I was really surprised with how much this struck a chord. You’ll notice 150+ comments asking for specific areas you want me to cover. Read closely: It’s not just tactics you want. Lots of you asked for help crushing your own psychological barriers.

I know you want me to jump right into the tactics of earning more money — how to turn your idea into income, negotiate higher rates, and scale your earnings — but I’m not going to yet. That’s because it’s critically important to understand your implicit barriers before you start tackling action steps.

And that’s what I want to cover today: Whiny people who don’t think they can save (and earn more money).

Let’s start by examining what happened about 1 year ago.

“I’m offended you’re showing me how to save money”

In late 2008, when the market was crashing, people stopped caring about investing and negotiation and just wanted to hunker down and save money. As a result, I launched something called the “Save $1,000 in 30 Days Challenge,” where I showed people tactical ways to save money using fresh psychological techniques. Thousands of people joined in and worked to save thousands and thousands of dollars.

Except a few people.

While most people were supportive, I was surprised by how many people were actually offended by the very concept of a “Save $1,000 in 30 days challenge” because they didn’t even earn that much each month, or they found my recommendations to be “too obvious” — even though I defined “saving” as cutting costs, earning more, and optimizing spending.

Here are some examples of their complaints, which I’ve categorized for easy reading:

Whiny complaint #1: “I don’t make enough money”:

Whiny complaint #2: “This is so obvious”

Whiny complaint #3: “You’re just doing this to make money”

Analysis: Stop the whining

These whiners miss the point.

• Saving $1,000 in a month was eminently reasonable, but it was also an aspirational goal. If you couldn’t save $1,000, what about $500? $200?
• More likely, the whiners expected personalized information to be spoon-fed to them.
• The people who complained a year ago are probably still complaining about money, while many of the people who took the challenge saved hundreds and even thousands of dollars.

No more excuses, please. We all know friends who complain and complain about money, but do nothing to change their situations. Yes, of course luck and other factors are involved in saving money, but 90% of people could easily save — cut costs, earn more, and optimize their spending — with some effort. Maybe not $1,000, but certainly $100, $200, or maybe even $800.

Even worse, these commenters chose to complain about the tips not being specifically relevant to their own situations instead of saying, “Hey, how can I apply these to my life and save more money?”

Let’s break down the complaints because they happen over and over again when it comes to doing something entrepreneurial — whether saving money or earning more money.

Myth #1: “I don’t earn enough to save $1,000″
With the Save $1,000 Challenge, the goal was clear, but you could just as easily decide to save a different amount. $100, $200, $500 — it doesn’t matter. In fact, even if you just saved $100, you’d be better off than doing nothing. And remember, you can save even if you don’t earn a lot. They could “save” by cutting costs, earning more, or optimizing the spending they’re already doing. But it’s easier to complain, isn’t it?

What’s also likely is that these readers were not regular iwillteachyoutoberich readers with above-average incomes and a propensity for taking action. In fact, I had a huge influx of traffic from sites like MSN Money and Lifehacker, which have very different audiences.

Myth #2: “These tips are obvious”

This is the oldest complaint in the book from useless people looking for novel tips instead of actually doing something.

Yes, most personal-finance tips are obvious (just like losing weight is simple: Eat less and exercise more). The magic comes in getting you to actually take action. But we love to debate minutiae and complain about the economy, even though saving money fundamentally involves earning more and spending less. These commenters were looking for “secret” tips and silver bullets, custom-written for their situation. That’s ridiculous. If the tip on hedging your fuel costs doesn’t apply to your situation because you don’t have a car, a smart person would say, “Hmm, how can I apply that general technique to the rest of my life?”

I’ve written about the Manifest Destiny Fallacy before:

“Have you noticed how lots of people always want more and more information, but rarely implement what they already have? A couple years ago, I started realizing how lots of personal-finance readers were constantly asking for more and more information — more blog posts, more book reviews, more financial magazines — but would often just READ, not take action.

To put it bluntly, I have lots of friends who read blog post after blog post, but have STILL not automated their money, started investing, or even put together an aggressive plan to pay off debt.”

Action is more important than reading tip after tip.

Myth #3: You’re just doing this to earn money

I always laugh when I hear people say, “Hey, I have a good way to save $10…just don’t buy his book! Ha Ha Ha!!” Yes, good one.

Many people hate the idea of other people making money, even if it helps them make more money. I find this totally absurd. Last year, I paid thousands and thousands of dollars on personal development materials (books, courses, travel to meet people) and made a lot more. Yesterday alone, I bought a $197 marketing course because it had one piece of training that I wanted.

So notice when people talk about investing in training, books, courses, or anything that could potentially improve their careers or lifestyles. You’ll notice this funny phenomenon of ‘nobody better take my money,’ which is the typical complaint of friends who adopt the fixed-pie mentality. They think that there’s a fixed amount of money in the world and “Nobody else better make money because if they do, somehow I’m losing it.”

You know friends like this: They’re fiercely combative about their money, they generally don’t believe in spending money to make money (e.g., they would never spend $20 to take someone out and get their advice) because the other person would be “winning” and they would be losing money. They invest conservatively, if at all, and if they lose money over any time period, they blame someone else.

Pay for value. You can’t out-frugal your way to being rich.

See people who TOOK ACTION

Compare the above negative comments to these readers below, who decided to make a change with their personal finances.

Jenni at Astronaut-In-Training breaks down exactly how much she saved from each tip. The conclusion?

“Final savings through the 30 Day Challenge is ……….

$1021.25!!!!

I seriously didn’t add this up until I was done writing everything. Wow. Granted, many of this tips are things I already do, but some of them I just recently implemented, and will continue to save me money if I continue to do them. Most importantly, I view my money in a different light. In college, if money came my way, I just spent it.

That’s what it was there for, right? I didn’t have a real budget, and didn’t track anything. Now I have a monthly budget, I track every penny, I have an emergency fund, I’m paying off my debt faster, and this year I plan to start investing. I only wish I had developed this drive to protect and cherish my money sooner.”

From Tip #5: Optimize your cellphone bill, Rachel writes:

“I just did this, and the fifteen minute conversation with AT&T has just saved me $20.00/month, or $240.00 per YEAR. That is huge.”

From Tip #10: Use the free rewards from your credit card, car insurance, and workplace, Jenni says:

“I JUST did this over the weekend: my BoA Visa gets reward points ($1 = 1 point), which I haven’t used since I got the credit card. I purchased my Christmas travel home through the rewards website, and instead of a $555 flight on Southwest, I paid $175.75 plus all my accumlated points for a similar US Air flight!

Savings this tip: $379.25″

Let’s be aware of one thing: Some people insist that everyone can simply earn more and save more money, regardless of their life situations. I’m not one of those people (read Nickel and Dimed to see why it’s not as easy as saying, “just try to earn more”). But if you’re reading a blog and leaving comments in the middle of the day, I start to get the sense that it’s not your situation — it’s just a negative attitude and a sense of entitlement that any tips should be specifically geared towards you.

Underlying every single tip, tactic, and strategy I recommend is the need to take action. Without action, you sit in your room, leaving negative blog posts and convincing yourself that you can’t save $1,000, or make an extra $500 or $5,000 per month. You can. But you need to get started.

How this relates to earning more money in 2010

I’m about to unveil a 3-week series on earning money, and then more material afterwards. There will inevitably be people who complain that earning more money is impossible. I’m guessing the excuses will be things like:

• “I don’t have enough time”
• “That might work if you have an Ivy League education but I’m just a humble [occupation]…”
• “Maybe if you live in SF or NYC…”
• “Maybe if you’re a single guy, but I have a family…”

All of those are reasonable excuses. And some might be legitimate. But if those are going to hold you back, just go away. In the next few weeks I have case studies of people who earn thousands on the side as parents who live in podunkville. I have a case study of a person who started a side job while working at one of the most prestigious/time-consuming jobs in the world. And people who earn great side incomes with ordinary jobs and incomes…all because they took the initiative to do it.

It can be done.

Let’s work through it together.

Sign up (free) to get advanced techniques on earning money.

To find supporting evidence for my theory, I Googled “bmw asshole” and got 1,500+ responses, including this one. I rest my case.

There has only been one exception (he was a startup CTO…who by definition cannot be an asshole). Also, Asians don’t count because they don’t drive BMWs.

The point is this: There are patterns you can recognize. We like to believe we’re individual and different, but the entire field of social psychology illustrates how we mistakenly believe we’re in control of our own lives while systematically underestimating situational and social influence.

As we get older, the vast majority of us fall into predictable patterns: We become more conservative with our investments. We have kids. We spend on things we never imagined we would (like window treatments, homeowners’ insurance, and childcare).

Recently, I wrote a post about the 10 Year Savings Strategy, where I recommended that people who are already saving and investing and maxing out their retirement accounts do one simple thing: Find some people who are 10 years older and ask them what they wish they’d saved for. Then start saving for those things.

This isn’t as sexy as alternative investments or currency arbitrage, but it works. It also forces us to confront the fact that most of us will live very similar lives as everyone else. We’ll start really paying attention to our money around age 40. Our wedding cost will be far higher than we planned. We’ll buy a house.

Sure, there are exceptions. But chances are you’re not going to be one of them. None of us is.

The comments that people submitted to the post were some of the most interesting and infuriating I can remember, prompting me to write a 456-word comment in response. Here are a few selected comments from the original post:

Delusional Guy:

“First of all, I’m not getting married. No, this isn’t just the talk of someone who can’t see far enough into the future. We all know the only benefit of getting married is in avoiding divorce. If you get divorced, you’re screwed. For anyone who would ever put themselves into that situation, I have no sympathy because it is completely avoidable. Marriage is a contract and (especially for guys) if you enter into it, you will be on the losing end from the get go. You recommend getting advice from your elders. What do they tell me? Don’t get married. That’s some advice I’ll be taking because I care too much about my assets.

Actually I see kids as a complete waste of money, time, and freedom. There are many people out there who live child free (and loving it) and I will be one of them. Don’t believe it? Believe it when i get a vasectomy sometime in the near future.”

Smart Person Who Understands The Point of the Post, Not Just The Superficial Words

“Ramit, I really liked this. The take-away was still the same despite that I don’t intend to have children (and neither does my g/f). Plan for large expenses I will encounter on my path in life, whether or not it’s children or lots of travel or whatever hobby I choose. The action is not, “save for children.” The action is: ask and try to predict what your major expenses will be in 10 years and save for it. Don’t think you’re going to be above average and beat the system. Reality is sometimes harsh on us 20-somethings. Realize I am not an exception to every rule. Realize that reality will bite me sometimes and I will want to be prepared.”

Hilarious Person I Want To Marry

“Good lord….To pretend you know exactly what you want now (at say, 25) for when you are 50 is the equivalent of adamantly stating when you are 5 that you hate all boys/girls and will never like them. It’s utterly ridiculous. All you can do is acknowledge that your current self cannot predict everything that will happen in your life, or everything that you will want, but it’s probably going to cost more than you think. So instead of spending so much energy being defensive, why don’t you critically think about his point, and whether you want to apply it to your finances?”

And finally, here’s the response that I left in the comments:

“Exactly. Some phenomenal comments on this post and some very, very stupid ones.

The most absurd thing about many of the negative comments is the inability to take a strategy or tactic and apply it to the commenters’ own lives. If you’re not going to get married (which you probably are, despite what you think now), you’re still going to have many other expenses that you simply can’t predict yet. If you claim you’re determined to have a frugal wedding (which many people say, by the way), then the question to ask is this: “Under what conditions might I find significant future expenses that I didn’t predict?” Ever hear of the hedonic treadmill?

I’m willing to bet one of the commenters who complained this post is “obvious” hasn’t cut costs, automated, created a Conscious Spending Plan, earned more, optimized his spending, maxed out investments, and created sub-accounts for his future 10+ year spending. I’m not being sarcastic — if you have, please let me know and I’ll call you because I’d love to profile you for my readers.

“Obvious” doesn’t mean “easy.” But that’s the point of the post, isn’t it?

As commenter Sara said:

“To pretend you know exactly what you want now (at say, 25) for when you are 50 is the equivalent of adamantly stating when you are 5 that you hate all boys/girls and will never like them. It’s utterly ridiculous. All you can do is acknowledge that your current self cannot predict everything that will happen in your life, or everything that you will want, but it’s probably going to cost more than you think. So instead of spending so much energy being defensive, why don’t you critically think about his point, and whether you want to apply it to your finances?”

Now that I’m writing, let me go on a little bit: One key insight of writing a blog for a large audience has been how entitled people feel in getting a tip that’s exactly written for their specific situation. “I’m 60 and widowed!” people say. Or, “But I’m gonna have a vasectomy!”

A post addressing your specific situation is not going to happen here — you need to use your imagination and think about how to apply them to your life. And I’m not going to water down this blog with equivocations and qualifications (as ec213 points out).

The sad thing about this is the smart people already know this. I have to write this comment for whiners who (1) constantly complain about this site, (2) will never buy anything, and (3) repeatedly threaten to leave.

With that said, I LOVED writing this post and I love reading these comments even more. Look for MORE posts like this.”

By planning to live an ordinary life, you give yourself the means to be extraordinary.

The original post on the 10 Year Savings Strategy is here.

Follow me on Twitter to get frequent micro-updates that I only post there.

Turn on the TV or read any comments section of an online newspaper — even the New York Times — and you will quickly feel the need to take a shower and to physically distance yourself from common citizens of dubious intellect.

You’ll notice people complaining about their taxes, while never cutting their own spending, earning more, or optimize their spending (like the CEO Model I describe in the Save $1,000 in 30 Days Challenge).

The problem is multi-faceted:

First, once something incurs spending, it’s incredibly difficult to stop spending on it. Why? On a national level, because there’s momentum, jobs, and opposition to change. On an individual level, we’re more motivated by loss than by gain, so it’s easier to do nothing than to take away something we’ve grown accustomed to.

Second, people get emotional. You see this with jobs and taxes (and rightfully so), but also with areas as prosaic as design changes on Facebook. In many/most circumstances, we don’t like change, and we over-emphasize our own interests (”I CAN’T UNDERSTAND WHY THEY DON’T MAKE A MAC PRODUCT!!! GRRR!!), while never seeing the big picture (Macs have a ridiculously small market share).

Third, the natural progression is to do more: more staff, more funding, more spending. Without a conscious spending plan, you’ll find that executing a Think, Want, Do analysis will reveal some huge disparities in where you think your money is going vs. where it’s actually going.

Let’s take a look at some numbers.

Now, you can take a couple routes after seeing these:

1. Complain about Obama, Democrats, Republicans, the war in Iraq, etc. The funny thing is, people love to debate minutiae but fail to realize that energy is a valuable resource — and it’d be much more productive to focus on things we can control (like our asset allocation, automation, negotiation, etc). If you do this, you are just like everybody else who loves to complain but does nothing to improve their own finances.

2. Realize that the real message of this post is to focus on the BIG WINS — the things that let us save significant amounts of money. While it might be fun and emotionally liberating to debate over some local issue, the way to move the federal budget forward is to fix the 800-lb gorilla: healthcare costs. The same is true of your spending: The very first tip in my Scrooge Strategy is called the Two-Headed Savings Approach, where I show you how to focus on dramatically cutting the costs on your two biggest discretionary expenses, rather than trying to save 5% on 50 things (as most people do), and ending up feeling guilty and achieving no behavioral change.

Stop complaining about things you can’t control. Realize that the correlation between macro-economic and political decisions has very little to do with our money on a day-to-day basis. Most importantly, we’re cognitive misers, and only have a limited amount of attention. Focus on your own finances first, and let the fools (or politicians) debate the macro-level.

I recorded a 30-minute interview with Flexo and Tom over at the Consumerism Commentary podcast with extensive notes below. It’s called Stupid Financial Advice + The 5 Myths of Personal Finance.

Notes:
[00:00] Introduction from Flexo
[00:50] Interview with Ramit Sethi about stupid financial advice
[01:50] — The Reddit community
[03:27] — Frugality
[05:09] — Big wins
[08:03] — Knee-jerk behavioral change
[09:41] — The “buy and hold” strategy
[13:10] — Financial magazines leading up to the recession
[16:48] — Finding decent financial advice
[19:01] Ramit’s five myths of personal finance
[20:01] — Myth #1: Personal finance advice is only about spending less than you earn

– Sort of meaningless pablum that lets people feel better about themselves but get nothing done
– And you can just see that’s true by asking a few questions: Are you happy with your finances? How much do you spend on eating out and loans? What’s your system for getting ahead? What are your goals?
– Just knowing a fact doesn’t make it implementable. As we say in persuasion, “informational influence is one of the least persuasive methods available”
– Make it tactical: How do you get the right accounts? Dominate your credit card? Automate your money? Pick the right investments? Handle money and relationships?

[21:33] — Myth #2: Personal finance is about more will power

– If I just try harder…
– Reminds me of weight: If I just try harder to diet…
– Every choice has a cost. Trying to save on 50 things vs. 5 things…
– How has that worked for you over the last 1-2 years? 10 years? Most of us are fat and in debt
– It’s about building systems that handle your weaknesses so you can exploit your strengths. Automate, earn more, cut costs

[22:55] — Myth #3: You can’t save any more money

– Yes you can
– We under-report how much we eat, just as we under-report how much we spend
– You can’t out-frugal your way to rich
– Saving: CEO
– Tracking is #1
– Setting goals is #2
– Automation is #3
– Earning more is #4

[25:18] — Myth #4: Everyone is like you

– MSN readers criticizing my frugality tips, saying frugality is about a lifestyle choice
– “Ridiculous to spend $28k on weddings”
– Silo effect: Sites like Reddit make you surround yourself with people who (1) don’t know anything, (2) act like they do, and (3) they ALL have the similarly kooky opinions!
– Solution is to read multiple CREDIBLE sources

[27:43] — Myth #5: Frugality will make you rich

Myth: “I can save $10 by not buying that book! Ha Ha!”
– Pay for value
– Not just sticker price, but value
– Why it’s crazy for people to try to find these extreme deals on books. If you implement even 1 tip, you’ll save/earn 1000x the money
– Same people who don’t pay end up spinning their wheels
– Would it be worth it to buy a $10 book that has saved people thousands? Scrooge for a few bucks/month if it helps you earn $300/month? Or to buy a course at a community college for $500?
– Focus on value, not cost

[30:26] End

Random notes

BUY AND HOLD

- Unprecedented what’s happened, lot of people to blame (including ourselves)
- But there’s a knee-jerk reaction: BUY AND HOLD DOESN’T WORK!
1. Ok, so what does?
2. The people who pull out of the market now are going to face another, more serious phantom risk: Running out of $. (SEE BELOW)

AVAILABILITY HEURISTIC

- We tend to overvalue what’s easily remembered — so you might say, “VWs are terrible cars” when in fact Consumers’ Reports prove otherwise (I do this)
- People are freaking out and removing their money from the market — driven by fear, not educated moves
- Change asset allocation. Change regular contribution amounts. Diversify. Earn more. But PULLING YOUR $ OUT? Worst thing you could do
- And people will face another fear they don’t know today: Running out of money. Not as obvious as losing 40%, but you can’t do much when you’re 82 and out of $
- Focus on the most important things and work, step-by-step, to hit them

BUY AND HOLD 2

- Compare equity returns to any other measure and you’ll see over the last 70 years have shown equities to return the best. PAST PERFORMANCE IS NO GUARANTEE…
- But I prefer to use data unlike the other handwavy arguments that involve the gold standard, doom and gloom, and tin cans

Stop reading and start doing. Thousands of people have already bought my book and dominated their personal finances. If you haven’t already bought my book for about $10 (Amazon), take 10 seconds to do it and learn how to turn all this information into a 6-week plan to dominate your personal finances. If not now, when?

(Make sure you forward your receipt to iboughtthebook@iwillteachyoutoberich.com for a bunch of bonuses, including something new coming up soon.)