The best-selling author and viral content creator shares her journey to building wealth and advice from her book, Rich AF: The Winning Mindset That Will Change Your Life

Written by Jillian Holness

The phrase ‘wealth whispers’ is complete BS to Vivian Tu.  “The super yacht in the South of France,” that’s whispering? Tu smirked to the crowd of young and older adults who filled the Eastman Reading Garden on Aug. 1. The New York Times best-selling author of  “Rich AF: The Winning Mindset that Will Change Your Life”  and CEO of Your Rich BFF, a multimillion-dollar company providing financial education, believes there’s nothing wrong with wanting a rich life. 

“We’re not going to work for our health,” Tu explains. “We’re going to make sure we can support the people we love and build a lifetime we’re proud about.” Tu describes her book Rich AF: The Winning Mindset That Will Change Your Life as snappy, fun, and an irreverent tool that helps readers get themselves on their financial journey and improve their mindset. 

Creating a budget

In “Rich AF”, Tu talks about how budgeting is super, duper important. She mentions how the 50-30-20 method is an efficient way to eyeball your budget and see if you’re on track. 50 percent of your take-home pay should go towards your basic needs, such as food, transportation, and rent. 30 percent should go towards your wants.

“People always say if you’re budgeting you shouldn’t have wants, but that’s crash dieting,” Tu says. “I’ve never been able to do the keto diet for longer than 4 hours because I love bread,” Tu laughs. Tu further elaborates that if a budget doesn’t have any room for joy, such as getting your hair or nails done, or going out to dinner with friends it’s less likely that you’ll stick to it.  The remaining 20 percent should go to taking care of your future,  which could mean an emergency, sinking fund, or investing.

Paying off Debt

Tu reminds Clevelanders how important it is to be proactive in creating a strategy to tackle their debt. “I know a lot of people who have debt and they’re like, this is annoying, I don’t like this feeling when I think about my debt. I’m going to stick my head in the sand and when you do that and want to avoid it, it grows and it gets scarier,” Tu warns.  “When you have a plan, regardless of if it gets done in 2 years or two weeks, you are going to feel lighter.” 

For people with leftover income every month, Tu enforces the debt avalanche strategy. The debt avalanche strategy starts with ranking your debt from the highest to lowest interest rates. You make the minimum payment across everything and put the remainder towards the debt with the highest interest rate.  According to Tu, this strategy is how you pay down your debt in the fastest timeline while paying down the least interest. 

For besties who are struggling with making the minimum payment and have a little bit of credit card debt, she suggests a balance transfer card. All of your existing credit card debt rolls onto this new card and you pay down the debt you borrow. Tu also says a great thing about the card is that you get an introductory fee of 0 percent interest for the first 12-18 months. Tu suggests a personal loan for those who have a high-interest debt that can’t be paid in 12-18 months.

A personal loan’s interest rate is typically 7-15 percent, which is lower than the average 20-30 percent of credit card interest. “You get this loan and pay down your credit card debt and don’t use those cards for the time being,” Tu explains. “Then, you use the money you were paying towards your credit card bills to pay that personal loan back.”

Investing

Tu also spent a significant amount of time talking about investing and how it’s a key component of how the rich can make their money grow with little effort. Tu said you should think of investing as going to the grocery store. 

The first step is to figure out which store you’re going to or which brokerage, you’re investing at.  Step number two is choosing between a grocery cart, basket, or carrying your groceries in your hands. “This is the vehicle for holding the stuff,” Tu says. “You can choose a Roth IRA, traditional IRA, or a 529 if you have educational needs. 

Tu warns the audience to make sure that they actually buy investments and not just put cash in their investment fund. She also mentions how important it is to have a diverse portfolio. “You don’t go to the store and just buy an entire bag of Almond Joys, do you?” Tu raises her eyebrow. “You buy the multipack of candy that comes with the Almond Joy, the Snickers, and the Twix. The reason you do this is because if a kid with a peanut allergy wants some candy from you, he’ll still be able to have a piece.”

Tu relates the candy example to stocks. She says if you just buy one stock and something happens to it, you’re going to lose all your money.  Having a diversified portfolio helps you weather stock market issues much better. Speaking of the stock market, Tu believes that the market is up 15 percent since the beginning of this year and there’s no perfect time to get in. Tu reassures the audience to not be scared to go into the stock market and take the dollar-cost average approach. 

“This is when you get your paycheck and set aside a specific dollar amount and buy the same hedge fund or the same targeted retirement fund every single month on months when the market is down and you’ll naturally buy more shares,” Tu explains. “When the market is up, you’ll buy less and that will help you average out your entry point cost.”

Tu says this strategy means less stress and once you hit retirement age, you’ll look at all the money you put in and see that the money worked harder for you than the labor you put in. 

Importance of Mindset

As a child of Chinese immigrants, Tu grew up with her parents constantly struggling with money and hearing them say, “Those jobs are for rich folks and “the rich neighborhood.” 

“You start to think I don’t get to live in the neighborhood with the big houses or I don’t get to have these things in my life because it’s for people like them and not people like me,” Tu explains.  Tu challenges readers to holistically improve their lives by changing the way they think and not falling into a self-limiting mindset. She encourages readers to think; “I can network my way to the right rooms, get people to advocate for me, and help me be smart with the things that I do have,” Tu explains. 

Copies of Tu’s book are available at the Cleveland Public Library and on the virtual library app, Libby.