How to Negotiate a Prenup — Ramit Sethi

1. 0:00 – 4:24

   Start

   1. TFTim Ferriss0:00

      [upbeat music] Well, hello, boys and girls. This is Tim Ferriss. Welcome to another episode of The Tim Ferriss Show, where it is my job to interview and dissect world-class performers and all-around funny people, like my guest today. And I'm gonna butcher his name, even though I've known him for a thousand years. Ramit Sethi, that's R-A-M-I-T S-E-T-H-I, author of the New York Times bestseller I Will Teach You to Be Rich, has become a financial guru to millions of readers in their 20s, 30s, and 40s. Gotta make sure I don't disqualify myself soon. He started his website, iwillteachyoutoberich.com, as a Stanford undergrad in 2004, and he now hosts more than a million readers per month on his blog, newsletter, and social media. Ramit and his team of dozens of employees build premium digital products about personal finance, entrepreneurship, psychology, careers, and personal development for top performers. The IWT community includes one million monthly readers, 400,000 plus newsletter subscribers, and 35,000 premium customers. He has written about personal finance for The Wall Street Journal, The New York Times, and has been interviewed on dozens of media outlets, including NPR, ABC News, CNBC, and The Tim Ferriss Show. Welcome back to the show, Ramit.

   2. RSRamit Sethi1:27

      Thanks a lot. It's great to be here.

   3. TFTim Ferriss1:28

      And, uh, you can find Ramit if you want to, uh, say hello, ask a question, or yell at him-

   4. RSRamit Sethi1:34

      [laughs]

   5. TFTim Ferriss1:34

      ... on Twitter, @ramit, R-A-M-I-T, and Instagram, @ramit. So I thought we could start with the floor mats. Maybe you could tell me about your dad and the floor mats.

   6. RSRamit Sethi1:44

      [laughs] You wanna start there?

   7. TFTim Ferriss1:46

      Yeah.

   8. RSRamit Sethi1:47

      All right. So you know how you grow up and you discover that your parents did things a little differently, and you just thought it was normal? I thought it was normal to take five days to buy a car. [laughs] 'Cause that's what my dad would do. My mom would stay home. My dad would take us, he would take a couple of the kids in my family, including me, and we would go to the dealer. It was always Honda or Toyota. You know that. And we would start looking around, and my dad would play very innocent, like he didn't know anything about cars. My dad knew everything. He knew how much the dealer was paying, how much the holdback was, everything. So we'd go, we'd test drive it. He wouldn't be sure, da, da, da. And [laughs] then we'd stay there for four or five hours, and he'd say, "Okay, I'm gonna think about it." The car dealer spent, like, five hours with my dad. He goes, "No, thanks. This price isn't good. I'm gonna go." They're like, "What?" So we literally left. Then we go back the next day. Like, we're basically having breakfast at the dealership. And I remember one time we were buying a car for our family, and it was, like, the fourth day. [laughs] Okay, again, I thought that this was normal. And we're down to the last bit. We're... The part where the dealer's drawing the numbers, you know, and telling you, like, "Well, it's actually a really good deal." And my dad, uh, you know, he knows the math. He's an engineer, of course. And, and finally, w- we've closed the deal, and my dad goes, "You're gonna throw in free floor mats, right?"

   9. TFTim Ferriss3:11

      [laughs]

   10. RSRamit Sethi3:12

       These are 50 bucks. [laughs] And the guy's like, "Sir, we're losing money on this car. How can we throw these floor..." And my dad says, "I'm out of here."

   11. TFTim Ferriss3:20

       [laughs]

   12. RSRamit Sethi3:20

       And we just walked up and left. And I was like a Vietnam vet. I'm just shell-shocked walking out.

   13. TFTim Ferriss3:25

       [laughs]

   14. RSRamit Sethi3:25

       My eyes are just glazed over. And I'm like, "We just spent a week buying this car, and we walked out of here over $50 floor mats." So that's where I learned to negotiate-

   15. TFTim Ferriss3:35

       [laughs]

   16. RSRamit Sethi3:36

       ... in, uh, in the most elite negotiation of all.

   17. TFTim Ferriss3:40

       Now, where, where are your parents from?

   18. RSRamit Sethi3:42

       They're from India.

   19. TFTim Ferriss3:43

       And are they first generation? They emigrated to the US?

   20. RSRamit Sethi3:46

       Yep, they came here in the '70s. My dad came here actually to study. He went back to India, and it was known that he was coming back. He was a bachelor, and, you know, they sort of arranged things so that he meets people when he comes back. And it w- passed around the community that this bachelor's coming back, and he ended up meeting my mom. They met by both families coming together in a living room and talking, and [laughs] they met each other. The families decided it was a good thing. Seven days later, they were married. My mom got on a plane and flew to the US for the first time, and they've been, uh, married for about 40 years now.

   21. TFTim Ferriss4:22

       Amazing.

2. 4:24 – 8:42

   Ramit’s precognition

   1. TFTim Ferriss4:24

      We have so much to talk about and so much to catch up on, and so many questions that I want to ask, but I thought we could, we could start, and certainly we'll, we'll bounce all over the place. But you said before we started recording, 'cause you have a new edition of your book, I Will Teach You to Be Rich, noticeably lacking a photograph of you barefoot on the cover. [laughs] Uh, and you have some incredible, uh, quotes, testimonials I should say, including from, uh, Burton Malkiel, author of A Random Walk Down Wall Street. But you said to me, because I haven't read the introduction, that you either should have started it or you did start it with, "I was right." [laughs] Uh, could you explain? Uh, please explain.

   2. RSRamit Sethi5:09

      Okay. So this book, I Will Teach You to Be Rich, originally came out in March 2009, and let's just dispense with the idea the name sounds like a scam. We both know we write books that sound like scams, but they're not.

   3. TFTim Ferriss5:21

      [laughs]

   4. RSRamit Sethi5:21

      I mean, it's like a running... And I've just learned to embrace it.

   5. TFTim Ferriss5:23

      Yeah.

   6. RSRamit Sethi5:23

      Guys, it's the weird-sounding book, but it's actually good advice. And in the first edition, I talked about long-term investing, low-cost investing, thinking about really automating your money and using psychology against yourself for, for positive results. Now, if you had followed that advice, it turns out that when the book came out in March 2009, that was the absolute bottom of the recession. Crazy enough. Now, I don't believe in market timing, but if you had used the advice in the book, this $10 book, you would be set for life. So I started book off by saying, "Well, I was right. Let me tell you all the things that would have happened if you'd used this book." I did get a couple of things wrong I had to change. Uh, one of them, man, the biggest mistake of my life was putting in interest rates in the book.

   7. TFTim Ferriss6:10

      [laughs]

   8. RSRamit Sethi6:11

      Like, the... Okay. Do you remember what was-

   9. TFTim Ferriss6:14

      Sounds like me putting, uh, doing market testing with magazines [laughs] before I buy.

   10. RSRamit Sethi6:19

       Oh, my God. Okay, so I put in, back then, savings rates were 5%. Remember these banks were paying 5%? So I was like, "Guys, 5%, da, da, da. Here's the math." And then, like, the minute the book came out, they dropped to 4, 3, 2, and then 0.5%. Now, the point of it is you don't make money on your savings account anyway. We're talking about $21 a year or a month versus $4. Like, it's irrelevant. It's tiny details. Every day for the last decade, I've gotten, like, 10 emails a day that are like, "Fuck you. Where's the 5% you talked about, you liar?" And so I'm like never again. I'm never putting interest rates in this book again. So I took them out, I clarified it, I corrected a couple of things that I wanted to update, and I added, like, 80 new pages of material. So things have changed a bit, but good advice really shouldn't change that much.

   11. TFTim Ferriss7:07

       Now, I have, I've had a chance to observe you as sort of an animal in the wild for 10 plus years, and part of the reason I enjoy having our conversations, uh, but also sharing your tactics and scripts and so on, is that I've seen you use them and walk the walk, which is more than I can say for a lot of financial pundits or commentators, uh, out there in the world. And I wanted to, to perhaps just mention a, uh, a, not really an upsell, maybe a side sell, which is if somebody wants to be either greatly informed on the arts of negotiating or if you're just looking for outrage porn to get really angry if, if that's your current sport of choice, you can find a guest post that, uh, you put on my blog, uh, quite a few years ago called How to Negotiate Like an Indian. [laughs]

   12. RSRamit Sethi8:04

       [laughs]

   13. TFTim Ferriss8:05

       Which, uh, which I can only imagine the, the response to that title if, if I were to publish it [laughs] now.

   14. RSRamit Sethi8:10

       Probably not a good idea.

   15. TFTim Ferriss8:11

       But it's staying. It's staying the way it is, folks.

   16. RSRamit Sethi8:14

       [laughs]

   17. TFTim Ferriss8:14

       So there you have it. If you wanna Google that on tim.blog, you can find it. But let's talk about some of the perhaps counterintuitive, uh, things that you do, because we talk about all sorts of aspects of finance and investing and life in general on the phone, just the two of us, but I'm looking at a number of different bullets that I was hoping to explore, and one is

3. 8:42 – 26:15

   Renting vs. buying

   1. TFTim Ferriss8:42

      you've mentioned that you've lived in the same apartment for 10 years. Why do you still rent?

   2. RSRamit Sethi8:47

      [laughs] Yeah. I get this question a lot because in America, real estate is religion, and if you're successful, then you're supposed to buy, right? And the old tax deduction and they're not making any more land and all these things that we say that we don't really understand. I rent intentionally. I could go buy a place in Manhattan tomorrow with cash, but I don't want to. It doesn't make sense for me financially, and also, I enjoy the flexibility. Just to give you an example, um, I love that the building that I live in has awesome services. I love that anything that goes wrong, I make a phone call. Somebody... There, there was a... It started raining last winter, and water started coming through my windowsill. So I made a phone call, and they came up and they took a look, and they were like, "We actually have to replace this part of the roof because it connects, and we have to send someone to the outside of the building." I said, "Sounds good to me. It doesn't matter to me. I'm gonna be out of town for the next few days, so have a blast." I would estimate that that repair probably cost, in Manhattan on a weekend, probably 25,000, maybe $35,000. I didn't pay it, right? So that's financial. Also, a flexibility issue, which is I don't know where I'm gonna be five years from now, and if you're gonna buy and you run the numbers, it makes sense to plan on being there at least seven to 10 years minimum, so that you can sort of eat the cost of the f- transaction fees. But I think the biggest thing that really surprises people is that in America, we have been told so many times real estate is the best investment, and in my opinion, that's just not true a lot of the time. Now, I don't think it's a bad investment always, but I always say you should run the numbers, and when I run the numbers in Manhattan, it just makes no sense. I would rather take that money and I would put it in the stock market, and I know consistently what that outcome is gonna be over the long term. I don't have to do any repairs, and I, as we may talk about, I really hate anything that affects my convenience. So I think for a lot of people, I just want people to think, like, "Hey, is it really true that real estate is the best investment?" For me, it's not. Um, it's a cost, and I'm happy to pay the cost just like I'm happy to pay the cost of, you know, a basket of strawberries that I'm gonna eat. I don't think I'm throwing money away on strawberries. I don't think I'm throwing money away on rent.

   3. TFTim Ferriss11:06

      So you said, uh, real estate is, is religion, or it can be, and I think this is worth digging into for a second because there are a lot of statements that in certain circumstances can be conditionally true, right? Like real estate is the best investment, asterisk, fine print, if-

   4. RSRamit Sethi11:25

      Yes

   5. TFTim Ferriss11:25

      ... A, B, C, D, E, right? And there are, then there are things that are just patently, I think, untrue, right? Like you need money to make money. False. It's who you know, not what you know.

   6. RSRamit Sethi11:38

      Yep.

   7. TFTim Ferriss11:38

      Uh, false dichotomy, not mutually exclusive.

   8. RSRamit Sethi11:40

      Investing is only for the rich.

   9. TFTim Ferriss11:42

      Right.

   10. RSRamit Sethi11:42

       Ironically, the way you get rich is by investing.

   11. TFTim Ferriss11:45

       And there are a lot of different ways to invest, right?

   12. RSRamit Sethi11:46

       Mm-hmm.

   13. TFTim Ferriss11:47

       So, uh, s- so th- one perhaps, uh, undertone or, uh, portion of context that I think is, is worth talking about, 'cause I've been thinking a lot about this myself in the last 10 years, is that there are, there are investments that you make to optimize for financial ROI, and then there are investments that you make which are decisions about ... allocating resources for optimizing other things, right? So I'll give just a perfectly seemingly opposite example, which is I, I have bought real estate. I've also had my ass handed to me, uh, of, of a year and a half before your book came out, in fact. Uh, hello, adjustable rate mortgage, first home buyer.

   14. RSRamit Sethi12:30

       Oh.

   15. TFTim Ferriss12:31

       Um, yeah, that was, that was ugly. But I have, I have bought real estate. Typically, I have used mortgages of various types, and I had a friend of mine, a different Indian, uh, who was also first generation-

   16. RSRamit Sethi12:45

       Who, who is this guy? We all know each other. [laughs]

   17. TFTim Ferriss12:46

       Mm-hmm. Naveen Thakaram.

   18. RSRamit Sethi12:47

       Okay, okay. [laughs]

   19. TFTim Ferriss12:48

       Yeah. [laughs] So thank you, Naveen, for this advice, by the way, uh, who I've known for ages, also an engineer. [laughs] Uh, brilliant guy. And we were looking through different financial decisions because, uh... And, and I wanna talk about kinda what got you here won't get you where you wanna go type changes, right?

   20. RSRamit Sethi13:06

       Yeah.

   21. TFTim Ferriss13:06

       'Cause I imagine you do things very differently from your parents.

   22. RSRamit Sethi13:08

       Totally.

   23. TFTim Ferriss13:08

       Even though their behavior makes perfect sense-

   24. RSRamit Sethi13:11

       Yes

   25. TFTim Ferriss13:11

       ... based on their conditioning and their experience. What he said to me, looking at my balance sheet, there was a small amount of principal left to pay on a mortgage, and he said, "Just for your peace of mind, for this primary residence, it doesn't make financial sense. You should pay this off so that you feel as though no matter what, you have that, and, uh, it, it's almost like a homestead," right? You have something that on many levels cannot be taken away. That's how you feel. And I did that. I'm not saying this is the advice that everybody should take, by the way, but for me in that moment, there was, there was so much uncertainty in my life, to make a decision that seemingly did not let the numbers line up was in fact the right thing to do.

   26. RSRamit Sethi14:02

       I completely agree. I'm so glad we're talking about the nuance because I believe there's a few underlying beliefs when it comes to money, and I believe that number one, most people are mostly the same, and that's profoundly different than a lot of people who believe that we're all individual and we have different situations. No, I believe that most of us are mostly the same, and if we can optimize, if we can basically just follow good advice for 90, 95% of the way, then we earn the right to take advantage of our individual specialties and differences. So for most people, that means saving a certain percentage, investing a certain percentage, et cetera. But I do think once you do the basics, then you earn the right to say, "Hey, what are the nuances here? Where do the rules not necessarily apply to me?" So for you, yeah, you have the principal. Maybe financially it didn't make sense, but it just felt good, or it, it provided safety in an uncertain world at that moment. I've got examples in my own life where I pay for stuff that makes no rational sense. I, I hired a personal trainer, uh, f- for the last many years. That doesn't make any sense. I could theoretically find the same workouts on YouTube, and, you know, they're all printed out, or I could just stop going with my trainer. Why? He's given me all the workouts. But there's something more that I get out of it. And when I was starting out, when I was, like, 22, I wish I could go back and shake myself because I was very utilitarian and really judgmental about how other people spent their money, and I would scoff. I would say, you know, "Flying business class is so stupid. We're all getting to the same place. I'm just paying 20% of what that person's paying." And what I really should have done is say, "Why do they do that?" Like, if we're listening to you right now saying you paid off a principal where you really didn't have to, you could have just dripped it out. You're not paying much in interest. Why? And for you, that safety was meaningful. For me, I like the flexibility and convenience. So I'm not saying don't ever buy real estate, and you're not saying buy or pay it off tomorrow, but what are the circumstances in which people who are otherwise probably pretty thoughtful make certain decisions?

   27. TFTim Ferriss16:06

       Mm-hmm. And the, the mistake that I've, in retrospect, made a lot when I was younger, and I think that's also i- in part because I grew up with, by necessity, very, very frugal parents, is, sounds like much like yourself, I would scoff at, uh, and sort of look down upon a lot of behaviors that had I actually looked closer and said, "What am I missing?" Right? All right, a bunch of wealthy people are doing X.

   28. RSRamit Sethi16:37

       Yeah. They must know something.

   29. TFTim Ferriss16:39

       Now I'm like, "Holy shit, I can't believe I missed it for, like, 20 or 30 years." Like, it actually makes a whole lot of sense.

   30. RSRamit Sethi16:47

       Yeah. Okay, so let's talk about what are some examples.
4. 26:15 – 30:13

   Unlimited earning, limited cutting

   1. TFTim Ferriss26:15

      uh, I'd love to hear a bit, since you have such a great sample set of students, right, what, what are some of the s- psychological, uh, blind spots or rules that most prevent people from reaching their financial goals? And, and I wanna touch on... So think about that. I wanna touch on one thing you said, which was frugality. And, and, and having grown up with a, a definite frugality lens, I think this is, this is worth commenting on. That is, frugality has its place. Like, you don't wanna just be flying blind because, you know, uh, what is it? A, a fool and his money are soon separated. I mean, [laughs] it's like you, no matter how much money you have, you can spend it all, right? And I've seen this a lot. It's not hard. So you have to have a, a, a means of assessing what is worth spending money on and what is not. However, if you make, let's just say, uh, 20, 30, 40, $50,000 a year, fill in the number, but let's just say $50,000 a year. If you want to reach all of your financial goals by, by cutting costs, the maximum amount that you can cut is 50,000. At which point you are, you've got, like, a T-shirt and you're, you're a wandering ascetic, [laughs] you know, begging for food and, and so on. Uh, so there is, by definition, a limit to the delta you can create between the money you spend and the money you have. Whereas if you, if you have an equal focus on income generation or even disproportionate focus on income generation, uh, sky's the limit in, in a sense, right? So that would be one where, like, I was trained to, like, cut, cut, cut, cut, cut. But, uh, if you're not simultaneously looking at income generation or increasing income, it can be really problematic.

   2. RSRamit Sethi28:12

      100%. That's why most of America and most of the world has the frugality lens on, right? There's a limit to how much you can cut, but no limit to how much you can earn. And if you think about the typical financial advice, it's a very pointed question to ask, "Why don't any of these so-called financial experts in the newspapers talk about how to earn more money?" And the answer is they don't know how. That's not their job. They're writers. So to be able to understand that you do need to manage your costs. For example, there are a lot of things I do in my life that are highly frugal, highly, especially for the income that I have, and I just, it's not of interest to me. But I also-

   3. TFTim Ferriss28:51

      Like what?

   4. RSRamit Sethi28:52

      Like, um, my wife makes fun of me because I run my entire business on a MacBook Air and, you know, I put my feet up on the table, I got my thing on my lap, and she's like, "Why don't you get a new computer? Like, that fan is so loud." And I had to upgrade.

   5. TFTim Ferriss29:06

      How long have you had it?

   6. RSRamit Sethi29:07

      So I, that's what I, I wanted to find out. I went to the Apple thing in the top left corner, and it shows you when you bought it. It's seven years old.

   7. TFTim Ferriss29:14

      [laughs]

   8. RSRamit Sethi29:15

      But, like, it still works, so I don't want another one. And I also, when I grew up, this comes from my childhood, we didn't buy a new computer unless the other one did not turn on. So I've kept that with me and I like having little places in my life where I intentionally, uh, impose scarcity. I think it's healthy. I think it's healthy to have restraint. I think it's healthy to build that discipline. If you just go out and buy everything you can, I think you're on a quick path to a bad place.

   9. TFTim Ferriss29:44

      You're also aware that you're doing it.

   10. RSRamit Sethi29:46

       Yeah.

   11. TFTim Ferriss29:47

       Right?

   12. RSRamit Sethi29:47

       Yes. Exactly. So exactly. Another example is I hardly ever eat out-

   13. TFTim Ferriss29:52

       Yeah

   14. RSRamit Sethi29:52

       ... at all. And, um, and that's a big change from 10 year... Well, I was single, and I was Seamless, like, my Seamless receipts are just, like, through the roof. Seamless is an online delivery service in New York. Everybody there uses it. And now for health reasons and also just for cost reasons as well, we like to cut back on that.

   15. TFTim Ferriss30:11

       Yeah.

   16. RSRamit Sethi30:11

       But I spend more on

5. 30:13 – 49:52

   Your money dials

   1. RSRamit Sethi30:13

      things. So I always like to spend extravagantly on the things I love, but cut costs mercilessly on the things I don't. Mercilessly. So I like that. I actually would... I think a lot of people kind of try to cut back a little bit here and a little bit there, and they just end up generally unhappy about it. I would actually encourage people to pick the area, I call it a money dial, pick the area of your life that you truly love spending money on. Like, let's do a quick exercise. What's the area of life that you love, it gives you joy to spend money on?

   2. TFTim Ferriss30:44

      Travel. Travel and food-

   3. RSRamit Sethi30:46

      Perfect

   4. TFTim Ferriss30:46

      ... I would say. Whether I cook at home or I, I go out, I would say. Uh, and now I... You had a Veracruz breakfast taco this morning-

   5. RSRamit Sethi30:55

      Yeah

   6. TFTim Ferriss30:55

      ... which was amazing. Not expensive.

   7. RSRamit Sethi30:57

      No. I loved it.

   8. TFTim Ferriss30:58

      But, but delicious. At the same time, I could go to, say, San Francisco to, like, Saison-

   9. RSRamit Sethi31:03

      There you go

   10. TFTim Ferriss31:03

       ... and enjoy that as an experience. So those would be two areas: travel and, and food.

   11. RSRamit Sethi31:10

       Perfect. So let's, let's do this now. A lot of people say travel. It's one of the most common ones. Mine is convenience. I like my life to be super convenient, so I've spent a lot of money and time engineering that. Now, let's take your money dial, travel, and like a stereo dial, let's turn it up. Let's say, just for easy math, that you spend $100 a month on travel. Again, easy math. What if you 10X that or let's say you 100X that? What would travel look like for you different than what you do now?

   12. TFTim Ferriss31:40

       [laughs] Uh, let's see. Well, I w- I w- it would probably mean that I have, which quite honestly I've thought about because I've had some... Given some of the gnarly, crazy places I go, I've had some catastrophes and near catastrophes. I would probably have a fixer on the ground each place I went. I would have somebody who is on call and available to ef- m- effectively fix any problem or tackle any, uh, challenge or want that came up.

   13. RSRamit Sethi32:13

       I love that. Anything else?

   14. TFTim Ferriss32:16

       That's the one that comes to mind.

   15. RSRamit Sethi32:18

       Okay.

   16. TFTim Ferriss32:18

       Uh, because it, it's... Yeah, that's, that's, that's the one that comes, that's the one that comes to mind.

   17. RSRamit Sethi32:23

       All right. Now, what's something in your life that you spend money on but you don't really care, doesn't make that much of a meaningful difference to you?

   18. TFTim Ferriss32:29

       Clothing.

   19. RSRamit Sethi32:30

       Perfect. Okay, so this is... You'll find this common-

   20. TFTim Ferriss32:32

       [laughs] Which my fans have given me unending grief for. [laughs]

   21. RSRamit Sethi32:36

       You know my wife is a personal stylist.

   22. TFTim Ferriss32:38

       Okay. [laughs]

   23. RSRamit Sethi32:38

       Oh, man. All right. Well-

   24. TFTim Ferriss32:39

       She won't like my budget

   25. RSRamit Sethi32:40

       ... we can talk about this. [laughs]

   26. TFTim Ferriss32:42

       [laughs]

   27. RSRamit Sethi32:42

       Okay, so I love this exercise. There are about 10 money dials that I've identified. L- uh, travel is a big one. Convenience is very rare. There's health and fitness. There's relationships. There's a few more. What I like to see people doing is actually spending more-

   28. TFTim Ferriss32:59

       Yeah

   29. RSRamit Sethi32:59

       ... on the thing they love.

   30. TFTim Ferriss32:59

       Health and fitness is the one where I would ratchet it up.
6. 49:52 – 1:41:00

   Stress-testing your money beliefs

   1. TFTim Ferriss49:52

      Uh, and we know someone who lives here in Austin also, Noah Kagan, who has his coffee challenge, right?

   2. RSRamit Sethi49:58

      Yeah.

   3. TFTim Ferriss49:58

      So walk into a coffee shop, ask for 10% off. And [laughs] you can't tell them you're doing an experiment. You can't tell them that so-and-so told you to do it. Uh, it doesn't matter what they say. So it could be a Starbucks, it could be an indie, doesn't matter. And if they're like, "What if I bo- what if I don't like coffee?" It's like, "Fu- I don't care. Get a water. Get a, you know, order a Pellegrino, uh, order a tea," but ask for 10% off. Uh, cultivating the muscle used f- for asking for things, uh, is so incredible. And I, you, you're talking about, uh, you know, those who, those who can't teach, and how there are these, these common sayings that are, that are taken as true. I do th- I, there is one that I like which I do think is generally true, and that is in life you don't get what you deserve, you get what you negotiate.

   4. RSRamit Sethi50:47

      I agree.

   5. TFTim Ferriss50:47

      And sometimes negotiating is just asking for what you want, right? So are there any exercises that you would suggest, or practices, phone calls, questions to people who are listening that might help them kinda stress test some of the things they've accepted?

   6. RSRamit Sethi51:06

      Yes. I love this. So I'm gonna give you a small one and I'm gonna give you a big one. The small one is if you have any sort of late fee, you should just use the scripts in my book, or you can Google for them, and you should call up your financial institution, usually it's a credit card, and negotiate the late fee.

   7. TFTim Ferriss51:25

      What should they Google specifically?

   8. RSRamit Sethi51:26

      Um, if you don't, if you don't... Well, get the book.

   9. TFTim Ferriss51:29

      Yeah. Get, get the book.

   10. RSRamit Sethi51:29

       But if you don't get the book, you c- you can just Google Ramit Sethi negotiation scripts.

   11. TFTim Ferriss51:34

       Okay.

   12. RSRamit Sethi51:34

       And you're gonna see there, uh, y- this is how it's gonna go. You call up the credit card and you say, "Hi. Uh, I just wanted to confirm that I've been a member for the last four years." And they're gonna say, "Yes, I see that, 2000 whatever year." "Okay, great. Uh, I noticed that there's a late fee here of $37 from last month. Um, I'd like to get that waived please." And they're gonna s- By the way, notice my tonality. "I'd like to get that waived please." "Why, sir?" "Well, I made a mistake, but I sent the payment in the next day, and I'd like to confirm that it can be removed and it won't affect my credit." 80% of the time right there you're gonna get it removed. And there's a reason I put that in chapter one of my book, as well as with bank fees, overdrafts, et cetera. It's that most people have never proactively taken control of their money. They just accept the world the way it is. "Oh, the credit card screwed me again." No. You can get that back. And once you get that late fee back, you're like, "Oh my God, I can actually have control over this. These companies work for me." So that's, that's the first thing I would say. The second exercise is a little bigger and it's more conceptual. Right now I'm doing a small coaching program with, like, 150 people. G- I'm walking them through my book. And it's, like, this private group and I'm just walking them through every chapter. And I asked them a thought exercise a couple of days ago. I said, "If I gave you $10,000 tomorrow, or if you just found it, no obligation, no strings, what would you do with it?" Okay, Tim, what do you think they said they would do with this $10,000?

   13. TFTim Ferriss53:04

       $10,000. This is just, like, right off the cuff. Pay down mortgage or invest in, in an index fund. But I'm guessing closer to the former than the latter. I don't know.

   14. RSRamit Sethi53:18

       Okay. You pretty, pretty close. So it turns out that according to these answers, that they're all saints. We have a bunch of Mother Teresas in the group. They're like, "I would pay off my debt. I would give 10% to charity. I would do this and that." I'm like, "You got $25,000 of credit card debt. You're telling me that you would magically take this money and just pay it off?" They, what they were doing was they were having a very optimistic sense of their future selves. I would rather they say, "I actually don't know what I would do with this money. Based on my past behavior, I'd probably just spend a lot of it," or, "I have no system or way of thinking about what to do with my money." That would've been more honest.

   15. TFTim Ferriss53:57

       Yeah.

   16. RSRamit Sethi53:58

       Instead, when faced with what we're gonna do in the future, we're really optimistic. "Oh, I'd work out four times a week. I'd pay this off. I'd pay for my parents' retirement." What I would really like to see people is go through this exercise, start with your optimistic self, and then try your realistic self. If you say you're gonna pay off all your debt, why are you even in debt in the first place?

   17. TFTim Ferriss54:17

       [laughs]

   18. RSRamit Sethi54:18

       Clearly you didn't have a system-

   19. TFTim Ferriss54:19

       Right

   20. RSRamit Sethi54:20

       ... that would keep you out of it. So I, I think for people, whether it's $100, $1,000, $10,000, whether it's, you know, you could even go as big as somebody just gives you a house. What are you gonna do with it? I haven't even done that myself, but you could play with the concept. And then remember, if you don't have a system, like for me the answer is I would put it straight into my system, put it into a checking account, and money would be withdrawn to certain places. 20% would go here, 10% would go there. Some money would be spit out for guilt-free spending, and I'd probably go buy a beautiful sweater.

   21. TFTim Ferriss54:51

       Where did the [laughs] ...

   22. RSRamit Sethi54:53

       That's where it always ends up.

   23. TFTim Ferriss54:54

       You and your sweaters. [laughs]

   24. RSRamit Sethi54:54

       I know, I love them.

   25. TFTim Ferriss54:55

       [laughs] So where, where, where do those funds go, if you're comfortable-

   26. RSRamit Sethi55:01

       Yeah

   27. TFTim Ferriss55:01

       ... talking about some of the places?

   28. RSRamit Sethi55:02

       Sure. So you get 10 grand, you put it into the checking account-

   29. TFTim Ferriss55:05

       Yep

   30. RSRamit Sethi55:05

       ... and then it gets kinda put into this-
7. 1:41:00 – 1:46:45

   Pre-nups

   1. RSRamit Sethi1:41:00

      if I see anything that looks good, I just order it, and I also tell the people eating with me, "Do the same. Don't even think about it." And so, like, my coworkers love eating out with me 'cause I'm like, "Just order it all."

   2. TFTim Ferriss1:41:10

      [laughs]

   3. RSRamit Sethi1:41:11

      Like, I got the bill. Um-

   4. TFTim Ferriss1:41:13

      S- just a quick side note for anyone who has not seen it, it, it, uh, came out not long ago from, uh, the time of this recording, but there's a, an incredible ESPN article on Coach Gregg Popovich and the dinners and the wine for the Spurs. It is phenomenal.

   5. RSRamit Sethi1:41:29

      It's fantastic.

   6. TFTim Ferriss1:41:29

      Pe- people can look that up. Anyway.

   7. RSRamit Sethi1:41:30

      Um, have a couple of areas in your life where you have absolutely no budget. Doesn't matter how much you spend, you just love it.

   8. TFTim Ferriss1:41:38

      Unlimited.

   9. RSRamit Sethi1:41:38

      Unlimited. There's no, if you love strawberries, like when I grew up, I loved strawberries, but we had a big family and strawberries were expensive. There's no amount of strawberries that will ever cause me any material difference in my life. It's three bucks, four bucks, five bucks, six bucks, doesn't matter. Buy it. Have something. It could be as small as strawberries, it could be as big as whatever. Um, eat the same... For, this is for me personal, a lot of people don't agree, but eat the same thing, mostly the same thing every single day. I do it. It's just easy, decision fatigue.

   10. TFTim Ferriss1:42:09

       I do the same thing.

   11. RSRamit Sethi1:42:10

       Yeah. Um, and then also, so this is what my wife and I have been talking about recently, is let's come up with some rules for our relationship too. These are guidelines.

   12. TFTim Ferriss1:42:18

       Yeah.

   13. RSRamit Sethi1:42:18

       We can change them, but, you know, we were planning a vacation. We're gonna stay with a friend for their birthday in Mexico City, and we're looking at flights, and I find that we're deciding which flight. Should it be economy? Should it be business? What hotel, this or that? And I said like, "Hey, let's, let's get into it. Let's kinda figure out where we like to travel together and what style. But over the course of the next few months, let's kinda come up with some basic rules." For example, if you're traveling over five hours, business class, or if we're staying just the two of us, we don't need a fancy hotel. Whatever the case, make a basic guideline so that we don't have to think about it all the time. And even down to, like, who's taking out the trash? Like, let's just kind of articulate that and be explicit so that it's all on the table, and that way it clears up any misconceptions. So I love this general playbook for life, especially-

   14. TFTim Ferriss1:43:07

       Wait, so who... So wait, what's this, what, what was your conclusion on the trash?

   15. RSRamit Sethi1:43:09

       Oh, dude, I take the trash out.

   16. TFTim Ferriss1:43:10

       Okay. [laughs]

   17. RSRamit Sethi1:43:11

       And it just got revealed because, like, I would notice the trash filling up, and then she would take it out once in a while. But really she would say, like, "Would you mind taking the trash out?" And it just became very clear. In any relationship, there are certain things that one person does or doesn't like to do, and, like, the same thing true for cooking, ironing clothes.

   18. TFTim Ferriss1:43:30

       Yeah.

   19. RSRamit Sethi1:43:30

       Cass cooks, I iron.

   20. TFTim Ferriss1:43:32

       Quick, quick note on that. One thing that I've found really helpful is whether it's with friends or your significant other, but especially significant other, is agreeing in advance from a scale of 1 to 10, 10 being absolutely heartfelt must-have or must-not-have, you can't use a lot of 10s. Like, so, like, you only really get a couple of 10s in your pocket, so don't spend them-

   21. RSRamit Sethi1:43:53

       [laughs]

   22. TFTim Ferriss1:43:54

       ... on nonsense, right? But asking someone, like, zero to, like, "1 to 10, how much do you like doing this?" Or, "1 to 10, how much do you hate doing this?" And it's like, all right, if, if to you it's like you don't love taking out the garbage, but if it's like, "Eh, I'm a 5 out of 10, like 6 out of 10, who cares?"

   23. RSRamit Sethi1:44:08

       Yeah.

   24. TFTim Ferriss1:44:08

       Like, I, I, it doesn't really matter. She's like, "I grew up in such and such a way. I hate taking out the garbage." Like, "Okay, fine. I'll take out the garbage."

   25. RSRamit Sethi1:44:14

       Wait, so what's your 10?

   26. TFTim Ferriss1:44:16

       Uh, on liking or not liking?

   27. RSRamit Sethi1:44:18

       Uh, let's go both.

   28. TFTim Ferriss1:44:19

       Uh, so I, for instance, uh, very fond of cooking, very unfond of cleanup.

   29. RSRamit Sethi1:44:27

       Love it.

   30. TFTim Ferriss1:44:27

       Right? And-
8. 1:46:45 – 1:59:40

   Ramit vs. Tim

   1. TFTim Ferriss1:46:45

      So I, I, I know we don't have too much time left, but I wanna jump into one of these because I'm curious what, what you will say in response to some of these, uh, questions. And we may only have time for one or two, but, so these, these are from people on the interwebs. Always a risky proposition, but they were, they were voted on or up-voted. And, uh, one, this is from Scott, no last name here indicated. Uh, where does Ramit disagree with what Tim teaches or preaches? Or Bri- And, and I'll just rephrase that, but, like, what do you think we disagree on?

   2. RSRamit Sethi1:47:19

      This is a g-

   3. TFTim Ferriss1:47:20

      And it could be-

   4. RSRamit Sethi1:47:20

      This is one of my favorite questions

   5. TFTim Ferriss1:47:21

      ... and it could be anything, right? But fire away.

   6. RSRamit Sethi1:47:25

      Oh my God, I love this. I think that we disagree on morning routines.

   7. TFTim Ferriss1:47:29

      Yeah.

   8. RSRamit Sethi1:47:29

      I think they're overrated.

   9. TFTim Ferriss1:47:30

      Yeah.

   10. RSRamit Sethi1:47:31

       I think that the best morning routine is decided a year ago. It's about your psychology. It's about how much you sleep. It's about, um, what, you know, what have you outlined in your calendar. It's all those softer details. And I think that, you know, I get people asking me every day what's my morning routine, and I'm like, "Who gives a shit?" Like, you think, you think if I ask Michael, I'm not saying I'm Michael Jordan at all, but if I ask Michael Jordan what shoes he wears or what his morning routine is, am I gonna be like Mike? No. And similarly, if you find out what kind of coffee I drink, you're not gonna be doing what I do either. But I know that you're not-

   11. TFTim Ferriss1:48:09

       [laughs]

   12. RSRamit Sethi1:48:09

       ... saying that. But that's what people are taking away, and it drives me insane.

   13. TFTim Ferriss1:48:13

       Yeah. Well, yeah. I mean, what, what-

   14. RSRamit Sethi1:48:14

       Can you please correct the record, Tim?

   15. TFTim Ferriss1:48:16

       ... what one person tries to impart and what people hear are [laughs] sometimes very different. Uh. [laughs]

   16. RSRamit Sethi1:48:21

       The 4-Hour Workweek. Tim, you work more than four hours.

   17. TFTim Ferriss1:48:24

       Yeah, yeah.

   18. RSRamit Sethi1:48:24

       Ah.

   19. TFTim Ferriss1:48:24

       I'm just like, okay, thanks for... Yeah, right. The gift that keeps on giving. Um, so, uh, morning routines I think are, number, number one, for me, coming back to what we just said, m- morning routines are one example of removing decisions. That's it. Uh, there's a little bit more to it for me in the sense that, uh, as someone who had onset insomnia and slept very poorly for several decades, I would wake up and be non-functional, generally speaking. So having a boot-up sequence Which didn't require any thought. I'm not deciding what to eat for breakfast. I'm not deciding what step number one is. Do I do A, B, C, D, or E first? No, I'm always gonna be doing B, right, or A, whatever it might be. Has been very helpful. I also know equally or far more successful people who have your answer. They're like, "I wake up, I drink a fucking cup of coffee, and then-

   20. RSRamit Sethi1:49:24

       I re- I scroll Instagram first. Literally the first thing I do is I get on Instagram while I'm in bed.

   21. TFTim Ferriss1:49:28

       Yeah.

   22. RSRamit Sethi1:49:28

       It's like the worst possible thing.

   23. TFTim Ferriss1:49:29

       Yeah.

   24. RSRamit Sethi1:49:29

       But I'm like, "I like it."

   25. TFTim Ferriss1:49:30

       Yeah. And [laughs]

   26. RSRamit Sethi1:49:33

       Is that unhealthy?

   27. TFTim Ferriss1:49:33

       I wonder what accounts. Uh, anyways, [laughs] it's all cabins. It's all cabins, I swear to God. Uh, the, uh, the, the question I think that is, that is also just like a macro question that's worth asking is, is this person you're looking at succeeding because of, uh, or despite what you're looking at, right? This is really important. It's especially important if you're studying people who have already reached escape velocity in some type of success or financial, uh, freedom and you're still working your way up. Because, uh, hindsight is not 20/20. A lot of folks who are on top of the world and are just crafting billion-dollar deals every day do not remember very clearly what helped them when they were working in the office on Thanksgiving or whatever it might have been.

   28. RSRamit Sethi1:50:26

       This is a great point, and so powerful. By the way, this is why I love your podcast because here we are, two people who seemingly disagree on something, but now we're getting into the nuances and we can really crack the code of what's, what's the differences and similarities. I will totally agree with what you just said about the more successful you get or the more time you get away from something, the less y- details you remember. I'll give you an example. My wife started, she used to be a senior buyer at Equinox. She left to start her own styling business about 18 months ago. I would hear her doing sales calls in our living room, and I would see her sometimes closing a client and sometimes going weeks without closing a client. And, you know, I've got a business now, I've got amazing employees, we've got, uh, traffic that's coming. You know, we've got people coming and regular customers and all that stuff. But when I started off, that shit was not easy. I would go weeks without getting one person joining any of my programs, and I forgot how emotional it is. You're, the highs are so high and the lows are so low. And half the game in this is just living to fight another day.

   29. TFTim Ferriss1:51:40

       Yeah.

   30. RSRamit Sethi1:51:40

       It's just not giving up and improving just a tiny bit every day. And I watched it and I heard her and I saw her, um, go through the ups and the lows, and it's amazing now. This month she told me how many clients she's done. She's totally booked up for two or three more months. It's amazing what she's accomplished in 18 months. She never would've believed it. But you forget, and you forget fast, the tiniest details of what it means to wake up in the morning and say like, "Wow, the last four weeks I haven't gotten one client. Am I gonna do it different today?" So I just, big shout-out to every entrepreneur who's starting out out there. It's tough, and you should always put in context the advice that you hear. And thanks for bringing it up, because people need to know it's not all roses. Like, shit is hard when you start. It's hard for everyone. It actually should be hard, but if you stick with it, hopefully you're doing the right thing. You can get escape velocity.
9. 1:59:40 – 2:04:00

   Retirement

   1. TFTim Ferriss1:59:40

      Question about retirement. I was gonna ask this earlier. So this, uh, I mean, I've, you know, wrote about this as, as far back as, as my, my equally scammy sounding book Four Hour Workweek a thousand years ago. But the, the, so this concept of retirement, right? Let's replace that with financial freedom, 'cause I wanna ask you what that means or what you th- how you think people should think about it, because a lot of thinking about retirement I find to be extremely porous at best. Like, it's, it's very faulty. And-

   2. RSRamit Sethi2:00:12

      Well, your, in your book you had a great example of, uh, mini retirements and, like, you wanna buy a Ferrari? Why don't you just rent it for a week?

   3. TFTim Ferriss2:00:19

      Yeah.

   4. RSRamit Sethi2:00:20

      Great example.

   5. TFTim Ferriss2:00:20

      Or, or you think like, okay, 20 years from now everything I'm doing is predicated on being able to, like, buy a boat, and I'm gonna live on my boat and sail around the Med- Mediterranean for 20 years after. That's like, maybe you should get on a boat first-

   6. RSRamit Sethi2:00:31

      Yes

   7. TFTim Ferriss2:00:32

      ... and try that for a weekend. Like, go take a sailing course. You might come out of it being like, "That fucking sucks, and I was [laughs] , I felt sick the entire time." Okay, good to know that now and not when you've kind of slaved away and done something that you find distasteful for 20 years. Um, and, uh, people mess up the math, too, right? I mean, they, they often miscalculate and, uh, end up having a very tough time in retirement per se. So with, with your students, how do you encourage them to think about the objective? Uh, right?

   8. RSRamit Sethi2:01:08

      Yeah. Well, I don't believe that most people are automatons that sit down and say, "Here's my 50-year goal, and let me break it down and reverse engineer it to what I'm gonna do this week." I know about two people like that, and they're special on their own, but most people don't do that. Most people are- Very simple. They want to wake up, they wanna have a good day at work, maybe they wanna have a little bit of fun or watch Netflix or have a good conversation with their partner or their friends, and that's a good day, and that's okay. Now, to kind of push people out of that and make them think a little bit bigger, it might be taking a vacation they may not have done. It might be going to a tea event that they may have never thought of going to. It's these experiences that people remember. I would say that your comment about retirement is really true for people our age. Like, I don't hear anyone saying, like, "When I retire," this, that, my pension. Like, those conversations are not happening with our generation. So there's more of, um, what do I wanna do? There's more spending on things like wellness and vacations and experiences, and we're seeing that in the economy as well. What I tell people is a couple of things. Number one, you may not think right now that you wanna retire, but when you look at what everybody else who reaches a certain age does, if everyone does something, it might be true. And so plan for it. Like, I don't wanna buy a house, but almost everybody else does, so I saved enough for a down payment. I don't need to use it, but it's there if I need to. Um, similarly, don't wait, right? And think bigger. So don't wait means go take a trip for three days, and think bigger is like your retirement doesn't have to just be sitting around. It can actually be much bigger. That money dial, turn it to 10, and it could be traveling with a fixer. It could be going for a month a year or two months. Um, but in order to do that, you need to build a muscle now of thinking bigger. People have this linear belief that once this bifurcation of retirement happens, then the curtain opens and I get to do all this cool stuff. Dude, if you haven't been doing it until you're 60 years old, you're not gonna magically do it at 60 years old in one day. So I would encourage people to start building the muscle just like you've told them, and realize that doing creative things, trying different things is a muscle. I found myself getting lazy with this in New York. I looked at where I'd gone to in the city, like, over the course of the last six months, and I was like, "I live in this amazing city, and I'm not even taking advantage of it." So I put it into my calendar. Once a quarter minimum, I'm gonna do a cultural event, like a show or a tea tasting, whatever the case may... Something that I could only do in New York. And so now it's, like, on the calendar. And you can say it sounds unromantic, but I'm like, "That's what I needed to, to do that to keep building my muscle of trying new things." So whatever works for people, do it, but I would say don't wait until you are retirement

10. 2:04:00 – 2:20:56

    Calendaring your relationship

    1. RSRamit Sethi2:04:00

       age.

    2. TFTim Ferriss2:04:01

       Yeah. And I, I feel like so much in our conversation has come back to, you know, making one decision that removes 1,000 decisions i- in the sense that, like, you put it in your calendar. And for me, if it's not in the calendar, it's just not real, right? So even, uh, what we call batching conversations for, uh, with me and my girlfriend for discussing certain, like, constant, uh, not, not issues in the sense of problems, but, like, we have a- we have regularly scheduled times to talk about certain things.

    3. RSRamit Sethi2:04:35

       We do the same thing.

    4. TFTim Ferriss2:04:36

       And it's in the calendar.

    5. RSRamit Sethi2:04:38

       Same.

    6. TFTim Ferriss2:04:38

       Uh, it's... And that's true with, uh, certain types of k- like date nights. It's true... If we're talking about relationships, right? It's true for taking trips together.

    7. RSRamit Sethi2:04:50

       Yep.

    8. TFTim Ferriss2:04:51

       It's true for visiting my family, visiting her family. And by making that decision and putting it in the calendar, you preserve your brain power and emotional resilience and so on for other stuff that is less predictable.

    9. RSRamit Sethi2:05:07

       Do you have a consistent thing you talk about on your check-ins?

    10. TFTim Ferriss2:05:11

        We do. Yeah, we have a whole format and everything.

    11. RSRamit Sethi2:05:12

        Yeah. Okay.

    12. TFTim Ferriss2:05:13

        And-

    13. RSRamit Sethi2:05:13

        So this is amazing. I love meeting smart people who apply their intelligence to a different part of life. Like for example, there's a book out by Gretchen Rubin, who we both know, and she's just so smart, and she decided to write a book about keeping her house and workspace organized. And I'm like, "Yep, bought it." And the stuff she writes about in there is clever, interesting. It's exactly what you would think a smart person applying themselves to something for, like, a year would come up with.

    14. TFTim Ferriss2:05:41

        Yeah.

    15. RSRamit Sethi2:05:41

        And the fact that you and your girlfriend have, we call it a touch base or a check-in, and you have a consistency, it's on the calendar, like, I love that.

    16. TFTim Ferriss2:05:50

        Yeah.

    17. RSRamit Sethi2:05:50

        And, you know, I wanna know, like, what's on that? How... What, what surprised you? Da, da, da. 'Cause we're going through building our own one-

    18. TFTim Ferriss2:05:56

        [laughs]

    19. RSRamit Sethi2:05:56

        ... and we're tweaking it, and I'm like-

    20. TFTim Ferriss2:05:58

        Yeah

    21. RSRamit Sethi2:05:58

        ... this is awesome.

    22. TFTim Ferriss2:05:59

        She's much smarter about, uh, anything involving emotions. [laughs]

    23. RSRamit Sethi2:06:03

        Oh, God. It's funny. My, my wife is the one who suggested it for us too.

    24. TFTim Ferriss2:06:06

        Yeah, much more, much more observant-

    25. RSRamit Sethi2:06:09

        [laughs]

    26. TFTim Ferriss2:06:09

        ... uh, than I am. Uh-

    27. RSRamit Sethi2:06:12

        It's like two cavemen talking to each other.

    28. TFTim Ferriss2:06:14

        Y- y- yeah.

    29. RSRamit Sethi2:06:14

        "Hey, how do you feel, Tim?"

    30. TFTim Ferriss2:06:16

        Yeah. So, so she ha- she's much... Yeah. "Are we good? We're good? Okay, great."

Episode duration: 2:21:17