Let's create things that matter. Together.
There are few moments scarier in life than when you examine where you are in your career and say to yourself:
“I don’t want to be doing this anymore.”
Whether you’ve been pigeonholed your entire career and you hate the kinds of projects you work on today, or because you can’t financially afford to say ‘No’ to the wrong gigs, or because you’re afraid of building something on your own because it’s easier to work for others, or [insert your excuse here], it’s hard coming to the realization that you need to make a major change in your life. The only thing harder than that moment…is the years of hard work that comes after it.
What differentiates those who successfully make major life transitions versus those who continue to stay stuck? What differentiates the “winners” from everyone else? Whether you are pursuing your ‘dream job’ or building your own business, how can you put yourself in the financial position to have greater freedom over your future career choices, global pandemic or otherwise?
And most importantly, how do YOU define your version of a “Rich Life?”
In today’s podcast interview I have the pleasure of chatting with one of the world’s foremost experts on all of these topics. Ramit Sethi is the founder of I Will Teach You to Be Rich, and author of the New York Times bestseller, “I Will Teach You To Be Rich.” He writes about money, business, and psychology for 1 million+ readers every month. And he is also my business mentor and the #1 influence that helped me transition from being “just an editor” to making a living on my terms by podcasting, coaching, & mentoring.
Get ready for 60+ minutes of knowledge bombs, because this podcast could change the direction of your entire life. And if you don’t believe that’s possible, my entire life changed five years ago the first time I heard Ramit Sethi on a podcast, and I wouldn’t be here today had I not listened, taken notes, and most importantly…taken action.
Ramit Sethi is the founder of I Will Teach You to Be Rich (www.iwt.com), and author of the New York Times bestseller, I Will Teach You To Be Rich. He writes about money, business, and psychology for 1 million+ readers every month. Follow him on Twitter (@ramit), Instagram (@ramit), and Facebook.
Zack Arnold: I’m here today with Ramit Sethi, who’s the author of The New York Times bestseller I Will Teach You To Be Rich. He’s the founder of the website and online business of the same name, and you sir, write about money, business and psychology for over a million readers every month. And by the way, I want to make sure to mention. You’re no slouch when it comes to perfectly ironing a dress shirt. So Ramit, we are finally here. I am so excited to have you on the other end of my microphone.
Ramit Sethi: Thank you. Oh, I’m very excited to be here.
Zack Arnold: So it’s only taken four plus years of patience, persistence, a lot of perseverance, but the thing that finally got us over the edge was a pandemic,
Ramit Sethi: That’s right.
Zack Arnold: So however we got here, we got here. Super excited to have you. And before we jump right in, I want to frame this conversation for people a little bit, and I want them to understand, especially for those that have either listened to me or read me for the last several years, or even before I started everything I’m doing when I was just a Hollywood film and television editor, and they wonder, how did you figure all of this out? Like, how did you go from just being a technician to now being an entrepreneur and having people, readers, listeners, members of your program, all over the world. I want to make it very clear to everybody listening right now, if they’re wondering how I did it, you’re talking to the man behind the curtain. You are what I would consider by far my most influential and most valuable business mentor. So first, I want to make sure and thank you for that so we have some context.
Ramit Sethi: Well, thank you. I appreciate that, and thank you for applying the material that I teach. It’s always a thrill to follow the journey, and we have a lot of fun stories that we can share today about when you were right on the cusp of making it, or so you thought, and then things went south, and then what did you do to recover? So there’s just so much to talk about today, but I’m thrilled to be here. And also, like I said, it’s great to see someone applying the material, just like, I hope like today your listeners apply your material.
Zack Arnold: Now, one thing that didn’t occur to me about having you on my show is that you can talk about all my failures, because you’ve seen all of them, so that that that kind of scares me. But anyway, I one of the reasons that I gravitated to you originally, I discovered you on the Tim Ferriss podcast. Also heard you on Pat Flynn’s podcast years ago, and it was just like, I love this guy. He’s noble. He just he’s a straight talker. So I’m going to apply that to this first question. This is where we’re gonna we’re gonna begin things. So, Indian guy, kind of funny name, online business I Will Teach You To Be Rich. I don’t know. Sounds kind of scammy,
Ramit Sethi: That’s what. Yeah, you pretty much said, What about a million other people have said too.
Zack Arnold: Oh, so I’m not the first time to bring that up. Oh, interesting, yeah. So tell me more about that.
Ramit Sethi: I know that the name sounds like a scam for everyone listening. Trust me, I’ve I’ve heard people tell me this over the last 16 years that my site has been up. I don’t know if I would change the name. A lot of my friends tell me they’re like, You got to change the name. And I finally made peace with it. I started it because I took some of my college scholarship money and I put in the stock market. And, you know, everybody thinks that investing is about randomly picking stocks and something to do with PE ratios, and then you put money in, and somehow you make money. Well, I picked a few stocks, I lost half my scholarship money of that check, and I realized I better learn how this thing works. And so as I learned about money, I was studying psychology and human behavior, and just like you, I had this idea that I wanted to help people. The problem is sometimes you start to help people, and you know, you’re good at it, but people don’t want to listen. And that’s a really frustrating moment. And I think it’s a pivotal your first pivotal moment as a potential entrepreneur. So I had friends in the dining halls. This is 617, years ago, and these were my classmates in college, and they were complaining about an overdraft fee from the bank or some credit card and I was like, Hey, man, I actually have this one hour class that I teach on money. It’s totally free. Let’s do it. I’ll show you this stuff about your banking and investing and all that stuff. They were like, Oh, awesome. And then nobody would ever come. And all of us have probably experienced something where we try to help someone, and they maybe seem interested, and then they just don’t follow through. And I was very frustrated. I tried it for a year and a half, and finally I decided this is not working. I have to change approaches. And that was when the blog I Will Teach You To Be Rich was born.
Zack Arnold: And clearly it’s come a long way from the days of it just being a financial blog and talking about interest rates and how to save money on credit cards. And you know, your your $4.95 cent ebooks, like, if you’ve come a long way since then,
Ramit Sethi: Yeah, you know, I never started it off to be a business, and it was purely a hobby. And again, this is something where I maybe a little arrogantly, felt that the world needed to hear what I had to say. And I remember, this is in 2004 I was writing my blog. Nobody was reading it, but I was just like, I have things I want to say. And every couple of months I would email the Wall Street Journal, and I told him, You guys are great. Wall Street Journal, fine, fine, but you need to understand young people. I’m young. I have college kids all around me. Let me write a column. You don’t even have to pay me, and let’s get it going, guys, Wall Street Journal, let me know they just would never. Spawn. Then finally, they blew me off to someone else. And then one day around August or November, they contacted me and said, We want to write an article and we want to feature you, and they linked to my site. And on that day, I remember, I got 9000 visitors. And in retrospect, I think we all have a little, a little or a big break that someone gives us. In this case, it was the Wall Street Journal that was amazing. In some cases, it’s just someone actually taking a meeting with us that probably shouldn’t. And those breaks can really change the trajectory of our lives. Sometimes they happen by luck, sometimes they happen by perseverance. Either way, I try to engineer them as much as possible.
Zack Arnold: Well. Speaking of trajectories that change our lives, let’s talk a little bit about current events and trajectories. If I hear the word unprecedented one more time, I might punch somebody in the face, because we think that this has never happened to us before, and we’ve never been through anything like this in human history, and we are so unprepared, if you look, and I don’t want to talk too much about it from the political side, or even the medical side, or from the virus side, if we’re talking about the economic side, in jobs, this idea of, I don’t know when the next job is coming, and I’m not sure how I can prepare, and I feel like I didn’t have enough money saved up, and how can I even weather this? Right for a lot of people, they feel this is unprecedented. For business owners, we call it Wednesday, we’re used to these situations, and I feel that there is very little that’s actually unprecedented. And there are so many people listening to this right now that work in my industry that are just now discovering, oh, wait a second, my entire livelihood depends on other people’s ideas and projects. Then they hire me as a technician to help them realize their dreams. Maybe it’s my time to start realizing something that I want to pursue and I want to become an entrepreneur, but I have no idea what that means or how to start, because even though I am my own business, didn’t know it, and I’ve always been working for others, so I’m just lost, like, where do I start? What do I do right now?
Ramit Sethi: Yeah, the one of the patterns that I learned is that the rich, however you define rich, and we can talk about that, the rich plan for contingencies before they need to. And so I would like to ask everyone listening to just do an exercise together. Let’s all just close our eyes for a second and imagine if we had totally prepared for something like a pandemic financially. What would that look like, and what would that feel like? What do you think, Zack, if you had totally prepared for a pandemic financially, what would that look and feel like to you?
Zack Arnold: Oh, this is not hypothetical. This is very practical. And I can tell you that the position that I’m in right now, once again, I owe all of it to the things that I learned from you, and I also have seen the opposite. So back in 2008 2009 during the housing crisis, I was in a very similar, quote, unquote, unprecedented position. I had bought a home in Los Angeles at the height of the market, had plenty of equity in it. Six months later, we were underwater. We owed way more than the house was worth. I’m like, well, that’s crazy. That’s not the way that it’s supposed to go. That was my nest egg. That was my protection. At the same time, I was just having my first child, and I had just started my own brick and mortar business where I was providing post production services. I had a team, I had rent, I had a facility, and everything fell to the ground. I was six figures in debt. It was just, it’s the worst experience emotionally, financially that I’ve ever been through, and just on the deepest emotional level, I said, I don’t care what it takes. I’m never going to let this happen to me again. And I need to learn how to better manage my finances. I need to learn how to organize my finances and build a system. And it wasn’t just oh, I guess I need to put more on the 401, k, right. It was I have to take more control over how my money actually works, and it took a few years just to weather that storm and get through all of it. But then once I started to look around, that’s when I discovered you and the difference between the last 10 years, both of which are gigantic emergency situations that nobody planned for this time, I and this is a joke that I’ve had on multiple coaching and mentorship podcasts where we talk about how you organize your finances, and I say, how many accounts do you have? I’ve got one, I’ve got three, I’ve got five. I have 19 different bank accounts because of you, and they’re all automated, all talking to each other, and there are multiple safety nets. So when the pandemic hits, the emotional part of me that’s run by the amygdala said, Oh, my God, what’s happening? I’m going to lose all my clients. I’m never going to make money again, and I’m going to live on the streets 90 minutes going through my bank accounts and looking at a spreadsheet like, Oh, dude, I’m totally fine, and it’s because of the system that I built. So there’s nothing hypothetical about this. I know what this feels and looks like at a very visceral level.
Ramit Sethi: Awesome. So awesome. What a contrast to hear the difference between what happened in Oh 809, to now almost, almost exactly a decade later. I like the exercise because, you know, many of us, particularly if we work as a freelancer, have never actually closed our eyes and thought about what would it look like to feel safe, and then what would it look like to feel successful? And I’m just starting strictly financially, you know, to have enough money to weather 18 months of a storm, let’s just say to know that if we needed to leave a city that was overrun by a pandemic, we could to know that we wouldn’t have to worry about eating some late fees for a trip that we had planned, because safety comes first money later. Those are powerful emotions, and many of us have never thought about that. Instead, what we do is we almost lay back on the river of life, just sitting back and seeing where the river takes us. Will we go left? Will we go right? Who knows? Let’s just go where everyone else is going. And I found it was a lot more interesting and fun to pick up your and paddle the direction I wanted to go. I didn’t always get it right. I still don’t, but at least I’m taking charge of my own life. So for everybody listening, you know, while we may have never had a global pandemic exactly like this, if you call up your parents or anyone 1520, 30 years older, they will tell you that they have gone through some really difficult times in their career, and they may have worked a straight nine to five for their entire life, but they’ve been laid off. They’ve been fired. Others have gone into debt. So everyone has gone through some hardships. The question is, are we going to wait until our backs are against the wall to make a plan? And if so, Fine, let’s make the plan, but we can think like you did, Zack, and say, Okay, I’m never going to be in this situation again. So it’s time for me to take this under my control and choose the path I want to go.
Zack Arnold: I think another really important point to bring up, if we’re talking about at a very visceral, emotional level, and I love by the way, just want to point this out as a stepping aside to talk a little more meta that when I said, Where do I start with this online business idea, you didn’t say, Well, what you want to do is create a survey and blah daddy, blahdy, blahdy, like, let’s get into the psychology. Let’s get into the stuff that nobody’s willing to talk about. That’s why you’re here today. I love that we’re talking about this and not the details, and I’m sure we’ll get into some of them, but this is the important stuff that people don’t think about. So the one of the biggest revelations that I’ve seen happen to so many people working through my program is when they realize, oh my god, the reason that I’m stuck where I am, and I’ve been doing this for 15 years, is because I’ve always said yes, because I haven’t prepared myself to be able to say no to the wrong opportunities. I always need the next paycheck, I need the next gig, and I feel like part of this process is not just how do I prepare for a global pandemic and get groceries, it’s, how do I put myself in a position where I guide the choices, whether it’s in my career or it’s in building my own business, where the financial safety net is such that I can say no for months at a time and say yes to things that pay nothing, but actually move me forwards, creatively, artistically, build my network. This is such a big revelation that so many people come to
Ramit Sethi: Yeah, that’s a huge one. I will say that, first of all, most people have never imagined what that even looks or feels like. That was the exercise we just did a minute ago. So that’s important. If you skipped over that and you’re listening, pause and really think about what would that look like and feel like. The second thing that people don’t do is they don’t talk to people who have done it right? So we hear this over and over. People say, the minute I start to get ahead, something comes up and I’m two steps behind. One step forward, two steps back. For freelancers, this is super common. You get a gig, it’s working for six months. Somebody pulls the rug out from under you. Now you’re back out there looking for the next thing. And okay, if it happens once, fine, maybe it was unlucky. If it happens twice, that’s a fluke, but after three times, no, not going to let that happen again. I got to change something, because I am not going to let this river take me where it’s going to take me. I’m going to be the captain of my own ship. And so people have never imagined what it feels like to feel good or to have success in that area. And they have never actually picked up the phone or sent an email or text and say, Hey, like I’m doing these gigs all the time. You seem to have it stable, like I see you taking a trip every four months. I see you spending time with your kids. Can you please, like, can we take 15 minutes? I would love to know. How do you think about this? What was there a moment where you made a decision to change your trajectory, and if you do that, I guarantee if you do that with five to 10 people, you will discover that the people who are living. The kind of life you want to make very different decisions and think about their work in a completely different way.
Zack Arnold: And one of the areas that I think they look at things differently, and this is one of the lessons that I’ve learned from you, is I’ve become very good at sharing unpopular opinions.
Ramit Sethi: Okay,
Zack Arnold: So I’m willing to get in front of people and talk about the things that nobody else is willing to say. It’s very popular in a creative industry like mine to say you get pigeonholed. People pigeonhole and they say you can only do drama, you can only do comedy, you can only do trailers or commercials. What I’ve been saying for years, which is very unpopular, nobody’s pigeonholing you. You allow yourself to be pigeonholed by saying yes over and over and over and until you learn to say no and have the safety net and the confidence to say no, you just continually pigeonhole yourself over and over again. And one of the things you would learn, like you said, from reaching out to people that have made the transition, is that one of the key fundamental ways that they made the transition is finally being able to say no.
Ramit Sethi: Yeah, that’s really powerful. And I find that the need to please others really cuts across so many different parts of life. So I can already imagine people listening right now saying, hey, must be nice to be able to say no, must be nice. But let’s zoom out of working in a creative industry, and let’s just think about a relationship. Think about the perennial single person that you know who actually wants to be in a relationship. They’re eagerly seeking a partner. We all have patterns in our relationship. We all do this. Person says yes to the first person that expresses interest. They don’t set any boundaries. They’re not clear about what they want. In effect, they like someone who likes them. We all know somebody like this, and we can spot it from a mile away. It’s so obvious to everyone except the person in it. Well, guess what? That is exactly what happens with a lot of people’s careers. So you’re saying yes, but in this case, because it’s work, you have a really logical way to convince yourself of saying yes. Well, I can’t say no. Must be nice. I need to do just this last gig, and then I’ll change it. It’s the same exact thing as our relationship friend. It just has a veneer of logic. So what can you do? You can do a few things. One, you can ask other people who are more successful and say, How do you think about this? Here are the five career decisions I’ve made in the last six months. This is what I did. How would you have done and you might discover they would say, Oh, wow. Why did you say yes to that? And then you might say something like, Well, you know, I think it was gonna, you know, I know it didn’t pay that much, but I had a feeling if I did it, it would turn into something big. And then this person would say, okay, you’ve done that 10 times. Has it ever turned into something big? And then you’re going to look down and you’re going to put your hand over your eyes, and you’re going to be like, Oh my God, no, it hasn’t. And suddenly, with the help of an outsider, whether it be you, Zack or or anybody else that they talk to, you have realized a pattern in your life that is not serving and that is when you can start to make decisions, some of which will start to be no so that you can say yes to the more important ones.
Zack Arnold: And I think a key here that comes up over and over and over people ask me this question all the time is, well, if I were to reach out to these people, I never really get good answers. They say, Well, you got to work hard and put in your time and pay your dues and blahdy, blahdy, blah right? And what I always tell people is, if you’re getting unhelpful answers, then you’re asking crappy questions, and you need to start asking better questions. And whether they’re trying to transition their career or they decide they want to start something new for themselves, it doesn’t start with a new website. Is it Wix, or is it Squarespace, or whatever it’s, understanding what the path looks like, talking to people that have done it, but then talking to people that potentially are interested in the value that you can provide, but people just don’t know what questions to ask or how and the quality of your question determines the quality of your answer. Yeah, how do we ask better questions?
Ramit Sethi: Well, this is a losing battle for me. I’ve tried to help people ask, but like nobody cares, so I’ve moved on, but I’ll tell you this. This is a technique we use internally at IWT. So when we create our research questions, we have about 20 different programs on business, careers, money and psychology. And you know, these programs take us a long time to build, and they’re not cheap. You know, people are coming. They’re joining them. They’re spending 1000s of dollars. Zack, you know this, and so we really want the quality to be really high, so we do quite a bit of research. And one of our rules of thumb is we will write down our questions, and then we will try to answer them ourselves. For example, we might say, did you have any pivotal moments in your life that caused you to want to change your career. Okay, that’s a that’s a decent question, is it good or not? Then we’ll say, Okay, what would the average person say? The average person would say, oh, yeah, I actually, you know, I had a child, and so that made me want to change a career so that I could have more time with my son. Great. That’s a very specific answer. However, if we ask a question like, do. What advice do you have for me as I’m trying to have a more stable career? What would most people say? Work hard, put the work in, find a good boss. And then I zoom out and I look at that answer, is that valuable? No, it’s not their fault. It’s my fault for asking a bad question. So the best advice I can give is try to answer your own questions yourself. Put yourself in the head of the average person, and if the answers are not good, change the question.
Zack Arnold: Alright, so from there, I now want to rewind. I want to come back to the very beginning of our conversation. And I want to go back to this idea of I Will Teach You To Be Rich, whether somebody is thinking to themselves. You know what I’ve learned from this pandemic how vulnerable my career is to other people’s projects or ideas, and I either want to make a transition in my career and do something that I actually love because I’ve been doing things I don’t love and I realize time is limited, or they decide I really want to build something for myself. What does it even mean to pursue a rich life? Because you have a very different perspective on this than most. And I think this is the place before we go into the nuances and the tactics, we need to better understand what you really mean by pursuing a rich life.
Ramit Sethi: A rich life is different for you than it is for me. A rich life allows you to spend extravagantly on the things you love, and I’m going to say that again extravagantly, if you cut costs mercilessly on the things you don’t. So here are some examples of rich lives that I can share. I know people personally who work from home that is their rich life. I know others who take Wednesdays off so they can be with their kids. I personally travel for weeks at a time with my wife, and we travel all over the world to these crazy places, but we also have lived in the same place for many, many years, right? We haven’t upgraded our apartment or anything like that. So the key distinction for a rich life is that most people in America have the same exact invisible script they follow. Okay, I need to go to college, graduate, get a job, buy a house, get married, have a midlife crisis, retire, and then, after 40 years of guilt inducing latte reduction, maybe I can spend some money and enjoy what I do. I don’t want to live like that. And Zack, I know you don’t, and I know all the I will teach me rich readers decided I don’t want to follow that script. So what I started to do is to show people your rich life is yours if you don’t want to buy a house, great. I don’t want to buy one. I rent by choice, so I made that decision. And there are rationale and real estate isn’t always the best investment. We can talk about that, but I chose that for each person, I would ask you, what is your rich life? What is the thing you love to spend money on, and you wish you could spend more on it? And once you answer that question, suddenly cutting back on other things becomes easy, earning more becomes more appealing, because you see a reason that you can use the extra money. And suddenly everything shifts versus the typical invisible script of, I need to go, graduate, buy a house, etc.
Zack Arnold: Well, I can tell you that where I was when I first found you was in a similar position, where the maybe it wasn’t like the typical white picket fence, two and a half kids, like I’ve, you know, I don’t have a white picket fence, but I do have, you know, two kids, not two and a half. But at the time, it was all about career. From nine years old until 35 years old, it was all about the Oscar on the shelf. I’m going to be one of the top film editors in the industry. Oscar on the shelf. And then I started to see as I rose in the ranks, there’s a pretty steep toll that you have to pay to make that happen, whether it’s family, whether it’s your health. And I realized I’m not willing to sacrifice these things, but nobody’s ever paid me for anything else, other than editing and the rich life that I defined came from a very specific moment. And I actually think I shared this on stage with you a couple years ago when I was at one of your events. It was, I was working on Season One of empire, and it was the season finale biggest show in America. 25 million people were going to watch that episode in less than a week. I’m in this small, dark, tiny room, cramped office, and I’m like, holy crap, 25 million people are going to watch this. I’ve made it right. And then also, at eight o’clock that night, I was putting my kid to bed via FaceTime for the 100 and 50th time in a row, he thought that they had hung up they had and he was about five years old at the time, and he said to my wife, why doesn’t daddy want to be home with us at night? Why doesn’t he love us? Bam, life changed right there, and my rich life was I want to confidently say no to a project because it will not allow me to put my kids to bed in person.
Ramit Sethi: Amazing,
Zack Arnold: That simple. It wasn’t X number of dollars in my bank account. It wasn’t I need to be able to travel. It was I want the freedom to say no to a huge Netflix show that calls me and within five minutes, say, unfortunately, this isn’t a good fit. I’m going to have to pass. And I had that exact phone conversation six months ago. So it happened, it became reality, and I’m like, Nope, can’t put my kids to bed. Sorry, not gonna be able to take that job.
Ramit Sethi: What a heartbreaking thing it must have been for you to hear five years old and to hear your son say that. And boy, I just think, I think it is heartbreaking, but I also think you are so fortunate that you had that one pivotal moment, because so few of us do. Most of us go through life and we have, you know, the people listening, you have a pretty decent life. Got a roof over your head. You got high speed internet. You know where your next meal is coming from all in all things are pretty good relative to the rest of the world. And so there’s less incentive for these pivotal moments to occur in our life, like we lose it all, floods taken away. In your case, that one moment which you still the way you talk about is like it happened yesterday. And so I just think you were so fortunate to have that happen. But I also think for the people listening, if you haven’t had something that acute happen to you, then maybe you could take this pandemic as an opportunity to say, hey, things have really changed, and yes, I can muddle through it. Yes, I need to figure out where my next few dollars are coming from. Okay, I might need to say yes to some stuff temporarily, but I am going to set a deadline to start saying no, and I’m going to find out the paths of other successful people, and I’m going to treat this moment as acutely as anything else, because if I don’t, I will be on this treadmill for the rest of my life.
Zack Arnold: Well, clearly, the best time to plant a tree was 20 years ago. Would have been great. Would have been fantastic, if I had planned for all this before the pandemic. But you don’t understand. You don’t. You don’t you don’t get my situation.
Ramit Sethi: Yeah,
Zack Arnold: I don’t have the savings. I mean, it’s specifically in the entertainment industry. The unemployment rate is like, 95 plus percent. It’s insane. Like, globally, we’ve just shut down. So you don’t get it like, I can’t plan for the future right now, I’m barely treading water, and I’m almost drowning as it is. So, I mean, I’ve cut back on lattes, and I’ve negotiated, you know, my car payments, so I’ve gotten a couple of months of deferment, but that’s it. I really don’t see what else I can do in this circumstance.
Ramit Sethi: First off, the greatest value in having an outsider look at your situation, even an anonymous person on Reddit, okay, could be some crackpot on Reddit. The greatest value in that is you realize that you are not unique. Your situation is not that different. Do you know how many business owners come to me, they’re in our business program, Ramit, that that may have worked to generate 10s of millions of dollars for other people, but, but it’s different for me. Ramit, Oh, you don’t understand our launch strategy. It’s so different. And we take a look at their launch strategy, they have a couple of things that they call up, some variable, a different name, or something like it’s not that different. We’ve seen this 100 times, and suddenly they’re like, wait what? And there’s two reactions that happen. The first is defensiveness, no, no, that can’t be. That’s you don’t get it. And then the second one, if they make the shift, is realization, the realization that, Oh, my God, if there are other people who have the same problem as me, then they have also solved it. And that is powerful, really powerful. So for the people listening, if it feels like you are unique, I would say that there’s probably light at the end of the tunnel, because you might, it might not be true, you know, and if you are unique, hey, you’re one in a billion, but I think your financial challenges might be manageable. Here’s what I would say, you can use a strategy I call the CEO strategy. You know, normally people, when they think about money, the only thing they’ve been taught is to cut back. And where do they cut back? They cut back on $3 lattes. And there’s some magic involved. Let me cut back on $3 lattes, and then something happens, and then I turn into a millionaire. That’s not how life works. Okay? You were sold a bill of goods. Okay, let’s talk about CEO. C is for cut costs. Yes, you should cut costs. Most Americans should give me 10 minutes with your spending. I could probably cut off 10 to 15% fine. You should cut some stuff off. E is one that almost nobody thinks about, and it’s really important. E is for earn more. You can expand the size of the pie instead of only trying to protect the pie that you have. And then finally, O is for optimizing your existing spending. For anyone here, if you have cell phone bill, cable bill, student loan, credit card debt, or even your landlord, you can make phone calls use the script on my website, and you can often get $1,000 with one phone call. I think the most interesting and big opportunity for your listeners Zack is the E the earn more part
Zack Arnold: Probably the most fundamental life changing thing. And there have been a whole lot of like nuances and tactics and psychology and all this other stuff. But if I boil down. Everything that I’ve learned in the last five years. And I said, this is the key to me making the transition. It was the aha moment of, oh, I can only cut back so much, but there is no limit to what I can earn. Life changer,
Ramit Sethi: Yeah, there’s a limit to how much you can cut. So talk about that. Where were you before? And then once you heard me say, you know, there’s a limit to how much you can cut, but no limit to how much you can earn. What changed for you?
Zack Arnold: Yeah, so where I was at that time, the psychology was and I was, like, super nerdy into spreadsheets and budgets, and I could have told you I spent $783.15 on groceries last month. Oh, I’m amazing, right? So my thought was, I need to optimize everything I possibly can about my existing spending, I can cut back on this, that or the other thing, and let’s look at the earning potential. Well, I’m a TV editor. I’m working on this show now, but, but if I were to work on a better show, I might make an extra $200 a week. I might make an extra $300 a week, and in 10 years, I might have a rate that’s 500 to $1,000 a week better than it is now. Bam, hello, glass ceiling. Meet Zack. That was one of the moments that I had on empire where I realized I’m doing this for the next 30 years, and within a small variation, this is what I’m getting paid. And am I okay with that? Am I okay with having that little control over my future? That was when this mindset really kicked in, and I said, I need to start from scratch, and I need to focus on the earning part on my own terms, not on somebody else’s terms. Wow, powerful.
Ramit Sethi: It is one of the most powerful concepts that that I teach it, I will teach you rich. And I just love hearing the dynamics of how it unfolded for you. I agree that there are a lot of people. First of all, most people don’t, don’t really track their spending at all. Okay, fine, but there is a small subset who does, and they tend to be a little nerdy, and they’re really proud as you mentioned. You know, I got it all categorized, and I’m optimizing my salary spend as of last week. But what they don’t understand is that, yes, you should track to some extent you should optimize, yes, but you might be winning the battle and losing the war if you are constantly living in the spreadsheet. That means you open it up and you’re obsessed. If you are playing a game that is getting increasingly small, like, Okay, we already cut back on this. We cut back on clothes, we cut back on Netflix. What’s next? And you’re now chasing pennies, then you may have chosen the wrong war to be engaged. You’re playing the wrong game. And so another way to do it is the 85% solution. Hey, let’s take a look at my spending over the last four weeks. Let’s find a couple of things that we don’t care about. Let’s cut back on those. Let’s you know, we’ll cut back 10% and over six months, we’ll cut back 20% gradual, but it’ll make a meaningful difference. But that’s it. We did two or three things we’re done now. Let’s take all the energy, all the attention we would have spent on cutting back celery and disabling our oven light to save 36 cents over the course of a year. And let’s really get into earning more. How do people do it? Like me? What skills do I have? Oh, I don’t think I have any ideas. Well, let me actually find out using the earnable program that we have, or other pro your program. And let’s learn how to take the skills that I have and turn them into more income. Because if you run the numbers, you know you could cut back on your grocery bill by 10% fine, maybe you should. But if you were to increase your earnings by 200% the numbers are undeniable, and it’s very clear where you should focus your attention.
Zack Arnold: First of all, I almost ruined that entire thing by laughing out loud at the oven light strategy, because that’s fantastic. Almost almost broke me. I was really close. But I think a follow up to my story that I think is so important, that goes to another fundamental mindset that I learned from you that just completely blew my mind, is that now I have no idea what I spend on groceries, and I don’t care anymore. And here’s why that’s important. The thing that you taught me, I believe it was in your book, could have been one of the 27 programs. I mean, I lose track, right? Basically, you’ve been in my ear 24/7 for the last five years. So I’m not exactly sure where I picked it up, but you said I spend about two hours a month on my finances. And, like, that’s not possible. I spend like, four hours a weekend, and you must have so many more accounts and so much more, there’s no way that you spend less time than I do. And then as I dug into the nuances of how you build your system, I’m like, oh my god, I’m doing it all wrong, seeing on the nuance, and I’m not looking at the big picture. Now, I have no idea what I spend, but big picture, I know where it all goes. It all works for itself, and all these automated accounts, and as long as I stay within a general guideline, I don’t give it what I spend.
Ramit Sethi: Yeah, so this is, this is the example I want everyone to think about. When you go to the grocery store and you are deciding on the type of ketchup you’re going to buy, are you sitting there doing an analysis of the price? Prices? No, you’re buying the ketchup that your mom or dad bought when you were a kid, and it takes you five seconds to make the decision, and you’re off to the next aisle. That all makes intuitive sense to us. We all know that if it’s a bottle of ketchup or, you know, an apple, it’s just beneath us. We don’t really need to analyze the prices for the majority of people, it’s just it’s an apple or ketchup, but as you make more, that actually should be the same case with larger items. If you’re fixated on how much it costs to get a haircut, well, at a certain point you’re going to earn enough where that’s not really an issue, and then, depending on how much you make, it may be that the trip you take, you’re you’re not really going to sort the flight by cheapest. You’re going to actually sort by direct flight, right? Those numbers can grow. What happens is that as people go on in their career, they might start to become a little bit more successful, but their psychology doesn’t follow. And so they make more but they still think small. And so they’re playing a game that might have made sense when they were 18 years old, where it actually did make sense how much you spent on ketchup. That was a real decision. Back then, I used to buy tacos from Jack in the Box, and I was like saving my quarters so that I could get him a Jack in the Box that doesn’t make any sense anymore, and yet, most of us are still playing the game that we played at 18. So yes, as you grow and as you put the right systems into place, depending on your income and your priority, it might be, you know, a bottle of ketchup, it might be a trip, whatever, but you really should do the 85% solution. You should get 85% of the way there and then move on with your life. And you know, there are so many different ways to do it, but you should be spending one to two hours per month max on your money, because that tells you you’ve put the right I will teach you be rich systems in place.
Zack Arnold: One of the moments that I had that’s just another one of these amazing takeaways. And we could do like, a six part podcast just on my takeaways from everything that I’ve learned. Won’t go too deep down the rabbit hole, but another one where I seriously it was creepy, like you were sitting on the couch next to me, had crawled inside the middle of my brain, and you said, Stop asking whether or not you should spend $10 on a book. And I was like, oh my god, I’m so guilty of that. Like, deliberating, like, I don’t know, should I do it? Like, it’s not that much money, but it’s the time and this or that. And you’re like, Stop doing that.
Ramit Sethi: Yeah? So you know what, most of us, including all of us listening here, most of us, are asking $3 questions, and we really should be asking $30,000 questions. Just think about it. $3 should I buy this latte? Should I get that appetizer? Ooh, I don’t know, maybe. And then we agonize over it, we deliberate, we equivocate. It’s almost like we’re mentally exhausted running a completely pointless race. But we ignore the $30,000 questions, do I have a great job? Have I negotiated my salary? Am I charging my clients? What the market will bear? Have I invested my money? Am I putting money? Do I have the correct asset allocation? If you don’t know what that is, that’s a $30,000 question, not your lattes. Stop thinking about that. Have I paid off my debt? And on and on? These are big questions, and there’s only about five to 10 of them. If you get the big questions right, you never have to worry about ordering lattes or appetizers. You can order as many as you want for the rest of your life.
Zack Arnold: Well, one of the big questions that may not be one of the five or 10, it was something much more specific to my circumstance, but one of the questions that I rewrote in my mind and I started asking was one of the biggest challenges in my industry, is that, yeah, you can make a decent amount of money, or even make really good money when you get to the top, but what you’re trading is time right, time for money. There is no other equation when you’re a technician at the highest levels in Hollywood. And I asked myself, this was the big question, is it possible for me to earn the same amount of money that I’m making now, or even more, but in way less time, and I’ve now reached the point where I’ve just about hit that threshold where I earn similarly to what I make as a film editor, but I do it working no more than from Eight to 11am Monday through Friday, and I was working 8am to eight to 10pm Monday through Friday. So now I have all this extra time where, of course, I’m still working, and I’m a self proclaimed workaholic. So it’s not like it’s Netflix the rest of the day, but the whole rest of the day is all about growth and increased earnings potential, not just putting in the time to earn the same paycheck. That was the question that I asked.
Ramit Sethi: Yeah. Everybody listened to what Zack just said. What if? What a powerful question. What if it would be so easy as so many creatives do listen. I love creatives. Creatives have a big chip on their shoulders, sometimes about money, and I love to get the opportunity to talk. To them and show them, hey, there’s actually a different way. And you don’t have to worry so much about the competition, because the competition is not listening to podcasts like this. They’re not so you’re not competing against 99 other people. You’re really competing against three or four other creatives who have devoted themselves to self development. That’s it. Your competition is way smaller than you think. Okay, so that’s why I love talking to creatives. It kind of also drive me crazy. Sometimes I’m like, Guys, this works. Let’s just do it. There’s a million others who have done it too. I love the question you asked, what if? What if I could earn more and not have to work 12 hours a day? Very powerful question for everyone listening. What is the question that you ask yourself? What if blank? What is it? And notice it’s not, what if I made a billion dollars overnight? That’s unrealistic, but what if I could make the same amount I make today, but work nine to five? Let’s just start there, and then. What if I could make 50% more working nine to five, and then what if I could make double working nine to one? Now we’re talking and again, we’re spending so much time Zack on the psychology here, because we’ll get into the tactics. And those are in all my programs, and a lot of yours too. But for so many people, we are surrounded with other people who think the same way, who commiserate about the same things, who reinforce our invisible scripts, oh, they’re never going to pay us. We’re just out here to fend for ourselves. You know, we’re never going to have job security, and on and on and on. And you know, they say you are the average of the five people that surround you. If those are the the material you’ve been consuming and you’ve been believing those stories, it doesn’t matter what tactics we give you right now, it’s impossible until you surround yourself with different beliefs and different people, you’re gonna be stuck in that place, on that treadmill forever.
Zack Arnold: Well and I think that one of the interesting things about that statement that has just been really exacerbated. Given present circumstances, you’re no longer surrounded by the five people that are the you’re the average of you’re surrounded by the 13,476 people in that Facebook group where you spend way too much time and you are all reinforcing each other’s beliefs. So I just I see this all the time, especially in my industry, where it’s just back and forth. Like you said, Oh, these people never pay me, or you could never take free work. All these limiting beliefs in these scripts. Let’s just lean on these fires. Shall we
Ramit Sethi: So true that? Okay, so I love that you said the free work thing on Reddit. That’s where also really think about your media consumption, whether you’re on Twitter, Reddit, wherever you are, wherever you get a large group of anonymous people together, it’s usually not good information you’re going to get. Okay, so you go on Reddit, and I see this all the time. I go into the different financial forums which I read, I lurk there, and someone will ask, you know, hey, is this a good book or is this a good program? Should I buy it? You can tell that this person really whether they want to lose weight or they want to start a business. You know, they could. They’ve been thinking about this for a long time, and they finally psyched themselves up to decide whether they should join or not. You know, I’ve heard people say, I’ve seen four or five launches go by, but I feel like I’m really ready to start a business. What do you guys think of this program? And then there’s 100 comments, all anonymous people who say, No, don’t do it. You should save your money. You should just do it on your own, and on and on and on. And if you looked at the user names of the people posting, you will see that, you know, they don’t have any particular expertise in business, etc. They’ve been posting there for years, and I think to myself, What a tragedy. This person finally got the enthusiasm up to make a decision. And hey, when you are deciding whether to join a program or buy a book or whatever, invest in anything, you’re going to make mistakes. It’s not always going to be perfect. I would say, out of every 10 programs I buy, maybe two are amazing. Same for books, but those two are life changing. And so I think it’s a tragedy if you have enthusiasm about something, and the people around you kind of put it down and say, no, just, just keep doing what you’re doing. That is an immediate sign that you need to get out of that group, and you need to instead, find a group of people, like, if someone joined us right now, Zack, and they were like, Oh my God. Like, I’ve been in this thing, stuck in this freelancing thing for years. I found this program. I don’t know it sounds pretty good. I’m thinking of doing it. I can guarantee both of us would be like, do it. It doesn’t even matter if it doesn’t work. The point is, you are sending a message to yourself, and hey, if it doesn’t work, ask for a refund. But it’s more important that you send a symbol. I value myself. I prioritize myself, and I’m going to invest in myself.
Zack Arnold: Yep, I couldn’t agree with all of that more. I want to go. I want to be very respectful of your time, and I do want to talk about maybe a couple of the tactics The short answer to any of those questions. Questions is going to be, just go to your book or go to your programs. But there’s one other thing that I want to kind of put a put a bow on, so to speak, which was this topic of the big question that I asked, What if I were able to make the same amount of money in a shorter period of time? Here’s what’s been really cool about that. The question that people ask me all the time is, I just love all the stuff that you’re doing, the podcasts, the blogs, like, you’ve made such a difference for me. But how do you keep doing it? Like, does this thing make you any money? So what that means is that what what has been projected to the public is nothing but value that I want to provide to people. And I’ve told I’ve been very candid about how this process works behind the scenes. I say 98 to 99% of the people are never going to take any step beyond the free stuff, and I’m fine with that. I love that. I love putting it like this right here, you and I, this is costing me money. I don’t make money doing this. This costs me money and time. But what it does is it provides tremendous value to the world. It starts the right conversations, and I know that maybe one person, just one person, is going to listen to this and say, Holy, I need to make a change, and I’m willing to invest in myself. You’re ready to go to the next step. You come to me. I have the strategies to do so, but you’re going to have to make it an investment of both time and money. But what I love is that from the outside, it’s not, Oh God, this money grubbing business owner, and how dare he think he can just make a bunch of money off of film editors, like they see the value first, and then for the select few that want to move on, they’re the ones that finance the eight to 11am of me making the same amount of money. And I think that one of the biggest fears that keeps coming up for people that want to make this transition is, who do I think I am? How dare I try and do this and ask people for money in exchange for my services?
Ramit Sethi: Well, it’s a very real concern, and I went through it first in 2006 when I first sold an ebook. Now keep in mind, I’d been writing for free for years on my blog, and I decided, just out of curiosity, I wanted to sell something, just to see if anyone buys anything online, right? Online. Remember this 2006 and so I put together an ebook, and I sold it for $4.95 that’s not a lot of money, okay, back then or now, it’s not a lot of money. And I had such low self confidence that I didn’t set up any payment fulfillment. I just literally put a PayPal link on my blog. And I was like, All right, if you want to join, you can I even had this horribly cowardly paragraph where I said, Why am I charging? Um, I know you can find a lot of material for free, but just like selling from my heels. And I thought maybe 50 people would join. I was worried people would call me a sellout. Very worried, who am I to do? This? Is this thing just meant to make money? The site already sounds kind of scammy, and I posted it. And actually, my worst fears came true. There were comments all over the place, including my emails saying, Oh, I will teach remit to be rich. Oh, I see what you’ve been doing for the last few years. You’ve been buttering us up. And, you know, I’m reading these, and I just had this horrible feeling in the pit of my stomach. But at the same time, I was getting PayPal notifications and emails from people saying thank you. And I was like, what? And what was fascinating was the people who bought opened my emails quadruple as much as the people who didn’t. The buyers have an 80% open rate. That was unbelievable. So what I realized is a couple of things. Number one is you said you don’t need everyone. You just need the right people and in your business, whatever your business may be, as a creative, as a freelancer, you’re not trying to sell to everyone, just a few people, and those people can subsidize or fund your entire business. The second thing is, when you first try to sell, you have to understand you’re probably not very good at it. I wasn’t okay, and I didn’t have any courses back then that I joined, but selling is a skill. You can learn how to do it on the phone. You can learn how to do it in email or sales copy, and you’ll get better. You also have to remember that the people who complain you should listen, because sometimes they have some valid things they’re telling you, but in general, the people who are going to buy are going to buy, and the people who are not are not. Think about it like this, if you go into a grocery store, would you complain to them? How dare you sell peanut butter? How dare you? That’s outrageous. And by the way, this price is too high. Maybe, just maybe, if it were 25 cents, I would buy it. Maybe. Why don’t you give me a trial for the next two weeks, for four for free? No, it’s outrageous. So I would say really think about real world metaphors. When you go into a grocery store or a retail store, you’re not complaining about the price. If it’s if it’s too expensive, you just leave it’s not for you. Same thing with your business. Don’t worry so much about the people who might. Say, you know, oh my god, what a sellout. That’s okay. Let them say that you focus on the small amount of customers that are going to help your business grow, and they’re going to get the most value from what you’re delivering.
Zack Arnold: So once again, want to be very respectful of your time, but we’ve thrown around the words systems and automation one too many times to leave all of my nerds and my geeks hanging so I don’t want to go too deep into this. The short answer, again, is just get the damn book, because all of it is in there. It is it life changing? Just follow the steps, one by one, by one by one. But if I just wanted a taste, if I wanted to understand in the because you wrote the book before a pandemic, which, again, it’s evergreen, I don’t think it matters. But I’m in this pandemic state of mind. Got to cut the cost, got to get things organized. Want to be ready. So when this happens again, I’m prepared. Give us a taste of where we can start.
Ramit Sethi: You know, I think one thing that you can do to start is to first answer the question, what do you love spending on? And that is something I call money dials. You can search around for it and see the exercise. But we would first start off by saying, What do I love to spend money on? And what if I could double or quadruple that spend? What would that look like? And it’s very fascinating the answers that people have. In fact, I have a video online. I think me at Google, where I do this exercise. I’d love for people to follow along. In terms of systems, let me give you a little sneak peek of what could happen with your money so you get paid, and that money goes into your checking account now, from there, the money, like an email inbox, is filtered out to the places it needs to go. Some of it is taken into a savings account that could be your emergency fund, that could be your saving for a down payment on a house or a vacation to Bali. Okay, all of those things can happen in these sub savings accounts. Part of your money is automatically taken and sent to be invested, and you’ve already chosen the right investment. It’s simple. It’s diversified. You don’t need to know what PE ratios are. And then you have this beautiful thing called guilt free spending. That’s money you get to take and spend on whatever you want. You want a beautiful jacket, you want to take your partner out for an amazing dinner, or you want to take a class. Awesome. Also, if you have irregular income, you know you’re paid a lot one month and you’re not paid anything for two months, the system will also handle that. So when you get paid more, the system will pull a little bit more, and it will use it to create a buffer, and then in months where you’re paid a little bit less, it will pull from that buffer, and eventually, with enough time and money, you can simulate a stable nine to five job, and your system will just hum along. This is how Zack you and I talked about spending an hour a month. This is how people accumulate wealth. And you don’t have to be wealthy to start investing. It’s actually the opposite. You get wealthy by investing. So even if it’s 50 bucks a month, there are ways for you to start building an asset right now, and that is what you will learn in chapter five of the book.
Zack Arnold: Yeah, I love it. So I want to just talk about a couple specific quick things here, from my own experience where I think this is so incredibly powerful beyond or I’ve got a little bit of extra money in the bank account. I’m going to talk about how just taking the time, like, oh god, I’ve got to call my bank, or maybe got to set up a new account. Like, what a pain you got to set up. They got to set up automations. Like, it’s a whole thing, right? If you’re thinking, if I’m doing this to save 50 bucks a month, it’s not worth it. But what if this saved your marriage? And I’m going to explain how that’s a very practical application. So finances is a very big point of of conflict for a lot of people in in marriages, and, you know, in the their relationships, right? So this was an area where there was a lot of confrontation in my own marriage because of past things that happened with our old house and me being in debt because of the business I was building, etc, etc, etc, but because of the system that I built after going through your book. Now, the way that our finances work, again, it all kind of pays itself. I don’t pay any bills. They all pay themselves, right? The only thing I have to do is make sure X number of dollars lands in this one account by this day. As long as that happens, I take one hour a month. Yep, it’s there. All good. The rest of the month happens like clockwork. But here’s the key, my wife has that spending account that you talked about, which is the guilt free spending. And I told her, this is very different than the way my system used to be. It was going through the quick end like, why did you do this? And why did you do that? Now I say to her, Listen, you have X amount of dollars in this account per month. If you throw this into a fire, I don’t care. I’m not going to ask you how you spend it. I’m not going to judge how you’re spending it. You want to buy 100 pairs of shoes, you want to give it to charity, you want to bury it in the backyard. Don’t care the difference that that has made in the quality of my marriage, that one bank account game changer, totally worth the time to come together.
Ramit Sethi: Amazing. I’m so happy to hear that. You know, fundamentally, money goes deeper than just. US dollars and cents, and that is why today we’ve talked about what do you love spending on? We’ve talked about using it for freedom, using it to set boundaries and say no, using it to work with people and orgs that you respect and I love what you’re talking about with your wife, where it can actually bring you closer together and really give a like a shared freedom value to both of you. That’s where money becomes truly transformative, and that’s a rich life for everybody listening for you and your wife. So thank you for sharing that example. I hope everyone can apply the IWT material to create something like that.
Zack Arnold: Absolutely. So the last thing that I want to add on your really quickly, I did a podcast with Mike Michalowicz fairly recently, the author of profit first. You guys have so much in common. He’s great. I know you guys know each other. I know you’ve had lunch. Basically, you guys need to get together and have like a super baby, because these two systems put together are amazing. And that’s what I’ve done, is I’ve done an amalgam of a lot of your stuff on the personal end, the profit first system on the professional end, it’s just, it’s like watching a symphonic orchestra. It’s an amazing it takes time. It takes effort. But I want, I’m going to point people to that podcast that I have with Mike Michal as well. This was so worth the four plus years to get you on the other end of my microphone tracked for an hour. My God, you’ve provided so much value to me. Over the years, you’ve now provided value to my audience and my community. I can’t thank you enough for that. So last thing, if people want to go deeper down the IWT rabbit hole, give them all the best options to make the changes in their life that I did when I discovered you four and a half years ago.
Ramit Sethi: Awesome. Well, thank you for having me. For people who are curious and want to learn how to earn more. You can go to iwt.com/earn, that’s iwt.com/earn, you can get my book on money. It’s called I Will Teach You To Be Rich. It’s anywhere, any bookstore, any library, and then I’m on Instagram @ramit R, A, M, I T, so that should that should get you set. And I would just love to welcome people and show them a different way of thinking about money and their careers and earning more, because there are some really specific tactics they can use, and they can start earning quite a bit more and create their rich life.
Zack Arnold: I love it. This has been fantastic. Can’t thank you enough. Once again, take care of yourself and be well, my friend.
Ramit Sethi: Thanks.
Transcribed by https://otter.ai
This episode was edited by Curtis Fritsch, and the show notes were prepared and published by Glen McNiel.
The original music in the opening and closing of the show is courtesy of Joe Trapanese (who is quite possibly one of the most talented composers on the face of the planet).
Learn how to reorganize your finances for the 21st century gig economy so you have the freedom to say 'no' to gigs you don't want and build the career you desire.
Stop wasting time with bills and invoices and focus on your most important creative work by organizing and automating your personal and small business finances.
Learn how to better manage your finances (especially if you're a freelancer) to prepare whether you're dealing with feast, famine, or a global pandemic.
Learn the latest about the freelance unemployment mess as well as the challenges of applying for a small business PPP loan.
Nobody really knows when we're going back to work. In this conversation we speculate on when Hollywood will go back into production…and how we can make money until that time comes.
TV Editor Monica Daniel joins the Optimizer community Q&A to discuss how to provide value to others but also get paid for that value instead of giving everything away for free.
