284. “We’re worth $1.8M, but I feel guilty buying a $78 jacket”

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Transcript:

00:00:00.080 — 00:00:05.400 · Jason

She cried when we put our first offering on the house, but she also threw up when she bought her first car. So I did what?

00:00:05.440 — 00:00:08.080 · Laura

Spending large sums of money freaks me out.

00:00:08.120 — 00:00:14.960 · Ramit

$1.8 million in net worth in your 30s. You both told me you don’t really feel safe about it.

00:00:14.960 — 00:00:18.960 · Jason

I don’t think any number makes me feel safe.

00:00:19.000 — 00:00:24.680 · Laura

I saw this jean jacket that I liked, and I tried it on and I was like, oh, this is perfect. And then I didn’t get it.

00:00:24.720 — 00:00:25.720 · Ramit

How much was the jacket?

00:00:25.720 — 00:00:32.520 · Laura

$78. The hell? I’m just scared. Scared of the rug being pulled out from underneath us.

00:00:32.560 — 00:00:35.480 · Jason

My take is absolutely we could retire at 40.

00:00:35.520 — 00:00:36.480 · Laura

There’s no way.

00:00:36.520 — 00:00:45.400 · Ramit

What a way to go through life. Just finding one way to feel unsafe after another for the next 50 years. I’m not really into it. What do you think?

00:00:45.440 — 00:00:46.680 · Laura

Doesn’t sound great.

00:00:47.880 — 00:03:41.170 · Ramit

When can I retire? That is a very common question that most people ask themselves at some point in their lives, and it’s important, but it’s also a layered question that requires a few different answers to determine like how much is enough? What is your day to day life look like when you stop working? And I think, most importantly, what is your rich life today and tomorrow?

That is what we are talking about today. I’m about to speak with Laura and Jason, both 38 years old, married, no children and a high income. Jason thinks they can stop working soon. Laura wants that freedom too, but she doesn’t feel confident about what happens when the paychecks stop. For this episode, sponsored by facet, we asked their team to prepare three retirement scenarios using Laura and Jason’s financial information.

I want them to understand the trade offs and what each version of their future could actually look like. They want to know if they can retire early, like in the next few years. Before I talk to them, let’s open up their monarch account. I’m curious what their numbers tell us. Dining out 1200 bucks. Shopping $3,700.

Treat yourself. They got a massage for $72. Wow. Shall we look at what else? Let’s look at their accounts. Okay. Net worth $1.8 million. Cash at $132,000. They got a lot of money in checking accounts. Savings accounts? $49,000 in a money market savings account. Okay, fine. Credit card, 3900 bucks. I’m sure they pay that off every month.

Investments at $542,000. Loans at $1.8 million. The question is, can they retire in just a few years? I’m not sure. Here’s the clues. They make a very high income. Their fixed costs are low, but they are spending basically five times more than they planned on guilt free spending. I think the real decision will center on what they envision their retirement to be.

Let’s talk to Jason and Laura. This episode is sponsored by facet. I’m not a member of facet, but I have an incentive to endorse them as I have an ongoing fee based contract for cash compensation based on this endorsement. These opinions are my own and not a guarantee of a similar result. Fassett is an SCC registered investment advisor.

Now, Laura, in your application, you wrote something that caught my eye. You wrote were often unable to get on the same page about financial plans because of the large gap in our incomes and the way that we view and define financial stability. We’re on the precipice of making decisions to set a potential retirement in motion, and I’m freaking out a little help.

Jason thinks we can retire by 40. That sounds like a dream, but I’m not convinced. Laura, when you say you are freaking out, what does that mean?

00:03:41.210 — 00:04:11.360 · Laura

I guess freaking out is never feeling confident in my decisions. My brain will keep going and going at night being like, can we retire at 40? What would that look like? Like, are we even stable enough to be having these conversations. Like this year, we’ve spent so much money on like things that we wanted and needed.

Like constantly feel like if an early retirement is possible, should we be making all of these decisions with our money or should we be saving more? I don’t know.

00:04:11.400 — 00:04:24.480 · Ramit

Got it. Okay, Jason, what is your take on this question? You know, Laura says, I’m not sure if we can retire, and if so, should we be spending our money differently? What is your take on that question of early retirement?

00:04:24.520 — 00:04:40.320 · Jason

My take is absolutely. We could retire our 40. I think retiring our 40 would take some lifestyle changes to be on a fixed income. But if that’s the way we wanted to move, that’s definitely a possibility at our current trajectory. There’s also the option to work a few more years and have a more comfortable retirement as well.

00:04:40.360 — 00:04:45.400 · Ramit

Okay. Have you talked about that? Hey, if we push this lever, pull this, etc..

00:04:45.440 — 00:05:14.710 · Laura

Yeah, so a lot has changed since I initially wrote that. Tell me, since then we’ve had so many conversations about money and retirement that are not as abstract as they used to be. After we did the CSP and got that monarch app and like had pretty much complete transparency with all of our accounts and like, I don’t know, I feel like I have a better picture.

We’ve also paid off, I think a quarter of $1 million worth of debt since I sent that.

00:05:14.990 — 00:05:15.750 · Ramit

Hold on.

00:05:16.270 — 00:05:16.870 · Laura

Yeah.

00:05:18.150 — 00:05:31.390 · Ramit

God, I’m gonna get my ass handed to me in the comments. But it’s actually not my fault. You’re telling me. Laura, in the last two months, you paid off $250,000 of debt.

00:05:31.830 — 00:05:32.510 · Laura

Yes.

00:05:32.790 — 00:05:34.070 · Ramit

Tell America

00:05:35.150 — 00:05:36.510 · Ramit

how’d you do that?

00:05:36.550 — 00:05:55.020 · Laura

Okay, I’ll tell you. I’ve had student debt around my neck for a very long time. It has not been fun. Why have I let it sit there for so long? I don’t know, but I have, and that’s a mistake. But I realize I have this large chunk of money in my savings account. That’s just sitting there. And I like looking at it because I’m like,

00:05:56.140 — 00:06:16.340 · Laura

yay! I can see all of my hard work in that amount of money. And then I realize with that CSP thing, I was like, okay, so if I pay off that amount of money on my student loans, my net worth is still the same. It doesn’t matter whether it’s sitting in a savings account or paying off debt.

00:06:16.380 — 00:06:21.700 · Jason

Like, I think it’s important to clarify that the entire $250,000 was not student loans.

00:06:21.780 — 00:06:22.660 · Laura

That’s true.

00:06:22.700 — 00:06:55.100 · Ramit

Yeah. That doesn’t that doesn’t matter to me and actually doesn’t matter to anyone else. They don’t make that distinction. They just see a lot of zeros and they go, you know, that’s great. I mean, Laura, great insight. The idea that I just sort of had money sitting around in a savings account because it made me feel safe.

It just made me feel like there’s something there. And I realize, what am I actually doing with it? That is a great insight and I appreciate you doing that. Okay. I have more questions for you. Are the two of you married? Yes. How long you been married?

00:06:55.140 — 00:06:56.180 · Jason

Six years.

00:06:56.260 — 00:07:08.900 · Ramit

Okay. Laura. I’m curious. Even though things have changed in the last couple of months. What were you doing? Where were you and what was going on that you wrote that application? I mean, using words like freaking out. What was going on then?

00:07:08.940 — 00:07:28.580 · Laura

I remember the morning we were sitting on the couch having coffee and we were talking about retirement. It’s been a topic of conversation for us for the last couple of years. I’ve been, like slightly obsessive about it, I think. And yeah, that was one of the mornings when Jason was like, we can retire now or like when we’re 40 if we wanted to.

00:07:28.860 — 00:07:29.740 · Ramit

What’d you say?

00:07:30.020 — 00:07:41.940 · Laura

There’s no way. Then we fall into these roles in our relationship where I’m kind of like a perpetual pessimist, and Jason’s much more optimistic.

00:07:42.060 — 00:07:46.700 · Ramit

Okay. That’s interesting. How do you decide to potentially retire early?

00:07:46.820 — 00:08:40.969 · Laura

A series of things happened in life that made me realize that I really don’t want to work forever. Like my dad passed away after. Like, literally on his deathbed. He was, like, working from his hospice bed and was like, that was tragic to me. Right around that time, my company laid off a lot of people, and that was the first time in, like my adult life that I had, like, worked at a company that had mass layoffs.

And I was like, I felt very unstable. And then at the same time, our next door neighbor had retired. She was a schoolteacher forever. She retired. And like months after she retired, doctor found a brain tumor and she passed away like, within months. The story I told myself after that was like, I want to enjoy life now because you don’t know how long you have.

I don’t want to work forever, and I want to enjoy my life right now.

00:08:41.010 — 00:08:50.560 · Ramit

That’s a lot of tragedy and realizations in a short amount of time, I appreciate that. Sorry to hear about you, dad. Thanks. It’s tough. Jason, how about you?

00:08:50.640 — 00:09:23.280 · Jason

Oh. Meaning to more of the positive reasons when we first started dating. Um, I lived in a van. We traveled a lot. We would take month long trips and we’d travel, do a lot of climbing, hiking, that kind of stuff. And we’ve kind of built these habits of being able to live well within our means and knowing that and enjoying that type of lifestyle.

Uh, we’ve decided multiple times that a good way of like, stopping early is just living a little more simply, and we both enjoy that lifestyle. We’re happy to do that.

00:09:23.560 — 00:12:18.969 · Ramit

It’s quite poignant that Laura has seen mortality up close and in so many different ways. Seeing people pass away makes you rethink the way that you have approached life. One of the reasons that I love doing this podcast is that I don’t want you to have to wait until something terrible happens in order for you to design your rich life and certainly to live it.

Now, how much of her decision to retire early is based on a real desire to, versus a feeling of running out of time? I don’t know, but I do know that it is important to her. It’s important to Jason, and therefore I want to help them craft the kind of life that, assuming the numbers justify it, that they can live.

And so I can understand why Laura is in a big hurry to live that next chapter of her life. I actually feel for her, and I love when people are in a hurry to live their rich life. Sometimes I think that we put up with way too much for way too long. Do you know how many people are on my newsletter? And they tell me that they have been trying to start a business, or thinking about starting a business for five years, ten years, 15 years.

I’m like, what, 15 years? You’ve been thinking about doing this? You haven’t done it As one of my friends, Julie said, get impatient with yourself. Why do you allow yourself to keep dreaming of this thing? You wouldn’t even let a good friend do that. You’d be like, dude, get your shit together and get it going.

Let’s go. But we give ourselves a pass. So when I hear somebody saying, look, this is what I want. Here’s why I’m in a big hurry. I don’t know how to do it, but this is what I want. I love it, that’s what I’m here to try to help them do. This message is sponsored by kindred. Now I love hotels. I’ve stayed in some beautiful hotels across the world.

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00:14:06.350 — 00:14:15.110 · Ramit

40, or use 40 at checkout. What’s a time in the last few months where you two have not agreed on money?

00:14:15.150 — 00:14:37.380 · Laura

Right after we filled in the CSP spreadsheet. I was sitting on one side of the couch canceling subscriptions because I was like, we don’t need all of these. And then I noticed Jason on the other side of the couch, and I was like, oh, what are you doing? He was like, I’m looking at Vespas on Facebook Marketplace.

And I was like, we’re such different people. That’s not what I would be doing right now.

00:14:37.420 — 00:14:38.740 · Ramit

Is that what you said to him?

00:14:38.740 — 00:14:45.300 · Laura

I think. At that point, we had been talking about finances for like two hours straight, and I was like, I’m just going to let this one go.

00:14:45.540 — 00:14:50.100 · Ramit

Laura, do you feel like you are good when you spend less?

00:14:50.460 — 00:14:51.180 · Laura

Kind of.

00:14:51.220 — 00:14:54.500 · Ramit

Okay. And Jason is nodding his head with a smile. Yeah.

00:14:54.860 — 00:14:55.380 · Laura

I know.

00:14:55.420 — 00:14:59.660 · Ramit

And would the contrary be true as well? You are bad when you spend more.

00:14:59.740 — 00:15:04.740 · Laura

I see it as a negative to spend on, like frivolous kinds of things.

00:15:04.780 — 00:15:05.700 · Ramit

What’s frivolous?

00:15:05.740 — 00:15:08.700 · Laura

Well, the only thing I could think of right now is vehicles. But, like.

00:15:08.780 — 00:15:10.500 · Jason

What about that jacket that you saw that.

00:15:10.500 — 00:15:13.860 · Laura

You like? Yeah, I was going to say, like, a bunch of clothes or like.

00:15:13.900 — 00:15:19.300 · Ramit

Let’s talk about the jacket. What is this jacket? What happened? Wow. Two big smiles.

00:15:19.500 — 00:15:21.500 · Jason

I don’t know if she even knows what jacket I’m talking about.

00:15:21.700 — 00:15:21.980 · Laura

No, I.

00:15:21.980 — 00:15:22.620 · Jason

Know, I.

00:15:22.900 — 00:15:25.900 · Ramit

Know, she knows. Go ahead. Laura, what is the jacket and what happened?

00:15:25.940 — 00:15:46.170 · Laura

We were at a store, and I saw this jean jacket that I liked. I’ve been talking for a long time about getting a jean jacket to put a bunch of patches on, because I think it’d be funny to write a Vespa around like a jean jacket with patches. And I tried it on and I was like, oh, this is perfect. And then I didn’t get it because like I said, we’ve had a very expensive year.

00:15:46.210 — 00:15:55.090 · Jason

And it’s at the time, I didn’t know that she didn’t get it because of money. I thought she just didn’t like the jacket. Otherwise I probably would have talked her into purchasing it at that time. Ah.

00:15:55.970 — 00:16:10.450 · Ramit

A lot of kind of like counter signaling or pre avoidance. I don’t want to have this conversation, so I’m just not gonna bring it up. How much was the jacket? Hold on. Before we go on, look at Jason’s big smile. He’s like just wait for me. Go ahead Laura, how much was it?

00:16:10.490 — 00:16:12.090 · Laura

$78.

00:16:13.010 — 00:16:13.570 · Jason

Wow.

00:16:14.210 — 00:16:29.050 · Ramit

Wow. For everybody watching, I’m only smiling because I’ve seen their CSP. So 78, would that be? Where would that fall in your wardrobe? Like most expensive. Middle? Expensive. Where would that.

00:16:29.050 — 00:16:30.010 · Laura

Fall? Like middle?

00:16:30.050 — 00:16:32.880 · Ramit

Middle. Okay. And did you ever end up getting it?

00:16:32.920 — 00:16:33.280 · Laura

I did.

00:16:33.280 — 00:16:35.920 · Ramit

Not. Okay. How does money work in your household?

00:16:35.960 — 00:16:44.480 · Jason

We each kind of control our own money. She has her own savings, her own checking. I have my own savings. I have my own checking. Anything you buy for yourself, you just use your own money.

00:16:44.520 — 00:16:46.080 · Ramit

And what about the joint stuff?

00:16:46.640 — 00:17:02.240 · Jason

The joint stuff? Oh, well, we’ll talk about. We don’t have large conversations about a lot of this stuff, to be honest. It’s usually pretty easy, I think. Um, and so you start getting to about 10,000 or above, then we start getting more in the weeds for sure.

00:17:02.280 — 00:17:03.200 · Ramit

Give me an example.

00:17:03.240 — 00:17:22.240 · Jason

So we recently bought a new van and built it out to be like a camper van. And the total cost for us on that project came out to about 25,000. And I think everything over 10,000. I had to scrape and claw out of. Laura. Got it.

00:17:22.319 — 00:17:26.079 · Ramit

Laura, what was your experience talking about the spending on the van?

00:17:26.120 — 00:17:53.950 · Laura

Really succinctly. This is like usually how big purchases like the Van Gogh. We’ll agree that, like, yes, we want to buy a van and build it out. He’ll be like, what do you want to spend? And then I’ll throw out a number that’s not based on anything other than vibes. And then inevitably, Jason will be like, oh, and then I’ll maybe up it a little bit.

And then that’s how we arrive at like a budget, which is probably not smart.

00:17:53.990 — 00:17:55.230 · Ramit

Do you guys like this?

00:17:55.630 — 00:18:09.670 · Jason

No. I think honestly, I like some aspects of it. I’m a lot more impulsive than Laura is. Um, so without her, if it was just me, I would have spent easily 70,000. I would not have built it myself.

00:18:09.710 — 00:18:15.350 · Ramit

You enjoy the kind of back and forth in negotiation because, as you put it, you’re impulsive. Laura, do you enjoy it?

00:18:15.350 — 00:18:30.300 · Laura

I wish, like initially at the beginning when he was like, what’s your number? I felt more confident. And I knew, like, what number makes sense for like, our budget and like, What costs? You know what I mean.

00:18:30.340 — 00:18:44.140 · Ramit

Laura. In your application, you wrote something else. You wrote. Large expenses are more of a financial drain on my income. But we split everything in half instead of equitably. What do you mean by that?

00:18:44.180 — 00:19:32.780 · Laura

I make good money. He makes more. And that was just like a nod to that. One of the other things that has changed a lot since I initially wrote this, um, is like that quarter of $1 million that we paid off in debt. 200,000 of that was from Jason. So I think it’s important to say things are split in half, even though he makes a lot more than I do.

But at the end of the day, when big things like that come up, he’ll pay it off. Or like when we bought the current house that we live in, he put a lot more towards a down payment than I did. So like in that moment, for example, I felt like so many things. 50, 50. Like, why are we doing that? And then kind of as time goes on, I’m just like, maybe it evens out in the end.

00:19:32.820 — 00:19:38.460 · Jason

And now I paid off the HELOC and then Laura put money down towards your student loans. Okay.

00:19:38.500 — 00:20:13.700 · Ramit

That’s an interesting approach. I can see exactly why it feels a bit challenging day to day. If you are splitting things 5050, that can feel really expensive for you. Laura. If Jason’s earning way more because proportionally you’re paying more, but then again, then Jason is you’re coming out Jason and paying off huge joint expenses.

Okay, I get it. It’s interesting. It’s challenging, I like it, it’s different. I haven’t encountered this before, but I like a good challenge. Okay. What was it like to do the CSP together?

00:20:14.020 — 00:20:16.460 · Laura

That was the least amount of fun I’ve had in a long time.

00:20:17.620 — 00:20:18.060 · Ramit

What?

00:20:18.100 — 00:20:18.660 · Laura

I’m sorry.

00:20:18.820 — 00:20:20.140 · Jason

Yeah, it wasn’t that fun.

00:20:20.180 — 00:20:22.980 · Ramit

That was both brutal. This is like a I’m.

00:20:22.980 — 00:20:38.170 · Laura

I’m glad we did it, but it was not like. I feel like our money and our is just like all over the place. And tracking it down felt hard, but once we did it, I felt like I had a better grasp on what’s going on.

00:20:38.530 — 00:20:41.930 · Ramit

Uh, it sounds awesome to me. Hold on one second.

00:20:41.970 — 00:20:43.010 · Laura

Oh, okay.

00:20:43.930 — 00:20:44.370 · Ramit

Good job.

00:20:44.930 — 00:20:45.930 · Laura

I guess that’s the point.

00:20:48.250 — 00:20:59.570 · Ramit

For anyone who wants that. All right. We’re gonna look at your CSP right now. Let’s do it. Jason, can you read off the words in bold and the numbers next to them for this entire box, please?

00:20:59.610 — 00:21:14.490 · Jason

Assets 3.1 million. Investments 530,000. Savings 117,000. Debt 1.89 million. Total net worth 1.857 million.

00:21:14.530 — 00:21:16.130 · Ramit

All right. Cool. What do you think about those numbers?

00:21:16.170 — 00:21:25.960 · Jason

I think the portfolio is real estate heavy. And everything seems very dependent on markets and policy, which makes me feel slightly uneasy.

00:21:26.360 — 00:21:27.640 · Ramit

Okay, Laura.

00:21:28.040 — 00:21:44.840 · Laura

Yeah, same. It makes me feel like a little perplexed. I feel like the net worth number looks good on paper, but I also feel like, yeah, it’s a lot of dependance on, like, things going right and not falling apart.

00:21:44.880 — 00:21:50.640 · Ramit

Anybody feel good about the seven figures you have in net worth in your 30s?

00:21:51.080 — 00:21:51.880 · Laura

Yes.

00:21:52.240 — 00:21:54.200 · Jason

I feel good about it too. Yeah, absolutely.

00:21:54.480 — 00:21:56.040 · Ramit

Sounds depressing to me.

00:21:57.640 — 00:21:58.920 · Laura

I’m just scared.

00:21:59.280 — 00:22:00.240 · Ramit

Scared of.

00:22:00.280 — 00:22:05.240 · Laura

Like, the rug being pulled out from underneath us and things going haywire.

00:22:05.240 — 00:22:08.800 · Ramit

And how much do you need to feel safe?

00:22:09.120 — 00:22:12.920 · Laura

I’ve wondered that many times. I don’t know.

00:22:13.400 — 00:22:15.480 · Ramit

Maybe an extra 50,000.

00:22:15.640 — 00:22:20.120 · Laura

I think I feel safer if we didn’t have as much debt.

00:22:20.440 — 00:22:23.430 · Ramit

Okay, Maybe if we cut your debt by half.

00:22:23.790 — 00:22:24.550 · Laura

Yes.

00:22:25.550 — 00:22:30.830 · Ramit

And where would the money go? Let’s just say you sold off something. Where would you put the money?

00:22:31.230 — 00:22:35.870 · Laura

It’s a great point, because we’d probably put it in the stock market, which is just another risk.

00:22:35.910 — 00:23:03.270 · Jason

That sounds good to say. I don’t think any number makes me feel safe, um, when it’s invested. I just I have such little trust in our investments. Like one 2008. And we’ll lose 50% of our net worth another 2020, and we’re going to lose, you know, tons of money based on our other investments. I’ve just seen so many things that I don’t know.

I just never feel safe.

00:23:03.310 — 00:23:16.990 · Ramit

Okay. It’s not 50,000 more or even 500,000 more. It’s not moving money from real estate to a stock market. Why don’t you just sell everything and put it in your checking account? Would you feel safe then?

00:23:17.030 — 00:23:30.580 · Jason

No. Um, inflation will take care of that one, I think what does make me feel safe is I do have one source of income that is Cola based. It’s 4300 a month.

00:23:30.620 — 00:23:51.180 · Ramit

Wait wait wait, we’re getting to income. In a second, we’ll get to okay, $1.857 million in net worth in your 30s. You both told me you don’t really feel safe about it. And I’m trying to find out what would make you feel safe, if anything at all. Can I ask you both the question? What do you get out of not feeling safe?

00:23:51.220 — 00:23:54.780 · Laura

I guess it’s motivating to keep making more.

00:23:55.900 — 00:24:15.500 · Ramit

I think that’s a really honest answer to capitalism. Right? Right. We’ve been living it and breathing it, and now it’s all we know. And so we gotta work. We gotta grind. Okay, little ironic for a couple that met living in a van, but okay. And wants to retire in like a few years.

00:24:15.500 — 00:24:22.090 · Laura

But I’m not gonna lie, when you were like, what would make you feel safe selling everything and putting it in a checking account? I was like, yeah, kind of, do.

00:24:22.090 — 00:24:22.330 · Ramit

You want.

00:24:22.330 — 00:24:23.090 · Laura

To do it?

00:24:23.130 — 00:24:33.810 · Ramit

Because this could be a very short conversation. I’ll watch you log in and we could do it right now. I don’t think it’s a good idea, you know. But do you truly believe that would make you feel safe?

00:24:33.850 — 00:24:34.730 · Laura

I don’t know.

00:24:35.290 — 00:24:43.050 · Ramit

Think about this. You had that money sitting in a checking account or savings account or whatever for your student loans, right? Mhm. How often did you log in and look at it?

00:24:43.050 — 00:24:45.009 · Laura

Anytime I would log in to my

00:24:46.250 — 00:24:49.810 · Laura

finance app I’d be like oh that’s that’s nice I like that, that’s.

00:24:49.850 — 00:25:01.250 · Ramit

Yeah. Okay. So basically exactly that you logged in if you felt something and then you want to just do that forever. What’s the cost of keeping money sitting in your checking your savings account.

00:25:01.290 — 00:25:02.970 · Jason

Inflation 4% annually.

00:25:03.570 — 00:26:04.320 · Ramit

Yeah. Yeah that’s about right. Inflation. You’re actually losing money every single day because it’s not growing. But you have to take a little bit of risk. I’m trying to understand how you both think about money. That’s what I’m trying to understand, because the numbers are quite large and they will become larger and larger to a point where this is what’s going to happen.

This is what happens with people who have high incomes and or high net worth as they start off and they go, ah, I don’t feel safe. I have only $20,000 in the bank. Okay, you can make the argument, but then it becomes 200,000 and then they still make the same argument. I don’t feel safe. We’re going to need more.

And then this and that. And then the number becomes 2 million even they as they say it out loud, they’re like, this sounds crazy. I can’t even say this out loud. So they shift their feeling of being unsafe to something else. They go, well, what about the kids? Or we’re going to have to buy a new house? Or what about retirement?

And then what’s the final trump card in America for wealthy people who want to perpetuate their feeling of insecurity? What do they say?

00:26:04.400 — 00:26:06.360 · Jason

I don’t know if tax policy. Nope.

00:26:06.360 — 00:26:33.870 · Ramit

What about health care? Because in America, nobody can argue against the price of health care when you’re 89 years old. Now, all of these can be realistic. Maybe you are going to have children, or a house, or help an ailing parent or whatever. All of these can be true, but what a way to go through life. Just finding one way to feel unsafe after another for the next 50 years, I don’t know.

I’m not really into it. What do you think?

00:26:34.270 — 00:26:35.350 · Laura

It doesn’t sound great.

00:26:35.390 — 00:27:12.150 · Ramit

You came to me, I think because I talk about a rich life and I talk about how to feel good, especially in your situation where you are earning and having a lot of money. So let’s let’s try to figure out how $1.8 million we haven’t quite resolved. What would make you feel safe, but we’re starting to get some clues.

Let’s go into the income. Laura, I want you to read off your combined gross monthly income 68,235. Okay, just so everybody knows, that’s monthly, which means that annually, your gross income as a household is $818,820. Buy show of hands. Who knew that number? And Jason.

00:27:12.150 — 00:27:13.580 · Laura

Clifton, we filled out the CSP.

00:27:13.620 — 00:27:28.980 · Ramit

But not before. Okay. Jason puts his hand up. Laura does not so true to statistics, even couples earning almost $1 million a year, 50% of couples tend to know their number, although I think it’s a little higher for higher earning couples. Laura, what do you think you made as a household?

00:27:29.660 — 00:27:33.300 · Laura

Like 400,000 for 50?

00:27:33.580 — 00:27:42.580 · Ramit

So am I. Am I hearing this right? You thought that you made 400 and something thousand. The actual number is 818,000.

00:27:42.620 — 00:27:51.620 · Jason

To be fair and to stand up for a lot of that money gets directly straight into investments and it doesn’t go to any bank account.

00:27:51.660 — 00:28:03.220 · Ramit

I don’t care where it goes. It could go straight into a freaking arcade, I don’t care. That’s $400,000 a year off. Do you feel safer knowing that you make $818,000 a year?

00:28:03.260 — 00:28:06.300 · Laura

I mean, the way you’re saying that, I feel like I should.

00:28:06.540 — 00:28:07.980 · Ramit

Yes, but do you?

00:28:08.580 — 00:28:17.890 · Laura

I don’t, because I know that a lot of that is like income from our rentals. That just goes to paying a mortgage, which is debt.

00:28:18.050 — 00:28:21.250 · Ramit

Maybe if it was like 2 million a year.

00:28:21.290 — 00:28:30.770 · Laura

No. I think maybe if like the house was paid off or something, and it was like actually income that didn’t straight up just go to pay off debt that we owe.

00:28:30.930 — 00:29:02.170 · Ramit

That’s possible. And I think when you have a bit of a complex financial situation, it can all just feel a little unwieldy. And part of what I can help you do is cut through all the noise. That’s why the CSP is actually design the way it is, because even for a couple in your somewhat complex financial situation, you really need to know like a few key numbers.

Here’s a key number. You make $800,000 a year. Yeah. Some of it goes here and some of it goes there. But just on its face, what does that tell you, Laura? That you make $800,000 a year.

00:29:02.650 — 00:29:04.250 · Laura

So we’re very high earners.

00:29:04.570 — 00:29:06.490 · Ramit

Yeah. Jason, what does it tell you.

00:29:06.490 — 00:29:10.640 · Jason

That since a lot of it’s W-2, It’s highly taxed.

00:29:11.080 — 00:29:11.960 · Ramit

Jesus.

00:29:14.680 — 00:29:15.080 · Laura

Oh, God.

00:29:15.120 — 00:29:21.480 · Ramit

That’s everything you notice. About $800,000 is it’s highly taxed. That’s it. Not like we’re wealthy.

00:29:21.520 — 00:29:25.560 · Jason

Comes out. Yeah, but that comes out to like, 400 some. Gross.

00:29:25.680 — 00:29:35.760 · Ramit

Wow. That’s a real tough hit. It actually comes out to $497,000 net. So $500,000. That’s got to be tough. How do you make it work on only $500,000?

00:29:36.000 — 00:29:39.640 · Jason

I didn’t say it was tough. I’m not gonna fight that. I know it’s not tough.

00:29:39.640 — 00:29:48.000 · Ramit

I love it, I love with high earners because, like, they all, they they play the game with their other rich friends, and then they come here and I’m like, you’re rich. Please.

00:29:48.000 — 00:29:50.520 · Jason

I think Laura thinks it’s tough. A little more than I do.

00:29:50.560 — 00:29:51.680 · Laura

I don’t think it.

00:29:52.320 — 00:29:54.280 · Ramit

Oh, Laura, get him back. Go ahead.

00:29:54.440 — 00:29:55.080 · Jason

Baby.

00:29:55.520 — 00:30:14.590 · Laura

I don’t think it’s tough. The reason I wanted to be here was to make sure that it’s, like. Enough. For what? Like for retiring very early. I feel like it’s a very, like, Lucky privilege thing to be able to do if we are able to do it. So I just want to know if we make enough to do that specifically.

00:30:14.630 — 00:30:22.870 · Ramit

Totally hear you. All jokes aside, it is great to hear you both acknowledge that you do make a lot of money. You do. What are the two of you do for a living, Jason?

00:30:23.030 — 00:30:24.150 · Jason

Uh, software engineer.

00:30:24.190 — 00:30:25.470 · Ramit

Okay. Laura.

00:30:25.510 — 00:30:27.150 · Laura

Marketing at a tech company.

00:30:27.190 — 00:31:29.980 · Ramit

Okay, great. Laura, you make $20,000 a month. Gross. So, like 240 K, which is an awesome income. And, Jason, you make $48,000 a month. So this is big money, right? It’s great. It’s awesome. I love high earners. Nobody trips and falls into $800,000 of income. You have to be very, very good at what you do. So I totally appreciate that.

And Laura, your question is apt. Hey, it’s great that we make this much money, but we’re trying to do something highly unusual retiring in our early 40s. Can we actually do it? We’ll walk through the numbers. We’ll find out if you can. But I want to encourage you to also add another element beyond just the math.

Because if it was just the math, honestly, I feel confident you could have figured it out on your own. I will help you do it. But it’s not just the math. What if you were able to mathematically do it and you retire an X number of years and you spend the rest of your life feeling scarce about money.

00:31:29.980 — 00:31:31.540 · Laura

That would be very unfortunate.

00:31:31.780 — 00:31:47.140 · Ramit

Yeah, that’s misery. Misery. So we have to account for that part. And that’s why I want you to start thinking about the way you feel. Today is a very good predictor of how you’re going to feel tomorrow, unless you rewire the way that you interact with money.

00:31:47.340 — 00:32:04.300 · Laura

I think in all of our conversations about possibly retiring early, like I think we’ve grossly underestimated how difficult it will be to leave stable jobs. I don’t really feel like it’s realistic to be like, I will leave my job when I’m 42 or whatever.

00:32:04.340 — 00:32:04.660 · Jason

I.

00:32:04.660 — 00:32:06.340 · Laura

Got when I feel this way.

00:32:06.700 — 00:33:31.890 · Ramit

Good. I hope everybody is listening right now. What you just said, Laura, is strikingly honest, which is I can be in a household that’s earning $818,000 a year. I can have a supportive partner, and even still, my money psychology probably will not allow me, even if the math justifies it, to retire and have a healthy outlook unless I make some changes.

The feeling of safety with money is one of the most elusive feelings there is, and we actually don’t even know how to understand it. Many of us come up with these facile responses like, oh, I just need 50,000 more dollars. Then we find out after going through their CSP, they actually make $80,000 more than they thought.

And I go, you feel safe? They go, no, I don’t know why, I know why because the way you feel about money is not connected to the amount in your bank account. That’s what we think, though. We come up with these easy answers, but we actually don’t know why we feel this way. But it’s got to be mystifying for you watching this episode and seeing a couple making so much money and not able to answer the question, what will make me feel safe?

Don’t get mad. Don’t become infuriated. Get curious. Say wow, if this is a very reasonable couple making almost $1 million a year and even they can’t figure out how to feel safe,

00:33:33.090 — 00:33:53.010 · Ramit

what does that say about me? Maybe it’s not about the numbers alone. Maybe we’ve got to totally change and transform the way that we think about money, the way that we behave with money, and ultimately the way we feel about money. Maybe there’s a level to this podcast that I haven’t been aware of. I’ve been looking at the numbers and getting mad because I don’t agree.

00:33:53.010 — 00:33:54.890 · Ramit

With the way that they distribute their investments.

00:33:54.930 — 00:35:12.590 · Ramit

Maybe there’s something much deeper. That is what I want to challenge you to find in each of these episodes, including this one. Let’s take a look at your to do list. How many things are on there that you’ve been putting off for nine months or more? I’m talking about important stuff like booking doctor’s appointments and getting your estate plan in order.

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00:35:28.430 — 00:36:31.700 · Ramit

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00:36:33.220 — 00:36:39.940 · Ramit

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00:36:45.020 — 00:36:50.580 · Ramit

I want to go through the rest of your CSP just so we can get a comprehensive look here.

00:36:50.580 — 00:37:01.730 · Ramit

So again we have gross income of 68,000 a month. Net is 41,000 a month. And if we look at your fixed costs, what is that number, Jason?

00:37:01.770 — 00:37:02.690 · Jason

41%.

00:37:02.730 — 00:37:12.210 · Ramit

41%. Some of the lowest numbers I’ve seen. I have no comments. If you want to spend money on whatever it is in here. Go ahead. You rent or you have a mortgage.

00:37:12.650 — 00:37:12.970 · Jason

We have a.

00:37:12.970 — 00:37:28.690 · Ramit

Mortgage. You have a mortgage. It’s approximately 18% fine and that’s $12,500 a month. Great. I love it. That’s awesome. Moving along. Investments are set. What’s that number?

00:37:28.730 — 00:37:31.250 · Laura

Laura 54%.

00:37:31.330 — 00:37:56.360 · Ramit

54%. And of course, I want to scroll up to your 401 K’s, which, not surprisingly, you are. It appears close to maxing them out. So you’re putting a lot of money in there. It’s 40,000 a year, plus $8,000 a month in your taxable account and then $13,000 a month. Additionally, that’s $22,000 a month you’re investing plus your for one case.

What do you think about that?

00:37:56.400 — 00:38:00.560 · Laura

I think it’s great. We’re saving a ton of money. I think it’s good.

00:38:00.600 — 00:38:05.200 · Ramit

It’s great. That’s exactly how it should be. Listen up everybody.

00:38:05.200 — 00:38:31.600 · Ramit

I know the vast majority of people are not going to earn $818,000 a year, but you don’t need to. Here’s the point. When you make a lot of money, bread still costs the price of bread you are making more like in a super linear way. You’re making way more than your fixed costs. Therefore, what should you do? You should be saving more, investing more, and yes, probably spending more.

So already I like what I’m seeing. You are investing.

00:38:31.600 — 00:38:32.400 · Ramit

Super.

00:38:32.400 — 00:38:55.310 · Ramit

Aggressively when you’re making a huge amount of income. This is the way you want to treat your investments. All right, let’s keep moving along because I’m excited. Savings at 2%. That’s only $1,000 a month. I already know why. Because if we scroll up, your savings are at $117,000. So you notably said, hey, we already have like 6 or 7 months of savings here.

We don’t need to put more in savings, right?

00:38:55.510 — 00:38:57.150 · Laura

Yeah, that was the conversation.

00:38:57.150 — 00:39:03.590 · Ramit

Great. Perfect. Personally, I would do a little bit more because when I have a super high income, I’m like, let’s just check every box. I’ll make it 12 months.

00:39:03.630 — 00:39:05.790 · Laura

We’ve discussed this. We’re gonna get it to 12 months.

00:39:05.830 — 00:39:10.910 · Ramit

Okay? I know you can. It wouldn’t take much. And then let’s go down to guilt free spending. What is this number?

00:39:10.910 — 00:39:11.710 · Jason

3%.

00:39:11.750 — 00:39:14.190 · Ramit

Is that true? You’re spending 3% on guilt free spending.

00:39:14.190 — 00:39:16.230 · Jason

I don’t know if that’s highly accurate.

00:39:16.270 — 00:39:17.550 · Ramit

What do you guys do for fun?

00:39:17.550 — 00:39:21.630 · Laura

We go to plays, comedy shows, go out to dinner.

00:39:21.710 — 00:39:22.590 · Ramit

Sounds great.

00:39:22.630 — 00:39:24.750 · Jason

Concerts, camping a lot.

00:39:24.790 — 00:39:31.830 · Ramit

I think maybe you miscounted. We’re going to look at your actual spending in monarch, but so far, what do you take away from this CSP?

00:39:31.870 — 00:39:35.550 · Laura

Do we have a lot of money and we save a lot of money and invest a lot of money.

00:39:35.550 — 00:39:37.510 · Ramit

I agree, what else? Jason.

00:39:37.550 — 00:39:39.670 · Jason

Yeah, we can spend more money on fun stuff.

00:39:39.710 — 00:39:48.710 · Ramit

If the guilt free spending number is true, then yeah, I mean 3% is like way under spending. What else do you notice? I mean, are you in a healthy financial position?

00:39:48.790 — 00:39:49.270 · Jason

Yes.

00:39:49.900 — 00:40:11.780 · Ramit

Good, I agree, I have no comments. This is an incredible CSP, incredible focus. Even though you are indeed spending way beneath what you make, way beneath your fixed cost of 41%. Looks like you have a really nice life, you know, just based on your mortgage. It looks like you have a nice place.

00:40:11.860 — 00:40:14.660 · Jason

That’s the mortgage for including our rentals as well.

00:40:14.700 — 00:40:16.500 · Ramit

So how many properties?

00:40:16.580 — 00:40:18.020 · Jason

It’s a single triplex.

00:40:18.020 — 00:40:20.980 · Laura

So we have a triplex and then we live in a single family home.

00:40:21.020 — 00:40:33.580 · Ramit

Okay. Can we look at some of your actual expenses like line by line? Because you worked with our partners at monarch, you imported your information. We have access to your accounts and transactions. Did you happen to log in and look at any of it?

00:40:33.620 — 00:40:35.340 · Laura

Oh, we log in a lot.

00:40:35.380 — 00:40:36.300 · Ramit

Great. No, I love that.

00:40:36.300 — 00:40:41.340 · Ramit

And what did you learn as you went through monarch and looked at the transaction level?

00:40:41.340 — 00:40:51.730 · Laura

I think what I learned is that we spend around 4 to $5000 on like a typical month. Again, this year has been very atypical because we’ve been spending a lot.

00:40:51.770 — 00:40:53.610 · Ramit

That would be like your guilt free spending number.

00:40:53.650 — 00:40:54.890 · Laura

Right, I think so.

00:40:54.930 — 00:40:57.850 · Ramit

Okay. Like eating out plays, concert, that kind of thing.

00:40:57.890 — 00:41:02.050 · Jason

Now that includes groceries and utilities and. Yeah.

00:41:02.050 — 00:41:09.170 · Ramit

All right, well let’s look. So you planned to make 41,000, but you actually made 48,000 that month. How’s that?

00:41:09.210 — 00:41:16.730 · Jason

Um, one of the rentals is a short term rental with variable income per month. So that’s extra income from the rentals.

00:41:16.730 — 00:42:21.840 · Ramit

It’s great. I’m starting to already gather clues. I think I see what’s going on. Let’s continue. Look, you made 7000 extra in a month. That’s fantastic. Let’s go down to fixed costs. You planned for it to be 17,000, but it was actually only 11,000. So your debt payments, you paid extra towards your debt.

That’s basically the extra money you made. And miscellaneous. Okay, this actually made me laugh because this is when I knew I was dealing with a couple. that is pretty diligent about their money. Our CSP gives you 15% for miscellaneous spending. You actually only spent $7 untracked, which is hilarious.

That’s like the lowest amount. I spend more for a coffee. So let’s look at what you spent $7 extra for. Your massage place was $1. What is that? Probably some pre authorization charge or something. Whatever. And then fees $5. I hate financial fees but in this case okay 575 for some ATM fee or something like that.

Whatever other fixed costs. You spent a little bit more on transportation than you thought. What happened?

00:42:21.880 — 00:42:23.880 · Jason

Yeah, we’re road tripping this month.

00:42:23.920 — 00:42:50.630 · Ramit

Okay, great. Here’s the thing. You all can easily afford all this stuff. You have so much flex room that I think it’s amazing. Let’s look at your guilt free spending, because I think this is quite illustrative here. So you had planned about $1,000. That’s what we saw in the CSP, but actually it was $5,764 that month.

so approximately five times more than you had planned. So then the question is what did you spend on?

00:42:50.670 — 00:42:56.230 · Jason

During this road trip, we did go to the nicest restaurant. It’s like one of the most expensive restaurants we’ve ever been to.

00:42:56.270 — 00:43:41.910 · Ramit

Okay, so you spent more on eating out. Fine. Let’s just actually look now at the overall spending in shopping, because I think this also tells us a lot. We can see here that for the last several months, just shopping alone, which is part of your guilt free spending was $4,000, $2,000, $2,700, $3,000. So I think obviously you miscounted on your CSP.

Let’s just put it at 6000. Okay. Watch the number here. That 3%. It’s going to tell us everything we need to know. At $6,000 a month you’re at 14%. Typically I recommend you spend 20 to 35% on guilt free spending. You are at 14%. What does that tell you just in general.

00:43:41.950 — 00:43:51.620 · Laura

That we have room to spend more. I love my life like we do a lot of cool fun together. We’re like, if I died tomorrow, I would not regret something that I didn’t do.

00:43:51.660 — 00:43:53.460 · Ramit

Why retire in your 40s then?

00:43:53.460 — 00:44:02.220 · Laura

Because if we had more time, if we traveled, we would say somewhere for like a month and get to do all of the things we wanted to do instead of like, come home to go to work.

00:44:02.220 — 00:44:04.020 · Jason

Never have the Sunday scares.

00:44:04.340 — 00:45:04.820 · Ramit

I think it’s pretty cool that you’ve built the potential to retire, and we will definitely look at some scenarios so that you can decide on what sounds right to you. But where I am right now is even though it’s not $1,000 you’re spending on guilt free, it’s $6,000 a month, which is a really healthy amount to spend at that number.

Because of your high combined income, you’re still under even the lowest recommended amount for guilt free spending. To me, that’s pretty cool. Tells me I have room to play with if I’m you. Let’s keep looking. So we have shopping. Treat yourself. That’s a good category. 400 bucks a month on. Treat yourself.

Great. Wonderful. I have no comments. I think it’s great. Let’s look at your accounts. So here we have a net worth of 1.8 million. As we saw cash. You got $132,000 in cash. We sort of talked about that. That’s fine. Credit cards, 3900 bucks. I assume you pay that off every month?

00:45:05.340 — 00:45:05.940 · Jason

Yes.

00:45:05.980 — 00:45:34.460 · Ramit

Yep. And investments at 542,000. So we have a taxable account. That’s because you maxed out all your other stuff and then you have 401 equity stuff etc.. This all looks fine. No comments. Back down to loans. So you have 972,000 for one mortgage. And then you have 55 K for the student loans and 830 for another loan just called account.

What’s going on here.

00:45:34.460 — 00:45:37.020 · Jason

That one’s also mortgage okay.

00:45:37.100 — 00:45:42.410 · Ramit

Real estate. You have two properties for a total of $3 million. Right.

00:45:42.450 — 00:45:42.850 · Laura

Assets.

00:45:42.850 — 00:45:46.490 · Ramit

Yeah. All right. Who decided to get into real estate out of the two of you?

00:45:46.810 — 00:45:47.770 · Laura

Who do you think?

00:45:47.810 — 00:45:48.490 · Ramit

Yeah.

00:45:48.770 — 00:45:53.610 · Jason

She cried when we put our first offering on the house. But she also threw up when she bought her first car. So she.

00:45:53.610 — 00:45:53.890 · Laura

Did.

00:45:53.930 — 00:45:54.530 · Ramit

What? What?

00:45:54.570 — 00:45:56.290 · Laura

Spending large sums of money.

00:45:57.890 — 00:45:58.610 · Laura

Freaks me out.

00:45:58.650 — 00:45:59.210 · Ramit

Why?

00:45:59.770 — 00:46:01.690 · Jason

Oh, so sorry for putting you on blast, I love you.

00:46:01.810 — 00:46:02.650 · Laura

No. It’s okay.

00:46:02.690 — 00:46:04.450 · Ramit

Why’d you throw up buying a car?

00:46:04.490 — 00:46:12.210 · Laura

It was like my first car. It was just like the first time I took out a loan for a lot of money. And it was just, like, scary.

00:46:12.250 — 00:46:39.960 · Ramit

This is a curious, because I know that making a huge purchase can feel uncomfortable, but throwing up and crying, all jokes aside, it’s actually like a really interesting clue of what’s going on here. It tells me that even though your income has certainly grown by multiples since then, still some of the same feelings are there.

And that’s what I want to get to the root of. Laura, take me back in time. What do you remember your family saying about money when you grew up.

00:46:40.320 — 00:47:04.840 · Laura

My family didn’t really talk about money when I was growing up. Grew up in suburbia in Southern California. Had a pretty idyllic childhood and then didn’t really think about money until 2008. Like, my parents lost their house. I think the first conversation about money that I ever had with my parents was my dad being like, we can’t pay for your college.

And I was like, that’s fine, student loans. But it is fine.

00:47:04.960 — 00:47:10.320 · Ramit

Where were they when they had this conversation with you? And what was the tone of the discussion?

00:47:10.680 — 00:47:49.670 · Laura

Oh, my dad was like distraught. Like, he wasn’t like, crying or anything, but he could just tell that he was just, like, kind of a shell of himself. He was just, like, upset about it, obviously. And I know he was upset about it until he died because like when I was talking to him, like when he had cancer, I was like, I really wanted to like milk.

The last couple months I had with him. And I was asking him, like, do you have any regrets? Like, I wanted to, like, learn stuff from him. You know, and like, one of his main regrets he had was like, he told me, I wish I could have paid for your college. And I was like, that’s such a sad thing to be thinking about.

You know, like, it doesn’t matter.

00:47:50.070 — 00:47:51.630 · Ramit

Why? Why does it not matter?

00:47:51.670 — 00:48:07.190 · Laura

I mean, in the grand scheme of things like paying for somebody’s college, it’s not a big deal. It’s just like you’re not the only father that wasn’t able to pay for college for their kids after 2008. That’s not a failure on your part.

00:48:07.230 — 00:48:10.270 · Ramit

Yeah. Why do you think it meant so much to him?

00:48:10.670 — 00:48:18.510 · Laura

He wanted to give us everything we wanted and to care for us. And that was something he took a lot of pride in.

00:48:18.550 — 00:48:25.150 · Ramit

Yeah. You see any connections to your own relationship with money and how your dad felt about money later in life?

00:48:25.190 — 00:48:40.820 · Laura

I mean, the main connection I’ve always drawn between, like, what my parents went through with money and what I went through with money is like it made me realize that, like, things can go south very fast and it’s not like a failure on your own part.

00:48:40.860 — 00:48:54.139 · Ramit

Laura, you said that was an interesting thing for him to almost fixate on, because in the grand scheme, college doesn’t really make sense. Couldn’t I say the same thing about a car, or a jean jacket or

00:48:55.140 — 00:48:57.660 · Ramit

a van that you both bought?

00:48:57.700 — 00:49:01.260 · Laura

Yeah, that’s an astute observation.

00:49:01.780 — 00:49:28.620 · Ramit

Part of why I wanted to talk to you was to be able to help see money in a different way, to be able to put things in a different perspective. Because when you grow up in a certain way and when you make money and then make a lot of money and then have a partner who makes a lot of money. You actually have to change the way you think.

Otherwise you will be living the same way you kind of grew up, and it’s actually a shame it’s playing small. So that’s what I’m hoping to be able to do.

00:49:28.780 — 00:49:58.970 · Laura

That’d be great. I feel like Jason historically has been very good at that, Like when we first started dating, we were not making this kind of money. Like, I actually remember a conversation I had with him where I was like, I think, like at most maybe in my career, I’ll be able to like pull in $80,000 a year.

And he was like, no, that’s not true. Like, you should dream bigger. He, like always, just seems to know that, like, things can be bigger and better. And it’s I don’t know why I don’t have that, but it would be great to get to that point.

00:49:59.010 — 00:50:04.490 · Ramit

But okay, that’s good to know I appreciate that. Um, Laura, is your mom still alive?

00:50:04.610 — 00:50:05.690 · Laura

She is. Yes.

00:50:05.730 — 00:50:07.330 · Ramit

Okay. How is she doing with money?

00:50:07.650 — 00:50:25.090 · Laura

She’s on. Like she’s on Social Security. When my dad passed away. He didn’t leave, like, a ton. So when we think about, like, retirement and stuff, like, that’s part of it, I want to make sure that she’s obviously like, okay. And like.

00:50:25.850 — 00:50:27.530 · Ramit

Yeah, you talk to her about money.

00:50:28.690 — 00:50:37.680 · Laura

Yes. Not in the same way I’m able to talk to Jason about money, though. She doesn’t want me in her business a lot. I don’t think that feels great to her.

00:50:37.880 — 00:50:43.880 · Ramit

Okay, great. Jason, what about you? If you rewind back to your childhood, what do you remember your family saying about money?

00:50:44.520 — 00:51:16.960 · Jason

Not having it. So I started out with a single mom, two kids who didn’t. She didn’t have a lot of money. And then later on in life, she married a military guy. And we got, um, as much money as, like, um, a good enlisted military person makes, uh, with supporting a family of four. So we got a house in the suburbs, uh, for my teens, and it was good.

And then, uh, college, like, wasn’t something that was really ever an option, so did not go to college and then, uh, joined the military.

00:51:17.000 — 00:51:21.800 · Ramit

Oh, you didn’t go to college. You joined the military. Did you join the military because of your stepdad?

00:51:21.920 — 00:51:22.680 · Jason

Uh, yes.

00:51:22.760 — 00:51:25.600 · Ramit

Got it. Okay. How long were you in the military?

00:51:26.120 — 00:51:27.400 · Jason

14 years.

00:51:27.440 — 00:51:31.470 · Ramit

So what’s that like until, like your early 30s?

00:51:31.510 — 00:51:36.750 · Jason

Yeah, I got out in 2020, and that’s when I went to school.

00:51:36.750 — 00:51:37.990 · Ramit

What kind of degree did you get?

00:51:38.030 — 00:51:43.230 · Jason

I got a degree in design with a minor in, uh, software engineering.

00:51:43.270 — 00:51:49.430 · Ramit

Nice. All right. Wait, what was your income trajectory? Just give it to me year by year. This is crazy.

00:51:50.510 — 00:52:04.470 · Jason

So I was making probably about 80 K when I was in the Navy. From getting out to now, I pretty much doubled or tripled it every year since. I’ve done well with myself as an engineer. I’m way better than the Navy. Let me 80.

00:52:05.150 — 00:52:12.350 · Ramit

That’s year 1163 2640 there we go. Basically that.

00:52:12.550 — 00:52:13.190 · Jason

Yeah.

00:52:13.430 — 00:52:14.710 · Ramit

That’s insane.

00:52:15.230 — 00:52:39.220 · Jason

But I do know that that was a very, um, not normal pass. Yeah. Takeaway I would like to actually give is never put yourself into a career with that has a roof that has a ceiling. Like you can only make but so much when you’re in something like the military. Like it doesn’t matter how hard you try, you will not make more money.

I don’t believe in limiting yourself like that if you have the ability to.

00:52:39.220 — 00:52:58.740 · Ramit

Not this actually very powerful wisdom, the idea that if you believe in yourself, if you believe that you can perform at a high level, then why would you put yourself in a career or a role where there is a natural, unbreakable cap? Amazing. That’s really valuable.

00:52:58.780 — 00:53:07.140 · Laura

I will say I’m really proud of him. Like that lesson for him was so hard to learn, like he was agonizing over the decision of like, should I stay in the military? Should I get out of the military?

00:53:07.140 — 00:53:16.980 · Jason

And I would have never got out if I didn’t have Flora as my breadwinner at that time. So I was able to get out and go to school while she was the breadwinner for plenty of years.

00:53:17.140 — 00:53:51.330 · Ramit

That’s sweet. I love the way that the two of you compliment each other and recognize each other. It’s really cool. It’s really beautiful. Laura, you just really growing your income beyond what you ever thought possible. Jason growing up, single mom, going to the Navy for 14 years and within four years.

Making this kind of money again does not happen by accident. A lot of hard decisions made, a lot of luck, a lot of hard work, and what you just shared is a lot of partnership as well. It’s like, wow, a lot of things had to go right in order for that to happen.

00:53:54.170 — 00:55:09.360 · Ramit

I would like to take my positive feelings about your stories, and I’d like to almost pass it along to you in the way that I would like for you to to feel really good about money. Really good. You know, I grew up a middle class family, my parents, immigrants, and I always felt I would be, like, financially successful.

And it happened and I’m really grateful for it. I would like for the two of you together to be able to say like, damn, look at the journey we went on, each of us and then together and like, gosh, for us to be able to buy a van or to be able to retire or to even be able to talk about retiring, what an amazing position that we are in in order to get there.

Probably your money needs to become a little simpler. Probably you need to change the way that you think about money and talk about money and ultimately feel about money. But you have the right raw ingredients for sure. What is the vision for your rich life in retirement? I know you’ve told me about being able to travel and stay here and there for a month and kind of do what you want.

I appreciate that. What are some of the options that you might be willing to go through in order to retire early?

00:55:09.400 — 00:55:29.510 · Laura

We have a lot of different ideas about what we could potentially do from, like, let’s sell the house we live in and just live in the van and be on like an extended road trip for like a year or two. Everything from that to let’s like, move to Spain for a couple of years.

00:55:29.550 — 00:55:41.110 · Jason

The vast majority of scenarios, almost all of them, include selling our current primary residence and downsizing a bit. I think we’ve come to agree and said, we don’t need this many bedrooms for a retirement home.

00:55:41.150 — 00:55:41.550 · Ramit

Where would.

00:55:41.550 — 00:55:56.750 · Jason

You live? San Diego is one option, but it’s very expensive. In Nevada it’s another option. Spain is another large option. And then part of what she said before about driving around in the van, that like that would be like the pre-retirement of driving around and trying to decide where to settle down.

00:55:56.790 — 00:55:58.830 · Ramit

Got it. What about the rental property?

00:55:58.870 — 00:56:21.900 · Jason

It’s a great home and we can live in it. And one of the units can still just rent out the other two. And to me personally, I would like to hold it forever as it makes me feel comfortable. That’s one of those things that I’m like, with this I am comfortable. Like we can lose everything. But if we have this and just a small amount of time that I’m kind of guaranteed, then we can survive anything.

And that’s my safety net. Great.

00:56:21.940 — 00:56:27.780 · Ramit

There’s a lot of options. Yeah. What does it feel like when you think about the options? Does it feel great? Does it feel overwhelming?

00:56:27.820 — 00:56:41.100 · Jason

That one. It’s the overwhelming one. Because when you retire, when you pull that trigger, you don’t go back. It’s not like I’m like, oh, I’m just gonna go back to my old company and just I’ll come back, back in real fast and like and not saying it’s impossible, but it’s difficult.

00:56:41.140 — 00:56:42.300 · Ramit

And Laura, what about for you?

00:56:42.340 — 00:56:47.860 · Laura

It feels amazing to even be able to, like, talk about something like this. Like.

00:56:47.900 — 00:56:48.460 · Jason

Yeah.

00:56:48.460 — 00:56:58.380 · Laura

I never would have dreamed this for myself in my 20s. But like I was saying before, I don’t want to do that unless I’m 1,000% sure that we can.

00:56:58.420 — 00:57:11.780 · Ramit

If I can just ask this question, what if this were not an irreversible decision? Like, what if you could lower the stakes of this decision? Because right now it feels existential?

00:57:12.020 — 00:57:40.730 · Laura

It does. I was just thinking, like in a lot of different scenarios that we’ve talked about when we talk about retirement, I always say I don’t mind getting a part time job at a bookshop. And then Jason’s like, no, like defeats the entire purpose. But to me, I’m like, it’s like a transition. Like, I can, like, work at a job that’s not like, doesn’t feel super high stakes.

And then like, you know, like you transition into living a different life.

00:57:40.810 — 00:58:53.170 · Ramit

I like that that’s a great example of lowering the stakes. Lowering the stakes could be, hey, instead of doing this, burn all the boats. We are going to do it more gradually. We are going to take a one year sabbatical or three month sabbatical. We are going to travel for two years. We’re going to give ourselves a very generous amount of money, and then we are going to regroup and we’re going to answer these five questions.

Do we still like it? Do we still not? Da da da da da da. And if we aren’t loving it, we’re going to go back and get another job Understanding that we may not make as much as we are currently making, but maybe the possibility is we both go or one of us goes back to work. Speaking of which, another lowering the stakes approach is one person stops working for a while.

I don’t know if this applies to you or not. We’ll play with some scenarios, but existential is scary. I always ask myself for big questions how do we lower the stakes? It’s just a good framework to interrogate these big life decisions. Okay, so you want to know, can you retire in your early 40s? Like that is the primary reason that we are talking today, right?

00:58:53.530 — 00:58:54.130 · Laura

Mhm.

00:58:54.210 — 00:59:12.010 · Ramit

All right. Well I told you I’m going to give you some crisp answers to it. I am Laura in your application you wrote quote, it seems like we’re living in two different realities. We’d like to know whose version is closer to the truth and come up with a retirement plan based on what is actually possible.

00:59:12.210 — 00:59:14.250 · Laura

Is that we. And it was just me.

00:59:14.890 — 00:59:16.000 · Ramit

Right? We are.

00:59:16.000 — 00:59:18.400 · Jason

Living. Now hearing this. All right.

00:59:18.680 — 00:59:44.960 · Ramit

I did want to help you see some different realities, some different scenarios. So we shared your financial details with our partners at Fassett. We gave them your CSP, your cash flow, assets, investments, liabilities and rental information. And I’m going to show you three different scenarios. I’ll give you a lot of details here.

Facet found that all three are financially viable. Are they good? All three.

00:59:46.000 — 00:59:49.200 · Ramit

Okay, Laura, I see the look on your face. What is that look?

00:59:50.440 — 00:59:51.280 · Laura

Gaby.

00:59:54.640 — 01:00:07.240 · Jason

Before this, she told me she’s like, one of the things she expected was we’re gonna. She said we’re gonna meet with our meet, and he’s just gonna go. You’re crazy. Like there’s not a chance that you could ever retire. That’s like. Laura. That’s not going to happen.

01:00:07.280 — 01:00:09.560 · Ramit

Laura, I noticed that you’re tearing up here.

01:00:12.000 — 01:00:15.390 · Ramit

Take a second. We’re in no rush. Take as long as you need.

01:00:16.550 — 01:00:16.950 · Laura

All right.

01:00:22.350 — 01:00:22.910 · Laura

Hey. I’m back.

01:00:23.870 — 01:00:28.110 · Ramit

I don’t mind you crying, I appreciate it. What are you feeling right now?

01:00:28.190 — 01:00:32.150 · Laura

It’s like joy. Just very like and like. Relief.

01:00:32.670 — 01:00:38.750 · Ramit

Relief? Yeah, yeah. What’s amazing is we haven’t even gotten to the scenarios, but it’s just.

01:00:38.790 — 01:00:39.870 · Laura

Seems like any.

01:00:41.950 — 01:00:50.750 · Ramit

It seems like just hearing that three scenarios are possible really reached you. It affected you.

01:00:50.790 — 01:01:03.270 · Laura

Yeah. I also feel like a little bit kind of bad because this is stuff that Jason has been telling me, like he’s like, I engineered this thing for, like retirement scenarios. Like, we can do this.

01:01:03.910 — 01:01:54.500 · Ramit

This was quite a moment. I haven’t even gotten to the three scenarios that facet prepared for this couple. All I have said is facet found each of the scenarios financially viable and she cries. It’s such a beautiful moment. It’s also so revealing, this idea that there’s been so much tension bottled up, so much that finally somebody comes along.

We’re sitting in different cities and somebody you’ve just met a couple of hours ago, and he says, all three scenarios work and you cry. It tells me that just hearing you’re going to be okay is such a powerful message. It also tells me,

01:01:55.740 — 01:04:24.230 · Ramit

fortunately or unfortunately, that sometimes hearing it from your own partner doesn’t work. And although it’s usually a man who agrees with me, here we have Laura, a woman who agrees with me, even though her partner has been trying to tell her this for years. I don’t want to see people bottling up anxiety.

I actually don’t want to see him bottling up anything. If you want to cry, cry. I love it. If you’re angry, be angry. We’ve got to be able to express the way that we feel, and it feels kind of surreal for a guy like me who was not taught to express my feelings, to be saying that now. That’s part of my journey. That’s why I love what I do, because I grew up.

Go look at my old videos. I had no emotion. This is how I talked. Why won’t you put me on TV? I’m so happy right now. I have no emotion. It took a lot of self work to be able to communicate how I was feeling, and so I do love that Laura cried. I love that she expressed herself going forward. I would love to see less bottling up of emotions and more expressing them consistently over time.

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01:04:26.870 — 01:05:35.980 · Ramit

For 20% off. So I appreciate the trust you giving me. I do want to walk you through some of the scenarios, and I would like you to know, again, all of these scenarios are financially viable. It’s actually up to you to choose which one feels right to you. Okay. There is no right decision. It is what is right for you.

So here are some of the assumptions that they made. You can always change these assumptions on your own, but I’ll just give it to you quickly. They assume that income and expenses increase 3% annually. Spending is based on your current CSP, including $3,000 a month for travel. That’s great. Student loans 576 a month paid off by 2045.

Early retirement health care is $1,200 per person per month until 65 before 59.5. Retirement is funded through rental income and taxable investments. Jason’s pension begins at 65. Social security at 67. Investments grow and gradually become more conservative as you age. Plan runs through age 95.

And therefore I would like to show you three different scenarios. Scenario one retire at 45.

01:05:37.420 — 01:06:01.900 · Ramit

Move into the rental property and travel via van. Let’s go through it. You move into one of the units. Laura’s mom moves into one of the rental units, which would reduce the income. You would cut your spending by $3,500 per month, and your net worth at age 95 would be $3 million.

01:06:02.300 — 01:06:09.570 · Jason

Which means that we would have too much money because I plan to add in the 90s. I would like to have $0 zero.

01:06:09.770 — 01:06:59.930 · Ramit

Yeah, we want to always have a little healthy buffer, but if you’re telling me 3 million is too much to end up okay, I totally respect that. Yeah. The trade off here is you would retire. You would retire earliest and you would support mom, but you would have less spending flexibility. Okay, that’s option one.

Scenario two retire at 47. Sell your current house. Move to Vegas. So in this case, you work two more years, sell your house, buy a $600,000 Vegas home outright, keep your rental, including one unit for Laura’s mom. You could increase your spending by $3,000 a month, which is a total of about almost $25,000 a month in spending.

Your net worth at 95 would be $4.69 million. The trade off here is you’d work two more years, but you’d have a lot more spending flexibility.

01:07:00.330 — 01:07:05.200 · Jason

Are we able to adjust these like with like large things.

01:07:05.240 — 01:07:54.080 · Ramit

Yeah. Of course these are scenarios given based on the the assumptions that facet ran, you know. But you can totally change these and play with them on your own. Let’s go to scenario three. So you work until 55 while maintaining your current lifestyle and property setup, including support for Laura’s mom.

You could increase your spending by $5,000 a month, which translates into about almost $32,000 in monthly spending. Your net worth at 95 would be $9.4 million. And the trade off here is you would have the most financial freedom, but you would have ten more years of work from scenario one. Okay, so Jason shaking his head already, here’s some questions to ask.

Just like Rapid Fire is retiring at 45 worth cutting $3,500 a month in spending.

01:07:54.080 — 01:07:56.800 · Laura

How much did you say the monthly spending would be?

01:07:56.920 — 01:08:03.310 · Ramit

Good question. In scenario one, you would have about $18,000 of monthly spending.

01:08:03.310 — 01:08:08.350 · Laura

That’s spending after that mortgage is paid regardless.

01:08:08.390 — 01:08:23.589 · Jason

$18,000 a month is $216,000 a year. I think that’s a fine amount to live off of and honestly higher than anything that I’ve been projecting for us. Yeah, I’ve been putting this at roughly 170 for our projections.

01:08:23.630 — 01:08:43.230 · Ramit

That’s great. That’s a lot. That’s more. You currently spend roughly $6,000 a month on guilt free spending. Would you be willing to reduce that number in certain areas for several more years? That’s a question to ask. And does it actually feel like your rich life? What do you think I think?

01:08:43.270 — 01:09:05.579 · Laura

Yes, I think my rich life is like, not really about spending more money. It’s just about having more time together and more time to do the things that we actually want to do. And a lot of those things honestly don’t cost a lot of money. Like going to the mountains and climbing. Doesn’t cost

01:09:06.740 — 01:09:07.940 · Laura

money. Really.

01:09:07.980 — 01:09:24.900 · Jason

Our favorite thing to do is just be together. To be honest. And, um, typically that’s free. Um. And like she said, time is more important to us, I think. And I would willingly cut a good amount to just have more time.

01:09:25.100 — 01:10:15.050 · Ramit

You know, I really love your answer. And I love it because the two of you are aligned. You have a clear vision of what’s important to you. And I think sometimes people think that I am the guy who tells people you need to spend more money. But what I love is you have calculated a trade off. You’re like, look, we could accumulate more money, but actually most of the stuff we enjoy is being together and just having time.

That’s a very clear vision. It’s actually so rare. You’re starting to come across what is enough. And I can see the way you talk about it. You don’t just need endless amounts more of money. I think it’s so awesome, so revealing, so rare. So this is great. Your vision is coming through. I really love it. Laura, what would it mean for you to be able to provide your mom a place to live.

01:10:15.090 — 01:10:25.010 · Laura

If she needs it? I would like to be able to like, give that to her, because right now it’s kind of like it’s a question mark. I don’t know what she’ll need. I don’t know where she’ll want to go.

01:10:25.050 — 01:10:53.370 · Ramit

It’s an option. You know, you might talk about it and say like, hey, we’d love to be able to provide housing. Maybe the rental unit isn’t the place we want to put her, but we can get another place. There’s so many different ways you could do it, but just to put an end to the question and feel confident and feel good.

Yeah, so much of feeling good about money is just taking these open questions and actually being decisive to come up with an answer. Laura, what comes up for you when you hear working until 47 versus 45?

01:10:53.690 — 01:10:58.890 · Laura

And I’d rather stop working at 45, I think.

01:10:58.930 — 01:11:00.970 · Ramit

Good to know. Jason, how about you?

01:11:01.490 — 01:11:03.210 · Jason

Oh, that’s a hard no for me, dawg.

01:11:03.330 — 01:11:05.850 · Ramit

So, 45 for you. You want earlier?

01:11:06.170 — 01:11:11.490 · Jason

I think 45 is right now at the top end of my limit as well. Wow.

01:11:11.530 — 01:11:24.370 · Ramit

Great. Okay. You both are quite aligned. This is interesting just to play the other side of the coin. Hey, what if you ended up with $9.4 million in your 90s? What would that mean to you?

01:11:24.690 — 01:11:26.050 · Laura

I don’t really want that.

01:11:26.170 — 01:11:28.090 · Jason

Yeah, I don’t want that, to be honest.

01:11:28.130 — 01:11:30.009 · Ramit

You know, it’s interesting when you have

01:11:31.250 — 01:12:16.200 · Ramit

people who who haven’t really planned their retirement out at all. You talk about what would it mean to have $3 million in your 90s or whatever. They go like, oh my God, that would be a dream. But when you actually are high earners, when you’ve been planning retirement, maxing out your 401 K and some of these numbers become more of a certainty rather than a dream, then you start to look at it in a different way.

You know, for a lot of people, Correctly there. Like it would be a failure if I was in my 90s and I had like $15 million. That’s a failure of living my rich life because it means I did not spend money effectively along the way. It means I wasn’t generous, I wasn’t adventurous, it means I worked years extra to have more money that I didn’t even need.

And what am I going to do by the time I’m 92? What’s it for?

01:12:16.400 — 01:12:17.040 · Laura

Right?

01:12:17.120 — 01:12:18.920 · Ramit

That’s what I’m hearing from the two of you.

01:12:18.960 — 01:12:24.880 · Laura

We are not, like, gonna have anybody to leave that to. Yeah. You know.

01:12:24.920 — 01:12:34.040 · Ramit

So the time is more valuable than money down the road and to some extent, even money. Now, that’s really a powerful realization.

01:12:35.120 — 01:12:35.760 · Laura

Yeah.

01:12:35.800 — 01:12:45.680 · Ramit

Okay. I can tell from talking to you that working ten extra years from 45 to 55 is like, out of the question. We already know that that actually is a relief to close the door.

01:12:46.720 — 01:12:51.590 · Ramit

Which of these feels right to you just to put a button on it.

01:12:51.750 — 01:13:15.310 · Laura

I’d say 45. And like my remaining questions are just like, how do you do that? Like, I don’t know how to turn off that part of my brain that’s like, must go to work every day. And I’m also like, I just don’t think I don’t get like, where’s the money coming from to support that? But like, if we stop working, you know.

01:13:15.590 — 01:14:08.100 · Ramit

We’ll talk about that. Those are great questions, the mindset and the day to day logistics. Those are both great questions. It can be challenging to nail all the logistics of retirement, knowing when to take Social Security, knowing which account to draw from first. Just being able to say, how have other people done this?

And how much can we afford to spend on travel every year? For some people, they are going to want to use a flat fee advisor like Fassett. Our friends at Fassett have helped lots of listeners of the money for couples podcast. They are the ones responsible for creating today’s three scenarios, and if you are looking for a little help with your retirement scenario, planning or other complex topics, I would recommend you check out Fassett.

Jason, what about for you? What comes up?

01:14:08.140 — 01:14:13.500 · Jason

Realistically, I think about 42 is the number that I kind of land on.

01:14:13.540 — 01:14:18.380 · Ramit

So earlier spending less than projected but earlier than 45.

01:14:18.380 — 01:14:30.940 · Jason

I don’t think we’d have to spend less than projected. I think we can get roughly about the 45 projection at 42. How like we don’t have to pay for health care. We have free health care for the rest of our lives. So that’s like a big one that helps out a lot there.

01:14:30.940 — 01:15:09.050 · Ramit

Well, early retirement, healthcare, $1,200 per person per month until 65. That’s a huge amount. Massive. So you’re right. If you have healthcare already covered, then that changes the game in your favor of retiring younger. I’m sure you can calculate all of this and tweak it. No doubt. And in fact, I will put you in touch with facet so that you can run any of your scenarios by them.

Happy to make that introduction for you. They’re great and you can run everything by them for a second set of eyes. So 42 to 45 we’re kind of centralizing around there. That’s kind of right around the corner.

01:15:09.170 — 01:15:31.730 · Jason

Absolutely. And it comes with a lot of emotions for sure. Like as we discussed earlier, I’d like the apprehension of how does one just stop? It’s kind of reminiscent of when I got out of the military. Yeah, I know I can still work, I can get another job, but the job I have now is very good, and stepping out of that door and knowing it’s not a revolving door is definitely scary.

01:15:32.050 — 01:16:07.280 · Ramit

Yeah, a lot of people, especially men, find your retirement very difficult. It’s their source of meaning is their source of purpose, status, and they become Extremely uncomfortable at seeing their financial number only go down now. That is incredibly scary. And so often you’ll see them start to, like, become really overly frugal even though they have all the money they can.

This is classic for retirees. They’ll only go to a matinee. It’s like, why are we talking about $5? $10?

01:16:07.320 — 01:16:10.520 · Jason

We do that now, but just as we’re old, I think, okay.

01:16:10.680 — 01:16:36.280 · Ramit

Well, we got larger issues to talk about, but okay. I like that you are already thinking about what happens when you start to take the money and use it, and not just grow it. How do you think you could make your transition in just a few years easier? Like right now, you both have paychecks. Those paychecks are going to vanish.

How do you think you’re both going to feel when those those large paychecks vanish?

01:16:36.320 — 01:16:38.640 · Laura

Not great. Like, I literally don’t know what to do.

01:16:39.160 — 01:16:40.000 · Ramit

Okay, so,

01:16:41.040 — 01:16:42.480 · Ramit

Jason, what do you.

01:16:42.480 — 01:17:06.950 · Jason

Think I can say? This is something I’ve actually already started preparing for. So I have my paychecks from my job, go directly to my savings account, and my checking account is only populated by my current pension check. So I kind of have already started like being like, okay, this is what it looks like to get this amount of much money per month.

And I kind of try to stick to just my checking account if possible.

01:17:06.990 — 01:17:09.390 · Ramit

Great Lord, what’s your take on that?

01:17:09.430 — 01:17:24.310 · Laura

I guess I do kind of do a similar thing, but like when I get my paycheck, I transfer most of it into savings out of checking and I give myself like a budget for each month. Like I’ll keep $1,000 in my checking account or whatever, maybe something like that.

01:17:24.310 — 01:17:31.190 · Ramit

I think that’s pretty good. I think that’s a great start when the paycheck stops for you. Laura, how are you going to pay for stuff?

01:17:31.230 — 01:17:36.390 · Laura

I guess with just with, I guess with the Jason’s pension.

01:17:36.790 — 01:17:44.060 · Jason

I think we’ll just use the credit card for everything. And then I would pay off the credit card. I think that’s pretty much how everything would transition.

01:17:44.420 — 01:19:24.330 · Ramit

You could. Mechanically, that would work. But can you see Laura’s discomfort here because she’s like, I actually don’t know. This is where the two of you can actually come together and start to simulate what’s going to happen. Doing this, especially now, would actually be really beautiful because you have a vision.

You know what’s coming approximately 4 or 5 years from now. You know it. You’re going to run your calculations, you’re going to talk to facet, and you’re going to be like, okay, this is the approximate date that we are going to do it. What are the things we need to do to feel really good? I Laura, I don’t even understand how it’s going to work in terms of income.

Like let’s say we’re going to retire on January 1st. January 2nd. How am I paying for groceries? Or like we’re going on a trip, like, how am I putting some money in there? Oh, I’ve realized that we don’t actually have a joint account that we use. Let’s do that now and let’s start simulating. So money comes there instead of your individual accounts.

You can transfer it here and there. Great. Okay. This is working a month or two. We both feel good. We ironed out a couple things and if something goes wrong, we still got years. Okay, suddenly Jason’s pension is going into the joint. You can transfer some money in from your savings to simulate what will happen from your investments that you’re going to draw.

Let’s just say 2.5 or 3% from you can do all this stuff and you can simulate and you can be like, hey, let’s talk about it. Here’s what happened. Here’s a diagram of how everything flows and you already know what’s going to happen January 1st XYZ year. Laura, how would that feel.

01:19:24.370 — 01:19:31.930 · Laura

That I’m so good I haven’t even ever thought about like the logistics of like withdrawing money when you don’t have a paycheck.

01:19:31.970 — 01:20:09.920 · Ramit

Most retirees have no idea how this works. Why would they? They spent their whole life accumulating and saving, and now they have to accumulate. So I think starting off just simulating it with plenty of time to go is an awesome way to start and to feel really good. And then over time, you can get into some of the more complicated things like tax advantages and which account you draw from and things like that.

I have no doubt you’ll be well advised. Fassett and others can advise on that kind of question. I think if you did that, it would actually bring you together right now. Jason, what do you think?

01:20:09.960 — 01:20:24.520 · Jason

Yeah, I think that’s one of the things I do the most amount of research on, like getting money out of the 401 K, converting it, Ross and moving Roth IRAs and like all that stuff. And then just, you know, adding more things onto it and it just starts giving me like overwhelmed. I’m like, oh.

01:20:24.560 — 01:20:25.960 · Ramit

Do you want to do it yourself?

01:20:25.960 — 01:20:32.240 · Jason

I do want to do it myself. Um, I don’t want to give people money to manage my money most of the time.

01:20:32.400 — 01:21:25.430 · Ramit

Fair enough. Yeah. Listen, for most people, I think they can manage their own money. And they should. I think that some people in certain situations, high net worth, etc. it might make sense to get help. You know my philosophy, if you’re going to pay for help, it’s fine. I’ve hired a financial advisor myself before.

I just don’t believe in paying AUM. So I believe in flat fee, hourly fee, etc. but I think it’s worth thinking about if it starts to feel like overwhelming or like God. There’s a lot of logistics and I sure would like a little bit of help. Just reminder, the same as I reminded Laura when we’re talking about her jean jacket, is the two of you make $820,000 a year.

You certainly have the money to get some help for anything that’s important to you, especially over the next few years. So if you want to, I would encourage you to. Laura, what about other ways of feeling good? What do you think would help you feel confident competent about your finances?

01:21:25.470 — 01:21:44.380 · Laura

I feel a little bit better after, like getting monarch and doing our CSP because I know, like the shape of our finances. I just, I feel like my knowledge is very minimal. It’s like I know how much we have in what investment accounts. Beyond that, I’m not well-versed in.

01:21:44.420 — 01:21:45.460 · Ramit

Have you read this?

01:21:46.660 — 01:21:48.220 · Laura

I have it, okay.

01:21:48.740 — 01:22:14.020 · Ramit

That’s okay. I’m not here to blame you. You know, I think it’s just a very clear answer. I think you’re right. I think that if you don’t understand how money works, especially with the kind of numbers of zeros we’re talking about here, it just starts to feel really overwhelming and onerous. But if you understand the basics of money, then you will become so much more competent, which is going to make your confidence go way up.

01:22:14.060 — 01:22:23.060 · Laura

Yeah, I still feel like I might have a lot of reservations about like, am I making the right decision with this withdrawal or I don’t.

01:22:23.100 — 01:22:45.970 · Ramit

Know, I think that’s probably true. If I were you, this is how I would be looking at it. Based on what Jason and I discuss and talk to Fassett, we are going to retire in approximately five years. This date, we’re both going to know that it feels good. We’re going to have the money. We’re going to do it. How do I want to feel?

By the time I get.

01:22:45.970 — 01:22:50.490 · Laura

There, confident and competent and in control.

01:22:50.770 — 01:22:51.450 · Jason

Nice.

01:22:51.490 — 01:22:58.330 · Ramit

How do you want to feel when it comes to like, should we go to Greece or should we go to whatever?

01:22:58.930 — 01:23:00.650 · Laura

All of those same things?

01:23:00.690 — 01:23:01.170 · Ramit

Yeah. You wouldn’t.

01:23:01.170 — 01:23:02.730 · Laura

Feel. Just basing it on vibes.

01:23:02.770 — 01:23:09.330 · Ramit

Like. Yeah. Yeah. So you want to feel good? You want to feel confident? Competent in control. You want to feel good about these?

01:23:09.370 — 01:23:15.770 · Laura

I want to I want to know when I say yes, why I’m saying yes. And if I say no, why I’m saying no.

01:23:15.810 — 01:23:22.690 · Ramit

Nice. Nice. I love that. And, Jason, how about you? How do you want to feel?

01:23:22.730 — 01:23:26.690 · Jason

Everything. She’s had to sound pretty perfect. Can I second that? That was. That was good.

01:23:26.730 — 01:23:42.730 · Ramit

You can second that. How do you want the two of you to interact? Because right now notice the dynamic that you mentioned, which is Jason kind of comes up with an idea of like spending money and then goes, I don’t know. Let me give you a lower number than that, and then let’s haggle over it and let’s do that for the rest of our life.

I don’t love that dynamic.

01:23:42.930 — 01:23:46.890 · Jason

I don’t want it to change completely, though, because he keeps me in check.

01:23:47.010 — 01:25:13.200 · Ramit

Look, when you say she keeps me in check, I know it’s funny, but it actually puts her in a bad position. It puts her in the position of having to be the the naysayer, the person who says no. And it actually is not serving Laura. She’s actually been in that role for a long time. And I think, Laura, you would admit you’re not quite sure sometimes.

Why you are like feeling uncomfortable with these things, as you put it, it’s vibes. But Jason, I think that by joking about it and subtly putting her in that position, it’s actually not serving her or how the two of you want to be. The two of you have a lot of money. You’re making a super bold move. You’re able to justify it because of the hard work that you’ve done.

And good luck to me. I’m like, why? Why not? Um, rewrite our story and actually be super crystal clear about what’s important to us. And when one of us proposes something, as long as it fits within our guidelines and our rules, the other should be like, this is awesome, let’s do it. That feels good. My wife came to me.

She goes like, hey, let’s go on this long trip. I say, how long? She goes, let’s go for like 3 or 4 months. I was like, I’m in. Just like that. I’m in. I don’t know where, I don’t know how, but when my partner gets excited about something, unless it’s like unsafe or something I’m diametrically opposed to, I’m in.

That’s my philosophy. Wouldn’t it be nice to be like that, knowing that you know your numbers?

01:25:13.240 — 01:25:16.200 · Laura

Yeah, like the first step is knowing the numbers. So yeah.

01:25:16.520 — 01:25:51.950 · Ramit

There we go. Knowing the numbers, Jason, you’ve got to really listen to what Laura is saying. Laura is saying, hey, I don’t feel that I know enough about money right now, which is fair. Read the book. Do a little book club. Go through it. Do it together. Amazing. You’ll be way more competent. I think Laura might also be saying, like, I don’t want to have to be in the role.

That is like saying no. I would love for Laura to be like, hey, let’s go to Greece, let’s do this, let’s do that. I want to get this jacket. I bought it yesterday. How would that feel to you, Jason?

01:25:51.990 — 01:25:54.910 · Jason

Oh, it’s definitely larger things than that that she keeps me in check for.

01:25:54.910 — 01:26:00.910 · Ramit

I would love for Laura to say, hey, that sounds really interesting. Let’s sit down and show me the math.

01:26:00.950 — 01:26:37.940 · Jason

Oh, man, this is a good point. This is actually kind of what brings us here. I 1,000% showed her the math, and I showed her the math for months and months and months, and sooner or later I did win out. We bought the the the house. It was a fantastic financial move on our part and it was great. Um, but she did not, you know, believe that.

So then now when I’m like, we can retire like and like. Here’s all the mass. I’ve literally built models on this. And then, uh, she’s like, ah, I don’t know. And then you’re like, hey, you can retire. And she’s like, oh my God, it’s true.

01:26:37.980 — 01:26:54.260 · Ramit

Like, it’s got to be frustrating. You’ve built all these. I don’t know how many hours you freaking smoke coming out of your computer. And then I come along, I say like five words. I’m like, yeah, it’s all good. She’s like, oh my God. And then the tears start coming. I know that’s frustrating. Let me ask Laura.

Laura, why didn’t you believe Jason when he showed you his models?

01:26:54.580 — 01:27:10.140 · Laura

I know our net worth. I know our fixed costs. I know all the lines on that spreadsheet, but he has a better handle on how our money actually works. Okay, I don’t have that knowledge.

01:27:10.780 — 01:27:20.940 · Ramit

Now, let me try to make Jason’s argument for him. Tell me your reaction. He might say, but I showed you all the math. What’s your reaction?

01:27:20.940 — 01:27:27.370 · Laura

Showing the math and like having a deep understanding of the math are two different things.

01:27:27.690 — 01:27:34.890 · Jason

But what is the difference in what I did and what did? They didn’t even show you the math, did you just said it.

01:27:34.930 — 01:27:57.530 · Laura

I think the difference is, a while back, like when we first started talking, but it was always just so abstract and like, what if we could do this? Like, if we, like, went to Spain and came home, we’d be like, God, wouldn’t it be so cool? Like, we were retired and we could stay as long as we wanted? And like, we talked about, like, what would we do with our time if we weren’t working eight hours a day, but we weren’t talking about like, how to do it?

01:27:57.650 — 01:29:02.000 · Ramit

You’ll see what’s going on here. I know most people for their entire lives. This kind of stuff is all just a dream. It’s just a fantasy. What if we could go to Spain? What if we could go to Disneyland for a week? And I don’t know, it’s just a dream. They don’t really know how to talk about it in a way that is a plan.

And so you’ve been doing the same thing, even though your income and net worth has been skyrocketing. So You’re in many ways still living like most people live, which is just like, oh, wouldn’t it be nice? It takes real skill to accept we can do almost anything we want to do. So when we talk about this stuff, we need to both find a way of bringing it up in a way that like, first of all, am I even serious?

Do I really want to do this? The other partner has to learn the skill of how to receive that, and the two of you have to talk about it as if it’s an actual possibility. Because right now, I think the way that you have been discussing things for a long time is just like this abstract thing. What would happen if you go through the rest of your life doing it like that?

01:29:02.040 — 01:29:03.360 · Laura

We’d never really do it.

01:29:04.000 — 01:29:54.630 · Ramit

Yeah, you would do cool stuff. You’d go, you know, go camping. That’s awesome. You too have told me you enjoy it. That’s amazing. I think you should. That’s fantastic. But what about all the stuff you could do? When my wife and I were talking about money? Um, early on. And this was during when we were talking about a prenup, My vision was like, I want to be so generous that there can be no question that I’m trying to like, quote, get one over her.

I go there, I’ve prepared all this stuff. I felt so good and I was shocked at the response. I was taken aback. I was surprised that I felt like I wasn’t really being heard, and my wife felt the same way. She wasn’t being heard. And we started to get in arguments, disagreements, and this went on for a long time and I was like, look at the math.

This model is so beautiful.

01:29:55.790 — 01:30:15.070 · Ramit

And what I didn’t realize at the time and appreciate was when she finally said, like, we should go see a therapist because this is not good. And we went out of our apartment and we went to this therapist’s office and she asked us this question, what does money mean to you? I was like, it means growth, so obvious.

And then to her, money meant safety.

01:30:16.190 — 01:31:42.490 · Ramit

And I looked at her like, what? What does that word even have to do with money? because it hadn’t meant safety to me in like 30 years. I’ve been earning since I was like 14 years old. But it dawned on me as we were talking in that little office, that we just saw money completely differently. And that really began that evolution of not just the math part, which is important, but also the softer part of talking and painting a vision together and all of that stuff.

A lot of that has happened on today’s call, even though you may not realize it because the two of you are just talking naturally about your own life, which is my favorite thing to do. But think about all the little subtleties that happen today. Joking with the two of you. We’re laughing. We’re having fun asking you about your childhood, validating, saying, look, we don’t have to do it all today.

Some of that we can deal with later, you can talk to Fassett, you can do this stuff. So much of that is the skills that I would encourage you to build over time, because you actually don’t have something that most Americans have, which is scarcity about money. You can do what you want to do. It’s incredibly empowering and a little bit scary because very few other people have that.

But I think it’s just awesome. I just think it’s so cool. So, Laura, tell me what you might be able to do in, let’s say, the next ten days to start having a more positive relationship with money.

01:31:42.490 — 01:31:51.490 · Laura

In the next ten days, I can learn more about how our money works beyond just how much of it we have.

01:31:52.170 — 01:31:53.410 · Ramit

What do you need from Jason?

01:31:53.450 — 01:32:03.890 · Laura

I think it would be cool if I sat down with Jason, actually, like looked at what he’s created instead of just having him tell me about it. That might make it more concrete for me.

01:32:03.930 — 01:32:34.440 · Ramit

I think that’s really cool. I bet you he would love that. I know that I loved it when when my wife started asking me about what compound interest calculator do you use? I was like, go to my website. The real interest is like, awesome. You know, Jason’s put a lot of work into this. I think that’s awesome for you to get curious about it.

I think you’re right on the money. That’s amazing. Jason, how about you? What could you do in the next ten days to have a, let’s call it healthier relationship with money? And then what do you need from Laura?

01:32:34.480 — 01:32:38.760 · Jason

Why do we let’s call it healthier relationship with money. I’m confused by that framing.

01:32:39.080 — 01:33:27.390 · Ramit

Great question. That’s an excellent question, actually. Why am I a little bit hesitant? I think, Jason, you have a pretty healthy relationship with money. Actually, the only thing that I’ve noticed that is a bit of a flag, not even a red flag, but a flag, is that you have mentioned a couple of times that you’re the optimist, which I love.

And also sometimes you like for Laura to maybe keep you in check, which I don’t love, right? The area that I mentioned is really about creating a culture where Laura feels confident, competent about money while Laura takes on the responsibility of also becoming competent and confident with money. You to do that, you’re like, you’re gonna not only live an awesome life, but feel great doing it.

01:33:27.510 — 01:33:41.430 · Jason

I want to sit down and answer any questions she has, and I want to be a wealth of knowledge for her, but I don’t want to be pushy about it as well. So there’s a lot of things I want to do, but I’m like, I’m struggling. On thinking of, um, an actual step.

01:33:41.430 — 01:34:18.900 · Ramit

Here’s some of the things I might consider doing if I were in your position. I might make a visual diagram of how our money flows, and I might say like, hey, I’m gonna leave this here and let me know if you’d like to talk about it in the next few days. I’d love to walk through it with you. Next up, I might say like, hey, I’ve been thinking about our conversation with Ramit, and I’ve realized as we get closer to retirement, I just think it would be cool to write down some of the things that are really important to us.

I made a draft. I’d love to know what you think and write at the top or in the top three is provide for your mom, so she is always taken care of, right?

01:34:19.460 — 01:34:21.300 · Jason

Lauren loves the pros and cons.

01:34:22.020 — 01:34:23.660 · Laura

I have a full system.

01:34:23.820 — 01:34:44.220 · Ramit

There you go. So it’s recognizing some of the things that you already know that are on her mind and just proactively saying, hey, here’s what I’m thinking. What do you think about it? Those kinds of things go a long way. One other thing is, I might say, let’s go back to that store, because that jean jacket’s been on my mind and I really want you to get it.

01:34:44.660 — 01:35:05.380 · Jason

I’m chuckling it because there is a repeat thing with this particular store. Whenever you find something, you like it and you’re like, oh, awesome. I’m going to think about it for five months, and then five months later she’s like, you know what, I’m gonna buy it. And then go there and our buddy Bryan’s like, it’s sold.

It’s gone. It’s doing.

01:35:05.380 — 01:35:05.780 · Ramit

This.

01:35:06.540 — 01:35:07.940 · Laura

It happens to me a lot.

01:35:08.140 — 01:35:24.250 · Ramit

That’s hilarious. And, Laura, I think probably a healthy relationship with money at your income level is if you see something you like below x thousand dollars, you get it and you feel great doing it.

01:35:24.290 — 01:35:25.490 · Laura

Yeah, it’s a good sweater.

01:35:25.530 — 01:36:10.810 · Ramit

Yeah. It’s beautiful. The way that we did that in our household is we created a worry free number. Anything below this number we don’t worry about as your income and as your net worth goes up, that number should increase. For some people, it’s 100, 500, $10,000. Whatever the number is, we just simply do not worry about it.

We get it and you adjust it every year based on your finances. I feel like it would be a really good idea to pick that number. I know that $79 fits in there. I know it philosophy for the rest of your life should be we’re going to enjoy it. We don’t get any benefit from playing small. We certainly don’t get any benefit from suffering.

We’re going to have an awesome life and we better feel good about it. And I think based on today, I have total confidence that you can. Laura, what surprised you about our conversation today?

01:36:10.850 — 01:36:22.970 · Laura

I guess that I don’t actually have to do all of this worrying or like pinching pennies about like little things that I want.

01:36:23.170 — 01:36:26.050 · Ramit

And instead you can what.

01:36:26.130 — 01:36:35.330 · Laura

Say yes and like get a thing if I want it. Although like I do think that’s going to take work for me because even saying that felt like a lie, to be completely honest.

01:36:35.730 — 01:37:43.480 · Ramit

You know, an exercise we do in our Rich life program, we have a number of people who are starting off in their financial journey, and they want to know how to spend money more easily, more meaningfully. So we have this thing called the $100 challenge, and I give them roughly 48 hours. They have to spend $100 they have to spend on something they love.

They cannot spend it on a spouse, a kid, a dog. It’s just got to be something for themselves. And when they buy it, they’re sitting there and they’re buying something they probably normally would not buy. I tell them tend to really monitor how they feel they’re going up to the register or they’re going online and all these things are going through their mind.

Oh my God, I could find this cheaper. Oh my God, I could build this myself. Oh my God. Am I going to derail my retirement. And I just encourage them to just feel it. Don’t shut it down. Listen. And after they buy it and they receive it, it’s really appreciate it and connect that to their money and realize that $100 did not change their life trajectory at all.

Not one bit. Something I’d like to ask you to do in the next two days. Can you do it?

01:37:44.080 — 01:37:50.160 · Laura

Spend $100? Yeah, I’ll go save that, Jack. It’s still there, but I feel like it’s going great.

01:37:50.640 — 01:40:55.490 · Ramit

Great, perfect. And if it’s gone, you got to find something else. Something that you love. Okay, cool. All right. I can’t wait to see the photo you send. I’d love to see whatever it is you choose to get. That’ll be awesome. It’s very lovely to see the two of you talk to each other and about each other. I really enjoy it.

My dreams for you are different than other couples who come on here. You know, a lot of times they may be in serious debt. They may be overspending. You’re not like that. I knew at the moment that I saw your miscellaneous expenses in monarch, and it was $7. I knew it, I said, this is a much more advanced couple.

I’m gonna treat them accordingly. And what a beautiful thing. We did not have to spend two hours mired in the weeds about some random expense, but instead get to talk about the big picture. You want to retire early? Great. You can do it. Is it 42 or 43? I don’t know. Run the calculations again and talk to Fassett, but it’s somewhere in there.

Great. Most importantly, how do you feel? Good about it. How do you both get on the same page, understand money and just start to feel really good becoming skilled at spending money meaningfully? That, to me is so exciting because you already won at the game of earning money. You’re doing well at the game of managing money.

The new game is the game of spending money meaningfully. I have a lot of confidence with this couple. I like watching the two of them talk. I love the way they interact with each other. There’s a lot of love. There’s a lot of mutual respect to me that is more predictive than almost anything else. They could be making much less money, and I would still feel confident because of their energy, because of the way they talk to each other, because of their understanding of the numbers at this point.

But also they make $818,000. So a high income solves a lot of financial problems. Don’t let anybody tell you that’s not true. They want to do something really special, something remarkable. They want to retire in their 40s. That’s something almost nobody does because of the work that they have done because of their high income.

I think they have a very good shot at it. What will get in their way? Well, I think that mathematically they’re going to be able to retire. I have no doubt about that. I think that the one thing could be that they don’t actually change the way they talk about money and the way they feel about money. And so they continue this trend of, you know, he’s the optimist and she’s the pessimist, and they kind of go through life in that pattern.

I think that would be a tragedy. But I think today actually shined a light on that dynamic. And I think they have a very good chance of changing that. I want them to feel good about money. I want for them to feel a sense of ease with money, and if they work hard and they practice it, they can definitely do it. I want to give a huge shout out to this episode sponsor facet.

If you’re thinking about your own retirement and you want specific scenarios on what your life might look like, or you’re dealing with a complex portfolio, go to facet.

01:40:57.490 — 01:41:23.680 · Ramit

What you saw today helps make these huge decisions more concrete. Like when could I retire? How much can I spend? What would my life actually look like? As of the date of this recording, facet is waiving their enrollment fee for new annual members and for my audience. Fassett is offering $300 into your brokerage account.

If you invest and maintain $5,000 within your first 90 days. Head to facet

01:41:24.920 — 01:42:00.200 · Ramit

to learn more about which membership option is best for you. Offer ends December 31st, 2026. I’m not a member of facet, but I have an incentive to endorse them as I have an ongoing fee based contract for cash compensation. Based on this endorsement, the facet develops. Scenarios are for education purposes only, are not advised, and do not guarantee a similar outcome.

They are based on industry standard assumptions and inputs provided by Laura and Jason. As of the date of this recording, Laura and Jason are not members of facet, nor were they compensated for their appearance. These opinions are my own and not a guarantee of a similar result. Facet is an SEC Registered Investment Advisor.