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It would have taken 33 years to pay off her debt. Now, just 5 years

Ramit Sethi

Every week, I get dozens of stories about people using iwillteachyoutoberich to turn their finances around…or just dominate even more than they already were.

Today, 3 short ones that I thought you’d like.

1. Alan writes:

“I thought you would enjoy this conversion I had yesterday. Couldn’t help but think of you and your best acronym, STFUDF.

While reading “A Random Walk Down Wallstreet”

Crazy Girl: “What are you reading? Oh… trying to learn about stocks?
Me: “Yeah, trying to do some research. I heard about this book from a personal finance blog.”
Crazy Girl: “That book is WAY conservative. He doesn’t want you to take any risk at all. I have some recommendations for you when you finish that.”
Me: “Really… cool… What books?”
Crazy Girl: “Oh, I’ll tell you later.”
Me: “Okay…”
Crazy Girl: “You know, it’s all about options, calls, and puts. That’s where the real money is.”
Me: “Really? Have you done that? Is that how you invest?”
Crazy Girl: “No, but I’m going to. Thats how you make money in the market. Tell me how you like that book.”
Me: “Okay…” (STFUDF!!!)”

What does this mysterious STFUDF mean? How do you use it against dumb people? Find out here.

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2. Nice success story about paying off debt from iwillteachyoutoberich reader Anandi. I bolded the best part:

“I called up my bank (UNFCU) about revisiting my current loan and consolidating my Amex (with it’s skyrocketing rates and lowered limits it’s pretty atrocious).

On a phone call a couple weeks ago, I inquired about the new location in midtown and about setting up an appointment to discuss loan options. I discussed my situation with the helpful representative and told her that I wanted to refinance my current loan or apply for a new loan and combine the two so there wouldn’t be two separate payments. She said she can do it over the phone and prepared all the paperwork for me.

They were able to get me a decent fixed rate and saved me over $500 per month in Amex payments (which doesn’t even factor in the interest). And my monthly loan payment is $100 less than it was before (and this is for a larger amount, go figure!!). Therefore, I’m actually saving about $600 a month! Wow!!! Now I can apply that to paying off the whole loan faster and funding my vacation fund.

If I had kept paying off Amex with the minimums it would have taken 33 years and cost me $44,062. Ouch! Now I can pay off this new loan in under 5 years and save over $20,000 (which might be accelerated with the additional payment). Too much math for me to think about, but it’s all good.”

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3. Why you should dollar-cost average:

Tyler F. writes:

…for people that didn’t want to invest when the market was “down”. Sucks to be them! Also makes a good argument for dollar cost averaging, especially in down markets.

I just logged into my 401k account to tally my networth and happened to notice. Glad my contributions have been maxed for the past few years!

He sends this graphic, which I love (click for full image):

Most people react emotionally when the market goes down, which is the worst thing you can do. Yet once the carnage passes, we reassure ourselves that we’re rational, logical people, and that investing has to be this exciting, nail-biting adventure. In reality, it should be boring and long-term, which illustrates the difference between being sexy or rich. The best thing you can do is build an automatic system that eliminates your emotions from investing…and let it run, automatically, while you focus on living a rich life.

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You can do all of this — invest, find the best accounts, create a plan to pay off debt, negotiate, and build an automated financial system — in 6 weeks using my book.

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  1. avatar
    Jimbo Donsmore

    I hope those returns for Tyler F. are annualized, because otherwise, I wouldn’t love those numbers.

  2. avatar

    Could you please post the calculations and assumptions used for story number 2?

  3. avatar
    Jimbo Donsmore

    Also, I’m pretty sure dollar-cost-averaging will actually lower (theoretical) returns over time. DCA would be if you had a lump sum and invested it over time.

    What you DO want is automatic investing. Which is what most people do because they invest what they’re saving each month. It’s not a conscious dollar cost averaging like you might do (but shouldn’t) with a lump sum.

    I realize it is mostly semantics, but I’m a crazy person.

    Plus, if you think about it, when you retire and start pulling money out it would be like “dollar cost averaging” in reverse because you would sell less shares when they’re high, and more when they are low.

    I just blew my own mind!

  4. avatar

    Whether you invest a lump sum over time, or do automatic investing at periodic intervals, the end result is the same. You end up buying over a period of time, and buy shares over different costs, hence dollar cost averaging.

    DCA will lower returns when the markets go up, but it will also lower losses when the market goes down when you compare it to a lump sum purchase.

    DCA is to mitigate risk; nothing more, nothing less.

  5. avatar

    Regarding #3:
    My 401k (ish) retirement went up 34.99% in 2009. Problem is it was down 39.9% in 2008. I still lost a lot of money, but yes, I would have missed out on the 35% increase in 2009 if I had stopped contributions altogether. All in all, if I had $100 invested at the end of 2007, I would have had $61 at the end of 2008, and now $82 at the end of 2009. Overall I’m still down 18% despite those continued contributions. Ideally I know the market will keep going up since I got those shares at a discount, but if I was to cash out today I would have had more money if I was just keeping it under my mattress.

  6. avatar

    A girl curious about what investment book you’re reading? I hope you got her number.

  7. avatar


    Seeking advice here:

    I want to get out of around $20K in credit card (mostly) debt from some bad business decisions and some hard times last summer. I have a small online business that makes a bit of money per month, but not enough to basically wipe out the debt for some time. The debt looks like this:

    There are in fact 3 sources of debt. 2 are credit cards (one at 7.24% and the other at a whopping 21.99%) and the other a line of credit at 4.75%. My biz, which is a side venture, makes anywhere between break even and $1K-$1.5K/month. Credit score is around 720…so, good there and I’m 38.

    I do have an IRA (traditional) from a previous job which is around $24K. I’d lose 10% of it straight away, and then probably 35% to income taxes (fed, state). Even if I cashed in my IRA, I wouldn’t be able to pay it all off…but I would make a major dent in it. Normally, it would be a bad idea to pay it off, but the highest interest earning card is 22%! And, it is a business credit card. The wrinkle is I am looking to sell the business and my hunch is to sell it with this cc debt in it is a very bad idea. Pay it off now and improve the overall finances of the business, then sell it.

    Thoughts on this? I realize it is usually never a good idea to use a taxable IRA to pay credit card debt, but I have some interested buyers and want to improve the picture of the business.



  8. avatar
    Debt Free Hispanic

    I agree with automatic investing. All I know is that 15% of my income goes to a 403B and a Roth IRA. I never worry about it, I receive quarterly reports but I never even think about taking money out or that the numbers are down. That would make me sick, i’m just contributing and the numbers continue to skyrocket, since i’m young I’ve asked to put my money in aggressive markets.

  9. avatar

    Thanks for sharing this success story for paying off debt. It is great that she was able to take such control over the situation. Great post.

  10. avatar

    I love this. It is really helpful for you to filter these kinds of exchanges as I think we have been taught so much jargon and there are so many conflicting messages about how to best use money.

    Plus there is nothing better for morale than a success story…

  11. avatar

    Hi Ramit! I’ve been a follower on your blog for awhile.! Thank You, thank you! I saw your youtube video on credit reports (and wasn’t able to post a comment)
    I’ve used this site for my credit score It’s free, so I thought be a better recommendation.. : ) Good Job on CBS this week!
    I do use for my annual report, though! Thumbs up!

  12. avatar

    I think that if you are interested in business, investing, or technology then you should make sure that you follow all of the latest news regarding them. Fortunatley, there are plenty of websites such as for example that tend to go into great detail about all the latest developments and news. Be sure to be up to date so that you don’t miss out on anything important.

  13. avatar
    Rosario Olivera

    My name is Rosario Del Olivera and I am thanking God Almighty for everything he has done for me and my family, My own Story started in 2011 when i was seeking for a loan in one loan firm in USA and i spent all the money i have and i even sell all my property here in Ecuador including my cars and i did not get the loan. Mrs ANTONIA DIMITAR the woman that later gave me a loan on-line in Bulgaria, This woman gave me a loan of 52,000.00 EURO which i invested in my business here in Ecuador. And if you need a legit loan lender i can direct you to this wonderful woman. email: