SXSW: Building a BulletProof Financial System

March 14, 2010

2:00 pm

Day 3 at SXSW started off for me with a great session by Ramit Sethi, author of I Will Teach You to Be Rich. I had heard of Sethi before, but never read any of his books.  But for some reason, I was interested in the the session, titled “Building a Bullet-Proof Financial System,” even though it was a little off the tech track.

He first touched on how delusional we are as a society when it comes to money and finances.  To make his point, he said that according to a recent poll, 20% of people believe they will get rich via the lottery. Not me … well, maybe.

One of the big themes he touches on throughout his speaking and writing is that the ability to automate much of your finances will allow you to  achieve your financial and personal goals.  But he says that, much of the time, the concepts seem so difficult, the usual outcome equals no action.

Most of Sethi’s presentation revolved around his six-week program to take charge of your finances. Here is a brief summary:

Week 1 – Dominate your credit. It is very important to keep credit active. It helps you achieve a higher credit score and in turn helps with large consumer purchases like homes and cars.  And while you have the credit, make sure to use the perks and benefits that come with it, like an automated warranty extension program when you buy a car.  Also, use your negotiation powers to get better rates.

Week 2 – Use sub savings accounts. These are small savings accounts set aside for certain purposes.  So if you have a general savings account, create sub accounts to save for things like a car or a vacation or to have funds for emergencies.  And AUTOMATE the amounts being deposited in these accounts so you don’t have to worry about adding money to them.

Week 3 – Open an investment account.

Week 4 – Practice conscious spending. He said you should absolutely spend on things you love, as long as you cut back on things that are not as important to you.  And follow the CEO model:
C = Cut Costs
E = Earn more
O = Optimize spending

Use tools like Mint.com to help manage your spending.

Week 5 – Automate your money. Set tools in place that automatically distribute your money to bills, savings, etc.

Week 6 – Invest. Use easy tools provided by banks to make decisions and invest simply and smartly.

All in all, it was a great session, and I was happy I attended.  It definitely gave me s0me ideas and plans to put into place to get on the right  financial track.

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Jimmy Gardner is a Senior Unix/Windows Engineer, a lover of technology and photography. Follow him online at @jjgardner3 and enjoy his portfolio at jjg3photo.com/.

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