• Discounts and special offers
  • Subscriber-only articles and interviews
  • Breaking news and trending topics

Already a subscriber?

By signing up, you accept Moneywise's Terms of Use, Subscription Agreement, and Privacy Policy.

Not interested ?

Downsize your home

Living beyond your means is one of the easiest traps to fall into — but a tricky one to get out of if you have deeply ingrained spending habits and you’ve grown accustomed to living a certain lifestyle.

Sethi gives money advice to people from all walks of life in his “I Will Teach You To Be Rich” podcast. He remembers one couple who had a profound impact on his own financial philosophy.

The couple had two young children and were living in a very expensive neighborhood — a “great place” with bars, restaurants and lots of walkable amenities.

“Finally, they decided to look at their finances — and I say ‘finally’ because most of us never look at our numbers; we simply feel bad about money,” says Sethi. “They realized they were actually spending more than they make every single month.”

So, they decided to make a “big, bold change.”

“That is another thing very few of us do,” according to Sethi. “We nibble at the edges, we try to optimize the price we're paying for asparagus — none of that matters.”

The couple sold their house and moved to a smaller home in a cheaper area, where they lived for the next 10 years.

“They were able to pay off their debt quickly, they accelerated their payoffs,” says Sethi. “Then they were able to go on offense and start aggressively investing. In a few short years, they have totally changed the way that their finances work and the rich life they are living.”

Sethi claims this is a great example of the impact that prudent financial planning, money management and investing can have on people’s lives.

“Money is not just this vapid thing we talk about,” he says. “Money affects where you live, it affects what kind of camp or activities you can send your children to, it affects in many ways, who you are. Taking big bold actions can get you huge results in a much shorter time than you'd ever think possible.”

Kiss Your Credit Card Debt Goodbye

Millions of Americans are struggling to crawl out of debt in the face of record-high interest rates. A personal loan offers lower interest rates and fixed payments, making it a smart choice to consolidate high-interest credit card debt. It helps save money, simplifies payments, and accelerates debt payoff. Credible is a free online service that shows you the best lending options to pay off your credit card debt fast — and save a ton in interest.

Explore better rates

Up your investment rate

In his book “I Will Teach You to be Rich,” Sethi says you should “spend extravagantly on the things you love, and cut costs mercilessly on the things you don’t.”

The coffee-obsessed money adviser says you could cut back on $5 lattes for the rest of your life — “and by the time you turn 85 years old, if you invested 100% of that money, you may turn it into tens of thousands of dollars” — but that doesn’t mean he thinks you should sacrifice your morning caffeine hit.

That’s not the type of “big, bold change” that he says will have a real impact on your life. Instead, Sethi says you should look at your investment rate, which is the percentage of your income that you’re investing every month.

“You could change your investment rate from 3% to 5%, and you would have more money over the course of your life than you would have in all the lattes and all the restrictions combined,” he argues.

Investing is where “real wealth is created,” according to Sethi, who argues that it doesn’t have to be complex or time-consuming. In fact, he’s all for dumping as much money as possible into target-date funds and letting your money do the hard work for you.

If that sounds overwhelming to you, Sethi says it may be a sign you need to better inform yourself.

“So many of us are worried about investing and money,” he says. “And by the time people turn 40, it is their number one worry in life. And yet, most people have never read a single book about money. If something is truly important to you, learn about it.”

More: Best investing books every investor should read

Don’t ignore your debt

Sethi says some people just accept being in debt as one of life’s inevitable realities, rather than doing everything possible to get out of the red.

Debt complacency is more dangerous than ever today due to the high interest rate environment. For instance, the average interest rate on credit cards is currently 24.45%, according to LendingTree data — the highest since the firm began tracking rates in 2019. That means it’s very expensive to borrow money and even more expensive if you fail to keep up with your monthly payments.

“I speak to couples or people who have $50,000 to $60,000 of credit card debt, and they're very unconcerned about it,” says Sethi. “I'm over here hyperventilating, like: 'Why am I more worried than you are?' And the answer is that I understand what a 26.99% interest rate means.”

The personal finance personality preaches the philosophy: Where there’s a will, there’s a way. And he doesn’t believe in the “myth” of hiding under a rock or living in a monastery to stop spending and get out of debt.

In a blog post on his website, Sethi writes: “You’d be surprised that many people don’t even have to cut much spending to pay off debt quickly. They just have to stop spending on random items, get conscious about making debt a priority, and set up aggressive automatic transfers to pay off their credit card debt.”

He admits that in some cases, he wants the change more than the debt-stricken individuals he’s advising want it for themselves.

“I can show them: ‘Here's how we can make some changes. Let's make some tough decisions. What are you willing to do to be debt free?'” he says. “And in almost all cases, they can do it — at least on paper.”


This 2 Minute Move Could Knock $500/Year off Your Car Insurance in 2024

Saving money on car insurance with BestMoney is a simple way to reduce your expenses. You’ll often get the same, or even better, insurance for less than what you’re paying right now.

There’s no reason not to at least try this free service. Check out BestMoney today, and take a turn in the right direction.

Bethan Moorcraft is a reporter for Moneywise with experience in news editing and business reporting across international markets.


The content provided on Moneywise is information to help users become financially literate. It is neither tax nor legal advice, is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. Tax, investment and all other decisions should be made, as appropriate, only with guidance from a qualified professional. We make no representation or warranty of any kind, either express or implied, with respect to the data provided, the timeliness thereof, the results to be obtained by the use thereof or any other matter.