or “Awesome videos!” He says he has multiple ING Direct accounts, a Roth IRA, and an automated finance system set up because of me. THAT’S how you write a polite email.

Use the first one to two sentences to compliment the person you’re emailing and their work. Tell them how long you’ve been following them, what their advice has done for you, and/or your favorite post by them.

This will hook them into reading the rest of your email.

Step 2: Sell your benefits

Let’s face it, you’re trying to sell yourself here.

What benefits can you offer them? Why should they care?

Sometimes this comes in the form of a warm contact (more on this later). If you know of a mutual connection, you should name drop so the person you’re talking to knows how you know them. They’ll be much more willing to work with you if you both know the same person.  

For this email, my reader knew that I was looking for talented developers — so he sold me on that.

Guess what? That immediately set him apart from 99.999% of the crowd.

You’re going to have to do your homework if you want to leverage this technique. You need to know your VIP’s pain points and how YOU can solve them.

Go deep. Get inside of their heads. See what solutions you can offer to their biggest problems.

Be like Don Corleone.

Notice that they’re ramping up their YouTube presence and you’re a video expert? Tell them that and do it for them.

Can you take their social media game to the next level? Sell them on all the followers and traffic you can generate for them.

If you can’t come up with a specific solution, show the person you’re emailing you have XYZ skill that’ll have ABC benefit for them.

Step 3: Make saying “no” impossible

Your last step is to anticipate any objections or concerns they might have.

My reader knew I had a few projects I wanted to get to but hadn’t made time for them yet.

And while I could tell he really wanted paid work, he tells me that he’d “be happy just for the opportunity to network and receive a little advice.”

This made me saying no to him impossible!

He respected the power dynamic. After all, he reached out to me asking for my time.

And he showed this by being proactive, offering up his phone number, and also providing samples of his work from his website.

Also acknowledge how many emails they get by ending your email with this script:

“I understand you have tremendous demands on your time, and if you don’t have time to respond, no problem. But if you do, even a sentence would mean a lot to me.”

This gives VIPs an easy out if they’re too busy. Counterintuitively, it also boosts your response rate since you’re showing empathy toward their time demands. Remember, this email from the developer worked so well, I called him within 60 seconds of receiving his message.

Follow these steps, and you can see the same results.

I then encourage you to use the Closing the Loop Technique to follow up with your VIP two weeks after you get your response. You can use the following script:

“Hey, you told me ABC. I dug in. I discovered you were right, and so I took your advice and I just wanted to thank you. I’ll keep you updated a couple months from now about how the new XYZ is going.”

ACTION STEP: Contact your VIP
  1. Brainstorm ONE busy VIP you’d love to contact, then shoot them an email.
  2. In the comments below, share your story and the response you got.

Now I want to show you the four traits all great email introductions share that’ll get you responses.

The traits are simple — but 99% of people skip them. Don’t do this.

Trait #1: Reaches out through a warm contact.

As mentioned before, you’re going to have a better chance of someone responding if you name drop a mutual contact.

Why? This gives you social capital. If you know the same awesome people they know, they’ll want to work with you. Simple as that.

Even if you don’t think you have one, I HIGHLY suggest you search anyways. The results might surprise you.

Some good resources to check for mutual contacts:

  • Facebook (Use the site’s mutual friends tool to see who you know in common)
  • Twitter (Check out who they follow. Do they follow and engage with anyone you know?)
  • LinkedIn (Leverage the site’s mutual connections tool to see who you both know)
  • Their blog posts
  • If they wrote a book, check the “Acknowledgements” page

Over the years, people have found mutual contacts with me through ALL of these resources.  

Trait #2: Explains any similarities we have.

This trait can automatically establish a connection with the person you’re emailing even if they’re a complete stranger.

Some examples of areas where you might share similarities:

  • College
  • High school
  • Hometown
  • Company
  • Industry

Even if you’ve never met, if you both went to the same high school or are from the same town, you both immediately have shared experiences. This is powerful and crucial when getting someone to respond to you.

If another Stanford alum reached out to me and seemed genuine, I’ll almost always take a phone call, or if convenient, a coffee meeting. It’s that powerful.  

Trait #3: Cuts out the fat.

Check out this email I got a while back. It’s an absolute master class in bad email introductions.

Notice that in the second paragraph, he actually acknowledges that he should focus on ME (the busy person) … and proceeds to do the exact opposite!

On top of that, this was a very long stream-of-consciousness email.

Chances are, the person you’re emailing is probably very busy. As such, you’re going to want to make sure that your email isn’t wasting their time with any superfluous information.

Do that, and you’ll INSTANTLY eliminate yourself from their inbox.

Trait #4: Doesn’t outright ask for a favor.

This is something you should not do in an email introduction. That’s the opposite of polite.

Even if you’re just asking for help, it’s best if you provide the recipient an out so they don’t feel like you’re demanding something from them.

It’s always best to end an email acknowledging how busy they are and that they shouldn’t feel pressured into doing anything. Here’s the great script from above to do just that:

“I understand you have tremendous demands on your time, and if you don’t have time to respond, no problem. But if you do, even a sentence would mean a lot to me.”

See why that works? This gives your email recipient an easy out if they’re too busy. Counterintuitively, it also boosts your response rate since you’re showing empathy toward their time demands.

NOTE: The people who have reached out to me weren’t always the most socially smooth people. But the very best showed a remarkable level of preparation, which anyone can accomplish — but few actually do.

As a result, many of these people stood out among tens of thousands of others who left comments/emails/tweets. Not only do the very best Top Performers have an uncanny ability to reach extremely busy people, but they can turn a one-time meeting into a long-term relationship.

And over time, that is worth more than almost any technical skill or amount of experience.

Get what you want

I’ve just given you the five steps to asking for a favor and getting what you want. This strategy works for anything.

And if you want specific scripts for emails that get results too, I have five you can use to:

  1. Set up an informational interview
  2. Ask for recommendations for people to talk to
  3. Cold email a stranger for advice
  4. Pitch for a consulting gig or a job interview
  5. Reach out to others in your company to get to know them

Just enter your information below, and I’ll send you these five word-for-word scripts for free.

How to write a polite email asking for something is a post from: I Will Teach You To Be Rich.

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The first time I remember my money situation really changing was when I got my first scholarship check for college. I realized if I could get one scholarship … I could get five … and then 10 … and then, pay my way through undergrad and grad school.

That totally changed the way I thought about going to college and money.

Other moments where I realized my financial situation had changed:

  • I realized I could take a taxi instead of the subway on my way to a sweltering summer meeting
  • I walked out of the grocery store realizing I hadn’t looked at the prices of anything — I just got what I wanted

I’m curious about your story: What’s the moment you realized your money situation had changed?

For example:

  • The moment you ordered off the menu without looking at price
  • The moment you decided to catch a taxi without thinking twice
  • The moment you covered a round for your friends and didn’t worry after

Let’s have some fun. It would mean a lot to me to see your wins. Leave a comment and tell me what the moment was and what it meant to you.

When did you realize your money situation had changed? is a post from: I Will Teach You To Be Rich.

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