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Knowing average retirement savings for your age can give you a good idea of how you stack up for your ride into the sunset.

Check it out below.

32- to 37-year-olds $31,644
38- to 43-year-olds $67,270
44- to 49-year-olds $81,347
50- to 55-year-olds $124,831
56- to 61-year-olds $163,577

Economic Policy Institute

The hard part of thinking about retirement is that it’s often discussed with charts and numbers in the abstract. It helps when you can see the actual steps and actual person took to save for their retirement.

To prove it, we talked to four different readers about their retirement savings. What they told us was revealing, fascinating, AND occasionally contradictory to typical investment advice.

Let’s jump in.

DAKOTA, 25 – $18,000 // “I didn’t have a model for saving money.”

Income? $56,000 / year

Family? “Married. No children.”

Retirement savings? $18,000

Rent or own? Rent. $1,800 / month

What’s your job? IT coordinator at a consulting firm.

How confident do you feel about your retirement plans? I don’t feel very confident about my retirement plans so far. The amount we have saved is lower than where I’d like it to be but I know these things take time to evolve.

When did you start saving for your retirement fund? I started when I got my first full-time job out of college. It was cool because I literally started with nothing and it’s been amazing to watch it grow, even though only around $63 gets taken out of my paycheck each week.

Have you always had a saving mentality? For a lot of my adolescence we were living off of just my mom’s wages. I’m not exactly sure how much she made, it must have been less than than $30,000 a year on a waitress’s salary. And then whatever she got from my dad for child support and food stamps.

We lived paycheck to paycheck with a “we got to put food on the table” sort of mentality. So initially, I didn’t really have a model for saving money.

Did your parents have any tactics to help you get by? Mom would always bring home the food she was given for dinner to my sister and I. At the time, I never worried about what she was eating, but I know she made a lot of sacrifices to keep food on the table for us. I also never had an “allowance” like most kids get.

I did have a very frugal mindset from watching what my parents did with their money though. Once I had that surplus for the first time in my life, I started to get into the habit of saving as much as I can for the future.

What advice would you give your younger self? It doesn’t take a lot to be mindful about how much you can save. I think a lot of people get bogged down in the numbers. “Oh man, I only made $200 this pay period. I need to use this X of it just to live!” so they use the fact that saving a small amount doesn’t feel as good. BUT it can be just as impactful later on. If I saved earlier, no matter how small the amount, I would be in an even better situation now.

Also, I’d tell him to go to a cheaper school. I went to an out of state school and put myself in way more debt than I realized. I think I ended college with a little over $30,000 of debt. I could have easily gotten an associates from a local college and then went off to a university for two years to get my bachelors and saved my parents and I tens of thousands of dollars.

TIM, 30 – $327,000 // “Spend your money before you have it.”

Income? $150,000 / year

Family? “Married with one newborn.”

Rent or own? Own a house. 15-year fixed rate mortgage $2,800 / month.

What’s your job? Associate director of strategy for an insurance company.

What advice would you give your younger self when it comes to saving for retirement? Spend your money before you have it. Every Monday morning, I sit down and go through all the expenses I have for the week. I also look back at the last week to see how my expenses compares to my budget. I set up a week-by-week budget for each month too.

That’s helped me figure out that if I set away a little bit of money specifically for fun purchases like restaurants or going out, you have more money than you think to go towards saving for retirement. Making sure I knew where I wanted it to go was very important for me.

When did you start saving for retirement? I started when I was able to get a job after school. It was very basic: I contributed 6% of my income while getting a 4% employee match.

How did it evolve over time? I just kept doing that for five years until about 2014. I went from contributing enough to hit the employer contribution to enough to max out the 401k at $18,000 a year.

I don’t have a Roth IRA or anything like that.

Do you feel confident about your retirement plans? Very. We’re investing very aggressively right now — we have less than 10% in bonds and the rest are in equities. We also saved about $20,000 for the baby on top of another $20,000 we have for emergencies. So if we have some unforeseen expenses come up, we have the money there.

How does your newborn impact your finances? A lot. [laughs] Our ultimate goal is to be financially independent by the time we’re 40, though to be more realistic it’ll be closer to 50. That was our plan — BUT our baby coming along threw us a curveball.

Why do you want to be financially independent? We look at the people around us — our parents, former bosses, colleagues — and they’ve spent their whole careers in this rat race doing jobs maybe they enjoyed but were ultimately grueling.

Then you get to age 60 or 65 and THEN you’re supposed to enjoy your life? We’ve seen people get there and struggle to enjoy it or not enjoy it at all. My wife and I don’t want to wait.

Is there anything keeping you from enjoying life now? I have a really good life now, so it’s not so I can enjoy my life more necessarily. It’d just give us a much greater work flexibility. It would just allow us to pursue the work that we’re really passionate about easier since we won’t have to worry about paying the bills.

What concerns you most with your retirement savings? Once we get to that point where we’re financially independent, then comes questions like, “Are my wife and I healthy enough? What if there’s an unexpected health emergency we haven’t thought about?” Then I wonder if there’s any sort of risk that we haven’t thought about that we’re not protected against.

Have you always had that fear? It goes beyond all the money we’ve saved. We’ve done all this hard work. We’ve saved all this money to protect ourselves against major financial issues … but is there something else we should be thinking about? I don’t know.

Do you feel like that’s more exasperated since having your baby? For sure. One thing we started doing differently is keeping more liquid cash on hand in case we need a safety net. Before we had our baby, I was much more concerned with putting all the extra money I had towards debt or investing it.

How much liquid cash do you have? Just under $40,000. We’re still saving for it now.

Any specific tactics that have helped you with your investing? Automating my savings. I highly suggest everyone do the same. Once you set up the money in your accounts to save automatically, you can build your life around what ends up in your personal checking account to spend. That’s huge for my wife and I. Whenever we get raises or our paychecks, we can automate it to go where it needs to go.

PETER, 32 – ~$100,000 // “Control your time now, not later.”

Income: $60,000

Family: “Married. No children.”

Rent or own: Own.

What’s your job? I work as an architect in my 9-to-5, but the thing I’m most involved in is investing through a real estate company I co-founded.

That’s very non-traditional. How has it worked out? The strategy was to buy at a reasonable price and achieve stable returns. I’d rather spend my time and money investing in areas that I have more of a control over.

What did your retirement savings look like in the beginning? I started my retirement by doing a number of things. First, I lived in my wife’s parent’s basement for four years. During that time, I worked as an architect for a firm and I saved money through a traditional 401k. I felt like I was spinning my wheels though because I felt like I didn’t have control over it. Also I had my student loans to worry about.

What are you most worried about when it comes to saving in the future? Why? I’m torn between worrying about saving too much and not saving enough. What is the right amount? How do you balance current spending with future savings?

Also things that are totally outside of my control like what happens if the real estate market crashes tomorrow? That affects the vast majority of investments I’m focused on at the moment.

Why are you worried about saving too much? You can really put yourself in a bind by saving too aggressively — especially for retirement. I think you can plan to some extent about the things that can happen but you never know what can happen. You can save and try to plan but you can really sacrifice too much of your current life if you focus on saving too aggressively.

Do you know if/when you’ll ever retire? For me, I’m viewing leaving my current job as “retiring,” because I’m going from needing to work to wanting to work. As soon as I can stop worrying about needing to work and I can focus on what I want to do, I’ll have retired.

Why don’t more view retirement this way? That’s actually something that bums me out about people’s choice when it comes to retirement. They’ll work jobs they hate for years and year and then “retire” to go do things they could have been doing the entire time.

What’s your best piece of advice for retirement savings? My wife and I have been pretty fortunate that we’ve been able to travel a lot. People always ask us, “How do you do it?” The reality is I don’t make a lot more money than they do. I just use my money intentionally.

For example, I spend money on travel and an INSANE amount of coffee, because I love those things. It actually helps you save money for things like retirement when you spend money on things you care about. It’s pretty powerful.

SCOTT, 48 – ~$500,000 // “I think we’re under.”

Income: $130,000 / year

Family: “Married with two children (ages 10 and 12).”

Rent or own: Own. 3.25% 15-year mortgage at $2,200 / month

What’s your job? I’m an interior designer and I run my own photography studio on the side.

Why are you investing so aggressively at the age of 48? We’re planning on working another 20 years until we retire. I’m not military. I don’t work for the government. I won’t have a pension.

What advice would you give to your younger self if you could? Start saving early — even if it’s just a little bit. I didn’t have as much money as I thought I should for a Roth or these other basic investments, but I should have started out with whatever it was even if it was just $50 a month. Just start. Keep it rolling. Then it’s on your radar. It is moving.

When did you start saving for your retirement fund? Right away after college. In my mid-twenties I started contributing to my employer’s 401k.

Do you feel confident with your retirement plans? No. I think we’re under. Before kids, we were really putting money away but once we had kids she got laid off from her job. Very bad luck because she was the breadwinner then.

So we had about four to five years where she was unemployed and stayed home with the kids. Our retirement could easily be double what it currently is if it weren’t for those four to five years. We missed out on an enormous amount of money.

What do you mean it could be double what it is now? It’s been 10 years since she was laid off. That income would have provided more than $1 million in gross pay. All that compounding for a decade would have made all the difference in the world.

How would you describe your life now to before your wife was laid off? While she working we made more than enough to save for our future and enjoy life – travel, eat out frequently with friends, etc.

I wouldn’t say we’ve cut out that much more, just greatly reduced the frequency. We used to spend a weekend in NYC each month, now we go maybe twice a year. We have to be a lot more thoughtful in terms of going out and socializing. Even entertaining at home can be a pricey affair. We still do these things, just less than we’d like.

How has your savings strategy changed since your wife was laid off? I’m earning more now which is good, but it’s still tough. It’s part of the reason why I started picking up my side business. It’s my “keep us sane” play money. At our age, you have to enjoy life.

What investment does your wife have? Now she runs her own marketing business, so she contributes to an SEP IRA — it’s like a Roth IRA specifically for self-employed people. The beautiful thing about that is that when you’re self employed, you’re absolutely hammered by taxes — something like 33.3% goes away! You can contribute way more to a SEP IRA than you can to a Roth IRA.

It’s a beautiful thing because it takes your taxable earnings way down.

What did you learn from becoming a one-income household? The good thing that came out of this is that we really started paying attention to our money flow. I got really obsessed with tracking our expenses and income. We got hypervigilant.

How to start saving for retirement

There’s two big takeaways from their stories I want to point out:

  1. They all wish they started earlier. It’s so fascinating that each of the readers wished they could tell themselves to start saving earlier — no matter how little it was. If you’re reading this, and you’re still relatively young, that’s awesome! If you’re a bit older though and feel like you’re behind, don’t worry, because..
  2. There’s no one way to do things. From Peter and Scott’s hustles to Dakota and Tim’s 401k employer match, each of these readers approach their savings differently. That means if you’re just starting that’s great. We want to show you how you can save for retirement.

Let’s talk about the two best investment tools you’ll ever have:

  1. 401k
  2. Roth IRA

With retirement accounts, you’ll be able to accrue gains with big tax advantages with one caveat: You promise to save and invest long term. That means you can buy and sell shares of almost anything as often as you want as long as you leave the money in your account until you get near retirement age.

We’ll talk about those exceptions a little later, but for now just know that retirement accounts give you a HUGE advantage over regular investment accounts but can tie up your money in the short term, penalizing you for withdrawing before a certain date.

But what is a 401k and Roth IRA? Do you have to jump through a lot of hoops to get them? How much do you have to invest each month?

Let’s take a look at each one.

401k: Free money from your employer

A 401k is a powerful retirement account offered to you by your employer. With each pay period, you put a portion of your pre-tax paycheck into the account. That means you’re able to invest more money into a 401k than you would a regular investment account.

But here’s the best part: Your company will match you 1:1 up to a certain percentage of your paycheck.

Say your company offers 3% matching. If your yearly salary is $150,000 and you invest 3% of your yearly salary (~$5,000) into your 401k, your company would match you that amount — doubling your investment.

Check out the graph below that illustrates this.

This is free money!!! If your company offers a match, you should ABSOLUTELY take part in their 401k plan.

Where’s my money going?

When you invest in a 401k, your money goes into an investment account where a professional investing company manages it. Typically, your employer gives you different investment options to choose from (aggressive, international, mixed, etc).

Your company does most of the work when you set up the 401k and you’ll often be able to instruct them to automatically withdraw a certain amount from every paycheck. And don’t worry about switching jobs. If you should ever decide to leave your company, you can take your 401k with you.

When can I take my money out?

The money you invest in your 401k must stay in the account until you are 59 ½ years old. If you take the money out before then, you’ll get slapped with a 10% federal tax penalty on your funds.

If you want to maximize your returns for your 401k, make sure you leave it in there until you’re ready to retire. When you do take it out, you are going to have to pay income tax so it’s not completely tax-free.

For more on 401k’s, be sure to check out my article on how the account is the best way to grow your money.

But 401ks are only one part of the equation when you want to start saving for retirement. The other account you should get is a Roth IRA. And ideally, you have both.

Roth IRA: The best long-term investment

A Roth IRA is one of the best deals for long-term investing.

Remember how your 401k uses pre-tax dollars and you pay income tax when you take the money out at retirement? Well, a Roth IRA uses after-tax dollars to give you an even better deal.

With a Roth, you put in already taxed income into stocks, bonds, or index funds and pay no taxes when you withdraw it.

That’s an exceptional example, but when saving for retirement your greatest advantage is time. You have time to weather the bumps in the market. And over years, those tax-free gains are an amazing deal.

How to open a Roth IRA account

To open up a Roth IRA, find a brokerage account. There are many out there so I highly suggest shopping around and taking a look at the options out there.

Certain factors you want to consider when looking at brokers can be:

  • Minimum investment fees
  • Customer service
  • Investment options
  • Transaction fees

A few brokers we suggest, though, are Charles Schwab, Vanguard, and E*TRADE.

These brokers offer fantastic customer service and are well-known in the investment community for their great stock options.

Special note: Most brokers typically have minimum amounts for opening a Roth IRA, usually $3,000. Sometimes they’ll waive the minimums if you set up an automatic payment plan depositing, say, $100/month.

Also, it’s worth noting that there’s currently a yearly maximum investment of $5,500 to a Roth. (This amount changes often so be sure to check out the IRS contribution limits page to keep..

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Asking for a promotion is an extremely stressful moment in your career.

  • “What if they say no?”
  • “What if they laugh me out of the room?”
  • “What if they don’t see the value I add to the company?”

Just thinking of the possible answers can make you sick.

But if you’ve tackled larger workloads and added tremendous value, shouldn’t your job title adequately reflect your increased value?

It’s time to ask for a promotion or a raise.

You’re going to learn exactly how to turn a typically uncomfortable conversation into an enjoyable discussion and how to make this a no-brainer decision for your boss.

Knowing how to ask for a promotion can make you rich

Consider these three points:

  1. A promotion conversation can take as little as 10 minutes.
  2. A promotion can propel you to the next level in your career.
  3. Many of my students and friends who’ve used the techniques I’m going to share have learned how to ask for raises of $10,000 or more.

Even if a promotion only gets you half of that (a $5,000 raise), it adds up dramatically over time.

Take a look:

And remember — most people who get a promotion once tend to get promoted frequently!

Asking for a promotion is a smart and time-effective way to put more money in your pocket and improve your career.

So why do most people leave their career trajectory to chance? Simple: Fear. Most are afraid they’re going to be shot down so they don’t even try.

Luckily, you can combat this fear with some preparation. 

How to define your value to your employer (you’re probably doing too much)

How long have you been at your company?

2 years? 5 years? 10 years? Let’s just assume it’s been awhile.

During that time, you’ve definitely gotten better at your job. You’ve probably developed new skills and you’ve taken on new responsibilities. You’re probably helping the company much more than you did a year ago. So while your contribution continues to rise, your compensation has remained stagnant.

Many of us are humble and modest by nature — and that’s okay. But there’s a BIG difference between being humble and undervaluing yourself:

  • Humble: “I’ve done XYZ, and I’m proud of that accomplishment.”
  • Undervaluing: “Oh sure, I kinda helped out with that project, but it wasn’t just me. Besides, anybody could have done that, so why should I feel special?”

And as the bard once wrote…

Kendrick Lamar - HUMBLE. - YouTube

Here’s an exercise you can do to break this limiting belief: List all the ways that you’ve become more valuable to the company since you started your job.

Be generous with your list, but push yourself to get specific:

  • Have you delivered specific results? Which ones? Estimate how much they were worth.
  • Has your communication improved? How so?
  • Are you more efficient than before? How do you know?
  • Do you know the business better? How does this translate to the company’s bottom line?
  • Have you developed new skills? What kind?

Keep in mind that achievements that seem mundane to you might seem exceptional to someone else. No achievement is too small. Write them all down.

This is your first step in learning how to ask for a raise or a promotion.

Now that you know the value you add, it’s time to prepare for the conversation with your boss.

The #1 mistake when asking for a promotion (or raise)

The absolute WORST mistake you can make when it comes to how to ask for a raise or promotion is to simply show up on the day of your performance review and ask for it.

If this is your plan, you will lose.

And what’s more, you deserve to lose.

I learned this lesson the hard way. When I was a student at Stanford, I did some work for a local venture capital firm. After a few months, I decided that I was going to ask my boss for a promotion — after all, I’m a smart guy and I’ve been working pretty hard, so I should ask, right?

The conversation went something like this:

Ramit: “Hi Boss, thanks for meeting with me. So, I’ve been working here for a few months now, and I think I’ve been doing a really good job. I’ve really gotten a good understanding of the ins and outs of the business, and because of that I’d like to discuss with you the possibility of a promotion.”

Boss: “Why do you think I should give you a promotion?”

Ramit: “Well … you know, as I mentioned, I think I’ve been doing a really good job, and I’ve been learning a lot about the company and how everything works here and … yeah.”

Boss: “No. Not gonna happen.”

Ramit: “Oh. Okay.”

It wasn’t pretty. And I was actually mad at my boss about it for two whole days (he said “NO!!’).

But then I realized I was being ridiculous. I hadn’t given him any legitimate reasons why he should be giving me more responsibility and paying me more. So why would I have expected him to?

I’ve gotten a lot better at negotiation since then, and this is the #1 rule I’ve discovered about negotiation:

80% of the work in a negotiation is done before you ever walk into the room

That means the conversation is only a small fraction of what actually makes or breaks the negotiation. In reality, when you’re learning how to ask for a raise or a promotion, it’s your PREPARATION that will determine whether you succeed or fail.

Put it another way, would you rather spend zero hours preparing and get immediately blown out of a negotiation — or would you be willing to spend 20 hours of preparation with a 70% chance of successfully negotiating a raise or a promotion?

Front-loading the work

Top performers are willing to put in the time and effort, which is why they can reap disproportionate rewards.

I call this “front-loading the work.”

Here are some examples of front-loading the work you can try (I cover even more of these preparation tips and other advanced career strategies in my Find Your Dream Job program):

  • Doing amazing work for at least three to six months, with written praise collected from your coworkers and your own boss.
  • Creating a five-page document of proof of performance, showing all the ways you’ve added value above and beyond your job’s requirements.
  • Practicing with another skilled negotiator, recording that on video, preparing for every contingency and objection that your boss might have.

Once you’ve put in the work and have done a decent amount of preparation, you’ll want to make sure your boss knows you plan on asking for a raise or promotion.

The timeline for negotiation

How long would it take for you to go from an average performer (where you are now) to a Top Performer (ready to negotiate your first raise)?

Three to six months in most cases. Sometimes more, sometimes less, but three to six months is usually an achievable goal.

This tends to surprise people.

“How can I negotiate my salary three months from now? I’m just lucky to have a job.”

If you’re a Top Performer, the time that you’re at the company won’t matter as much as the work you’re putting in.

This mindset is crucial to knowing your worth. If you’re skeptical of your own value, your boss will instantly ferret it out, costing you thousands of dollars.

It is possible to demonstrate massive tremendous value in three months — even as a new graduate. Even with few skills. Even in a crappy economy.

I’ll show you how to pick ambitious goals that actually matter to your boss and work collaboratively to achieve them. These goals will be strategic to negotiating a raise, all within a tight timeline.

And here’s what those three to six months would look like:

If you don’t get a regularly scheduled performance review, don’t worry — I’ll provide all the scripts you need to get your boss to agree to a salary conversation. But the basic idea behind your Negotiation Timeline is this:

  • 3-6 months before your review: Become a Top Performer by collaboratively setting expectations with your boss, then exceeding those expectations in every way possible.
  • 1-2 months before your review: Prepare the Briefcase Technique of evidence to support the exact reasons why you should be given a raise.
  • 1-2 weeks before your review: Practice extensively with the right tactics and scripts.

Notice that all of this is done BEFORE the actual meeting (of course, your friends will only see the results you got, not all the work you put in).

This timeline positions you best to ask for a raise or promotion.

Let’s start by learning how to set expectations for your boss.

3 – 6 months out: Prepare your boss for giving you a promotion by setting expectations

Your boss should NEVER be surprised by you asking for a promotion or a raise. If they are, you did something wrong and your chances for success drop dramatically.

Think about it: If you simply blindside your boss, you’re putting him or her on the spot.

Nobody likes being cornered, especially regarding money and promotions. Their natural reaction will be to become defensive. In psychological parlance, they’ll experience “reactance” (which is a fancy way of saying “no way, Jose”).

Instead, prepare your boss for giving you a promotion. I walk through exactly how to do this in this video:

How to Ask For a Raise The Right Way, with Ramit Sethi - YouTube

Once your boss is prepared it’s time to prepare the Briefcase Technique.

1 – 2 months out: Prepare the Briefcase Technique to nail your negotiations

This is one of my absolute favorite techniques to utilize in interviews, salary negotiations, client proposals — whatever!

First, you’re going to create a one to five page proposal document showcasing the specific areas in the company wherein you can add value.

Then, you’re going to bring the proposal with you when you negotiate your salary. When the question of compensation inevitably arises, you’re going to pull out this document and outline exactly how you’re going to solve the challenges of the company.

Hiring manager: So what’s your price range?

You: Actually, before we discuss compensation, I’d love to show you something I put together.

And then you literally pull out your proposal document detailing the pain points of the company and EXACTLY how you can help them. (Bonus points if you actually use a briefcase.)

By identifying the pain points the company is experiencing, you can show the hiring manager where specifically you’re going to add value — making you a very valuable hire.

Approach the proposal as the most compelling menu they’ve ever received — complete with issues that they know about and how YOU are the person to solve those problems.

I go into even more detail on the Briefcase Technique in this two-minute video. Check it out below.

The Briefcase Technique, with Ramit Sethi - YouTube
1 – 2 weeks out: Practice, practice, practice

The last step before your negotiation is to practice, practice, and practice some more.

It’s one thing to read about how to negotiate. Actually doing it, live and under pressure, is another experience altogether. The only solution is practice.

Amazingly, most people never do this. They simply consume information and think, “Yeah yeah, I got it,” or “I’ll do it later.” But they never follow through. Yet as little as one to two hours of practice could mean the difference between success and failure.

Here’s how to do it: First, sit in front of a video camera, either alone or with a friend. Then brainstorm as many different potential scenarios as possible and practice your responses live and out loud, just as you would in front of your boss.

For example, you might practice what you’d say if:

  • Your boss acts surprised or annoyed when you bring up salary.
  • Your boss asks you to name a number first.
  • He tries to turn you down with excuses like “It’s the economy” or “Everyone else is getting the same thing.”

Then, observe (or have a friend give feedback on) the following, and practice until perfect:

  • Your words. They should be compelling and concise, and free of rambling sentences.
  • Your body language. You want to be sitting up, leaning forward, and relaxed.
  • Your tone. It should be professional, positive, and energetic.

This works. I know because I used to suck in interviews and negotiations. I had no idea how to ask for a raise or promotion — but then I started practicing.

When I was in high school, I was having trouble landing any scholarships, even though I thought I was acing the in-person interviews.

It wasn’t until I recorded myself practicing on video that I realized the problem: I never smiled. I seemed stern and unfriendly. When I started smiling regularly, I started to nail scholarship after scholarship — enough to pay my way through undergrad and grad school at Stanford.

A while back, I decided I wanted to get better at doing TV interviews, so I got some help from professional media trainers. Again, I thought I was already pretty good. But in my very first videotaped answer, the trainers showed me about a dozen subtle mistakes I was making.

They showed me how to correct them and we tried again and again. After each round, they showed me the before-and-after video. The difference was night and day.

See for yourself the difference that even a few minutes of practice can make:

Talking Too Fast During Job Interviews, with Ramit Sethi - YouTube
How to ask for a raise and boost your salary

The Boys Scouts know it. The Lion King knows it. And now, YOU know it.

Be prepared.

It’s the most important element when it comes to how to ask for a raise or promotion. With a little bit of preparation, you’ll be ahead of 99.9% of the population — instantly improving your chances of nailing your negotiations.

If you’ve made it to this stage, the final step is knowing simply what to say when you finally ask your boss for a promotion. You want to make the conversation flow as smoothly as possible. The discussion should be mutually beneficial so your boss sees the tremendous value you’ve delivered.

I’ve gone the extra step and included word-for-word negotiation scripts here. Now, you’ll walk into your discussion confident and skyrocket your odds of getting a better title and a better salary.

How to ask for a promotion is a post from: I Will Teach You To Be Rich.

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A lot of people think that having a second income means you need a part-time job like:

  • Waitering
  • Bussing tables
  • Bartending
  • Getting yelled at by angry customers

…when that doesn’t have to be the case.

Having a good second income idea can even help you make passive income (i.e., money that you don’t have to constantly work for to earn). It’s just a matter of having the right systems and being willing to dedicate the time to building your side hustle.

You’re about to learn those systems and the exact steps to come up with second income ideas.

3 steps to find great second income ideas

There’s a three-step system that you can use to find great second income ideas today. Your immediate goal by the end of this system is to have one good idea that has earned you at least $100. Once you have that, it becomes much easier to earn $1,000 and beyond.

That’s one of the beauties of having your second income ideas: They’re easily scalable. You can make a lot of money if you’re willing to devote just a little time to it. BUT if you’re busy in other areas of your life, you can just as easily scale back.

To start, though, you need to find a great second income idea.

Step 1: Find great second income ideas

Most people make this step way too complicated, usually because they’re looking for ideas that are clever and unique. If that’s your goal, that’s great, but it’s definitely not a prerequisite to making money.

One of my favorite personal finance books, “The Millionaire Next Door,” observes that most rich business owners work in “dull-normal” industries: carpenters, dry-cleaners, vacuum services, etc.

The same applies to freelancing. Here are a few real-life examples:

  • John Z. did well on his SATs, so he started doing college prep tutoring for high school students. He got as many clients as possible, then started rapidly raising his rates until only his top clients remained. He now charges $80/hour, meaning he can work just 10 hours a week and still earn $40,000 a year.
  • Bryce Conway traveled for free using credit card rewards while he was in college. When his friends and family kept asking him for travel hacking advice, he decided to turn it into a side hustle. Now he generates over $25,000 a month in revenue.  

If you’re trying to earn money, you can do well by simply brainstorming ideas that already exist in some way. No need to re-invent the wheel.

Here’s what to do: Get a sheet of paper or open up a text document. Spend some time brainstorming each and every freelance service you find the slightest bit interesting. Get it all down on paper.

NOTE: The key to doing this well is to not edit yourself. Don’t worry if you think “nobody wants this,” or “I’m not qualified to do this.” Write it down anyways. This is an exercise in coming up with ideas – you’ll do massive edits on the list later. Try to come up with at least 50 ideas, though I bet most of you can come up with more.  

“But Ramit, I can’t even think of a single freelancing service I might be interested in!”

That’s okay! Here’s what I suggest: Start by examining your own life and the things you do on a regular basis. Here are five great areas you can look at:

  • Your skills
  • Your hobbies
  • Websites you visit regularly
  • Tools or applications you use
  • Subjects of nonfiction books and magazines you read

I want you to get 50 ideas down on paper. When you have those ideas down, I want you to come up with a specific service you can do for each one.

You might have a skill like, “I’m good with dogs” but is anyone going to pay you for just being good with dogs? No. Instead, you have to translate that skill into a service like “I can help you train your pets” or “I can pet sit for you.”

This is key when you’re generating second income ideas. Think in terms of services as well as your qualities.

Here’s a tip: To check if your service is actually a service, you should be able to explain it by saying, “I can help you (some service) so that you can (some benefit).”

Here are a few examples of qualities that can be positioned as services:


Great with animals

Pet sitting: “I help you watch your pets while you’re on vacation, so you can relax and enjoy yourself knowing Fido hasn’t chewed off his own leg.”

Genius with PowerPoint

Presentation design: “I help you create fantastic business presentations so you can save time and money while looking good for your clients.”

Love working out

Fitness trainer: “I help you achieve your health and fitness goals so you look and feel better.”

To help you even more, I’ve even provided a template below you can use to come up with great second income ideas.

You’ll be surprised at how many seemingly mundane activities can be converted into potential business ideas. Even some people on my staff started their careers by taking regular things they were already doing and simply charging for it.

BONUS: If you want even MORE help generating great second income ideas, check out my four-minute video below where I dive into the topic.

How to Find Good Business Ideas -- with Ramit Sethi - YouTube

Once you have your second income ideas, it’s time to find out which ones people want to pay for and you’ll love doing.

Step 2: Validate your ideas

This is a critical step that MANY people miss. And I’ve seen the results from skipping this step happen time and again: People who are still, months after starting their businesses, trying to figure out why they’re not making any money or progress.

I’ll tell you why: Because their idea wasn’t good to begin with.

You’re not going to make that mistake though. Instead, you’ll invest a little bit of time to make sure that your second income idea is a winner.

To do this, we’re going to use a system I call the “Pay Certainty Test.” The best part? You can validate your ideas in less than 15 minutes.

Here’s how it works: Take the paper with your ideas and write down who would pay you for each service next to each one.

  • Is your idea “social media consultant for law firms”? A law partner would pay for that.
  • Is your idea “career consultant for millennials”? Twenty-somethings looking for jobs would pay for that.
  • Is your idea “violin instructor”? Parents of musically inclined children will pay for that.

Once you do that, it’s time to ask yourself two questions:

  1. Is my prospect willing and able to pay me for this service? (Demand)
  2. Am I willing and able to provide this service? (Supply)

Where those two questions meet is where you’ll find your good ideas.

So take “social media consultant for law firms.” Will a law partner be able to pay? Of course. Law firms have more money than God.

Are they willing to pay money for a social media consultant? Probably not. Law firms don’t typically care about social media. They recruit and market themselves through other means.

Verdict: Eliminate the idea.

What about something like “violin instructor”? Are parents able to pay? Yes. The parents who are able to buy a violin for their child are going to be able to give money for instruction.

Are parents willing to pay? You bet. These parents will spend virtually anything to make sure their child is well-rounded and successful.

Verdict: Great idea! Pursue!

Use the Pay Certainty Test for all of your ideas. Once you do this, write down all of the ideas that passed onto their own “good ideas” list. Don’t worry about the other ones. They’re not permanently rejected — and you can always revisit them later if you want.

For now though, you should have at least three to five potentially profitable second income ideas.

Now pick the one you think is best.

I know. It’s like choosing which child is your favorite. But, at this point, there are no wrong answers. The important thing is you choose one and try it out.

Once you have your second income idea chosen, now it’s time for my favorite part: Finding your first client.

Step 3: Find your first client

Once you have your second income ideas, it’s time to start putting your ideas to work for you — and you do that by finding your first client.

While it may seem daunting to start selling your skills, it’s actually pretty straightforward as long as you have the right systems.

That’s why I want to offer you my guide to get you started:

Find Your First Client in the Next 6 Weeks

I’ve included some of my best techniques and strategies on finding a client who will pay you money for your skills in less than two months.

Enter your information below and I’ll send you the FREE guide right to your inbox.

3 steps to find the perfect second income idea is a post from: I Will Teach You To Be Rich.

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Think of all the favors you might need:

  • A job referral from an old boss
  • A friend to teach you how to cook a meal to impress your girlfriend
  • An introduction to the founder of a startup you want to freelance for

Favors like these can act as turning points in our life. But sometimes it’s hard to ask for a favor — especially if you’re shy and not too confident about the process.

Today I’m going to teach you the five simple steps to ask for a favor and actually get what you want.

How to ask for a favor in 5 steps

Each year on my birthday I ask my readers to do me a simple favor: Comment telling me how IWT has personally helped them

You know what happens? I get more than 500 comments every time. People LOVE telling me about landing their dream job, eliminating $45K of debt, earning $10K on the side, and more.

This is the best gift I could hope for. I don’t need cookies or new clothes. I just love hearing how my material has helped other people.

This is just a tiny favor. I’ve also asked for bigger ones like getting a bunch of my entrepreneur friends to contribute to an e-book I was working on.

So how do you ask for a favor and get great results?

Use the following 5 steps:

Let’s get started.

Step 1: Consider how your favor impacts them

When you ask for a favor, you’re essentially doing sales. You’re selling someone else your needs at the cost of their time, energy, and/or money.

And that’s what you’ve got to realize: It’s not all about you. While this favor benefits you in some way, you’re putting this person out in another way. You need to acknowledge that and compensate for it.

Having empathy like this is absolutely necessary for two reasons:

  1. It lets you talk to the person you’re selling to on their terms. You can relate to them and speak their language. Think about it: How you ask for a favor from your boss is a lot different than how you ask for a favor from your friend.
  2. It lets you adapt as the sale happens. When you care about the other person’s emotions and needs, you can see if what you’re asking from them is too much, or maybe if you’re asking it in a way that makes them feel weird. So stop weirding them out and relate to them.

Check out this amazing email I got from a reader a while back that did exactly this.


This email is the perfect example of everything that goes into learning how to ask for a favor:

  1. He showed that he actually knows me. Nothing is going to make me want to trash your email faster than a boilerplate message. The guy who sent me this message showcased how he knew me and how I’ve helped him.
  2. He made me care. Most likely, the person you’re trying to get a favor from is busy. That’s why you need to make them give a damn. That incentivized me even more to work with him. He also touched on a subject that matters to me (in this case, the sender knew that I’m always on the lookout for talented developers).
  3. He made it easy to say yes. The reader who sent me the email made it clear that, though he was looking for paid work, he would be willing to work “to network and receive a little advice” while acknowledging that I did have a few projects that I didn’t have time for.

By the time I finished the email, I was clamoring for the phone to call him. THAT’S how you ask for a favor.

Step 2: Ask with the expectation that your request will be granted

However, if you feel like you’re putting them out by asking for this favor, stop. You’ve already failed.

Your mental framework matters. You need to believe you’re going to get whatever you ask for. If you’re going to play, play to win. Don’t try. Don’t hope. You’ve already decided to do it … you might as well do it right.

Go in with a winner’s mentality.

You should go in ACKNOWLEDGING that you are asking them to go out of their way. But that doesn’t mean you go in thinking that you’re “bothering” them or that this is a waste of their time.

That’s why I want to go over the “What if I were perfect” technique.

I’ve talked about this technique before but it’s important to mention again because it has everything to do with confidence.

Let’s say that you were trying to become more confident about public speaking, or cooking, or running, or starting a business. Whatever.

With these goals come a set of crippling barriers:

  • What if I screw up and make a bad meal?
  • What if I never lose weight?
  • What if my business fails?

And many times, that’s enough to screw up. It’s a self-fulfilling prophecy.

That’s what happened when I was younger and I thought nobody would ever show up to my personal finance class — and nobody did. That’s because I already set myself up for failure with my mental barriers.

Instead, just ask yourself, “What if I were the absolute master of this domain? What if I were perfect and had all the knowledge — in the world — what would I do?”

You wouldn’t get overwhelmed by going to the store, buying onions, and learning how to chop them. You wouldn’t get overwhelmed by going to the gym and hitting the treadmill. I definitely wouldn’t have been bothered by getting people to attend my personal finance class.

And you wouldn’t get psyched out by asking someone for a favor.

You would just do what was necessary to accomplish your goals. This technique helps you get past your own mental barriers and say, “If I were perfect, how would I handle this issue?”

Using this exercise is a great way to become more confident over time.

For more help, check out my video below on how to develop natural confidence. It’s only six minutes but you’ll learn some great mental frameworks.

How to develop natural confidence - YouTube
Step 3: Don’t lie

Many people think that you have to lie or at least tell a white lie (like these 7 money lies) when it comes to asking for something. They believe you’ll be more successful if you butter someone up and give them a bunch of phony reasons to do something.


Being truthful is what makes people believe you and want to help you. Studies show that when you come at people from a place of honesty you not only make yourself and your relationship with that person happier but it’s also better for your mental health (per UC San Diego’s Emotion Lab).

Think about it. If I want my brother-in-law to introduce me to his boss, he’s going to be pissed if I come to him with the pretense of asking how his Thai cooking classes are going.

“Hey I saw that pad thai you made on Instagram the other day. Awesome stuff. Do you think your boss likes pad thai too?”

Fail. Instead he’ll respect me if I am direct and tell him, “Hey, I really want an intro to your boss because I think I could help him with XYZ goal.”

Step 4: Leverage your power

Nobody likes a needy person. But if you act like you don’t really need your favor granted, you’re more likely to get what you want.

I‘ve explained this before in the context of negotiating your way out of paying bank fees. Banks want your money however they can get it, but if you threaten to leave the bank they’ll clear any charges in no time.

I’m not saying threaten to terminate a friendship or partnership because they’re not presenting what you want on a gold platter.

Instead, lead into the conversation with something organic. For example, “Hey, do you still want those tickets for the game on Thursday? I’m happy to give them away since I know you love the team — but I was hoping I could ask you for a favor. Would you have a couple of hours to help me move this weekend?”

It’s like my system for asking for a raise from your boss or raising your freelance rates for your clients: Always do it after you’ve added value.

Did you just crush a project at work that increased sales by 100%? Perfect time to ask for that raise.

Did you create an email for your client that doubled leads for them? Strike while the iron is hot and raise your rates.

This isn’t all to say that you should be doing favors for other people strictly so you can have a bargaining chip for when you need a favor. What I’m saying is your chances of having your favor granted increase immensely when you’ve done something nice for the other person.

Think about my birthday example. It doesn’t actually matter to you that it’s my birthday. But, because of how our society is set up, you feel like you owe me one because of the value I’ve provided you. It’s totally okay to leverage situations like that.

Step 5: Be very specific about what you want

When you ask for directions, would you go up to someone and say, “How do I go somewhere?”

Of course not. Not only would you sound like an idiot, but you wouldn’t get what you want. Instead you ask specifically, “How do I get to the Farmhouse Restaurant?”

The same goes when you ask for your favor. Make sure you have a very specific ask in mind.

Don’t ask: “Can you get me a job?”

Ask: “Can you give me a warm intro to Ross Currier? He’s your head of accounting at Company XYZ, and there’s a position opening up under him that I’m interested in.”

Don’t ask: “Are you around this weekend?”

Ask: “Are you free on Saturday afternoon? I need to pick up a couch from ABC Store and I was wondering if you could drive me over in your pickup to get it.”

Be direct. Be succinct. When you say exactly what you want, people know exactly how to help you.

A great example of this was when I asked a few of my entrepreneur friends to contribute to an e-book I was writing.

I knew that all these people were incredibly busy, so I needed to offer value to them and show them that the favor wasn’t a waste of their time.

Here’s a private email I wrote to NYT bestselling author Ben Casnocha when I wanted him to help me with my 15 Little Life Experiments e-book. My comments are in brackets:

Hey Ben,

I’m putting together a short free e-book with fascinating/actionable test results (e.g., material on marketing, business, lifestyle design, social dynamics, career hacks, etc). [Quickly introduce what I’m doing and get them excited about it. Note how I skip over introductions because I already know Ben. If I didn’t, it would be important to introduce who I am and why he should read this email.]

I’d love to have you contribute, and wanted to see if you’d be interested. I already have a great idea of what your test result could be. [VIPs expect you to want something from them. Get to the point. Again, this is not the approach I would take with everyone, but it works here because Ben is (1) insanely busy and (2) a friend.]

I’ll be putting IWT’s marketing muscle behind it — we’ll be sharing it with our list of 200,000+ and we expect to have at least 500,000 other emails going out. The emails will have links to your site. [Benefit. Why should he care? Note that almost anyone would love to get this kind of exposure. (And note the meta-lesson of me promoting Ben in this very email.)]

All I would need from you is ONE great test/result that you’ve run. For example, one of the following list:

1. How I started waking up earlier (lifestyle)

2. One phrase I always use when I meet someone new (social dynamics)

3. How I got more people to join my email list (business/marketing) [Anticipate the needs of the reader. As he reads, he’s saying, “Hmm…so what would this require?” BOOM — proactively hit him with specific examples.]

(For you, I’m thinking about conversational techniques you used to become more interested/interesting … or how you elicit people to become more open by being transparent yourself. Also, you had that AWESOME tip about speaking, where you take a mid-talk break and tell them 5 books to write down, and everyone wakes up. People love that.) [Personalize it. I personalized every email I sent and got a tremendous response rate of over 90%. Use my motto — “Don’t make the busy person do your work for you” — and suggest ideas to them. There’s more to this principle that I outline in my e-book on writing winning emails (see below).]

We’ll include ~300-word case study about a successful test you’ve run. Here’s a previous e-book we did with examples from people like BJ Fogg, Mark Sisson, and Josh Kaufman: [Include a finished result, if possible. This also shows him big names I worked with in the past, so he can see this will be a gathering of renowned contributors.]


Our deadline is Wednesday, September 18th. What do you think?


P.S. If you’re interested but not sure what you’d contribute, let me know and I can give you a quick call to share some ideas. [VIPs get swamped with emails. Sometimes, I prefer to hop on a 5-minute call while I’m in between errands. So I offer that option here.]

A few takeaways:

  • Be specific but brief. VIPs are busy and do not want to read your tortured expository essay on your life history, food allergies, and the mole on your back
  • Focus on what’s in it for THEM. Benefit-driven, focused on benefit to THEM (“putting the full IWT muscle behind it”)
  • Offer a clear CTA (call to action). You wouldn’t believe how many people end their emails to me with “Yeah, so … wow, I wrote more than I thought” DELETE
  • Anticipate every objection and counter it before they can consciously voice it. Who’s going to be in this? Oh, here are past people I worked with. I don’t have any ideas. Oh, let’s get on a call and I’ll help you come up with some, etc.
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 ask for a favor (and get it) is a post from: I Will Teach You To Be Rich.

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Deciding on a freelance hourly rate can be nerve-wracking — especially if you’re a new freelancer.

You don’t want to charge too much and lose potential clients. On the other hand, you don’t want to undersell yourself and lose out on potential profits.

So what’s a new freelancer to do?

Luckily, there are a few rules of thumb that you can use to find a good freelance hourly rate to start with. I’m going to walk you through each one and even give you a tip on how to RAISE your rate in the future.

Let’s get started.  

3 key things to remember for a good freelance hourly rate

Before you jump into the rules of thumb to calculate your freelance hourly rate, keep in mind three things:

  1. Remember your overhead. Freelancing gives you a lot of freedom and flexibility when it comes to when and where you work. However, freelancing can also be a cost burden in unexpected ways too. You need to factor that in when considering your rate.  

    For example, you might rent out a coworking space (~$200/month). You’re going to need internet (~$50/month). You’re going to need phone service to take client calls (~$70/month). All of that added up is going to impact your bottom line.

  2. Have a goal salary. Ask yourself, how much do I want to earn in one year? Factor in your overhead as well as your monthly expenses to find out what your goal salary would be.

    Not only will this come into play later, but setting goals can give you focus and motivation to finish your objectives. For more information on setting a good goal that you’ll accomplish, check out my article on SMART objectives

  3. This is just the start. It’s easy to get dejected as a new freelancer when you look at your first freelance hourly rate. It’s probably going to be low in all likelihood. You might even work for free occasionally while you’re building up a good portfolio.

    BUT it’s important to keep in mind that this won’t be your salary forever. It might seem low at first — but freelancing allows you to scale your earnings. That’s part of the reason why I LOVE it so much.

Later, I’ll show you exactly how you can scale your freelance hourly rate so you’re earning more. For now, let’s jump into the first system to find an hourly rate.

Freelance hourly rate #1: Drop three zeros

Remember your goal salary? Take that number and drop three zeros from it.

Voila, you have an hourly rate!

For example, say you’d really like to earn at least $40,000. Just drop the three zeros from the end and you now have your rate: $40 / hour.

“Hey! That math doesn’t make any sense,” you might be saying. “If I work eight hours a day for $40 an hour, my salary would be $76,800 a year!”

That’s true. However, this rule of thumb accounts for the fact that you won’t be working eight hours a day in your freelancing role. Sporadic hours and spans of time when you just don’t have work to do is the nature of freelancing.

Also the clients don’t have to pay taxes and benefits. You do. You also may have to cover some of your own materials or transportation costs.

This method might not be good if you’re trying to charge for your very first client. You’re still new after all. BUT it can give you a good idea of where you can go and charge later when you get experience.

If you’re still stuck on what your goal salary should be, check out sites like PayScale or Glassdoor for good average pay rates for your freelance gig.

Freelance hourly rate #2: Double your resentment number

I love this one because it’s effective AND it’ll vary from person to person.

Ask yourself: What’s the lowest rate I’ll work for that’ll leave me resentful of my work? This the number that is your floor — the absolute lowest amount you’ll work for, but you’ll resent the work because it’s so low.

Once you have that number, now double it. THAT is your hourly rate.

Say you’ll work for $10 / hour at the VERY LEAST. You won’t like it but you’ll do it. Now just double that number so you get your freelance hourly rate of $20 / hour.

Now, I want you to just be really careful about the double your resentment strategy because it’s easy to get delusional about it — especially if you’re a beginner.  

I know because I have been very, very delusional in my day. I remember when I started a company a while back. We grew it a little bit, and all of a sudden, we had some people talking to us about potentially buying the company. But we were completely delusional about how much it was worth.

When we met to negotiate with someone about buying the company, he said, “So what do you guys think? Any numbers in your head?” And we kind of danced around the subject, but ultimately, we got down to a number we thought was fair — and he literally laughed.

He asked, “How’d you guys come to that number?” And we really had no justification. We just said, “Yeah, that’s what we’re worth. We think that that would be a nice number. You know, we could brag to our friends about it.”

Of course, it had no basis in reality.

Now, your resentment number is probably equally delusional. You may say, “Oh, I wouldn’t tutor someone for less than $25.00 an hour.” The truth is, you may need to do that, especially at first to get your first few clients.

After you get three, four, five paying clients, you’re going to have a much better idea about what your real resentment number is.

Freelance hourly rate #3: Do what the next guy does

I really like this method because of its simplicity.

When in doubt, do what the next guy does.

What does this mean? Find the going rate for other freelancers in your experience level and charge that amount or just a little above.

Many freelancers hate to hear this. They’d rather say things like, “Charge what you think you’re worth and ignore everyone else!”

Sorry, but here’s a reality check: Supply and demand is real.

As someone who frequently hires freelancers, I can attest to this. A while back, I had two different freelancers charging two different prices. I’m talking about a difference of 100%.

Both freelancers were equal in quality. However, one was charging DOUBLE the other one because they clearly didn’t know the going rate.

Who do you think I hired? Of course, I’m not going to pay double the price. As a client, I’m going with the cheaper option!

That’s why it’s so important to find the going rate and charge equal to that or just a little bit over (~10% more).

Here are a few good ways you can find the going rate:

  • Check job listings on sites like Glassdoor to see what other companies are paying.
  • Google average hourly rates for your specific industry.
  • Ask your friends or colleagues who have hired freelancers before.
  • Ask any freelancer friends of yours what they charged.
Still stuck? Try these freelance hourly rates

If you’re still stuck on this (which is totally fine), here are a few good starting numbers for beginners:

  • Writing and editing: $30 / hour
  • Graphic design: $40 / hour
  • Tech / programming: $50 / hour

This number will vary on your market, your positioning, and your level of experience. Remember the number though so you can quote it when you’re asked (you’ll look more professional that way).

Also, keep your rates flexible. These numbers are just starting points.

Your standard rate might be $40 / hour BUT if you really like a project a client offers you, you might be willing to do it for $20 / hour or even for free. When you do that, you might be able to ask your client to revisit the payment question in a month’s time. If you’ve done extraordinary work, you’ll have a huge bargaining chip when it comes to negotiating your rates.

Don’t spend more than 30 minutes thinking this over. Just pick a number and spend your time testing and validating it with your clients.

That’s a much better use of your time than debating it and running endless calculations in your head as to how much you can make.  

To help you even more, check out the two videos below all about what to charge. The first one is a part of a discussion I had with Chase Jarvis. The second is a speech I gave during a past 99U conference. Enjoy!

Chase Jarvis & Ramit Sethi - How to Charge Clients and Name Your Price - YouTube
Ramit Sethi: How to Charge What You're Worth - YouTube
How to raise your freelance hourly rate

When it comes to raising your freelance hourly rate, it all boils down to when you should raise your rates — not necessarily how much you should raise it by.

You don’t want to increase your rate right after you agree to your very first project with a client. After all, you haven’t proven yourself to them yet.

Why should they pay you more money when you haven’t given them anything worth paying more for?

Instead, you’re going to increase your rate only after you deliver a high-value product.

I’ll say that again:

Increase your rate after you deliver your client a high-value product.

Did you:

  • Just finish a landing page that generated a ton of qualified leads?
  • Create an email campaign with a record-high open rate?
  • Have a blog post go viral and increase traffic by 200%?

That’s why I LOVE increasing rates. It encourages you — the freelancer — to do great work and deliver fantastic products while letting the client know that you should be valued.

You can also raise your rates through referrals. Referrals are clients that you get from existing clients and they are the lifeblood of any freelancer.

For a few reasons:

  1. You can raise your prices when you get a referral. The client who referred you has automatically added value to your work by recommending you. That means you can charge more for your work.
  2. You get better clients. When you charge more, you’ll start attracting high-quality clients who can afford you. They’re also much less likely to waste your time if you’re being paid top dollar. It’s a win all around.
  3. You can more than double your income. Check out this case study from a freelance project manager who went from charging $25 / hour to $75 / hour just by getting a referral. This is a HUGE win.

“At this point the majority of my clients and contracts come through referrals,” says LaPointe. “When clients are happy with what I’ve done, it’s natural for them to recommend me to their friends and colleagues.”

And asking for referrals is easy — if you have the right script.

Luckily, we have a proven script from our article on how to get clients to help you ask for referrals:


I’m so happy to hear that you enjoyed my work. If you know of anyone else who’s looking for my services as well, I’d be grateful if you passed my contact information along to them.

Thank you,


It’s simple, direct, and gets results.

BONUS: The Ultimate Guide to Making Money

If you want even more information on becoming a freelancer, be sure to check out our articles on the topic below:

If you’re really interested in making money in freelance marketing, we here at IWT have a gift for you: The Ultimate Guide to Making Money.

In it, we’ve included our 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 jump into freelance marketing today.

3 systems to find your freelance hourly rate is a post from: I Will Teach You To Be Rich.

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What is a bad credit score (and what to do about it)

The world of credit scores can be confusing. It’s filled with esoteric jargon like “credit risk” and “FICO.”

I want to help you cut through all the BS and get down to one really important question:

What is a bad credit score?

The answer? Anything less than 670.

Anything below 670 and you’re at risk for higher interest rates on loans (if you get approved at all), getting denied an apartment rental, or even passed up on a job application.

But there is hope. You can improve your credit score even if your score is less than 670.

We know because we talked to someone who has been there.

How this entrepreneur crawled out of debt and escaped her bad credit score

Credit score then: 600 – 650 Credit score now: 789 Debt owed: $12,000 in credit card debt and $35,000 in student loans

Meet Kelsey Jones.

Kelsey is a writer, entrepreneur, and founder of a marketing company called Six Stories. Though her business is thriving and she and her husband are on solid financial footing, that wasn’t always the case.

In fact, her credit score took an absolute beating after college due to a problem that happens to many college students: They don’t understand how credit cards work.

This put her in a prime position to fall into debt and kill her credit score before she even graduated.

“I got one of those credit cards you get at a tent with a free t-shirt,” she says. “My parents told me nothing about credit card debt and managing money as I’m sure most don’t, so I had no idea how to manage a credit card and use it to my advantage.”

Due to her inexperience with cards, she didn’t understand the dangers. Like many people with bad credit, she was drawn in by flashy sign-up offers and bonuses. She wound up opening credit cards at stores such as American Eagle and Victoria’s Secret, as well as the major card companies like American Express and Discover.

This behavior eventually led to a sizeable amount of credit card debt. Kelly wound up owing roughly $12,000 in credit card debt when she graduated in 2008 on top of the $35,000 she owed for student loans.  

Her credit score soon plummeted — and was further exacerbated by late payments.

“I sometimes paid my bills late because I just didn’t have enough money,” she says. “I was so broke when I graduated! I vividly remember my paychecks every two weeks were only $730. Meanwhile, I had to pay for my one-bedroom studio, car, cell phone, and all the other bills that come from truly being on your own.”

She adds, “My rent was almost the equivalent of one entire paycheck!”

I felt like I was “less than”

Being in debt and having your credit card debt can take a mental and emotional toll on you as well as a financial one. In fact, researchers have found that there’s a strong correlation between debt and mental health issues.

Debt can be both the cause and symptom of depression and anxiety — and it’s only exacerbated by the fact that many just want to ignore their financial problems.

“I buried my head in the sand for a long time,” she says. “I justified it for a while so I didn’t have to confront the angry feelings I had at myself for getting myself in that situation — specifically from credit card debt.”

For anyone who has ever been in debt, this feeling of anger and guilt should be familiar. When combined, it creates a potent mix that can be debilitating leading to inaction.

That’s why the first step in our system to getting out of debt fast is simply finding out how much you owe. When you confront your debt head-on, you provide yourself with a powerful mental boost that can help you eliminate it completely.

For Kelsey, though, that was easier said than done.

“I felt like I was ‘less than’ because I couldn’t get my shit together well enough to really take care of it,” Kelsey explains. “I felt so out of control of my life and wasn’t ready to be so broke after college. For some reason, I thought things would automatically get better, without me actually having to do anything.”

The wake-up call

It wasn’t until one day when her husband sat her down that she finally had a frank discussion about her finances: Something needed to change.

“Him coming to me about my debt was a wake-up call for me,” she says. “I couldn’t hide anymore.”

Debt is one of the biggest and most common barriers to living a Rich Life. And in their discussion, Kelsey realized that it was getting in the way of everything she and her husband wanted in their lives.

“I wanted to stop being a victim,” she says, “and dreading everything to do with money.”

Credit score improvement game plan

Kelsey’s plan to improve her credit score and escape her financial advice was threefold.

Step 1: Set a goal

First, Kelsey made the conscious decision to escape debt.

“I decided that this was it,” she says. “I was done being in debt. You have to make the conscious decision that you are done being ‘that person.’”

Though it may seem like a no-brainer, many people still put their heads in the sand and avoid their situation entirely — but that’s exactly what your lenders want you to do. They want you to avoid your statements. They want you to just pay off the minimum every month so you owe more interest. That’s how they make money.

Which is why one of our first steps in our credit score improvement system is to find out how much you owe. Once you do that, you’ll know how you can approach paying off your debts.

For Kelsey, the decision to confront her debt was a game changer.

“I went to Staples and bought a huge piece of poster board and bright markers and hung it up in my office,” she says. “I created a bar chart with months at the bottom and debt amount on the side. At the end of every month, I updated the poster board with different colors. It was awesome to see the bar graph trend down.”

Kelsey began to obsess over crushing her debt. She even leveraged this debt calculator spreadsheet whenever she made a financial transaction.

“I constantly updated it when I made payments and even made extra copies of it to test scenarios like ‘What would happen if I paid extra on my Discover card payment?’ or ‘What if I paid off this loan versus the other one?’” she explains. “Just knowing I could be debt-free in X number of months kept me going.”

Step 2: Pay down the debt by any means necessary

Kelsey also made sure that every piece of extra money she received went towards paying down her debt. This meant sacrificing a few things she loved in order to do it.

“We didn’t go on any trips and I didn’t go out to eat with friends as often as I used to,” she explains. “I still didn’t deprive myself, I simply cut down a little.”

She continues, “Any additional extra money, like tax returns, birthday gifts, and even the brand new MacBook I won in a contest, all went toward debt. It was extremely sad to ship that new MacBook to its new owner after I sold it on eBay — but I was obsessed.”

Step 3: Earn more money

Kelsey also leveraged a tried-and-true IWT method of attaining a Rich Life: Earning more money.

“I had my own digital marketing business at this time,” she recalls. “So the amount of money I made was completely up to me. I went into overdrive mode. I asked existing clients for more work and I sent pitch after pitch to potential new clients. I worked probably 50 hours a week … often until 9 or 10 at night and on the weekends, to hit my goals.”

The results

This diligence and hustle ultimately paid off when nearly two years later, she found herself debt-free.

“I still vividly remember sitting on my bed and submitting that last payment to Sallie Mae,” she says. “I promptly had a dance party in my bedroom for a few minutes, and then immediately started making my credit cards work for me.”

That meant putting in place a proven system of (say it with me):

“I set all recurring bills I could to be paid via credit card for the points and I paid off the balances completely each month,” Kelsey says. “Knowing how hard I worked to pay off that debt, I never wanted to get into that situation again. Now, about five years later, I still have never carried a balance over on a credit card more than one time.”

And to people with a low credit score, Kelsey has three pieces of advice:

  1. Stop lying to yourself or justifying it. By confronting the uncomfortable truths about your credit score, you can take the steps to improve it. “Put yourself on an all cash budget or open a new checking account that only has your spending money for groceries, fun, etc.,” she suggests. “Your other checking account can be used to pay your credit card balances and other bills like rent.”
  2. Ask yourself, “Where do I want to be a year from now?” It’s easy to make bad financial decisions when you don’t keep the end goal in mind. “Think about if going into more debt is worth it,” Kelsey says. “Will that new computer really make you feel better or will you feel worse because you’re even more behind on your debt?”
  3. Think about your loved ones. Often times, debt doesn’t only affect you. It also affects your loved ones. “Having a child with our income and debt I had would’ve been irresponsible […] Think about how your debt could impact your spouse and your freedom as a family to make decisions and move forward in life.”

Now that Kelsey’s out of debt and she has a good credit score, she’s now in a great position to live her Rich Life.

What is a bad credit score?

Just like with Kelsey, a bad credit score can be emblematic of many financial issues. To understand why a credit score like 670 is bad though, you need to understand how credit scores work.

Your credit score is a number that lenders use to determine how much of a risk it is to lend to you.

This number will typically be between 300 and 850. The higher your credit score, the better you are situated for things like home and car loans.

The actual number is determined by the following information and their associated weight in relation to your score (credit score formula 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%  

Check out these ranges from Experian, one of the three main credit reporting bureaus, to see how your credit score shapes up:

  • 800 – 850 (Great credit score). I want to take this credit score out to a nice seafood dinner, propose marriage to it, and live out our days in the country. It’s that good. If your credit score is in this range, you’ll have no problems getting a home loan or nailing a fantastic interest rate on your mortgage.
  • 740 – 799 (Good credit score). The credit score you’d be happy to bring home to your parents. This is a pretty good spot to be. Though it’s not the best, you’ll still have no problem getting approved for loans and attaining good interest rates.
  • 670 – 739 (Okay credit score). This credit score range is fine for the short term, but you’re going to want to upgrade soon. At this point, any hit to your credit score will be a bad one.
  • 580 – 669 (Bad credit score). In this range, you’re considered a “subprime borrower,” which means you’re likely not to be considered for a loan at all and will struggle getting approved for simple things like apartments.
  • 300 – 579 (Really bad credit score). Immediate swipe left on this credit score. In fact, delete the app entirely. You are a “deep subprime borrower” and won’t get any good rates and won’t likely get approved for any loans. You’ll want to stick around to find out how exactly you can improve your score.

If you want to be approved for any conventional mortgage, you’re going to need a credit score of at least 620. That’s why any credit score below 670 is a bad credit score. At that point, even the smallest hit to your credit score can affect your interest rates and loan approvals.

Miss a payment? Those missing payments affect 35% of your score.

Close down a credit card? That affects 10% of your score.

Even the lender simply opening up an inquiry to your credit hits your score by 10%.

That’s why it’s so important to be aware of your credit score and improve it when it’s bad.

“I have a bad credit score! What should I do?”

If your credit score is bad, you’re not alone. Nearly a third of Americans have a credit score of less than 600.

Also, there’s a chance that you might even be typical for your age range. Check out the average credit score by age as of early 2017 (courtesy of Time):

Age range

Credit score

18 – 29


30 – 39


40 – 49


50 – 59




No matter what your credit score is, remember one thing: No credit score is too low to improve.

We want to help you do just that by taking a look at someone who had a low credit score — and the exact steps they took to improve it.

What is a bad credit score? The one that stops you from your Rich Life.

Debt is the number one barrier to living your Rich Life. If you’re in debt and have a bad credit score, we want to help you.

Check out our resources below to get started improving your credit score today:

Be sure to check out Ramit’s video on negotiating your debt too so you can pay it off even faster.

How to Negotiate Your Debt, with Ramit Sethi - YouTube

To help you even more, we’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.

It includes 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.

What is a bad credit score (and what to do about it) is a post from: I Will Teach You To Be Rich.

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A quick one for today:

Which of these money messages did you grow up with?

  • “Save for a rainy day”
  • “We don’t talk about money in this house”
  • “Rich people stepped on someone to get where they are”
  • “We always have money for education”
  • “Money comes, money goes”

I’m collecting a list of money messages around us — think “invisible scripts for money.”

Please leave a comment below sharing one money message you heard while you were growing up.

What’s one money message you grew up with? is a post from: I Will Teach You To Be Rich.

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Good side hustle ideas can open the door to unlimited earning potential.

However, we have limited willpower as humans.

Think about how so many of us go about doing something like creating a side hustle:

  • Stage 1: Decide you want to have a side hustle. (“I think I want to have a side business so I’m my own boss!”)
  • Stage 2: Get excited about the prospect of earning more money. (“I can’t wait to do what I love AND get more money! I wonder how much tickets to Cabo are this time of year?”)
  • Stage 3: Try to come up with side hustle ideas. (“But wait, what’s my business going to be?”)
  • Stage 4: Get overwhelmed, dejected, and give up. (“I can’t come up with a good idea. I guess I’ll just keep working for my boss…”)

We’re not going to do that though. Instead, I’m going to show you exactly how you can create your own side hustle AND give you a list of great side hustle ideas as a launching point.

Three questions to find great side hustle ideas

One thing I’m sick of are listicles online that tout the “3,000 best side hustle ideas” but most of them are trash.

You know the ones I’m talking about too.

  • “Have a garage sale!”
  • “Sell your hair for cash!”
  • “Take online surveys that’ll pay you literally DOZENS of cents!”

These “hustles” are vague, non-scalable, and just not worth your time. Instead, I’d like you to reframe what you’re looking for. You’re not looking for an idea. You are focused on finding your inner expertise.

What do I mean? We all have skills and talents that are 100% marketable, but most of us don’t even realize it.

I went to this party while I was in college once and there was this guy there drinking heavily. I’m talking seven shots in with more to come. Later, I’m looking at his bookshelf (because I’m a weirdo) and find a neuroanatomy textbook.

This guy was in the process of killing hundreds of his own brain cells — but he’s also smart enough to save another person’s brain cells. You wouldn’t know he was this very talented and smart dude by just looking at him though.

That’s because those skills were his inner expertise — and you have them too.

All you have to do is ask yourself some very simple questions:

Question #1: What knowledge have I acquired?

We pay to learn a lot of things:

  • College degrees
  • Spanish language lessons
  • Yoga classes
  • Guitar lessons
  • Improv classes
  • Writing workshops

We pay for all of this because we know it’s more efficient to learn things by paying money for expert knowledge.

Guess what? You can be that teacher too.

And I know what you’re thinking: “I’m not good enough at anything to teach anyone else.” Look, there are plenty of people who aren’t “as good” as other people in certain skills but they’re still making money off of their knowledge.

Do you think James Patterson is the BEST writer?

Do you think Dwayne “The Rock” Johnson is the BEST actor?

How about that popular Mexican restaurant a few blocks from you. Do you think they have the BEST burritos?

No — but these people are still making money off their knowledge. And there are things that you can turn into marketable side hustle ideas too.

What knowledge do you have to turn into a side hustle?

Question #2: What do I do on a Saturday morning?

The answer to this question reveals what you’re passionate about and what people might pay you for. Because we all have something we just love doing on Saturday mornings before everyone else is awake.

I have a friend who LOVES clothes. Her Saturday mornings consist of reading fashion blogs and maintaining a Pinterest account overflowing with outfit and design ideas.

Here’s what I find interesting: She never thought about turning this into a business! It’s just something she likes to do BUT I guarantee you that there are a lot of people who’d pay $500 for a style consultation over Skype that she could do from the comfort of her own home. Some people might even pay her thousands to be their personal shopper.

Something that my friend loves doing for fun on a Saturday morning could be turned into a thriving business with a few key systems (more on that later). So ask yourself: What do I like to do in my free time?

  • Are you at the gym or training for marathons as a hobby? People would pay you for your fitness knowledge.
  • Do you love reading dating advice blogs or browsing /r/relationships? You could give relationship advice or coaching to the lovelorn.
  • Maybe you like working on your car in your free time. People would pay you to fix their car troubles too!

What you do when you have a ton of downtime is a great indicator of your passions and talents.

Question #3: What challenges have I overcome?

We can turn our most painful and vulnerable moments into a great side hustle.

Don’t believe me? Check out all of these profitable hustles that came out of challenges people have faced:

  • CrohnsColitisLifestyle.com. After Dane Johnson was diagnosed with Crohn’s/Colitis, he devoted himself to helping people with the disease achieve their fitness and nutrition goals.
  • JenTurrell.com. When her eldest daughter was born, Jen discovered her daughter had autism. Her life soon became a whirlwind of tough financial decisions and sacrifices. She now uses the knowledge she gained during her experience to help other women find their financial footing as well.
  • FindYourInnerHappy.com. Tree Franklyn always struggled with handling her emotions — until she learned a great system to deal with her sensitive nature. Now she helps women manage their emotions so they don’t feel overwhelmed all the time.

While it may be tough to revisit some of those painful moments, it’s also empowering knowing that you overcame it AND can help others in their struggles too.

So what have YOU struggled with that you can help others with too?

  • Did you struggle to lose weight for years and figured out how to get in shape?
  • Are you an introvert who has learned to overcome shyness to become more sociable?
  • Have you failed test after test before learning an amazing study technique?

Find an answer to this question and I promise you you’ll find a profitable business idea.

Action step: Come up with 20 ideas

It’s time to figure out what exactly you’re good at and put it down on paper. We start by doing an inventory of everything — our knowledge, passions, and challenges we’ve overcome.

So answer each question below and come up with a few ideas for each until you have 20 answers in all.

  • What knowledge have I acquired?
  • What do I do on a Saturday morning?
  • What challenges have I overcome?

It’s okay if it’s not an even number of answers (unless you can come up with 6.666667 answers for each one). What’s important is that you’ve put down 20 on paper.

Put aside 30 minutes today and 30 minutes tomorrow to do this. Literally block them out on your calendar and protect that time. You can do this RIGHT now.

Make sure there are TWO distinct times you do this. That’s because when you step away from a problem, you free up a different part of your mind that helps you problem solve more effectively.

Once you’re done, congrats! You’re well on your way to getting started earning money with your side hustle ideas.

How to keep motivated with your side hustle ideas

Many people can get overwhelmed after coming up with their 20 side hustle ideas — and I don’t blame them. Taking your side hustle ideas and running with them takes a lot of time and determination.

BUT I promise you that it’s completely worth it. Three reasons why:

  1. Most people don’t even think to earn more — giving you an edge. Because of differences in skill, motivation, and luck, few people ever try to earn more. Instead, they choose to complain about things they can’t control like the economy and taxes while focusing on things like cutting out lattes to save money.

    So if you’re in that small group of motivated hustlers who do actually earn more, you earn the lion’s share of side revenue. When you pick an area to excel where there’s a built-in barrier to success — like earning more money on the side — the winners get disproportionate winnings.

  2. Mitigate your risks. What if you lost your job tomorrow? Would you have another source of income to fall back on? If not, you’re going to have to dip into your emergency fund … if you have one that is.

    Just like with your portfolio, you know about the importance of diversifying your investments. It’s the same idea when it comes to your revenue sources.

  3. Managing your money and earning more money is a powerful combination. Combine earning more with the automation strategy for saving, investing, and spending that I outline in my book, and you’ll have a powerful financial combination guaranteed to set you up for a Rich Life.

If you’re still nervous about your side hustle ideas, I want to help you even more with a bonus:

BONUS: 42 side hustle ideas for beginners, college students, parents, and more!

No matter your employment, family status, or location, you can find the right business idea to pursue on the side. To help you get started even more, here are 42 examples of great hustles you can start today.

Side hustle ideas for beginners

Here is a list of services that don’t take any special skills or training at all that you can offer to people for money:

  • Transcription services
  • Courier services
  • Cooking / personal chef
  • Technical writing
  • Small business marketing
  • Proofreading / editing
  • Business writing (business plans, grants white papers)
Side hustle ideas for college students

You can start a lucrative side hustle even if you’re living in a dorm room right now. Actually, that’s how I started IWT over a decade ago. Check out these hustles:

  • Video production / editing
  • Design (brochures, business cards, logos, newsletters)
  • Web design
  • Blogging / blog consulting
  • Sports / personal training
  • Child care
  • Search engine optimization (SEO)
Side hustle ideas for millennials

Millennials have a wealth of marketable skills just by virtue of being in a tech-centric generation. My first side hustle was consulting for venture capital firms on how young people were using social media. Here are some other things you can do:

  • User interface & user experience (UI/UX)
  • Google Analytics
  • Programming / web development
  • E-commerce consulting
  • Tech tutoring (e.g., how to set up and use your tablet)
  • Internet marketing consulting
  • Fashion / image consulting
Side hustle ideas for stay-at-home parents

Parents have some of the busiest schedules and irregular hours of anyone. However, on top of all those responsibilities, you can find a side hustle idea that makes your money. Case in point:

  • Personal / virtual assistant
  • Pet services (grooming, walking, etc.)
  • Home maintenance
  • Crafting / personalization services
  • Human resources / payroll services
  • Project management / productivity consulting
  • Copywriting and editing
Side hustle ideas for working parents

If you’re a working parent, you probably have skills such as planning, budgeting, and productivity. You can easily transform one of those skills into a side hustle such as:

  • Photography
  • Travel planning
  • Event planning / promotion
  • Automobile / motorcycle repair
  • Tax and financial planning
  • Community management / promotion
  • Career help (finding work, optimizing resumes, cover letters, etc.)
Side hustle ideas for teachers

Teaching and the skills involved are at the core of a lot of thriving side hustles. That’s why professional teachers have an advantage when it comes to hustles such as:

  • Research
  • Presentation design (e.g., PowerPoint)
  • Tutoring and coaching
  • SAT prep
  • College application review
  • Productivity coaching
  • Accounting / bookkeeping
“I have my side hustle ideas … what now?”

Once you have your side hustle ideas, it’s time to start putting your ideas to work for you — and you do that by finding your first client/customer/person-who-will-throw-money-at-you-for-your-service.

Without your customer, your side hustle ideas will remain just that — ideas. And while it may seem daunting to start selling your skills, it’s actually pretty straightforward as long as you have the right systems.

That’s why I want to offer you my guide to get you started:

Find Your First Client in the Next 6 Weeks

I’ve included some of my best techniques and strategies on finding a client who will pay you money for your skills in less than two months.

Enter your information below and I’ll send you the FREE guide right to your inbox.

Be sure to tweet your results at me @ramit. Check out this one I got from a reader recently:

 I can’t wait to hear about your awesome side hustle ideas.

How to find the best side hustle ideas today is a post from: I Will Teach You To Be Rich.

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Your credit report dispute letter is a letter you send to credit bureaus to dispute any errors that are on your credit report.

And it can be CRUCIAL to improving your credit score. Because the smallest error can affect your score.

For instance, if your credit report says that you were late on your payments when you actually paid them on time, that affects nearly a third of your credit score, since 30% of it is determined by the amount you owe.

That’s why it’s so important to dispute any errors you find on your report.

With so many credit report dispute letter scripts out there, which do you choose?

This one:


I want to dispute the following information in my file. The items I dispute also are encircled on the attached copy of the report I received.

  • X is wrong because Y. I have attached a receipt showing this.
  • A is wrong because B. On December 21st, I sent an email (“Correct my record”) requesting the change.
  • C is wrong because D.

I have also included my payment records. Please make sure that these errors are rectified soon.


BUT let’s take a step back and get a bird’s-eye view of this letter, why it works, and the exact steps you need to take in order to dispute errors on your credit report.

How to dispute errors on your credit report (with scripts)

I asked my readers how they improved their credit scores a while back — and disputing errors on their credit reports was one tactic that kept coming up.

You can turbocharge your credit score by finding and disputing the errors in your credit report.

The process is going to be fraught with tense negotiations, countless emails sent, and late nights slaving over a hot spreadsheet while screaming into a telephone with your credit card company’s outsourced customer support line.

Just kidding! It just takes four steps:

Step 1: Get your credit report

To dispute any errors on your credit report you must first get your credit report.

Your credit report is an all-inclusive record detailing your credit history and information such as your:

  • Loan history
  • Accounts opened and closed
  • Payment history
  • Credit balance

Credit bureaus issue your credit report based on information they receive from “data furnishers,” or creditors you’ve worked with (more on this later).

There are three major credit bureaus that will provide credit reports for you:

  1. Equifax
  2. Experian
  3. TransUnion

These are the primary credit bureaus — and the same ones that creditors, lenders, employers, and even potential landlords use to make sure that you’re good about paying back debt on time.

If your credit score is good (700+), you are fine just checking your credit report once a year.

If you find yourself with bad credit (<700) or if you think you’ve been unjustly denied anything due to your credit score, though, you’ll want to get your credit report to dispute anything erroneous in there.

Luckily, you’re entitled to a free credit report each year from each of the three major credit bureaus, per the Fair Credit Reporting Act. To attain it, head to AnnualCreditReport.com (a site recommended by the Federal Trade Commission).

NOTE: If you’ve already used up your free credit report for the year, you’ll still be able to attain it — you’ll just have to pay a fee through the specific credit bureau.

Sites like Credit Karma will allow you to view your TransUnion and Equifax credit report for free. However, in exchange, you’ll have to view advertisements for their credit offers.

When requesting your credit report, you’ll fill out a form online that includes basic information (name, address, DOB, etc.) and also your social security number. Once the form is filled out, you’ll send that information in and receive your credit report in minutes.

Alternatively, you can also order a physical copy of your report by calling the toll-free number 1-877-322-8228. You’ll be asked to provide the same information as if you did it online.

If you ordered your credit report via phone, you’ll receive a copy of it “within 15 days of receipt,” according to the FTC.

If you ordered your credit report through the website, though, you’ll be able to view your credit report right away.

BONUS: Check out this quick video I made a while back explaining how you can check your credit score and get your credit report.

How to Get Your Credit Score and Report, with Ramit Sethi - YouTube

Once you receive your report, it’s now time to find any and all errors that might be in there.

Step 2: Find any errors

A credit report error is simply anything that’s wrong in your credit report. That means making sure that everything on your credit report accurately reflects your actions as a borrower.

The Consumer Financial Protection Bureau provides a substantive list of common errors that you might encounter in your report.

They include:

  • Identity errors. These are any issues with erroneous identity. Example: The report got your name or address wrong, they mixed you up with a person with your name, or even cases of identity theft.
  • Incorrect reporting of account status. These are errors within your individual accounts. Example: When the report says you have an account closed/open when it isn’t, it says you were late on an account payment when you weren’t, or when they report the same debt multiple times.
  • Data management errors. This happens when you’ve disputed your credit report already and the same errors appear on your next report. Example: You’ve sent a credit report dispute letter about an account you’ve already closed but your next report still contains the error.  
  • Balance errors. It shows the wrong balance in your accounts. Example: It says you owe $500 when you really owe $300.  

Identifying these errors is crucial to your credit report dispute letter. So go through your credit report, line by line, and note any and all errors you find.

And there’s no one way to do this. You can print out the credit report and mark it up with a pen and highlighter, or you can just go through it and make notes in a notebook or a Google Doc. Any method works as long as you note all of the errors.

Once you’ve found all of the errors, it’s now time to draft your credit report dispute letter.

Step 3: Send this credit report dispute letter script

Now it’s time to use that email script I gave you at the top.

This one:


I want to dispute the following information in my file. The items I dispute also are encircled on the attached copy of the report I received.

  • X is wrong because Y. I have attached a receipt showing this.
  • A is wrong because B. On December 21st, I sent an email (“Correct my record”) requesting the change.
  • C is wrong because D.

I have also included my payment records. Please make sure that these errors are rectified soon.


A few notes:

  • Just get straight to the point. Just like when you’re writing a cover letter or your resume, each word needs to earn its spot on the page. Your credit report dispute letter should be the same. No messing around. Just get straight to the damn point!
  • Give them their exact errors with evidence. Note exactly what you are disputing and provide evidence to make your case. Be as comprehensive as you need to be and include specific dates, payment amounts, and account names.
  • Enclose your copy of the credit report. Include your own copy of the report wherein you’ve highlighted the errors. If you’ve already marked up your own copy of the report for step two, this is a perfect place to send in your handiwork.

Also, remember to keep a copy of the credit report for your records. If there’s another data management error in the future, you’ll be able to use it to dispute the error.

Now it’s time to decide where you want to send your credit report dispute letter. You have three options:

  1. The credit bureau
  2. The data furnisher
  3. Both

Guess which one will increase your chances of having the dispute work?

If you want to send your credit report dispute letter to a specific credit bureau, here are the links to exactly where you can send your dispute.

If you want to send your credit report dispute letter to a data furnisher, you’re going to have to handle that yourself since it’s specific to you and your financial situation.

Once you’ve sent in your credit report dispute letter, it’s time to play the waiting game (everyone’s most favorite game of course).

Step 4: Receive the credit report dispute results

Luckily, you don’t generally have to wait too long. The Consumer Financial Protection Bureau requires credit bureaus and data furnishers to “investigate the dispute within 30 days of receiving it.” After completing the investigation, they have five days to send you the results.

However, there are a few things to note:

  • If you send in additional pieces of information regarding the dispute during the first 30-day investigation, they can extend it for 15 more days.
  • They have 45 days if you send in your credit report dispute letter AFTER receiving your free yearly credit report.

Once the investigation period is up, though, congrats! You’ve successfully disputed with the credit bureaus using a great credit report dispute letter!

You’ll now receive a few things. First, you’re going to get a complete summary on what the credit bureau discovered and the actions they decided to take to rectify the errors.

If they decided that what was in the previous credit report was correct, then they’ll tell you that as well.  

The credit bureau will also send you a brand new updated copy of your credit report (Note: This is NOT your annual free credit report) and you can frame it and put it on your office wall so you can let everyone know how much of a weirdo you are. I like to put them on my mantle like hunting trophies.

What to do if your credit report dispute didn’t work

You might run into a case where your credit dispute didn’t work and you didn’t get the changes you wanted reflected on your report.

It typically means that the issue you were trying to report wasn’t actually an error when this happens — and that’s okay. There are still many different ways you can improve your credit.

Here are a few resources you can use to get started doing that today:

Getting out of debt and improving your credit score is crazy important. I cannot stress that enough.

There’s a reason it’s on the second rung of my ladder of personal finance.

Ask Ramit: 401k's, Roth IRA, & the Ladder of Personal Finance - YouTube

To help you even more, I’d like to offer you something: The first chapter of my 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.

How to send a credit report dispute letter (with scripts) is a post from: I Will Teach You To Be Rich.

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Your credit score is the biggest determining factor for your mortgage.

Lenders look at other things like your income and job history, but none of that matters if your credit score is in the toilet. That’s why knowing the score you need for a mortgage is the first step in buying a house.

What is that credit score though? The score you need to hit to be able to qualify for most conventional mortgages?

At a minimum: 620.

BUT(of course) it’s a bit more complicated than that. The minimum credit score can vary depending on your specific financial situation, your debt-to-income ratio, and which mortgage you choose.

The different types of mortgages

The world of mortgages can often feel like the Wild West — a dramatic and confusing place with unwritten rules that can end your journey at any second. Only those with grit (and a high credit score) can survive.

And in this chaotic land, there are two kinds of mortgages you can get. They are:

  1. Conventional mortgage. These mortgages are insured by private lenders. The biggest of which are the Federal Home Loan Mortgage Corporation (Freddie Mac) and the Federal National Mortgage Association (Fannie Mae).
  2. Government mortgage. These are mortgages that are insured by specific government agencies.

Future homeowners also have the option to choose between three different types of loans within government mortgages. Those are:

  1. FHA loans. These loans are insured by the Federal Housing Administration and given by a private mortgage lender. These mortgages are popular because they require a small down payment when compared to other types of home loans. It’s also much easier to qualify for these loans if you have less-than-perfect credit.
  2. VA loans. These loans are insured by the Department of Veteran Affairs. As such, they’re only available to military service members (active or discharged). They’re very lucrative to prospective homeowners due to their incredibly low to no down payment.
  3. USDA loans. Aside from making sure your steak is “Grade A” Angus beef, the Department of Agriculture also doles out home loans for rural areas. These loans are tailored for low-income homeowners and don’t require you to pay mortgage insurance.

Your credit score will be the biggest determining factor on whether or not you get these loans.

So let’s take a look at how different credit scores can affect your mortgage (in classic spaghetti western fashion):

Saddle up, partner. It might get bumpy.

The Good the Bad and The Ugly main theme by Ennio Morricone - YouTube
Credit score for mortgage: The good

Having a credit score in the 700 range is the good. It shows lenders that you’re the Clint Eastwood of borrowers — competent, reliable, and deadly in a Mexican standoff.

In fact, you might want to aim it even higher than that.

“You should aim to have your credit in the high 700s if you want to be absolutely ensured a home mortgage,” says Jasmine, a home mortgage advisor at MortgageAdvisor.com. Her job is to help would-be homeowners understand exactly what they need in order to secure a home loan, so she knows her stuff.

According to Jasmin, this puts yourself into prime position to obtain a mortgage without worrying about being denied due to your credit score. This applies to both conventional mortgages as well as government mortgages.  

Having a credit in the high 700s is also beneficial because it means you’ll likely get a better interest rate on your mortgage too. This could mean saving thousands over the life of your mortgage (more on that later).

So having your credit score in the 700s is the good … but what about the bad?

Credit score for mortgage: The bad

620 is bad. Mortgage lenders will likely approve you for a loan — though they’ll be suspicious of you and your dastardly ways.

Luckily, it’s not the worst credit score for mortgage. 620 is just the minimum credit you’ll need to qualify for most conventional mortgages with private loan companies like Freddie Mac or Fannie Mae.

“At a minimum, you have to be at least at a credit score of 620 [for conventional mortgages],” Jasmine says. “If it was below that, you would have better luck of applying for an FHA or a VA loan.”

That’s because the credit score minimum for government loans tends to be lower and occasionally non-existent (with the exception of USDA). Take a look:

Just because this is the minimum credit score doesn’t mean that this should be your goal credit score though. Your credit score affects aspects such as your interest rates as well as your initial down payment.

For example, if your credit score is 500 and you’re applying for an FHA loan, you’re going to need to put down a 10% down payment on your home as opposed to 3.5% down payment if your credit score was 580 or higher.

So that’s the bad credit score for mortgage. Let’s take a dive into the dark pit that is the ugly credit score.

Credit score for mortgage: The ugly

Oof. At less than 500, your credit score looks sorrier than a steer in a stockyard. You best high-tail it towards our articles on improving your credit score to help you out … ‘cause you got a score not even a mama could love.

There are still ways to get a home loan if your credit score is less than 500 (such as getting a VA loan). However, you’re going to want to improve that credit score if you want a good interest rate and low down payment on the house.

This can end up saving you thousands over the length of your mortgage.

Take a look at this chart:

Source: MyFico.com. Data calculated in June 2017.

Imagine two home buyers. One has a great credit score of 760 and the other has a bad credit score of 500.

The one with the bad credit score is going to end up paying over $67,000 more in interest than the one with fantastic credit.

Don’t be the one with an ugly credit score. Instead, start taking steps to improve your credit score today.

How to improve your credit score for mortgage

If your credit score is bad then you’ve come to the right place, partner. We have a wealth of resources at IWT to help you get out of debt and improve your credit score faster than a jackrabbit in a hurricane — or something.

Anyway, here’s a quick overview on our proven system to improving your credit score:

  • Step 1: Get out of debt fast. Debt is the number one barrier to living a Rich Life. That’s why if you want to improve your credit score and get a Big Win, you’re going to want to get out of debt as fast as possible.
  • Step 2: Automate your credit card payments. The biggest determining factor of your credit score is your payment history. That’s why you’re going to want to automate your personal finances so you can do things like invest and pay down debt easily and painlessly. It also takes the hassle out of paying your bills each month.
  • Step 3: Keep your accounts open — and put a recurring charge on them. 15% of your credit score is determined by the length of your credit history. That’s why you’re going to want to keep any credit card accounts open BUT keep just one or two recurring payments on them (e.g., Netflix, utility payments, rent).
  • Step 4: Get more credit — but only if you have no debt. 10% of your credit score is determined by how many types of credit you have in use. That’s why you’re going to want to actually get more credit once you’re out of debt.

For more information on those systems, be sure to check out our article on how to improve your credit score.

If you want even more resources on getting out of debt and getting a better score, be sure to check the articles below:

Improve your credit score for mortgage = Big Win

To help you even more, we’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.

It includes 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.

Credit score for mortgage: The good, the bad, and the ugly is a post from: I Will Teach You To Be Rich.

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