Comments on: The Psychology of Automation: Building a Bulletproof Personal-Finance System

By: True Freedom is Not Free, So How Can You Reclaim Your Freedom? | Think Big Think Money

Tue, 03 Nov 2009 22:11:13 +0000

[...] learning how to be financially free is important. For starters, go grab a personal finance book or read a great personal finance blog post. If you don’t want to go DIY, at least consult a professional financial advisor and learn from [...]

By: Ramit Sethi Shows You How to Negotiate, Automate & Perspirate Your Way to Financial Success | Thrilling Heroics

Tue, 03 Nov 2009 15:59:26 +0000

[...] days Ramit hangs out with Tim Ferriss (check out his feature on the 4-Hour Workweek blog about the psychology of money and how to set up an automated personal finance system, with great [...]

By: Oleg Mokhov

Oleg Mokhov — Wed, 14 Oct 2009 02:33:20 +0000

Hey Ramit,

Automation is the most effective way to work.

Do the work only once. Put in the one-time effort to build a system that’ll do the work for you from here on out.

You free up your most valuable resources–time and energy–to spend on what’s important to you. Which is highly unlikely to be paying bills, managing personal finance, website maintenance, and so forth.

Maximize your living by automating unnecessary work. Do the work once, free up resources, and go live.

Thank you for your insanely useful book. Your 6-week program was exactly what I needed to build and automate my personal finance system,
Oleg

By: JustinFoamer

JustinFoamer — Thu, 08 Oct 2009 16:07:06 +0000

at Rob on the 5% and 5% vs. 10% question –

While a 10% contribution will increase your 401(k) balance and subsequently decrease your tax liability, you’ll want to contribute the max to a 401(k) that your employer will match. If it’s say 50% up to 3%, you’ll want to contribute 6% to achieve the max 3% match – make sense? The additional amount should go to the Roth (assuming you are below the income limit) for the purpose of creating separate buckets of money to be accessed at various points in your life.

Example:

Age 30, single, income of $70,000 – tax bracket 25% – use non-qualified (taxable) savings
Age 60, married, retired – use Roth IRA for income before touching Traditional IRA – Roth IRA distributions tax free. must pay ordinary income taxes on Traditional IRA.

If one doesn’t take full advantage of a Roth IRA while eligible (generally during the younger years of one’s earning life because of lower income and assuming as you age, you earn more hopefully), they lose this valuable “bucket of money” that will save thousands in taxes when they will most likely need the savings – during retirement.

So, 5% to the 401(k) for the match in Ramit’s example and 5% to the Roth IRA.

By: JustinFoamer

JustinFoamer — Thu, 08 Oct 2009 15:35:25 +0000

I’ve been reading the advice on tax savings…and I have a few comments:
1. Contributions to a ROTH IRA are non-deductable – won’t help lower the bottom line come April ONE-FIVE.
2. Student Loan and Mortgage Interest are deductable – it’s good to keep both, but look at the ammortization schedule, you may want to pay them off early – scary stuff.
3. Work with a CPA, not an accountant, not jackson-hewitt, not H&R Block, a Certified Public Accountant – aicpa dot org to look for one in your area.
4. Some alternative investments (asset classes other than stocks and bonds) offer additional deductibility – but beware of illiquidity and net worth/income minimum requirements.

Great read Gentlemen, the precise reason I’ve read Tim’s book 4 times. I’m a Wealth Advisor and will steal a few of your ideas for myself.