Earn Money – BE UPDATED

263. “We spend 102% of what we make. Will we ever stop drowning?”

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Ramit Sethi of I Will Teach You To Be Rich talks to Freya and Blake, a couple in their mid-40s with two young children who are facing one of the most urgent financial situations we’ve seen on the show. Together, they earn around $143K a year, but their fixed costs are at 102%, they have $0 in savings, only $180 invested, and more than $96K in debt. Freya applied because she feared they were close to becoming homeless.

On the surface, their problem looks like debt. Underneath, it’s avoidance, guilt, lack of partnership, and years of “we’ll figure it out later.” Freya carries the emotional labour of the household and money decisions, while Blake admits he avoids the numbers and tries to solve problems by simply making more money. Ramit helps them confront the reality of their situation, stop tinkering around the edges, and build a radical plan that gives their family a chance to get stable.

In this episode we uncover:

Why Freya and Blake are spending more than they make every month
How their fixed costs reached 102% of their income
Why having a $143K income still isn’t enough when there’s no system
The $96K debt number that forces them to face reality
Why Freya feels like she has to manage everything alone
Blake’s “ostrich” approach to money and avoidance
How trips, skiing, and everyday spending became symptoms of a bigger issue
Why being intelligent doesn’t protect you from bad money decisions
The emotional cost of having $0 in savings with two young children
How childhood, privilege, resentment, and guilt shaped their money habits
Why hustling stops working once fixed costs get too high
Ramit’s warning that they are weeks away from not being able to pay rent
Why Blake may need to aggressively increase his income
How they move from blame and panic into a shared plan
Their follow-up reflections on what finally felt doable

Chapters:

(00:01:20) Meet Freya and Blake

(00:03:30) Why Freya applied to speak with Ramit

(00:05:23) “Do you want to have a budget conversation?”

(00:05:56) The skiing trip that became a money fight

(00:08:22) The Mexico trip they couldn’t afford

(00:13:52) Savings are gone and the safety net has disappeared

(00:15:16) Freya carries the planning, groceries, kids, and money stress

(00:21:54) Looking at the Conscious Spending Plan together

(00:24:01) The real debt and net worth numbers land

(00:31:24) Why 102% fixed costs means they are broke

(00:32:04) Ramit warns they are weeks away from not paying rent

(00:34:54) Childhood money lessons and blame

(00:43:57) Borrowing money to avoid eviction

(00:48:11) Blake’s belief that more income will solve everything

(00:57:14) Guilt, family, and saying yes when they should say no

(01:03:00) Defining a realistic Rich Life from where they are now

(01:08:30) Childcare costs disappearing

(01:15:03) Freya asks Blake to help with grocery planning

(01:18:00) Why savings comes before debt payoff right now

(01:34:00) Why the plan finally feels doable

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Transcript:

[00:00:00:00 – 00:00:01:13] Freya: It feels like a joke.

[00:00:01:14 – 00:00:13:20] Ramit: It means you are broke. Yeah. It means you’re spending more than you make every month. Every month. That’s the ballgame. Tens of thousands of dollars in credit card debt. No savings, no investments. Two children. What are the real issues here?

[00:00:13:21 – 00:00:23:00] Blake: It’s dread and anxiety. Poor financial decisions made for one case. Cash down. We had to ask them. Hey, can we barfed in K because we’re about to get evicted.

[00:00:23:01 – 00:00:26:16] Freya: It feels like failure, especially with kids.

[00:00:26:19 – 00:00:47:29] Ramit: I would actually get angry. Angry at myself. Angry at my upbringing. Angry at each other. Angry at the dynamic that we have allowed ourselves to sink into. You are actually weeks away from not being able to pay your rent. And frankly, in order to not get evicted, you will need to confront the very thing that you have avoided your entire life.

[00:00:48:02 – 00:00:48:24] Ramit: Confrontation.

[00:00:48:27 – 00:00:57:13] Blake: I have to for prayer and my children. You want the kids to have a great future.

[00:00:57:16 – 00:01:18:14] Ramit: Today is a big day for money for couples because we are recording in our new studio. Now, if you have followed along for the last few years, you’ve noticed that we are always improving. Thanks to your feedback, my team and I are listening, and one of the things that I’ve wanted to do for a long time is go from audio only to video, and then to even higher quality video.

[00:01:18:21 – 00:01:36:24] Ramit: And I love seeing couples in the same room holding hands, crying, sometimes looking at each other. It tells me so much and I think it’s going to tell you a lot. So welcome to the new era of money for couples in our new studio. Today I’m kicking things off with Freya and Blake. They’re 45 and 47 years old.

[00:01:36:24 – 00:02:00:07] Ramit: They have two young children together, and they spend more than they make. Every single month, Freya applied to speak with me, and she wrote, we are living with our terrible choices right now. We are literally broke to the point that I’m worried we will be homeless. You can hear the panic almost jumping off her application. Let’s take a quick look at their numbers to see what they’re working with.

[00:02:00:09 – 00:02:35:02] Ramit: I’m looking at their Conscious Spending Plan or KSP. If you want my help with your own KSP, you can join my money coaching program at Shmoney coaching. Assets $5,000. Investments. $180. Wow. Savings. Zero. Debt. $96,000. Total net worth. Negative 90,999. Now, let’s take a look at their fixed costs 102%. Okay, that’s the ball game. They are spending far more than they make every single month.

[00:02:35:08 – 00:02:58:04] Ramit: Investments 1%. Savings zero. And guilt free spending is -2%. We know that’s impossible. Looking at these numbers, it’s no surprise that Freya is panicking about their financial situation. It’s actually quite dire. And when you see numbers like this, it is very easy to just take a huge hatchet and say, okay, we need to start doing this just as this.

[00:02:58:06 – 00:03:25:24] Ramit: Maybe we do, but we need to find out why they even got into this situation in the first place. So we are actually addressing the root problem. That’s my goal today. Now let’s get started with Freya and Blake. There was something that stood out to me from your application. Freya. I wonder if I can read it. You wrote where basically one missed rent payment away from an eviction notice.

[00:03:25:26 – 00:03:27:00] Ramit: Is that accurate?

[00:03:27:02 – 00:03:34:04] Freya: It feels accurate. We don’t have, like, the kind of warm, fuzzy landlords that are like. Yeah, yeah, we used to have one of them.

[00:03:34:04 – 00:03:36:02] Ramit: Have you ever gotten an eviction notice? No.

[00:03:36:05 – 00:03:38:23] Freya: Okay. I’ve never. I’ve always made it work.

[00:03:38:26 – 00:03:39:12] Ramit:

[00:03:39:14 – 00:03:58:05] Freya: And that is I think the end part of my issue with all of this is I’ve always managed to make it work. I’ve always managed to come up with money somehow or, you know, talk my way out of being a month late in rent and being like, I get our promise. You know, like things like that my whole life.

[00:03:58:06 – 00:04:03:05] Ramit: How long has it felt this dire? Oh, my God, I’m 21.

[00:04:03:07 – 00:04:04:26] Freya: The pandemic. You would think.

[00:04:05:03 – 00:04:06:00] Blake: It got hit us hard.

[00:04:06:04 – 00:04:06:13] Freya: Yeah.

[00:04:06:18 – 00:04:15:07] Ramit: And, does it feel equally dire, or does one of you feel the weight of money more?

[00:04:15:09 – 00:04:21:21] Freya: I don’t know. I mean, I know how I feel. I don’t know how you feel. Honestly, I feel like I think about it more and I talk about it more.

[00:04:21:23 – 00:04:30:11] Blake: It’s tough to call. Thinks about it more, but I certainly think about it all the time. Every day. Yeah. And every day. Late at night. You know.

[00:04:30:13 – 00:04:33:02] Ramit: Because it’s interesting that you don’t know how each other feels about money.

[00:04:33:04 – 00:04:44:09] Freya: He doesn’t like to talk about it. We’ll do it. But then I’m like, okay, now we need to have our weekly follow ups. And that just that part doesn’t happen. And then I start feeling like a nag, and then we just kind of rinse and repeat.

[00:04:44:16 – 00:04:52:03] Ramit: When you hear Freya saying, we need to have a budget meeting, what is your initial emotional reaction to that?

[00:04:52:06 – 00:05:10:19] Blake: Dread. I’d say yeah. Because I had it’s dread and then anxiety and it just means like I need to make more money. I’m the classic sort of like I need to just go make more money. So then we have that and the budget conversation can be a little more positive.

[00:05:10:21 – 00:05:12:16] Ramit: Do you want to have a budget conversation?

[00:05:12:18 – 00:05:13:02] Blake: No.

[00:05:13:02 – 00:05:22:07] Ramit: It was honestly, I don’t want to have a budget. Yeah. Somebody comes to me the like, we got to talk about the budget. I’m like, what the I don’t want to do that. I’d rather be dead. Yeah. Do you want to have a budget meeting?

[00:05:22:13 – 00:05:26:26] Freya: Kind of I like, I like, I like, I like that kind of stuff. I do like.

[00:05:26:26 – 00:05:28:11] Ramit: What? Like checking things off.

[00:05:28:11 – 00:05:32:17] Freya: Yes. I love to do this. I have different notebooks with different to do lists.

[00:05:32:18 – 00:05:32:29] Ramit: Okay?

[00:05:32:29 – 00:05:33:28] Freya: Different parts of my life.

[00:05:34:01 – 00:05:36:22] Ramit: What the hell you multiple to do? No.

[00:05:36:24 – 00:05:49:24] Freya: Yes. I have a work on. I have a household one. I have one for the kids. I have, yeah, one for my personal growth. Like, wow, I do, I’m not. And but, you know, it doesn’t always translate into a lot of things I would like to do. Okay.

[00:05:49:27 – 00:05:55:29] Ramit: Now you also mentioned that you don’t communicate effectively about money. Can you give me an example?

[00:05:56:02 – 00:06:11:29] Freya: We when we had just moved, we were kind of like in the same situation. We always are as like end of the month. Oh my God. And he was like, oh, I, my friend, we should go up to Bagnell Bachelor and go skiing for the day. And I was like, what? I was like, but that’s for rich people, sport.

[00:06:12:02 – 00:06:25:05] Freya: And then it just it literally just would devolve into a fight. Then I was like, well, we can’t afford it right now. I was like, it’s going to be thousands of dollars to go. You know, he wants to get the kids lessons. They’ve never skiing, I don’t ski. He’s like, you get a lesson and you get a lesson.

[00:06:25:05 – 00:06:41:07] Freya: And it’s like, oh, we have lift passes. So it’s not that big of a deal. And you know, it ended up being a fight. He acquiesced and say, we won’t go. I feel guilty. He was so psyched to go, had it gone skiing in like ten years. And he used to go all the time. And so I finally said, okay, fine, let’s just do it.

[00:06:41:07 – 00:06:42:27] Freya: We’ll figure it out because I felt bad.

[00:06:43:01 – 00:06:45:22] Ramit: Did you go? We did. How much did it cost?

[00:06:45:24 – 00:06:48:11] Freya: Probably about two. Two K at the end of the day.

[00:06:48:13 – 00:06:50:15] Blake: Okay. We spent money that we should not have spent.

[00:06:50:22 – 00:06:52:29] Ramit: Okay. Is that true? You shouldn’t have spent it.

[00:06:53:01 – 00:06:55:07] Freya: We didn’t have to spend.

[00:06:55:09 – 00:06:56:25] Blake: We didn’t have it to spend.

[00:06:57:02 – 00:07:00:02] Freya: Yeah. I felt really guilty for saying no.

[00:07:00:04 – 00:07:05:05] Ramit: Have you ever just embraced it and said, okay, good. We’re not going.

[00:07:05:08 – 00:07:17:04] Freya: It depends. I think I was that the moment we had just moved. We didn’t know. We don’t know anybody there. And I just, I think I was feeling a lot of that guilt. I have said no, but I probably say yes more than no, I will say.

[00:07:17:06 – 00:07:33:04] Ramit: And interestingly, you acquiesced, as she put it, like you said. All right, fine. We don’t have to go. But then when she said, okay, let’s go, you were like, cool, let’s do it. Yeah. Is there a world where you were like, no, you’re right, we shouldn’t go there because of financial reasons.

[00:07:33:07 – 00:07:35:24] Blake: In that particular situation?

[00:07:35:27 – 00:07:37:19] Ramit: No, no.

[00:07:37:21 – 00:07:37:27] Blake: Because.

[00:07:37:27 – 00:07:38:28] Ramit: You wanted to go?

[00:07:39:00 – 00:07:46:10] Blake: Yeah. In other situations, we’ve certainly made, like, you know. Hey, let’s cancel this. This is not a good. Yeah.

[00:07:46:12 – 00:07:47:13] Freya: Yeah. That’s rare.

[00:07:47:15 – 00:07:53:26] Ramit: Okay, let me understand a little bit more about the relationship. Are you married? No. Okay. Do you have kids? Yes. How old?

[00:07:53:27 – 00:07:54:22] Freya: Six and almost.

[00:07:54:22 – 00:07:58:11] Ramit: Five. And are there other children from prior relationship?

[00:07:58:15 – 00:07:59:05] Freya: I have two.

[00:07:59:08 – 00:07:59:22] Ramit: You have two?

[00:07:59:23 – 00:08:02:04] Freya: A 26 year old and a 22 year old.

[00:08:02:09 – 00:08:20:19] Ramit: Got it. Okay. And do the older children live at home with you? Okay, so the two young kids live with you? Yeah. Got it. Okay. I want to get a little bit more understanding of the dynamic here. So I’m curious about another example. Okay. Where the two of you are not on the same page with money.

[00:08:20:22 – 00:08:22:24] Freya: Lots to choose from.

[00:08:22:26 – 00:08:24:05] Blake: Mexico trip with my parents.

[00:08:24:06 – 00:08:25:16] Freya: That one’s probably a good one for you to.

[00:08:25:20 – 00:08:26:15] Ramit: What happened?

[00:08:26:17 – 00:08:34:09] Blake: It was a summer trip to La Paz in Mexico with the kids. Finances are tight.

[00:08:34:12 – 00:08:52:10] Blake: I was very nervous about that because the vicissitudes of my income are tough. And knowing that end of the summer always gets a little tight because there’s not as much work. Yeah. I felt like for I really wanted to go, I mean, I wanted to go to. So I was more in the position of like, I don’t saying no.

[00:08:52:10 – 00:08:53:09] Blake: Like I don’t think we should do.

[00:08:53:10 – 00:08:57:03] Freya: Parents who are involved. So I think your parents are going. So it’s probably harder for you to.

[00:08:57:07 – 00:09:01:19] Blake: Yeah. Parents going. Yeah. And we took a trip to Mexico.

[00:09:01:22 – 00:09:02:18] Freya: On a credit card.

[00:09:02:20 – 00:09:04:15] Blake: Yeah. On credit card.

[00:09:04:17 – 00:09:07:18] Ramit: How much did it cost? Three and a half. Something like that.

[00:09:07:19 – 00:09:08:20] Blake: Yeah, 3500.

[00:09:08:21 – 00:09:10:08] Freya: Not sure. Yeah, it might have been more.

[00:09:10:13 – 00:09:19:13] Ramit: Okay. And then, when you got back, what was the moment where you looked at the credit card receipt and you were like, oh. What happened?

[00:09:19:16 – 00:09:33:20] Blake: This just added to the debt. You know, you get back, you’re like, okay, that’s amazing trip and double memories with the family and the parents and the kids. And, then you get back in there, you know, to kick in the teeth cause you’re like.

[00:09:33:23 – 00:09:51:26] Freya: And we thought about it. Yeah. Like, you would. You would bring it up in in financial conversations. It would be like, well, you decided that we should go and now we split. Yeah. So it would turn into like, almost like ano. Sometimes I feel like. And then, you know, I’m a oh, I did it for the kids in the, in your parents and like.

[00:09:51:26 – 00:09:54:17] Freya: Yeah. So it’s it definitely turned into a sticking point.

[00:09:54:21 – 00:10:02:16] Ramit: How often does that happen that you did this. You said that a lot. Yeah. You see a therapist. No.

[00:10:02:19 – 00:10:05:18] Freya: No not anymore. We did. It’s been a while.

[00:10:05:25 – 00:10:07:25] Ramit: Why? Money.

[00:10:07:28 – 00:10:09:10] Freya: Partially. It’s expensive.

[00:10:09:12 – 00:10:09:22] Ramit: Because.

[00:10:09:22 – 00:10:14:04] Blake: Our therapist was $175 dollars for a pop.

[00:10:14:04 – 00:10:15:00] Ramit: In is expensive.

[00:10:15:02 – 00:10:16:16] Freya: It’s very expensive.

[00:10:16:16 – 00:10:32:16] Ramit: And you mentioned in your application you don’t even have money for a bankruptcy attorney. Yeah. In that Mexico conversation where you talked about, should we go? No we shouldn’t. What was the role that each of you played? If you look back at that conversation.

[00:10:32:20 – 00:10:35:14] Freya: I was the driver and the planner 100%.

[00:10:35:18 – 00:10:43:13] Ramit: You were the one who wanted to go. Yeah. Okay. And then you planned the trip. Yeah. This is your parents involved? Okay. And what was your role?

[00:10:43:15 – 00:10:52:29] Blake: Just come along and try not to spend it too much while were there. Or, like, make some money before we go. Make some money when we come back.

[00:10:53:00 – 00:10:57:26] Ramit: Well, like, what was it time in Mexico where you were like, let’s not order that because it’s too much money. Well, I think we did.

[00:10:57:28 – 00:11:08:09] Freya: Not once, but we didn’t. We were like, we’re not like super extravagant. When we do travel. But like, we did have a your mom wanted a private chef for the week.

[00:11:08:14 – 00:11:09:29] Ramit: Did your parents offer to pay?

[00:11:10:00 – 00:11:11:02] Freya: They paid for part of it.

[00:11:11:03 – 00:11:17:24] Ramit: Okay. Yeah. And was there a conversation where you said, like, hey, right now it’s not a good time. Could you help or. We can’t do that.

[00:11:17:26 – 00:11:24:26] Blake: Yeah. I’ve definitely for moments like that, it’s been, you know, parents have been very generous and like, hey, let us cover the house.

[00:11:24:28 – 00:11:52:23] Ramit: Or something. Yeah. Yeah. Even still, you spent 3500 dollars on it. Yeah. The fact that this couple is clearly intelligent and still in almost $100,000 of debt is a big lesson for everybody watching this show, which is intelligence matters. Of course, it matters. But just being smart doesn’t mean you’re going to be wealthy. In fact, just being smart doesn’t mean you’re going to stay debt free.

[00:11:52:28 – 00:12:11:00] Ramit: A lot of you are too smart for your own good thinking. Oh, we’ll just figure it out. We’ll just solve it. You know, maybe instead of being too smart for your own good, maybe I’d rather take a ten point decrease in the IQ and be like, I don’t understand this. I better read a book because I won’t be able to figure this out unless I learn.

[00:12:11:01 – 00:12:32:12] Ramit: So before you come writing a bunch of angry comments, just ask yourself, is there a world where I could be in this situation too? You know, I’m kind of stuck speaking to both of you. You’re obviously very intelligent. I’m hearing words like vicissitudes and trepidatious, you know, like you’re going to LA pause. Like when we put all those things together.

[00:12:32:14 – 00:12:41:20] Ramit: You’re obviously intelligent, yet you are, as you put it, a month away from an eviction notice. Yeah. What do you both think is going on here?

[00:12:41:23 – 00:13:01:16] Freya: I’ve gotten very used to money being here or not here, and I just have to adapt. And that’s. I got kicked out when I was a teenager. So I’ve been like, on my own, supporting myself since I was 17. I’m just so used to being in a state of not having anything that is just it’s I guess it’s comfortable for me.

[00:13:01:16 – 00:13:17:06] Freya: It doesn’t worry me. Well, it didn’t worry me that much also because I had like, I feel like I have so long to fix the problem. I had so much time, you know, it’s like so for me it was just like, hey man, money comes when it goes. I’ve had money taken from me by bad relationships, things like that.

[00:13:17:06 – 00:13:31:02] Freya: So I’m just used to being, even if I have it, not being able to like see it as like a permanent fixture that could help me do anything. So I’m just very I think that’s part of my issue where I’m just like, yeah, it’ll work itself out, okay.

[00:13:31:05 – 00:13:46:04] Blake: Like money comes in, money goes. However, you know, when you get through periods that are sometimes out of your control and money is not coming, then you’re really faced with some dire situations.

[00:13:46:07 – 00:13:52:09] Ramit: And is that acceptable? Like, are you cool with it? Have you done that before? You can do it again?

[00:13:52:11 – 00:14:16:15] Blake: No. There’s always been a bit of a safety net or, you know, some freelance gigs that I can pick up quickly in the last few years. It’s then that safety net has shrunk, savings have shrunk. We’ve used it to cover some stuff here and there to pay down a card or, you know, whatever. Just, you know, we’ve just had that now that safety net is gone.

[00:14:16:18 – 00:14:25:04] Blake: The savings from all the years 401 K is cashed out. Poor financial decisions made. But to cover monthly costs.

[00:14:25:04 – 00:14:27:00] Ramit: Who made those decisions.

[00:14:27:02 – 00:14:46:14] Freya: Together I think I mean I think I definitely suggested stuff like the 41K or whatever like and you agreed to do it. I could tell you were a lot more hesitant than I was, but I feel like we felt like it was in a time during the panic from neither one of us was working, and it was like, and I was, I think we had a baby and I was pregnant.

[00:14:46:17 – 00:14:47:04] Freya: It was like.

[00:14:47:04 – 00:14:54:13] Ramit: Are you always the driver of the finances in this relationship? Yes. Okay. And your role is you’re along for the ride.

[00:14:54:15 – 00:14:56:05] Blake: Is that right? Along for the ride.

[00:14:56:05 – 00:15:01:16] Ramit: Maybe putting up some slight resistance, but basically along for the ride. That’s what I’m reading.

[00:15:01:22 – 00:15:15:17] Blake: Yeah. I tend to be like, okay, finances are, you know, cost like think of them and I don’t I try to really limit spending. Like I don’t buy a lot of stuff. Right.

[00:15:15:20 – 00:15:16:24] Ramit: This is common with men.

[00:15:16:27 – 00:15:31:15] Freya: Yeah. But when he says I am a spender it’s also because I do all the planning, I do all the kid stuff, I do the grocery shopping, I do everything. So I feel like and it’s a point of contention I always say that. So I’m like, well, yeah, you’re not spending any money because you’re not doing any of the things I need to be.

[00:15:31:17 – 00:15:33:27] Ramit: I didn’t hear him say that. You are a spender.

[00:15:33:29 – 00:15:40:23] Freya: What do you say? Okay. We’ve had this conversation before, and I feel like he’s like I’m the spender and he’s the not spender.

[00:15:40:26 – 00:16:09:23] Ramit: I hate this dynamic in a heterosexual relationship. The woman is the one who’s tracking everything. She’s worrying because she sees the numbers. And then you have the guy who’s like, I don’t really pay attention to it very much. It causes an ever increasing rift because she is down in the weeds, necessarily. But like, I hate when people are in the weeds taking on all this emotional labor and he’s oblivious to it.

[00:16:09:24 – 00:16:29:06] Ramit: It’s just not partnership. Look, everybody has blind spots. You do? I do. My guests certainly do. And that’s okay. What’s important is to recognize those blind spots, whether it’s on your own or with the help of your partner, and then make a plan to fix it.

[00:16:29:08 – 00:16:33:19] Ramit: Walk me through how money flows in your relationship for you.

[00:16:33:22 – 00:16:57:18] Freya: I have not been working a lot lately with the kids. It’s been tough. But usually it’s like income that we rely on and it’s sporadic. So it depends on how, you know, how was the the month before? Do we even have any left over? It just feels like a scramble. It’s like what hole to plug first.

[00:16:57:22 – 00:16:58:11] Ramit:

[00:16:58:14 – 00:17:14:07] Freya: Because maybe we’re a little late on rent and a couple of the utilities. And so it’s like plug those holes up. Oh but here comes summer camp. What are we going to end it at six. It feels like a scramble. It feels like it comes in and it’s gone quickly because we’re patching holes.

[00:17:14:13 – 00:17:26:27] Ramit: So you’re making decisions about what bill to pay, including some of your fixed costs like rent or utilities. What about the non fixed costs. So, you mentioned summer camp.

[00:17:26:28 – 00:17:27:16] Freya: Yeah.

[00:17:27:18 – 00:17:35:03] Ramit: Or let’s say eating out trips whatever the non-discretionary. So what about that.

[00:17:35:05 – 00:17:39:12] Freya: When we have it we spend it. And then when we don’t we panic.

[00:17:39:15 – 00:17:39:25] Ramit:

[00:17:40:02 – 00:17:57:24] Freya: And that’s literally how it feels. It’s just like pure panic. Otherwise like oh we have a couple extra hundred dollars. Let’s, let’s just go to dinner this one time. Right. You know and then it’s like oh well so-and-so really wants to go to like, we should, we should try a different director of that relationship. And here we are at dinner, doing the same thing we always do.

[00:17:57:27 – 00:17:59:04] Ramit: What do you get out of it?

[00:17:59:06 – 00:18:02:17] Freya: Honestly, for me, it feels like a just a minute of escape.

[00:18:02:20 – 00:18:05:10] Ramit: Escape from all the crap that is.

[00:18:05:10 – 00:18:16:07] Freya: Going on financially, which is like completely backwards. I know that’s what it feels like. I can forget about it for a minute. Enjoy it for a second and then worry about it later.

[00:18:16:08 – 00:18:17:06] Ramit: And Blake.

[00:18:17:11 – 00:18:37:21] Blake: I’m very similar to that, you know, kick the can down. You know live in the moment. Have that good time. Work your butt off to make the money back. They are very sort of myopic take on it. Yeah. And not no real future planning at all.

[00:18:37:24 – 00:18:38:10] Ramit:

[00:18:38:26 – 00:18:50:21] Blake: Frankly and it’s. Yeah it’s and that weighs on you, you know, that weighs emotionally that you have that moment, that dinner out or whatever. And then you’re like, oh my God. We spent, you know, $1,000 on dinners this month.

[00:18:50:27 – 00:18:54:25] Ramit: It weighs on you, but it seems like not enough to make a change.

[00:18:55:01 – 00:18:57:02] Blake: Or only recently have we made those changes.

[00:18:57:07 – 00:18:57:26] Ramit: What changes?

[00:18:58:03 – 00:19:17:28] Freya: We and I cut down on all of our subscriptions. I got a bot, a software thing to do. Budgeting. So we’ve been like. I’ve been really paying attention. It’s only been like a month, but like, I’m very invested in, like keeping track of things now, which isn’t the same as saving yet. But I’m like, I could’ve told you where I was spending money before.

[00:19:17:29 – 00:19:21:23] Ramit: Has anything in the relationship dynamic changed around money in the last month?

[00:19:21:26 – 00:19:26:19] Blake: I mean, we we have done weekly sit down, save all of our sit.

[00:19:26:21 – 00:19:32:06] Freya: I’m trying to do weekly sit downs. We’ve done it twice and we have not done it in three weeks.

[00:19:32:13 – 00:19:54:16] Ramit: The dynamic seems to have been Freya, you drive it and often you are also contributing to spending without knowing where the money’s going. Blake is along for the ride. There’s not real collaboration. And so even when you are trying to make a change in the last month, it’s just you doing more work.

[00:19:54:19 – 00:20:00:24] Freya: That’s 100% how it feels. Yeah, I’ve done this before. This is not the first time I’ve tried to get our finances in order try to make it.

[00:20:00:25 – 00:20:03:25] Ramit: Maybe if I try again. Yeah, maybe. And this time in.

[00:20:04:02 – 00:20:09:28] Freya: Time, it’s going to be better. But it’s it’s literally the same thing. I ended up giving up because it feels like I’m doing everything.

[00:20:09:28 – 00:20:10:28] Ramit: Why don’t you do it differently?

[00:20:11:04 – 00:20:17:28] Freya: I don’t know how. I guess I can’t figure out, like, I feel like I can’t do it by myself. I don’t know, I feel like, but yeah, I guess so.

[00:20:18:00 – 00:20:19:20] Ramit: Why don’t you do it differently?

[00:20:19:22 – 00:20:22:11] Freya: I get to say. Well, I tried.

[00:20:22:14 – 00:20:26:07] Ramit: And when you say that, what does it feel like?

[00:20:26:10 – 00:20:27:18] Freya: It’s not my fault.

[00:20:27:20 – 00:20:28:09] Ramit:

[00:20:28:12 – 00:20:34:23] Freya: I think it’s a definite like me being able to shift some blame and be like, well I don’t know. Okay. I can’t do it alone.

[00:20:34:26 – 00:20:45:19] Ramit: Yeah. And then Blake she’s setting up the meetings. But you have not taken on a role an active role in this. What do you get out of that guilt.

[00:20:45:22 – 00:20:46:16] Blake: Anxiety.

[00:20:46:20 – 00:20:48:23] Ramit: You get that. Then why don’t you change.

[00:20:48:25 – 00:20:55:14] Blake: Tough question. I mean it’s not tough I. Yeah I need to change. I mean I don’t know why I don’t.

[00:20:55:16 – 00:20:56:03] Ramit: Think about it.

[00:20:56:10 – 00:20:59:01] Blake: Yeah. I don’t I’m not sure the real.

[00:20:59:03 – 00:21:00:25] Freya: From my perspective I’m not him.

[00:21:00:27 – 00:21:01:09] Ramit:

[00:21:01:11 – 00:21:11:14] Freya: Been to lots of therapy in my life though. And I’m just like you know you just you’ve had a life when you were growing up where responsibility wasn’t really a thing. You know it’s like a very privileged upbringing.

[00:21:11:17 – 00:21:14:23] Ramit: In your opinion, what is Blake getting out of this.

[00:21:14:25 – 00:21:18:26] Freya: Of a complete avoidance doesn’t have to deal with it. Someone else will take care of the.

[00:21:18:26 – 00:21:19:28] Ramit: Problem, which is you.

[00:21:19:29 – 00:21:20:26] Freya: Which is me right now.

[00:21:20:27 – 00:21:31:23] Ramit: Freya, you called Blake an ostrich with money, I think. I guess, yeah, I think I understand what that means. And do you accept that comment? Would you agree that you are an ostrich with money 100%.

[00:21:31:28 – 00:21:38:14] Blake: Okay. I just try to make more money and then not talk about it. Yeah.

[00:21:38:17 – 00:21:53:11] Ramit: Maybe the conversations will go away. Yes. Yeah. If I just make more, then we don’t have to talk about this for another month. And maybe one day maybe never. Classic. That’s what’s going on. That’s descriptive. That doesn’t tell us what to do about it.

[00:21:53:13 – 00:21:54:02] Freya: Right.

[00:21:54:04 – 00:22:00:07] Ramit: I need to look at the numbers. Can we take a look. Okay. Okay. What was it like putting the conscious spending plan together?

[00:22:00:09 – 00:22:04:08] Freya: You don’t know because I did that coming up.

[00:22:04:11 – 00:22:09:01] Ramit: That, that answers my question. So you didn’t do it together? Why not? Is that the instructions?

[00:22:09:04 – 00:22:13:07] Freya: We did. I did share it with him. But I had already done it because I was like, I sent it.

[00:22:13:12 – 00:22:22:04] Ramit: You sent the link. You go. Here it is. FYI. And then you checked off one of those notepads. Exactly. I’m kind of missing the spirit trade first. Yeah.

[00:22:22:05 – 00:22:25:13] Blake: We actually sat down on the couch and went through.

[00:22:25:15 – 00:22:28:17] Ramit: Did you look through it? Oh, yeah. And what was that like for you?

[00:22:28:19 – 00:22:32:20] Blake: Shocking. You know that, like, wait, we have 500 whatever.

[00:22:32:20 – 00:22:34:20] Freya: $770 in subscriptions.

[00:22:34:24 – 00:22:35:13] Ramit: Yeah. Okay.

[00:22:35:16 – 00:22:36:14] Blake: Okay. Descriptions at.

[00:22:36:14 – 00:22:37:02] Freya: Seven. We did.

[00:22:37:02 – 00:22:47:00] Blake: It. No insurance on on our house. You know, that we rented in Venice. The hadn’t gotten canceled with our car. There was bundle a bundle that was unbundled when I canceled it. Yeah.

[00:22:47:00 – 00:22:49:17] Ramit: So you’re paying a lot of money. You didn’t realize what else.

[00:22:49:19 – 00:22:55:13] Blake: You know, shock at the amount of money we spend on food monthly.

[00:22:55:15 – 00:22:57:03] Ramit: Do you remember how much that was?

[00:22:57:06 – 00:23:04:07] Blake: I think we’re on 3000 range above 3000. Okay. With groceries and eating out and all those.

[00:23:04:11 – 00:23:06:07] Ramit: So you saw that number and what was your reaction?

[00:23:06:12 – 00:23:10:15] Blake: Like? We need to figure out a new, new system.

[00:23:10:21 – 00:23:12:12] Ramit: All right. Did you.

[00:23:12:14 – 00:23:20:07] Blake: We switched grocery stores, talked about the food that we eat.

[00:23:20:09 – 00:23:22:28] Ramit: What do you eat for $3,000 a month?

[00:23:23:00 – 00:23:26:28] Blake: We eat really, really well at home. Okay. We are not.

[00:23:26:29 – 00:23:28:04] Ramit: Like, what does that mean?

[00:23:28:06 – 00:23:41:05] Blake: I mean, Fred’s a chef. Yeah, she is an amazing cook. And we eat like we’re at a restaurant almost every night. Okay. And it is a luxury, and it’s amazing.

[00:23:41:10 – 00:23:46:18] Ramit: All right, let’s take a look at these numbers actually. What does it feel like to look at these numbers?

[00:23:46:20 – 00:23:51:16] Freya: I’m a little nervous. I don’t remember every single number that was on there. Okay. So I haven’t looked at it since.

[00:23:51:16 – 00:23:54:13] Ramit: So how long has it been since you put this together?

[00:23:54:15 – 00:23:55:28] Freya: I guess about a month.

[00:23:56:01 – 00:24:01:15] Ramit: All right. Can you read me the word in bold and the number next to it for this entire box?

[00:24:01:15 – 00:24:17:24] Freya: Assets, $5,000. Investments, $180. Savings, zero. Debt 96,179. Total net worth -$90,999.

[00:24:18:02 – 00:24:20:15] Ramit: All right. Well, was, if you like to see those numbers.

[00:24:20:15 – 00:24:22:15] Freya: Nauseating.

[00:24:22:17 – 00:24:24:03] Ramit: Blake, what about for you?

[00:24:24:05 – 00:24:25:01] Blake: Feels awful.

[00:24:25:03 – 00:24:27:20] Ramit: Yeah. Did you know these numbers?

[00:24:27:22 – 00:24:34:12] Blake: Yeah. Okay. I mean, especially that the debt numbers and the assets. Yeah. Yeah, I know these numbers.

[00:24:34:14 – 00:24:35:22] Ramit: What is the debt?

[00:24:35:24 – 00:24:37:19] Freya: Mostly credit card.

[00:24:37:21 – 00:24:39:18] Ramit: That’s credit card debt. Yeah, yeah.

[00:24:39:24 – 00:24:47:04] Freya: I think I have some back taxes on, my small business that I started. I think that’s about it, that most of his credit card.

[00:24:47:06 – 00:24:53:06] Ramit: What does it mean to you when you see these numbers? Like when you look at the numbers, what is the meaning that you draw from it?

[00:24:53:08 – 00:24:59:24] Freya: Honestly, for me it feels like failure. It looks like failure. Especially with kids.

[00:24:59:26 – 00:25:07:09] Blake: What about for you, Blake? I was going to say failure as well. Yeah, it’s just depressing to look at these numbers was, you know.

[00:25:07:12 – 00:25:08:03] Ramit: Me.

[00:25:08:06 – 00:25:32:19] Blake: As hard as you know, you work to try to get ahead and then. Yeah, that’s that’s where you are. It’s just like devastating. Yeah. And you kind of look back and back for decades. Yeah. Like what how what small shifts could I have made and behaviors and spending or whatever. Yeah. And what’s the answer. I mean so many things.

[00:25:32:21 – 00:25:50:27] Blake: First of all you know credit just made some smart fiscal decisions and and said no more or said yes to things like the discussion about personal finances. We’re actually embrace the personal finance and look at it. Yeah. I mean it’s it’s just brutal. I mean, it’s brutal as.

[00:25:50:28 – 00:26:19:26] Freya: Tough because like for me, I love my kids, but I’m like, I don’t think we were in a position to have two kids when we did, honestly. And then like looking at back at Ben’s like that is a decision I could have made differently. But of course, like you talking about your children. And then when I did, I wasn’t working and I’m like, I could have tried harder, maybe to, like, get more work somehow and just paying attention, like I didn’t pay attention in, like, in the years where I was working.

[00:26:19:26 – 00:26:36:14] Freya: And it was easier for me to make money. I wasn’t paying attention to where it was going. I didn’t do, I didn’t do. I used to say I was, I no one taught me what to do with money, but I also didn’t teach myself like, I’m like, I know that’s a cop out now because I was like, my parents taught me nothing about money.

[00:26:36:14 – 00:26:48:25] Freya: They had a terrible really, you know, I put a lot of blame on them, and only recently am I like, well, you know, there’s internet, there’s books, there’s classes. Like, I could have done so much more. Yeah. And I just did it.

[00:26:48:28 – 00:26:50:00] Ramit: Are you doing it now?

[00:26:50:03 – 00:27:08:13] Freya: I mean, I’m trying. It’s like I’m like reading a books and I am trying to, like, work on getting more skills so I can find more work. But it’s like it feels so late in the game. It’s like depressing is like definitely a word that I would use. But I look at this and like, what can I do now?

[00:27:08:13 – 00:27:10:09] Freya: It does feel depressing. It feels daunting.

[00:27:10:15 – 00:27:21:11] Ramit: Okay, let’s keep going down. The rest of the KSP. So let’s talk about the income. Blake, can you read off the combined monthly gross income.

[00:27:21:13 – 00:27:26:12] Blake: Combined monthly gross income is 11,933.

[00:27:26:14 – 00:27:31:25] Ramit: You to combine make $143,000 a year. Did you know that?

[00:27:31:27 – 00:27:33:01] Freya: I mean, I did.

[00:27:33:03 – 00:27:35:13] Ramit: You did. Okay. And Blake, did you know that.

[00:27:35:15 – 00:27:37:12] Blake: I knew it was around that.

[00:27:37:14 – 00:27:39:01] Ramit: What do you think about the income?

[00:27:39:04 – 00:27:43:29] Blake: I think it’s not where we need to be. Not where I want to be.

[00:27:44:04 – 00:27:46:09] Ramit: Is it a good income or a bad income?

[00:27:46:12 – 00:27:58:12] Blake: It depends on your situation and how you want to live. I think how we’re currently how we have been operating in the past seven years, it’s not a great income at all.

[00:27:58:15 – 00:28:06:29] Ramit: Two YouTuber living like you made a lot more. Yeah. How much do you think income, the lifestyle you were living was?

[00:28:07:02 – 00:28:10:02] Blake: Two 5250 that’s sort of where we were.

[00:28:10:04 – 00:28:12:06] Freya: I think that’s I think that’s part of the problem.

[00:28:12:08 – 00:28:13:26] Ramit: Oh, you need to make that much. Yeah.

[00:28:13:28 – 00:28:17:24] Freya: I used to make a six figure low six figure salary. Okay.

[00:28:17:24 – 00:28:22:10] Ramit: And then you made money as well. So that combined you were making, what, 252.

[00:28:22:10 – 00:28:23:04] Freya: Probably to.

[00:28:23:04 – 00:28:25:25] Blake: My salary. 2225. And then.

[00:28:25:27 – 00:28:27:13] Ramit: Oh, that’s a lot of money plus bonus.

[00:28:27:13 – 00:28:28:18] Blake: And that’s like.

[00:28:28:21 – 00:28:37:02] Ramit: So you’ve, you’ve come down from, let’s just say 250 to 140. And I’m guessing you didn’t change a lot of expenses.

[00:28:37:04 – 00:28:38:26] Freya: And added two kids.

[00:28:38:28 – 00:28:49:12] Blake: Okay. It was just a cash like an avalanche of expenses and responsibilities. And that combined with exterior.

[00:28:49:15 – 00:28:50:29] Freya: Yeah.

[00:28:51:02 – 00:28:55:03] Blake: The things that have happened, with, you know, economy and.

[00:28:55:03 – 00:28:59:09] Ramit: Wait, wait, wait, what about the interior stuff, though, the decisions that you made.

[00:28:59:12 – 00:29:20:06] Freya: We didn’t we we never talked about it. Yeah. We just things changed and we just kept doing what we were doing, you know, and just avoiding it. We just avoided it. And there’s like no way around it. We just avoided it. And we also lived in like, you know, the people that are our friend group and our circle all made way more money even before we started.

[00:29:20:06 – 00:29:27:26] Freya: And I definitely feel like there was a leaning into it and we did not put the brakes on it. Like it didn’t matter that I wasn’t working.

[00:29:28:03 – 00:29:28:16] Ramit:

[00:29:28:18 – 00:29:31:08] Freya: We did the exact same things we were doing anyways.

[00:29:31:11 – 00:30:01:04] Ramit: Yeah, I can understand the challenge of going from 250 to 140. That’s hard. Yeah, I don’t think many people have experienced what that’s like. At 250 you can spend without having to track a lot of stuff. Yeah, and at 140, with kids with debt, with additional expenses that you’re not in the same ballpark. I can understand it. I can understand avoiding decisions for a while that I can understand.

[00:30:01:06 – 00:30:16:07] Ramit: What I can’t understand is why you haven’t made a radical change right now. The only change that I’ve really heard is we got an app. I, Frida, am looking through the numbers, but, like, that’s about it.

[00:30:16:13 – 00:30:32:19] Freya: I did do some stuff like we got I cut our subscriptions down to. I think we’re down to 250. Some of them are for work stuff, so we can’t get rid of all the time. Okay, I did change what he said. We changed grocery stores. I, I did research, I didn’t know, and I started shopping at different grocery stores.

[00:30:32:21 – 00:30:36:13] Freya: We got rid of our babysitter. Okay. So I’ve been doing so.

[00:30:36:13 – 00:30:36:24] Ramit: They did make.

[00:30:36:24 – 00:30:38:12] Freya: Changes I have meetings.

[00:30:38:15 – 00:30:53:29] Ramit: Yeah. Now when we stop blaming, moving, making, tinkering changes and we just have to be still, it gets very quiet and then we have to be like, oh, there’s nobody coming to save us. Have you gotten to that point yet?

[00:30:54:01 – 00:30:58:18] Freya: I was going to say yes, but I don’t think I have because I haven’t changed anything.

[00:30:58:20 – 00:31:23:29] Ramit: Yes. So let’s take a look at the rest of the numbers. Investments are at 1% at $60. Going to a post-tax retirement account, savings are at zero. And then everything else is guilt free. Spending is -2%, which we know is not accurate. Right? You all are eating out just that at a minimum. Plus any other trips and whatever else.

[00:31:24:01 – 00:31:34:24] Ramit: So that’s not accurate for you. Can you read off the fixed cost number 102%? 102%. Was that mean?

[00:31:34:26 – 00:31:36:02] Freya: Feels like a joke.

[00:31:36:02 – 00:31:37:27] Ramit: Like what does it mean specifically?

[00:31:37:27 – 00:31:40:10] Freya: Just it means we’re living way beyond our means.

[00:31:40:10 – 00:32:04:12] Ramit: It means you are broke. Yeah. It means you’re spending more than you make every month. Every month. That’s the ballgame right there. Nothing else matters right there. That’s everything. It means that whatever money you are bringing in, you are spending more just to keep your fixed costs. In other words, the lights on. Yeah, there is no tinkering around the edges that will solve that.

[00:32:04:14 – 00:32:29:26] Ramit: And when you tell me that you have $0 in savings, what this tells me is you are actually weeks away from not being able to pay your rent. Yeah, this is the problem. Yeah. This is one of the worst financial situations that I have seen on this show. And I was shocked that it was almost $90,000 of high interest debt.

[00:32:29:29 – 00:32:56:17] Ramit: That is just, on its face, almost impossible to get out of. Then I see the 102% fixed costs they are spending more than they make every single month with no savings. What can I do here? Sometimes I also think about what the kids in situations like this are going to be learning. Am I going to see these children on my own show 30 years from now?

[00:32:56:20 – 00:33:15:21] Ramit: They’re coming on and telling me my parents never taught me anything about money. My parents were in severe debt, but they covered it up. I don’t want that. I’m trying to change these generational cycles. So when I hear that a couple is in this kind of debt, especially high interest debt, because they overspent and they have two kids, like that is a real problem for me.

[00:33:15:23 – 00:33:23:22] Ramit: A lot of people come to me with the idea that I have some secret magic math formula. I definitely do not. I can guarantee that.

[00:33:23:22 – 00:33:25:26] Freya: Let’s go, let’s quiet.

[00:33:25:28 – 00:33:52:17] Ramit: But I think what often ends up happening is this becomes the place that they can finally stop spinning, actually get quiet and still, and realize what the real issues are. What do you think the real issues are? Now that we are looking at your KSP and seeing tens of thousands of dollars in credit card debt, no savings, effectively no investments to children.

[00:33:52:19 – 00:33:55:19] Ramit: What are the real issues here? Blake?

[00:33:55:21 – 00:34:39:20] Blake: Avoidance, lack of proactivity. You know, operating out of, kind of a negative space and just fix it with more income kind of mentality. The constant search for more income. Yes. And not being a as good of a partner to Freya and taking some more responsibility, really sit down and put my really earnest effort into solving some of those issues and really facing, like, tougher decisions that we probably should make in very near future.

[00:34:39:23 – 00:34:41:24] Ramit: You ever said that out loud before?

[00:34:41:26 – 00:34:48:16] Blake: I’ve said similar things, but it’s about action and not words. Yeah.

[00:34:48:19 – 00:34:51:03] Ramit: Freya, what about you? What’s the real issues going on here?

[00:34:51:05 – 00:35:08:01] Freya: I think a lot of it for me is feeling siloed, like we’re not in a partnership. And I think that’s hard for me because then I feel like I have to do it, but then I can’t, and then I stop. And it’s like this cycle of just not, I don’t know, I just does it. I feel like I’m doing it by myself, but I’m not doing anything.

[00:35:08:01 – 00:35:13:14] Ramit: I mean, as recently as 3 or 4 weeks ago, you downloaded an app. Yeah. You’re taking on more.

[00:35:13:15 – 00:35:22:27] Freya: I think I feel a little helpless in this situation to to do it. Like, I don’t know, I just feel I feel lost. I’m just I look at it, it feels daunting and overwhelming.

[00:35:22:27 – 00:35:27:19] Ramit: And what about for each other? Like, I didn’t hear you mention anything about Blake’s complete absence from it.

[00:35:27:19 – 00:35:49:00] Freya: Yeah, I think that’s why we’re feeling siloed. Like, I just I feel like we end up. We end up fighting about it. And it’s really hard for me to want to push the conversations because it’s so often ends negatively. And then. Yeah, and then it just we just go back into our usual like modes and I do all this stuff and then I get frustrated.

[00:35:49:00 – 00:35:55:16] Freya: But I don’t know, it’s like I feel like I need a partner.

[00:35:55:18 – 00:36:06:00] Ramit: How much you think you spend on guilt free spending or let’s call it discretionary spending. In this case, there’s a lot of guilt. Yeah, I don’t think how much you think you spend if you, you know, you eat out, let’s say how many times a week?

[00:36:06:02 – 00:36:09:28] Freya: Only a month. More like three times a month. Three times a year. Really pretty good about that. All right.

[00:36:09:28 – 00:36:14:19] Ramit: And then clothes, vacation. Personal care.

[00:36:14:21 – 00:36:18:21] Freya: I mean, it’s got to be at least $1,200, at least.

[00:36:18:21 – 00:36:20:17] Ramit: At least kids.

[00:36:20:19 – 00:36:31:20] Freya: A lot of that would be the kids stuff, like their clothes. And, like, we don’t take them to eat out, but like, they’re growing, they have they have tennis lesson. One of them is in tennis. One of them takes dance, you know.

[00:36:31:21 – 00:36:32:00] Ramit: To ask a.

[00:36:32:00 – 00:36:33:17] Freya: Question. Yeah.

[00:36:33:19 – 00:36:39:10] Ramit: For a couple that’s in almost $100,000 of credit card debt. Did their kids get to go to tennis lessons?

[00:36:39:13 – 00:36:48:24] Freya: I mean, ours do, and they probably shouldn’t play the scarcity thing with how I was raised and how I always made it work. And I think that’s part of my problem.

[00:36:48:24 – 00:36:50:07] Ramit: Like, how were you raised?

[00:36:50:09 – 00:37:08:09] Freya: Oh, I didn’t get to do anything. I was homeschooled, I was not allowed to do any no lessons, no not no fun. Like it was just not a thing that we did. We did not go on vacations. We did not do you know, it was not money was very always very scarce. Or I was told anyways was we didn’t have any.

[00:37:08:11 – 00:37:09:21] Ramit: And that’s not true.

[00:37:09:24 – 00:37:18:05] Freya: Now, I know it wasn’t necessarily true. They weren’t, you know, super well-off, but they were middle class. And why did.

[00:37:18:05 – 00:37:18:27] Ramit: They tell you that?

[00:37:19:00 – 00:37:41:16] Freya: I don’t know if it was the religion part of it. I think that might have had a big part of. Yeah. Just not spending. And then there was ups and downs with my, you know, my dad was the only one working. Got it. And then I was on my own at 17. So it was literally just hand-to-mouth for a really, really, really long time hand-to-mouth.

[00:37:41:16 – 00:37:42:09] Ramit: What does that mean to you?

[00:37:42:13 – 00:37:46:20] Freya: Like slept on a train when I first moved to New York, like, really didn’t have anywhere to go. Yeah.

[00:37:46:24 – 00:37:51:26] Ramit: Do you remember any specific phrases that they said about money phrases?

[00:37:51:26 – 00:37:52:21] Freya: No.

[00:37:52:24 – 00:37:53:24] Ramit: We can’t afford it.

[00:37:53:26 – 00:37:58:00] Freya: Yeah, we don’t have it. Honestly. We just. I just don’t ask for anything.

[00:37:58:01 – 00:37:58:23] Ramit: Were you an only child?

[00:37:58:24 – 00:38:00:14] Freya: No 1A5.

[00:38:00:15 – 00:38:02:01] Ramit: Oh really?

[00:38:02:03 – 00:38:07:27] Freya: And I just remember layaway. Wow. Clothes like winter coats on layaway.

[00:38:08:00 – 00:38:13:09] Ramit: Are your siblings in similar financial situations. Yes. All of them.

[00:38:13:14 – 00:38:17:04] Freya: Them the one with one exception.

[00:38:17:06 – 00:38:21:20] Ramit: You mentioned, your family was religious. Tell me a little bit about that.

[00:38:21:27 – 00:38:29:28] Freya: Oh, wow. Hardcore Jehovah’s Witness. Hardcore. Really? I did not go to school. I was taken out of school when I was ten.

[00:38:30:00 – 00:38:30:22] Ramit: Wow.

[00:38:30:25 – 00:38:53:09] Freya: So no formal education? Until I was seven. I applied for fashion school. Like I got a high school diploma from my home school. Then I applied to the fashion school, got it on my own steam, and did that for a couple years. And that’s how I ended up being able to have it a career later. But yeah, no, I didn’t go to high school.

[00:38:53:10 – 00:39:05:28] Freya: Everything I know I had to learn on my own, like I would go to the library and like study things because it was just, here’s what you have to do to graduate every year. I just I never got any actual education.

[00:39:06:02 – 00:39:09:08] Ramit: But you still religious? Oh, God, no. And you’re.

[00:39:09:08 – 00:39:10:13] Freya: Spiritual. But I’m not.

[00:39:10:13 – 00:39:12:09] Ramit: Religious. What about your siblings?

[00:39:12:12 – 00:39:12:28] Freya: No.

[00:39:13:01 – 00:39:13:27] Ramit: They’re not religious either.

[00:39:13:27 – 00:39:16:22] Freya: Oh, absolutely. Not even my dad’s not in the religion anymore.

[00:39:16:23 – 00:39:23:20] Ramit: Is that right? Wow. How do you think your religious upbringing affected your view of money?

[00:39:23:22 – 00:39:45:16] Freya: A lot of it did go to the church, and I was very resentful of a lot of it. I think I have a big I had a big resentment towards the whole thing because I wasn’t allowed to be educated when I was talking about what job I would want to support myself, it was like, be a locksmith so you can go preach God’s Word during daytime hours and you can work at night.

[00:39:45:18 – 00:40:03:06] Freya: Yeah. So there was a lot it was like very deprivation, scarcity kind of mindset. And I think that had a lot to do with it. And I had realized really early on that I would have been completely self reliant. Which I feel like also translated need like, well I’m going to do whatever I need to do for me to feel good.

[00:40:03:08 – 00:40:08:19] Freya: And that’s a lot of that translated to not saving, not denying myself stuff.

[00:40:08:22 – 00:40:21:17] Ramit: Because you were denied so often as a kid. Oh yeah. And what about the relationship here. How do you think that your religious upbringing has affected your relationship with Blake?

[00:40:21:19 – 00:40:29:17] Freya: I okay, well, when it comes down to saying no to one’s self, I feel like I found a kind of like my soulmate and not wanting to do that.

[00:40:29:20 – 00:40:32:05] Ramit: You don’t say no to yourself, nor does he.

[00:40:32:08 – 00:40:48:05] Freya: Yeah, but I feel like that. I felt kind of symbiotic in a way. Like we both kind of have like the same kind of laissez faire, you know, embrace life while you can viewpoint. And I think that’s one of the reasons we clicked in the first place, just like kind of our similar outlooks.

[00:40:48:07 – 00:40:54:01] Ramit: That outlook being, let’s say, yes, let’s take the day off and let’s, let’s enjoy what life has to offer and.

[00:40:54:01 – 00:41:01:13] Freya: Also work hard and like and hustle. And we both have a really big hustle mentality, hustle mentality.

[00:41:01:15 – 00:41:08:03] Ramit: It works until it doesn’t. You can hustle now. Yeah, you can hustle when your fixed expenses are low.

[00:41:08:03 – 00:41:09:08] Freya: And when you’re 25.

[00:41:09:08 – 00:41:18:17] Ramit: When you’re 25. Yeah. But when you have high fixed costs, including 90 K of debt, when you have two children, hustling stops working.

[00:41:18:20 – 00:41:21:02] Freya: We are realizing that now.

[00:41:21:04 – 00:41:53:08] Ramit: I really feel for Freya, hearing how she grew up in a way that most of us cannot fathom, kicked out of her house at 17. Just imagine what type of upbringing somebody had to go through in order for that to happen. Being a Jehovah’s Witness, having many siblings, none of whom are religious anymore, and almost all of whom are in similarly dire financial straits, there was obviously a lot going on when she grew up that causes long lasting effects.

[00:41:53:10 – 00:42:18:25] Ramit: Some of you ate pizza two days ago, and the roof of your mouth is still burn and you’re complaining about it all so difficult. My life. It is quite illuminating that Freya was kicked out of her house at 17, and here she is, maybe weeks away from being kicked out of her house as an adult. As a mother, the ways that we grow up often show up for us as adults.

[00:42:19:01 – 00:42:29:07] Ramit: They are often inescapable unless we make huge changes. What about you? What do you remember your family saying about money when you were young?

[00:42:29:10 – 00:42:53:18] Blake: We don’t talk about money. We’re southern. Okay. I grew up in the Bible belt, man. You know you don’t talk about money. Wow. You don’t talk about emotions. He, you know, sweep it under the rug, right? I, you know, grew up in eastern Tennessee, you know, felt wealthy or felt privileged, for sure.

[00:42:53:23 – 00:42:54:17] Ramit: Why do you feel that?

[00:42:54:23 – 00:43:07:08] Blake: My dad was a doctor. Okay. In the small town, there was not. Layaway was not a thing for us. Take trips. Trips? Yeah. The annual summer trip. Yeah.

[00:43:07:11 – 00:43:11:29] Ramit: And what did that teach you? The fact that you grew up privileged, like, what was your feeling about money?

[00:43:12:02 – 00:43:31:26] Blake: My feeling about money was I just didn’t give it much thought. Frankly, I never talked to my parents about it. In fact, when I confided in my dad that work going to do this show last a couple days ago, he ironically said, well, it’s going to be really nice. Must be nice to be able to talk to someone about that, right?

[00:43:32:03 – 00:43:57:25] Blake: Wow. And I was like, yeah, what it would have been 20 years ago, right? I get a little wish I would have asked, you know, wish I would have dug a little deeper because I know there’s information there. Yeah. I didn’t know that. They at my parents struggled with their mortgage. At one point we had to ask them, hey, can we borrow five K or whatever a ten K?

[00:43:57:27 – 00:44:19:23] Blake: Because we’re about to, you know, get evicted. And they were like, absolutely. We can help. Yeah. Yeah it was a band aid. But it was so helpful and we’re very grateful. But then they confided and let us know that they too had a similar issue. There were points in their lives that they, you know, didn’t know if they were going to make their mortgage, etc..

[00:44:19:27 – 00:44:42:08] Blake: I was like, I was like, really? I’ve been shocked to even know that. Never heard any of that before. I think the main takeaway from my parents that I can remember was invest Roth IRA like burnt into the brain. That’s I actually don’t think that that’s on here. There is a Roth with 18 K.

[00:44:42:09 – 00:44:43:25] Freya: Oh, I didn’t know that.

[00:44:43:25 – 00:44:48:08] Blake: In this that I did. I’ve never told anyone about this. I don’t ever want to touch the Roth.

[00:44:48:11 – 00:44:52:11] Ramit: Well, that’s quite interesting. How did that not come up?

[00:44:52:14 – 00:44:55:11] Blake: I don’t want to cash it out for that.

[00:44:55:13 – 00:45:06:03] Ramit: Yeah, yeah, yeah. So you know that if you bring that up into this dynamic, it will simply get drained. Yeah. Okay.

[00:45:06:06 – 00:45:13:10] Blake: And I know the Roth I mean, from the little I know, I know Roth IRA is one thing that you absolutely shouldn’t touch and everything else has been touched.

[00:45:13:12 – 00:45:15:18] Ramit: So what does that feel like to hear that.

[00:45:15:21 – 00:45:31:15] Freya: I’m actually not. I thought I would be mad if I found something out like that. But I get it. You get it, I understand. And you know, I had a 401 K once upon a time too, and somebody convinced me to take it out and I never saw it again. And it’s so I get it. And I don’t think.

[00:45:31:15 – 00:45:38:08] Ramit: It’s I didn’t realize that I was asking if you can blame Blake. I just asked how it felt to hear that.

[00:45:38:11 – 00:45:53:17] Freya: I’m. I mean, it’s I’m surprised. And it’s like I’m also kind of relieved in a way, to know that there’s still something there. Like, I feel a little bit of relief, honestly, just to know that that there is something somewhere.

[00:45:53:20 – 00:46:01:11] Ramit: Like, what do you think that your little lessons about money, what are those? Have you brought to this relationship?

[00:46:01:14 – 00:46:05:10] Blake: Yeah, I don’t think I brought any good tools to this relationship at all.

[00:46:05:10 – 00:46:09:09] Freya: Just I feel like you’re being a little coy about your upbringing. You went to boarding school.

[00:46:09:11 – 00:46:11:26] Ramit: What’s a like? They went their.

[00:46:12:02 – 00:46:16:23] Freya: Their their yearly vacations were like, weeks long in Europe.

[00:46:16:26 – 00:46:20:17] Ramit: I feel like he’s made it quite interesting. How come you didn’t bring that up?

[00:46:20:20 – 00:46:22:22] Blake: I mean, that was there was one thing.

[00:46:22:24 – 00:46:24:17] Freya: You guys. Maybe you went to boarding school.

[00:46:24:22 – 00:46:26:08] Blake: Yeah, I did boarding school.

[00:46:26:09 – 00:46:30:26] Ramit: It’s a different caliber. Well, than we might think. Like small town doctor.

[00:46:30:26 – 00:46:31:23] Freya: Exactly.

[00:46:32:01 – 00:47:01:29] Ramit: Okay. That’s interesting. What is this shit? What are these secret accounts coming out of nowhere when they’re down to 180 bucks in their investment account? At first, it’s like, very comfortable. My dad was a little country doctor. Then the hidden IRA. Where did that come from? I certainly didn’t know about it. And the boarding school? Two secrets, two things that provide a ton of color but just glossed over.

[00:47:02:00 – 00:47:21:12] Ramit: That kind of changes the story. It kind of tells me you have a different view than what I was led to believe. The funniest part of this, by the way, is that I only caught on to this because I glanced at Freya’s face. As I’ve always said, the partner knows best when someone is not telling the full story.

[00:47:21:17 – 00:47:47:06] Ramit: I just look one foot to the left. Boom. There you go. First of all, I’m not okay with people hiding things from me. If you come here, you want help, so why would you lie when I’m trying to help you? But second is just another way of recreating this dynamic of Blake not getting into the details, of staying superficial or vague and not engaging with the meet.

[00:47:47:08 – 00:48:11:18] Ramit: The real fact of the matter. We got to make a change on this one. So no lessons from that. Like, let me put yourself. I’m myself in your shoes. I grew up in the South, wealthy family. I never really have to worry about money. I get the things I want and we travel and we see the world. And then I grow up and I make six figures living a pretty good life.

[00:48:11:20 – 00:48:31:03] Ramit: And then I blink my eyes and I find myself in $90,000 of debt, potentially about to be evicted. Yeah, I’m kind of like, I don’t understand what happened here, but I just need to keep earning money because if I just make money, then I can have the type of childhood or type of relationship that we had growing up.

[00:48:31:05 – 00:48:34:17] Ramit: Where did I go wrong on that? How much of that is accurate?

[00:48:34:20 – 00:48:44:26] Blake: Very, very accurate. All right. Yeah. It’s yeah I’ve always had I’ve had strong income, good work ethic.

[00:48:44:28 – 00:48:56:04] Ramit: I think you didn’t need to develop any serious skills around money. I think that you grew up your family provided provided very well. Didn’t teach you much. Right. When did you start making a lot of money?

[00:48:56:08 – 00:48:56:28] Blake: 30s.

[00:48:56:28 – 00:49:12:03] Ramit: 30s. All right. Made it spent it developed no real skills for saving, right. Investing. But you know what? A lot of people grow up privileged with their parents not telling them about money, but they don’t get into $90,000 of debt. What do you think happened here differently?

[00:49:12:05 – 00:49:40:02] Blake: I was just very Peter Pan esque. I’m on a good roll here. Positive outlook. Yeah. Totally naive. Of like, this will lead to more. And with each year, that salary is going to get a little bigger. Things are on my side. Not thinking about a worst case scenario. Never like imagining like, oh wow, big things can shift.

[00:49:40:02 – 00:49:42:08] Blake: And I have no security.

[00:49:42:08 – 00:49:43:28] Ramit: Blanket and life doesn’t always go up.

[00:49:43:29 – 00:49:58:06] Blake: Yeah, putting things on a credit card, paying down, I mean, I never and that whole time I never missed a credit card payment, you know. But pay them down. And then that just became a little more comfortable to put there. Comfort. Yeah.

[00:49:58:07 – 00:49:59:19] Ramit: That’s what you mentioned early on.

[00:49:59:24 – 00:50:17:15] Blake: Yeah. And not saying no, I don’t I’m not confrontation is not good eye confrontation has always been a problem for me or really standing up, even if I think like this is not a good idea, I’d rather just go with the bad idea and deal with it later.

[00:50:17:18 – 00:50:30:02] Ramit: What if I told you that in order to succeed with money, or frankly, in order to not get evicted, you will need to confront the very thing that you have avoided your entire life. Confrontation.

[00:50:30:08 – 00:50:58:03] Blake: I had a feeling you’re going to say. Yeah, yeah. I mean, we have to I have to for for Freya and frankly, for my children because I because it’s a, you know, very emotional because you want the kids to have a great future. And experiences and I’d rather them know the problems we’re having now than like, try to hide.

[00:50:58:06 – 00:51:03:14] Ramit: Yeah. So like your family did.

[00:51:03:16 – 00:51:08:19] Ramit: I mean you made the choice to come on here. They’re going to see this one day. Yeah. What do you think about that.

[00:51:08:21 – 00:51:21:18] Blake: Good I mean fine I’d rather like, you know, strip down naked and tell the truth and, like, hopefully someone learn from it. Them or someone else I do. Don’t make the mistakes that guy made.

[00:51:21:20 – 00:51:40:28] Ramit: Yeah. You know, that’s that is the kind of energy that I have not seen today. But that tells me you might be ready to make a change. Yeah, that’s very courageous. I think it’s a gift that your kids are going to see this one day. Because look at what happened that your parents didn’t teach you. They were very privileged.

[00:51:40:28 – 00:51:59:02] Ramit: Your family, they could have taught you about when times are good and when times were not. That is an opportunity they did. Not. Even today. Your dad goes, oh, it must be nice. Like there’s an opportunity for a lesson. And they couldn’t do it for whatever reason. That was their time and their style. Okay. But you too can.

[00:51:59:06 – 00:51:59:28] Ramit: Yeah.

[00:52:00:00 – 00:52:10:08] Blake: I think that’s my as we’re thinking about coming here is that’s my goal. My make that make that change. So the plane lands in a different area. Yes. For them you know. Yes.

[00:52:10:13 – 00:52:12:19] Ramit: And and actually for you too.

[00:52:12:22 – 00:52:13:16] Blake: And for us too. Yeah.

[00:52:13:17 – 00:52:40:28] Ramit: Yeah. This is a really difficult situation. They’re going to have to make huge changes that they are unaccustomed to. But seeing Blake stripped down basically say, I’m ready to make a change. And crying, dad tells me that there is hope. Most people in a bad financial situation struggle to even acknowledge that it’s a problem people will make endless justifications for.

[00:52:40:28 – 00:52:57:23] Ramit: It’s not so bad. Or at least we’re not as bad as our neighbors here. You can see that Blake is actually acknowledging they’re in a bad situation, and that is the first step to making a plan that’s going to get them out of it.

[00:52:57:26 – 00:53:21:12] Ramit: We need to go back to the numbers now. Now that I understand a little bit more about how you grew up, and I want to see what these numbers are specifically line by line. Okay. Let’s take a look. So under your, fixed costs, your rent is $3,480, which is 29% of take home pay, not bad in and of itself, it’s a little higher than 28%.

[00:53:21:12 – 00:53:29:16] Ramit: But these days that’s difficult to hit. Yeah, but it doesn’t give you any real margin for extra stuff. Did you know that?

[00:53:29:19 – 00:53:30:01] Freya: Yeah.

[00:53:30:04 – 00:53:36:07] Ramit: You knew that when you downscaled from Venice to go to Washington, you chose that.

[00:53:36:07 – 00:53:39:03] Freya: I was making more money at the time.

[00:53:39:06 – 00:53:45:14] Ramit: Okay. Got it. So you’re making more money and you’re making less now. So nowadays you’re making $2,200 a month.

[00:53:45:15 – 00:53:47:26] Freya: I’m making about half of what I was making before.

[00:53:47:29 – 00:53:54:29] Ramit: All right. Utilities, 450 insurance, 488. Car payment. 636. Does that include gas as well?

[00:53:55:01 – 00:54:04:00] Freya: Yeah. Okay. Once that’s a lease and it’s electric. So we don’t pay for that. But then we have another car, a second car that we own outright. And that’s.

[00:54:04:04 – 00:54:22:02] Ramit: Do you need two cars? Well that’s a good answer. Something I’ve said when you said I said goodbye car. Nice knowing you. Yeah. No need to tell me. We’ll get to that. But enjoy the last 12 minutes with your car. Does anything stolen? Thank you for the sign that payments are 290. There’s no way.

[00:54:22:04 – 00:54:28:17] Freya: No, that’s because we were. I mean, that’s the other part. We have not been making the credit card payments at all.

[00:54:28:19 – 00:54:29:21] Ramit: I mean, the minimums, I.

[00:54:29:21 – 00:54:34:15] Freya: Think late in the last couple of months when it’s been.

[00:54:34:17 – 00:54:36:03] Blake: I would just stopped for it.

[00:54:36:04 – 00:54:37:24] Ramit: So is it in collections?

[00:54:37:27 – 00:54:42:15] Blake: Yeah. It just hit collections last like last week or last month. Yeah.

[00:54:42:20 – 00:54:46:13] Ramit: When you saw that, what was your reaction.

[00:54:46:16 – 00:54:48:27] Blake: When I saw it? I mean, I knew it was coming.

[00:54:49:00 – 00:54:49:22] Ramit: And then.

[00:54:49:25 – 00:55:00:28] Blake: I was like, I think bankruptcy is probably the answer. So I reached out to bankruptcy lawyer and then we learned the cost of that. And it’s like, oh my God.

[00:55:01:00 – 00:55:02:07] Ramit: Then what was your reaction?

[00:55:02:07 – 00:55:07:22] Blake: Then to hang tight and figure out how to do how to cobble the money together for the bankruptcy lawyer?

[00:55:08:00 – 00:55:31:04] Ramit: The pattern here is a very superficial engagement with money. It’s like, don’t pay any attention to it. I’m fast forwarding a lot. Get a collections notice. And just like, all right, what’s the fastest way out of this call a bankruptcy attorney. No engagement with the numbers? No, I guarantee you have not picked up a book or done something differently because of that.

[00:55:31:04 – 00:55:54:04] Ramit: Collections. Notice not even doing your regular meetings. Just like, what’s the most surface level thing that can get this away from me? Because it feels bad. Do you notice that pattern? Yeah. You cannot, delegate your way out of this. You can’t. You cannot stay at the service level. And actually, the hardest part of this transformation is in the weeds.

[00:55:54:06 – 00:55:59:22] Ramit: And it’s the only way out. Groceries are $1,200. And that’s down from the 3000.

[00:55:59:22 – 00:56:03:24] Freya: That is down from. Yeah, it was a little over three.

[00:56:03:24 – 00:56:08:18] Ramit: K clothes, 50 phone, 260 subscriptions or 375. And that’s down as well.

[00:56:08:18 – 00:56:17:03] Freya: Phone’s gone down to I takes my kids off the phone plan. I’ve been paying for my adult children’s phones for since they were ten.

[00:56:17:06 – 00:56:42:05] Ramit: Get in tight on this. What the fuck is wrong with all these parents and credit card debt paying for their adult children’s cell phones? Are you kidding me? When I moved to New York, you know, I lived in this building is a nice building, and my very nice, naive parents from California came to help me move in. And, you know, they’re, like, helping me push the cart up the elevator.

[00:56:42:05 – 00:57:02:10] Ramit: And they’re looking around and they’re like, wow, there’s a lot of young people in this building. They must do very well. And I just laughed at them. Like moms, these kids parents pay for their apartment, and they were, like, flabbergasted because this doesn’t happen on the West Coast as much as in New York. They’re like, how can the parents afford to pay for their apartment?

[00:57:02:12 – 00:57:14:18] Ramit: I’m like, oh my God, it’s so adorable. They don’t know how this works. But yeah, here we are in debt. Yeah. Paying. No, this opens up a whole can of worms. What else have you paid for for your adult children?

[00:57:14:20 – 00:57:24:22] Freya: Not a lot to say. No, I did, and that is why I kept doing it. Because I had a lot. I felt guilty that I couldn’t do more for them. This was like, I for me, I was like, I was like the bare minimum. I mean, don’t you.

[00:57:24:22 – 00:57:31:02] Ramit: Feel guilt about having, you know, almost being evicted? What about that? Right? I don’t even like guilt, first of all.

[00:57:31:03 – 00:57:31:16] Freya: No.

[00:57:31:17 – 00:57:38:27] Ramit: So I’m being a bit facetious here, but like, the guilt of not going on a trip, the guilt of not paying for, like, grown kids phones me.

[00:57:38:29 – 00:57:56:14] Freya: And my au pairs until I had to take care of my old au pair. That does not work for us any longer. I’m like, yeah, no, I was like, this is insane. I don’t know what I don’t know. I like, you know, I mean, I feel I mean, I think it is because again, when I was brought up, I got nothing from my parents.

[00:57:56:14 – 00:58:00:24] Freya: I mean, I got kicked out. I had they gave me negative thing. They gave me negative.

[00:58:00:25 – 00:58:03:17] Ramit: But you’re about to get kicked out yourself.

[00:58:03:25 – 00:58:04:24] Freya: Yeah.

[00:58:04:26 – 00:58:30:01] Ramit: So while I understand that your background has influenced the way that you give and perhaps even give when you can’t say you’re about to lose it all, yeah, like I would actually get angry. I’m angry at myself, angry at my upbringing, angry at each other, angry at the dynamic that we have allowed ourselves to sink into. Why not take that?

[00:58:30:03 – 00:58:39:26] Ramit: Why not decide what emotion you’re going to bring to bear and then channel it like a freaking magnifying glass till it lights this thing on fire? Why not that.

[00:58:39:28 – 00:58:45:10] Freya: I like that. No, I like this. Then this is. I feel like I’m like that with so much of my rest of my life.

[00:58:45:13 – 00:58:50:19] Ramit: Yeah. Somebody who has multiple freaking notepads knows what it’s like to focus her energy. I do like.

[00:58:50:19 – 00:59:06:22] Freya: That with the rest of my life. And I it’s just it’s been a weird I don’t know how like it got here. We’re fighting and except for, like, I don’t the psychologically, I know I’ve been used to people taking from me. I’ve been used to not having everything used to be able to make it up. Yes. And it’s just like it’s not working anymore.

[00:59:06:23 – 00:59:30:09] Ramit: You made decisions over and over and over again that brought you here. Yep. Like we can we can catalog them. There was Mexico. There’s paying for adult children. There’s not saying no, there’s not having meetings. There’s not even knowing that you’re spending thousands of dollars a month on groceries. These are compounding over time, right. And they’re certainly not adjusting your expenses when you cut your income.

[00:59:30:09 – 00:59:53:11] Ramit: All of these things worked in tandem, like a magnifying glass. And they lit a fire to the fire. Just happened to be $100,000 of credit card debt. Okay. Continuing along, we have childcare for 1400 and kids activities for 173, and then miscellaneous, which is $1,320. Would that be fair?

[00:59:53:13 – 00:59:55:10] Freya: Pretty close. Yeah, yeah.

[00:59:55:12 – 00:59:58:16] Ramit: Child care. Can you just walk me through that? So you have childcare?

[00:59:58:23 – 01:00:03:14] Freya: The youngest one is still in preschool. There’s no free pre-K where we live.

[01:00:03:15 – 01:00:05:05] Ramit: How long until that changes?

[01:00:05:06 – 01:00:05:20] Freya: August.

[01:00:05:28 – 01:00:07:24] Ramit: And then how much will you save?

[01:00:07:27 – 01:00:11:07] Freya: $1,400. So, like, that’s good. Yeah. No. That’s great.

[01:00:11:07 – 01:00:23:12] Ramit: Good. Let’s keep going. Investments. You have $60 going. All right. Yeah. Savings are zero. And then you’ll have what else for? We talked about eating out. What else?

[01:00:23:14 – 01:00:25:27] Freya: Books and art supplies.

[01:00:25:29 – 01:00:29:14] Ramit: What’s art? That’s an Indian person’s answer. What’s art?

[01:00:29:16 – 01:00:32:21] Freya: I mean, I do sell my pieces.

[01:00:32:23 – 01:00:35:18] Ramit: Don’t do that. Let’s be intellectually honest.

[01:00:35:20 – 01:00:39:23] Freya: I would say spend at least $100 a month on books.

[01:00:39:25 – 01:00:40:06] Ramit: Go ahead.

[01:00:40:06 – 01:00:42:11] Blake: Blake, I would say at least.

[01:00:42:14 – 01:00:44:26] Ramit: Let me get an accurate number. Give me the ceiling, not the floor.

[01:00:45:04 – 01:00:53:11] Blake: Between Ross Michaels and books and machines that make things. There, it’s.

[01:00:53:11 – 01:00:56:01] Freya: Probably if we averaged out 300.

[01:00:56:01 – 01:00:56:15] Blake: 300.

[01:00:56:18 – 01:01:03:10] Ramit: 300 a month. Okay. Yeah. What do you make of me going through these numbers? Blake, what are your surprises?

[01:01:03:12 – 01:01:15:16] Blake: I’m not surprised by a lot in here. Yeah, I mean, I’m surprised at how little we have. Yeah, and in certain situation. But, Are you surprised by anything?

[01:01:15:19 – 01:01:17:04] Freya: Yeah. Our inaction.

[01:01:17:06 – 01:01:17:12] Blake: Yeah.

[01:01:17:19 – 01:01:38:28] Freya: I was shocked that we can look that we looked at this and were like, cool. Let’s go to dinner next week. It doesn’t even feel like myself, like, you know, like I it’s almost like it’s happening to somebody else. That’s kind of what it feels like to look at that and be like, I just feel like there’s like this huge chasm between me and those numbers for some reason.

[01:01:39:04 – 01:01:43:17] Freya: Yes. And it’s not it’s honestly, I’m frankly annoyed with my good friend.

[01:01:43:17 – 01:02:09:00] Ramit: You should be pissed. Yes, I am pissed. So in order for me to help you make a change, I need to know. Right now, you’re essentially just. You’re still spending the way you used to spend us. Cutting this down by $200 is going to make no difference. We got to start blank page. So I want to know rich life, but rich life starting from where you are today, what is your rich life?

[01:02:09:00 – 01:02:16:27] Ramit: In other words, it can’t be. We’re going to retire in five years. That’s not going to happen. What is your true rich life based on where you are today?

[01:02:17:04 – 01:02:24:06] Blake: I think rich life would be keeping our kids and some extracurricular activities.

[01:02:24:10 – 01:02:29:19] Ramit: That’s the first part of your rich life is spending money on your kids.

[01:02:29:21 – 01:02:40:29] Blake: Letting them do some things. Okay, you know, not taking all that because they get so much joy out of that. What else? Yeah. Family trips, whether that’s camping or whatever.

[01:02:41:07 – 01:02:43:07] Ramit: What role does the debt play in your rich life?

[01:02:43:10 – 01:02:49:28] Blake: It would feel great to start just addressing that head on, so I can sleep at night and not have to worry.

[01:02:49:29 – 01:02:57:07] Ramit: It’s quite interesting that kids came first, then trips not to mention of debt until I brought it up. What does that tell you?

[01:02:57:09 – 01:03:00:02] Blake: That it’s not forefront? Yeah, that I’m avoiding it.

[01:03:00:07 – 01:03:12:20] Ramit: Yes. You’re not there yet. Until you actually confront the reality that you probably have to pull your kids out of certain activities. If you want to get out of this debt, then we’re stuck. Yeah.

[01:03:12:23 – 01:03:24:24] Freya: I was actually shocked. You didn’t say get rid of our debt first and start saving towards our retirement. Like that’s the that’s what would be my rich life is to know that.

[01:03:24:24 – 01:03:25:29] Ramit: Tell me, what is it.

[01:03:26:02 – 01:03:51:23] Freya: That we pay down this debt, and we have a savings account for the months when we know it’s going to be late on income. And also, you know, for my rich life, I want to work. I it’s like it’s not because I don’t want to I, I’ve worked since I was 15 years old and it’s like so for me having a fulfilling career where I’m getting paid to contribute more to our family so we can do all that stuff was definitely high on my list.

[01:03:51:27 – 01:03:55:10] Ramit: Okay, so increasing the income. Yeah. Paying off the debt. Okay.

[01:03:55:13 – 01:04:05:26] Freya: I just don’t want to have to like worry about it every waking hour. That’s what that’s like honestly that’s all I need. Yeah. So I’m not like stressed out by it. Every waking moment.

[01:04:05:27 – 01:04:06:12] Blake: Every waking.

[01:04:06:12 – 01:04:16:04] Ramit: Hour. The way that you will begin to stop feeling this ever present anxiety is by making a plan. Okay, I know you have no plan. You have.

[01:04:16:04 – 01:04:17:17] Freya: No plan.

[01:04:17:19 – 01:04:35:10] Ramit: Even when I asked the plan was like well we got to put the kids in these activities. No we got to make a plan for that debt. We got to make a plan for savings. Yeah. Like we have made almost a decade’s worth of decisions that got us here. We got to make rapid big changes to shift it.

[01:04:35:10 – 01:04:56:20] Ramit: Okay. So do we agree on that? We have to make big changes. They have to be fast. Yeah. Great. I’m gonna put the KSP back up on screen okay. When I do that we know that our typical goal is to bring that fixed cost number down to 60% okay. In your case it’s going to be a little different because you have debt which means that 60% is going to go up.

[01:04:56:22 – 01:05:19:29] Ramit: We’ll deal with it okay. Here we are. As a reminder, you’re spending 102% of your take home pay on fixed cost. Unsustainable. You will lose your house very soon. So we’re going to do an exercise where each of you bounces back and forth and you make a change to your KSP. So the goal here is to make big bold changes fast.

[01:05:19:29 – 01:05:23:07] Ramit: We don’t want to get stuck in the weeds. Who wants to start? Actually, I already know what.

[01:05:23:14 – 01:05:24:13] Blake: Can we say.

[01:05:24:15 – 01:05:25:21] Ramit: You’re starting.

[01:05:25:24 – 01:05:35:23] Blake: We’re going to sell some of her art supplies. The biggest change. I feel like, would be the house.

[01:05:35:26 – 01:05:37:17] Ramit: You want to rent to a smaller house.

[01:05:37:17 – 01:05:47:24] Blake: I just don’t know if that makes sense. If the cost of moving. If we save $1,000 a month on a smaller place that we have talked about it. I know that you talked about it.

[01:05:47:24 – 01:05:50:16] Freya: I have talked about it and brought it up a lot.

[01:05:50:21 – 01:05:52:03] Ramit: Yeah. And what was your reaction?

[01:05:52:06 – 01:06:02:19] Blake: My reaction was just concerned that the cost of moving will mitigate any savings throughout the next year.

[01:06:02:19 – 01:06:23:17] Ramit: You were concerned? Yeah. This is your way of not making changes. You express concern now concern is fine. But concern is just like a way to put the brakes on any changes I can tell you right now, you’re moving costs. Especially because you can economize, you know, not get these fancy movers. Move it yourself, okay? Saving $1,000 a month is huge.

[01:06:23:20 – 01:06:31:19] Ramit: It compounds over time. Huge. Massive. In your case, do you think that realistically, you could find a place that you would save $1,000 a month on close to it?

[01:06:31:19 – 01:06:36:05] Freya: I’ve been looking and I want to stay in the same school district for the kids. Yeah. And I we can.

[01:06:36:10 – 01:06:39:01] Ramit: Great. How much? 1800W real estate.

[01:06:39:01 – 01:06:40:20] Freya: Let’s say 800 to be conservative.

[01:06:40:20 – 01:06:51:18] Ramit: All right. Okay. Wow, that’s a big change. Take a look at this number. The 102%. We’re down to 94% going in the right direction. Well done. Nice. Freya. What do you got?

[01:06:51:20 – 01:07:00:00] Freya: Big changes. Well, like I said, the car, we could probably be fine with one car. Okay? It’s hard when it’s very suburban, so it can be tough, but we could. We could.

[01:07:00:00 – 01:07:01:14] Ramit: Do it. How much are you going to save?

[01:07:01:16 – 01:07:03:26] Freya: $480.

[01:07:03:26 – 01:07:04:23] Ramit: You serious?

[01:07:05:01 – 01:07:05:19] Blake: 44.

[01:07:05:26 – 01:07:10:11] Freya: 44 month? No. And actually more to. Because in our assurance we’ll go down.

[01:07:10:15 – 01:07:13:28] Ramit: Yes. Yeah. Let’s call it 500 just to be okay.

[01:07:14:00 – 01:07:17:11] Freya: 136 our gas prices will go up.

[01:07:17:11 – 01:07:23:21] Ramit: That’s that’s which number. What’s the number say 8,989%. Well done. Keep going. What’s next?

[01:07:23:25 – 01:07:25:04] Freya: Child care will be gone.

[01:07:25:07 – 01:07:26:29] Ramit: Yeah. Check this market off because.

[01:07:26:29 – 01:07:28:00] Freya: The I mean.

[01:07:28:02 – 01:07:28:15] Blake: August.

[01:07:28:15 – 01:07:29:25] Freya: Unless we take too long. Yeah.

[01:07:30:02 – 01:07:42:04] Ramit: Take the win zero. Watch the numbers. We’re down to 75%. This is actually going way better than I thought. I gotta take a second. Celebrate. This is crazy. Okay? I mean, wow.

[01:07:42:05 – 01:07:46:05] Freya: Feels so much better. I’m. Oh, my phone already went out. It’s only $80 a month now.

[01:07:46:06 – 01:07:48:17] Ramit: Oh, really? Are you serious?

[01:07:48:17 – 01:07:54:06] Freya: Yeah, but I also found out I can go on a family plan and it’ll only be 120 on my phone. I just need to move.

[01:07:54:06 – 01:07:55:01] Blake: You up to that.

[01:07:55:01 – 01:08:02:22] Ramit: 124. Yeah. Watch. We’re down now to 73%. Okay. Wow. What else? Keep going.

[01:08:02:24 – 01:08:03:24] Blake: Kids activities. All right.

[01:08:03:25 – 01:08:04:18] Freya: I was waiting for that.

[01:08:04:18 – 01:08:07:25] Ramit: What? Yeah. What do you want to put it?

[01:08:07:28 – 01:08:08:29] Blake: Zero.

[01:08:09:01 – 01:08:30:10] Ramit: Can I make a suggestion? Yeah. I’m always for cutting kids activities when you’re in debt. But there’s some other stuff here that’s quite obvious that we could not finance. What’s the latest miscellaneous. Yeah. Like in what world is a couple in almost a hundred K of debt spending $1,320 a month on miscellaneous?

[01:08:30:10 – 01:08:32:23] Freya: No, wait. Literally. Yeah. I’m like, I’m sorry.

[01:08:32:23 – 01:08:34:06] Ramit: You get mad. This is crazy.

[01:08:34:06 – 01:08:35:13] Freya: Like, what even is. I don’t.

[01:08:35:13 – 01:08:35:20] Ramit: Even know.

[01:08:35:24 – 01:08:36:26] Blake: Yeah. What is we.

[01:08:36:26 – 01:08:38:26] Ramit: Add that so because couples.

[01:08:38:26 – 01:08:39:13] Freya: Don’t.

[01:08:39:15 – 01:09:01:29] Ramit: Date they’re loose. They don’t track it. And we know this because you used to spend double or triple on your groceries. A couple in this kind of debt cannot afford to have this loosey goosey buffer. They are meticulous. Yeah. Okay. In your case, like we’re talking about meticulous down to the level of we’re not spending an extra 30 bucks out eating because the kids are crying.

[01:09:02:00 – 01:09:04:13] Ramit: No cry. We’re going home.

[01:09:04:15 – 01:09:05:07] Freya: That’s a big snack.

[01:09:05:07 – 01:09:08:25] Ramit: Packers does that. Plants in your kitchen.

[01:09:09:01 – 01:09:14:25] Freya: The eating out is us 100%. All right. And that’s something we need to just say that you love it.

[01:09:14:25 – 01:09:18:12] Ramit: And can we can we just flip that instead of we need to because we’re not doing that. We are.

[01:09:18:12 – 01:09:19:02] Freya: Going to.

[01:09:19:03 – 01:09:21:28] Ramit: We will. Let’s say be eating out any.

[01:09:21:29 – 01:09:25:09] Freya: I was a private chef, I cook, we’ll have people over for dinner. Okay.

[01:09:25:09 – 01:09:35:19] Ramit: Not that miscellaneous. I’m taking that down to 200 because I’ll give you 200 a buffer. But that’s it. Oh my God, my books. 200. Yeah. Good to books. Like, ever hear of a public library?

[01:09:35:24 – 01:09:38:08] Freya: Actually, two. I actually do that too. I read.

[01:09:38:10 – 01:09:39:26] Ramit: Yeah. Go to the library.

[01:09:39:26 – 01:09:42:18] Blake: I do with the 200 bucks.

[01:09:42:18 – 01:09:49:28] Ramit: What’s your number? We’re down to 62%. I actually cannot believe this. Me neither. And we’re not even done. Keep going. Don’t stop.

[01:09:49:28 – 01:09:51:20] Blake: What else? Trim groceries a little bit.

[01:09:51:26 – 01:09:56:07] Ramit: Yes. We could try to 900. Oh I.

[01:09:56:09 – 01:09:57:26] Freya: Okay I would yes.

[01:09:57:26 – 01:10:01:20] Ramit: With four people. That’s challenging. That’s a little tough. You’re a chef.

[01:10:01:20 – 01:10:02:04] Freya: Yes.

[01:10:02:04 – 01:10:03:14] Ramit: And I like. Come on.

[01:10:03:16 – 01:10:06:24] Freya: No, I’m like I can be more economical than I am.

[01:10:06:26 – 01:10:13:10] Ramit: Can you make it 800? I wouldn’t say this to a normal. Yeah, like family. But you’re a chef. It’s like, come on.

[01:10:13:12 – 01:10:16:01] Freya: Yeah. I have to just take the the chef part out.

[01:10:16:01 – 01:10:16:17] Ramit: Exactly.

[01:10:16:17 – 01:10:26:28] Freya: And do the production part only because that’s where it gets me. I’m like, oh grass fed. Yeah, yeah. No I’ll do a good budget and I’ll do this and I’ll get that one day. Yeah.

[01:10:26:28 – 01:10:36:08] Ramit: We can’t do that anymore. It’s it’s really like, the difference in, you know, a luxury hotel. This is like, we’re just here for a clean room, and that’s it. Yeah.

[01:10:36:11 – 01:10:37:10] Freya: Chicken breast and broccoli.

[01:10:37:10 – 01:10:41:17] Ramit: It is exactly. How much? Tell me the.

[01:10:41:19 – 01:10:42:12] Freya: 900.

[01:10:42:12 – 01:11:04:02] Ramit: And the. I want to show you the reaction that you’re giving me, which is, you mentioned it earlier on. For so much of life, I have gone through basically trying to, like, I’ll figure it out or how much can I get away with. And I think that’s the energy you’re bringing to this decision right now. Yeah. And I would like to encourage you to flip that, that energy of like, how much can I get away with that actually does not work because look where we are.

[01:11:04:04 – 01:11:07:18] Freya: How much can I add to paying off our debts? Yes.

[01:11:07:21 – 01:11:10:04] Ramit: Yes. So tell me the number for groceries.

[01:11:10:05 – 01:11:11:26] Freya: Let’s do 850.

[01:11:11:29 – 01:11:16:06] Ramit: I’m no go more aggressive. You’re way too smart. Aggressive. You’re way too smart.

[01:11:16:09 – 01:11:19:00] Blake: Does that include wine?

[01:11:19:00 – 01:11:22:05] Freya: And. No, I’m guaranteeing you it does not.

[01:11:22:08 – 01:11:27:16] Ramit: Did everybody catch that audio? Does that include wine. What’s wine. What’s not it?

[01:11:27:23 – 01:11:31:01] Freya: What’s mine? It’s what. Yeah. No, obviously this is.

[01:11:31:07 – 01:11:38:13] Ramit: To say no. He knew the answer to good wine. Oh, my God, this is. I mean, I couldn’t script it.

[01:11:38:18 – 01:11:45:05] Freya: No it doesn’t, it doesn’t. Yeah it doesn’t. And it doesn’t include grass fed beef. And it doesn’t include.

[01:11:45:06 – 01:11:47:18] Ramit: Y’all ever hear of Safeway? Lucky.

[01:11:47:20 – 01:11:49:26] Freya: Yeah, I actually stop at WinCo now.

[01:11:49:28 – 01:11:53:03] Ramit: WinCo. Love it. Yes. Bag your own groceries. I know it.

[01:11:53:03 – 01:11:55:21] Freya: Way I no so good bulk section.

[01:11:55:24 – 01:11:58:26] Ramit: They’re so good they’re cheap okay so I just.

[01:11:59:02 – 01:12:01:13] Freya: That’s like how we got it down to the 12.

[01:12:01:17 – 01:12:16:16] Ramit: 850 is not enough. We need to go more aggressive. You’re in serious financial straits. What is it 750 yes. 750 I know, and that’s a peak. That’s a peak. It will be no higher than 750. And if you can bring it down to 700 or even love this.

[01:12:16:19 – 01:12:16:28] Freya: I love a.

[01:12:16:28 – 01:12:18:01] Ramit: Challenge. I mean, yes, let’s.

[01:12:18:01 – 01:12:20:26] Freya: See how we can get everything in the pantry before I even go back to the.

[01:12:20:26 – 01:12:21:19] Ramit: Bingo.

[01:12:21:20 – 01:12:23:05] Blake: That’s one of our bingo.

[01:12:23:11 – 01:12:48:17] Ramit: If you can defray spending money or simply avoid it for like the equivalent of three weeks or four weeks, that’s literally thousands of dollars that you saved. That money can go right towards that. Yep. That’s how you do it. As you can see, we’re making changes on the KSP, but these are actually lifestyle and attitude changes. And I can be creative enough.

[01:12:48:17 – 01:13:03:19] Ramit: Yeah. To to provide for this family using my skills and paying the debt off aggressively. Well done. The number at 57%. Come on I think you all need to give yourself a round of applause so far. Good job.

[01:13:03:20 – 01:13:07:03] Freya: That’s it. Yeah, I didn’t I can’t even clap because I, I’m like really.

[01:13:07:03 – 01:13:11:04] Blake: Can’t I, I really don’t want to move.

[01:13:11:07 – 01:13:12:13] Freya: Okay. And that’s fair.

[01:13:12:13 – 01:13:14:25] Blake: We’ve moved like we’ve moved our family so many times.

[01:13:14:25 – 01:13:17:27] Ramit: So what are you going to do then. Because we need the number to be lower.

[01:13:17:28 – 01:13:20:28] Blake: If can we just see what it looks like if we keep it? The old ran. Yeah.

[01:13:20:28 – 01:13:30:04] Ramit: What was it, 30, 30, 40, 34, 80. All right. Good question. I like that you’re asking hey, can we talk about this or that. That’s great. Takes you back up to 65% okay.

[01:13:30:07 – 01:13:34:03] Freya: Not it’s still not good. I also feel like I could make more money, like.

[01:13:34:04 – 01:13:34:21] Ramit: Talk to me.

[01:13:34:21 – 01:13:38:00] Freya: I, I right now I am working ten hours a week.

[01:13:38:07 – 01:13:39:09] Ramit: How much can you make? I mean.

[01:13:39:09 – 01:13:51:15] Freya: Realistically, I could work 20 hours a week. I, I’d have to find a new source of that income. I don’t think it’s an impossibility. Yeah, I think I should be at least, at least able to bring that up to 3200 a month. I do.

[01:13:51:15 – 01:13:52:03] Ramit: 200 a month.

[01:13:52:03 – 01:13:55:18] Freya: Right. It’s another $1,000 a month. Yeah, I could do that.

[01:13:55:22 – 01:13:56:19] Ramit: Okay. And you just.

[01:13:56:19 – 01:13:58:13] Freya: Have to be more I have to be more aggressive about the job.

[01:13:58:17 – 01:14:10:06] Ramit: I mean, I’m going to hardcode this in to be 10,800. Okay. It’s not accurate but it’s in the ballpark. Yeah. Watch the number on fixed costs 60%. Not bad.

[01:14:10:06 – 01:14:11:16] Freya: That’s not bad.

[01:14:11:18 – 01:14:41:17] Ramit: Here’s how I might think about it. If I were in your situation I might say okay, we prefer not to move. However, we need to get these numbers aggressively down. Right. If you can find a job in the next four weeks that generates $1,000 a month, okay, not 600, not 800, $1,000 gross, we can stay. If not, we move like that is the level of decisiveness that you bring to this problem.

[01:14:41:19 – 01:14:49:27] Freya: I like that, okay. All right. I’ll be very motivating. I also don’t want to move. Yes. I’ve moved 20 times in my life. Okay.

[01:14:49:29 – 01:15:03:02] Ramit: Then. It’s very clear what needs to happen. So and your roles are very clear which is like you have to provide the you have to hit the numbers on the groceries. Yeah. And you have to find a job if you want this plan to work. And if not, you know exactly what it’s going to what you’re going to do.

[01:15:03:02 – 01:15:07:26] Freya: Can I have an ask please. Can you help with the grocery stuff? Can we do that together?

[01:15:07:29 – 01:15:08:10] Ramit: Yes.

[01:15:08:10 – 01:15:14:27] Freya: I hate doing it by myself. And then being also, it feels like a lot of pressure to be like I’m the only.

[01:15:14:27 – 01:15:19:05] Ramit: One that does it need to be both of you? Or can you just delegate that? Can he bring it and you cook?

[01:15:19:11 – 01:15:20:23] Freya: Let’s make a menu together.

[01:15:20:28 – 01:15:29:14] Blake: I would propose that we make the menu together, use our skylight and plug it in there. So we have all that stuff. And when there’s there’s.

[01:15:29:14 – 01:15:30:08] Ramit: Less less.

[01:15:30:08 – 01:15:32:17] Freya: Loosey goosey and like, oh, I didn’t plan today. Yeah.

[01:15:32:20 – 01:15:34:01] Ramit: What’s the skylight?

[01:15:34:04 – 01:15:37:07] Freya: Oh it’s our scheduling. It’s like a calendar. It’s like the.

[01:15:37:07 – 01:15:40:18] Ramit: Family. Okay. Yeah, yeah. But who’s going to pick up the groceries?

[01:15:40:20 – 01:15:45:13] Freya: I think I’ll do. I don’t mind doing it. I just do like the planning part I would like to do together.

[01:15:45:13 – 01:15:51:22] Ramit: Okay, great. So you all need to make a time. Yeah. You do it. It needs to be on the schedule. And there’s no more unscheduled like. Yeah, go.

[01:15:51:22 – 01:16:00:10] Freya: Run and get this. Oh, I decided I’m making this today. Instead I can and I because I get I do get tired of doing it sometimes I like that happens. So it would be nice and I’d be nice to do it together.

[01:16:00:10 – 01:16:16:00] Ramit: All right. Great. Let’s get let’s look at the box. Let’s look at the risk investments at $60. All right. Fine. We can keep it. That doesn’t really do anything but okay. Savings are at zero. That’s got to change. I just want to point out, look at the look at the bottom of the CSP. You currently have $4,000 a month.

[01:16:16:02 – 01:16:18:23] Freya: That does not feel like a real number.

[01:16:18:25 – 01:16:25:07] Ramit: Yeah. It’s real how I look at it. Six faces like what do how you know they.

[01:16:25:08 – 01:16:27:21] Freya: By budgeting and I’m sorry by having a is.

[01:16:27:22 – 01:16:50:26] Ramit: Because you cut dramatically. Yes. You cut a lot. You cut $1,000. You increase your income. You may or may not, cut the rent. You cut thousand bucks off of miscellaneous and then hundreds and hundred dollars from various things is very impressive. That means you have 4000 bucks a month to distribute. How do you want to use that money?

[01:16:50:29 – 01:16:52:11] Freya: That savings.

[01:16:52:14 – 01:16:54:10] Ramit: Good. Which one comes first?

[01:16:54:11 – 01:17:02:27] Freya: That no savings? Yeah. The kids. I think it’s really hard to have that. Like, oh, wow. They might not have a roof over their head.

[01:17:03:01 – 01:17:03:29] Ramit: Yeah, that’s a big problem.

[01:17:04:03 – 01:17:05:27] Freya: Yeah. So I feel like savings.

[01:17:05:27 – 01:17:22:02] Ramit: I do agree that savings is more important right now. I can’t believe I’m saying that to a couple in almost six figures of credit card debt. But the fact is, you have two kids and you are almost, yeah, out of your house. That’s you cannot allow that to happen. Do you see why I am moving so quickly?

[01:17:22:05 – 01:17:48:20] Ramit: You don’t have time to decide about this or that. Like you need the money now, which means any groceries that you were going to spend on don’t. Because you have the pantry. Yeah. The car. Get rid of it as quickly as possible. All these other changes immediately stop and go back and double check the subscriptions, because even an extra hundred dollars that you were about to spend, like phone, you need it for savings.

[01:17:48:20 – 01:17:49:15] Freya: Yeah.

[01:17:49:18 – 01:18:11:17] Ramit: That’s it. It’s as simple as that. You have to attack it with ferocity. Yeah. Okay. I think that we would want to look at a debt payoff plan, but in your case, you can call the credit card and talk to them about you’re in hardship. You need to make a plan that works with them. And what can they do for you?

[01:18:11:22 – 01:18:21:13] Ramit: Okay, okay. So there’s several things your credit is going to be in trouble. Yeah, it’s already gone to collection. So even moving is going to be challenging for you. That’s you’re. Yeah that’s what’s happened.

[01:18:21:13 – 01:18:23:01] Freya: So my credit is good.

[01:18:23:02 – 01:18:23:16] Blake: Yours.

[01:18:23:16 – 01:18:26:09] Freya: Yeah okay. Now but we’re trying and try to keep it that way.

[01:18:26:15 – 01:18:49:04] Ramit: Yeah. So yeah call them use the scripts from chapter one of my book. You’re going to have to spend at least a couple of thousand bucks a month to pay that debt up. I shouldn’t say at least you can spend less. They will let you. You can use the debt payoff calculator on my website, and that will allow you to see how long until your debt is paid off, right?

[01:18:49:06 – 01:18:55:24] Ramit: Guys? With thousands of dollars a month now, you could pay that relatively quickly. Yeah, especially if your income goes up.

[01:18:55:25 – 01:18:58:23] Freya: And I love you idea. I love that idea.

[01:18:58:25 – 01:19:18:09] Ramit: You might have noticed that I didn’t allocate the perfect amount for them to put in their debt payoff plan. Why? It’s kind of like you buying one of those taken baked pizzas. You know they’re made, but you take it home and put it in your oven. You get a sense of satisfaction from doing it yourself. There is something to that here.

[01:19:18:09 – 01:19:38:18] Ramit: I need them to go through the calculator themselves. I need them to realize that it’s going to take months, actually years to pay off this debt. And hey, if we put an extra 200, it will shave that down by six years. It is important for them to get their hands dirty, to get tactile, to get involved. And that is true for so many parts of money.

[01:19:38:23 – 01:19:51:14] Ramit: We’re not just looking for some AI tool to do the whole thing for us. I want you in there feeling it, baking it, even if you need a little help, so that you know what it takes to be successful.

[01:19:51:17 – 01:19:54:11] Blake: The real game changer would me in full time.

[01:19:54:11 – 01:19:55:18] Ramit: Can you do it?

[01:19:55:20 – 01:19:58:11] Blake: I can, I can go full throttle.

[01:19:58:14 – 01:20:00:22] Freya: Trying to find a yeah full time.

[01:20:00:22 – 01:20:01:24] Ramit: Position like he’s.

[01:20:01:28 – 01:20:21:11] Blake: I run my own company now with a partner. Yeah. And but it is you know it is a hustle and it’s some good months, some bad months. And so we tried to come up with the number here. But when I go in-house as a creative director. Yeah. You know, it’s usually, you know, a 200, 250 salary.

[01:20:21:13 – 01:20:30:15] Ramit: Can we just do this now like I would send a text message right now. Lock it down. That is that that is the biggest thing you could possibly do. Yeah.

[01:20:30:17 – 01:20:33:29] Freya: Especially for 400 K and all this things that come with it.

[01:20:34:01 – 01:20:42:24] Blake: I’ve never made this little money in my life. And so now it’s like I just I think that for me is the, the fastest. Yes.

[01:20:42:26 – 01:20:49:28] Ramit: Yes. What are the possibilities knowing the economy and your space, how likely is it that you could get a job like that?

[01:20:49:28 – 01:20:55:05] Blake: I mean, if I go, I think it’s probably 75, 80%.

[01:20:55:05 – 01:20:57:27] Freya: And like within like how long do you think six months a year.

[01:20:58:01 – 01:21:02:18] Blake: Like 3 to 6 months. Wow. Yeah. And that’s really like that.

[01:21:02:21 – 01:21:03:21] Ramit: Surprising shocked.

[01:21:03:27 – 01:21:04:22] Freya: Yes.

[01:21:04:24 – 01:21:06:24] Blake: I mean everyone says it takes it, but I, you know.

[01:21:06:29 – 01:21:33:18] Ramit: Do we all agree that that is the route to take. Yeah. You agree. Do you agree. Yeah. Okay. Done. Amazing. Okay. Blake can go out and seemingly earn tens of thousands of dollars more in a new job. That doesn’t happen very often. That’s not for everybody, but it is for them. And the fact that they haven’t done that yet, that he hasn’t done it, is actually what I want you to take away from this.

[01:21:33:20 – 01:21:57:00] Ramit: Oftentimes people’s houses are burning down and there’s a fire hose right there and they don’t even pick it up. You don’t know why most of us are problem oriented, meaning we love to talk about our problems. We agonize over them, we elaborate on them, but very few of us, I would estimate fewer than 5% of people are solution oriented.

[01:21:57:02 – 01:22:20:15] Ramit: Meaning we look for solutions. We try one, we try another. The interesting thing is we can be solution oriented in one part of life, but not in another. And for whatever reason, money tends to be one of the primary areas that people are problem oriented but not solution oriented. If you’ve got a financial problem, you may have a solution right in front of you.

[01:22:20:19 – 01:22:45:03] Ramit: Forget about the fact that he can make $50,000 more. That’s not the point. The question to apply to your own financial situation is, do I have a fire hose right in my front yard? And why am I not picking it up? Going full throttle on that would allow you to increase your income, your income for you. Your income would go up, your household income would massively skyrocket.

[01:22:45:03 – 01:22:51:03] Ramit: And here’s the key. Here’s where you will likely fail unless you make a change. Can you tell me what it is.

[01:22:51:04 – 01:22:55:04] Freya: Sticking to the see as me like? Now we can spend $3,000.

[01:22:55:04 – 01:23:14:20] Ramit: Because when you get into the 175 200, you’re like, oh, let’s like loosen up. Let’s not. No. Usually couples I go, yeah, you’re spending you’re making more. Go ahead and spend a little bit more. In your case, it will actually be purer to just be like, we’re not those people anymore. For now, we are going to only focus on debt and savings.

[01:23:14:20 – 01:23:17:28] Ramit: Yeah, we are not. It will even seem nonsensical at points.

[01:23:17:28 – 01:23:21:18] Freya: Yeah, but I would really love to do to get the kids involved. Even this little.

[01:23:21:19 – 01:23:23:17] Ramit: Tell me. Yes, tell me, how would you do it.

[01:23:23:19 – 01:23:37:02] Freya: If my six year old’s been asking for a bank account? Like he has a little notebook that he keeps all his little change in and. Yeah. And I was like, okay, you know, but I would, you know, even I said, with the meal planning, let them help, let them pick out something that we can cook and they can like.

[01:23:37:05 – 01:23:38:18] Freya: I’ll even take them to the grocery store.

[01:23:38:20 – 01:23:39:04] Ramit: Yes.

[01:23:39:04 – 01:23:40:19] Freya: One at a time. But.

[01:23:40:19 – 01:23:43:15] Ramit: The only choices they have are like broccoli. Yeah. Or rice.

[01:23:43:15 – 01:23:52:00] Freya: I mean, you’d be shocked with the. My kids love broccoli and rice, but. Yeah, but but literally getting them involved. And then when we say no, we can show them why.

[01:23:52:01 – 01:23:52:16] Ramit: Yes.

[01:23:52:16 – 01:23:59:16] Freya: And they can have like a little savings account and be like, no, let’s put this dollar here. And now look at your bank account.

[01:23:59:23 – 01:24:00:09] Ramit: That’s how, you know, I.

[01:24:00:09 – 01:24:04:29] Freya: Feel like that’s something that you did since then, like I certainly never got. Doesn’t sound like you did.

[01:24:05:01 – 01:24:22:00] Ramit: You all have a gift of an opportunity here, which is to let them in on what’s going on. And they may not understand what $99,000 of debt is, right? Maybe they don’t even need to hear it at that age. But to tell them, look, right now we realize we need to make a change and we need your help.

[01:24:22:01 – 01:24:24:10] Ramit: Can you help us? Yeah. They’ll be like, yes, okay.

[01:24:24:10 – 01:24:29:17] Freya: Make them a sticker. Sure they can. Exactly. They can be like, did it spending you guys get a gold star, mom and dad.

[01:24:29:22 – 01:24:45:01] Ramit: And when you do that, yes, you’re helping them, but actually you’re helping yourself. Yeah. Because your new identity as a couple who will not allow yourselves to stay in debt. You’ve now publicly told your kids that. Yeah. So how can you go back on it?

[01:24:45:04 – 01:24:46:00] Freya: Yeah.

[01:24:46:02 – 01:25:14:17] Ramit: I think you have a very viable plan. And I have to say, I am pleasantly surprised and even shocked. The reason for this is twofold. One, on the income side, you both have the possibility and skills and you are willing to make more money. That’s not easy. If your kids were a little younger, that wouldn’t be possible. Yeah, but you’re in this place where, wow, you both can do it and you’re willing to do it.

[01:25:14:17 – 01:25:25:06] Ramit: That’s amazing. That’s teamwork. Yeah. Now, the only thing that matters is will you actually stick to the plan? I mean.

[01:25:25:08 – 01:25:27:10] Freya: I want to stick to this plan. I’m going to stick to the plan.

[01:25:27:11 – 01:25:28:26] Blake: Until I feel.

[01:25:28:28 – 01:25:35:06] Freya: It’s going to feel so much better. Yeah. I mean, even just like I there’s just no way it can’t feel better than this.

[01:25:35:09 – 01:25:35:24] Blake: Oh, no.

[01:25:35:24 – 01:25:44:21] Freya: And if we’re all about comfort, let’s not be miserable. Every time we make a put our head on a pillow and start having racing thoughts about this, like, this is so stupid that we’ve been doing this.

[01:25:44:24 – 01:25:59:04] Ramit: I’m putting just, for example, $2,500 a month in savings. Okay. And we still have 1728. Y’all can have how much you think you should have in guilt free spending, just a ballpark per month.

[01:25:59:04 – 01:26:03:20] Freya: Per month like in our situation right now. Yes. 250.

[01:26:03:20 – 01:26:05:17] Ramit: Great. What do you think?

[01:26:05:19 – 01:26:07:18] Freya: 215 yeah. Totally doable.

[01:26:07:25 – 01:26:22:27] Ramit: Okay, that’s an amazing answer. That’s kind of like what I was thinking like 250. That’s like, you know, 1 or 2, one thing with the kids and maybe one thing for the two, and that’s it. Yeah. Can you do it? Because this is a different life than the kind you’ve been leading.

[01:26:22:29 – 01:26:24:07] Blake: Yeah, yeah, yeah.

[01:26:24:07 – 01:26:36:06] Ramit: You could do it. Do doing then what that allows you to have like roughly 1500 bucks a month, even more to put between debt payoff and savings. Oh, okay. That’s a lot.

[01:26:36:09 – 01:26:38:08] Freya: It’s like, how do you become.

[01:26:38:10 – 01:26:58:11] Ramit: Yeah. You know, part of this what’s happening here is that when you are in it with your money, most people never zoom up to look at the bird’s eye view. And even to be able to zoom up requires you to work through a lot of psychology and emotions and relational issues.

[01:26:58:11 – 01:27:14:18] Blake: That’s the thing, as you get into it, and then it becomes a you or you and like, why did that was, you know, and yeah, to have this like you said, bird’s eye view and an objective view point. I also wanted to ask you if you wanted to move in with us a little.

[01:27:14:18 – 01:27:41:28] Ramit: What makes yeah, getting a little extra rent would be I do love I do love to read. Okay. I want to say that I’m so impressed at how far you’ve come on the KSP. The reason that we’re able to make this plan, which just seemed to kind of breeze by in part, is that you were willing to acknowledge certain change the way you were brought up, the way that you need to relate to each other, and the focus that it’s not you versus you.

[01:27:41:28 – 01:27:52:06] Ramit: It’s we have a plan as a family. Yeah, this is our plan. What are we both going to do so that we can accelerate this plan?

[01:27:52:08 – 01:28:11:01] Freya: I love a plan and I love the goal is so helpful because I feel like we didn’t have there wasn’t a even goal really out loud said to work towards. So what? It felt like we were saving or trying not to spend it. I was like why? Yeah, what for? What’s the angle? Is it going to look like if we do this and we never did that?

[01:28:11:03 – 01:28:28:27] Blake: Yeah. And I you know, I wanted to say thank you to you for oh, thanks for pushing me and to hear and getting us was you book at was you know. Yeah. And I feel you know emotional about and about.

[01:28:29:00 – 01:28:51:28] Blake: You know where we’ve been and our trying that is. Yeah. But I feel good walking out of here. Maybe a good cry after a while. It would be nice. But like to, to see the future selves that I know we are. We’re good partners and we like each other and we have great kids and we can, you know, in a year or two, like, look at what is that richer life, you know?

[01:28:52:01 – 01:28:52:17] Blake: Yes.

[01:28:52:22 – 01:29:04:12] Freya: I felt like I came in here very hopeless and helpless. Yeah. I felt helpless with a lot of this. And just like small changes, big changes. But like that, I’m on a grand scheme of things. Small that we can do this.

[01:29:04:14 – 01:29:07:07] Ramit: Great. Yeah, great. How about you?

[01:29:07:10 – 01:29:12:17] Blake: I feel quite emotional to be honest. I mean, I’m on the brink of tears.

[01:29:12:20 – 01:29:14:01] Ramit: How come? Just.

[01:29:14:04 – 01:29:40:14] Blake: Yeah, because feeling helpless and just being, you know, like you mentioned, being siloed. And it’s not a fun place to be, you know, to, like, be knowing you’re both have somewhat of the same vision or goal, but then you’re just kind of working at it in two different ways. So just having that, you know, that idea of partnership is a kind of beautiful thing.

[01:29:40:17 – 01:30:05:10] Ramit: Yeah. Yeah it is. It’s beautiful to see. I’m actually very confident in this couple. I would not have expected that. Looking at the severity of their situation, but their reactions really give me a lot of confidence. The fact that they both moved through the fixed costs aggressively, that they are both suggesting earning more money, quite amazing, quite rare even on this show.

[01:30:05:10 – 01:30:23:22] Ramit: When they walked in to talk to me today, they were not on the same page. They were siloed, not partners. Quite remarkable that by the end they were encouraging each other. They were smiling. They were a team. I’ve shown them how to do it. Now it’s up to them I team.

[01:30:23:24 – 01:30:24:17] Freya: Hi team.

[01:30:24:17 – 01:30:31:13] Blake: A little follow up video here. We wanted to discuss our, biggest surprises from the day. Now that we’re back at home.

[01:30:31:13 – 01:30:33:10] Ramit: Yeah.

[01:30:33:13 – 01:30:51:12] Blake: And I think for me, one of the biggest surprises was just how doable, how plausible the plan is. Now that we have it in place, we have the information that we need to look at everything globally from a top down level.

[01:30:51:14 – 01:31:08:20] Freya: Yeah. I think that my biggest surprise was how accessible it felt when we went through the numbers with, for me and like line by line, we’re like, okay, we can make this change, this change. At the end of it, I was like, oh, there is a lot for this end of the tunnel. I’ll say that was my biggest surprise.

[01:31:08:25 – 01:31:14:20] Freya: There’s a light at the end of the tunnel. It doesn’t feel insurmountable. Yeah. Just doable.

[01:31:14:23 – 01:31:19:09] Blake: Yeah, yeah. Not easy. Not a cakewalk. No. But doable.

[01:31:19:10 – 01:31:20:14] Ramit: Yeah.

[01:31:20:16 – 01:31:23:09] Blake: Especially if there’s a partnership involved.

[01:31:23:12 – 01:31:43:20] Freya: Yes, I think that was another big take. That a takeaway, I would say, is that how much of it needs to be a team effort and not one person doing, trying to do the work, the other person avoiding? Like, we really have to figure out a way to do this together. We’re getting there. Is that take time?

[01:31:43:22 – 01:31:52:10] Freya: And so I think that was one of my biggest takeaways. And that. Yeah, just sort of tap it like, what am I to do list and just line by line, go down, make the changes.

[01:31:52:12 – 01:32:17:04] Blake: It’s just interesting to look back at that experience that we had with her made that day, and then see how many of those behavioral patterns actually extend into my life in general, and not just in the finance world. So big takeaway there that I need to make some fundamental changes in how I operate behaviorally on a day to day and big picture.

[01:32:17:06 – 01:32:24:26] Blake: So yeah, that was a real awakening. And yeah, thanks for that. I’ve had that moment in that clarity.

[01:32:24:29 – 01:32:47:17] Freya: There definitely have decided on some changes to make. Going down to one car and probably in the next month or two. Yeah. Grocery bill I have I’m taking on the challenge of getting that down really, really like in half almost of what we were spending. It’s, that is two goals that we have right now.

[01:32:47:24 – 01:32:55:16] Blake: Another specific change is just to really be more mindful of our baseline of spending.

[01:32:55:16 – 01:32:56:15] Freya: Yeah.

[01:32:56:17 – 01:32:57:14] Blake: It’s so easy to do.

[01:32:57:14 – 01:32:58:09] Freya: Little things that.

[01:32:58:09 – 01:32:59:13] Ramit: Just creep in.

[01:32:59:16 – 01:33:07:06] Blake: The little things to grab the little thing here when you’re shopping and a little $20 here and $30 there. So really trying to hone that in.

[01:33:07:09 – 01:33:18:19] Freya: I almost feel like we need to do like a jar, like a swear jar, but accept this thing. When we buy something miscellaneous, we have to return it. Or if we want to buy with to put them. Now that are.

[01:33:18:22 – 01:33:19:12] Ramit: Not.

[01:33:19:14 – 01:33:21:14] Blake: I’m not a terrible idea I guess.

[01:33:21:16 – 01:33:22:00] Ramit: Yeah.

[01:33:22:02 – 01:33:32:02] Freya: Oh my God. It’s like children. Yeah. I think those are the big changes that we’ve decided to make. We decided not to move. Gonna stick it out here, and.

[01:33:32:02 – 01:33:35:00] Blake: We’re hoping that we still look on Zillow and.

[01:33:35:00 – 01:33:35:19] Ramit: All of that.

[01:33:35:20 – 01:33:37:01] Blake: All the time.

[01:33:37:03 – 01:33:37:29] Freya: For the time being.

[01:33:38:03 – 01:33:40:07] Blake: For the time being.

[01:33:40:10 – 01:33:41:20] Freya: Oh, and work.

[01:33:41:22 – 01:33:42:09] Ramit: Work.

[01:33:42:14 – 01:33:54:14] Freya: I mean, I personally have, you know, did all the things I need to do with my portfolio and my LinkedIn and my resume. So I’m ready to, like, jump in and really start trying to find what work and increase our income.

[01:33:54:17 – 01:34:14:13] Blake: So, yeah, increase income. Yeah. That’s a big priority. What to write up that knows that. And I’ve even started putting out the, the feelers, and saying out loud, but I am aggressively pursuing opportunities, rather than just.

[01:34:14:16 – 01:34:15:13] Freya: Putting out feelers.

[01:34:15:18 – 01:34:35:13] Blake: Rather, rather than putting out feelers, actually saying it out loud and contacting people started back. So that is feels good. This continued, well, continue. But just saying it out loud and letting people know has been, yeah, a good first step. Yeah. Thanks. Thanks a lot. They I’m.

#spend #stop #drowning

263. “We make $167k. Why do we feel poor?”

admin — Tue, 26 May 2026 11:03:59 +0000

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Ramit Sethi of I Will Teach You To Be Rich talks to Drew and Amanda, a married couple earning around $167,000 a year with a net worth of over $800,000. On paper, they look financially successful but behind the scenes, their fixed costs are dangerously high, their savings are low, and their spending decisions are causing tension in the relationship. Drew admits he struggles with spending, while Amanda finds it difficult to say no, leaving them stuck in a pattern where money feels stressful instead of empowering.

In this episode we uncover:

• Their household income of around $167,000 a year
• Why they still feel financially stretched despite a strong net worth
• Their surprisingly low savings compared with their assets
• How fixed costs reached around 89% of their gross income
• Drew’s struggle with spending and impulse decisions
• Amanda’s difficulty saying no without feeling like the “bad guy”
• The hidden relationship dynamic behind their financial stress
• Why eating out 6–8 times a week became a major spending leak
• The role of bonuses in justifying bigger spending decisions
• Amanda’s childhood experiences with financial instability
• Drew’s “you only live once” money mindset
• How their daughter is learning from their financial behaviour
• Ramit’s challenge for them to stop making emotional money decisions
• Why vacations may need to pause while they rebuild savings
• Their plan to create a family money philosophy and emergency fund

Chapters:

(00:03:15) Why Drew applied to the podcast
(00:07:00) The hidden decision-making problem
(00:10:30) Why they don’t feel like a team with money
(00:16:15) Their financial numbers revealed
(00:21:15) The reality of their household income
(00:29:25) Fixed costs are the real problem
(00:33:10) The truth about eating out
(00:35:50) How bonuses fuel spending
(00:39:30) The couple who struggle to say no
(00:45:30) Amanda’s childhood money story
(00:56:30) Their inherited money beliefs
(00:58:20) Starting their Rich Life vision
(01:04:00) Pausing vacations to rebuild stability
(01:10:00) Drew practices saying no
(01:16:30) Amanda’s role changes
(01:20:30) Cutting subscriptions and eating out
(01:29:30) Redirecting money toward savings
(01:36:00) Creating a family money philosophy
(01:44:30) Ramit’s final advice

This episode is brought to you by:

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Calling LA couples: Apply to be coached for free on this podcast at https://iwt.com/apply

Transcript:

[00;00;00;01 – 00;00;03;19] Ramit: $167,000. What do you all think of that income?

[00;00;03;28 – 00;00;08;27] Drew: I’m super proud of the work that we’ve put in, but we don’t have enough.

[00;00;08;34 – 00;00;13;27] Amanda: Kind of like always a struggle. And it makes me sad.

[00;00;13;34 – 00;00;18;45] Drew: I am the one with the standing problem and I have asked Amanda to make me stop.

[00;00;18;54 – 00;00;22;59] Amanda: I have a hard time saying no. Money’s just not my thing.

[00;00;23;01 – 00;00;31;07] Ramit: You have a crisis right now. You’re spending more than you make every month, and you only have $13,000 in savings.

[00;00;31;11 – 00;00;31;29] Amanda: Yeah.

[00;00;31;35 – 00;00;33;11] Ramit: What do you think is going on?

[00;00;33;16 – 00;00;36;21] Drew: I know what to say to eventually get what I.

[00;00;36;21 – 00;00;44;41] Amanda: Want with, like, money. We’ve seen how each other maneuvers with it, and so we need each other to do the bad things.

[00;00;44;46 – 00;00;53;58] Drew: If I keep spending like this, are we going to have enough to retire at a comfortable age and enjoy my life with Amanda moving forward?

[00;00;54;06 – 00;00;55;25] Ramit: Are you going to do that?

[00;00;55;30 – 00;00;59;48] Drew: I don’t know how people will just turn that switch.

[00;00;59;52 – 00;01;26;39] Ramit: Why is it that you make good money but you still worry about it? Today we are going to get into that very question that plagues millions of people. I’m going to speak to Drew and Amanda. They’re married. They’re in their mid 30s. They have a six year old daughter, and they make a combined $167,000 a year, but with low savings and high fixed costs, they’re basically one emergency away from being in serious trouble.

[00;01;26;44 – 00;01;57;42] Ramit: Let’s take a look at the numbers. I’m looking at their conscious spending plan or KSP. If you want my help with your CSP so you can understand your four key numbers. Join my money coaching program at dot com slash money coaching assets. $925,000 investments. 454,000 savings. 13,000 debt. 568,000. Net worth. $824,000. Now let’s look at their fixed costs.

[00;01;57;43 – 00;02;22;46] Ramit: 89% PUA right there. That’s the ballgame. That explains so much investments at 4%, savings at 2%. That also is very explanatory. Guilt free spending at 5%, which I pretty much don’t believe without even talking to them. But we’ll see. Drew writes if I lost my job tomorrow, life altering negative results would happen immediately. Drew’s right to be concerned.

[00;02;22;51 – 00;02;47;11] Ramit: They have a net worth of close to $1 million, but at the end of every month, they still feel broke. And the question is, what is going on here? We’re about to find out. Let’s meet Drew and Amanda. Andrew, you wrote something in your application that caught my eye. You said, quote, I am the one who handles the finances, but I am also the one who has the spending problem.

[00;02;47;16 – 00;03;13;50] Ramit: I hold resentment towards her that she never looks at our bank account. Yet I am the one who says, let’s go out to eat. I have asked her to tell me no, but honestly, that is not her job. If I lost my job, we wouldn’t be able to survive a couple of months with our fixed costs. Is that a pretty accurate representation of why you are here today?

[00;03;13;55 – 00;03;16;48] Drew: Yeah, absolutely. It’s a representation of why we’re here today.

[00;03;16;53 – 00;03;22;46] Ramit: And, Amanda, did you also participate in the application or was it just drew?

[00;03;23;00 – 00;03;25;26] Amanda: It was just drew.

[00;03;25;31 – 00;03;30;19] Ramit: It’s interesting. Drew, what made you decide to want to apply to speak to me?

[00;03;30;20 – 00;03;47;33] Drew: I wanted to speak to you because I feel like I am the one with the spending problem. I need some help and guidance with how I should spend my money. And I have asked Amanda to make me stop. But again, it is not her. Her job.

[00;03;47;38 – 00;03;49;16] Ramit: Amanda, what’s your take on this?

[00;03;49;21 – 00;04;14;43] Amanda: I wish I was more involved, and I tried, but it always is. Just like a day or so, and then I’m like, oh, he handles it so much better than I do. And I know that I have a hard time saying no. Because I like the idea too. And then if someone else is signing off on it, I’m like, sure, because it wasn’t coming from me, because I’m not a spender.

[00;04;14;48 – 00;04;29;40] Amanda: And so I find it harder to make those judgments on my own. And so when I’m like, oh, someone else is on board, let’s let’s do it. And so, like, drew is the planner for vacations. And I’m always so thankful because if it was up to me, I probably wouldn’t go.

[00;04;29;45 – 00;04;37;54] Ramit: In a heterosexual relationship, it’s almost always the woman who applies. So this is quite unusual and I really appreciate it. How long you’ve been married?

[00;04;37;54 – 00;04;40;27] Drew: For almost 13 years.

[00;04;40;32 – 00;04;41;43] Ramit: Kids?

[00;04;41;48 – 00;04;43;06] Drew: One. One daughter.

[00;04;43;11 – 00;04;52;30] Ramit: How about making decisions around major purchases as a married couple with a daughter? How do you go about making those major purchase decisions?

[00;04;52;35 – 00;05;09;57] Amanda: Drew gets an idea. I’ll start with a little bit of, hesitancy of like, are you sure? Like, this seems expensive or because I tend to get very comfortable. Even when we lived in an apartment, he was like, we should buy a house. And I was like, oh my gosh, no way. We can’t afford this.

[00;05;09;59 – 00;05;17;08] Ramit: Let’s think of a time in the last six months where you were not on the same financial page. Does something come to mind?

[00;05;17;21 – 00;05;42;30] Drew: Yeah, absolutely. I kind of like to look around the house to see what could use improvements. I had this idea that we needed more storage. With with our daughter. And why don’t we put in some, cabinets, in our living room? We could have easily bought and, you know, two things off of Amazon to put on each side that has cabinets.

[00;05;42;35 – 00;06;14;09] Drew: But I decided I wanted to go all out and give, a business a call that where they would build the cabinets. We had them come to our house, price it out. I expected it to cost anywhere from 2000 to 3000. Amanda was probably shooting in the ballpark of 1000. It ended up being about 1500. When I was going through the decision process, I looked at Amanda, and I just gave her the head nod and a little wink and said, let’s do it.

[00;06;14;14 – 00;06;17;14] Drew: And she said, okay, sounds good.

[00;06;17;16 – 00;06;32;26] Ramit: What’s that? I’m married to. I didn’t know that move. I could just get my wife to agree on everything by just winking at her. Is that it getting tight on this? I could wink on both eyes. Who knew? All I have to do. And I got to give a little smile. That’s a little difficult for me, but let me try.

[00;06;32;35 – 00;07;01;02] Ramit: Hold on. I’m imagining. I want to buy, and, antique ceramic from Kyoto, and it costs, $9,500 for a tiny, thing in the side of my hand, and, I need it. I need it to put right here. Hold on. My wife is looking at me like, are you sure? And I go like this.

[00;07;01;07 – 00;07;14;13] Ramit: That’s it. Yeah. Yeah. I learned something new on this podcast every day. All right. Amanda, what was it like from your perspective? What do you remember him saying. Actually should we just recreate the conversation.

[00;07;14;18 – 00;07;14;51] Amanda: Yeah.

[00;07;14;58 – 00;07;15;16] Drew: All right.

[00;07;15;18 – 00;07;21;16] Ramit: Let’s do it. All right. So you know the the person is coming over the vendor to give the quote. Pick it up from there. Drew.

[00;07;21;21 – 00;07;37;40] Drew: Amanda. I think that these cameras would look great. Might add an extra little value to their house if we ever decide to sell. I think that we we have a little bit of money from taxes that are coming our way. Why don’t we pull the trigger and have these put in?

[00;07;37;44 – 00;07;47;29] Amanda: Are you sure that we really need those? I mean, I, I think I’ve seen something like that in, like, Amazon or Ikea. Like, maybe we could just do it ourselves.

[00;07;47;34 – 00;07;57;28] Drew: That is true. But they are going to be built ins and they can probably do it in a day. And we do have a little bit of cash on hand.

[00;07;57;33 – 00;08;12;06] Amanda: And we’re not very handy. So they probably just be a pain and uneven. So. Okay, maybe we’ll just have him come in, we’ll talk to them and see what it is that. Yeah. It’s like going to be like 1500, right?

[00;08;12;20 – 00;08;16;00] Drew: I was thinking more in the ballpark of 3000.

[00;08;16;05 – 00;08;32;24] Ramit: Okay, let’s pause right there. Okay. Great work. Actually really helpful to see. Thank you. Would you say that was a pretty accurate as to how the conversation went? Yeah. Okay. All right. Zoom out. What role was each of you playing in that conversation? Amanda.

[00;08;32;28 – 00;08;37;58] Amanda: I was trying to be like the level headed.

[00;08;38;03 – 00;08;40;12] Ramit: Okay. Against what?

[00;08;40;14 – 00;08;53;10] Amanda: Against the spender. And so it’s like, oh, I did my part. Like to say no. So then I can kind of go back and be like, I tried to say no to this thing.

[00;08;53;15 – 00;09;06;44] Drew: For me, I almost kind of feel like the big bad wolf when she’s saying no. Her house is made of straw. If I blow and blow, I eventually blow that house down and kind of get what I want.

[00;09;06;46 – 00;09;25;36] Ramit: I think that’s a really good description. I was thinking when you were talking, I was visualizing, I kind of saw it like I’m getting like I’m getting pretty. I’m coming at you. Hey, what about this? What about that? Try this. No, we need it. It’s going to raise the value. Like, lots of arguments. And Amanda is playing her part.

[00;09;25;41 – 00;09;33;00] Ramit: Okay, now that we’re kind of agreeing to all these things, we’re seeing it in a different light. What do you both make of the role that you’re playing?

[00;09;33;05 – 00;09;39;03] Amanda: I don’t like it. I don’t like my role. I don’t like the idea of like, a big bad wolf either, though.

[00;09;39;12 – 00;09;51;20] Drew: No, and I didn’t mean it as like, I’m angry. And you want something? It’s more like, I know my way to blow that house down. I know what to say to eventually get what I want.

[00;09;51;22 – 00;09;53;12] Ramit: What do you think about your role, drew?

[00;09;53;17 – 00;10;18;19] Drew: Do you like it? No. I feel like we. I need to work more on being a team, but I feel like I need to do a better job of knowing my wife and listening to her instincts and kind of taking on that role where we are doing it more together than just me coming up with this, something up in my head and trying to move forward.

[00;10;18;24 – 00;10;21;38] Ramit: Can I ask you both? Do you know other couples with this dynamic?

[00;10;21;49 – 00;10;32;12] Drew: I feel like my my parents have a little bit of this dynamic. My dad usually is the spender and kind of gets what gets what he wants as well.

[00;10;32;13 – 00;10;33;07] Ramit: Amanda.

[00;10;33;12 – 00;10;38;01] Amanda: Yeah. My mom was in charge of the money, and my dad was the spender.

[00;10;38;01 – 00;11;02;06] Ramit: In a way, it already explained so much. If the only dynamic you have ever known is that one person is trying to convince the other to spend money, and then the other person has this kind of not particularly strong counter-argument. And so basically, the person who brings it up pretty much gets what they want. Is it really any surprise that that’s what you’re going to do?

[00;11;02;11 – 00;11;06;55] Ramit: No. Can I ask you something? Do you think that my wife and I have that dynamic?

[00;11;07;06 – 00;11;12;26] Drew: No. I would assume you to, discuss big travel. Big purchases.

[00;11;12;41 – 00;11;18;57] Ramit: What’s different about us versus the dynamic that you have?

[00;11;19;02 – 00;11;29;43] Drew: Nothing really comes to mind. What difference is I’m you in a loving relationship with with your wife. You’ve made a conscious decision. Decision to do it together.

[00;11;29;47 – 00;11;31;43] Ramit: Yeah. Amanda, what do you see?

[00;11;31;48 – 00;11;51;06] Amanda: I’m wondering if it’s, like, both having confidence in where you’re at, where you stand, and then it’s like you don’t have to convince the other, and you’re not. You’re not, like, waiting for the other person to give the green light.

[00;11;51;11 – 00;12;06;31] Ramit: I like that. Yes. You are totally right. Is there a part of your relationship where there is no convincing one or the other. It’s we are both knowledgeable. We are a team.

[00;12;06;45 – 00;12;09;18] Amanda: I think in every other aspect.

[00;12;09;30 – 00;12;11;06] Drew: I couldn’t agree more.

[00;12;11;15 – 00;12;21;40] Amanda: Yeah. We are like such a team. Like parenting with friendships. Like we’re always on the same page. So it’s really just with money.

[00;12;21;49 – 00;12;30;03] Ramit: What made you get on the same page with your daughter? That has not happened with money.

[00;12;30;08 – 00;12;41;08] Drew: Sounds cheesy, but love, I guess the love like we love our daughter. And maybe that love of money isn’t necessarily there because money’s hard to understand fully.

[00;12;41;13 – 00;12;43;31] Ramit: Okay. Amanda, any other perspectives?

[00;12;43;33 – 00;13;05;20] Amanda: I was thinking like the respect with how like what we want for her and we like respect each other in that regard. But with like money. We’ve seen how each other maneuvers with it. And so it’s always been kind of this we need each other to do the bad things.

[00;13;05;25 – 00;13;10;30] Ramit: Oh. We need each other to do the bad thing. Give me an example.

[00;13;10;43 – 00;13;32;14] Amanda: Like kind of going through how we went through the cabinets. It’s like drew needs me to say okay. So that later he’s going to say you said okay to like you didn’t say no you didn’t stop me. And then I do the same thing on the opposite of like I gave all the I said no, and you did it without me.

[00;13;32;21 – 00;13;56;59] Ramit: In a way it’s like semi related to flirting as I’m seeing flirting like you send a signal but you’re not too aggressive about it. There’s plausible deniability, but the right person can pick up on the clue, etc., etc., right? It’s not written in black and white. It’s very murky and gray by nature. And you’ve been married for a long time and you have a six year old daughter.

[00;13;56;59 – 00;14;00;41] Ramit: And it seems like things are fine. So why is it a problem now.

[00;14;00;46 – 00;14;22;43] Drew: As we are getting into our 40s. We are getting close to the age of retirement and it’s becoming like, oh my goodness, if I keep spending like this, are we going to have enough to retire at a comfortable age and, enjoy my life with Amanda moving forward? So I kind of think that’s where.

[00;14;22;48 – 00;14;23;13] Ramit:

[00;14;23;18 – 00;14;24;12] Drew: Where that came from.

[00;14;24;22 – 00;14;47;30] Amanda: Okay. Yeah. And I feel like two maybe for the first time we realized the pattern of like oh we get some money and then we have fun and don’t get me. I then infer from this like I love it too. But it’s just like we can never just let us have money.

[00;14;47;35 – 00;15;09;50] Ramit: It’s not a good dynamic to depend on your partner to say no, especially when you know they’re not really good at it. It basically just allows both partners to create the charade. Hey, I’m going to kind of ask you what you think you’re going to kind of say, should we really do it? And then we’re just going to do it anyway?

[00;15;09;55 – 00;15;26;52] Ramit: This is not real. If we want to live a rich life, we need to live in reality. We need to be honest about where we’re spending our money, what we can afford, what is important to us. And right now, there’s a lot of tap dancing around. The truth. When I was talking to them, I started to realize I don’t think they know any other way.

[00;15;26;56 – 00;15;48;18] Ramit: I think this is what they know, and that actually makes me feel a little bit more compassionate to them, because if they have never seen another couple’s dynamic, how could they ever do it? It’s actually one of the reasons that I started this podcast, because I wanted to know how other couples talk about Prenups, because we were doing it.

[00;15;48;18 – 00;16;10;22] Ramit: It’s all behind closed doors. None of this stuff is public, and I’m like, I can’t even figure out how people are talking about this, and I’m supposed to know all of this stuff? So when couples struggle with money, I feel a lot of compassion because you can’t find this material out unless you listen to these couples on this podcast.

[00;16;10;37 – 00;16;16;55] Ramit: We’re going to take a look at the numbers right after this.

[00;16;17;00 – 00;16;18;25] Ramit: Should we take a look at the numbers?

[00;16;18;30 – 00;16;19;06] Drew: I think we should.

[00;16;19;13 – 00;16;35;32] Ramit: All right. Let’s take a look at the KSP. I’m excited. Why don’t we start with the net worth box? And I would like drew to read off of the word in bold, and then the number in full next to it for this entire box, please.

[00;16;35;36 – 00;16;56;25] Drew: Assets. 925,434. Investments 454,580. Savings 13,000. Debt 568,285. For a total net worth of $824,729.

[00;16;56;30 – 00;16;57;51] Ramit: What do you think about those numbers?

[00;16;57;56 – 00;17;23;32] Drew: I am very happy and privileged that we’ve had jobs where our companies have matched our 401 K, and we have taken advantage of that. So, extremely happy with our total net worth. The only thing that makes me a little taken aback is about half of that is a home. And I don’t know, like, how do you ever get that money without selling it?

[00;17;23;34 – 00;17;25;31] Ramit: And Amanda, what do you think about those numbers?

[00;17;25;36 – 00;17;42;05] Amanda: I think they’re pretty good. Based on the limited knowledge that I have, I’m very happy with where we’re at. I mean, I know it includes my student loan debt and there. And that makes us uneasy. But overall, I think it’s pretty good.

[00;17;42;20 – 00;17;44;35] Ramit: What do these numbers mean to both of you?

[00;17;44;40 – 00;18;04;55] Drew: I feel like we worked really hard to get where we are. Getting jobs right out of college. In the corporate world and kind of working. Working up the ladder and putting away, our money in our for one case, the only number that really jumps out to me is that savings, being sold so low.

[00;18;04;59 – 00;18;12;02] Drew: I think that would be a months worth of six fixed cost. So that number really jumps out at me.

[00;18;12;11 – 00;18;15;04] Ramit: What about for you? Amanda was mean to you.

[00;18;15;09 – 00;18;24;23] Amanda: I think I think the biggest piece is like oh we might be able to retire at a reasonable age. That’s kind of where my mind goes.

[00;18;24;27 – 00;18;32;49] Ramit: I’m guessing you have not like run the numbers carefully on your retirement compounding that kind of thing. Would that be fair to say?

[00;18;32;54 – 00;18;36;19] Amanda: I’ve looked at like a projection.

[00;18;36;24 – 00;18;37;10] Ramit: Okay.

[00;18;37;14 – 00;18;41;06] Amanda: And seeing where it’s headed, I feel pretty good about. Oh.

[00;18;41;19 – 00;18;49;34] Ramit: That’s good. Wait, you have this. I’m quite surprised right now. The way you talking about it was like. I feel like maybe we can retire.

[00;18;49;39 – 00;19;05;20] Amanda: I think I’m waiting for someone to say, like, you’re way off. And so that’s why I kind of approach it that way, I guess because I’m just trusting, you know, projections in my Charles Schwab, like, you know, portfolio manager, you.

[00;19;05;20 – 00;19;30;11] Ramit: Find yourself minimizing your own knowledge a lot. Yeah. Oh, yeah. Yeah, I hate it. I don’t like it. I really I’ll give you an example. So there’s this thing when I take pictures with people. It happens when I’m in pictures with women. And you know what women will often do when they’re in a group photo? You know, Amanda, tell me, what do you do sometimes when you’re in a group photo?

[00;19;30;16 – 00;19;31;10] Ramit: And you just.

[00;19;31;15 – 00;19;32;32] Amanda: Like, turn to the side.

[00;19;32;41 – 00;19;56;20] Ramit: Yeah. And, the sorority squad. The squad down. Right. It infuriates me. I never allow it. I always say no squatting. Stand up. Tall and very, very commonly. Someone will say, well, what about the people behind me? I go, let them deal with themselves. They’ll figure it out. They’re adults. So I have vivid memories of this photo we just took.

[00;19;56;20 – 00;20;21;36] Ramit: I was on tour last year, and I was with my team, and we were taking a beautiful group photo. And what do you know? People start to squat down. I’m like, stand up. We have room for everybody. Stand up. Take up space. So, Amanda, I’m going to ask you on today’s conversation to take up space. Like, I think you might be a lot more knowledgeable than you’re letting on.

[00;20;21;36 – 00;20;41;02] Ramit: And if that’s. If not, that’s okay. Tell me. I never, never come down on anyone for not knowing something. But if you know, like, you’re like, oh, I happen to run a compound interest projection for both nominal and real returns for the next 45 years. Tell me. I love it. Cool.

[00;20;41;07 – 00;20;41;45] Amanda: Got it.

[00;20;41;50 – 00;20;52;05] Ramit: All right. So you all have a net worth of $844,000? You’re in your early 30s, correct? Mid 30s, mid mid 30s. All right. We’re going to look at what it means.

[00;20;52;10 – 00;20;52;54] Amanda: Yeah.

[00;20;52;59 – 00;21;08;00] Ramit: But first we need to understand more about income and expenses. So this time I’m going to ask Amanda. Amanda, can you read off the combined gross monthly income number for your household?

[00;21;08;14 – 00;21;12;59] Amanda: Gross monthly income combined is 13,911.

[00;21;13;04 – 00;21;21;54] Ramit: Great for a household income. Annual income of $166,932. What do you all think of that income?

[00;21;22;09 – 00;21;30;47] Drew: I’m super proud of the work that we’ve put in and our careers, and I couldn’t be more proud of Amanda.

[00;21;30;52 – 00;21;42;23] Ramit: Who’s the one who makes, 85, 21 per month? That’s true. And 5390 is gross is Amanda. And that’s what the new business.

[00;21;42;28 – 00;21;49;43] Amanda: Yes. And I think the part that has been hard for us is we used to be more equal.

[00;21;49;58 – 00;21;50;31] Ramit:

[00;21;50;35 – 00;21;58;21] Amanda: And it’s not we don’t care about like, breadwinner, but it was like mine took a dip. And so it was like adjusting to that.

[00;21;58;28 – 00;22;08;15] Ramit: Yeah, that makes sense. When you took a pay cut, Amanda, to start your own business, did you, Andrew, cut your household expenses?

[00;22;08;20 – 00;22;11;42] Drew: Overall, I would say no, we did not change our monthly expenses.

[00;22;11;43 – 00;22;12;22] Amanda: Okay.

[00;22;12;27 – 00;22;25;42] Ramit: They never do. They never did. Let’s continue on with the fixed costs. Here we go. This is where it gets fun. All right. Let’s see here. I’m looking at the fixed cost number. Whoa. What’s that number? You see, drew.

[00;22;25;47 – 00;22;27;24] Drew: I just called 89%.

[00;22;27;37 – 00;22;31;51] Ramit: 89%. That’s the ball game, right there means that you are.

[00;22;31;55 – 00;22;33;36] Drew: Not having much money afterwards.

[00;22;33;43 – 00;23;01;56] Ramit: Yeah, exactly. Means you’re spending more than you make have every month. Because. Because fixed cost is just one component of expenses. So we will drill down into fixed costs in a minute. But first let’s look at investments 4%. And noting that you are making a monthly contribution of $1,500 a month total to your 401 K, and then we go down to post-tax investments and we have 4% or $350.

[00;23;02;01 – 00;23;11;14] Ramit: Let’s go down to savings at 2%, and that’s 200 bucks a month. And then finally guilt free spending at 5%. But I don’t believe that number.

[00;23;11;19 – 00;23;13;43] Drew: Do you? I wouldn’t either, absolutely not.

[00;23;13;48 – 00;23;30;05] Ramit: It’s probably more, but that’s concerning because you’re spending more than you make every month and you only have $13,000 in savings. Think this is a real problem? Yeah. So what do you think is going on here?

[00;23;30;10 – 00;23;56;09] Drew: I think we have gotten comfortable with going to events, going out to eat. I’ve also gotten comfortable with telling Amanda that we’re good. We don’t need to cook dinner tonight and we can go. Go out. We just decided to turn a blind eye to our commitments on our monthly fixed costs and our guilt free spending. Overall.

[00;23;56;14 – 00;24;01;32] Ramit: What about you? Not we, but you drew with me.

[00;24;01;36 – 00;24;26;20] Drew: It sounds like an excuse overall, but I do work from home 24, seven, five, five days a week. Where I feel like I want to go out after after work, and I’m. I’m the one that kind of pushes to going to events and going out to eat, taste, feel some resemblance of being outgoing and talking to people.

[00;24;26;20 – 00;24;31;59] Drew: And I created that issue on a monthly basis.

[00;24;32;03 – 00;24;35;07] Ramit: Okay. Amanda, what do you think’s going on here?

[00;24;35;12 – 00;24;46;38] Amanda: We don’t know how to say no. We just do what we want to do and get what we want to get. And I think, I mean, maybe it’s a lot of me not saying no.

[00;24;46;43 – 00;25;00;08] Ramit: While I agree, there are definitely, relational dynamics here with the two of you I’m interested in, what do you think is going on here from Amanda’s perspective, what is your role in this?

[00;25;00;12 – 00;25;09;12] Amanda: Maybe having no vision into what’s going on. And so I’m just I’m not taking action.

[00;25;09;17 – 00;25;28;02] Ramit: You’re not participating in the finances. I agree that’s probably a problem. Is there a vision of like what your family finances should be? Money rules or policies? Philosophies in your family? Do you have those?

[00;25;28;07 – 00;25;28;57] Amanda: I’d say no.

[00;25;29;02 – 00;25;31;09] Ramit: Okay. Do you have them for parenting?

[00;25;31;14 – 00;25;31;37] Amanda: I would say.

[00;25;31;37 – 00;25;56;57] Ramit: Yes. Yeah, absolutely. Yeah. It’s very common. Every parent or couple of parents has some sort of philosophy. You know, in our house we take off our shoes or we eat dinner together or we don’t use curse words and we clean up our toys. Whatever. Every parent has some philosophy. It is peculiar to me that very few people have an explicit philosophy on money.

[00;25;57;02 – 00;26;24;01] Ramit: Yeah. Part of the problem here is that there’s no philosophy. It’s just like, hey, what do I want? And when you live in America, if you are the downstream recipient of trillions of dollars worth of marketing dollars being spent to get you to spend more money, you have very little shot of trying to brute force your way against these companies.

[00;26;24;06 – 00;26;30;24] Ramit: Unless you have a philosophy. Yeah. All right. What have each of you do for a living?

[00;26;30;29 – 00;26;33;50] Amanda: I’m a marriage and family therapist associate working towards licensure.

[00;26;33;52 – 00;26;36;39] Ramit: Great. Andrew. Yeah. I’m.

[00;26;36;39 – 00;26;40;03] Drew: A senior onboarding analyst. For an insurance company.

[00;26;40;13 – 00;26;52;38] Ramit: Amanda. As a soon to be licensed therapist, do you bring any of that skill set to bear when it comes to money and your relationship?

[00;26;52;43 – 00;26;55;02] Amanda: Probably more so. The relationship.

[00;26;55;07 – 00;26;55;45] Ramit:

[00;26;55;50 – 00;26;58;15] Amanda: I’m not bringing it to the money aspect.

[00;26;58;19 – 00;27;06;46] Ramit: Do you think you could bring those skills when it comes to money? Yeah, I bet you could. Why haven’t you, if you if you had to guess, why haven’t you?

[00;27;06;51 – 00;27;17;48] Amanda: I think it’s maybe a confidence piece. Yeah. Oh, I feel way more confident. Risk relationships. Money’s just not my thing.

[00;27;17;52 – 00;27;46;35] Ramit: Money is just not my thing. I like when people say that. It’s like, It’s like you never hear someone saying, like, food is just not my mean, oxygen’s just not my thing. Like, money is what allows you to have that plant and that doorknob behind you. It’s what allows your daughter to have a roof. So maybe when we think about money a lot of times like the word and the concept of money, we immediately jump to all these like arcane concept.

[00;27;46;35 – 00;28;09;19] Ramit: But when I think about money I think about you all taking a family trip. And I think about the ability for you to, to go on a hike and get an ice cream on the way home, like money can do. Those simple, beautiful things I think about if one of you gets sick or injured or a tire pops on your car to be able to go and get that fixed.

[00;28;09;24 – 00;28;09;57] Ramit:

[00;28;09;58 – 00;28;10;39] Amanda: But that stress.

[00;28;10;48 – 00;28;37;25] Ramit: So maybe, maybe there is something here about the way that we envision ourselves. You have drew who says I work from home and I need relief, I need some semblance of being with people. Well if that’s the way you view yourself and money, then you’re going to spend it, right? You have now automatically given yourself justification. There’s Amanda saying, you know, I don’t know.

[00;28;37;25 – 00;28;57;52] Ramit: I’m not really as confident. Oh, I’m extremely confident when it comes to the relational skills. But money, no, is just not my thing. But actually, it has to be your thing. It actually has to become a core competence of your relationship. If the two of you want to live a rich life. Yeah, simple as that.

[00;28;57;52 – 00;29;00;20] Amanda: Yes. And I think that’s exactly why we’re here.

[00;29;00;25 – 00;29;22;16] Ramit: Good, good. I’m glad you are. I like being told you need to get good at this. You need to. I don’t think anyone in our adult life tells us this. Like, you know what? You actually need to get good. This. That’s it. There’s no other way out. So if we go forward in today’s conversation, with that in mind, would the two of you be okay with it?

[00;29;22;21 – 00;29;24;47] Drew: Yeah, yeah, I think it’s needed. Great.

[00;29;24;52 – 00;29;46;54] Ramit: Let’s dig into your fixed costs. I want to put these back up on screen and let’s talk about the actual numbers here, because your fixed costs are 89% and this is it right here. If we can fix this we can fix a lot of other things. If we can’t fix this game over okay, okay. So we’re looking at your, rent or mortgage.

[00;29;46;56 – 00;29;47;59] Ramit: Is it a mortgage?

[00;29;48;04 – 00;29;48;51] Drew: It’s a mortgage.

[00;29;49;03 – 00;30;15;08] Ramit: Okay. Now, $3,235 or 23% of gross. That’s not bad. We like to see that number. You know, at 28% or lower, even though in high cost of living areas, that’s difficult. So the fact that you’re at 23 is nice. That gives you some margin to play with. So then so then I go like, what else are they spending on to get to 89% of a very high income?

[00;30;15;08 – 00;30;23;55] Ramit: Your utilities are 580 insurance, 400 car payment is $914 a month. How many cars is that?

[00;30;24;00 – 00;30;24;58] Drew: That is two cars.

[00;30;24;58 – 00;30;29;33] Ramit: Two cars. And does that include gas and stuff like that?

[00;30;29;38 – 00;30;31;23] Drew: They are electric.

[00;30;31;28 – 00;30;58;02] Ramit: Oh okay. All right. Debt payments are 600 bucks for student loan groceries. 800. That’s pretty reasonable. Clothing and kids activities. 400 bucks a month. And then we have this big chunk here, your phone, which is 30 bucks, but you’re 15% miscellaneous, including kids birthday parties, Amazon purchases and random items. That’s a lot for $1,120 a month.

[00;30;58;06 – 00;30;58;43] Amanda: Yeah.

[00;30;58;48 – 00;31;03;18] Ramit: And then finally subscriptions for $312 a month. What do you notice about all these expenses.

[00;31;03;25 – 00;31;11;56] Drew: Besides the miscellaneous. They seem like they are actual fixed costs that can’t go away.

[00;31;12;03 – 00;31;20;21] Ramit: Yeah. Maybe some of it can go away. Subscriptions at 312. We can knock that out right now. Okay. What else? What do you notice, Amanda.

[00;31;20;26 – 00;31;22;57] Amanda: I don’t nothing is like jumping out at.

[00;31;22;57 – 00;31;24;22] Ramit: Me. What about the cars?

[00;31;24;29 – 00;31;25;55] Drew: One car is a lease.

[00;31;26;08 – 00;31;28;29] Ramit: You’re leasing. What are you leasing?

[00;31;28;34 – 00;31;30;02] Drew: Tesla model three.

[00;31;30;07 – 00;31;32;42] Ramit: Are you doing it because it was, like, super cheap?

[00;31;32;47 – 00;31;37;12] Drew: It was. It was super cheap. Yes. And then we have another Tesla that we bought.

[00;31;37;24 – 00;31;42;22] Ramit: Can I ask you something? When you went in to make the purchase, how did you know how much you could afford?

[00;31;42;27 – 00;31;46;33] Drew: I think we just looked at how much it was a month.

[00;31;46;33 – 00;32;07;36] Ramit: This is exactly how fixed costs get higher and higher. I don’t mind if people go and buy, like, a bag of candy, or they go out and eat once in a while, like I really could not care less. That has very little material effect. That’s asking a $3 question. That’s why if people want to have coffee, get the coffee.

[00;32;07;41 – 00;32;34;27] Ramit: Yeah, but I am extremely protective of fixed costs because once something becomes a fixed cost, it is nearly impossible to get rid of. Like there is no real easy out for these cars. There just isn’t. A house is the ultimate. It’s very, very difficult to get out from that. And so while I am super loose and relaxed about candy, buying a drink or whatever, that’s a one time expense.

[00;32;34;27 – 00;32;56;12] Ramit: But for something that is either recurring or large and fixed, you have to be very protective. Like in many ways, the default should almost be no, unless we plan for it and we know exactly that making this purchase, plus all of the maintenance that we need to factor in, is going to keep our fixed cost below 60%. All right.

[00;32;56;14 – 00;33;07;09] Ramit: Yeah. Yeah. You didn’t do that. Most don’t. And that is how most end up with really high fixed costs okay. Yeah. I’m not here to beat you up. I just want to explain how we got here.

[00;33;07;14 – 00;33;08;24] Amanda: Yeah, absolutely. Makes sense.

[00;33;08;35 – 00;33;13;21] Ramit: All right. Down to your guilt free spending. What else are you spending money on?

[00;33;13;21 – 00;33;17;57] Drew: Mostly dining out. I would say 80% of that is dining out. How often then?

[00;33;18;02 – 00;33;18;55] Amanda: Three times.

[00;33;18;55 – 00;33;21;01] Drew: Know. Bump that up. I was going to say six.

[00;33;21;01 – 00;33;40;10] Ramit: Keep going. Probably nine. How? If I don’t know, there’s some magic number. If we factor in buying a coffee that counts as eating out. Because sometimes you buy a coffee and a pastry if we factor in lunch out or breakfast occasionally, blah blah blah blah blah. Yeah, yeah. I’m talking what, six, maybe more times a week? What do you think?

[00;33;40;16 – 00;33;41;40] Drew: Yeah, 6 to 8 times a week.

[00;33;41;40 – 00;33;43;43] Ramit: Absolutely. Yeah, it’s a lot.

[00;33;43;48 – 00;33;44;20] Drew: It’s a lot.

[00;33;44;26 – 00;33;45;04] Ramit: Vacation.

[00;33;45;14 – 00;33;47;24] Drew: We just got back from vacation two days ago.

[00;33;47;29 – 00;33;48;56] Ramit: Oh, wow. Where’d you go?

[00;33;49;01 – 00;33;50;21] Drew: Oh, we went to Boston.

[00;33;50;25 – 00;33;54;14] Ramit: Okay, let’s talk about how you planned the financial part of that.

[00;33;54;16 – 00;34;22;11] Drew: We had a free place to stay, for the weekend. So we did have a little bit of extra money from Amanda’s, taxes. As she puts away a certain amount. And she had left over. So we were able to purchase stuff, the plane tickets. And then it happened to coincide with when I usually get a bonus and we put a certain amount of money away for the trip itself.

[00;34;22;15 – 00;34;24;43] Ramit: How much did the tickets cost and how much.

[00;34;24;54 – 00;34;32;29] Drew: For the trip? But the tickets were $1,200, and the money I put aside was $1,000.

[00;34;32;36 – 00;34;38;25] Ramit: So the bonus money gets you. It gets spent pretty quickly. Would you say that happens regularly? It seems like it, yes.

[00;34;38;25 – 00;34;46;01] Drew: You’re kind of catching us at the perfect storm right now as this is tax season and bonus time for us. And this is usually.

[00;34;46;12 – 00;34;47;10] Ramit: Our.

[00;34;47;15 – 00;34;49;13] Drew: Timetable of where.

[00;34;49;17 – 00;34;50;02] Amanda: Things go spend.

[00;34;50;02 – 00;34;50;55] Drew: Our money. Yeah.

[00;34;51;05 – 00;34;57;29] Ramit: Yes. So you get tax money, you spend it, you get a bonus, you spend it. When did this start happening?

[00;34;57;34 – 00;35;00;36] Drew: Ever since our annual bonuses. When we started corporate.

[00;35;00;41 – 00;35;00;59] Ramit: Yep.

[00;35;00;59 – 00;35;07;21] Amanda: Yeah. And I used to get a very similar bonus. And now we don’t get. Now I don’t get that anymore.

[00;35;07;26 – 00;35;10;46] Ramit: Do you spend less because you don’t get the bonus that.

[00;35;11;00 – 00;35;12;57] Amanda: No.

[00;35;13;02 – 00;35;15;19] Ramit: Do you know any other way?

[00;35;15;24 – 00;35;30;32] Amanda: I don’t think so, because I think a lot of it, it comes down to like, we did. We we worked really hard. Like, you deserve a treat or we deserve, like, something with this because this bonus is, like, you worked really hard all year.

[00;35;30;36 – 00;35;34;22] Ramit: You work hard, so you deserve a treat. Who taught you that?

[00;35;34;37 – 00;35;40;24] Amanda: I might have learned that from you because I did not grow up going on vacations.

[00;35;40;25 – 00;35;58;25] Drew: And yeah, I mean, we went all in as a family. We went on yearly vacations that I can assume came from my dad’s bonus in taxes, and we went on vacation every single year. And I wanted to provide that for my family as well.

[00;35;58;30 – 00;36;03;44] Ramit: Did your dad ever explain the finances of these vacations?

[00;36;03;49 – 00;36;16;59] Drew: He never did explain them, but I on good authority. I would believe that they came from his yearly bonus that he probably. I’m following in his footsteps.

[00;36;17;03 – 00;36;19;03] Ramit: You’re going to explain this to your daughter?

[00;36;19;07 – 00;36;25;33] Drew: I would like to get some tools and help explain it better and say that we changed our ways.

[00;36;25;38 – 00;36;26;38] Ramit:

[00;36;26;42 – 00;36;46;28] Drew: So she has a better understanding of money and savings. So when she’s old enough I will explain to her the patterns that me and me mostly and Amanda had. And I think we can explain to her what we changed in the tools that we learned and how we move forward after this.

[00;36;46;33 – 00;36;50;24] Ramit: You talk to her about money today or. No, we do a little bit.

[00;36;50;28 – 00;36;51;55] Drew: Yeah, we do.

[00;36;52;00 – 00;36;52;31] Ramit: What do you tell her?

[00;36;52;31 – 00;36;55;45] Drew: To save as much as possible?

[00;36;55;50 – 00;36;57;31] Amanda: I think trying to.

[00;36;57;45 – 00;37;07;38] Ramit: I need to put this CSP back on one screen. Let’s just. Yeah, let’s just everybody take a look. I love seeing cognitive dissonance happen. Hey, what’s that number right there? What does it say next to savings?

[00;37;07;43 – 00;37;09;29] Drew: There’s a big old 13,000.

[00;37;09;31 – 00;37;21;07] Ramit: 13,000 on a $166,932 income. God, I love my job. Does she see mom active with the money.

[00;37;21;12 – 00;37;29;30] Amanda: No. Yeah. That one hit home a little bit. Because I don’t want her to follow what I’m doing.

[00;37;29;41 – 00;37;30;14] Ramit: Yeah.

[00;37;30;19 – 00;37;32;08] Amanda: And I don’t want her to be wishy washy.

[00;37;32;21 – 00;37;58;43] Ramit: Yes, yes I love that you said that. I want her confidence, which can only come from your confidence. And the two of you being confident. Yeah. What I would love is for her to build that confidence for example by mom saying money is really important. Here’s why. Here’s what it means to us. Here are the choices we make.

[00;37;58;43 – 00;38;17;51] Ramit: Here’s our philosophy on money. She should hear that. And she should see Mom and Dad talking about money and smiling and and giving each other a hug after they talk about money. And of course, you can make it age appropriate, but she should see that it should almost be theatrical. Mom and dad, you’re going to go over here.

[00;38;17;51 – 00;38;34;52] Ramit: We’re going to talk about money for 15 minutes. We need a little bit of quiet time, pull out a clipboard, talk about whatever. Have a serious conversation, smile, give each other a kiss. Yeah, great. She should see that. Yeah. These are kind of things that let her know. And of course, when you do this, it’s actually not just an act.

[00;38;34;52 – 00;38;46;27] Ramit: It actually is mom getting involved. And it is dad getting involved and talking together and smiling. And guess what? The more you do this, the more real it becomes. And then kids see it.

[00;38;46;32 – 00;38;48;28] Amanda: Yeah, yeah.

[00;38;48;32 – 00;39;09;37] Ramit: Whenever I talk to parents on this show, they almost always tell me that they have a philosophy about parenting. They have certain beliefs about sleep or feeding their kids or reading books at night. But when it comes to money, very few people have a philosophy like, what are you talking about? I spend on stuff. I have money in my savings.

[00;39;09;37 – 00;39;36;16] Ramit: I don’t know, philosophy. What? And I think there’s one crucial reason why. And that reason is that when you have a baby, you have a very urgent need to learn how parenting works. You have to learn it, and you have to do it now. But with money, there’s no such urgency. Even on this show, I have people who come on, they are a month away from running out of money and they’re perfectly calm about it.

[00;39;36;21 – 00;39;59;13] Ramit: But with a baby, you have to learn. I want you to have just a little bit of that urgency for money, because it is so important. If you get it right, you can live a very, very rich life. That’s why I’m pushing for them to develop a philosophy on money, just like they have a philosophy on parenting. I don’t think he realizes how dangerous of a financial situation they’re in.

[00;39;59;13 – 00;40;23;13] Ramit: Amanda definitely does not because she’s pretty disconnected from the finances, but he the one who logs into the accounts every day and is in charge of the money, doesn’t understand how close they are to financial ruin. That’s what I want him to understand. I want to understand a couple more things. The debt. So we have $568,000 of debt.

[00;40;23;19 – 00;40;26;15] Ramit: How much of that is the mortgage? How much of that is student debt?

[00;40;26;20 – 00;40;37;55] Drew: Yeah, 470 on the mortgage. 68,000 on the student loan. And then 28,000 on the car.

[00;40;38;00 – 00;40;43;29] Ramit: All that sounds reasonable to me. I notice there’s no child care. How are you managing?

[00;40;43;34 – 00;40;47;30] Drew: Elementary school, public school system. Great. It’s amazing.

[00;40;47;30 – 00;41;00;30] Ramit: Have you thought about what expenses might happen from now until later? I do see that you’re putting money aside. I believe it’s a 529. Yeah. What about between now and college? Are there any big expenses that you’re thinking?

[00;41;00;40 – 00;41;13;26] Drew: Me and Amanda did discuss? Private school. So that would be a a big expense. And also, as children get older, the sports and activities also get more expensive.

[00;41;13;26 – 00;41;20;36] Ramit: If you kept things going the way they are now, you know, and we just fast forward like five years, how would you handle it?

[00;41;20;41 – 00;41;28;05] Drew: I think Amanda and I would just pay for it to the detriment of our own finances.

[00;41;28;10 – 00;41;31;25] Ramit: Has anyone ever told, you know.

[00;41;31;30 – 00;41;53;47] Drew: No. But I had a very privileged life. I was able to. My parents were very generous and gave me an amazing childhood. Nike employees or shoes, vacations. So overall, I am not used to hearing no.

[00;41;53;51 – 00;41;55;38] Ramit: Give or tell yourself no today.

[00;41;55;43 – 00;41;57;55] Drew: Not often. Not often.

[00;41;58;00 – 00;41;59;10] Ramit: How about your family?

[00;41;59;15 – 00;42;01;17] Drew: I do not tell them no.

[00;42;01;21 – 00;42;08;12] Ramit: No. There are no no’s in your life. What has the result been?

[00;42;08;17 – 00;42;28;11] Drew: The result has been reaching out for help because I couldn’t do it on my, my own, put me and my family in a predicament that we don’t have enough savings. If something were to happen and it’s not a good feeling.

[00;42;28;16 – 00;42;33;22] Ramit: You would run out of money in under two months. That’s correct. Yeah. Do you think about that?

[00;42;33;31 – 00;42;36;04] Drew: Yeah, it’s something I think about often.

[00;42;36;09 – 00;42;50;07] Ramit: To push on that gently. Like if you think about it, it’s one thing. But you know, you have this tax refund, thousands of dollars, you have this bonus thousands of dollars. Why not go let’s take that money and put it in a savings account.

[00;42;50;12 – 00;43;11;57] Drew: We try to have fun in the moment which is sad to say. We try to go out and go to events and materialistic items just to kind of feel good in the moment. It feels like that’s something that I should do is take them out. Even though putting money away is probably showing more love to my family.

[00;43;12;02 – 00;43;13;14] Ramit: What do you think, Amanda?

[00;43;13;19 – 00;43;28;45] Amanda: It makes me feel like what is missing is that we’re just trying to fill with either stuff for food, or. I know we are very bad at being bored. Really very.

[00;43;28;45 – 00;43;29;19] Ramit: Bad.

[00;43;29;19 – 00;43;40;49] Amanda: And so, like, the weekends, it’s like, we can’t just sit here. We gotta go take our daughter to Topgolf or something, like, we gotta get out of the house.

[00;43;40;54 – 00;43;43;11] Ramit: That’s quite interesting. What else?

[00;43;43;16 – 00;43;44;55] Drew: We are both terrible cooks.

[00;43;45;00 – 00;43;45;31] Amanda: Yes.

[00;43;45;36 – 00;43;46;39] Drew: You say it. So what’s the.

[00;43;46;39 – 00;43;50;26] Ramit: Conclusion you go out to eat? Yep. Correct. Okay.

[00;43;50;31 – 00;43;54;02] Drew: We just love being with each other out and about.

[00;43;54;07 – 00;43;55;08] Ramit: I mean.

[00;43;55;13 – 00;43;59;15] Drew: It gives us joy to go out.

[00;43;59;19 – 00;44;10;53] Ramit: Do you mentioned that you grew up privileged? I’m curious if you can take me back in time. What do you remember your family saying about money back then?

[00;44;10;58 – 00;44;28;54] Drew: I don’t recall my parents ever talking about money in front of my sister or myself. I just remember asking for an item and that answer was usually yes.

[00;44;28;58 – 00;44;32;11] Ramit: What you ask for a Jordans?

[00;44;32;16 – 00;44;47;17] Drew: Almost every month, my parents were all, would always give me the new Jordans. Snowboards all that time. So it’s like none of my hobbies were cheap. They were always expensive. What.

[00;44;47;17 – 00;44;51;09] Ramit: Else do you remember? Your family saying about money? They just didn’t talk about it.

[00;44;51;18 – 00;45;03;03] Drew: We just did stuff. We just went on vacation. We just bought the items. My dad bought the new cars, but no ramifications of me or my sister hearing it.

[00;45;03;03 – 00;45;04;59] Ramit: Are your parents both still alive?

[00;45;05;04 – 00;45;07;05] Drew: They’re both still alive and still together.

[00;45;07;10 – 00;45;09;29] Ramit: Okay. And how are they doing with money?

[00;45;09;33 – 00;45;20;05] Drew: My dad is 69 and he does still work like a couple days a week. I don’t feel like they’re maybe as well off as peers around the same age.

[00;45;20;10 – 00;45;21;03] Ramit: How do you know?

[00;45;21;08 – 00;45;28;23] Drew: Because my dad always tells me to say now because he doesn’t want me to be in the same situation.

[00;45;28;28 – 00;45;35;01] Ramit: Your dad tells you to say, which he didn’t. You tell your daughter to save which you don’t.

[00;45;35;06 – 00;45;40;19] Drew: Yeah, definitely a pattern. I would love to break here and now.

[00;45;40;24 – 00;46;02;42] Ramit: I like that. I think that one of the joys, one of the responsibilities that we get, especially if we grow up educated, we grow up privileged, is that we can dispassionately look at our family upbringing and we can appreciate the things that our parents did that were awesome. And we can also say, hey, you know what? I didn’t love that.

[00;46;02;42 – 00;46;20;15] Ramit: Or there’s a different way now that I think I would like to integrate better. Maybe it comes from my spouse, maybe comes from a different culture, maybe from a religion or whatever. There’s something I want to do differently, and it’s going to be hard, because it’s easy to glide into doing exactly what your parents and their parents did.

[00;46;20;19 – 00;46;44;00] Ramit: But we are going to make this change as a family. To me, I think that’s actually one of the most powerful philosophies and visions that you can have. We are doing this as a family. Yeah. And Amanda, would you be on board with changing that pattern that has happened? Absolutely. Okay. Cool. Drew, anything else you want to highlight about how you were brought up?

[00;46;44;00 – 00;46;44;29] Ramit: Yeah, I think.

[00;46;44;29 – 00;47;10;26] Drew: The biggest thing that I’ve taken from them is the the yearly vacations, which, I don’t know how expensive they were back then. But I’ve been tending to do the same thing with, oh, wow, we need a yearly vacation. Because what you work all year round and you feel like you deserve an escape, but maybe it doesn’t need to be an extravagant vacation.

[00;47;10;39 – 00;47;20;33] Drew: It could just be a weekend or camping or anything like that. It doesn’t need to be a $10,000 Disneyland trip.

[00;47;20;38 – 00;47;45;02] Ramit: This is why I really love having a diverse group of people to hang out with and actually talking about this stuff. So, for example, my, my upbringing with my parents who immigrated from India, you know, we we grew up with a lot of Indian friends, and a lot of the parents had come at the same time. And so they were like making their way in a new country, but bringing a lot of their upbringing from India.

[00;47;45;11 – 00;48;09;19] Ramit: It was really common that we all ate at home for months at a time, like going out was a really big treat. I think that is very different than how we are all now. Yeah, yeah, I’m saying all this to say that in the if you only index on the upbringing you had, which was fairly, let’s call it privileged.

[00;48;09;24 – 00;48;17;46] Ramit: Yeah. Then it becomes totally normal. It’s abnormal to not take an annual vacation. But for millions of Americans, that’s totally normal.

[00;48;17;51 – 00;48;18;33] Amanda: Yeah.

[00;48;18;38 – 00;48;27;38] Ramit: Now let’s go to your, upbringing. Amanda, take us back in time. What do you remember your family saying about money when you were a kid?

[00;48;27;43 – 00;48;57;25] Amanda: Money was always a stress. Always talking about bills and how we’re going to make it. And refinancing the house several times. Needing grandma and grandpa to bail out. So there was just a lot of unease. I did get a lot of stuff. And, you know, I didn’t feel like I was going without, I did hear a lot of like that today.

[00;48;57;30 – 00;49;22;30] Amanda: Maybe next time. I heard that a lot. And I say that now to my daughter. A lot, and I’m like, oh, I remember being like, it’s never next time. So I don’t want my daughter to feel that way either, because it was just kind of like, you’re just lying to me. My dad was a spender and, like, couldn’t really be allowed to have, like, a debit card.

[00;49;22;30 – 00;49;44;39] Amanda: Or my mom would give him, like, an allowance because he would just spend it if he had it. And so I think maybe my mom kind of got forced into the role of managing the money. But my grandparents were like, well-off. So it was kind of confusing because it was like, oh, you know, with grandparents, things are great.

[00;49;44;50 – 00;50;12;19] Amanda: And then it’d be like at home struggle. And then it would be like, oh, we refinanced. And so they would get like a big chunk of money through the refinance and then that would like save us, you know, like, oh, we’re going to pay off all our debts and we’re going to start over. And then so it kind of mirrors a little bit not we don’t like do that, but like if we get a chunk of money it’s like, oh okay, we’re good now we can do the right thing.

[00;50;12;19 – 00;50;14;38] Amanda: But then you kind of fall back in the old patterns.

[00;50;14;43 – 00;50;24;15] Ramit: Okay. Yeah. When you took me on that journey, if you just notice how you’re feeling right now, how do you feel describing your job.

[00;50;24;20 – 00;50;29;08] Amanda: Uncomfortable. Anxious.

[00;50;29;13 – 00;50;40;32] Ramit: Yeah. You feel that way today about money as well. Yes. Yeah. Are they still alive. Are they still together. Yeah. Okay. And what’s their financial status. No. No.

[00;50;40;33 – 00;50;41;20] Amanda: Great.

[00;50;41;25 – 00;50;42;18] Ramit: Not great.

[00;50;42;22 – 00;51;04;52] Amanda: Yeah. It was kind of like always a struggle. And I think it’s still a struggle. And it makes me sad. And I don’t want that for my family or for me. And it’s not like I’m making these, like, big, right decisions. I think it was just kind of, like, snowballed for them. And it’s been hard to get out of them.

[00;51;04;57 – 00;51;16;14] Ramit: Look, we can’t control our parents. They are their own adult people. Yeah, but how do you think that that affects you, Amanda, and the two of you in your relationship with money?

[00;51;16;18 – 00;51;19;47] Amanda: And I’m scared, and I approach it with that.

[00;51;19;52 – 00;51;20;29] Ramit:

[00;51;21;02 – 00;51;49;40] Amanda: And then also, I didn’t get the luxuries like drew did. And so when I have now, I have an opportunity to go on vacation. I’m like, I want to complication because we didn’t we did one day creation like my whole childhood. And so to me, I’m like, oh, this is possible. Like I can do these things. And so I think there’s that novelty.

[00;51;49;54 – 00;51;51;10] Ramit: Do you ever say, no?

[00;51;51;15 – 00;51;53;38] Amanda: I yes to myself.

[00;51;53;42 – 00;51;56;52] Ramit: Oh, okay. To your daughter.

[00;51;56;57 – 00;52;01;13] Amanda: Yes I do, I’m, I’m working on it. Actively working on it. Yeah.

[00;52;01;18 – 00;52;08;25] Ramit: Do you ever just point blank say no to her. We are not going to get that or that’s not something we choose to spend our money on. No.

[00;52;08;29 – 00;52;13;45] Amanda: I usually prompt like, however, it’s like a sentence. It’s not just. No.

[00;52;13;49 – 00;52;21;12] Ramit: Do you say no? We’ll get it next time. Or do you say no? That is not something that we spend our money on.

[00;52;21;17 – 00;52;24;09] Amanda: I probably say, oh no, we’re not buying that today.

[00;52;24;13 – 00;52;25;06] Ramit: Yeah.

[00;52;25;11 – 00;52;28;26] Amanda: So there’s maybe hope for hope.

[00;52;28;31 – 00;52;47;23] Ramit: Yes. You ever had like a a creep hit on you and they’re like trying to get you to go out on a date or whatever. And then, you know, like some sometimes somebody will say like, oh, I’m not really looking for somebody right now. And the only thing that that guy hears is, like she said right now. Yeah.

[00;52;47;34 – 00;53;16;34] Ramit: No. Are you talking about me again? Yeah. Like about me. Yeah. Yeah. But, like, sometimes it actually just pays to just be like, definitive. No, no, I’m not interested. It is about both of you and your relationship with money and the ability to actually close certain doors. Yeah. No, we are not going to leave every door open. No, we are not going to take this vacation or no, we are not going to spend our bonus money.

[00;53;16;39 – 00;53;43;06] Ramit: Just no, no. Because right now at the at the level you’re at, where you are spending more than you make every month, and you are winnowing down your savings account to have a whole bunch of nuance, you are only tricking yourself into going right back to your old ways. In your situation, the most helpful thing you can do is have extremely clear, thick lines that say yes or no.

[00;53;43;10 – 00;54;07;28] Ramit: Like there is no question, no equivocation, no negotiation whatsoever. Yeah, and when you do that, which I’ll help you do, okay, it flows to your conversations for something as simple as, should we go out to eat? It’s Friday into larger things like, hey, you know, this vacation, we got these good deals on flights and even down to when you talk about money with your daughter, it goes everywhere.

[00;54;07;33 – 00;54;11;05] Ramit: But the only people who can decide that are the two of you.

[00;54;11;10 – 00;54;13;20] Drew: I love that. Yeah.

[00;54;13;25 – 00;54;37;10] Ramit: I think it’s really easy to come on a podcast and get blasted for saying something dumb or having, inappropriate belief about money. But for me, the more I have done this and the more successful I have become with my own money, the more compassionate I am in terms of like if I were in their situation, might I be doing exactly the same thing?

[00;54;37;15 – 00;54;55;29] Ramit: So when I hear drew saying, I never said no, I never got told no, I’m like, well, if my parents never told me no, I’d probably be doing exactly the same thing you are right now. It doesn’t excuse. It helps me understand a little bit more. Drew’s parents did not do him any favors by not talking about money.

[00;54;55;33 – 00;55;23;26] Ramit: They definitely did not do him any favors by giving him everything he asked for. What happens when you go ten years, 20 years, 30 years? Never being taught about money, never being told no is that you simply do not develop the capacity to make carefully nuanced decisions about money. You see it, you want it. You get it. That might work if you make a ton of money, but it stops working.

[00;55;23;26 – 00;55;49;20] Ramit: When you have a family. It’s certainly stops working when you have kids. For Amanda, money is anxiety. It is a source of tension. It is chaotic. It’s also a source of control that came from her grandmother to her mom. If you have the choice of being around something that causes you anxiety and stress makes you feel incompetent, what would you do?

[00;55;49;29 – 00;56;07;18] Ramit: Most people go, oh, I’d read a book and I’d learn about it. No you wouldn’t. You would just avoid it. And that’s exactly what Amanda is doing. That might work. If you’re 12 years old, it does not work. When you are a mother and a wife, you have to engage with money. You have to turn and walk straight into the fire and learn how money works.

[00;56;07;23 – 00;56;29;09] Ramit: It can cause anxiety right now. That’s okay. But it also is a source of your rich life. That is why I’m pushing her to stand up, to take up space, to acknowledge she actually knows some of this stuff is pretty impressive what she’s doing, but she needs to go into it full force, not depend on her husband.

[00;56;29;14 – 00;56;36;48] Ramit: What money messages do each of you bring from your upbringing to this relationship?

[00;56;37;03 – 00;56;44;55] Drew: I think the money message that I’ve brought to this relationship is you only live once, just do it.

[00;56;44;59 – 00;56;45;50] Ramit: Well.

[00;56;45;55 – 00;57;02;12] Drew: And I mean, I’ve heard like my my grandfather would say, it’s only money. I guess that is easier to say when you are a grandpa and you’re retired and you have money to, to spend. You can’t take that when you’re you’re 35. It’s it’s only money.

[00;57;02;23 – 00;57;05;14] Ramit: Really good insight. Amanda.

[00;57;05;19 – 00;57;07;47] Amanda: That money is scary.

[00;57;07;52 – 00;57;11;08] Ramit: What money messages are you passing along to your daughter.

[00;57;11;13 – 00;57;31;13] Drew: That you only live once, then spend it. But overall, we do only live once. And I want my retirement to reflect that. So I need to save. So we are happy and in a great place for me and Amanda as we move forward into that chapter.

[00;57;31;16 – 00;57;35;03] Ramit: Okay. Amanda, what money messages are you passing to your daughter.

[00;57;35;08 – 00;57;43;50] Amanda: That you have to be buying stuff or you’re doing stuff to enjoy life? Nice that you get everything you want.

[00;57;43;55 – 00;57;45;26] Drew: And that’s not life.

[00;57;45;30 – 00;58;06;06] Ramit: No, I think you actually get whatever you want and you don’t look at the numbers at all. Yeah. You also don’t have a vision. Yeah. Do you not have a vision of your money? If you want to change the money messages that are passed on, you could blah blah blah talk all you want. But the only thing that matters, as you know, as parents, is action.

[00;58;06;12 – 00;58;07;35] Drew: Selling, action.

[00;58;07;40 – 00;58;28;53] Ramit: Action. She’s got to see it. And she’s even got to see mom and dad not getting everything they want. But more importantly, having a powerful vision that they are getting. Yeah. Okay. I’m actually curious what that rich life vision is for both of you. Have you ever talked about what your rich life is?

[00;58;28;58 – 00;58;36;51] Drew: We’ve had conversations of what we’d like to do when we were older, but I don’t think we’ve looked at each other in the eyes and said, here is my rich life.

[00;58;36;56 – 00;58;43;15] Ramit: Should we do it right now? Let’s go for it. Okay, who wants to go first? The question is, what is your rich life.

[00;58;43;20 – 00;58;59;10] Drew: Amanda? My rich life is one, being with you. No matter what. Even though I know we just talked about vacations, but if we could limit those. And me and you.

[00;58;59;14 – 00;59;01;05] Ramit: Are.

[00;59;01;10 – 00;59;31;19] Drew: Together on vacation, providing our our daughter, the life that I know that we would love for her, which is to grow up as a confident woman, who doesn’t necessarily depend, on money would be amazing. My rich life also include being able to do that, the hobbies that I like without having to think about money, and then limiting going out to eat, but still still being able to go, out to eat with you.

[00;59;31;24 – 00;59;35;55] Ramit: Okay. Thank you very much, Amanda. What’s your rich life for me.

[00;59;35;59 – 01;00;02;53] Amanda: It’s definitely doing this together. And I think creating that philosophy where it becomes like second nature to us of making those easy decisions to take out that decision aspect of like, oh, maybe, maybe not. It’s more of that confidence, I think without fear and knowing that we can handle the life experiences that are bound to come, without it wrecking us.

[01;00;02;58 – 01;00;07;01] Ramit: How do you both feel expressing what your rich life is for the first time?

[01;00;07;06 – 01;00;08;16] Drew: It does feel a little weird.

[01;00;08;27 – 01;00;09;12] Ramit: Like, yeah.

[01;00;09;12 – 01;00;23;05] Drew: Expressing what you want in life. It’s not usually a dinner conversation, but it’s a great one. Yeah, and it’s one that we should continuously have, to be honest. As as life continues.

[01;00;23;10 – 01;00;38;42] Amanda: Amanda, it felt really good because I could see how well they intertwine and that they align really well and that we’re wanting to do it together to create that different outlook, I guess, change a cycle.

[01;00;38;47 – 01;01;07;21] Ramit: I like that what I noticed is without this type of discussion, what is our rich life? What’s our philosophy on kids activities or eating out, etc. without any of that, you simply look down at the day to day, and the day to day is stressful and busy and often filled with materialistic escapes that are not even part of your rich life.

[01;01;07;26 – 01;01;21;46] Ramit: Like somebody sitting here buying $500 worth of freaking crackers, I go, are crackers part of your rich life? So I don’t mind if you can afford it and you love it. God bless. They go, I hate crackers I don’t even like, I just eat them because they’re buttery and they’re in front of me. Then why are you buying it?

[01;01;21;46 – 01;01;40;43] Ramit: Because you have no philosophy. Drew, you made a really good point. We don’t really talk about this stuff. We probably should. Yeah, it’s actually probably the first thing you should talk about. And you should talk about it regularly because it elevates your purchase decisions and your relationship to a much higher level than where should we eat out this Saturday?

[01;01;40;47 – 01;01;49;51] Ramit: Yeah. Okay. No, no, I want to point something out. Knowing what you both said, do you know specifically what you would not spend money on now.

[01;01;49;56 – 01;02;00;13] Drew: I would probably need to limit the amount. I go to nicer golf courses and limit our eating out. Okay.

[01;02;00;13 – 01;02;01;40] Ramit: Dining out. Amanda.

[01;02;01;45 – 01;02;13;03] Amanda: A lot of it is the eating out. And just like random, like more expensive things like maybe tickets to a show or like those random like.

[01;02;13;08 – 01;02;28;58] Ramit: How come none of these things showed up on the KSP? By the way, I haven’t heard the word golf before, haven’t heard the word concerts. I haven’t heard any of these words. What is this, 89% fixed cost? You cannot afford to golf. Simple is that. End of story. There is no discussion. I don’t know what to tell you.

[01;02;29;12 – 01;02;54;39] Ramit: It’s it. That’s it. It’s over. What I really want to get to is I like your rich, light vision. I think it’s a good first step. But when I am hearing somebody describe a an effective personal, rich live vision, it cuts like a nice. It is sharp. Sometimes it’s a little abrasive. Sometimes it is bewildering. That’s what I want to hear from you on your rich life.

[01;02;54;48 – 01;03;22;05] Ramit: I want you to be so tuned in to what your rich life is so specific that it could only be yours. So if you were to say, I am going to play golf once a month, okay, we I can work with that. But I didn’t even hear to golf until just now. If you want to say we are going to take our daughter to art classes three times a month, great.

[01;03;22;10 – 01;03;36;10] Ramit: But right now what I’m hearing. Really? General? Yeah, I actually don’t know how to take what you told me and change the KSP. So can you try it again and tell me what your rich life is, what is important to you and what is not?

[01;03;36;15 – 01;03;44;19] Amanda: Definitely activities for our daughter. That’s definitely on there. I like to get my nails done.

[01;03;44;31 – 01;04;06;29] Drew: He’s absolutely correct that I do do not need to to golf that much. It is a very expensive hobby. But for me, my rich life is, with working from home five days a week. I would like to at least go out once a week with you. And our daughter is a family. I like that.

[01;04;06;33 – 01;04;13;01] Ramit: I want to go out once a week with the two of you to do some sort of activity.

[01;04;13;05 – 01;04;13;46] Amanda: Yeah.

[01;04;13;50 – 01;04;20;14] Ramit: We can make that work. So then, can I extrapolate that vacations are not part of your rich life?

[01;04;20;19 – 01;04;28;10] Amanda: I feel like I feel like they are because the experience with our daughter.

[01;04;28;15 – 01;04;42;14] Ramit: Oh, wow. Okay, then, if that’s the case, what if I were to say I feel like you have to double your income? That’s the goal. Could you put a hold on vacations until you do that?

[01;04;42;19 – 01;04;44;51] Amanda: Yes. I think that it makes complete sense. Yes.

[01;04;44;51 – 01;05;03;47] Ramit: Now we’re talking. Now we’re talking. See, part of your rich life. There can be many things in your rich life. You can’t afford all of them today, but they should still be listed. I want to stay at this hotel. I want to go to this. Whatever. Put them there. But you also have to know what is the moment where we can afford to do that.

[01;05;03;52 – 01;05;28;50] Ramit: And this is where you start to get honest. And this is where you start to say, okay, we can’t do this until that. That actually I find for high achievers is very, very motivational. And I actually think that the two of you can can do that. I could tell the way that you talk, you can achieve. So if you were to be like, all right, we’re not taking a vacation until x, Y and Z are reached, then I bet you you would reach X, Y, and Z pretty fast.

[01;05;28;55 – 01;05;53;34] Ramit: Yeah, which is incredible. I still set financial milestones for myself. Yeah, it motivates me. And then when it happens, it feels like incredible because I know how many years of work I had to put to get that. Yeah. All right. So we have a rich life vision. And then the last question before we go back to your KSP and change the numbers is how are you going to make sure that you do this together.

[01;05;53;39 – 01;06;24;10] Drew: Absolute, communication. I think me and Amanda will set a schedule to talk at least twice a month. Sunday evening we will have that conversation. I love where you said having our daughter not be present in the conversation, but seeing that conversation happen. So we will we will set up two days a month where we go through our finances.

[01;06;24;15 – 01;06;38;49] Drew: And I also love the setting, those future goals. So we will write down our future goals, talk about our finances, finances and our goals. And show that that affection in front of our our daughter.

[01;06;38;58 – 01;06;43;10] Ramit: Drew, what do you think is going to be the biggest challenge in these conversations?

[01;06;43;15 – 01;06;49;42] Drew: I need to do a better job at listening. Yeah. Where? No means no.

[01;06;49;47 – 01;06;50;58] Ramit: Who’s going to say no?

[01;06;51;03 – 01;06;54;47] Drew: I need to come to the realization that we can’t afford it either.

[01;06;54;47 – 01;07;00;16] Ramit: How are you going to do that? You never done it in your entire life. I.

[01;07;00;21 – 01;07;04;27] Drew: I don’t know how people just turn around, like, turn that switch.

[01;07;04;32 – 01;07;05;20] Ramit: Oh, well.

[01;07;05;24 – 01;07;09;27] Drew: I need to do a better job. Investigating tools to turn off that switch.

[01;07;09;27 – 01;07;28;15] Ramit: I don’t like the word tools. When people use the word tools, they especially guys, we’re looking for some magical AI solution. Those tools don’t exist. I’m talking about you, drew. You are the big bad wolf, as you yourself described it. Which, if we can bring it back down to earth, what that means is you don’t know how to say no.

[01;07;28;15 – 01;07;54;14] Ramit: You’ve never had to say no. You hate saying no. You actually hate it. You know exactly what to say to convince Amanda to agree with you. She is not knowledgeable about money in the way that you are. Although drew candidly, I don’t think you’re that knowledgeable about money either. You’re 89% fixed costs, you’re not doing a great job, but in your relationship you are the knowledgeable person in charge of money.

[01;07;54;19 – 01;08;04;06] Ramit: And you basically, as you put it, can maneuver to get Amanda to agree with whatever you want. How are you going to change that?

[01;08;04;11 – 01;08;30;37] Drew: Have a collaborative conversation with your your spouse, and come to an agreement. I need to learn to hear the word no. And let that sink in. I need to say no to myself, and I overall, I just needed to do a better job. And this self-reflection has really helped.

[01;08;30;50 – 01;08;48;48] Ramit: That’s good. The most important thing you just said right now was you need to say no to yourself. Best way to to change the dynamic of your relationship is for you to take the first step and change it for yourself. So tell me, what could you say no to? Today?

[01;08;48;53 – 01;09;04;23] Drew: I was asked to go to a basketball game that would cost a couple hundred dollars for tickets, and I will say no to that. I will not be going.

[01;09;04;28 – 01;09;06;26] Drew: Sure. Yeah. More than happy to practice.

[01;09;06;41 – 01;09;21;33] Ramit: Okay, let’s go to a Pacific Northwest basketball game. Please don’t ask me to name any teams because I don’t know any of them. Some Pacific Northwest team. Would you like to go these these tickets are great, and they’re pretty cheap. How.

[01;09;21;33 – 01;09;23;07] Drew: Cheap are they?

[01;09;23;12 – 01;09;25;02] Ramit: They’re 200 bucks.

[01;09;25;07 – 01;09;26;44] Drew: Where are the seats?

[01;09;26;49 – 01;09;28;05] Ramit: Five. Be.

[01;09;28;10 – 01;09;48;17] Drew: Oh, those are really good seats. I’ll have to off to take a look. But, so that’s how it would usually go. I would usually say, okay, sounds good. But for this conversation, sorry for me, I don’t have the, the funds to do that at the moment. If you would like to come over and watch the game, I’d be more than happy to have you here.

[01;09;48;22 – 01;10;02;40] Ramit: Whoa. Okay, first of all, round of applause. That was really good. Is it? I love that was great. And I love the the offer. Hey, come on over anyway. Like, we can do it here. I thought that was really good. Would you actually say that?

[01;10;02;45 – 01;10;05;51] Drew: I can text them right now and say no?

[01;10;05;56 – 01;10;15;23] Ramit: Really? Okay. Do it. Text to me. Let’s take a second, I don’t mind, take a second. That’s fine, I liked it. I can take your time.

[01;10;15;28 – 01;10;17;02] Amanda: Oh, I’m very proud.

[01;10;17;07 – 01;10;21;09] Ramit: What do you see, Amanda, as Drew’s typing this? Tell us what you’re seeing. What do you notice? He.

[01;10;21;14 – 01;10;29;42] Amanda: He said no to himself. And because I know you, we talked about it earlier, and I was like, oh, boy.

[01;10;29;56 – 01;10;48;08] Ramit: Hold on. Was that what you said? Oh, boy. Okay, we’re going to get to you in a minute, okay? No, hang tight on that. Yeah. Oh, boy. Did you said yes, I did. Okay. Right. Okay. Hold it up tight to the camera. Wait, what? What are we looking at? Can you read it out loud?

[01;10;48;13 – 01;10;50;24] Drew: I can’t make it to the playoff game. Sorry.

[01;10;50;35 – 01;10;51;19] Ramit:

[01;10;51;24 – 01;10;53;19] Drew: We should still try and watch it together.

[01;10;53;24 – 01;11;02;16] Ramit: Nice round of applause. Really good. Okay. Great crepe rate. How did that feel?

[01;11;02;20 – 01;11;18;09] Drew: Honestly, it feels this is what I would feel like if I had said no to myself more often instead of going to bed like, oh, shoot, I spent another $200. That guilt that sticks with you after you make a purchase.

[01;11;18;13 – 01;11;43;50] Ramit: Nice. That’s the first time I’ve heard you mention that. Guilt. Yeah, I don’t like guilt with money. I don’t like men to feel it. I don’t like women to feel. I don’t like anybody to feel it. When I spend money, I feel great, I feel awesome. Yeah. I want you to feel like that. The only way your daughter can learn healthy relationships with money is if her parents feel good about money.

[01;11;43;55 – 01;12;06;01] Ramit: Yeah. How many people do we know? Including the two of you who grew up with parents not feeling great about money or confused about money? And then you internalize it and you got to make your own way in this world. No, we have to feel good, which means we need to develop a philosophy and then live it. And sometimes that philosophy means we’re not doing that.

[01;12;06;06 – 01;12;29;19] Ramit: Yeah. And then we start to be congruent. We start to be living our values. And it feels awesome. You know, people like this who are living their values and you’re just like Jesus. Like, yeah, you can just see it in their alignment. Some people would describe it with their energy. They are living their values. That is how you transmit money in a healthy way.

[01;12;29;28 – 01;12;40;14] Ramit: And your kids, your loved ones, they pick up on that, okay. Thank you drew. That was awesome Amanda. Now to you. Yeah.

[01;12;40;19 – 01;12;44;12] Amanda: Same question how I’m gonna change.

[01;12;44;17 – 01;12;44;53] Ramit: Yep.

[01;12;44;58 – 01;13;06;37] Amanda: Yeah. Same. No. And being confident in like no that’s not part of our plan or that doesn’t align with our philosophy. Being able to I guess say why I’m saying no, without like getting in the nitty gritty, but more of like, hey, we’re getting off course. Yeah.

[01;13;06;42 – 01;13;31;46] Ramit: The way you build confidence is deep competence. That’s why I’m confident about money. I’m very because I know my numbers. I know how compounding works. And you can do exactly the same thing. Okay. Start with my book then I, what I heard you say was you said I got to say no. But what I think I really loved you say is we’ve got to stay on a plan.

[01;13;31;51 – 01;13;50;26] Ramit: So you’re not. You’re not Mrs.. No, that’s not your role. That’s actually not fair to you. Okay? Neither of you are the know person. Because if you are the know person, then the other person is the yes person, and you’re right back to the way you were. Instead, you need to radically reconceptualize the dynamic here, which is what is our plan.

[01;13;50;26 – 01;14;07;24] Ramit: We’re going to come up with it together. Do we both agree? Now we’re going to stick to it. We can always reevaluate every six months, 6 to 12. But yeah, we are sticking with our plan and we’re going to gently remind one another if one of us goes off plan. Yeah, it’s not about saying no, you’re a bad person.

[01;14;07;24 – 01;14;23;06] Ramit: It’s about, hey, we have this plan that’s actually more important than any individual desire that we want. Got it? Yep, yep. You’re living our rich life plan. Okay, now, with that all laid out, we’re going to go back to the KSP. And you are going to tell me what changes you want to make. Are you ready? Great.

[01;14;23;11 – 01;14;24;36] Drew: Stuart.

[01;14;24;41 – 01;14;49;25] Ramit: Are you surprised that they have never talked about what their rich life is? I’m not. Most couples do not talk about philosophy about the big picture. If anything, they’ll say one day I would like to go to space. One day I’d like to go to Bali. But it is so much easier to live in the day to day.

[01;14;49;25 – 01;15;10;38] Ramit: An endless series of one to do after another. And hey, that’s life. We do have to manage the household fine, but what’s it all for? This is why I want every single person to put out your hand. Just go ahead and put out your hand right now. Go. What do I get? All this work, all this automation, all this stuff.

[01;15;10;38 – 01;15;39;00] Ramit: We’re doing with our time and our effort. What do we get? Do we get to go on vacation for three weeks a year to this very specific place? Do we get to buy a beautiful car or beautiful clothes? Do we get to put our kids in activities? What tangible, specific things do we get? If you don’t have a list of the things you want now and at your next milestone, and when you turn 45 or 60, what are you doing?

[01;15;39;05 – 01;16;00;41] Ramit: What I’m trying to get across is that you could spend the rest of your life going through your email to do’s, and you’re just going to end up with an inbox full of emails. Or you could zoom up, use the questions in my journal. Ask yourself, what is our rich life? What do we want? That would be a ten out of ten magical life.

[01;16;00;45 – 01;16;34;33] Ramit: And now can we start adapting our money to be able to get there? It is an incredibly powerful, counterintuitive way to live. It also gets you a rich life like nobody else. Looking now at the CSP, your fixed costs are 89, almost 90%. Your job is to get this number down to 60%. Your job is to also change the investment savings in guilt free numbers to reflect your rich life values.

[01;16;34;37 – 01;16;45;14] Ramit: So we’re going to start. And the pattern I would like to take is each of you are going to suggest one thing back and forth, like a ball you each have tossing back and forth. Who wants to go first?

[01;16;45;19 – 01;16;46;22] Drew: I can go first.

[01;16;46;29 – 01;17;00;57] Ramit: No, we’re not going to do that. Do you know why we’re not going to do that? Not only do you need to chill as that former big bad wolf, but you actually need to give Amanda the space to rise up and take some space. Amanda. Go ahead.

[01;17;01;02 – 01;17;02;05] Amanda: Subscriptions.

[01;17;02;17 – 01;17;04;14] Ramit: Rate. What’s the current number here?

[01;17;04;18 – 01;17;05;06] Amanda: 312.

[01;17;05;06 – 01;17;05;42] Ramit: What, you want to take it?

[01;17;05;42 – 01;17;07;52] Amanda: You definitely can cancel Netflix.

[01;17;07;52 – 01;17;10;45] Ramit: That one’s okay. 15 bucks a month.

[01;17;10;50 – 01;17;11;26] Amanda: I know.

[01;17;11;31 – 01;17;34;07] Ramit: Can I can I point something out? So you’re doing what everybody does the first time they do this, they jump right into the weeds and they try to fiddle and and it’s rational. That’s what I would do myself. But I’m going to ask you to think about your vision first. What is our vision? If we had a blank page, what is important to our family.

[01;17;34;16 – 01;17;36;36] Amanda: That we’re not spending more than we make a moment?

[01;17;36;51 – 01;17;47;17] Ramit: Yes, we are building savings. That’s good. That’s a great philosophy every month. And what else? Yeah. What did you say is important to you for spending.

[01;17;47;22 – 01;17;50;07] Amanda: Then it aligns with that plan.

[01;17;50;07 – 01;17;54;00] Ramit: Yeah. What what specific things do you want to spend money on?

[01;17;54;05 – 01;17;56;12] Amanda: Our daughter’s activities.

[01;17;56;12 – 01;17;58;26] Ramit: Yeah. Her activities and what else?

[01;17;58;31 – 01;18;01;21] Amanda: A healthy meals that we can have at home.

[01;18;01;26 – 01;18;09;12] Ramit: Really sounds very aspirational. Didn’t the two of you say you hate cooking? You’re not good at cooking, etc.? You want to learn house?

[01;18;09;17 – 01;18;10;33] Amanda: Yes.

[01;18;10;38 – 01;18;21;04] Ramit: What the. What was it? The way you said? It just tells me everything I need to know. Yes, I want to learn how to cook. Look at my head. Yeah, I want that to know.

[01;18;21;09 – 01;18;26;33] Amanda: If we’re not eating out. That’s something that’s not going to be part of that.

[01;18;26;43 – 01;18;27;43] Ramit: Oh.

[01;18;27;48 – 01;18;29;11] Amanda: Then what are we going to have to do?

[01;18;29;23 – 01;18;52;48] Ramit: Good. That is good. Now you’re I like that. I didn’t believe you before. Now the way you said it, you’re like, well, look, yeah, you got to do this. What’s our other choice? Yes. Decisive. Okay, now you’ve told me what’s important to spend and what’s not. Yeah. Can I suggest that when I pop this back up on screen, I want you to become a little bit more ruthless?

[01;18;52;53 – 01;19;01;02] Ramit: A little bit more like a mercenary. Okay? We’re doing that with your expenses. All right, here we go. Fixed costs. What do you want to do?

[01;19;01;06 – 01;19;02;53] Amanda: Cut subscriptions.

[01;19;02;58 – 01;19;10;26] Ramit: We want to take it to, half, half of that. So from 312 to, let’s just say 160. Okay. Look at the number. What changed here on the fixed cost?

[01;19;10;27 – 01;19;11;25] Amanda: It went down one.

[01;19;11;36 – 01;19;16;27] Ramit: It went down from 89 to 88%. Okay. It’s a start. But what does that tell you?

[01;19;16;27 – 01;19;17;39] Amanda: I’m not doing big enough.

[01;19;17;53 – 01;19;19;21] Ramit: Yes, we need bigger changes.

[01;19;19;21 – 01;19;31;28] Amanda: Go ahead. I know the phone and miscellaneous section is a problem. Yeah. And I think this is probably points to the issue is I don’t know what cells in there.

[01;19;31;37 – 01;19;34;50] Ramit: Okay. Actually, it’s Drew’s turn anyway. So why don’t we kick it over to drew?

[01;19;34;55 – 01;19;36;27] Amanda: Perfect.

[01;19;36;32 – 01;20;06;34] Drew: I know Amanda had talked about, healthier meals, with groceries. I do feel like chat. GTP, has the ability to make us six days a week meal plan. So I think that we would have the ability to cut groceries from 800 to 500 to 600 if we are able to find a meal plan and kind of shop for what we need instead of going into the store with no plan.

[01;20;06;44 – 01;20;24;06] Ramit: Okay, I like I like your energy, I like it, and I am going to cut the groceries. Can I just point out you all are starting from a place where you don’t really cook at all, and I need you to create a plan where you don’t have to be perfect to win. You are not going to be perfect at cooking.

[01;20;24;11 – 01;20;44;40] Ramit: Yeah, 25% of your vegetables are going to go rotten for the first month. It’s just going to happen. You’re going to hate the dish and you’re going to slip up and go eat out. It’s going to happen. We still need you to win even though you are human. So I’m never going to set you up with a plan where I expect you to be perfect, especially the first time you’re doing this.

[01;20;44;45 – 01;21;06;25] Ramit: All right, so let me suggest I’m going to take the groceries down, like, really, really a little bit. Okay. But what I’m going to suggest to you is that instead, you focus on creating a rule of how often you are eating out. I’m going to take your groceries from 800 to 750. That’s it. Okay. How often you’re eating out, like let’s just say nine times a week, okay.

[01;21;06;32 – 01;21;09;12] Ramit: That’s 7 to 9, whatever. How often you going to eat out?

[01;21;09;12 – 01;21;17;47] Drew: Now we are going to create a philosophy and a goal and follow it of eating out once a week. Does that work for you Amanda.

[01;21;17;52 – 01;21;18;30] Amanda: Yes.

[01;21;18;35 – 01;21;27;17] Ramit: Okay. Ooh, I like that last I drew. Good job. Yeah. Okay. So what’s the number we’re putting down for eating out? How much per week?

[01;21;27;22 – 01;21;34;11] Drew: If we’re only going once a week for 40, $45 or going out.

[01;21;34;16 – 01;21;36;33] Ramit: Amanda, where are you on this? Speak up.

[01;21;36;38 – 01;21;44;06] Amanda: I think we would enjoy it. And it’s a break, too, from having to make stuff at home.

[01;21;44;11 – 01;21;45;29] Ramit:

[01;21;45;33 – 01;21;51;09] Amanda: So I think once a week at the 5050.

[01;21;51;13 – 01;22;11;21] Ramit: Yeah. So 50 bucks a week on eating out. That’s $225 meals. I wish I could see the face of all the immigrants listening to this. And they’re like people who are especially the people in other countries, and they’re just like, what the is this couple talking about right now at $50? Meanwhile, I’m remembering like when we ate out.

[01;22;11;26 – 01;22;32;21] Ramit: Yeah, I can’t believe the six of us in my family. Right? We go out, we get two Cokes, two okay. And then we like, share them that I know I’m sorry to all the pizza places that we defrauded. That was not. But that’s what we did. We only ate out with a coupon and we would under order. And like we’re not getting full.

[01;22;32;35 – 01;23;01;15] Ramit: Like, that’s just life. That’s what we did. So I guess what I’m trying to show you is other examples of what’s possible. Like, you ever see families? It’s striking with their kids, right? The kids get their own freaking adult size meal. And I’m looking at them like, what the. That could feed four kids. Yeah, yeah. I’m trying to stretch the possibility, the imagination of what is possible for you.

[01;23;01;20 – 01;23;24;04] Ramit: Yeah. So yeah, if you want to start a 50 bucks, fine, I’ll mind. But I want you to start thinking there are other ways. Let’s, like, look at other people’s dishes. What are they eating? Let’s talk to our friends. Where they go. Do they not go? How do they save money okay. Great. All right 200 bucks Thelma put that up on screen and show you because guess what that needs to go down here.

[01;23;24;09 – 01;23;45;13] Ramit: Guilt free spending. That’s where it goes. So that’s included right there. We’re not going to change anything on your fixed costs okay. Right now. All right. So we’re going back up here. Can somebody just tackle the big expense here please. Yes. Yeah $1,120 for kids birthday parties Amazon purchases and random items. No fix this.

[01;23;45;18 – 01;23;59;18] Drew: Amanda I know that we tend to go a little big on the kid’s birthday party presidents and stuff like that. Those, we need to talk to our daughter of putting a limit on those. Those kids, presents.

[01;23;59;18 – 01;24;01;59] Ramit: Drew, give me a number. We got to move. Yeah.

[01;24;02;04 – 01;24;04;10] Drew: All right. I would say 650.

[01;24;04;24 – 01;24;15;47] Ramit: No way. I’ll show you. Why? Because. Watch. I’m dropping it from $1120 to $650. Look at this number up here. Your fixed cost number ready. What? The number dropped to 82%.

[01;24;16;00 – 01;24;16;39] Amanda: Not enough at.

[01;24;16;39 – 01;24;40;27] Ramit: All. How are you going to spend $650 a month on random kids and Amazon purchases? No, we’re not doing that. Y’all can’t afford it. You realize you’re going broke every month right now. What’s happening here and what I want you to pay attention to is you are what you’re trying to do is you’re still trying to live in the past and just, like, squeeze out a little bit here in a little bit there.

[01;24;40;33 – 01;25;01;51] Ramit: No, you actually need to start completely fresh in your rich life. Did you tell me Amazon purchases were part of your rich life? No you didn’t. Did you say kids birthday parties and getting them all these big ass gifts were part of it? No, you did not. You said activities with your daughter. I haven’t seen that anywhere. Okay, but you’re living in the past and trying to tinker around the edges.

[01;25;01;51 – 01;25;14;16] Ramit: That is a recipe for failure. You will always hate it. You will resent it, and you’ll go right back to spending the way you were. My job is to help get you where you want to go, even though you may not want to get there yourself. Okay, so fix this.

[01;25;14;16 – 01;25;16;33] Amanda: Is that just the phone?

[01;25;16;38 – 01;25;18;37] Drew: It really is. Just the phone.

[01;25;18;42 – 01;25;36;21] Ramit: Yeah. 30 bucks. That’s it. Yeah. All right. I’m going to give you a little bit more because miscellaneous stuff does come up, especially when you have kids. So let’s put it at 100. Honestly it’s going to require the two of you talking about money every single week. There cannot be mistakes. There cannot be like, oh, we should get this thing because it’s on sale.

[01;25;36;21 – 01;25;56;21] Ramit: No, it’s not happening guys. Yeah, I’m going to put this, but I have to give you like this is a red alert. This is asking a lot from a couple that has not really paid close attention to spending for a long time. Okay. Yeah. All right. I’m taking this down to 100. Look at the fixed cost number. Whoa.

[01;25;56;26 – 01;25;57;06] Amanda: Nice.

[01;25;57;06 – 01;26;06;13] Ramit: That dropped to 76%. We’re going in the right direction. I really like this. Okay, okay. What else? We got? Clothes and kids activities. 400 bucks a month.

[01;26;06;18 – 01;26;08;28] Drew: Yeah, that needs to be cut in half.

[01;26;08;33 – 01;26;15;43] Amanda: Her art class that she does with after school is. I would say it was like 220.

[01;26;15;55 – 01;26;20;02] Ramit: That’s her activity because it’s so great. 220 a month. Yeah.

[01;26;20;07 – 01;26;34;43] Amanda: I’m like, do we pay for anything else? Oh, like she’s in soccer. But we were it was like 60 bucks. But it’s like one time. But like she keeps doing stuff. So, cheer is coming up.

[01;26;34;48 – 01;26;36;22] Ramit: Let’s call it 250.

[01;26;36;27 – 01;26;40;03] Amanda: Yeah. I think that because things will fall off and things get. Yeah.

[01;26;40;08 – 01;26;54;45] Ramit: Let’s call 250. What’s the number? We’re down to 75% subscriptions. I’m just going to start making changes because you guys are not 160 for a couple. That’s losing money every month. Not in my world. And pick one. What do you want to have?

[01;26;54;49 – 01;26;58;44] Drew: We will keep the, the Apple subscription at $45.

[01;26;58;48 – 01;27;04;33] Ramit: All right. What’s the number? I’m changing it from 160 to 50. Fixed cost down to 73%. Not bad.

[01;27;04;38 – 01;27;06;06] Amanda: We’re chugging along now.

[01;27;06;06 – 01;27;15;42] Ramit: Do you have investments? At $200 a month, in addition to your 401 K, and then you have a 529 at 150 a month. Yeah.

[01;27;15;47 – 01;27;37;31] Drew: Maybe we need to hold off a little bit on the 529, because this is our future currently. I know we want the best for our daughter, but we need to kind of take care of ourselves at the moment. And I think if we are able to kind of cut that for the time being, that would help out.

[01;27;37;36 – 01;27;38;52] Drew: Agree.

[01;27;38;57 – 01;27;58;10] Ramit: So let’s take a look. We’re going to drop the 529. I totally agree. He your daughter needs you to be financially stable more than she needs money 20 years from now. I also want to go back up here to the kids activities because we did drop it. But what about clothes? She’s growing.

[01;27;58;15 – 01;28;01;04] Amanda: Yes, she needs clothes. Oh. She’s getting. Yeah.

[01;28;01;13 – 01;28;02;42] Ramit: Where do you buy those clothes?

[01;28;02;47 – 01;28;05;46] Amanda: We did get blessed with a lot of hand-me-downs.

[01;28;05;46 – 01;28;06;50] Ramit: Can you keep getting him?

[01;28;06;51 – 01;28;08;38] Drew: Me? Do we keep get. We keep getting them.

[01;28;08;43 – 01;28;19;05] Ramit: All right, so we don’t need a lot more. But maybe once in a while. We do need something. Would that be fair? I don’t want to. Yeah, I don’t want an unrealistic plan. Okay. Sarah, what do you want to do for this number? It’s 250 right now.

[01;28;19;05 – 01;28;21;10] Drew: Probably bump it to 300 okay.

[01;28;21;14 – 01;28;22;32] Ramit: 300.

[01;28;22;37 – 01;28;28;53] Amanda: Yeah. We I think we’re pretty mindful with our spending for her because we know how fast she grows.

[01;28;28;55 – 01;28;37;15] Ramit: I like that you’re both so mindful about her spending spending on her but not for yourselves. You’re like yeah she’s fine.

[01;28;37;15 – 01;28;38;39] Amanda: She can wear those.

[01;28;38;41 – 01;28;42;32] Ramit: Oh we need to go to golf. We need it.

[01;28;42;36 – 01;28;43;33] Drew: All right.

[01;28;43;38 – 01;28;45;58] Ramit: Speaking of that, where is the golf expense in here?

[01;28;46;01 – 01;28;47;54] Drew: It was in the miscellaneous.

[01;28;47;55 – 01;28;49;40] Amanda: It got wiped out.

[01;28;49;44 – 01;28;55;22] Ramit: It’s really quite peculiar that there’s no word saying golf in here. Anybody notice that? It was.

[01;28;55;33 – 01;28;56;57] Drew: I took what was there.

[01;28;57;01 – 01;29;00;04] Ramit: Yeah. Yeah, sure. All right. Bye.

[01;29;00;09 – 01;29;04;59] Amanda: Oh, and then I think that’s a good question. Is, are my nails in miscellaneous.

[01;29;05;04 – 01;29;06;14] Drew: They were.

[01;29;06;19 – 01;29;08;19] Ramit: How often you get your nails done, Amanda?

[01;29;08;23 – 01;29;13;42] Amanda: Once a month. But I can switch to that. Like press on once.

[01;29;13;42 – 01;29;32;07] Ramit: I say it might be the case if that’s what you do. That’s really up to the two of you to decide as you get more into the nitty gritty. But what I want is actually for you to to have a discussion about it, and I want you to do it not based on feelings. You all should not be talking about your feelings that much right now.

[01;29;32;07 – 01;29;53;12] Ramit: You should be talking about math. Here’s what we have. We have a finite amount of money. How are we going to distribute it? What I notice is that there’s been an over focus on feelings, and your feelings have actually lead you astray. Your feelings are why the that you don’t have enough in savings, and why each of you has adopted this role.

[01;29;53;24 – 01;30;07;07] Ramit: And we need to make feelings secondary right now and make the math primary. Okay, okay, let’s keep moving $100 a month for vacations.

[01;30;07;11 – 01;30;15;10] Drew: Those need to be wiped out Amanda if you feel the same way and transferred to emergency or long term savings you good.

[01;30;15;15 – 01;30;17;31] Ramit: Yeah. I mean are you sure.

[01;30;17;35 – 01;30;21;32] Amanda: Yes. Because we agreed that the vacation should wait.

[01;30;21;36 – 01;30;46;07] Ramit: Good. Yeah. Agreed. So we’re at 200 a month which is 2% which is low. Oh well guess what we have margin to play with because look at your guilt free space. Yeah. Those cuts you made at the bottom at the top they flow to the bottom automatically. So you have 22% to play with. That’s $2,052 a month.

[01;30;46;07 – 01;30;50;48] Ramit: Why don’t you say we put that money to work? Yeah. Where do you want to put that money?

[01;30;50;59 – 01;30;56;37] Amanda: Definitely the emergency fund. How much? Make that 400.

[01;30;56;42 – 01;31;13;02] Ramit: Okay. If we put 400 more here. Okay. Watch what happens to the numbers. So 600 bucks, this turns into 6%. This number I typically like to see it at 5 to 10%. But in your case do you think that number should be higher or lower?

[01;31;13;13 – 01;31;23;46] Drew: I think it should be higher as I do have a solid contribution to my floor. Okay, but not in our savings. So it should be higher in our savings to kind of bump those up.

[01;31;23;52 – 01;31;26;29] Ramit: Okay. And Amanda, why do you think it should be higher?

[01;31;26;33 – 01;31;30;56] Amanda: Because we’re kind of behind. Good. Yeah.

[01;31;31;05 – 01;31;51;40] Ramit: You have a high income and you’ve had it for a while and you don’t have great savings, and you have very high fixed costs. So if something goes wrong for one of you, you’re in trouble. So that is why I’m like, guess higher, right? So at 6% you’re kind of like near the bottom. I’d like to see that number at like 14, 15%.

[01;31;51;51 – 01;32;06;08] Ramit: So let me, let me actually try to like pump that number up a bit. Watch this I’m going to go to 800. We’re now at 9%. And look how much you still have down here 15% guilt free spending. What what is your immediate intuition tell you. What should you do?

[01;32;06;13 – 01;32;07;01] Amanda: Add more to that.

[01;32;07;01 – 01;32;25;21] Ramit: Yeah, I agree your guilt free spending should actually come down. You’ve been guilt free spending a long time. It’s actually causing you guilt at how much you’ve been spending. So we need to take that down and we need to redirect it into savings. So let’s pump this number up. And I’m just going to go a little faster. 1200 yeah yeah 13% savings.

[01;32;25;26 – 01;32;53;06] Ramit: That’s $1,200 a month. Guilt free spending is at 1052 which is good. Good. I think we could cut that down even a bit more. It’s starting to feel a little bit more rational, a little bit more aligned with the goal of a couple that told me they want to spend less every month and build up savings. One last thing I want to talk about, which is investments.

[01;32;53;11 – 01;32;55;24] Ramit: Have you run a compound interest calculation?

[01;32;55;34 – 01;32;56;27] Drew: Yes we have.

[01;32;56;27 – 01;32;59;05] Ramit: What do you find at the end? How much are you going to have?

[01;32;59;17 – 01;33;04;27] Amanda: I think mine was like 1.25 million.

[01;33;04;42 – 01;33;06;19] Ramit: And for you drew.

[01;33;06;24 – 01;33;09;33] Drew: 1.4, 1.4. Okay.

[01;33;09;38 – 01;33;41;48] Ramit: Well, we calculated if you continue on the current path, you’re on no raises, which I suspect you will both get. That when Andrew is 65 years old, that’s 29 years from now, you will have not 3 million like the two of you said combined. No. $5.58 million. Oh okay. That’s a safe withdrawal at 4% of $223,000 per year.

[01;33;41;53 – 01;33;46;04] Ramit: That’s a lot of money. Yeah. Does that surprise you.

[01;33;46;08 – 01;33;47;44] Drew: Yeah it does surprise us. Yeah.

[01;33;47;44 – 01;33;49;59] Ramit: Why is our calculation different than yours.

[01;33;50;04 – 01;33;57;56] Drew: I think I might have put in only half of my paycheck investments in there. Instead of a full month’s investment.

[01;33;58;01 – 01;34;00;16] Ramit: Why in I think I looked.

[01;34;00;16 – 01;34;06;23] Drew: At one paycheck and I grabbed. Since I paid bi weekly, I think I accidentally grabbed. Oh, why? Why?

[01;34;06;28 – 01;34;15;19] Ramit: You know, I’d rather make a mistake in the good direction, not the bad direction. But yeah, that’s kind of a big mistake. That’s like $2 million. $2.5 million. Wrong.

[01;34;15;24 – 01;34;33;32] Amanda: Yeah, yeah. Well, like, I’m looking at my Charles Schwab with what? What’s in there? Because nothing’s getting added to that. Right? Because I’m not at that job anymore. It says by the age of. So by the year 2060, it’ll be 1.9.

[01;34;33;37 – 01;34;38;02] Ramit: 1.9, almost $2 million. That’s pretty impressive.

[01;34;38;12 – 01;34;39;46] Amanda: That’s good.

[01;34;39;51 – 01;34;52;11] Ramit: And remember that’s if you don’t add anything else. Yeah. You’re going to add more. Of course you’re going to add more okay. So can I in light of all this what does this suggest to you for your CSP.

[01;34;52;16 – 01;35;14;09] Amanda: There was a big pressure on me, mainly because I’ve been contributing to A41K this whole time and company was matching it. And so I was worried that like, oh my gosh, I don’t have that anymore. But when we look at the projection, it’s like, do I need to be adding as much or worrying about it as much? Right now.

[01;35;14;12 – 01;35;39;31] Ramit: These are the questions you should be asking. These are valuable questions. So let me share what’s going on here. First, your fixed costs were way too high. So we went through the fixed costs and we tackled them and we brought them down to a level I think is reasonable. I actually think these numbers are pretty aggressive. Okay. Like you need to really be dialed in every week okay.

[01;35;39;35 – 01;35;42;16] Ramit: With that said we’re still a 74%.

[01;35;42;21 – 01;35;42;42] Amanda: Yeah.

[01;35;42;46 – 01;36;06;37] Ramit: It’s high. It’s really high. And so what we did was we went down to guilt free spending and we took that to about 11%. That number needs to go down a little bit more okay. Because the money has to come from somewhere and you simply cannot be spending as much as another couple on guilt free spending because you have locked yourself into high fixed costs.

[01;36;06;41 – 01;36;29;02] Ramit: That’s it. So we have to accept that your guilt free spending number will probably have to be something in the zone of like 8%. And what that really means is there are no more ad hoc, last minute decisions about spending, and it just doesn’t exist anymore. That is not the type of couple you are. Instead, it is planned ahead of time.

[01;36;29;07 – 01;36;48;17] Ramit: Each of you will decide how you’re going to take responsibility, what is the number allowed, and you’re going to leave buffer in case something goes wrong or you know, there’s a breakdown or something. You need to spend a little bit of money, but the automatic days for now are over. Cool. Yeah, yeah. Savings. You have put more towards it.

[01;36;48;17 – 01;37;13;59] Ramit: 1200 bucks a month, which I think is a good start. Investments. You’re at your Roth IRA for 200. Personally, that’s $2,400 a year. I might just redirect that to savings, boost that savings up. And then finally, if we look at your 401 K, I just want to point this out. Another option you should calculate is do you need to be putting $1,400 a month into a 401 K?

[01;37;13;59 – 01;37;15;24] Ramit: I’m not so sure.

[01;37;15;29 – 01;37;16;10] Amanda: That’s a lot.

[01;37;16;10 – 01;37;48;17] Ramit: Yeah, that’s a lot. Especially if there’s, you know, an additional match and blah blah blah. Of course that’s the best place to make a lot of money 20, 30 years from now. But you have a crisis right now. And so if it’s me and I am truly dialed in with my partner and I’m confident that I can follow a system, I probably take some of that money and I would redirected to savings and quickly, as aggressively as possible, build up that savings account for at least six months of fixed costs.

[01;37;48;21 – 01;38;16;15] Ramit: Okay. Do you know how much that is? Oh, $42,000. So you’re partially there, but you can see that even an extra $100 a month. Yeah, it’s $1,200 a year. So like when you put it in that perspective, like finding 300 bucks a month actually really adds up. Yeah it does. Where do you think that the biggest opportunity that this plan falls apart might be?

[01;38;16;19 – 01;38;26;48] Drew: The biggest opportunity would be having a rough day at work and you’re like, we’re going out. We we deserve this.

[01;38;26;52 – 01;38;28;00] Amanda: I was going to say stress.

[01;38;28;04 – 01;38;32;00] Ramit: Yeah, good I agree. What’s the antidote to that?

[01;38;32;02 – 01;38;55;53] Drew: I think it’s me and you sitting in the backyard with, with a drink and watching our daughter play, and, you know, instead of an $8, $12 drink at a place, it’s, you know, one that we got at the grocery store that’s $2, you know, and I think, I mean, we go out to talk to each other in a different environment.

[01;38;56;04 – 01;39;04;39] Drew: We can we can still have that same vibe and conversation together at home.

[01;39;04;44 – 01;39;23;57] Ramit: It’s really good. I love the way you two are, almost coming up with this new way of relating to each other. It’s, it reminds me of when my wife and I changed our diet and we didn’t eat out as much. We’re like, what are you supposed to do? What do we do with our friends? And we had to invent a whole new way of being with our friends.

[01;39;24;02 – 01;39;48;10] Ramit: And it’s like, let’s go for a walk. Let’s go check out this new park in the city. We haven’t been to that kind of stuff different. Yeah, but like cool, cool for the phase of life that we’re in. Same for you. Yeah. What can each of you commit to in terms of your rich life vision? To make sure that your plan stays on track?

[01;39;48;11 – 01;39;48;57] Ramit: Amanda.

[01;39;49;02 – 01;40;04;57] Amanda: Writing down or like, putting it somewhere like, this is our plan, and this is why I think this is why we’re making these tough decisions. Nice. And so yeah, I think like we’re saying no because this.

[01;40;05;02 – 01;40;18;03] Ramit: Love it beautiful. Get your daughter involved too. Yeah. Tell her. Yeah. Hello. Hey. This is what we’re doing. We want to build a person. We need your help and get her involved in the way that is appropriate for her. Drew, what about for you? Yeah.

[01;40;18;08 – 01;40;47;37] Drew: I think making that commitment to talk as a family. Listen, write out those goals. Stick to it. Be each other’s partners throughout this whole process. Leon, 1 to 1 another. I, I think as long as I’m with Amanda and my daughter, knowing what we talked about today, I think our, our, our life will grow and we’ll, we’ll have that opportunity, in the future.

[01;40;47;43 – 01;40;49;13] Drew: Really good.

[01;40;49;18 – 01;41;20;16] Ramit: I want to remind you that the changes you’re making, especially the aggressive changes. First, I don’t expect you to be perfect. You shouldn’t expect each other to be perfect either. I do expect a level results a plus. It’s going to take a while. It’s going to take some mistakes and that’s okay. You will get there. But if and when a mistake happens, give each other a little grace and get right back on the plan, okay.

[01;41;20;16 – 01;41;38;54] Ramit: That’s just normal. And the other thing I want to point out is that as you develop this plan more, which I want to see, by the way, I want to see a full plan with numbers. You should remember that a lot of this is temporary until Amanda’s income goes up. So you should make a plan for what do you get once that income goes up.

[01;41;38;54 – 01;42;11;28] Ramit: And that is a really fun exercise. For example, we get to accelerate our savings account by double. So that’s going to shorten the time from six years to fill it up to two years. If the salary increases by this much, we’re going to increase our guilt free spending by an extra $150 a month. That’s going to allow us to go out to a nice meal with drinks, and we are going to start putting aside, you know, 100 bucks a month for a vacation.

[01;42;11;33 – 01;42;33;05] Ramit: Like these are the kind of things where you plan it ahead of time. You plan for the worst, like term life insurance savings. Can we also plan for the best of the next extra money we get? 50% is going to go to savings, 20% here, etc. etc. and that’s how you always have a plan. Yeah yeah yeah okay.

[01;42;33;09 – 01;42;35;55] Ramit: What surprised you in today’s conversation?

[01;42;36;00 – 01;42;40;47] Drew: I think what surprised me the most was how dire situation was.

[01;42;40;52 – 01;42;43;03] Ramit:

[01;42;43;08 – 01;42;53;45] Drew: I didn’t know that we were out on the Titanic with like, without a floatie or a door and secondary. Was that retirement number that you had thrown out?

[01;42;53;50 – 01;42;55;39] Ramit: Nice. Amanda.

[01;42;55;44 – 01;43;25;00] Amanda: I definitely agree with the crisis. Because I think we’ve always just kind of told ourselves that we’re doing pretty good, you know, and, I think to how we were bringing each other into the pattern and using each other, I think it was a big piece for me. And I like the new, like, take on this is what we really want to do.

[01;43;25;04 – 01;43;29;19] Amanda: So this other stuff, it what are we really getting out of it?

[01;43;29;23 – 01;43;53;36] Ramit: Yes, yes. A rich life is unique and personal and it fits you like a glove. The two of you and your daughter, that’s what it is. And often when we look at where we are spending our money, it’s not reflective of our vision at all. And that’s okay. Yeah, that’s just an opportunity to clean things up and get back on our vision.

[01;43;53;51 – 01;43;59;22] Ramit: And how are you both feeling now as opposed to when we started talking? Amanda.

[01;43;59;27 – 01;44;18;49] Amanda: I feel hopeful and actually excited to act, to take action and be like, actually, this isn’t part of our plan. And I think having those guardrails, so helpful and take away a lot of anxiety for me.

[01;44;19;03 – 01;44;49;31] Drew: I am so excited and appreciate your time and the hard truths that we were told today. Because I kind of have to agree that we thought, oh, we make the amount of money we’re doing just fine, like with our total amount. But really, when you get into the nitty gritty, it’s just not not that way. So I’m super hopeful and excited to take what we learned today, set those goals and talk to each other, and continue to strive for our rich life.

[01;44;49;36 – 01;44;56;02] Amanda: Love that. Yeah. And to have our daughter actually see it’s safe. Not to say we’re saying yes.

[01;44;56;02 – 01;45;21;17] Ramit: Yeah, that is going to change everything. I think that Amanda and Drew are really smart. I think that they’re going to make some changes. I think the biggest challenge for them will be their mental vision of what money is for. Drew this idea that I want, what I want, and I don’t want to say no. I think it’s going to be really challenging for him to see money in a different way.

[01;45;21;22 – 01;45;47;43] Ramit: In other words, money is not just about whatever I see around me that I want right now. Money can be put aside to get something even bigger and more meaningful. And I think for Amanda, her biggest challenge will be becoming a true partner, stepping up into her own knowledge and power, becoming competent to build that confidence and actually saying, you know what?

[01;45;47;43 – 01;46;14;39] Ramit: That might not be part of the plan or this is what I want for our rich life. Those are the challenges, but I do feel confident that they can get there. This is why creating a rich life is so important. It goes way beyond where you should spend your money on Friday night eating out. It’s about creating a vision for yourself and maybe your partner that fits you individually like a glove.

[01;46;14;43 – 01;46;38;12] Ramit: If you need help developing your rich life vision and making your money work for you, you can get help in my Money coaching program. You can join right now. Within 24 hours you will have your vision on the way being developed. You can join at Common Money Coaching. And now let’s take a look at their follow ups.

[01;46;38;17 – 01;47;03;03] Amanda: I. So one of the biggest surprises from our conversation was realizing that we’re stuck in a pattern we generally thought was the right thing to do. Hearing that we were actually in desperate need of a larger emergency fund was really eye opening. It shifted the way we see our dating tips and choices. My biggest takeaway was learning how to signal or intentionally, and how using a shared philosophy can keep us on track.

[01;47;03;08 – 01;47;23;58] Amanda: Now we actually have a reason behind our no. Instead of feeling random or restrictive, it gives us a sense of direction and something that can kind of keep calling us back and see you’re like, oh, if we follow this, philosophy or pilot, we’re going to actually be able to do the things that are important to us, that give us average life.

[01;47;24;03 – 01;47;38;41] Amanda: So we’ve already made several changes. We’ve canceled multiple subscriptions, and we called to negotiate, lower our internet, current trends, and even pet insurance. We also decided to limit eating out once a week as a family, making it more.

[01;47;38;48 – 01;47;39;53] Ramit: Of.

[01;47;39;58 – 01;48;02;40] Amanda: An important outing instead of just doing it together. And we’re starting daily meet twice a month to make sure we stay aligned and keep checking in on our goals, our progress. So overall, this was a great experience. It gave us some clarity, motivation, and a better path forward that we really needed. So thank you so much, Beth.

[01;48;02;45 – 01;48;21;20] Drew: One of my biggest surprises from the conversation was realizing just how much our day to day decisions were driving our financial picture. It wasn’t one big mistake. It was a lot of it’s continuously developed, like eating out too often in our miscellaneous spending that added up each month. That was really eye opening for me. That made it clear that awareness alone isn’t enough.

[01;48;21;20 – 01;48;46;34] Drew: We need clear boundaries. My biggest takeaways were the importance of being intentional and aligned as a family that was developing a shared, rich like vision and a family philosophy. So our spending actually reflects what matters to us. I also learned how powerful it can be by practicing saying no in real time. I did not attend the NBA playoff game, and I have been saying no to invites to golf as well.

[01;48;46;39 – 01;49;05;58] Drew: For specific changes that we decided to make. As a team, we’ve been really intentional in our changes. First we called and negotiated with a few of our utilities companies, and we were able to lower our monthly payments. We also went through all of our subscriptions together and canceled everything that wasn’t really adding value to our life.

[01;49;06;03 – 01;49;30;56] Drew: Just those two steps along. Cut out a little over $2,000 in bills over the course of the year. We also decided to temporarily reduce my four one day contributions down to the maximum company match, and we also put a pause on our post-tax investments and our 529, the goal there is to really increase our savings right now, and we’ve committed to putting $1,400 a month into our emergency savings account.

[01;49;31;01 – 01;49;56;05] Drew: On a more day to day level, we are limiting eating out to once per week. We know that there might be a few slip ups, but we are trying to set out to set up ourselves for success by using ChatGPT to create will be weekly meal plans and keeping that grocery budget to about $150 per week. Finally, we’ve set aside a specific day in time, twice a month, to continuously talk about our rich like vision and our family philosophy.

[01;49;56;10 – 01;50;10;08] Drew: We plan to include our daughter in those conversations as she grows. So this really becomes something we’re building together as a family. Overall, this conversation gave me clarity, confidence and a clear plan, moving forward. Thank you.

[01;50;10;13 – 01;50;38;54] Ramit: Listen up. If you want my help with your specific money questions, there are only two ways to get it. First, you can apply to be on this podcast at root.com. Slash apply. Or second, you can join my Money coaching program instantly at Comma Money Coaching. In that program you get access to live virtual events, monthly group coaching calls, live Q&A, and an amazing huge community of other people like you.

[01;50;38;54 – 01;50;42;23] Ramit: Check it out at Comma Money Coaching.

#167k #feel #poor

261. “We’re in our 40s with nothing saved… Will we be ok?”

admin — Tue, 19 May 2026 10:40:46 +0000

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Ramit Sethi of I Will Teach You To Be Rich talks to Sebastien and Hope, a married couple in their forties who have been together for 20 years, married for 16, and have a nine-year-old son. They earn around $195,000 a year, have $674,000 in assets, $129,000 invested, just $11,000 in savings, and $437,000 in debt. On paper, they are not broke, but emotionally, Sebastien still feels like they are constantly scrambling, while Hope believes their personal finances are in the best place they have ever been. Both recently became business owners, with Hope running an architecture firm and Sebastien running a wine importing business, but the risk of entrepreneurship, debt, low emergency savings, and under-investing for retirement has left them stuck between optimism, fear, and avoidance.

In this episode we uncover:

Why Sebastien still feels broke, even though their finances are stronger than they used to be

How Hope’s optimism clashes with Sebastien’s fear about the future

Their combined income of around $195,000 a year

Their assets of $674,000, investments of $129,000, savings of $11,000, and debt of $437,000

Why having only one month of emergency savings puts them in a risky position

How both Hope and Sebastien became business owners after buying existing companies

Hope’s architecture business and Sebastien’s wine importing business

Why Ramit says they are talking around the numbers instead of confronting them directly

How their current retirement projection could give them only around $35,000 a year

Why Hope’s $130,000 retirement dream requires a much more aggressive investing plan

Why their guilt-free spending and fixed costs are squeezing savings and investments

How one final credit card payment could drop their fixed costs from 67% to 52%

Why their grocery spending becomes one of the first practical areas to tighten

Ramit’s math mistake in the episode and why the overall lesson still stands

Sebastien’s need for a clear business runway and decision point

Hope’s realization that she was not being fully honest with herself about their finances

Chapters:

(00:00:53) Introduction: is it too late to be successful with money?

(00:02:40) Sebastien and Hope’s financial snapshot

(00:04:11) Their annual “executive household planning retreat”

(00:06:01) Ramit asks if their planning system is actually working

(00:08:02) Sebastien’s fear about his wine importing business

(00:11:31) How they each became business owners

(00:15:31) Feeling broke vs actually being broke

(00:16:47) Ramit reads Sebastien’s application back to Hope

(00:20:08) Assets, investments, savings, debt, and net worth

(00:21:21) Ramit pushes them to say: “It’s not enough”

(00:23:20) Their projected retirement number

(00:25:31) Ramit points out they only have one month of emergency savings

(00:33:31) Their CSP: fixed costs, investments, savings, and guilt-free spending

(00:34:24) Breaking down their $437,000 debt

(01:01:22) The $45,500-a-year investment target

(01:15:59) Sebastien’s business plan and runway

(01:24:20) Ramit’s final advice: redo the CSP and lock in the numbers

(01:25:46) Hope’s follow-up

(01:27:40) Sebastien’s follow-up

(01:29:22) Their updates: increased IRA contributions and Vanguard investing

This episode is brought to you by:

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Calling LA couples: Apply to be coached for free on this podcast at https://iwt.com/apply

Transcript:

00:00:00.040 — 00:00:07.360 · Sebastien

I’m in my 40s and we felt broke for a long time. We’re constantly trying to make things work, make things a little bit better.

00:00:07.400 — 00:00:13.600 · Hope

I feel like our personal finances are in a better place than they ever have been.

00:00:13.640 — 00:00:18.120 · Ramit

Guys, these are two different universes. Talk about being on a different page. What’s the deal?

00:00:18.160 — 00:00:22.640 · Sebastien

Maybe sometimes we’re overreaching and it just never feels comfortable.

00:00:22.640 — 00:00:27.080 · Ramit

If you cannot build up a reserve. You are already in a very dangerous zone.

00:00:27.120 — 00:00:31.280 · Hope

I would love $130,000 a year to retire.

00:00:31.320 — 00:00:35.040 · Sebastien

I think it could probably be a little bit less like 80 to 90 guys.

00:00:35.040 — 00:00:51.000 · Ramit

That’s like wildly off. To get to $130,000, you need $2.35 million at retirement. That means you need to increase your investments to $45,500 per year. If nothing changes in the next five years, what happens to you

00:00:51.040 — 00:00:53.120 · Hope

We still are not able to retire.

00:00:53.960 — 00:02:37.440 · Ramit

Is it too late for you to be successful with money? Maybe you didn’t get started in your 20s. Maybe you woke up one day worried about money, asking yourself, am I screwed in retirement? Well, today we’re getting a look into that very question that tens of millions of people ask themselves, because I’m speaking with Sebastien, who’s 42, and Hope, who’s 48

They’ve been married for 16 years. They have a nine year old son, and they recently both became business owners. Listen to this line from Sebastien’s application. Quote. We both made a choice to become business owners, but now we are locked into these choices for the foreseeable future. Raising a kid, running businesses and paying down debt leaves us with barely any money to invest and has us questioning every purchase.

We mostly ignore it and pretend that it is a problem will solve later. Unfortunately, this is a story I hear all the time. A couple will come up against some financial challenge. Maybe it’s debt, maybe it’s high cost of living and they will simply say, I’ll deal with that later. Human beings do not like pain, especially when it’s not acute.

It’s much easier to tell ourselves. I’ll just deal with that later. Some dull, throbbing thing on your wrist? That’s fine. I’m actually curious to hear from you. Have you ever kicked the can down the road until you just couldn’t ignore it anymore? What was that moment where it finally broke? Like the straw that broke the camel’s back?

Head over to YouTube or Spotify and let me know in the comments! I read every one of your comments. Now I’m looking at their conscious spending plan, which breaks down how much they make and where they spend their money. If you want my help with your own conscious spending plan. Join my money coaching program at.

00:02:40.760 — 00:03:16.760 · Ramit

Their assets $674,000. Investments $129,000. Savings $11,000. Debt $437,000. For a total net worth of $76,000. I have a lot of questions. So let’s get started with Sebastien and hope you said something in your application. You said, Sebastien, we’ve been together for 20 years, married for 16, and have only recently started talking about investing for retirement.

I’m curious, why did it take you so long to talk about investing?

00:03:16.800 — 00:03:21.000 · Sebastien

It never occurred to us before. I wasn’t taught that as a kid.

00:03:21.160 — 00:03:25.400 · Ramit

Um, you guys don’t talk about investing strategy on date number 1 or 2?

00:03:26.160 — 00:03:30.560 · Hope

No, we talked about a lot of other stuff from day 1 or 2. But, yeah.

00:03:30.600 — 00:03:35.360 · Sebastien

We were too busy thinking about adventures and what we wanted to do with our lives. Right then.

00:03:35.400 — 00:03:40.800 · Ramit

When was the first time you did have a substantive conversation about money?

00:03:40.840 — 00:04:10.720 · Sebastien

Well, the first big time was we were living in another city, and before moving, we kind of wanted to put together a plan and what we were going to do next. I wanted to change careers and we needed to plan with the next, you know, ten months to a year look like in that transition. And it was the first time we kind of actually sat down for a whole day and, uh, like, mapped out what we wanted to do, what it would take, what we were able to do.

00:04:10.760 — 00:04:11.680 · Ramit

How did it feel?

00:04:11.720 — 00:04:27.520 · Sebastien

Good. It’s actually a tradition that we’ve, uh, maintained for the last 15 years. Every every January, we take a retreat together and spend a day or two talking about money and really what we want to do.

00:04:27.560 — 00:04:30.440 · Ramit

Wait, what? That’s quite advanced. Hold on.

00:04:32.160 — 00:04:35.120 · Sebastien

It’s become more sophisticated over the years, for sure.

00:04:35.160 — 00:04:39.360 · Ramit

This is amazing. What did you talk about in these annual money meetings?

00:04:39.360 — 00:05:07.080 · Hope

They’re not just money meetings. They’re they’re really a look at. It’s called our executive household planning Retreat. And so we talk about things that we want to do more of during the year. Friends, we want to have more of in our lives things that we should really focus on in in the coming year, and then also looking back at what have we accomplished in the past year?

00:05:07.280 — 00:05:09.640 · Ramit

What role does money play in these conversations?

00:05:10.560 — 00:05:14.120 · Hope

Sadly, it only started to play a role probably five years ago.

00:05:14.160 — 00:05:16.480 · Ramit

Got it. Okay. You have kids?

00:05:16.760 — 00:05:18.800 · Hope

One child. He’s nine.

00:05:18.800 — 00:05:22.640 · Ramit

And now? How often do you talk about money?

00:05:22.680 — 00:05:32.760 · Sebastien

Probably, uh, you know, on a weekly basis, there’s a sort of small check in, a more serious check in once every six weeks.

00:05:33.320 — 00:05:51.680 · Hope

And then every six months, because we do a now we do a bi annual head of household, like check in. And that’s a half day thing. And so we check in then as well just to see how we’re doing on our projections.

00:05:51.680 — 00:06:00.840 · Ramit

And I mean, I love what I’m hearing. I freaking love it. It’s all dialed in. You got the six weeks, six months, one year I love it. It’s very structured.

00:06:00.880 — 00:06:01.480 · Hope

Yeah.

00:06:01.520 — 00:06:02.720 · Ramit

Is it working?

00:06:02.720 — 00:06:16.680 · Hope

I would say it’s. It’s working pretty well. Yes. Okay. We’re fairly on the same page, honestly, about money. And doing these planning retreats really helps us align.

00:06:16.720 — 00:06:17.400 · Ramit

Okay.

00:06:17.440 — 00:06:48.600 · Hope

What we want to do because we, you know, we say, okay, this year we’re really going to focus on our debt or this year we really want to make some moves in terms of investments. But I still think that we’re just at this precipice right now where our lives have been changing for the better, and our finances have been changing for the better.

And we’re still.

00:06:50.120 — 00:07:00.080 · Hope

just having a hard time conceiving that our finances are better and that we are about to make some steps ahead, I think.

00:07:00.160 — 00:07:02.680 · Ramit

What do you mean? I don’t understand.

00:07:02.920 — 00:07:10.320 · Hope

So I purchased a business five years ago. So now I am the sole owner.

00:07:11.400 — 00:07:36.160 · Hope

I am still paying off the former owner for the next two years. There is some leeway now for an increase in wages. But once I finish the purchase, there will be more leeway for an increase in wages. Sebastien just purchased his business last October, a year ago today, actually.

00:07:36.400 — 00:07:37.640 · Ramit

Oh, congrats.

00:07:37.680 — 00:07:44.399 · Hope

Which is so cool. And so I think that we’re so used to being broke

00:07:45.520 — 00:07:52.840 · Hope

that we’re still kind of. We’re still living in that, in that kind of way.

00:07:53.040 — 00:08:01.680 · Ramit

I guess I’m surprised because from reading your application, Sebastien, what you wrote is quite different than what Hope is telling me. Yeah.

00:08:02.200 — 00:08:40.760 · Sebastien

We have a we have a different approach or a different outlook on how things are going. I purchased this business and I’m super thrilled I made it through. A year like that feels like a really big accomplishment to stay on top of my bills and, you know, be paying down the loan. And I also feel like it’s very precarious because there’s all sorts of stuff that I can’t control.

Um, you know, tariffs are affecting my businesses. I import, so I pay my bills in another currency. And, you know, the currency markets have changed. Like the dollar is a lot weaker than it was a year ago.

00:08:40.760 — 00:09:19.720 · Ramit

So this is this is quite surprising. Hope you just spent a couple of minutes telling me, like, we’re about to have more money. We’re about to be in a better position than we ever have. We can’t seem to get our heads around the fact that we’re doing really well. Sebastien, in your application, you wrote, quote, we just can’t seem to get ahead.

We are both small business owners who wanted to direct our future and have control of our time, but are constantly stressed about whether our businesses are sustainable and what could happen if one of us or both, doesn’t make it. Guys, these are two different universes. Talk about being on a different page.

What’s the deal?

00:09:20.680 — 00:09:28.960 · Sebastien

Yeah, I mean, I like I my business does feel, um, really shaken up this year with everything that’s going on with trade.

00:09:29.000 — 00:09:35.480 · Ramit

How do you feel about Hope saying, we’re in a great place and we’re about to have more success than we’ve ever had?

00:09:35.560 — 00:10:05.810 · Sebastien

I mean, that was the hope when we, uh, you know, when she became a business owner, the idea was that, um, she would have not just more control over her career, but also that, you know, eventually she would be able to like financially see some return on it. She took over her business in January of 2020 and, you know, six weeks later, had to send everybody to work from home.

And working through the pandemic was, uh, like a huge trial.

00:10:05.970 — 00:10:13.530 · Ramit

Sebastien, I guess my question is about the fact that the two of you just a minute ago said you’re on the same page, but to my mind, you are not.

00:10:13.690 — 00:10:30.930 · Sebastien

Yeah. I mean, I think we’re on the same page in terms of, like, how we how we allocate our money, how we, you know, how we choose to manage it and what priorities we choose to make about it. Um, I think we’re on a different page in terms of how we feel about our businesses are going.

00:10:30.970 — 00:10:32.810 · Ramit

How do you feel about it in a sentence.

00:10:32.850 — 00:10:46.810 · Sebastien

Like our personal finances are are are headed on the right track? If I can make it through the next six months of my business, that would mean things are going in the right direction. But I’m I’m really nervous that they might not be able to continue.

00:10:46.850 — 00:10:49.490 · Ramit

Okay. And hope. How about you?

00:10:49.530 — 00:11:13.369 · Hope

I feel like our personal finances are in a better place than they ever have been. We’re on more solid ground in terms of our finances. Currently, I do absolutely worry about Sebastien’s business, mostly just because it is so new and things are so

00:11:14.570 — 00:11:29.490 · Hope

precarious, and the tariffs and people not drinking as much have really affected wine consumption and importing. My business is is pretty steady.

00:11:29.690 — 00:11:30.290 · Ramit

Okay.

00:11:30.330 — 00:11:31.010 · Hope

Right now.

00:11:31.050 — 00:11:39.970 · Ramit

Now you both own businesses separately, correct? Yes, yes. Okay. And how did you wind up owning them? Are you both founders.

00:11:40.090 — 00:11:44.410 · Hope

Know both of us purchased from a founder.

00:11:44.570 — 00:11:52.730 · Ramit

Owe separately. You each purchased a business. Wow. Okay. And how did you decide to purchase businesses is somewhat unusual.

00:11:53.610 — 00:11:56.969 · Hope

Oh, you’re gonna hate this for me. Sorry. I

00:11:58.370 — 00:12:27.370 · Hope

have always been a little bit nervous about owning a business. I’m an architect and was just nervous about the prospect of being in charge of all those people. Yeah, but then I heard that my former employer, uh, was going to sell to someone else. And so I put my hand up because I was in my favorite job that I’ve ever been in.

00:12:27.410 — 00:12:28.730 · Ramit

Why do I hate that?

00:12:29.210 — 00:12:59.370 · Hope

Um, because it was very spontaneous. I mean, he went out for happy hour with these other people, and I wrote him an email right then, even though I’d been saying for years, like I do not. I’m not going to get licensed because you have to be licensed to become a firm owner. I’m not going to get licensed. I’m not going to purchase this firm.

Even though I knew he he felt as though I would do a good job, but it was a very spontaneous, spur of the moment decision.

00:12:59.490 — 00:13:02.330 · Ramit

Okay. All right. So you’re an architect. Is that the business architect?

00:13:02.370 — 00:13:03.490 · Hope

I’m an architect. Yeah.

00:13:03.530 — 00:13:07.370 · Ramit

Cool. All right. Sebastien, what about you? How did you come to buy this business?

00:13:07.410 — 00:13:46.770 · Sebastien

I was working for a guy that I really enjoyed working for. And it’s a really interesting business I like. I hope I love my job, you know? The former owner actually lives out of the country, and he realized he wanted to kind of make a transition. And we had long conversations about it. And, you know, after a long process, I came to realize, like, things are going to change whether I like it or not.

And either I can be in control of where that goes and continue to do something that I really love. Or go find something else.

00:13:46.810 — 00:13:48.650 · Ramit

This is a wine business. Yeah.

00:13:48.690 — 00:13:49.810 · Sebastien

It’s a wine importer.

00:13:49.810 — 00:13:57.330 · Ramit

So now that you both run your own businesses, why do you say in the application that it feels like you’re not getting ahead?

00:13:57.370 — 00:14:25.650 · Sebastien

I knew this from the get go, that the first year or two was going to be hard. There was a lot of startup cost. I’m still paying down some of that, uh, business debt. Um, for the startup cost. I think part of it’s the feeling of, you know, I’m in my 40s and as I said, it’s like we’ve felt broke for a long time. We’re constantly trying to make things work, make things a little bit better.

And and maybe sometimes we’re overreaching and

00:14:26.730 — 00:14:29.850 · Sebastien

it just never feels comfortable.

00:14:29.890 — 00:14:30.890 · Ramit

Are you broke?

00:14:31.170 — 00:14:35.450 · Sebastien

Uh, I mean, we pay our bills. There’s money in a savings account. So no.

00:14:36.250 — 00:15:26.690 · Ramit

I’m kind of confused about what I’m even doing here. Like Hope tells me, they’re doing better than ever. But Sebastien’s application is full of fear. They say they’re on the same page, but if you listen to them, they’re clearly not. They have executive planning retreats where they meet every six weeks with all this structure.

And yet one of them says they’re thriving. The other says they feel broke. Very confusing. Mixed messages. It’s like they’ve built this forcefield around themselves. And no matter how bad it gets, they can always say, well, we’re better off than we used to be. I don’t think they would be here if there wasn’t a real problem, but I can’t help them if we can’t even agree on what that problem is.

So I’m going to get direct before we can fix anything, I need to cut through some of this and see what’s actually going on. We’ll get to that right after this.

00:15:31.610 — 00:15:34.370 · Ramit

So you feel broke, but you’re not broke. Why?

00:15:34.610 — 00:15:43.330 · Sebastien

It feels like there’s always something. There’s always something that comes up. There’s always something that needs to be taken care of. You know, we’re always scrambling to put the pieces together.

00:15:43.490 — 00:15:44.210 · Ramit

Like what?

00:15:44.290 — 00:15:52.810 · Sebastien

Oh, we had to replace three appliances this year already. Two refrigerators and a dishwasher. And it wasn’t something we planned on.

00:15:52.850 — 00:16:01.610 · Ramit

I’m kind of surprised because you have these planning sessions multiple times a year. Why not plan ahead for the expected and the unexpected?

00:16:01.650 — 00:16:04.010 · Hope

We’ll add that for this coming January.

00:16:04.050 — 00:16:06.490 · Ramit

I’m sure you will. But why have you not?

00:16:06.770 — 00:16:14.850 · Sebastien

We’ve been trying to pay off debt. We’ve been trying to, like, get some of the fundamentals taken care of.

00:16:15.090 — 00:16:17.810 · Ramit

Do you find yourself feeling like you’re not getting ahead?

00:16:17.850 — 00:16:25.850 · Hope

I would like to be more prepared for the future. I actually feel good about about where we are, actually.

00:16:25.890 — 00:16:26.370 · Ramit

Okay.

00:16:26.410 — 00:16:41.210 · Hope

I am happy that when these things have come up. We have had the resources to to buy them even when it feels more tight. We have been able to buy them.

00:16:41.250 — 00:16:44.130 · Ramit

Have you seen what Sebastien wrote in his application?

00:16:44.170 — 00:16:45.250 · Hope

I don’t think so.

00:16:45.490 — 00:16:47.090 · Ramit

Do you mind if I read it? Sebastien?

00:16:47.130 — 00:16:47.370 · Sebastien

No.

00:16:47.370 — 00:17:30.170 · Ramit

Go ahead. Okay. The reason I’m. Because I’m kind of struck by the differences in the application. Sebastien. What you’re telling me and then hope what you’re saying. Like, these are three different things. And I want to try to get us on the same page before we proceed. As I mentioned, Sebastien wrote. We just can’t seem to get ahead.

We are constantly stressed about whether our businesses are sustainable. We have been supportive of each other’s choices, but we are now locked in to these choices for the foreseeable future. Running our businesses and paying down debt leave us barely any money to invest and has us questioning every purchase.

Does anybody hear a difference in the way this conversation is going in this application.

00:17:30.210 — 00:17:32.450 · Hope

I’m an eternal optimist.

00:17:33.770 — 00:17:46.610 · Ramit

Your name is Hope. There’s something to that. Probably like the way you’re talking. It’s like, oh, we’re doing great. We’re doing better than ever, and we just don’t know how to spend our money. Like we’re crushing.

00:17:46.610 — 00:17:54.410 · Hope

It. Sometimes when I hear Sebastien talk about these things, I think that it’s a little overblown.

00:17:54.450 — 00:17:56.410 · Ramit

Okay. Tell me about that.

00:17:56.570 — 00:18:04.490 · Sebastien

I mean, I agree, I can definitely be a little bit of a doom and gloom, uh, you know, response to these things.

00:18:04.530 — 00:18:05.770 · Ramit

You’re the pessimist.

00:18:05.810 — 00:18:06.410 · Hope

Yes.

00:18:06.450 — 00:18:10.050 · Ramit

And then you’re the optimist. Hope the optimist?

00:18:10.090 — 00:18:10.650 · Hope

Yes.

00:18:10.690 — 00:18:13.850 · Ramit

Is there any realism in the conversation?

00:18:14.050 — 00:18:31.130 · Hope

I think that’s why we we meet and have these discussions because we’re trying to keep it real. We’ve been able to do planning in our, in our past for, for moves or for planning to purchase a house.

00:18:31.170 — 00:18:34.250 · Ramit

Who? Who brings up the topic of money in the conversation?

00:18:34.290 — 00:18:41.450 · Hope

Usually Sebastien, because he’s more in it, but we both discuss it.

00:18:41.530 — 00:18:45.250 · Ramit

Sebastien, when you bring up money, what is the tone of these conversations about money?

00:18:45.290 — 00:19:32.090 · Sebastien

Probably not very cheerful. It’s probably coming from a place of worry. I think there’s a block in my thinking about this hope. Who said we’re doing better in our personal finances than we ever have? And it feels to me like that could all go away. Everything that we’ve built over the last few years, like, yes, we have investments, yes, we have an emergency fund.

And it all feels so small and so much like a placeholder like, oh, okay, we’ve started an emergency fund, but it’s not that much like if this if I have to close the doors of my business. Like, there’s very little runway for us. Or if something happens to Hope’s business, there’s very little runway there.

00:19:32.130 — 00:19:33.290 · Hope

I agree with that.

00:19:33.330 — 00:19:37.810 · Ramit

That’s the first time I’ve heard you describe it like that and hope you agree with that.

00:19:37.850 — 00:20:08.290 · Hope

Yeah, that’s why I want to plan more for the future. I think Sebastien will be successful in his business. He’s really good at what he does. I think that the tariff things are going to even out, but it is a very weird situation that we’re in right now, and I, I would rather be in a place of preparedness than than not so that we can feel more free.

00:20:08.650 — 00:20:18.930 · Ramit

Okay. Let’s take a look at the numbers. Sebastien, can you read the words in bold and then the numbers in full next to it for this entire box, please?

00:20:18.970 — 00:20:39.090 · Sebastien

Assets 674,300. Investments 129,000. Savings 11,125. Debt 437,732. And then total net worth 376,693.

00:20:39.370 — 00:20:41.290 · Ramit

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

00:20:41.370 — 00:20:48.690 · Sebastien

Not bad. Not great. Like I said, some of those numbers feel kind of like a placeholder rather than real.

00:20:48.730 — 00:20:53.250 · Ramit

What? Hold on. What does that mean? They feel like a placeholder. Those are real numbers.

00:20:53.370 — 00:21:05.090 · Sebastien

Yeah. I mean, if we look at, like, where our investments would be when we’re ready to retire, it doesn’t feel like enough. Our savings doesn’t feel like enough of an emergency fund.

00:21:05.130 — 00:21:15.610 · Ramit

Why are we talking about feelings? I’m just curious. It’s like we’re looking at cold, hard numbers. Why? Why does it not feel like enough? It’s either enough or it’s not.

00:21:16.130 — 00:21:17.250 · Sebastien

I mean, it’s not enough.

00:21:17.290 — 00:21:21.810 · Hope

Our investments and savings aren’t where we would want them to be.

00:21:21.850 — 00:21:54.290 · Ramit

Okay, They’re not worried. No, they’re. Nobody’s are where they want them to be. Almost nobody I talk to. Even the ones who have more than they thought. They even say they’re not where we want them to be. Nobody knows what they want. But candidly, being 42 and 48, if you extrapolate the numbers and project at retirement, blah, blah, blah, would it be fair to say those numbers are not where they need to be?

Yes. Would it be fair to say they are not enough? Yes, yes. Have you ever said that exact phrase? The amount we have is not enough.

00:21:54.330 — 00:21:55.050 · Hope

Yes.

00:21:55.090 — 00:21:55.850 · Ramit

Really?

00:21:56.050 — 00:21:57.530 · Sebastien

We said it the other night.

00:21:57.570 — 00:22:08.170 · Ramit

What’d you say? Because the way you just said it was, it doesn’t feel like it’s enough. They’re better than they’ve ever been. But we’d like them to be better. ET cetera. Etc., etc.. What did you say the other night?

00:22:08.210 — 00:22:31.810 · Sebastien

Well, we actually looked at it like an investment calculator to see, okay, what are the possibilities? Like, if you can get a raise, if I can give myself a raise, you know, as soon as we’re done paying off our credit card debt. Like if we can put more money away in our investments. What, like how does that affect, you know, where our retirement would be in 2025 years?

00:22:31.890 — 00:22:45.370 · Ramit

What about just how much do we have and how much is it going to be? What about just that? Do you guys see what I’m getting at? I feel like there’s a lot of avoiding the actual numbers in front of us. Can I just put them back up on screen? Yeah. You have $129,000 invested.

00:22:45.410 — 00:22:46.290 · Hope

We need more.

00:22:46.370 — 00:22:48.650 · Sebastien

Yeah, I agree with hope. Like we need more.

00:22:48.690 — 00:22:54.810 · Ramit

Why has it been so difficult to confront the reality of where you are financially?

00:22:54.890 — 00:23:04.650 · Sebastien

I think for me, it feels like I should have been doing this 10 or 15 years ago. It feels like I haven’t been doing the work that I should have been doing.

00:23:05.210 — 00:23:20.330 · Hope

Same, I, I have had a long time that I’ve been working and I was just making making it through for so long. Should have also been investing more.

00:23:20.450 — 00:23:25.810 · Ramit

Okay. Do you know how much you will currently on your current trajectory you will have at retirement?

00:23:25.850 — 00:23:28.450 · Hope

Probably about 750,000.

00:23:28.490 — 00:23:43.010 · Ramit

Yeah. Ballpark. We calculate 885,000. But within the margin we do a 4% calculation. You will be able to safely withdraw $35,000 per year in income.

00:23:43.530 — 00:23:44.610 · Hope

Yeah that’s low.

00:23:44.890 — 00:24:08.290 · Ramit

Here are some of the things that I have noticed you describing. I feel like we could be doing better. I feel like we are doing better than we have done in the past. I feel like it’s not enough, but there are other people who are doing worse, so we’re actually doing okay. And this doesn’t include our business value.

What do you notice about all those things I’m saying?

00:24:08.370 — 00:24:09.970 · Hope

They’re all hedging bets.

00:24:10.050 — 00:24:15.010 · Sebastien

Yeah. Just excuses for not dealing with the numbers directly.

00:24:15.050 — 00:24:50.570 · Ramit

Yeah. There is no confrontation of what are the numbers? Point blank. And what do they mean? Guys, just run a calculation and and without adding into mythical res and selling the business. Is that enough for us? Obviously, no. What should we do? I’m not trying to berate anybody. I’m just trying to talk in terms of pure numbers.

There is a time and a place for feelings, and there is a time and a place to talk about the numbers and run a calculation. Do you find that this is a recurring pattern when the two of you talk about money minimizing, hedging, talking about the future, but not confronting the numbers directly?

00:24:50.610 — 00:25:00.770 · Sebastien

Yeah, I mean, there’s always there’s always a contingency or, you know, what ifs that we talk about? I think we’re driven a lot by,

00:25:02.050 — 00:25:18.330 · Sebastien

um, you know, thinking big and and dreaming about our goals and being creative about how to make those things happen. And it it bleeds into that sense of like, not just talking about, you know, this is the number, but how can we how can we get what we want?

00:25:18.370 — 00:25:31.490 · Ramit

Is that why we’re here today? Because I don’t think we’re here to talk tariffs. I don’t think we’re here to talk about how. You’re in a better position than you’ve ever been, and you don’t know how to spend money. Guys, you have one month of emergency savings.

00:25:31.610 — 00:25:32.330 · Hope

Yeah.

00:25:32.410 — 00:25:48.090 · Ramit

This is directly at odds with what you told me. We have more money than we know what to do with. I don’t see that. Let’s take a look at the rest of the numbers on the CSP. This time I will ask Hope to read off your combined gross monthly income, please.

00:25:48.130 — 00:25:55.010 · Hope

Combined gross monthly income is $16,260.

00:25:55.010 — 00:26:01.970 · Ramit

Great. So your household income is $195,000 a year by a show of hands. Who here knew that?

00:26:02.890 — 00:26:04.610 · Hope

Mostly. Yeah.

00:26:05.250 — 00:26:08.770 · Ramit

Why is everybody’s hand going kind of up? What the hell’s happening right now?

00:26:09.610 — 00:26:13.450 · Sebastien

That’s not the number that I expected to see, actually.

00:26:13.490 — 00:26:13.890 · Ramit

What do you.

00:26:13.890 — 00:26:15.890 · Sebastien

Think? 158,000.

00:26:15.930 — 00:26:23.730 · Ramit

Oh, only $40,000 off. Okay, now that you have $40,000 more than you thought. What does that tell you?

00:26:23.770 — 00:26:30.530 · Sebastien

I mean, it tells me that we need to think about putting our, you know, our money where we say we

00:26:31.610 — 00:26:33.330 · Sebastien

we need it. Okay.

00:26:33.490 — 00:26:36.690 · Ramit

And hope. Did you know it was 195 K?

00:26:36.730 — 00:26:41.010 · Hope

I also thought that we were up near 160. Because that’s.

00:26:41.050 — 00:26:58.690 · Ramit

How did both of you raise your hand? But both of you were $40,000 off. Remember? You filled this out. This is literally your CSP. I’m sure I will show you right now. I’m gonna show you. Look, I took the two gross incomes. They add up together to 16,260 a month, and then I multiplied it by 12.

00:26:58.730 — 00:27:00.810 · Hope

So what did we do wrong? Sebastien?

00:27:00.810 — 00:27:07.050 · Sebastien

I’m not sure. I think we’re including the rental income in my income column.

00:27:07.130 — 00:27:07.850 · Hope

Yeah.

00:27:08.050 — 00:28:28.220 · Ramit

Okay. Okay. Did you see what just happened? They both raised their hands and told me they know their household income, and then they were $40,000 off. Now, most couples would say, see, we’re not on the same page, but Hope and Sebastien insist that they are on the same page, and I think that’s actually more concerning.

I talk about being on the same page in my new book, money for couples. Like when I asked couples, what’s the problem with money in your relationship? Almost everyone says we’re just not on the same page. But that’s vague. That’s generic. It’s what people say when they don’t really want to look at what’s truly going on.

When couples insist they are aligned, even though obviously their words are telling completely different stories, to me, that’s almost worse because they don’t even realize they’re reading totally different books. Hope says we’re doing better than ever. Sebastien says we can’t get ahead. You can’t be on the same page when you don’t even know what page you’re on.

So if you and your partner need help getting on the same page, actually on the same page. Not just feeling one way about it, then that’s exactly what my money coaching program does. You’re going to get personalized help from me and from our community members to see the patterns that you might just be missing on your own.

You can sign up at.

00:28:31.100 — 00:28:36.620 · Ramit

Now, listen as I challenge them on these answers, and I’ll see if I can actually help them get on the same page.

00:28:39.420 — 00:29:51.020 · Ramit

Here’s what’s interesting to me, and I think this is a big pattern I’m seeing over and over already. I don’t mind that you don’t know what your household income is. 50% of the people I talk to don’t know their household income. No problem. I mean, it’s a problem, but everybody does it. The real problem is that I asked you, did you know this number?

Both of you put your hands up saying yes, and it turns out you were $40,000 off. So not only did you not know it, but you told me. Yes, I actually knew it. And I think this is a recurring pattern. You both are struggling to give me straight answers. Guys, I’m not here to, like, trick you. I’m not here to judge you.

That’s not my role. I’m actually here to help you. You called me. I really want to help you. I don’t think you have a candid assessment of what is going on with your finances. Like, on one hand, you’re saying we’re in a better place than ever. On another hand, we are now realizing we are not in a position to be able to retire.

And what are we working for? We’re taking on all this stress and risk and like we have one month of emergency fund. That would be my assessment. If you disagree, tell me I’m wide open to it. But I want to hear your take because I am struggling to get straight answers from both of you.

00:29:51.220 — 00:30:15.900 · Sebastien

I think what you’re saying is, is rings true to me is why am I? Why am I taking on all of this stress if it’s not resulting in the the life that we want and the, you know, being able to reach the goals that we want. What am I not seeing about what we’re doing that I have blind spots to, or I have blocks to that I can’t I can’t get there.

00:30:15.900 — 00:30:21.819 · Hope

I have done the projection many times, and I know that we’re not where we need to be. We need to

00:30:23.140 — 00:30:26.620 · Hope

get in a better place. So that is why we’re here.

00:30:26.860 — 00:30:33.420 · Ramit

Okay. Let’s keep continuing along. Fixed costs are at 67%. What do you think about that number?

00:30:33.420 — 00:30:34.060 · Hope

It’s high.

00:30:34.420 — 00:30:51.420 · Ramit

Yep. It’s high. We typically like to see that 50 to 60%. And if you are getting older and you do not have enough saved for retirement, that number needs to be even lower. So that’s challenging. We’ll come back to that. Investments are at 2% okay. What does that tell you?

00:30:51.660 — 00:30:52.300 · Hope

Low.

00:30:52.740 — 00:31:21.420 · Ramit

Low. And even though you are contributing an additional $400 a month to your 401 K, which brings the total up to approximately 4 or 5%, that actually explains why you don’t have enough in investments. Yeah. Savings are at 5%. Okay. Interesting. Here. We have vacations at $400 a month, gifts at 200 a month, and then zero for a long term emergency fund.

What’s that?

00:31:22.660 — 00:31:25.500 · Sebastien

Not putting our money where we should be putting it.

00:31:25.540 — 00:31:32.900 · Ramit

Okay. I agree. Why? Out of curiosity. Like. Okay. You love to travel, I get that gifts. Where are the gifts going?

00:31:32.940 — 00:31:37.220 · Sebastien

Birthday presents. Christmas. You know, saving for Christmas for.

00:31:37.260 — 00:31:45.700 · Hope

I think it’s more. It’s gifts and big dinners. It’s not dinners out. It’s. We host a solstice party every year.

00:31:46.020 — 00:31:48.340 · Ramit

Okay. So you put money aside for that?

00:31:48.380 — 00:31:59.620 · Hope

It’s in the gifts. I mean, it’s all it’s it’s kind of. We’re not crazy about buying a lot of things, but. But we do like food and experiences.

00:31:59.780 — 00:32:07.580 · Ramit

Okay, what’s what’s this? Guilt free spending at 26%, or $3,237 a month.

00:32:07.700 — 00:32:18.060 · Sebastien

So all of the discretionary stuff that we choose to do music lessons for our son. Um, you know, eating out, you know, those sorts of things.

00:32:18.060 — 00:32:18.820 · Ramit

What else?

00:32:18.860 — 00:32:23.499 · Hope

$3,000 is so much money. It seems like more

00:32:24.820 — 00:32:26.420 · Hope

than we’re actually spending.

00:32:26.540 — 00:32:32.820 · Sebastien

I think some of that includes, like, if our son has a school break, uh, we’ll book a camp for him.

00:32:32.860 — 00:32:33.620 · Ramit

How much?

00:32:33.700 — 00:32:41.380 · Sebastien

Summer camps will be 300, $400. Uh, for weeks. So sometimes we’re, you know, we’re paying those over a few months.

00:32:41.420 — 00:33:31.460 · Ramit

What happens is these one time expenses. We’ll spend it in December, or we’ll spread it out for camp for eight months, not 12, etc.. And our mind does not properly amortize those costs. The only way to know is to actually put it in here and track it. Yeah. And it’s no shame. Like you want to send your kid to camp.

Great. We just need to know it. Because otherwise you’re like, 3000 bucks is crazy. It’s actually not that crazy when we just go through it in five seconds and over the course of two more minutes, you could probably get 85% of the way there. Yeah. Okay, so now that we look at the entire picture, you have 67% going to fix costs.

You have 2% going to investments, 5% going to savings and 26% going to guilt free spending. What do you notice about these numbers. How would you assess these numbers?

00:33:31.660 — 00:33:34.180 · Hope

We have too much going to guilt free spending.

00:33:34.460 — 00:33:35.100 · Ramit

Agreed.

00:33:35.100 — 00:33:37.220 · Sebastien

And our fixed costs are too high.

00:33:37.300 — 00:34:12.060 · Ramit

Agreed. Agreed on both. And accordingly. Too little. Going to savings and investing. Yeah. Perfect. The the puzzle pieces. All fit. Makes perfect sense. So the good news is there’s no mystery here. It totally explains why things are the way they are. Now, what I want to do is I want to dive in a little bit more to the fixed cost to understand what’s going on there?

All right. Your mortgage is 2100 bucks. That’s pretty low. That’s great. Stay there. Don’t move your insurance. 990. All right. Fine. Car payment is 100. What is that? Just gas.

00:34:12.100 — 00:34:12.659 · Sebastien

Gas?

00:34:12.700 — 00:34:24.100 · Ramit

Amazing. What? The debt payments $2,770. Okay, I guess it’s time to dig into that. Tell me about your debt of $437,000. What do you have?

00:34:24.139 — 00:34:25.940 · Sebastien

So that’s the mortgage.

00:34:26.020 — 00:34:26.740 · Ramit

How much?

00:34:26.740 — 00:34:31.500 · Sebastien

338, I believe. Okay. Student loans.

00:34:31.500 — 00:34:32.139 · Ramit

How much?

00:34:32.139 — 00:34:35.820 · Sebastien

I have about 5500.

00:34:36.020 — 00:34:36.580 · Ramit

Mhm.

00:34:36.659 — 00:34:38.139 · Hope

I’m at 32,000.

00:34:38.179 — 00:34:39.179 · Sebastien

32,000.

00:34:39.220 — 00:34:40.860 · Ramit

Okay. What else on the debt.

00:34:40.899 — 00:34:51.820 · Sebastien

We have a HELOC that is 57,000. And then there is a balance of $1,800 on one of the credit cards.

00:34:51.860 — 00:34:57.580 · Ramit

What the what’s with the credit card balance? Couple making $195,000 has credit card debt.

00:34:57.580 — 00:35:02.300 · Sebastien

Why that is left over from a bathroom remodel.

00:35:02.300 — 00:35:04.100 · Ramit

What’s the HELOC? Why did you take that?

00:35:04.140 — 00:35:17.860 · Sebastien

For some home improvements. So. Uh, I mean, about half of that is for the bathroom remodel that we did. You know, we used some of that to convert our garage into an Adu, which is a rental property.

00:35:17.900 — 00:35:19.100 · Ramit

How much do you make from that?

00:35:19.100 — 00:35:23.260 · Hope

About 24 to 27,000 a year.

00:35:23.380 — 00:35:25.900 · Ramit

That’s great. Okay. Amazing.

00:35:25.900 — 00:35:48.460 · Sebastien

It feels to me like their choices we made at one point and we said, oh, this is this is good or we want this. And those choices have carried over, you know, and it’s hard I think for us to every month like make a conscious choice about what we’re, what we’re spending our money on.

00:35:48.780 — 00:35:54.260 · Ramit

Stay with that first idea. We’ve made choices long ago. Those choices have carried over. Keep going on that.

00:35:54.260 — 00:36:00.380 · Sebastien

And they’re just on autopilot. Now, we say this is part of our lives, so we’re just going to keep on doing this.

00:36:00.420 — 00:36:01.340 · Ramit

Like what?

00:36:01.620 — 00:36:11.580 · Sebastien

Like the gym. Like, I try to. I try to go, uh, you know, as often as I can. And there are some times where it doesn’t make sense for us to have a, you know, a gym membership.

00:36:11.620 — 00:36:44.500 · Ramit

I think this idea that Sebastien has brought up is really interesting, this idea of, like, we made choices years ago and we are now, quote, locked in. Either we are locked in, committed to them like a business, or we are locked in in the sense that they’ve just become second nature to us. This is really common.

A gym membership is the obvious one. I’m looking at them right now. Camp that is essentially locked in doesn’t have to be the case. Solstice dinner locked in doesn’t have to be the case. I know these are uncomfortable here. I’m just raising the question. What do you think about that?

00:36:44.540 — 00:36:51.860 · Hope

Yeah, that’s that is fair. I mean, I do think that these are things that we value in our lives.

00:36:51.900 — 00:37:03.940 · Ramit

Totally. I value a lot of things as well. I think the reason we’re here is we’re working hard, we have these businesses, but we don’t have enough money for retirement.

00:37:04.300 — 00:37:05.060 · Hope

Yes.

00:37:06.260 — 00:38:07.020 · Ramit

So it’s very interesting, especially talking to two business owners, because you know what? Business owners are really good at adapting to marketplace realities. If your business takes a 50% cut, you’re laying people off. Business owners are very good at this. They move extremely quickly. You know who sucks at doing this?

Individuals, literally one of them will lose their job. They will not change a single thing. They’ll buy the same that the grocery store. It’s crazy. So in many ways, I actually encourage people act like a business if it hits the fan. You already have a plan in place and you adapt immediately. That is why the CSP makes it so easy.

You something bad happens. You literally go down to the last box here, I’ll show you. You go down to the last box, you go. Time to pull out a freaking machete and chop it up. All this stuff. Goodbye. I don’t even have to think about it. That’s how it works. Now that’s the philosophy. What do you say we adapt it to your situation?

00:38:07.100 — 00:38:07.820 · Hope

Sounds good.

00:38:07.860 — 00:38:09.940 · Ramit

Yeah. How much is enough?

00:38:11.060 — 00:38:12.700 · Ramit

How much money do you need.

00:38:12.820 — 00:38:14.300 · Hope

On a monthly basis?

00:38:14.500 — 00:38:15.220 · Ramit

Sure.

00:38:15.460 — 00:38:17.060 · Hope

What would we need for

00:38:18.380 — 00:38:19.660 · Hope

just our lives?

00:38:19.660 — 00:38:21.060 · Ramit

How much do you need to retire?

00:38:21.100 — 00:38:35.700 · Hope

Oh, to retire. I would love even $100,000 or 100 and $130,000 a year in income. In income. Because we won’t be paying a mortgage at that time, too.

00:38:35.820 — 00:38:38.620 · Ramit

Okay. And what do you say, Sebastien?

00:38:38.660 — 00:38:45.260 · Sebastien

I think it could probably be a little bit less like 80 to 90,000 a year. Oh, of income.

00:38:45.300 — 00:38:48.540 · Ramit

Guys, that’s like wildly off. Do you ever talk about this before?

00:38:48.580 — 00:38:49.180 · Hope

No.

00:38:49.380 — 00:39:18.540 · Ramit

No. What? Well, I’m glad we’re talking about it now. Wait a minute. I’m very surprised. I need to understand. You both have a more sophisticated rhythm of meeting and talking about your relationship and about money than almost any other couple I’ve spoken to. That part is awesome. And yet you have not said how much money do we need in a relatively short amount of time?

How is that possible?

00:39:18.580 — 00:40:15.540 · Sebastien

We were in a habit of thinking about what’s happening this year. You know, those annual conversations were, hey, what’s going to happen in the next 12 months? What, you know, what are our goals for that? And I think it’s only been in the last couple of years that we started to have to consider what’s going to happen in the next five years, and certainly taking on a business for me, it opened my eyes to say, well, what’s going to happen in the next ten years?

And shifting my mentality from that short term thinking to long term thinking has been really hard. It’s never something I ever considered. And so to think about retirement is 25 years off. You know, like, I can’t think about that. I just need to get through the next week. I need to get through the next month.

I want to get through the next year. Um, you know, with my business and, and then if I’m doing things right, like, things will fall into place. But I,

00:40:16.740 — 00:40:23.340 · Sebastien

I have struggled to even consider like, a five year plan. Feels daunting to me to think.

00:40:23.700 — 00:40:34.300 · Ramit

You said so many interesting things. You said if I if I just do the right things, the rest of it will fall into place. You’ve been at this for 20 years. Has it worked.

00:40:34.420 — 00:40:46.980 · Sebastien

In the bigger sense? No. Like I’m not like I’m not. You know, I have $21,000 in my Roth account. Like that doesn’t feel like it’s worked. I feel a little bit,

00:40:48.220 — 00:41:01.620 · Sebastien

like there’s a false sense of security and like, oh, I’ve got a good credit score. And I’m, you know, I’m able to pay my bills. But but yeah, I mean, if I project all of that out, like, let’s just it’s it’s too little.

00:41:01.660 — 00:43:01.180 · Ramit

I believe most people deep down they have an intuitive understanding of at least where they are in the universe of money. They may not know their income. They may not know what a 26.99% interest rate means, but deep down they know am I doing poorly, okay or great? That at least. And I think part of my job is to take a chisel and chisel around the stories and the narratives that we have created for ourselves and just help people get in touch with reality.

And then when we actually confront that, like you’re both doing right now, which I really appreciate, then we can start to reflect on certain things. Wow, it’s been the last two years that you’ve really focused on money. Great. In the last two years, you’ve made a lot of progress. Great. So what if we did more of that for the next 10 to 15 years?

Where could we be? But in order to do that, we have to get rid of these old stories, these ones that are minimizing and and making excuses and like, just distracting us. We’ve seen the numbers $195,000 income, one month of emergency savings, 67% fixed costs, and almost nothing invested. But the numbers only tell you what’s happening.

They don’t tell you why. And it’s very important if you want to truly understand somebody, to understand why these things are happening. Because people don’t avoid their money for no reason. They don’t stay stuck in dysfunctional patterns that don’t serve them because they’re lazy or stupid. There’s a reason, and we have to figure out what that reason is.

There’s often a story they’re telling themselves, a belief they picked up a long time ago. Until we find that story and tackle it, then all the spreadsheets and retreats in the world don’t mean a thing. So I need to understand where did their stories about money come from? And I’m going to get into that right after this break.

00:43:03.700 — 00:43:09.620 · Ramit

Sebastien, I want to understand how you grew up with money. What do you remember your family saying about money when you were young?

00:43:09.820 — 00:44:06.300 · Sebastien

Not much. Um, my mom is French, and it’s. It’s not talked about culturally. You know, there was a big kind of turning point in my childhood around money. You know, from age 0 to 10, we were, like, solidly middle class. My dad was a business owner. Single income in the house, um, doing really well. And then, um, when I was about ten, he went through bankruptcy and we had to sell our house.

They actually lost money on it. Um, you know, there was a big life change. We actually moved. My dad started a new career and lived seven years after that. Were really tight. Um, and, you know, I saw my parents struggle, but they didn’t really talk about it. They kept it to themselves. You know, like, tried to handle it and give the best life they could to to me and my brother and sister.

00:44:06.300 — 00:44:07.420 · Ramit

Where did you grow up?

00:44:07.900 — 00:44:13.100 · Sebastien

Southern California. And then we moved to Oregon when I was, when I was ten.

00:44:13.140 — 00:44:15.580 · Ramit

What age were you when your dad went bankrupt?

00:44:15.820 — 00:44:16.620 · Sebastien

About ten.

00:44:16.660 — 00:44:18.180 · Ramit

And why did he go bankrupt?

00:44:18.220 — 00:44:22.900 · Sebastien

He had a print shop. It was a family business. Um, and,

00:44:24.020 — 00:44:32.060 · Sebastien

you know, things were changing in the 90s. Uh, desktop publishing. You know, he was a small shop, and so he was just kind of couldn’t compete with larger.

00:44:32.140 — 00:44:34.260 · Hope

They used to do all the Yellow Pages.

00:44:34.340 — 00:44:57.260 · Ramit

Yeah. Okay. Wow. That’s pretty interesting. So here your dad is running a small business. Times change around him sort of structurally causes the business to fail. There’s nothing he can really do. Maybe he tries to keep up. Doesn’t work. Shuts the business down. Affects his family finances. What messages do you take away?

Now, as a business owner yourself.

00:44:57.260 — 00:45:21.460 · Sebastien

I am terrified of that same thing happening to me. And I’ve thought about it a lot. Getting ready to buy the business. Um. And it’s come up a lot. Um, and like I said, I’m still terrified of it, but I also, I know I made a choice to engage with this for a lot of reasons. Not just, um, not just financially.

00:45:21.500 — 00:45:26.780 · Ramit

If you had to shut the business down, how would you feel?

00:45:27.100 — 00:45:29.340 · Sebastien

Like I’m letting a lot of people down.

00:45:29.420 — 00:45:31.900 · Ramit

Your employees, your colleagues.

00:45:31.900 — 00:45:37.420 · Sebastien

The guy I bought the business from, um, my family. Um, myself.

00:45:37.580 — 00:45:45.740 · Ramit

Does your dad’s experience make it more or less likely for you to take a rational approach to the business?

00:45:45.820 — 00:45:53.140 · Sebastien

I think of myself as a pretty rational operator. Um, so I don’t. Yeah, I don’t know.

00:45:53.340 — 00:45:54.380 · Ramit

Hope. What do you think?

00:45:54.420 — 00:46:10.020 · Hope

I think that Sebastien is terrified of losing the the business. I mean, you’re you’re down from last year, which is understandable. And I think that you’re doing

00:46:11.380 — 00:46:25.820 · Hope

a great job and headed in the right direction. But do I think that it makes him more or less rational? I think probably a little bit less rational because he’s so terrified of that.

00:46:25.820 — 00:46:34.180 · Ramit

By being terrified of tariffs, etc., that makes you do what? Sebastien.

00:46:34.300 — 00:46:43.910 · Sebastien

It’s made it harder to make decisions. It’s made it harder for me to feel like I’m making the right decisions and it’s paralyzing in some cases.

00:46:43.910 — 00:46:46.990 · Hope

That’s what I was going to say, is I feel like it makes you freeze.

00:46:47.270 — 00:46:53.150 · Ramit

Yeah, that’s very helpful. Thank you. Hope. How did you grow up with money? What do you remember your family saying?

00:46:53.230 — 00:47:07.110 · Hope

My mom was a single mom from the time that I was very small. She owned a big house and she rented out units. So she always said, be a landlord, which we are,

00:47:08.710 — 00:47:17.310 · Hope

because she. She was a school teacher and so she wanted us to have more passive income

00:47:18.350 — 00:47:21.749 · Hope

coming in. So we didn’t have a lot of money

00:47:22.790 — 00:47:49.030 · Hope

growing up. But in my town where we lived, we had a lot more money than a lot of people, and my dad had had money. He had been an attorney. He was sick my whole childhood, so he didn’t have any money. And so he was selling selling jackets and and things like that. From bar to bar like to bar owners.

00:47:49.070 — 00:47:49.710 · Ramit

Okay.

00:47:49.750 — 00:47:57.110 · Hope

Because he could do that and be kind of flexible with being in and out of the hospital. Sorry.

00:47:57.630 — 00:48:01.790 · Ramit

That’s okay. Take your time. I know this is difficult sometimes going back.

00:48:02.510 — 00:48:06.230 · Hope

So even he didn’t have any money. Um,

00:48:07.790 — 00:48:09.550 · Hope

he was also a gambler.

00:48:11.030 — 00:48:13.150 · Hope

Um, it’s not funny, but.

00:48:14.230 — 00:48:17.070 · Hope

But I think that’s also why he didn’t have any money.

00:48:18.030 — 00:48:23.230 · Ramit

Can I ask? It’s difficult for you to talk about your dad. Why is that?

00:48:23.270 — 00:48:28.150 · Hope

I think just because he. He died when I was 14.

00:48:28.630 — 00:48:29.230 · Ramit

That’s a tough.

00:48:29.230 — 00:48:33.150 · Hope

Age. And I just wish I could have had these conversations with him more.

00:48:33.190 — 00:48:34.510 · Ramit

What would you have said to him?

00:48:34.590 — 00:48:40.430 · Hope

Well, we I mean, we we actually did have a lot of his conversations. I was pretty precocious.

00:48:40.510 — 00:48:41.070 · Ramit

Mhm.

00:48:41.470 — 00:48:56.310 · Hope

Oh, man. So he, he had a lot of regrets about a lot of things including including money. Mhm. Even though he didn’t have money he, he wanted to be able to spend what he had on,

00:48:57.390 — 00:48:58.150 · Hope

on me.

00:48:58.630 — 00:48:59.070 · Ramit

Mhm.

00:48:59.630 — 00:49:00.470 · Hope

And

00:49:01.550 — 00:49:03.310 · Hope

it always made me feel guilty.

00:49:03.430 — 00:49:05.230 · Ramit

That your dad was spending money on you.

00:49:05.270 — 00:49:40.470 · Hope

Yeah. Because he would I mean I remember the stupid. It was a stupid, junky, junky little wall hanging that it was so dumb. It was just a little piece of wood that had a picture of a dog, probably from a magazine or something that was glued on it, and I really wanted it, and it was probably $20 or something ridiculous.

And of course, he bought it for me. And then it just made me feel so sad when I would look at it.

00:49:40.790 — 00:49:41.590 · Ramit

Sad.

00:49:41.830 — 00:49:45.550 · Hope

Sad because I felt guilty for taking

00:49:46.950 — 00:49:47.910 · Hope

his money.

00:49:48.870 — 00:49:54.630 · Ramit

It’s interesting because I haven’t heard you used the word guilt before today. Not once.

00:49:55.550 — 00:49:58.110 · Hope

Yeah, I’ve kind of gotten over that.

00:49:58.950 — 00:50:00.150 · Ramit

How’d you do that?

00:50:00.990 — 00:50:03.030 · Sebastien

Um, it took some work.

00:50:03.190 — 00:50:10.590 · Hope

It took some work? Yeah, it’s taken therapy. And I used to have a real problem spending any money on myself.

00:50:10.710 — 00:50:11.310 · Ramit

Mhm.

00:50:11.350 — 00:50:14.830 · Hope

And I, I no longer do like, I want more money

00:50:15.910 — 00:50:17.630 · Hope

to spend on myself.

00:50:17.870 — 00:50:24.590 · Ramit

Very refreshing. Honestly, I don’t hear that from a lot of people. Rarely from women.

00:50:25.150 — 00:50:26.990 · Hope

Oh no I definitely do.

00:50:27.110 — 00:50:28.150 · Ramit

I love that.

00:50:29.470 — 00:50:38.550 · Ramit

Can I ask you? Hope, what lessons do you think you took away from your upbringing with money that you bring into today’s relationship?

00:50:38.590 — 00:50:40.790 · Hope

Um, I’m very independent.

00:50:42.350 — 00:50:47.910 · Hope

I am super capable. I’m very resilient.

00:50:48.190 — 00:50:55.270 · Ramit

I could tell you have gone through a lot now. Very few of us lose a parent at that age. It’s a really tough age.

00:50:56.550 — 00:51:01.309 · Ramit

Very few of us raised by a single mom

00:51:02.350 — 00:51:05.350 · Ramit

in the manner that you were. And

00:51:06.630 — 00:51:34.270 · Ramit

I kind of love the way you describe yourself. I think it’s really cool. You said, I want more money. I’m independent. I’m resilient, I overcame guilt. A word I never heard you use today, which is extremely rare. Yeah, I love it. I’m. It’s refreshing. So. Thank you. Sebastien. How about you? What lessons did you bring from your upbringing to today’s relationship with money?

00:51:34.470 — 00:52:33.470 · Sebastien

You know, I’m pretty much the same age my dad was when he went through the bankruptcy. And to see him decide to change careers, go back and get a masters of education work at the same time while he was going through, uh, graduate school. My mom, who I mean, she didn’t even complete her high school education, much less college.

Like she worked to support us while my dad was in school. Like that work ethic. Yeah. You know, was instilled in me. And, like, I’ve had a job since I was 13. In one way or another, I know that I am also capable and hardworking and don’t shy away from engaging with the process as much as I’m terrified of bankruptcy.

Like, I take comfort in knowing like, oh, like my dad had. You know, there were three kids. It was super uncertain. And yet he was able to make a big change in his life.

00:52:33.470 — 00:52:36.390 · Ramit

And are you two able to make a big change in yours?

00:52:36.430 — 00:52:36.990 · Hope

Yeah.

00:52:37.030 — 00:52:46.110 · Sebastien

I think if we if we want something and we, you know, if we have a goal in mind, I, I know that we can make a big change.

00:52:46.150 — 00:52:47.070 · Ramit

Do you need to.

00:52:47.270 — 00:52:47.630 · Hope

Yeah.

00:52:47.670 — 00:52:49.230 · Sebastien

I mean, the numbers say yes.

00:52:49.710 — 00:53:12.550 · Ramit

It’s interesting response hope very resolute saying yes. Just crisp. Yes. Not even an extra syllable. Sebastien saying a bit of a softer than numbers tell us. So. Not that I agree. Not that I think we should not. Yes, just the numbers suggest. So what do you think’s the difference in that response?

00:53:12.830 — 00:53:14.430 · Sebastien

Yeah. No I’m the one hedging.

00:53:14.470 — 00:53:18.870 · Ramit

Yeah. It’s quite a role reversal. Why is that.

00:53:18.910 — 00:53:26.470 · Sebastien

I feel overwhelmed like it’s a lot to run a business. It’s a lot to raise a kid. And it’s hard to see the right answer in front of me.

00:53:26.990 — 00:54:59.030 · Ramit

Okay, now it’s starting to make sense. Sebastien watched his dad’s business fail. He watched his family lose their house, move states and struggle for years. And now he’s a business owner himself, paralyzed by the fear that history will repeat itself. Hope grew up feeling guilty every time her sick father spent money on her.

So what did she do? She learned not to want things. She had to do years of therapy just to be able to say, I want more money. These stories are real, but they’re also keeping them stuck. Notice that they have these planning retreats where they talk about their dreams and what they want and where they want to go, but I’m not particularly impressed by that.

Like, in a way, it’s the equivalent of people who spend hours budgeting but don’t actually make changes in their spending. Unless you actually change your behavior, this is all just play acting. Like let’s say your four year old gets one of those little kitchens. You know, when he puts a fake cupcake in there, is he really cooking?

Of course not. Oh, sure. We’ll lie to him and say, good job. You’re such a good little chef. But that little kid can’t cook shit. Now, how is this any different going on these retreats? But you don’t know your income within $40,000. It’s just not real. A rich life is not just about dreaming. Although dreaming is important, it is knowing your numbers and using your money to make those dreams reality.

If you need to make more money, could you?

00:54:59.710 — 00:55:00.470 · Hope

Yes.

00:55:00.710 — 00:55:03.710 · Ramit

How easily sounds like you answer that pretty quickly.

00:55:03.750 — 00:55:18.590 · Hope

Hope we were talking about this last week. I think I could give myself a raise in. Well, when we have our next project come into the office, because we’ll be more financially in a good place.

00:55:18.630 — 00:55:21.430 · Ramit

Okay, cool. How much of a raise could you give yourself?

00:55:21.470 — 00:55:28.390 · Hope

$1,000 a month, I think would would be fine and pretty easy. Actually, right now,

00:55:29.470 — 00:55:38.350 · Hope

I still have two more years before I’m paid off on my loan. So once that happens, I, I have there’s more flexibility.

00:55:38.390 — 00:55:40.910 · Ramit

Cool. And then, Sebastien, could you make more money?

00:55:40.990 — 00:55:47.950 · Sebastien

Um, in the next couple of months, some of my expenses are going to go down. I could give myself a raise.

00:55:48.110 — 00:55:54.270 · Ramit

Hmm. What if one of your businesses went under? How would that affect your family finances dramatically?

00:55:55.270 — 00:55:59.070 · Hope

I mean, we would have to just get another job immediately.

00:55:59.150 — 00:56:05.710 · Sebastien

Yeah. I mean, it would be a slash and burn to the monthly budget and. Yeah. Scramble.

00:56:05.750 — 00:56:41.150 · Ramit

Okay, I’m going to just be very direct. You all need the money. If the business doesn’t work, you gotta have a plan B. The plan B, shut it down. Figure out the debt. I don’t know if you declare bankruptcy or not. It would certainly be poignant. You know, you’ve been through that with your family. But in my opinion, you got to treat the business like a rational investor would.

And that’s why as CEOs, we are not rational, especially like CEOs that are in the business. It’s our name, blah blah blah. That’s why sometimes we need somebody from the outside to be like, dude, if I was an investor, I would never invest in this business or this is great, you’re undervalued. You should keep going.

00:56:41.190 — 00:57:06.270 · Sebastien

That is what has been so challenging for me is the uncertainty of, okay, I can do this this month and it’s working this month and I’ve paid all the bills this month. The cycle of how these tariffs are going to play out, the consumer confidence is going to play out. That level of uncertainty of these are going to work in three months is part of what is paralyzing to me.

00:57:06.310 — 00:57:08.790 · Ramit

You want me to paralyze you because.

00:57:08.790 — 00:57:09.190 · Sebastien

I’ll have.

00:57:09.190 — 00:59:03.750 · Ramit

That right now. I’m telling you, it sucks to be in it. I know it because I’ve done it. I’ve been there, like, totally paralyzed by what to do. My business was declining for a while as well, and it really helps to just have somebody from the outside be like, look, here’s what I would do. You don’t have to take the feedback, but let me just tell you what I would do.

You have business savings or no, no okay. You need it. The fact that you have no business savings is what is paralyzing you. That is why you’re on a thin razor’s edge every single month. So that’s a problem. I like to have 3 to 6 months of business savings. That would obviously take you a long time. It’s almost inconceivable to build savings while you’re talking about downsizing.

But if you cannot build up a reserve, you are already in like a very dangerous zone. Second, you set up a timeline and you say, look, I’m spending all day and night working on this freaking business. Here’s the amount I need to be making. Here’s the margin I need to be making. I’ll give myself six months to make it work.

But if at the end of that I am not, it’s time to pack it up again. You can adjust the margin and the timeline for what you want, but I would recommend you probably do it in less than a year, because it’s kind of like they used to tell you in the test. If you haven’t done it by the time the test ends, you’re not going to get it at all.

Just pick a timeline and then stick to it. Two of you, as entrepreneurs should probably be talking to each other giving advice as appropriate, but we need constraints. Otherwise we just drag on in this uncertainty forever. It’s that that kills us. Entrepreneurs know. Look, if I have to shut this thing down, fine, I’ll start something else.

I’ll buy something else. I’ll find a job. But just this paralyzing uncertainty is death. So make a plan. Execute it. Even if it means you shut it down. There’s a better future for you ahead. Or it means you turn the business around and crush it also. Great. What do you think about that?

00:59:03.790 — 00:59:10.590 · Sebastien

Yeah, I mean, it’s it’s not something I’ve laid out yet. It’s it’s been very like month to month for me.

00:59:10.630 — 00:59:12.630 · Ramit

I hate month to month, I hate it.

00:59:12.670 — 00:59:22.430 · Hope

I mean, if you have profit at the end of the month, instead of paying yourself more, can you set up a savings?

00:59:22.590 — 00:59:51.870 · Ramit

Yeah, that’s how you do it. Beautiful. More importantly, eventually you need to shift beyond month to month. Entrepreneurs should not be thinking month to month. That’s part of the reason you feel so scarce and behind. It’s like this month. Good. This month bad. We can’t do that. We can’t drive. Only planning ten feet ahead each time.

We need to be talking about miles, right? That hundreds of miles. That’s the way we need to think. Okay. Can we talk about your personal finances? If nothing changes in the next five years, what happens to you?

00:59:51.910 — 00:59:54.030 · Hope

We still are not able to retire.

00:59:54.790 — 00:59:56.590 · Ramit

Agreed? What else?

00:59:56.950 — 01:00:02.030 · Sebastien

We wouldn’t be able to do other big goals that we have in our life.

01:00:02.230 — 01:00:23.750 · Ramit

I suspect because of the dynamic you have, that you would probably still take some trips, probably still spend on your son who will be, you know, in his teenage years at the time, I suspect you’d probably still do those annual and six month meetings dreaming. I don’t know, guys. It just sounds kind of like dim to me, especially when you’re making almost $200,000 a year.

01:00:23.910 — 01:00:28.590 · Sebastien

It’s cheap to dream, but putting numbers to it? Yeah, the hard part.

01:00:28.630 — 01:01:22.830 · Ramit

That’s the whole point. Yes. So some quick numbers to give you to get to your goals of between $90,000 a year to $130,000 a year of safe withdrawal during retirement. Here’s what needs to happen. We’re going to assume like 35, $36,000 a year in Social Security. It could be more, who knows? We’re just going to make an assumption to have $90,000.

You need $1.35 million at retirement. That requires increasing your investments to $21,000 per year to get to $130,000 of income, you need $2.35 million at retirement. That means you need to increase your investments to $45,500 per year.

01:01:22.870 — 01:01:24.550 · Hope

$45,000 a year.

01:01:24.590 — 01:01:26.430 · Ramit

45.5 thousand.

01:01:26.590 — 01:01:27.790 · Hope

Wow. Okay.

01:01:27.950 — 01:01:29.310 · Ramit

What do you take away from that?

01:01:29.350 — 01:01:31.430 · Hope

I mean, that’s a big number. Yeah.

01:01:31.790 — 01:01:32.910 · Sebastien

That’s a big change.

01:01:32.950 — 01:01:42.830 · Ramit

Yes. Let’s go back to the CSP and you’re going to tell me what you want to do. All right. Here we are. Your fixed cost 67%. Where would you like to start.

01:01:42.830 — 01:01:53.070 · Sebastien

So the debt payment we have one more payment on our credit card. It’s going to go down by 1800. We’ve been aggressive with the credit card.

01:01:53.230 — 01:02:11.070 · Ramit

Okay. Your fixed cost just dropped down to 52%. That’s more like it for a couple making two almost $200,000 with a low mortgage. That is great. All right. Your debt payments are now at $970. Now tell me again. Is this going towards.

01:02:11.190 — 01:02:13.990 · Hope

Its student loans and HELOC?

01:02:14.030 — 01:02:18.870 · Ramit

7% and roughly 6%. And is this the minimum.

01:02:18.990 — 01:02:20.870 · Sebastien

On the HELOC? Yes.

01:02:20.950 — 01:02:22.430 · Ramit

And the student loans?

01:02:22.470 — 01:02:24.990 · Sebastien

Yeah, it’s I mean, it’s whatever we’ve been paying.

01:02:25.030 — 01:02:48.670 · Ramit

You know, the reason I’m asking, it’s a relatively high interest loan. So like paying an extra $100 a month could shave off years of payment. That’s why I’m asking. You’re paying the minimum. Fine. We could pay more, but right now, you’re at 52%. To me, this is great because it means you have margin to play with these groceries.

Come on. Well, you like food. You said it, right?

01:02:48.710 — 01:02:55.190 · Hope

We do, but we could. We could shop every other week at a cheaper store.

01:02:55.230 — 01:02:56.990 · Ramit

Great. How much you want to drop it?

01:02:57.030 — 01:03:00.230 · Hope

Let’s drop it. $200. Yeah.

01:03:00.270 — 01:03:08.430 · Ramit

Okay. Nine. Ten. Damn. We’re at 50%. This is what I’m talking about. And then the subscriptions. Keep or change?

01:03:08.470 — 01:03:09.070 · Hope

Keep.

01:03:09.110 — 01:03:16.630 · Ramit

All right. Cool investments, huh? Nah, we’re gonna fix this. This is where the real wealth is created. What do you want to do?

01:03:16.670 — 01:03:24.430 · Sebastien

So that, uh, post-tax retirement. That’s my Roth IRA. We can put it at 550 or the whatever the max is.

01:03:24.430 — 01:03:26.790 · Ramit

585, 83. Uh huh.

01:03:26.950 — 01:03:28.310 · Hope

So where is my.

01:03:28.550 — 01:03:31.710 · Ramit

Yours is probably up here at $400 a month for 401 K.

01:03:31.750 — 01:03:32.750 · Hope

Yes. Okay.

01:03:32.990 — 01:03:33.950 · Ramit

I want to put more.

01:03:34.110 — 01:03:37.790 · Hope

Yeah. I would love to put 1200 extra.

01:03:38.030 — 01:04:15.160 · Ramit

Extra. So 1600 total. Yeah. Great. Love it. Okay. Uh, I just want to point out the question is like, do we have enough? And the answer is always down here in the guilt free spending number, because whatever number, you know, you reduced your groceries and all that stuff, that number flows directly down to guilt free spending.

It’s sort of like a a bucket. It just collects all the rainwater. And now you can use that money. You have $4,600 a month still to allocate. Where do you want to allocate that money?

01:04:15.200 — 01:04:17.080 · Sebastien

A long term emergency fund.

01:04:17.120 — 01:04:19.320 · Ramit

Yeah I agree with that. How much do you want to put.

01:04:19.360 — 01:04:21.680 · Sebastien

Oh 500 a month more.

01:04:21.720 — 01:04:24.360 · Hope

Well I think more because.

01:04:24.360 — 01:04:37.440 · Ramit

Why don’t we try it and see what happens. Watch this number here. This right now tells you have $4,654 per month to play with. Okay, watch 500 bucks a month. What happened to that number?

01:04:37.520 — 01:04:38.560 · Hope

Barely anything.

01:04:38.600 — 01:04:49.240 · Ramit

Barely anything. You still have 4154. And now you know you’re accumulating about $6,000 a year in your emergency fund. What does that tell you?

01:04:49.240 — 01:04:50.280 · Hope

It’s not aggressive.

01:04:50.280 — 01:04:52.040 · Sebastien

We can do better. Yes.

01:04:52.560 — 01:04:54.080 · Ramit

Yes. How much?

01:04:54.240 — 01:05:05.480 · Hope

So if we put in 1200, then we would have 14,000 for a year or per year that we’re putting toward it.

01:05:05.520 — 01:05:39.160 · Ramit

You want to put in 100 instead of 500? Yeah. All right. Cool. Okay. So what? I’ll tell you what I noticed here. First of all, you still have 3400 bucks a month. That’s a lot of money. Yeah. Second, I noticed that your savings has gone up to 15%, which is great. Are not so sure about these gifts and vacations at 600, because you could keep it if you want, but it’s going to affect you down the road.

600 bucks right now. Would be, in my opinion, much more valuable in another place. I’m not trying to pressure anybody into not doing the stuff they want to do.

01:05:40.240 — 01:06:05.280 · Ramit

It’s up to you how you want to allocate your money. I do want to remind you that in order to get to 130 K of retirement income, you need $45,500 a year in investments. Do you know how much you have right now? I’m going to show you. You have $40,800. We’re actually not far off. Okay, that’s per year. And you’re trying to get to 45.5.

01:06:05.320 — 01:06:11.360 · Hope

So $5,000. So that’s an extra $50 a month.

01:06:11.760 — 01:06:14.160 · Ramit

Mhm. $500 a month.

01:06:14.280 — 01:06:16.160 · Hope

$500 a month. Thank you. Sorry.

01:06:16.200 — 01:06:19.120 · Ramit

That’s okay. And you know, I got to tell you something. I have a philosophy.

01:06:20.400 — 01:06:25.560 · Ramit

Clear the bar with extra room. Yeah, right.

01:06:25.600 — 01:06:27.120 · Hope

I was a high jumper. Yeah.

01:06:27.160 — 01:06:52.480 · Ramit

Oh. Oh, my God, this is amazing. Holy. Okay, I hope I use the term right. That’s what we want to do. So instead of 500, let’s freaking go for 800. Yeah. Watch what happens. Watch this number down here in guilt free spending. Okay. 800 in Vanguard per month. Aha! You still have 2654 per month.

01:06:52.520 — 01:06:53.160 · Hope

Yeah.

01:06:53.360 — 01:06:55.320 · Ramit

What do you notice about this so far?

01:06:55.600 — 01:07:01.680 · Hope

We’ve just had a miss allocated and been Spending with a lot of fat.

01:07:01.840 — 01:07:08.160 · Ramit

Yes. And and the real question is why? Why do you think you’ve been doing that.

01:07:08.240 — 01:07:10.720 · Hope

Mhm. Maybe because I feel so comfortable.

01:07:10.800 — 01:07:14.120 · Ramit

Yes. Keep going. Sebastien, what about you?

01:07:14.160 — 01:07:23.520 · Sebastien

We’ve always had, uh. Or we’ve had a reason to spend more and say, oh, this is for our kid or, you know, don’t we deserve this?

01:07:23.520 — 01:09:28.120 · Ramit

I agree with all these. In my opinion, two things here. One, you had dreams, but no actual plan on how to get there. There was no connection between money and your vision. Okay, that’s number one. And number two, you had a lot of narratives surrounding you. We’re doing better than we used to. Well, if we’re doing better than we used to, all we should do is give ourselves a pat on the back, not actually make dramatic changes by piercing through those narratives.

Now it’s just it feels like this is so easy. It’s like a hot butter through a hot knife through butter. We’re just like cruising. That took cutting through those narratives and realizing, oh, we should not only be complimenting ourselves, we should actually be making rapid change to get where we want to go.

Let’s keep going. We’re not done yet. We’re doing great. Okay, so I’m looking at the four key numbers. 50% in your fixed cost. Amazing. Because that gives you lots of margin to play with. Usually we like that number between 50 to 60%. You’re at the lower end of that. That’s amazing. If it’s me, I might be putting an extra like 100 or 200 bucks towards the debt just because you could shave off years from that payment.

So I’m just going to go ahead and do that. It’s up to you on this, but I’ll just show you we’re now at 52% totally fine. You can run the math to decide what is the sweet spot for you. But truthfully, once you set that up to be automatically paid, you will not even miss it. Your life will get so much better. Next up, investments at 14%.

While I agree that you probably will have enough. When I think about a couple who’s like, kind of seriously starting their investment journey in their 40s and they are making almost $200,000 per year. Just intuitively, I go, okay, like we gotta we gotta really double down on this. What does that mean for some?

For me, I might be talking about like 16, 18% basically getting really aggressive. Let’s remember there’s a point where in the next 20 years, one or both of you might be unemployed for a while.

01:09:28.400 — 01:09:28.920 · Hope

Yeah.

01:09:28.960 — 01:10:03.200 · Ramit

So when the going is good, I would rather have you investing an extra two, three, 4%, then burning it on whatever. So if it’s me, I’m just going to go ahead and increase this number. I’ll just randomly put it in one of these boxes. Let’s let’s just see what happens if we do 400, oh, 400 bucks a month, which you’re not even going to miss, and it increased your number to 17%.

That’s pretty cool. I’m going to leave it savings down at 15%. What do you guys want to do about the gifts and the vacations? That’s $600 a month or like 7000 bucks a year. Approx.

01:10:03.200 — 01:10:12.360 · Hope

I want to leave the vacation money. Okay. Gifts. I feel like we could reduce a little bit, but we have to.

01:10:12.400 — 01:10:15.120 · Ramit

It’s up to you. 150, 150.

01:10:15.280 — 01:10:16.680 · Hope

Sebastien, what do you think?

01:10:16.960 — 01:10:24.720 · Sebastien

Uh, yeah. And I would say we could probably trim the vacation budget by a little bit as well. Like 350.

01:10:24.880 — 01:10:41.240 · Ramit

Okay, okay, cool. So there we go. We’re at 14% for savings. Uh, 17% for guilt free spending. So I like to see that number 20 to 35%. You are starting aggressively investing late.

01:10:41.280 — 01:10:46.280 · Hope

I mean, vacations and gifts feel like guilt free anyway, I agree.

01:10:46.320 — 01:10:51.480 · Ramit

You’re actually just actively saving. So let’s let’s reduce some of this. What do you think? I want to move it somewhere or no.

01:10:51.520 — 01:10:53.080 · Hope

Ouch. But sure. Yeah.

01:10:53.320 — 01:11:12.120 · Ramit

Let’s try it. You tell me. Watch this. Watch this. You tell me if you want to do it or not. Let’s take an extra 400 bucks. I put 400 in investing. That leaves you with 1754 per month. Keep in mind that does not include vacations or gifts. Yeah, I don’t know. I feel like you could do it. What do you think? Tell me.

01:11:12.160 — 01:11:19.160 · Sebastien

Yeah, it feels dramatic. Like there’s definitely changes, but I know we can do that.

01:11:19.200 — 01:11:19.840 · Hope

Yeah.

01:11:20.160 — 01:11:43.400 · Ramit

The thing that you both talk about a lot is travel. Yeah. That’s important to you. Notice that I do not pressure you to cut back on the thing that is important to you. In fact, if you decide after 6 to 8 months of this, we want to actually add 50 bucks or 100 bucks a month into that, you go ahead, you have the margin.

But what I’m trying to do is to actually chop this unconscious spending.

01:11:43.440 — 01:11:57.040 · Hope

Yeah. Well, I think if if we are taking this amount of money out and just putting it where it needs to go without us seeing it. It won’t hurt us much.

01:11:57.280 — 01:11:58.520 · Ramit

You won’t even notice it.

01:11:58.560 — 01:12:05.640 · Hope

Yeah. How much? Long term emergency fund. Would you recommend that? We have, like, six months.

01:12:05.840 — 01:12:15.120 · Ramit

Yeah, maybe more, but at least six months. So if we calculate that it’s like $38,000. You currently have 11,000.

01:12:15.160 — 01:12:20.600 · Hope

So we need 27,000. So that’s two more years of saving. Okay.

01:12:20.640 — 01:12:23.120 · Ramit

Yeah a little less than two years. Yeah. So keep it up.

01:12:23.280 — 01:12:24.560 · Hope

If we

01:12:25.880 — 01:12:35.360 · Hope

are able to hit that mark, can we take all that money that’s going there and put it into vacations?

01:12:35.480 — 01:12:40.240 · Ramit

Excellent question. I wish more people ask me questions like this.

01:12:40.360 — 01:12:41.040 · Hope

Yeah.

01:12:41.320 — 01:12:56.080 · Ramit

Currently you have sketched out saving 1200 bucks a month towards your emergency fund. If it were, first of all, you could do whatever you want. It’s your money. And if it were me, I would probably take like

01:12:57.240 — 01:13:08.160 · Ramit

at least 400 bucks a month of that 1200 and put it towards travel, which is a massive upgrade to what you have been saving. It more than doubles your vacation.

01:13:08.200 — 01:13:08.920 · Hope

Oh yeah.

01:13:09.040 — 01:14:36.240 · Ramit

I would take some of it at least and put it towards investing. Okay. Especially because investing is a primary goal. So in my opinion that means you take at least half 600, put it towards investing and then you all can decide what to do. Probably take 200. Pay that freaking debt off faster. Yeah, that’s how we think about it.

And that is true for the next student loan that you pay off. You take that payment, you allocate it. Just do it by percentages okay. Boom. So like in like in our relationship, you know, we might take whatever extra money we have coming in like 70, 75% of it goes towards investments In your case, it may be 50 because you have a little bit of debt, so you’re going to put some more towards that.

That’s how you do it. God, I got so excited about that question. That was an awesome, awesome question. And I can see the reason I’m so excited about that is I can see you now looking forward. You’re like, once we hit this, then what about that? Then what about that? And you can see it’s starting to snowball.

It accelerates. Great. Okay, I need to stop here for a second because I made a mistake on this episode. I made a math error, and it really affected the rest of what I told this couple. Here’s what happened when we updated Hope’s 401 K contribution. I forgot to recalculate her net income. And then on top of that, I transposed a number from their savings line when I was calculating their retirement contribution.

Both of these things threw off the totals.

01:14:37.480 — 01:15:59.840 · Ramit

Both of these things threw off the totals. And frankly, that was just both of these things threw off the totals. I’m the guy who tells millions of people, you gotta know your numbers. You gotta get your numbers right. And I got these numbers wrong on camera. I want to apologize, and I’m flagging this, and I’m leaving this episode up because I have promised to always be honest with you.

I got this one wrong. I’m sorry. Now, let’s talk about what it means for Sebastien and hope even with my math errors, plural, they’re still in a strong position. Their income is solid, their fixed costs are relatively low, and once their emergency fund is fully funded and their debt is paid off, this plan becomes much easier to execute.

The mistake does not change the big picture. It means, though, that the exact contributions numbers need a small adjustment in the short term. All right, let’s keep moving on. Sebastien. Your business. What’s the plan? Because right now, if we look at the Effect on the personal finances. You’re bringing in roughly half.

Approximately. Maybe a little less, depending on the Adu and all that stuff, but it’s a considerable amount. None of this plan works. If your income is not the same, what’s your plan for the business?

01:15:59.840 — 01:16:49.640 · Sebastien

So I have a contract with another company that has another year on its term that I have to service. That feels like a good finish line or milestone to consider. Like, hey, am I succeeding or do I need to pivot? Um, I think like number one, like start a business savings so that I can start to build a little bit of a buffer.

You know, I’m planning out the next kind of 90 day cycle right now. That’s I’m kind of looking forward to what’s happening at the start of the year. And January, as I was kind of a slow time For me. So that gives me time to kind of examine what are the measures of success that I want to see, like, hey, am I?

01:16:49.680 — 01:16:58.720 · Ramit

I feel like we’re in the weeds. Just conceptually, what do you need to be doing as a business owner as it relates to your family finances?

01:16:58.800 — 01:17:03.560 · Sebastien

I mean, high level, like do everything that I can to make it succeed.

01:17:03.600 — 01:17:06.080 · Ramit

And if it does, that means what.

01:17:06.160 — 01:17:12.040 · Sebastien

If it does succeed? Um, you know, in a year from now, I will be able to give myself a raise.

01:17:12.080 — 01:17:16.120 · Ramit

Great. What would the raise that you would be targeting?

01:17:16.120 — 01:17:19.840 · Sebastien

Probably another $1,000 a month. Gross.

01:17:19.840 — 01:17:22.600 · Ramit

And then if it’s not succeeding.

01:17:23.280 — 01:17:29.520 · Sebastien

Then have a conversation with Hope. You know about this shutting down.

01:17:29.520 — 01:17:54.320 · Ramit

I would say that having that conversation happens well before 12 months from now. Yeah. Like in my opinion, 12 months is already a long time off. Those conversations start happening now. And sometimes those conversations, those people can actually help you. They’re like, have you tried this? Let me introduce you that.

Try this, whatever. But if you start having conversations 12 months from now, that’s another 12 months and y’all are going to be burning cash.

01:17:54.440 — 01:18:08.439 · Hope

He has been, um, trying new things with his business, which I’m very happy about, so that he can expand his base. Remy, do you want a wine newsletter

01:18:09.920 — 01:18:11.000 · Hope

or a house?

01:18:11.600 — 01:18:31.400 · Ramit

Yeah. That’s great. First of all, I love that the two of you are talking about this. That’s great. In a way. It’s easy for me to say this. It’s much harder for you to receive because if the roles were reversed, I would not want somebody being like, look, either make it work or shut the thing down. Like, yeah, easy for you to say, bro.

01:18:31.720 — 01:18:32.200 · Hope

Yeah.

01:18:32.240 — 01:18:33.680 · Ramit

But also,

01:18:34.880 — 01:18:59.800 · Ramit

that’s the kind of advice that entrepreneurs need. Because if you’re making like 38,000 or 40,000, then the question is like you’re putting in a lot of hours, a lot of work. Might it be better to simply if it’s not pulling its weight? Shut that thing down, get a job, do something else, etc.? Again, you have to think as an investor would.

And that’s tough for any entrepreneur to hear.

01:18:59.880 — 01:19:22.399 · Sebastien

Yeah, I, I never imagined myself as a business owner. Like I got into the wine business because I loved wine. And it you know, there was a lot of things that I was attracted to. I never thought about running my own business. And this was an opportunity that came up, and it seemed like it played to a lot of my strengths.

And

01:19:23.600 — 01:19:46.759 · Sebastien

like, my degree is in architecture, right? Like, not business like, I there’s so many things that I’ve had to learn over the last year, and it’s been a great education and I’ve taken a lot away from it. And I like there’s so much that I don’t know. And to get back to your question, like what’s the what is my plan?

Like, I think one of the things that I need to do is reach out to another mentor who can

01:19:47.800 — 01:19:54.680 · Sebastien

give that more cold hearted advice to say, this is not working, you need to do this or, you know, whatever it.

01:19:54.880 — 01:19:55.400 · Ramit

Yes.

01:19:55.440 — 01:19:56.240 · Sebastien

It may be.

01:19:56.280 — 01:20:24.120 · Ramit

Treat it like a cold hearted business. It’s numbers. It needs to pull its weight, otherwise get rid of it. It got to be Darwinian about this. That’s my opinion. Of course, I know that you are going to take half of that advice. And then every entrepreneur loves their baby and wants to nurture. I get that that’s normal.

If somebody told me this, I’d be like off. But then at night when I was sleeping, I was like, wait, maybe I should listen to part of that?

01:20:24.160 — 01:20:43.600 · Hope

Yeah, but it is. It is giving us what is on the cusp right now. It’s it is bringing in enough profit that he’s paying himself. Yes, it is right. I see those things as success.

01:20:44.200 — 01:20:46.320 · Ramit

Agree? Agree.

01:20:46.320 — 01:21:27.759 · Hope

I want your business to be successful. And I see that success as being. You’re paying. You’re able to pay yourself and and take care of your business loans. And so I think that that’s where the answer lies is where are we not able to pay you or where do you run into trouble with, with saving money in your business.

And so to be able to not give you a raise, we’ll give, you know, I’ll get a raise and you take that money and save it so that then you can have a raise later when you’re

01:21:29.160 — 01:21:30.360 · Hope

more profitable.

01:21:30.880 — 01:22:21.000 · Ramit

That’s pretty cool. I love the teamwork. I really, really love that. This idea that we’re both teammates. We’re we’re playing different sports fine, different companies. But at some times one of the teammates is injured, so the other one takes on a little bit more of the work. Sometimes the other one is in a development phase, so the other one takes on a little bit more.

I love this, this is what a team is and sometimes it doesn’t work out. And that’s also okay too. Yeah, lots of different ways to get to your rich life. What I especially notice is teamwork, which is awesome. I noticed that you are being both realistic. That is the ultimate lesson. And then I noticed that you’re saving and investing a ton of money.

That’s great. What surprised you about today’s conversation?

01:22:21.040 — 01:22:34.810 · Hope

Hope I really wasn’t trying to be obtuse, um, earlier, but maybe I have been just kind of glossing over things. I guess that was surprising. Cool.

01:22:35.610 — 01:22:37.330 · Ramit

Sebastien, what surprised you?

01:22:37.410 — 01:23:12.370 · Sebastien

I think seeing the numbers in such an aggressive way. Like. And what a dramatic difference that can make. You know, like when we have played around with this, it always felt like small measures, like little tweaks or little tweaks there. And it felt like that incremental progress where we could pat ourselves on the back.

And, you know, your comment about like, that’s fine, but like, we need to be thinking about ourselves in the future. Looking back at at us now and how we can pat ourselves on the back 20 years from now.

01:23:12.410 — 01:23:19.010 · Ramit

Great, great great insight. If if you had to finish this sentence in full, I feel.

01:23:20.330 — 01:23:22.930 · Ramit

What? Just give me that full sentence, Sebastien.

01:23:23.450 — 01:23:25.410 · Sebastien

I feel more optimistic.

01:23:26.370 — 01:23:26.690 · Ramit

Cool.

01:23:26.730 — 01:23:29.890 · Hope

Hope I feel taken care of.

01:23:30.450 — 01:23:38.650 · Ramit

Amazing, I appreciate that. Is there any question that either of you has that you did not get answered? I just want to make sure you have a chance.

01:23:39.050 — 01:23:58.770 · Hope

Yes, and I know that you’ve answered this before on the podcast, so I’m sorry to make you do it. I’m just blanking. But if we if we have take home. But this is measured in gross, right. What the CSP is, is our gross pay. Yeah.

01:23:59.250 — 01:24:19.370 · Ramit

Wrong. The CSP is based off of your take home. I’ll show you exactly what I mean. I want you to understand it. So this is a great question. Yeah. Here we have your gross. This number here 16 260. But all the other numbers are based on this 12 375, which is your net.

01:24:19.410 — 01:24:20.730 · Hope

That makes me feel much better.

01:24:20.770 — 01:24:44.970 · Ramit

Yeah. Great question. That was awesome question. So I would encourage you to redo your CSP and really lock it in. Make sure you calculate the actual numbers. How much are we going to have? Because we were a bit we were close. But I want you to get tighter knowing your exact retirement age, knowing exactly how much you’re going to be contributing.

Pretax. Post-tax. Get a little dialed in. I’m looking forward to hearing more from you.

01:24:45.010 — 01:24:46.210 · Hope

Yeah. You bet. Thank you.

01:24:46.930 — 01:25:45.770 · Ramit

Hope and Sebastien have this peculiar verbal tic where they keep measuring themselves against their past. They’ll say we’re doing better than we’ve ever done. We used to be broke, but now we’re not. Can I be blunt? Yes. It’s important to understand where you came from. But what I really care about is what you are doing now.

A rich life is lived today and tomorrow, not 30 years ago. So if Hope and Sebastien keep looking backwards instead of planning forwards and changing behaviorally, well, just try to imagine riding a bike ten miles backwards. You’re never going to get where you want to go. The good news is they can change this today.

They have a plan and most importantly, they understand why they have been stuck. If they can shift from look how far we’ve come to look, where we get the opportunity to go, they can actually build something incredible. Now let’s check out their follow ups.

01:25:46.730 — 01:25:51.209 · Hope

First of all, I want to say a big thank you to Rami and

01:25:52.210 — 01:27:40.250 · Hope

his staff for having us on the podcast. It was such a great learning experience and also really challenging, but we had a lot of takeaways. My biggest surprise is that one of my biggest goals in life is to live as a genuine, open and honest person. And I did not realize I wasn’t communicating to myself about my finances in that same way.

One of the biggest takeaways was that Sebastien and I do tend to look toward the past, and in fact, we had looked at our numbers on our taxes from last year for our yearly numbers. And that’s where a lot of the confusion came, because we knew our numbers pretty well. But apparently our big yearly number was from last year.

Obviously, we need more savings and retirement. That was kind of drilled in. I have already worked with Sebastien to figure out some money to go into savings, and some money to go into investments. We’re going to make we’re going to increase those numbers shortly. But also I do most of the grocery shopping, and I’ve committed to staying to within $900, including pet food, and I went shopping for the week yesterday and spent $155 on the week’s food, and so I’m well on track for that.

And if we go over, then it’s beans and rice for the next week.

01:27:40.330 — 01:29:22.250 · Sebastien

I really thanks again for having us on the podcast. My biggest surprise was to hear our story reflected back to us, how much we were looking at our past selves and not thinking about our future selves. Our biggest takeaway was that as much as we like to talk about our dreams and our rich life, that we actually need to fund those.

And in fact, if we’re aggressive and conscientious about the choices that we’re making, that we can reach our goals and be aggressive with saving for retirement and building up an emergency fund. Hubby and I actually had a really interesting conversation after the podcast about what success would look like in my business.

And she really reminded me that the metrics that I set out for myself when starting the business was to be able to pay down the debt, to pay my bills, pay my taxes, and pay myself. And I’ve been able to do that for the past year, and I’m feeling confident that I can continue to do that. But I also know that I need to have a plan about making sure that when those metrics aren’t being met, that I move on.

Um, the other plan that we have is to really sit down and talk about our retirement goals and get on the same page so that, uh, the number that we want to achieve is actually, uh, kind of jives since we had such a big disparity when we had a conversation with you. So we’re going to have a money meeting where we really talk about our retirement goals and get on the same page.

01:29:22.730 — 01:29:56.410 · Hope

IRA meath. Since we last spoke, Sebastien and I have actually not really been in the same place. Um, but we have made a few updates. He went to Europe for a couple weeks for work. I think that he is feeling better about his position with his company. I increased my simple IRA by $1,000 a month. I feel really good about that.

Thank you again for this opportunity. Take care. Bye.

01:29:56.690 — 01:30:43.250 · Sebastien

Since our conversation a few weeks ago, I hope and I have really focused hard on our investments. And so I have fully funded my Roth IRA, and we’ve also set up a reoccurring investment in our Vanguard account for $1,000 a month. We had an unexpected expense come up around our kids orthodontic. So we’ve made a little bit of adjustment to how much we’re investing, saving in our long term savings so that we can accommodate that, but otherwise still putting a lot more money towards our emergency fund.

And the biggest change has been that we’re thinking a lot less about how far we’ve come, and a lot more about how far we want to go.

01:30:43.610 — 01:30:51.530 · Ramit

Listen up. If you want my help with your specific money questions, there are only two ways to get it. First, you can apply to be on this podcast at.

01:30:54.050 — 01:30:59.850 · Ramit

Or second, you can join my Money coaching program instantly at TV.com.

01:31:01.130 — 01:31:13.290 · Ramit

In that program, you get access to live virtual events, monthly group coaching calls, live chalets, and an amazing huge community of other people like you. Check it out at.

#40s #saved

5 Smart Ways to Make Your Money Work Harder for You

admin — Fri, 08 May 2026 08:33:28 +0000

This post may contain affiliate links that at no additional cost to you, we may earn a small commission. Read the Disclosure Policy for more information.

Last Updated on May 8, 2026 by Katie

Is your income not quite as high as you’d like it to be?

If not, it’s important to explore ways to make your money work harder.

Here are some of the best possibilities we recommend to help you reach your financial goals.

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Related reading:

Key Takeaways

Real estate investing is one of the safest ways to make your money work harder, securing your earnings and building wealth for the future while avoiding dead money.

Prioritise clearing high-interest debt before focusing on savings; budget effectively, use high-yield savings accounts or certificates of deposit, and automate to build an emergency fund and retirement savings.

Diversify your portfolio with alternative investments like low-cost index funds or stocks, which you can start even with limited savings for both short-term stability and long-term growth.

Set up a side hustle, such as blogging, to generate extra cash and potential passive income, supported by reliable online merchant services and rewards cards.

Consider Real Estate Investing

People often make the mistake of thinking that saving money is enough for wealth management when ensuring that their finances are in a healthy position.

This isn’t the case and real estate investing is one way to ensure that you are investing your money the right way. One of the safest investments is property.

With property, you will be able to guarantee that any money that you have earned is secure.

You can also avoid the issue of dead money completely and start pouring cash into something that is truly yours and will help in building wealth for your financial future.

You might also like this article on how to start an Airbnb business without owning a house.

Focus On Your Savings

Of course, to make your money work harder, you also need to focus on saving the right amount of money over time.

This can be quite tricky, particularly if you are working on a limited income.

Before building your savings, prioritise clearing high-interest debt to avoid it eating into your progress.

To do this, think about how to budget more effectively by considering how much you are earning each month and all your living expenses and bills that you will need to pay over the course of a year.

These might include everything from your energy costs to things like insurance. This should give you a solid idea of how to save more by spending less in the right areas.

Consider moving funds from your checking account to a high-yield savings account or online savings account to maximise your annual percentage yield and interest rates.

For a fixed-term alternative, a certificate of deposit can offer competitive returns.

You can also automate your finances to steadily build an emergency fund and retirement savings, taking advantage of employer matching contributions where available.

There are lots of resources online that can help you gain a better understanding of your finances and keep them on track.

Further reading: How to save $1,000 in a month even if you’re broke.

Find The Right Alternative Investments

You should also think about different investments to diversify your portfolio and ensure that you are earning a lot more each month.

Some alternative investments include the stock market. You might think that you need a fortune saved to invest in stocks.

However, this is not the case. The reality is that you can invest even if you have limited savings. Low-cost index funds are a great way to do this.

For short-term goals, money market funds provide stability; for long-term goals, stocks offer strong growth potential.

Set Up A Side Hustle

A final way to make your money work harder is to start a side hustle.

Setting up a side hustle is a fantastic way to invest in yourself and work towards financial freedom.

A side hustle can provide you with the extra cushion of cash that you need to keep your money in a healthy position, while these ventures can also generate passive income.

There are lots of different possibilities when it comes to side hustles. So, it’s important to find the right choice for you.

For instance, you can think about setting up a blog. If you have a way with words, then blogging can be a great way to spend your spare time while you earn a little extra cash.

As things start to grow, you may find yourself selling products or services, and having access to reliable online merchant services can make managing payments far easier and more professional.

Here are a few more simple side hustles to consider:

For added rewards on business purchases, consider using a rewards card to earn cash back on expenses and build up even more cash back over time.

We hope this helps you understand some of the best ways you can get a lot more from the money that you earn in the long and short term.

Make Your Money Work Harder FAQs

Investment earnings are often subject to capital gains tax, while interest from savings accounts is typically treated as taxable income.

It is essential to consult with a tax professional to understand how specific strategies, like property rentals or stock dividends, affect your annual tax liability.

Proper planning and utilising tax-advantaged accounts can help you minimise these impacts and keep more of your investment returns.

Is real estate investing safe for beginners?

Yes, property is one of the safest investments available, helping to secure your earnings and build long-term wealth.

It ensures your money is working for you rather than sitting idle as dead money.

This approach positions your finances in a healthy state for the future.

How can I save effectively on a limited income?

Start by clearing high-interest debt, then create a budget covering your monthly earnings and essential expenses like energy costs and insurance.

Move funds to a high-yield savings account or certificate of deposit for better returns, and automate transfers to steadily build an emergency fund.

Online resources can help you track and improve your finances.

Further reading: How to save money on a low income.

Do I need a lot of money to invest in stocks?

No, you can begin investing in stocks even with limited savings through low-cost index funds.

For short-term goals, money market funds offer stability, while stocks provide strong growth potential for the long term.

Diversifying your portfolio this way helps maximise monthly earnings.

What makes a good side hustle?

A good side hustle invests in your skills and provides extra cash towards financial freedom, potentially turning into passive income.

Options like blogging suit those with a way with words, and as it grows, integrate online merchant services for professional payments.

Another option is affiliate marketing on social media and you can get started with zero upfront cash.

For small day to day wins, use rewards cards on business purchases to earn additional cash back.

Check out these top side hustle apps to earn an extra $500 a month.

Summary

Article Name

5 Smart Ways to Make Your Money Work Harder for You

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5 Smart Ways to Make Your Money Work Harder for You

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Katie Lamb

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Remote Work Rebels

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#Smart #Ways #Money #Work #Harder

259. “We’re worth $1.5M but I refuse to buy new pants”

admin — Tue, 05 May 2026 11:10:26 +0000

[00:00:00] Mikaela: It gets to me. Sometimes I feel like I need a break. [00:00:03] Dave: I don't want you to feel that way. I really don't. [00:00:06] Ramit: Aren't you guys pretty rich? [00:00:08] Dave: Yes. [00:00:08] Mikaela: Yeah, we have money, but both of us have a hard time with just spending, [00:00:14] Dave: it's probably a bit of like hoarder's mentality. We don't spend it and we don't really have a plan to spend it. [00:00:21] Mikaela: I'm scared that blink of an eye we're 65, 70. We never did anything with some money. The kids are good, but did we enjoy life? [00:00:30] Dave: We're stuck in where we are 'cause we're not sure what tomorrow Looks like [00:00:34] Ramit: the skills that you have developed have calcified into focusing on numbers and logistics versus like actually having fun. [00:00:41] Mikaela: I get in the details of our family. Dave gets on the details of like the price and sorting all of that out. [00:00:49] Ramit: Who's getting on the details of the two of you having a rich life? [00:00:52] Dave: Neither one of us have focused on it. [00:00:54] Mikaela: There's gotta be more than just being happy that we're not struggling. [00:01:00] Ramit: Sometimes on this show, I like to show you what happens when people earn high incomes, but they struggle to spend their money, and I always see the comments. [00:01:09] Ramit: People sometimes complain about these couples. They say they're unrelatable, but I want you to know that this is an extremely important topic to cover, and it's important for you because if you follow my system, you will likely have more money than you ever thought possible. I want you to learn from these types of couples who are still stuck in scarcity mode so that you can make changes. [00:01:34] Ramit: Now, in my opinion, it is a tragedy to live a smaller life than you have to, and I am determined for that not to happen to you. Today I'm talking to Michaela and Dave. They're 33 and 32 years old. They have two young children and they earn $278,000 a year. That's a great income for any age, but especially impressive for someone's early thirties. [00:01:58] Ramit: Why do they struggle to spend money so much so that Mikayla wears clothing with holes in it because she can't bring herself to spend money? That's what I wanna talk about today. And remember, I want you to apply the lessons to your own life. In fact, I think as you go through today's episode, you're gonna be surprised at their reasons for being frugal. [00:02:19] Ramit: So make sure you stick around. Now I'm looking at their conscious spending plan or their CS P. If you want my help with your conscious spending plan, join my money coaching program at iwt.com/money. Coaching assets, $545,000. Investments, $1,032,000 savings, $106,000 debt, 195,000, which is their mortgage, total net worth, $1.488 million. [00:02:47] Ramit: They have a net worth of nearly $1.5 million in their early thirties. Now, if this were you, what would you be doing with your money? Ask yourself that. And ask yourself why McKayla might be wearing clothes with holes still in them. Let's get into it, beginning with our conversation now. Help me understand a little bit about your day-to-day spending behaviors. [00:03:11] Ramit: Like what is something that you wanted to spend on or sort to talk about spending on, but you just couldn't bring yourself to do it? I'm not gonna judge you, I promise. Go ahead. [00:03:21] Mikaela: Just workout leggings, like my leggings have holes in them, uh, in the knees and from just years of use and even trying to buy new leggings. [00:03:31] Mikaela: I couldn't do it until there was a sale. [00:03:34] Ramit: This is an amazing example. First of all, are those leggings in the room that you're in right [00:03:39] Mikaela: now? I'm wearing them right now. [00:03:40] Ramit: Can we see? [00:03:41] Mikaela: Okay. [00:03:42] Ramit: Okay. She's standing up. I'm gonna describe what I'm seeing. Okay. She come closer to the camera. This is amazing. It's actually quite a modest hole. [00:03:51] Ramit: It's like the size of a hole puncher, and it's directly in the middle of her kneecap. It's like somebody punched a hole. Did your little 4-year-old punch a hole with a hole puncher in that? [00:04:00] Mikaela: Who knows at this point it might have been a pinch from him. [00:04:04] Ramit: I have so many questions. Uh, how long have you had those leggings for? [00:04:07] Mikaela: Probably four years. This [00:04:09] Ramit: is amazing. I couldn't script this. I love my life. So one day you said like, Hmm, I'm gonna get some leggings. Walk me through that. What happened? [00:04:19] Mikaela: Yeah, it's just like a mental to-do list. Like, ugh, add it to the list, I guess. Mm-hmm. And then I'm like, do I really wanna spend that? [00:04:27] Ramit: Oh, and how much are we talking about? [00:04:29] Mikaela: 55, 60 $5. [00:04:31] Ramit: Why don't you just wait till the whole thing freaking tears apart. Why not [00:04:35] Mikaela: that ordeal? [00:04:37] Ramit: And how much did you get these beautiful leggings for this time? [00:04:40] Mikaela: I think like half off. [00:04:42] Ramit: Wow. [00:04:42] Mikaela: 25. Wow. So 25 bucks. And hopefully it'll last me another four years. [00:04:48] Ramit: Uh, this is amazing, Dave. Care to comment. What are your thoughts? [00:04:51] Dave: I am probably worse with clothes. Um. But if you were to say the item, it's actually this chair that I'm sitting in. [00:04:58] Ramit: What, what that chair looks like. Batman's chair. What are we talking about? [00:05:02] Dave: Uh, it's a, I work from home, so it chair that I sit in all the time. It's grown very uncomfortable on my back tight. [00:05:09] Dave: My hips aren't sitting well into it and just, I've had it for, I don't know, four years and I don't know if it's purchased or more. So I have to make it, make the value stretch, but I won't go buy another a hundred dollars, $150 chair or splurge and get one that I'll sit in every day. [00:05:26] Ramit: All of this is a bit at odds with your own financial situation? [00:05:30] Ramit: Mm-hmm. Would that be fair to say? Very. [00:05:32] Mikaela: Yeah. [00:05:33] Ramit: Yes. You wanna spend more? My first question is what's stopping you? [00:05:37] Mikaela: I feel like just the unknown of the future and the expenses that could come with that. [00:05:42] Ramit: Dave, what about you? [00:05:43] Dave: It's probably a bit of like hoarder's mentality, just. Planning and over planning for retirement, what could be in the future? [00:05:52] Ramit: You like that? [00:05:53] Dave: Yes. I enjoy it. I enjoy it. Uh, looking at like investment vehicles and those kind of pieces, but at the same time I recognize the opportunity cost of what we could be doing, you know, what we could do to enjoy now versus what I'm older and can't move the same way. [00:06:07] Ramit: Probably a good sign that someone might be a hoarder is when they're talking about saving too much money. [00:06:12] Ramit: They use the word opportunity cost, like I think we're on to something here. I think I get it. Mikayla, do you also enjoy planning for the future? [00:06:21] Mikaela: Yes, but not even like the future a year from now. Like, I can't think of like the next two to five years. It's more so like jumping to our kids or in college we're retired and even that is still kind of fuzzy. [00:06:39] Mikaela: It's the idea more so than like concrete details in place. [00:06:43] Ramit: Is it the idea or the feeling? [00:06:45] Mikaela: The idea more so just because I don't know what the feeling would be. Not working so hard for what we have. [00:06:53] Ramit: Oh, right. Uh, meaning it's supposed to be hard. Yeah. We are supposed to work hard. [00:07:00] Mikaela: Mm-hmm. [00:07:00] Ramit: If we didn't work, what would we be? [00:07:04] Ramit: What would we be? [00:07:05] Mikaela: Yeah. [00:07:06] Dave: Purpose. Yeah. Purpose and drive. [00:07:09] Ramit: Aren't you guys pretty rich? Uh, [00:07:10] Mikaela: I'd [00:07:11] Dave: say so. [00:07:12] Mikaela: Yes. Yeah. [00:07:13] Ramit: Wow. Talk about a uncomfortable reaction. Let's try that again. Maybe we can get into slowmo. Aren't you guys pretty rich? Yes. [00:07:22] Mikaela: Yes. We have money. But you don't, I feel like anything could happen at any point, and that's what scares me. [00:07:30] Ramit: Well, I understand that you've had some recent life events that have really shaped some of your pivotal views on money. Would you be comfortable sharing a little bit about that? [00:07:40] Dave: Um, yeah. I'll, I'll share some. Um, we kind of talked about a little bit of a. Uh, lack of purpose. I've always been very drawn to work and purpose-driven work. [00:07:50] Dave: Um, and I think a lot of that along with, uh, surgery, procedure, medications, put me into a, a bit of a mental spiral. It's an overwhelming place, um, like time, not driven to work. Time, not driven to purpose. So, um, [00:08:06] Ramit: do you mean, can I read between the lines? Do you mean that you have always been driven, you've always been, uh, your identity has been part of work. [00:08:16] Ramit: When you were sick, you couldn't do that, and it made you question like, what is my purpose? [00:08:21] Dave: Yeah. [00:08:23] Ramit: Okay. [00:08:23] Dave: I would almost say not working, drove. The sickness and lack of doing things. I'm always doing something. I'm always analyzing and optimizing. Did I make the right choice? Were these the right three variables to pull on? [00:08:34] Dave: Those kind of pieces that always happen since, since McKayla and I met and even long before, I've always been very active. I don't relax, rebook those things. [00:08:43] Ramit: Alright, that's quite interesting. [00:08:44] Mikaela: He was in the hospital for a week and had some heart issues and it was scary. Just for the age that we are. [00:08:53] Ramit: Yeah, that is scary. [00:08:55] Mikaela: And that was just very sudden. So it was just a lot of doctor appointments and trying to get him healthy again to like just get back to our normal day today. So it was just like a shock. I was five months postpartum. So the stress of new baby and, yeah. [00:09:16] Ramit: That's scary. That's scary on so many fronts. [00:09:18] Mikaela: Mm-hmm. [00:09:19] Dave: Heart rate dropped below, very below normals mental state, not. Up to what it was. Wow. And it was ultimately hospitalized for a week as we worked through this. And then even coming back, for me it was a bit of a confidence drain. Totally. [00:09:35] Ramit: Yeah. [00:09:35] Dave: Uh, e especially when we're working so hard financially, but also for the family and where we want to go. [00:09:40] Dave: It's a bit of a, it felt like a large step back and for us to kind of reset 'em [00:09:45] Ramit: a step back from where we What do you mean by that? [00:09:48] Dave: Just it felt like we had, we had direction where we wanted to go financially, where we were going, kind of as, as a family. But being in that situation mentally and physically, it felt like, okay, there's this focus on, now I'm saying out loud, it's, it's the focus on the here and now and the hate we build from here rather than super focused into the future. [00:10:08] Ramit: Thank you for sharing that. Um, I really appreciate that. Dave and Mickayla, what about you? Um, I understand there was a, uh, illness in your family as well. [00:10:17] Mikaela: When I found out that I was like three months pregnant. Um, my mom was diagnosed with stage four cancer, so yeah. [00:10:28] Ramit: I'm sorry to hear that. [00:10:29] Mikaela: We don't have a timeline 'cause it's just a rare cancer, so it's slow growing, which is good. [00:10:37] Mikaela: Kind of bad 'cause you're just living with the pain for so long. Yeah. Um, but also tying into Dave's, uh, hospitalization earlier this year and just like the unknown of that, it just like really freaked me out on top of everything. 'cause just like another person getting sick, she's the only person that is still alive and my immediate family. [00:10:59] Mikaela: So it all falls on me to make sure that she gets taken care of. [00:11:05] Ramit: How is she feeling day to day now? [00:11:08] Mikaela: Uh, good and bad days. [00:11:10] Ramit: Yeah. [00:11:10] Mikaela: Yeah. I'd say like 60 40, like 60% of the month she. Can move, walk around and stuff. But 40%, she has really rough days, so, [00:11:21] Ramit: yeah. I'm sorry to hear that. I'm really sorry. How have the two of you reacted to Dave, your health scare and Mikayla, your mom's illness? [00:11:30] Ramit: Her cancer, [00:11:32] Dave: we've kind of been frozen. Um, at least for what I would say is we've kind of been frozen and we're not sure what happens next. We know something's going to happen, but we don't know, like time is the most elusive and yet most valuable thing we have. It's, it's, we're stuck in where we are 'cause we're not sure what tomorrow looks like. [00:11:51] Dave: And I think for a lot of reasons that's impacted a little bit of, you know, strain and stress on what we do, where we do it, how we do, who we communicate with. Uh, but also, you know, what we do with our money, what do we spend it on? Knowing that there could be other bills that were, you know, potentially gonna have to look after her mom or for me with doctor's appointments or just with the family, you know, more check-ins, et cetera. [00:12:12] Ramit: What about for you, Michaela? [00:12:14] Mikaela: Yeah. Uh, a lot of stress on the foreseeable future. Like I know my mom lives three and a half hours away right now, but, uh, we talked about a month ago, and her plan is to move closer to us mm-hmm. Within the next year, just because we will need her close to be able to take care of her when things decline more. [00:12:37] Dave: Mm-hmm. [00:12:37] Mikaela: So right now we aren't paying anything for her. However, she did not save or do anything really to set herself up to retire regardless of this illness. So we know in due time that we will definitely have to pitch into support. Some sort of lifestyle, whether that's the higher rent around our area for her or doctor's appointments, transportation, et cetera. [00:13:05] Mikaela: So it's just the stress of the unknown bills and budgeting that and how do you live your life and enjoy it, versus staying strapped and making sure that you're financially still saving for the future, but paying for these things in the now, I think. [00:13:24] Ramit: W Will your role in her care be her primary caretaker? [00:13:28] Mikaela: Yes. [00:13:29] Ramit: Okay. [00:13:29] Mikaela: Probably while working full-time, I mean, we'll definitely when we get to that point, when the health declines, I assume we will need like a nurse that comes around to make sure that she is getting the care she needs. [00:13:46] Ramit: Dave, what about your health? How are you now? [00:13:49] Dave: Uh, progress. I [00:13:51] Ramit: wouldn't [00:13:51] Dave: say, yeah, feel more confident, feeling better, but also still kinda recognizing that I have a long journey. [00:13:57] Dave: Okay. And respecting my own health and keeping up with it. [00:14:01] Ramit: Long journey. Okay. Got it. Got it. Um, day-to-day basis, are you able to work? Are you able to, you're able to be mobile? [00:14:08] Dave: Yeah. Yeah. [00:14:09] Okay. [00:14:09] Ramit: Okay, [00:14:09] Dave: good. Yeah. Day to day. Day to day's really no change. It's more of the, yeah, just foresight, doctor's visits and continued checkups. [00:14:15] Dave: Even, uh, I'll, I'll even expand and say even last two weeks went to the dermatologist because I have a cyst and they're saying maybe it's cancerous, maybe not. So it adds to a little bit of the stress and [00:14:24] Ramit: yeah, [00:14:25] Dave: I'm trying not to worry about it until we find out versus worrying about what could be so, but I think it just compounds to everything. [00:14:31] Mikaela: And of course I'm stressing about that on top of, it's just like another health scare that it's like, you've gotta be kidding me. [00:14:41] Ramit: I wanna stop here for a second. Because Dave was hospitalized in his early thirties. Mikayla's mom has a stage four cancer diagnosis delivered while Mikala was five months postpartum, and now on top of everything, there's another potential he scare for Dave. [00:14:58] Ramit: Any one of these things is difficult. All of them combined compounding. It is devastating. It's almost incomprehensible what they've been through. When I was at Stanford, I took a class on trauma and disasters, and I remember this example that I had also studied in my social psychology coursework, and that was how people take their cues from other people around them. [00:15:22] Ramit: There was a study where they have people eating in a restaurant and smoke starts filling the room and people are sitting there not moving. And guess what other people do? They just keep eating at a certain point, the smoke is so thick you can't even see your own hands, and people are still eating their food. [00:15:39] Ramit: It's almost unbelievable. But that is what happens. The lesson that I took away from that trauma class is don't freeze. If something bad is happening, don't worry what other people are doing. Move, even if it feels silly, even if it feels like an overreaction, you gotta move. That's why when COVID hit, my wife and I were living in New York City and I looked around and saw what was happening with the compounding numbers, and I said, we are outta here tomorrow. [00:16:03] Ramit: We left immediately before others left, and I remember our friends were on a WhatsApp group and we told 'em, we're leaving tomorrow morning. And they were like, really? Are you sure? It felt like an overreaction by next Friday. It was a very serious thing, and I think about that class. Every time I meet a couple like Michaela and Dave, people who are not lazy, they're not irresponsible people who are simply frozen, that doesn't make them bad people. [00:16:30] Ramit: It's actually deeply human. [00:16:32] Dave: So right after this, I wanna help them start moving again. [00:16:42] Ramit: When did money come up for the first time between the two of you? In a really substantive way? [00:16:48] Mikaela: The one thing that I can think of is when we first decided to move in together, uh, we had another couple that was close friends. So the four of us moved into like a three bedroom, two bath apartment. The first thought that I can think of is, oh my God, how much money we are going to save because we're splitting it four ways. [00:17:07] Ramit: Holy shit. Who around you has called one or both of you? Penny pinchers or cheap? [00:17:13] Dave: Uh, and not the word cheap, but definitely frugal and bargain hunters and friends. Family. [00:17:20] Mikaela: Friends. Yeah. [00:17:22] Ramit: When was the last time that you told somebody how good of a deal that you got on something? I'm gonna guess it's in the last month, [00:17:30] Dave: probably the last, probably the last week. [00:17:32] Ramit: Ah, [00:17:32] Mikaela: probably like Black Friday sales for our oldest son. He's getting a bike for Christmas, it was like 60, $65. And then Cyber Monday rolls around and Dave goes, Hey, uh, how much is it now? Like, can we get a better deal? Is it is? And he was like, we could buy it again and return it. [00:17:52] Ramit: Alright, well you guys wanna be cheap. [00:17:55] Mikaela: No, I mean, it got us to where we are, but no, I want to be able to spend our money and not feel guilty about it. I just feel like we can't get out of the mindset of when we first started dating and had like nothing and we made that work so well, budgeting and getting to where we are, that it's so hard to get out of that mindset of we have the money, why don't we use it? [00:18:21] Ramit: Answer the question for me. Why don't we do this? [00:18:24] Mikaela: Because what if something happens? What if. We get a random doctor bill or one of us gets sick or the kids can't go to daycare for a week for some odd reason, or my mom needs it or something else. So pause, [00:18:35] Ramit: pause, pause, pause. Yeah. Let's take a step by step. [00:18:38] Ramit: How much do you guys have in your savings account? [00:18:40] Mikaela: Isn't it like 20,000 or [00:18:42] Dave: 80? 90,000 [00:18:44] Mikaela: maybe. Oh, oh we're, I thought I was just talking about mine. Sorry. [00:18:48] Ramit: That's also not the number. It's higher than that. [00:18:50] Dave: 120,000. [00:18:52] Ramit: It's $106,000. You get a $6,000 medical bill. You write a fat check here, take it. Get the outta my life medical industry. [00:19:01] Ramit: Or even better, you call 'em and negotiate it down and then you write the check for $4,000. [00:19:06] Mikaela: Yeah. [00:19:07] Ramit: What's going on that, in each of these examples, the answer is actually quite simple. If you have the money, but the fear of it, the idea of it seems to be quite overwhelming. What do you think is going on there? [00:19:20] Mikaela: Like I said, my mentality is still stuck in the, like we. Just are in the grind of it and we don't have the money. Like my mind has not come to terms with how much we have saved and invested and come to have at this point. [00:19:39] Dave: I think it's a frugality, frugality mindset and living as if it's a scarce commodity. [00:19:44] Dave: Like we don't have the number in our bank account. We couldn't cover that cost. [00:19:48] Ramit: Yeah. When was the last time you took a trip? [00:19:51] Dave: It's been five years since we've done a vacation just for us. And even that was us going and then meeting up with one of my friends in Colorado, which was great. It was fun, but it's not just us. [00:20:04] Ramit: So like approximately five or six years ago. And how do you feel about that? Like some people are perfectly fine traveling once every five years, some are not. What's your take on that? [00:20:15] Mikaela: I definitely wish we were traveling more. Life and timing is so unpredictable, like you don't know how long you have. [00:20:23] Mikaela: While we have our health and the money, I would love to start making those memories together for us and our family and enjoying it before it's too late. [00:20:34] Ramit: Mm-hmm. I appreciate that. [00:20:36] Mikaela: Yeah. I get jealous of my friends that travel constantly, but they don't have kids, so it's a little easier for them. [00:20:44] Ramit: Is the reason that you don't travel kids? [00:20:46] Mikaela: I'd say partial. Just because childcare. [00:20:49] Ramit: Dave, what's going on in your head? I can see you're thinking right now. [00:20:52] Dave: That's what we used to do in the past. We would just build, not necessarily a big vacation, but just weekend and things to do. [00:20:59] Ramit: What changed? [00:21:00] Dave: Lack of fun? [00:21:02] Ramit: Uh, maybe, but what changed? Why [00:21:05] Dave: now? Kids. [00:21:06] Dave: Different priorities and we were putting our priorities into different places. [00:21:10] Mikaela: Yeah. And I feel like. We are. So we get so head down in the day to day that you look up and you're like, oh crap. Six months have gone by. Like just this year. It's like, where'd the whole year go? Did we do anything for ourselves? [00:21:27] Mikaela: And then even if it's is with the kids, once we start planning it like hits a point where it's just like, I don't, not that is this even worth it, but it's like, is this actually what we want to do? [00:21:40] Ramit: Do, do you see why? [00:21:42] Mikaela: Yeah. [00:21:42] Ramit: If you approach something as a to-do list. Mm-hmm. Whether it's buying new leggings or taking a family trip, if you approach these things as an obligation, as an, oh God, we got this family trip. [00:21:55] Ramit: Oh God, I gotta get new leggings, then of course you're not gonna wanna do it or do it well. It just becomes one thing that's just like relegated to, oh God, add it to my to-do list. I have things on my to-do list that have been there for like three months deep down, I just don't want to do 'em. I think that was quite illuminating when I asked you why did you used to do that, but you don't do it now. [00:22:18] Ramit: The answer that you gave me was almost reflexive. It is what so many people in America say, what was the answer? [00:22:27] Dave: Priorities And kids. [00:22:28] Ramit: Kids. Now let's not minimize kids. It's a 4-year-old and a 1-year-old. That's a out of work, and you love your kids. You wanna be with them. I understand that, but it's quite interesting that people making $40,000 a year with two kids would say kids, and then we have a couple like you making way more money and your answer is the same. [00:22:54] Ramit: For why you couldn't take a trip in the last five or six years. [00:22:59] Mikaela: I feel like I am, I get in the details of our family and all of the x, y, z of the kids. And then Dave gets on the details of like the price and like sorting all of that out and just [00:23:16] Ramit: who's getting on the details of the two of you having a rich life. [00:23:18] Dave: Neither one of us have focused on it. [00:23:21] Mikaela: Yeah. I feel like financially Dave focuses on making sure that we invest right and we save and everything, but a part that's [00:23:30] Ramit: not a rich life that's just accumulating money. [00:23:33] Mikaela: Yeah. [00:23:33] Ramit: A rich life is having a vision. So here you are today, you've made a certain series of decisions interlocking and you got money. [00:23:43] Ramit: I wanna look at your numbers in a second, but I'm just wondering if, if none of us change on this call today, if the two of you don't change it thing, what happens? [00:23:53] Mikaela: I'm scared that we like blink of an eye. We're 65, 70. We never did anything with some money. Yeah, we have a great retirement. I hope the kids are good, but did we enjoy life or like, I hope to God we even make it to 65, like with all of the health scares that we've encountered this year and last year. [00:24:17] Mikaela: I'm terrified that we don't use it and something happens to one of us and then we don't get to share those memories together. And that's really scary to me. [00:24:27] Dave: I'm almost more shortsighted and I could see the burnout, the friction, the frustration, the stress that happens if we don't. Really start thinking about this in the next five years, we're gonna have money in retirement, not be able to use it 'cause we're old and it's just gonna go to hospital bills or health bills or whatever. [00:24:45] Dave: Check in. Knee replacements. Hip replacements, [00:24:47] Mikaela: yeah. And then we still don't know how to use it in retirement. So then we just have so much leftover money that that's amazing for our kids. But I would like to use it and create these memories while they're young, while we're young and healthy and yeah, it's so that's where my fear lies. [00:25:06] Ramit: I think both of those are real. I would like to understand a little bit about your numbers. So a couple of questions. What was it like creating the conscious spending plan together? [00:25:19] Mikaela: It stuff is a little more confusing for salary wise, so it took a little longer on that end. But yeah, for the most part, the investment accounts and all of the. [00:25:29] Mikaela: Big number accounts. I feel like were on him. And then I came in with the subscriptions, what we pay for daycare, things like that as, yeah, [00:25:38] Ramit: don't Mikayla, I was trying to get to the numbers and now you diverted me and now we have to talk about this. Mikayla, have you heard me talk to men and women on this podcast? [00:25:50] Ramit: And then I'll ask the women, what is your role in this relationship and what do they always say? [00:25:57] Mikaela: Everything with the children. [00:25:58] Ramit: Exactly. On a given day. Mikala. When it comes to thinking about navigating your mom, who's sick, your kids who need attention work, Dave, all of it. How would you characterize how that feels? [00:26:12] Mikaela: I feel like I'm on autopilot all the time. For other people. I feel like my me time is when I'm sitting at my desk at work, and that's a little pathetic because it's like. I'm doing that for my family as well. So, [00:26:28] Ramit: have you told Dave this? [00:26:30] Mikaela: No. [00:26:30] Ramit: You wanna tell him? [00:26:31] Mikaela: Hey, I feel like I do a lot for everyone and it gets to me. [00:26:41] Mikaela: Sometimes I feel like I need to break once in a while. [00:26:45] Dave: I don't want you to feel that way. I really don't. And that's, I know you [00:26:48] Mikaela: don't, [00:26:48] Dave: that's me stepping up. But I, I also want you to feel comfortable in, in sharing and communicating this too. When you need a break, I'm gonna go sit down. I need you to do this. [00:27:01] Mikaela: Yeah. [00:27:02] Ramit: I see this a lot. In most households I work with, the financial labor is divided the same way. A lot of visible labor goes to him. A lot of invisible labor goes to her. Nobody ever sat down and decided this. It just kind of happened and it shows up in the small stuff. Who's handling the pediatrician appointments? [00:27:24] Ramit: Who's tracking what they need for groceries? That's McKayla. I suspect this hasn't been brought up at home and there's a lot of discussion happening these days about invisible labor. I think it's an important topic to have on the financial side. It reminds me of this famous quote that Jeff Bezos once told his senior executives. [00:27:45] Ramit: He said, there's no reason for you to be stressed out. If you're stressed out, you should hire someone to help. And his point was, the more successful you get, the more you can deploy money to solve problems. For somebody making $278,000 a year with $1.5 million in the bank, they can afford to solve some of these problems. [00:28:09] Ramit: And I think there's a question underneath all of this that she hasn't let herself ask yet. I've worked this hard, I've held a lot of this together. What do I get? That is what I wanna show her today. We're gonna get into the numbers right after this. [00:28:27] Ramit: Here we go. With the CSP. Holy. There's a lot of zeros on this CSP. Okay, hold on. Dave, can you read off the word in bold and the number in full next to it for that entire box please? [00:28:39] Dave: Assets 545,000 investments, 1,032,000 savings, 106,000 debt, 195,000 total net worth. 1,488,000. [00:28:54] Ramit: Okay, well done. What do you think about those numbers? [00:28:57] Mikaela: They're amazing. [00:28:58] Dave: They are amazing. And I also realized that we shorted assets a bit. [00:29:03] Ramit: 545,000 of assets, $1 million in investments. Mm-hmm. Y'all are in your early thirties. Incredibly impressive. And I also love that both of you said. I said, how do you feel? You said, amazing. That, that is awesome. That is like appreciation for what you have clearly worked very hard for, [00:29:22] Dave: and where we are is where we wanted to be. [00:29:24] Dave: We're okay with this forever versus, Hey, let's plan for the next thing. It's, that's where I think we're lacking. [00:29:30] Ramit: You made it to where you wanted to be in terms of your finances, is that what you're saying? [00:29:36] Dave: Yep. Finances, family house. [00:29:39] Ramit: Wow. [00:29:39] Mikaela: For this age. Yeah. [00:29:41] Ramit: Great. Congratulations. That's really cool. Did you stop and kind of recognize what you've achieved? [00:29:48] Dave: Yeah. I think for me quickly and then just kinda went like, okay, we're there now. What's the next thing? Put the next marker out there. [00:29:53] Ramit: What's next? Okay, I get that. That's, I, I totally understand and connect with that. Mikayla, what about you? [00:29:59] Mikaela: We recognize the milestones that we've hit. Like even when we paid off our student loans, we paid 'em off a year before we wanted to, we were excited, like, wow, we actually did it and. [00:30:11] Mikaela: We came up with a new goal, hit that recently, so it's like, wow, we did that one now too. So like what's next? I feel like how we have acted financially back right after college, it did help us get to where we wanna be. But now I feel like I am living the rich life that I never thought was possible as a child, and I love that. [00:30:37] Mikaela: But now it's like, well, do I wanna stay content like this? Or wouldn't it be more fun or like have another vision laid in place for like the next level of that rich life. [00:30:50] Dave: I think a lot of our goals have been so financially based that we haven't thought about the next step of rich life. We just hit financial goal, financial goal, financial goal. [00:30:58] Ramit: Well, why don't you guys just keep doing it for the rest of your life? Come on. That's what, that's what they say, right? [00:31:02] Mikaela: We see how fun we are talking about the plant. [00:31:05] Dave: I think it's, that's it. It's the, we, we question and analyze spend as we won't hit that financial goal as fast. [00:31:15] Ramit: Now, how much did you short your assets by? [00:31:17] Dave: I would say probably 30 to 40,000. Didn't really account for the vehicles in it. [00:31:22] Ramit: Alright, I'll add it. Wait, what kind of vehicles? 'cause if they're, uh, vehicles I don't like, I'm just gonna leave them out and 'em out. What are they? What brand? [00:31:29] Dave: Uh, Toyota and Hyundai. [00:31:31] Ramit: Oh my God, I love it. Okay, I'll add 'em in. [00:31:34] Ramit: 545,000 turns into. What do we say? Five 70? How about that? [00:31:39] Dave: Yeah, five 70 is good. [00:31:40] Ramit: Let's do income. McKayla, can you read off the combined gross monthly income, please? [00:31:46] Mikaela: 23,186. [00:31:48] Ramit: Great, so combine the two of you make $278,228. [00:31:53] Mikaela: Last we spoke earlier this year. I thought it was like one 70, which I thought was amazing. [00:31:59] Mikaela: Then I was like, oh my God, we make that much. [00:32:02] Ramit: What is this? People coming on and not realizing by $100,000. Yeah. How much they make per year. What world am I in? [00:32:11] Dave: She actually got mad at me and thought that I overinflated our numbers so much that I had to email you all to change it. And then we looked back at our taxes last year and confirmed that we weren't that far off. [00:32:23] Ramit: Wow. Michaela, what did it feel like when you realized your household makes an extra 100 K per year? [00:32:30] Mikaela: I mean, I felt like my heart dropped. I was just like, holy shit. Like. I was shocked. [00:32:36] Ramit: Finish this sentence. Holy. What? [00:32:38] Mikaela: I never thought that was possible. [00:32:40] Ramit: Okay. And then [00:32:42] Mikaela: it's amazing like, but what now? [00:32:47] Ramit: Well, tell me what is the answer to that? [00:32:49] Mikaela: I mean, that's kind of why we came on the show. And then not just that, but I've been the last few months trying to cycle through my head like, I need to change my rich life. How do I do that without feeling guilty, even seeing that big number? And I know how amazing it is. And I'm absolutely grateful because like I said, I never thought that would be possible in my lifetime to be as fortunate as we are. [00:33:16] Mikaela: But now I feel like I'm so stuck at a certain level that I can't elevate and not feel guilty about wanting to spend our money. [00:33:25] Ramit: Yeah, that's really common. That's really common. You're not alone. You're not weird. You're not broken. That is very common. What is rare and what I think is really impressive is that you are asking for help. [00:33:39] Dave: Mm-hmm. [00:33:39] Ramit: It's not a topic that's talked about a lot. It's quite taboo. Hey, we make a lot of money more than we ever thought possible. In fact, oops, I underestimated our household income by $100,000. [00:33:51] Mikaela: Yeah. [00:33:52] Ramit: What do we do now? The typical advice in America is like just count your blessings and save it. 'cause you never know what's gonna come around the corner. [00:34:00] Mikaela: And I feel like we're there now 'cause we have a lot of hardships that have happened and are still to come. [00:34:08] Ramit: But can I make a point to you that you would be doing the same thing if you had no illnesses in your family? [00:34:15] Mikaela: Yeah, it just heightens it more I think. [00:34:18] Ramit: Yeah. But you know that before you received the news about either of these things, this is what you were doing with your money, you're doing exactly this. [00:34:26] Mikaela: Yeah. Because even last year, I mean the numbers might not have been as high. But I could think of something like we were about to have a baby, so it's like, oh, well we can't do anything 'cause all of these expenses with a new baby. So That's right. I feel like there's always an excuse. [00:34:43] Ramit: Yes, yes. This is a little challenging for some people to hear because for a lot of people those are major expenses. [00:34:51] Ramit: Like having a baby is expensive. Mm-hmm. Buying a house or buying a car or a medical expense is expensive. No doubt. But one of the reasons I wanted to talk to you, and one of the reasons that I make it a point to find people from all different backgrounds, uh, financial income, socioeconomic, racial, all of it, is that there are different groups in different times in life where we actually do act differently. [00:35:16] Ramit: Where sometimes we have to act and think differently. And this is probably one of those times, let's keep going. So on the application, you listed 270 k. You told my producer that you thought you made closer to 380 K. What happened there? [00:35:34] Dave: So when we look back on taxes three 40 for last year, and that is, I think because of some stock allocations. [00:35:42] Ramit: Hold on. I need to, I need to like mentally digest what's happening here. Mikayla thinks that you made 170 K, then it turns out you made 270 K, but actually you made 340 K. Am I being punked right now? [00:35:55] Mikaela: I feel like his job confuses me so much that I know he makes more than me and that's essentially where I stop it. [00:36:03] Ramit: Okay, so you get paid like what You get a bonus and commissions and stuff like that? [00:36:07] Dave: Yep. [00:36:07] Ramit: Commissions. Okay. So it's irregular. [00:36:09] Mikaela: Mm-hmm. [00:36:10] Dave: Yeah, it is mostly, mostly predictable. Um, but there's also stock purchase program that I take part in, uh, as well as, uh, granted some stock. [00:36:18] Ramit: Have you communicated how your income works to Mikayla? [00:36:23] Dave: Yes. [00:36:24] Ramit: Why do you say it like that? [00:36:26] Dave: Uh, I say, yes, I've communicated how it works, but it's also at a point where our question just goes to, okay, well, are we covering our budget? Are we covering our expenses? And then it's, uh, okay, well then we should be good. [00:36:41] Mikaela: As long as the budget and the bills are getting paid, we can do our day-to-day by the things we can for the kids and stuff. [00:36:50] Mikaela: Like, I'm not thinking higher level than that. [00:36:54] Ramit: Mm-hmm. Look at my hands. Look at my hands. It's interlocking. Everything about the way that the two of you interact with money is interlocking on the frugality basis, even knowing your household income. Do we cover our budget? Do can we keep the lights on? Like that is how low [00:37:11] Dave: mm-hmm. [00:37:12] Ramit: Of a bar that you are setting. You think I'm walking around like, Ooh, do we have enough money in our checking account to cover our electricity bill? No way. Yeah. That's not a concern. I've accepted that. I'm never gonna be concerned about our electricity bill ever. I'm trying to elevate myself. So the way that you two even talk about your income is interlocking to force you to not even dream. [00:37:33] Ramit: How could you dream if you don't even know within $200,000 how much you make per year? [00:37:40] Dave: I think it goes back to just living well below the means and staying below the means in order to be able to do other things with money. [00:37:46] Ramit: Can I ask you a question? Like, why never did you probe him and say like, Hey, I don't understand all he's vesting and this and that. [00:37:52] Ramit: Like, give me a number. Why did you never say that to him? [00:37:55] Mikaela: One. 'cause I trust him 'cause we've been together for 10 years and [00:38:00] Ramit: mm-hmm. Have you heard these, um, stories and videos where women. Uh, notice that their husbands never ask about their medical conditions. Like woman might be taking medication or she might see an ob and the husbands are just kinda like, whatever, like is you take care of your medication. [00:38:19] Ramit: Whereas mm-hmm wives are often making sure their husbands are taking their medication and supplements and stuff. Have you heard this before? [00:38:25] Mikaela: Yeah. [00:38:26] Ramit: Okay. How about if that were happening here and you were taking like 20 different kinds of medications 'cause you were sick and stuff like that? And then I ask Dave, like, Dave, how come you're never curious about it? [00:38:36] Ramit: How come you never asked Mikayla? And Dave goes, I trust her. I trust her as long as she's alive and I trust her. How do you think that would've been received? [00:38:46] Mikaela: Not good at all. Yes. It's like, why you love her? Why aren't you looking into the details more? [00:38:52] Ramit: Yeah. So what do you make of this? Why have you not asked those questions? [00:38:56] Ramit: Think hard [00:38:57] Mikaela: because I'm just comfortable with him doing it and doing it for us. [00:39:01] Ramit: Yeah. He's the money guy. I focus on the kids. [00:39:04] Mikaela: Mm-hmm. [00:39:05] Ramit: And that's it. [00:39:06] Mikaela: I feel like if I understood the numbers more and had like clear numbers put to them, I think I would be celebrating more or being like, wow, that, that's awesome. [00:39:18] Ramit: Yes. Great. [00:39:19] Mikaela: Whereas when he says, I have stocks that are besting, I'm like, okay, [00:39:24] Ramit: what is that? It means nothing. Now guys, I wanna point something out to you. I, I respect you a lot. I'm not, I am not meaning for any of this to be condescending. I, I think both of you're very intelligent, obviously very successful. [00:39:36] Ramit: So the way that we are talking about this, it might seem like we are like bringing building blocks, you know, when we're playing with these very juvenile building blocks, it's actually not the case. It is not juvenile to connect with your partner. Even the simplest thing of like, this is how much I make. [00:39:54] Ramit: That's not juvenile, it's not pandering or condescending. We need to start at the basics and maybe the person gets it. Okay, cool. Then we move faster. Mikayla, in part you came on here 'cause you know, you're like, why do I feel this way about leggings and and travel and we struggle to spend money and we wanna live today and tomorrow. [00:40:12] Ramit: And a lot of people, maybe including both of you, thought that I would wave a magic wand and go like, you should just buy the leggings. It's okay, you have a lot of money. Maybe, but that's so simplistic. Like you already know that what is really going on is we are trying to take this interwoven set of, uh, beliefs and attitudes and behaviors that you have put together and we're trying to unwind them. [00:40:36] Ramit: And you can see that how far you have to go back. You don't even talk about your income. So this is the level of rebuilding that we are doing, and I hope you can see that when you start to build this solid foundation. Things like, should we buy a watch or leggings or take an extra few days in New York? [00:40:55] Ramit: Become quite easy. [00:40:57] Mikaela: Mm-hmm. [00:40:57] Ramit: How does that strike you? [00:40:59] Mikaela: I would love to get to a level that, and if it means that we have to start from ground zero again and try to work our way back up there, I'm willing to do it. It it means that we can feel freer with spending and not question every purchase that we're doing for ourselves. [00:41:17] Ramit: Fantastic. And Dave? [00:41:18] Dave: Yeah. I can see how it unlocks the future of us actually planning and getting descriptive about what the rich life is. Yes. For both of us. And then getting invested in each other's rich life. Not just like, here's our rich life individually, but also here's our rich life together and how they can join. [00:41:34] Ramit: Yeah. Amazing. Can we go through some of the rest of your numbers? [00:41:39] Dave: Mm-hmm. [00:41:40] Ramit: Alright. [00:41:43] Ramit: Again, I wanna reiterate, you have a net worth of about 1.5 million early thirties of that 1 million is. Invested, which is really, really impressive. So we already know that this will turn into a lot of money. Mm-hmm. Very good. This is not just a high quantity of money, but it's a high quality of money the way that you have apportioned or allocated it. [00:42:06] Ramit: Very well done. You also have an extremely high income. That's fantastic. And let's take a look at the rest here. So your fixed costs are at 60%. That's a little higher than I would've thought for a couple with a very high income. Let's dive in here. You got your rent? Is it rent or mortgage? [00:42:21] Dave: Mortgage. [00:42:21] Mikaela: It's mortgage. [00:42:22] Mikaela: But I will say for that category, we included daycare on that. 'cause we didn't know where exactly to put daycare. So our mortgage is not that high. [00:42:31] Ramit: Oh, how much is your daycare? [00:42:34] Mikaela: It's probably almost 50 KA year. [00:42:36] Dave: I think for me, I categorize it as a rent payment. It's almost like, hey, you're renting for four years, this space for your baby. [00:42:42] Ramit: Alright. I think there's something there, but I don't know what it is, but whatever. Alright, moving along here. Your car payment is zero. What's the story with that? [00:42:51] Mikaela: We just paid mine off. [00:42:53] Ramit: Great. Yep. I'm sure your gas is quite nominal. We can add it. It'll make a zero difference, but you have $106,000 in savings, which is great. [00:43:03] Ramit: That's more than 12 months of emergency fund, but I noticed that you are still saving $1,500 a month towards an emergency fund. What's behind that? [00:43:15] Mikaela: Just haven't thought of what to spend, like, not what to spend the money on, but like, 'cause yeah, we could go out and spend it on stupid stuff any time we want. [00:43:29] Mikaela: Like we could splurge and get a whole new wardrobe or on our children and do some insane stuff, but it's like. Actually spending it on quality time and quality things that we want, we're stuck in that. So it's just going to savings. [00:43:43] Ramit: It's a lack of vision in leftovers. Do you appreciate that there is a point where you do not need to keep saving money? [00:43:50] Dave: Mm-hmm. I do. I actually think it's far too much in savings. [00:43:55] Ramit: Okay. [00:43:55] Mikaela: Yeah. [00:43:55] Ramit: Wait, is the next line that you're about to say, I think we should move it to investments? [00:44:00] Dave: That's always what goes into my head. Yes, [00:44:02] Mikaela: absolutely. For heaven [00:44:04] Ramit: spending. [00:44:05] Mikaela: Mm-hmm. [00:44:06] Ramit: I mean the, the reason that you came to me. Mm-hmm. Because there are a lot of other people who can tell you to invest more and be more frugal. [00:44:13] Ramit: There's a lot of people out there. You came to me and so you know that I specialize in showing people how to use their money to live a rich life. Mm-hmm. So I note that neither of you have said, Hey, spending, it is something we've thought about. These are our three things. What do you think? It just kind of feels like you're like, I don't know, we have this extra money. [00:44:38] Ramit: We haven't really thought what to do with it. Mm-hmm. We have all these reasons we don't wanna spend on quote stupid stuff. But what about actually spending it on cool stuff, meaningful stuff? [00:44:49] Mikaela: Yeah. I feel like our rich life, the one vision that we have is, it's not really things, it's experiences, but we're stuck on trying to create that experience because once we actually start planning, it's like, oh, well, do we really need that? [00:45:08] Mikaela: I don't know. Like we just still get hung up on the money. Lisa, [00:45:12] Ramit: can I just answer the question? No, you don't need that. Yeah, you don't need any experiences. So there's your answer. What do you think is behind you asking the question? Because the answer to that question is very obviously no. [00:45:25] Mikaela: Mm-hmm. I [00:45:27] Ramit: don't need to take a pizza tour in New York. [00:45:31] Ramit: But I did. I don't need to go to the museum that I just went to over the weekend, but I did [00:45:38] Mikaela: ultimately, like am I, I still just look back like, am I gonna feel fulfilled at the end of the day, at the end of my life? Like, am I gonna be satisfied with just working my ass off for nothing? Like, not for nothing. [00:45:53] Mikaela: We have a beautiful life, but like my whole thing with our family and our children is doing as much as we can with them and making those experiences and memories, because I didn't have that as a child. [00:46:08] Ramit: Can I understand a little bit more about how you grew up, McKayla? I think it would help me understand your views on money today. [00:46:14] Ramit: So if, if we go way back to when you were a kid? Yeah. [00:46:19] Mikaela: Um, [00:46:20] Ramit: one sec. One sec. I noticed you're already tearing up. [00:46:23] Mikaela: Yeah. [00:46:24] Ramit: What's going on? [00:46:25] Mikaela: Well, it's just stressful to, I mean. To look back. [00:46:31] Ramit: Mm-hmm. [00:46:32] Mikaela: Um, I mean, it just brings up a lot of emotions. 'cause like I said, I'm very grateful for what I have now because I came from nothing. [00:46:42] Mikaela: So, [00:46:44] Ramit: do you mind if I ask you a few questions about it? [00:46:46] Mikaela: Sure. [00:46:47] Ramit: Do you need to pause or there's anything [00:46:48] Mikaela: uncomfortable? Uh, yeah. Let me get a tissue really fast. Sure, sure. One moment. Sorry, [00:46:52] Dave: I'm pausing to give her a hug as well. Real quick, [00:46:57] Ramit: little peek behind the curtain. Here at Money for Couples, we ask our guests to sit in separate rooms so that we get clean audio and separate camera feeds. But it also means that when things get emotional, they can't just reach across the table and hold each other's hands. So sometimes they leave the room to hug each other, to hold each other, and it's actually one of the most touching moments between couples. [00:47:24] Ramit: Because it's almost like there's an irresistible magnet bringing them together. They're putting each other first, not this podcast conversation. So I especially appreciate it. Now they're back. Listen in as Michaela shares her story, [00:47:42] Dave: what do you remember about growing [00:47:43] Ramit: up when you were young? What did your family say about money? [00:47:47] Mikaela: Um, it was always stressful. It was always a stressful topic. My parents got divorced when I was fourth grade, so like eight or so. [00:47:56] Dave: Mm-hmm. [00:47:57] Mikaela: My mom had to file for bankruptcy during the divorce. My dad had, uh, his own company, like, uh, construction company. So it was, uh, very up and down, depending on like. [00:48:12] Mikaela: Season and everything. [00:48:14] Ramit: What do you remember your mom saying about money as she was going through that financial hardship. [00:48:18] Mikaela: I mean, she was always stressed, like there, and there was never a positive conversation about money because it was always paying something off, paying bills. Like after my parents got divorced, I can only think of one or two times in her life. [00:48:32] Mikaela: She never actually took a vacation. So that's, I think another reason why I look at our life and I essentially, especially now that she's sick, like I don't wanna look at myself at 65 and think I never traveled and then I'm too sick to actually do these things. [00:48:53] Ramit: When you say she never took a vacation, was that a sore point with her? [00:49:00] Mikaela: Yeah, I mean she, especially after getting sick, she has definitely said like she regrets wasting time and that she never. Did anything like fun for herself and financially, I don't even know if she budgeted to even allow herself to do those things. [00:49:20] Ramit: Do you think that if she had had a little bit more money that she would've traveled? [00:49:24] Mikaela: No. [00:49:24] Ramit: Yeah, I agree. Why do you think that is? What would she have said? [00:49:28] Mikaela: She would've spent it on something else. They also had addictions and stuff, so both my parents, so [00:49:34] Ramit: ah, [00:49:34] Mikaela: they spent frivolously on things that I don't think were needed, so. [00:49:39] Ramit: Hmm. It's quite interesting. [00:49:42] Mikaela: Mm-hmm. [00:49:42] Ramit: What kind of messages, looking back, did you take away from your upbringing with money? [00:49:49] Mikaela: I mean, if I want something, I have to do it myself. Okay. Like, I had to get a job at a young age. I was 14, my first job working under the table and then had to, I, my ultimatum was, I played softball growing up and it was. It's either choose softball or get a job. So I stopped softball and I got a job, uh, to pay for car insurance, gas, like going to the movies or something as, and then it trickled into, um, I lived with my dad mostly full-time when they divorced, but it turned into my dad saying, well, can you pay for your cell phone bill? [00:50:32] Mikaela: Can you pay for cable? And it's, so I moved out early 'cause I'm like, well if I'm gonna pay for these things, I'll pay for myself and be independent. [00:50:41] Ramit: Is your dad still with us? [00:50:43] Mikaela: No, he passed away six years ago. How was [00:50:46] Ramit: he with money? [00:50:48] Mikaela: I would say a little better than my mom. But it was essentially, yeah, like as long as he has money to budget, to like pay his bills, the rest of it he is spending on himself. [00:51:01] Mikaela: Essentially like with his friends at the bar, that was his like social, he didn't really care about vacations. It was more so the social aspect of like the neighborhood bar hangout. So yeah. [00:51:12] Ramit: What, what part of the country did you grow up in? [00:51:15] Mikaela: The south? [00:51:16] Ramit: Any siblings? [00:51:17] Mikaela: I had an older brother, but he passed away when I was 19, so almost 11 years ago. [00:51:24] Ramit: I'm sorry to hear that. [00:51:25] Mikaela: Yeah, thanks. Steve. [00:51:27] Ramit: Did your dad's passing and your brother's passing, did that affect the way that you look at life? [00:51:33] Mikaela: Absolutely. There's no way It would've not. [00:51:36] Ramit: Yeah. [00:51:37] Mikaela: So [00:51:37] Ramit: like in, in what ways? If you can share? [00:51:40] Mikaela: Um, my brother passed away when I was, or he was 24, so I was 19. So you're already going through a huge transition anyway. [00:51:48] Mikaela: 'cause you're like. Independent college. Yeah. Like trying to find yourself. So I think it just really shook me. [00:51:58] Ramit: Mm-hmm. [00:51:58] Mikaela: And made me realize that like, life can be short and it can end instantly. So that kind of freaked me out. But I do remember my father saying when my brother passed away, that maturity wise, I, he said like, I grew up very fast that year. [00:52:16] Mikaela: Like he could tell how fast I grew up. [00:52:19] Ramit: When you think back and when you were younger, when you were a little girl, do you remember having fun? [00:52:25] Mikaela: Um, I think of more of the negative, more than the positive. I feel like a lot of the positive, I can't remember because you think of the negative, like it alwa always more. [00:52:37] Ramit: Yeah. [00:52:38] Mikaela: Yes. There's like bigger moments, like a Christmas or something here and there, but for the most part it was very stressful. [00:52:46] Ramit: Right. [00:52:47] Mikaela: I felt like I had to be the parent to my parents more so I was doing that from a young age and still continuing to this day, I feel like I am more of a parent than the parent. [00:53:03] Mikaela: So [00:53:04] Ramit: you've heard the phrase parentification. [00:53:06] Mikaela: Mm-hmm. [00:53:07] Ramit: And I think about it like as a young girl and then as somebody who watched their parents get divorced when you were young. Mom struggles, get older, gotta get a job or play the sport you love. And then continuing on to your brother tragically passing away. [00:53:26] Ramit: Your dad passing away. Now your mom is sick and you are the primary caretaker. [00:53:30] Mikaela: Mm-hmm. [00:53:30] Ramit: That's pretty serious. [00:53:33] Mikaela: Mm-hmm. [00:53:33] Ramit: It's, it's quite striking that when I ask, do you remember having fun? You essentially said, not really. [00:53:42] Mikaela: Yeah. Because I just was always, I always had a goal in mind to like, I had to get this done. [00:53:50] Mikaela: Like, [00:53:51] Ramit: yeah. [00:53:51] Mikaela: I mean, it was on me and I'm fine with that and I am the person I am today because of that, which is good. But yeah, it's like, oh, I want to go to college. I need to do it myself. I need to work full time. The whole time, like there was no, I remember in college, like people going, even Dave, like went to a different country to study abroad for a semester. [00:54:17] Mikaela: There was, that was never an option. It was like, I can't afford that. I can't, like I have to do this and this to have the life that I want. And it was always just like, yeah, making sure that I'm good and in a place. 'cause if it's not me, who's gonna do it? [00:54:35] Ramit: And now that you have reached the life that you never even dreamed of. [00:54:40] Mikaela: Yeah. [00:54:41] Ramit: Do you have fun now? [00:54:43] Mikaela: It's sad 'cause it's like I'm having more fun than I imagined I would, I guess. [00:54:48] Ramit: Mm-hmm. [00:54:49] Mikaela: At the time. Mm-hmm. But I know now that I am in a steady place. We're at this income we have been for a few years. It's increasing, if anything, which is fantastic. But now I, it's like, okay, well what's next? [00:55:05] Mikaela: Like, that's, yeah. [00:55:07] Ramit: Right. [00:55:08] Mikaela: And then I even feel guilty a little bit that I'm not happy with being at this place because I, I am, I'm so happy that we aren't struggling, but it's like there's gotta be more than just being happy that we're not struggling. [00:55:24] Ramit: Yeah. She's right. There is more, Mikayla did what you're supposed to, she watched her family struggle. [00:55:32] Ramit: She took notes, she made sure it would never happen to her. But in the same way that a child grows up, their voice changes their height, everything, it becomes immediately obvious when their clothes don't fit anymore. But with money, there is no such signal. You can go from struggling to having a lot of money, but there is no direct signal that you have made it. [00:55:59] Ramit: How many couples have come on this podcast and they have tons of money in an investment count or savings account, and the couples that I speak to still cannot internalize the idea that they're doing okay. Here we see her money. Psychology still stuck in a scarcity mindset. Remember those scarcity instincts worked for her in the beginning. [00:56:23] Ramit: They got her to where she is today, but those very instincts are now harming her. Is what we are here to change here. Now we fast forward several years, quite a few similarities here. What do you take away from those? [00:56:39] Mikaela: I mean, yeah, it makes a lot of sense as to why I am the way I am, but then it's a little upsetting 'cause it's like, well, I don't want to always be like that. [00:56:51] Mikaela: Like I don't want to just be serious and always thinking about like, keeping the family, like household running and all of the checklists, just the day-to-day or our children. Like, I want to experience life as well. One of the big trips that we want to take, um, that both of us has talked about and just never implemented as like a Euro trip. [00:57:13] Ramit: Mm-hmm. [00:57:13] Mikaela: At least a week, two weeks, Europe traveling, seeing things. [00:57:18] Ramit: What else? [00:57:19] Mikaela: That's the hard part. I like, we, I feel like I'm still trying to envision what that could be. Mm-hmm. At one point, Dave and I were like, do we buy a second property? Like, do we buy a vacation home? And the more I thought about it, I was like, no, I don't think that's really what I want my rich life to be. [00:57:39] Mikaela: It's great that, like, we have brought it up a couple times now, but I don't think a second property would make me like, that's not, [00:57:47] Ramit: why are we talking about what you don't want? [00:57:49] Mikaela: I, I don't know. I feel like my whole life that's, I've been more so negative mindset than the positive. There's things that I won't buy for myself, like let's say a massage. [00:58:02] Mikaela: I like getting them as gifts because buying them for myself, I'm like, I don't need that. But knowing we have the income, why can't I get a massage once a month or once every two months instead of like once a year? I feel like it's almost uncomfortable for me to try to overarch and get into a new mindset of a rich life. [00:58:25] Ramit: I'm glad to hear you. Expressing. See, what you did was quite typical, which is people who struggle to spend money, when I ask them what they wanna do, they gimme very lofty answers. I wanna travel to Europe for one to two weeks. I mean, if you haven't traveled for six years and you don't take any trips, that's, that's almost like me saying I haven't worked out in 20 years. [00:58:48] Ramit: I want to play in the NFL. It is so unlikely Yeah. That it's just another way of deferring my dream. [00:58:55] Mikaela: Yeah. [00:58:56] Ramit: What would be much more reasonable would say, you know, I, I'd like to be able to go to the gym like once a week [00:59:02] Mikaela: Yeah. [00:59:02] Ramit: Or one ounce. Yeah. So I, I can get you to Europe. If you wanna go to Europe, I will help you do it. [00:59:07] Ramit: No problem. [00:59:08] Dave: Okay. [00:59:09] Ramit: But sometimes it's as simple as I wanna go to lunch and be able to order appetizers and, and it seems so silly to say mm-hmm. I wanna get a massage for myself. We make 278,000 to $340,000. [00:59:24] Dave: Okay. [00:59:26] Ramit: But it's that N word. Oh god, I'm gonna get canceled again. It's the N word You said need? [00:59:33] Dave: Mm-hmm. [00:59:33] Ramit: Do I need it? If I can offer one piece of directive advice, it would be, in my opinion, that word should be banned from your household. [00:59:43] Mikaela: Probably. Yeah. [00:59:44] Ramit: It should be banned. And I would make it a whole theatrical thing. I would take a piece of paper, I would write need, Dave would videotape it. Well, Dave, you say it too. [00:59:52] Ramit: So both of you should take it. Let your kids videotape you and you both write need, and you put it over the fire and you rip it apart and throw it in the fire and say like, that was our past chapter where we had to ask, do we need it? When you're making $35,000 a year, or you have $250,000 of student loan debt, that is a question you need to ask. [01:00:14] Ramit: Do we need this? But when you make 10 times that. It's actually causing you to play small. [01:00:22] Mikaela: Yeah. I want to get up that mindset for sure. [01:00:25] Ramit: Okay. Thank you for sharing that. I am really, I really appreciate it. And I'm also sorry for a lot of the things that you have gone through, Dave. Can we talk about your upbringing with money? [01:00:38] Ramit: What was your family socioeconomically, how would you describe them? [01:00:42] Dave: Middle class. [01:00:43] Ramit: Middle class. Alright. And uh, did you grow up with mom and dad? [01:00:46] Dave: Yep. Mom and dad. [01:00:47] Ramit: And did one work, or both? Work? [01:00:50] Dave: Both worked. [01:00:51] Ramit: If you go back in time when you were young, what do you remember your family saying about money? [01:00:56] Dave: Early days there was a deep conversation about money. [01:00:59] Dave: I don't think I paid attention to it much, but there also wasn't any hesitation around it. I think the earliest thing that I've kind of caught from them is I think they were talking about money and I grabbed a bunch of stuffed animals and went around the neighborhood trying to sell 'em, you know, $5 to the neighbors. [01:01:14] Dave: Oh, I came home and they made me go back, give all the money, I think get my toy, get my toys and stuffed animals. But there wasn't, uh, there wasn't a deep scarcity. [01:01:23] Ramit: What age did you get your first job? I'm guessing young. [01:01:26] Dave: Yeah. Uh, first job was I think like 10 years old. Yeah. Maybe, maybe earlier than that. [01:01:31] Dave: Doing newspaper out would just kind of hoard the cash, trying to milk it as long as I can. Wouldn't really go out spending it, but just started getting early days. [01:01:39] Ramit: Well, what does a high school kid spend their money on anyway? [01:01:42] Dave: Yeah. Well, and I wasn't much like a soda drinker or candy, that kind of stuff. [01:01:45] Dave: Like the normal, normal stuff. I'd get a new bike. Like that was the biggest splurge that I can remember putting the money to. [01:01:51] Ramit: So what'd you do with the money? Did you save it, invest It [01:01:54] Dave: saved quite a bit of it. A lot of it. The cash sat in a shoebox, uh, for quite a long time. The rest of it just went into a savings account. [01:02:04] Ramit: Whenever I hear about someone stashing cash in a shoebox. It tells me a lot about how they grew up. There's a scarcity mindset that makes people feel money needs to be held tightly where you can see it or even physically touch it. Typically, people who grew up with these beliefs either grew up poor or they grew up with parents from a different country. [01:02:28] Ramit: Dave and McKayla came in with that instinct, and what's interesting is that when they found each other, this scarcity instinct doubled. They're like a supercharged scarcity couple, one plus one equals 10 on the scarcity scale, and they've spent years actually building impressive wealth, but neither of them has let themselves enjoy the money. [01:02:52] Ramit: They're still operating with that same mental script. Most people never change their financial scripts. They just keep going and their account changes, but it has no correlation to how they think or feel about money. The question now is not just, Hey, do you have enough? They have more than enough. It's obvious. [01:03:11] Ramit: The question is whether they can give themselves permission to truly believe it. Until now. What has your money identity as a couple been? [01:03:20] Mikaela: I'd say save as much as possible, like for retirement. [01:03:25] Dave: Okay, [01:03:25] Ramit: Dave? [01:03:26] Dave: Yeah. Long-term planning and save. Save. [01:03:30] Ramit: Did you ever think about when you would stop? [01:03:32] Dave: Yes. Yes. What [01:03:34] Mikaela: really? [01:03:36] Dave: I've thought about it, but never execute on it. [01:03:38] Ramit: Aren't you the guy who has $102,000 in your savings account and you're still contributing $1,500 a month to that emergency fund? [01:03:44] Dave: Yeah. [01:03:45] Ramit: Y'all are rich. Do you know that? [01:03:47] Dave: Yeah. [01:03:47] Mikaela: Yes. [01:03:48] Ramit: Wow. Okay, cool. That's cool. Even though it's a little painful for you to say, I love that you both said it. [01:03:53] Ramit: That's great. Yes. I'm just telling you that as you change, as you start to make more, as you change socioeconomically, your attitudes and behaviors often shift. And that's not a bad thing. In fact, it's quite counterculture. 'cause in America we really regale those who are like, they stayed true to their roots. [01:04:15] Ramit: They didn't get too big for their britches. You, we've all heard these phrases. The idea that your identity would change, of course your identity will change. Your identity changes when you become a parent. Your identity changes with your health as you get older. If you get super fit or the opposite, of course your identity changes. [01:04:33] Ramit: And so wouldn't naturally your identity change as well. You can still retain some of your core values and you can perhaps adapt. Maybe you don't wanna spend three hours looking for a discount deal on a chair or a shirt. Maybe you wanna travel a little bit easier. Mm-hmm. So what do you think about that? [01:04:52] Ramit: Both of you? Kind of smiling and nodding. I'm curious, Dave. [01:04:55] Dave: It's strikingly accurate. [01:04:57] Mikaela: Yeah. I feel like we are in the mindset of like, well if we're gonna spend, we have to get the best deal. And it's like, why are we living, like you said, why are we living in that mentality still when we can afford like the things that we want? [01:05:13] Mikaela: So why are we so hesitant to pull the trigger on that? Like you said, if, if we want to start doing these trips or even smaller things, like Dave always goes on a yearly golf trip and that's something that he really enjoys. And so he's been doing it for like five years now with some of his buddies. They go for a weekend long golf trip and I love that for him. [01:05:38] Mikaela: I don't have a mindset of something that I do for myself like that. And why shouldn't I like find something that I want and not have to second guess the budget or second guess the price on it before just saying, yeah, I'm gonna go for this. [01:05:56] Ramit: Is there a part of life where you're both really confident, like supremely confident, you don't second guess yourself? [01:06:01] Ramit: Michaelaa. [01:06:02] Mikaela: I feel like being a parent, I feel like I am a good parent, so [01:06:07] Ramit: Wow, that's power. I love that. Okay. And Dave? [01:06:11] Dave: Yeah, I would say finances, but also parent and And wait, [01:06:16] Ramit: finances. What do you, what do you mean? You told me you second guess. You didn't tell your wife your income. You're planning bite based on logistics. [01:06:24] Mikaela: I feel like saving for him is more saving. [01:06:28] Ramit: Well, that's actually quite intriguing because in order to get to the next level of personal finance, you're actually gonna need to radically change your relationship with saving. You are actually probably going to be, become a failure at saving. That's really, really hard. [01:06:46] Mikaela: Especially since we've been in this mindset for so many years. [01:06:49] Ramit: Yeah, [01:06:49] Dave: yeah. Even just you saying that the stress kind of mounts of like, oh, that's gonna be. Just different. Not seeing it kind of get socked away, [01:06:56] Ramit: but you're actually going to build something amazing. What would it be for you, Dave? If you're gonna build something amazing in terms of your relationship with money, what would it be? [01:07:05] Dave: If I'm building something amazing in terms of my relationship with money, it's being a better husband and parent in the freedom of finances. [01:07:12] Ramit: Okay, keep going. [01:07:14] Dave: So not worrying, not not limiting the experiences, not limiting date nights, not limiting vacations, not limiting things that, you know, I was blessed enough to experience myself as a kid, not limiting, or kids gimme the opposite. [01:07:29] Ramit: I, I don't wanna hear what it's not gonna be. I wanna hear what it is gonna be. [01:07:33] Dave: It's going to be being proactive in finding things to do with our family. Being proactive in scheduling weekly date nights. Just go to a fun cooking class or go bowling, do something that we used to do as like teens and fun and [01:07:46] Ramit: great. [01:07:47] Ramit: Here's how I would describe it. I want you to start using in. Uh, language that is intentional. So instead of saying, I am not going to, you know, wanna be stressed out by my, I don't care what you do not wanna do, we're taking that out of our vocabulary. We're gonna talk about what we do wanna do. What we do wanna do perhaps is I want to be consistent. [01:08:09] Ramit: We are going to have a date night, every week, every two weeks. And each date night is going to be magical. Now, magical could be, we're gonna get a piece of cheesecake 'cause we both love cheesecake. It could be we're gonna go bowling 'cause we used to do it as kids. It doesn't have to be expensive. Once in a while it can be like, you know, really cool, perhaps a little over the top or extravagant. [01:08:32] Ramit: But each is going to be magical and meaningful. [01:08:35] Dave: Mm-hmm. [01:08:36] Ramit: What do you think [01:08:37] Dave: I'd want you to do? Things that show, um, you know, the people around us that we can have fun, like go to sporting events. [01:08:47] Ramit: Like what can we get specific? [01:08:49] Dave: Yeah. Uh, go to the World Cup would be awesome, I think would be awesome. [01:08:55] Ramit: Okay. What else? [01:08:56] Dave: Love to do a trip. Just the two of us at least once a year. [01:09:01] Ramit: Great. And how about something more mundane? Something more day to day? [01:09:05] Dave: I'd love to change out some of our rooms. [01:09:08] Ramit: Okay. [01:09:08] Dave: Some of the layouts, some of the furnitures actually get to decorating one of our rooms so that we can enjoy living in it versus just being a room that's got stuff in it. [01:09:16] Ramit: Good. I like it. People who have money are decisive. What's the worst that happens? You get a headboard. You don't like, donate it, get another one. I'm not encouraging you to waste, but I'm saying at any system of any sufficient complexity, there's a little bit of waste. It's okay. Mikayla, what do you take away from Dave's responses? [01:09:34] Mikaela: I feel like he wants to do these things, but I feel like he's still a little hesitant. Um, just 'cause there I see where he's trying to come from. [01:09:46] Ramit: In your back of your head, both of you are gonna have a voice. I suggest, or I suspect telling you that's too expensive. We, we gotta start smaller. Like we don't need to do all this crazy stuff. [01:09:55] Ramit: Nobody, especially me, is telling you you have to go and drop $150,000 on some crazy trip. [01:10:01] Dave: I'm not saying [01:10:02] Ramit: that. [01:10:02] Mikaela: Yeah. [01:10:03] Ramit: Bowling sounds amazing. I love bowling. Take money out of the first part of your thought process. [01:10:12] Mikaela: No, that makes perfect sense. Number one should be we want to do this. [01:10:16] Ramit: Ooh, [01:10:17] Mikaela: this is fun. And that's, yeah. [01:10:19] Mikaela: And number two, it's like childcare or are they coming? And then number three is money. Like it's not, yeah. We need to swap out these. [01:10:27] Ramit: Number five, number eight is money. [01:10:30] Mikaela: Yeah. [01:10:30] Ramit: Okay. Um, I would like to talk about your rich life over the next three years. I'd like to do small and I'd like to do big. So I'd love to start off with your home day-to-day life. [01:10:48] Ramit: What would a rich life look like? [01:10:51] Mikaela: One thing I can think about is cleaning. Like, uh, last year right before we had the baby, I did a deep clean, like hired someone outside and it was amazing. We realized that with my bonus for the year, that I could essentially pay once a month for a cleaner. So we've been doing that the last year, which has been really nice. [01:11:15] Mikaela: Maybe upping that to not just once a month, but biweekly. [01:11:20] Ramit: I love that. Can, can I give you a little suggestion on this when we're talking about our vision and our rich life, let's start off by saying something like, imagine, I love that phrase. Imagine I wake up every Monday morning and our house is clean. [01:11:37] Mikaela: Mm-hmm. [01:11:38] Ramit: And what that does is allow us to feel it, see it, smell it. Notice that it keeps us out of the weeds. What else? [01:11:46] Dave: I would love to have a proper office. This room slash bedroom slash stockpile of stuff room that I'm in every day is aggravating. Frustrating. I'd love to. What do you [01:12:00] Ramit: want in this office? [01:12:01] Dave: I'd love to have a better background. I'd love to have better lighting set up. Uh, I'd love to have a different chair that's better for me. I'd just love to have it feel like an actual office and utilize in a way that we are gonna utilize it day to day versus the once or twice a year that somebody comes to visit and stay with us. [01:12:18] Ramit: Great. Back to you Mikayla. The [01:12:20] Mikaela: closet has been on our to-do list for a couple years now. We just haven't gotten to it yet, but just like organization, get it to a place 'cause it's very outdated and we have not touched it since. It's just chaos in there. So it would, [01:12:36] Ramit: what would it feel? I'm sorry. I'm getting lost in all the negative stuff. [01:12:39] Ramit: Can you get me lost in the positive [01:12:40] Mikaela: Imagine. Very organized closet with shelving and just clean, stress-free. Everything has a spot for it. [01:12:53] Ramit: How would you feel every morning when you opened up the closet? [01:12:56] Mikaela: I can find things easily and I'm in and out. [01:13:01] Ramit: Yes. Great example. So one of the ways that you have in an interlocking way, uh, created a strategy to not spend any money is that you focus on the negative. [01:13:12] Ramit: And I don't know if you notice, but people don't like to hear about the negative or talk about the negative. It just sucks. So you just go, ah, let's not even talk about this closet. It's been two years. You haven't done a thing. You could have that thing knocked out in seven days, but part of it is you actually have to start talking about the things you want unapologetically. [01:13:31] Ramit: I want a closet, I want a clean house. We both work really hard and we make a lot of money. I want a clean house. I'm not gonna apologize for it. And you need to talk about what it would feel like. What would it mean to you? It would allow me to wake up on Monday and actually be ready to go to work. That means I'm not kicking freaking Legos outta the way. [01:13:52] Ramit: Having a closet would mean I could finally see what I have to wear. That would feel so good. It would be the first thing that I do in the morning and it would set me up for the rest of the day. Isn't there a difference between those two examples? Negative and positive. [01:14:07] Mikaela: Yeah, definitely. [01:14:09] Ramit: Good strategy for you to implement both of you. [01:14:10] Ramit: Gimme another one. [01:14:11] Mikaela: I'm big on my coffee. [01:14:13] Ramit: Mm-hmm. [01:14:13] Mikaela: I want to get a new coffee maker that works properly. [01:14:17] Ramit: Like what kind of coffee maker? [01:14:19] Mikaela: Uh, right now we have a ninja, which is nice, but maybe not, I don't need an espresso machine or anything. Okay. But just like another elevated ninja or something along those lines. [01:14:30] Ramit: And like what kind of coffee beans do you get? [01:14:33] Mikaela: Uh, we just started. Buying a nicer brand of coffee completely and have noticed the difference. So I think now we're stuck in our ways of buying nicer, which is a good thing. [01:14:44] Ramit: Yeah. Great. Can we shift to bigger ideas of a rich life? Mm-hmm. You mentioned travel. [01:14:50] Mikaela: Yeah. [01:14:51] Ramit: So first I'd like to understand this Euro trip. [01:14:53] Mikaela: I've never been out of the us other than our honeymoon. So at, I would say probably at least a week and a half, two weeks. Um, we've talked about certain countries, but I'm open to [01:15:06] Ramit: which, let's get specific. [01:15:08] Mikaela: Yeah. Uh, we talked about Spain, definitely Portugal, Italy. [01:15:14] Ramit: And [01:15:15] Mikaela: I am big on historical artifacts and stuff, so I would love to see some older churches or, um, different historic sites. Um. Spain has great wine. We love wine, so I would love to do a wine tour. Those are a couple of mine. [01:15:34] Ramit: I love that sounds amazing. Uh, Dave, you wanna add anything? [01:15:38] Dave: Yeah, food. Uh, we both enjoy food, probably more so than going out and staying out and partying. [01:15:44] Dave: Uh, but waking up in the morning, having a, you know, good breakfast and, and sitting and relaxing to enjoy the breakfast. Good coffee, Spanish coffee, some croquettes or some little foods to kind of pick at for breakfast. Uh, good lunch. I'd love to go to a, like a vineyard, do a lunch, and then a vineyard somewhere to explore. [01:16:02] Dave: Um, but I think the food, finding a place centralized around a food we wanna try, whether it's a local, you know, tradition, style, uh, for that region. Okay. And maybe something specific for, you know, in, in Portugal. [01:16:17] Ramit: Is this, is this the two of you or your kids as well? [01:16:19] Mikaela: I am open for either, if it's two weeks, there's realistically no way we can go without them. [01:16:25] Ramit: Mm-hmm. [01:16:25] Mikaela: Um, but we have talked about bringing them on bigger vacations like Europe. [01:16:30] Ramit: Well, could you bring anyone else with you to help with the kids? [01:16:33] Mikaela: We could, but then I almost am like, well, I don't want it to be focused on the, like, I want it to be focused on our centralized family, but we could potentially invite my father-in-law since he is retired and then his girlfriend. [01:16:49] Ramit: I see. You want to have time for, for you four. [01:16:53] Mikaela: Mm-hmm. [01:16:55] Ramit: But there's also something to be said for, Hey, we also want some time as adults, like the two of us. Yeah. Okay. So how do you reconcile all that? How do you make that work? [01:17:05] Dave: Right now everything's focused around the kids. But for a vacation it would be planning two days where we don't have the kids. [01:17:13] Dave: We get to do some exploration of historical sites. We get to Who has them? [01:17:17] Ramit: Your dad? [01:17:18] Dave: Yeah. [01:17:19] Mikaela: We could invite his dad and his dad's girlfriend maybe for a portion of the trip. [01:17:24] Ramit: Nice. [01:17:24] Mikaela: Like the last four days and see if they could take them for a full day. And even if money was an issue that they didn't wanna spend. [01:17:34] Mikaela: 'cause they have several trips coming up in the next year. Maybe we, that's the way we get them to want to come is, Hey, we'll pay for your airfare and hotel. [01:17:44] Ramit: Great. Love it. We're getting creative now. Keep going. [01:17:48] Mikaela: If we are bringing the kids, I would also like to focus on things that would be kid friendly that they might enjoy, like parks and stuff. [01:17:56] Mikaela: They're huge on parks, finding parks and outdoor activities that they would enjoy. [01:18:00] Ramit: Mm-hmm. How are you gonna find all this stuff? [01:18:02] Dave: Yeah, I'm, as you're asking again though, travel agent, I don't think that's where I want to spend the money versus putting it to other experiences on the trip by using something like chat GBT or like a thousand places to visit before you die. [01:18:15] Dave: That it's localized to Spain, Portugal, Italy, those kind of pieces to build that itinerary. Okay. So our planning is less stressful, less optionality, so it's less frustrating for McKayla to have to pick through a variety of options. [01:18:26] Ramit: Dave, how much does a travel agent cost? [01:18:28] Dave: I have no idea. [01:18:29] Ramit: They cost zero. $0. [01:18:33] Ramit: They make their money from commissions through the hotel and through excursions. I'm not saying you have to use a travel agent, that's up to you. I can tell you whether or not it would be a good fit, but the fact that you're already closing doors. It's quite revealing. I'm trying to actually get you to expand and gimme more ideas. [01:18:52] Ramit: So here's how I would think about a trip at your income and net worth level. And with the constraints you have over young children, you want one-on-one time, but if you're going for like 10 days, they have to come one way or another. One, you can just go for a short amount of time, the two of you. So literally you go for four days, find somebody to take care of the kids, make it so easy for them, and you all are on your own, and at least you just have that time for the two of you. [01:19:24] Ramit: And if you go, Hey, we'd love to do that, but I think Europe for four days would be a little tight. Maybe you take a two day trip for just the two of you somewhere close by in the us. Just do that. Get your feet wet, and then you can decide about Europe later. Okay, that's option one. Another option. I love what you said about bringing your dad, bring him. [01:19:42] Ramit: Maybe he wants to come already happy, you're happy to pay for the flights and all that stuff. Great. And he can overlap. So maybe you take the kids for a couple of days. First, he then comes, has 'em for a couple of days, and then all of you are together for the last day or so, right? You really craft that emotional experience. [01:19:59] Ramit: What do we want to feel? Yeah, we wanna experience Spain with our kids. They're our kids. We love them, and then we wanna hand them over for a couple of days so we can go do something cool. Beautiful. Um, you could think about your friends and or family. Maybe there are other folks who would love to come and they're perfectly happy to come for 3, 4, 5, 6 days. [01:20:20] Ramit: And you're like, I'll pay for all your stuff. And you, you get like one day completely on your own, but we're paying for everything. They would love it. So think broadly. It's not just dad. There's a lot of people we have in our network. And then finally, there are at your income level, there are travel nannies. [01:20:35] Ramit: There are actually people who can come with you. Either from here or you can hire them there and you can find them. Now, that involves a lot of trust and things like that, but I'm just opening up the possibilities for you. How does that strike you? I'm not asking for you to make a decision, I'm just saying how does hearing those options hit you, Mikayla? [01:20:54] Mikaela: I think it's more options than I ever thought were possible. Um, especially the travel nanny. I never would've even, I know I've heard of it, I've seen it done before, but I've never thought of it for ourselves. I like the option, like, 'cause I love spending time with my in-laws. It's not, it's not me not wanting to spend time with them, but I do like the option of, Hey, we would love to experience this place with you that you guys also haven't been to. [01:21:25] Mikaela: And we're open to like all expenses paid for your end. We just want your time. [01:21:32] Ramit: Very generous. Yeah. I hope that as we're talking about this, you're actually getting more excited. Yeah. Because you go, oh my God. All these things that seem like insurmountable. There are a lot of solutions we can have. Mm-hmm. [01:21:43] Ramit: It's just up to us to decide if we want to do this. Then the question's, just the details. Yeah. How long, who do we wanna take? All that stuff. [01:21:51] Mikaela: Yeah. Yep. [01:21:52] Ramit: How much do you think a trip like this would cost? Ballpark? I'm not asking you to even be completely accurate, but just ballpark. [01:21:59] Mikaela: 10 to 12 K. I dunno, [01:22:02] Ramit: this is two weeks. [01:22:03] Mikaela: Yeah. 14, 15 [01:22:05] Dave: fifteen's fine with me. I would've said 12, but fifteen's fine with me. [01:22:08] Ramit: Okay, cool. Look, I don't know the answer 'cause it depends on what you wanna do, where you wanna stay. Yeah. How you wanna fly, all those things, but [01:22:14] Mikaela: mm-hmm. [01:22:15] Ramit: What if it was 20 5K? [01:22:16] Mikaela: I feel like as long as we get the experiences and do things that we want to do and make it fun, I'm fine spending that money. [01:22:25] Dave: It's, it's high in my head, but I'm also looking at it as not a, not scrutinizing the budget and saying, we have to do this. I, I actually see this as we have to do this. We're on here for a reason. We talked to each other for a reason. We already made a plan, even without coming on here, that we were gonna do an international trip. [01:22:42] Dave: Now it's a stop shutting of the doors. There's so many more options we hadn't thought about going into it. 25 is the number. 25 is the number. Put the money to it. [01:22:48] Ramit: Damn, I think you guys are ready to, to start using your money for a rich life. I'm very impressed with both of your answers. That's really impressive, especially for the two of you. [01:22:59] Ramit: I want to recognize that because that has been how you have been living for a long time, and so for you to be able to do that with this example, which is a big one, is really, really impressive. Can we go to your numbers? Mm-hmm. Your CSP. Can we make some changes to make these things inevitable? Mm-hmm. Are you down for that? [01:23:24] Dave: Yeah. Yeah. [01:23:25] Ramit: Okay, cool. So here we have your fixed costs at 60%. We have your investments at 17%. You're investing quite a bit, plus pre-tax. So almost 6,000 bucks a month approximately, which is extremely impressive. Your savings are at 13%. If you were to stop saving right now, I'm not saying you have to, it's your money, not mine. [01:23:52] Ramit: But if you were to just turn off the savings that go every month, how would you feel about it, Dave? [01:24:00] Dave: I'd wonder where it's going, but as long as there's a plan for it, I'd be okay with it. [01:24:05] Ramit: What if there's not a plan? [01:24:06] Dave: I'm uncomfortable with the amount of money we have in savings. [01:24:09] Ramit: You're uncomfortable with it because you don't think you're getting maximum return on that money. [01:24:13] Ramit: This is the wrong way to think about it. Again, I'm trying to systematically deconstruct the way that you think about money. I have a lot of money in savings. Okay. I like it because it allows me to sleep well at night. If something happens, I'm good. Okay. Am I losing potential return or yield? Yeah, that's the point. [01:24:28] Ramit: It's supposed to be liquid. It's supposed to be there in case of emergency. You know when people were going through COVID early on, they had elderly parents, things like that. They were themselves immunocompromised and they would message me all the time. I have this emergency fund, but I don't know if I should use it to stay home from work. [01:24:46] Ramit: I'm like, it is literally the defining emergency of our life and you are so concerned that you won't even use it to save your own life or your mom or dad's life. That's when you know personal finance has gone very, very wrong. And although we are not talking about life or death, we are talking about serious health concerns and we are talking about building a healthy relationship with money. [01:25:10] Ramit: So the fact that you are. Concerned you have too much in savings, but only because of yield really shows how trapped you are by this view that I need to be optimizing all the time. What would you like to do about your CSP to make these things you talked about inevitable? [01:25:30] Mikaela: I feel like the only place to really take out is stop allocating so much to investing every month. [01:25:37] Ramit: Okay. [01:25:37] Mikaela: And start putting it into a specified vacation fund. [01:25:41] Ramit: Alright, let's do it. So vacations right now is at zero. Yeah. No surprise you have not taken a vacation a long time. It all makes perfect sense. Let's change it. How much you wanna put in vacations, Mikayla? [01:25:50] Mikaela: Honestly, this might be a big jump, but since we're putting 1500 into savings every month, can we do at least a thousand a month? [01:26:00] Ramit: Sure. [01:26:01] Dave: 1500 I would say. Let's do 1500. [01:26:04] Ramit: Wow. Nice God, this is so cool. [01:26:07] Mikaela: Next year. I would love to not pull from our actual savings and like we do it. We do it now. [01:26:16] Ramit: Okay guys, so I just took the 1500, I zeroed it out for your emergency fund and I switched it over to your vacation. Okay? You have 1500 bucks a month going towards your vacation. [01:26:24] Ramit: Well done. That's awesome. So your vacation is gonna happen. When do you know? [01:26:30] Mikaela: Let's say like end of summer next year before our oldest goes to kindergarten. [01:26:35] Dave: Within the next two years. Yeah. [01:26:36] Ramit: Here, lemme just tell you straight. When I'm rich and I, I don't wait. No way. I don't say like two years, five years, no way. [01:26:44] Ramit: When, and we, you are in a big rush. Both of you have [01:26:47] Mikaela: Yeah. [01:26:48] Ramit: Health issues and all these things in your family. Why are you waiting? [01:26:51] Mikaela: Yes. Say early summer, next year before, because our oldest goes to kindergarten and then we don't have to worry about school. [01:26:58] Ramit: Beautiful. Six months. I think you need to put a little bit more than 1500 in, or you will just draw some out of your savings, which is totally fine. [01:27:06] Ramit: Yeah. You have way more than you need in savings. You're investing 2000 bucks a month. Why don't we drop that to 1500? How about that? Mm-hmm. And then raise this to 2000. We're still good. Same thing. [01:27:16] Mikaela: Yeah. [01:27:17] Ramit: I honestly think you could go way down personally. I'm just gonna, just as an example, I'm, I'm hell, I'll go to 500 over here. [01:27:24] Ramit: I would love for you to make those plans together. Mm-hmm. And it's not a question of are we going, we're going, we are a decisive couple. We have millions. We are gonna create these memories. So you've got the trip, you got the things in your home that you talked about. Fantastic. What else? [01:27:46] Dave: Uh, date night, like [01:27:47] Ramit: Yeah. [01:27:48] Mikaela: Yeah. [01:27:49] Dave: Date night every other week. And allocate 300 bucks for that. [01:27:54] Ramit: Are you guys actually spending this guilt free spending money right now? [01:27:57] Dave: It just kinda goes to like Target and Amazon. And [01:28:00] Ramit: that's not guilt free, that's just, [01:28:01] Dave: there's not really a guilt-free spending category because we [01:28:03] Ramit: don't Yeah, no kidding. [01:28:04] Ramit: That's why we're talking. I actually think you should just commit to using the $1,400 a month first [01:28:11] Mikaela: on ourselves and not exactly store stuff that we need. Not diapers, [01:28:17] Ramit: cleaning. Yeah, diapers don't count either. Cleaning person, that would be date night, every other week. How much is your date? Night? [01:28:24] Mikaela: Two 50. [01:28:24] Mikaela: Just 'cause that's sitter included. [01:28:27] Ramit: Yeah. Great. You gotta include the sitter. How much does a babysitter cost? [01:28:30] Mikaela: 20 an hour. [01:28:32] Ramit: So that's like 60 bucks or something like that? [01:28:34] Mikaela: Yeah, like 80. [01:28:35] Ramit: 80 bucks. Okay, great. Perfect. So yeah, that sounds very reasonable. There you go. So you got that. Is there something about, um, a little self-care? [01:28:44] Mikaela: I'll say a massage. Doesn't have to be, [01:28:47] Ramit: don't tell me what, it doesn't have to be. Hey everybody. In my dream, it doesn't even have to be good. It doesn't even have to be a human being. A raccoon [01:28:54] Dave: can push on my back. [01:28:56] Ramit: I'm great. I'm so happy. I just want something to touch my back. We're not doing that. [01:29:00] Mikaela: No. Okay. [01:29:01] Mikaela: Massage monthly. [01:29:03] Ramit: Thank you. [01:29:04] Mikaela: As long as I get a cleaner every other week at week. [01:29:07] Ramit: Great. You could do it all. [01:29:09] Mikaela: Yeah. [01:29:10] Ramit: All of this. This is not hard. You actually can do all of these things. And then Dave, what about for you? Is there something around self-care or something you enjoy doing? Oh God. Not this man thing again. [01:29:23] Ramit: Oh, no. I just like to sit at home with my no new office. [01:29:26] Dave: I enjoy golfing. Can't go every time. So hobbies of like playing a sport, which I do, uh, weekly, um, or golfing. [01:29:34] Ramit: Okay. I love it already with like minor, just shifting money from here to there. We've already funded the vacation. It is now an inevitability. [01:29:45] Ramit: So you will have many, many thousands of dollars for that vacation. And honestly, if you need to pull out an extra 5K from your savings, go for it. You have so much in there, it's fine. Um, you're still continuing to invest aggressively, which is very, very impressive. Do y'all know how much you're gonna have at retirement? [01:30:02] Dave: 4 million. [01:30:03] Ramit: Oh my god. This is gonna be the best moment of my life. Mikayla, how much do you think you're gonna have at retirement? [01:30:10] Mikaela: I didn't even think as much as what Dave was saying. 2.5, maybe two. [01:30:15] Ramit: So y'all have been saving aggressively for years and years without calculating how much you're gonna have? [01:30:21] Dave: Not in a simplified manner, no. [01:30:23] Mikaela: It was more so hitting the milestones of like paying the student loans off. Oh, we did that and then trying to hit Can I interrupt X number? [01:30:31] Ramit: Can I interrupt you? As it currently stands, you will have $18.2 million when you retire. [01:30:39] Mikaela: Yeah, I. I honestly don't, I don't want that. I want to use it throughout my life and not just hoard it at the end. [01:30:48] Mikaela: What am I gonna do with 18 million? [01:30:50] Ramit: I want you to process it for a second. [01:30:54] Mikaela: I can't. That's, and [01:30:56] Ramit: I, I want you to just listen. Dave is processing it. Dave, what's going through your head right now? I saw you really thinking about what I just said in taking it in. [01:31:07] Dave: Honestly, it's going to come off the wrong way, but embarrassment. [01:31:12] Ramit: Mm-hmm. [01:31:13] Dave: And it's embarrassment of how little we've given to ourselves and those around us in the time that we've had an 18 million in retirement, what are we going to do pay for a cyber body? Like what could we possibly do? I don't think we have a plan to leave. Yeah. A wild legacy for our kids and like Sure. [01:31:36] Dave: Some, some wealth, some generational wealth. Sure. But it's. It's almost like sad and embarrassing to say, why, why haven't we done this? Why haven't we committed to each other in this way? [01:31:47] Ramit: I think that's a really powerful reaction, Dave. I, I really appreciate it. That's not easy to say. It's not easy for anyone, especially for men to admit that's something they have done. [01:31:59] Ramit: Something that you have been in charge a lot of is embarrassing. So I think that takes a lot of courage. I really appreciate that. And Michaela, I noticed that you're tearing up. I'm curious why? [01:32:11] Mikaela: Um, it just kind of goes back to I'm grateful for what we have, but like, I feel like I'm taking it in and realizing like, why am I so stressed about like, the day to day because I shouldn't be, I shouldn't even, like, it makes, it gives me relief too, just knowing like. [01:32:38] Mikaela: Next year when I have to take care of my mom, like it, it's not gonna be stressful. Like why am I giving myself future stresses? [01:32:47] Ramit: Yes. [01:32:47] Mikaela: When the place that we're at right now, like it will all work out. [01:32:54] Ramit: You have more than you'll ever, ever need, ever. [01:32:59] Mikaela: And like I thought I had a rich life now in the like current present, without knowing those numbers. [01:33:06] Ramit: Yes. [01:33:07] Mikaela: Like the things that we could do long term for ourselves, for our children, for family is like, it's, yeah. It's way more than I thought possible at all. So [01:33:24] Ramit: I wanna just make a couple of suggestions now, because as you get to see, you get to have these conversations in a totally elevated way. Number one, you don't have to wait until your mom gets even sicker to move her. [01:33:34] Ramit: There you have the money, throw it. Towards her. [01:33:38] Mikaela: Yeah. [01:33:38] Ramit: There is nothing like being able to take care of your family, especially when you have the money to do it. Don't wait. Be overly generous. You will. As my wife says, she, she always reminds me, how do you wanna have a relationship with your family and your loved ones? [01:33:52] Ramit: So if money's not a concern, which it's not, get the place right now when you're talking about a vacation. Go. Don't wait. Start with a staycation. Have somebody come and take care of your kids. Next time. Take 'em with you. Bring somebody with you or not. It's up to you. Go to a nice theme park or restaurant. [01:34:10] Ramit: Don't think twice the cleaning every week. The closet. Have it done. The office set a deadline. It should be done within X months. Get it done. The Europe trip. Start to dream together. And if you can't plan all this yourself because it's the first time taking a trip in a long time, get some help. There's travel agents who do it for free and or you could pay somebody. [01:34:29] Ramit: There's lots of options. The point is, lean forward in your rich life. Not back. [01:34:35] Mikaela: Yeah. [01:34:36] Ramit: I also wanna point out one last thing, a number that should be incredibly startling to you. If you stopped adding money to your retirement right now, you just went to zero, you took all that money, what is it? Around $6,000 a month and just spent it on freaking dinners and cleaning supplies, whatever. [01:34:57] Ramit: You know how much you would have by the time McKayla, you turned 65. You wanna guess [01:35:01] Mikaela: I'll go with my original number again, like 2.5? [01:35:04] Ramit: No, you would have $9 million. [01:35:08] Mikaela: That's wild. That still also seems like more than what we will ever need, so [01:35:14] Ramit: yes it is. I can tell you from speaking to you, that is more than you will ever need. [01:35:19] Ramit: So the point is, it is now part of your job to learn how to responsibly spend this money responsibly, meaningfully, but simply hoarding it. What do you want? 9 million, 12 million, 18 million, 36 million. None of it matter. It, it's irrelevant. No, I would rather you all set up a charity or start to give to your community. [01:35:43] Ramit: There's so many things you can do, but seeing the surprise on your faces when I told you the number, a number, which by the way, you have been able to find out your entire lives, but because you were looking at the world through lenses of scarcity, it just never occurred to you to look for. And now just taking that off allows you to see the world is crystal clear and you can shape it the way you want it to be. [01:36:08] Dave: Yeah, absolutely. It's, I, we did all this work to set us up for this point to have optionality. [01:36:14] Ramit: Alex crushed it. That's what [01:36:15] Dave: wanna do with it. You crushed, [01:36:16] Ramit: you both crushed it. Like, can we just take a second and a round of applause? Please give yourselves a round of applause for what you accomplished. This is very, very impressive. [01:36:26] Ramit: I do not see this that often. [01:36:28] Mikaela: We are lucky, we are grateful, but we worked our butts off for this, so why don't we appreciate what we have and use it and create these memories. [01:36:37] Ramit: Now, can I ask another question? Considering the fact that you two are wealthy and are going to be incredibly wealthy, how does that affect hearing that your wife feels like she's on autopilot and she's doing everything for everybody else? [01:36:53] Dave: It's demoralizing a bit. It's almost like I've, I've failed in ways of being a, a great husband, a better husband than I could be. Um, one, I think it's, I think it's a recognition, appreciation and also understanding to allow me to step into it. Some of the small things she does in the morning, she's up earlier than I am getting us prepped for the day, and then at night she's, sometimes I'm working late, uh, because of the job and she's also settling the kids, hitting them down. [01:37:23] Dave: What can I do to step into some of that, even if it is not the. It's a true action, but meal prep or if that's, Hey, I already have DoorDash. I already have this taken care of for the night. I'll do dishes. You sit down, enjoy a movie, enjoy a show. [01:37:36] Ramit: Nice, nice, nice. I like this teamwork like, do you see how fun and empowering it can be to use money? [01:37:43] Ramit: And I'm not saying waste it. I'm not saying that you gotta start spending a million dollars a day. That's not gonna happen. It's never gonna happen for the two of you. Never. But you could increase your spend by $5,000 per month and you would still have more money than you ever know what to do with ever in your entire lives and for your kids' lives. [01:38:05] Mikaela: Yeah. [01:38:06] Dave: I found that as we talked about the experience and the experience of the case, like this is an experience of daily life that we've sacrificed ourselves in for so long. [01:38:15] Ramit: Yes. It's like y'all don't have to go to Disneyland to have a magical experience. You can have a magical experience at home every single day. [01:38:23] Mikaela: Mm-hmm. [01:38:24] Ramit: A clean house. Parents who are relaxed. I know you love your kids. I can tell by the way you talk about 'em, but parents who are relaxed, [01:38:31] Mikaela: that's a big one. But yeah, this was even better than I imagined. I feel like we hit on things that we have unconsciously been struggling with for years and now bringing them to the surface. [01:38:45] Mikaela: I feel like there's no other way to go back. It's more so how do we communicate better and work as a team to actually have fun in our life. Yes, like we've worked so hard for this. Now is our time to have fun. Have fun for our children, do things for my mom before things get worse. So it's just like so rewarding to realize that. [01:39:12] Ramit: When I told Dave he was on track to retire with $18.2 million. Did you catch the word he used? He said embarrassed. Embarrassed. Let's talk about that. Embarrassed at how little they had given themselves. Despite having so much I thought that was quite self-aware. Embarrassment iss a very powerful feeling, particularly for a man. [01:39:35] Ramit: Very powerful. Here's what I want you to take away from Mikayla and Dave. Scarcity is so powerful that it will talk you out of leggings without holes. It will talk you out of getting a cleaner or a vacation or an espresso machine. It will convince you that the number in your account is never quite enough and it will do all this so quietly you never think to question it. [01:39:58] Ramit: In fact, it will convince you that you are being responsible, but what got you here won't get you there. What they needed was not a better spreadsheet. To put it very simply. They needed someone to tell them it was okay. They were okay, and they were going to be safe. As for McKayla and Dave, I don't expect them to transform overnight. [01:40:20] Ramit: This is a incredibly difficult, transformational journey to go through from scarcity to abundance. It's really hard to do, but hopefully from going from level 10 scarcity to maybe level nine scarcity, level eight, scarcity to maybe level six scarcity, I do think they're gonna wake up one Monday morning to a clean house dinner, taken care of. [01:40:45] Ramit: Kids are settled, and the two of them finally with a little space to breathe in that moment, my wish is that they look at each other and they think, why did we wait so long? That is when their rich life truly begins [01:41:02] Dave: here. Ramit, uh, following up with the biggest surprise from the conversation, I think it's just how freeing emotionally leading with the vision. [01:41:11] Dave: Really becomes, and how much more fun it is to talk about things rather than starting with the cost and fitting within the confines. Um, whether it's planning our rich life together or even vacations, uh, just the conversations a little bit lighter of a mood overall. Uh, my biggest takeaway is really just leaning into Mikayla's ideas a bit more as well. [01:41:29] Dave: Uh, encourage it to be, you know, a little bit more fun and playful. Keeping Casa as really like a fifth consideration in things. And really, um, I think the biggest takeaway and probably the biggest area of work for me is also being very intentional with guilt-free spending and really respecting that too. [01:41:45] Dave: Um, it's not an area that we've, I, I personally have put a lot of focus on. So the specific changes that I've decided to make and just our household is autopay bills, uh, specifically the mortgage. Uh, just so it's not something we log into every month, just kind of frees the mind and puts us to bigger, better plans. [01:42:03] Dave: Um, I'm sure I'll still be logging in, but at least it's on autopay. Won't have to worry about setting up the next payment every 30 days. Uh, and then really being intentional about trip planning too. So setting aside that budget into a different account and just paying attention to the way that we speak about things, uh, and not using the word need, need, and also not leading with what things aren't. [01:42:26] Dave: Uh, really try to emphasize the vision [01:42:29] Mikaela: after the call. I feel like, uh, something that surprised me was definitely just how much we will end up having in retirement. I just never knew that number. Never thought it would be close to that. I knew that we were aggressively, um, saving in order to retire, so that was just a huge. [01:42:54] Mikaela: Um, exciting surprise, but just, um, shocking the number 'cause I don't feel like we need that much for retirement. And then the biggest takeaway is realizing that we have definitely been kind of working together against ourselves in spending any money. We're so good at budgeting and, um, being conscious of the numbers that we're buying and the numbers on the shelf that it's kind of hindered us spending any money and enjoying the money on anything we want, especially trips. [01:43:34] Mikaela: So, um, that was a big takeaway for me too. Be more conscious about, uh, what we spend. We have definitely talked about planning a vacation, um, the next steps we've told our family, so maybe we can try to invite them to get them to help us watch the kids and then spend the money on getting them over there with us too. [01:43:56] Mikaela: So looking for next year, [01:43:58] Dave: it's been three weeks since we last spoke with you and just wanna share some insights, uh, over the last three weeks that I've kind of noticed, um, McKayla and I, the conversations around anything around money we're quick to point out when we're talking about the negatives. Um, and really trying to make it a positive of, Hey, what do you want? [01:44:16] Dave: And that vision and creative aspect rather than exclusion, uh, or cost focus, um, albeit very hard to change. A lot of things are still very cost conscious for us. Um, but it is is definitely led with a, a bit more of that future vision of what we want things to be like in our life. And I would say that's probably the biggest thing that stuck. [01:44:36] Dave: Stuck with us over the last handful of weeks that I've noticed too. It's just a kind of playful banter we pointed out at each other. Uh, literally we'll point at each other as we're talking about things and say, Hey, you can't say need or can't say certain words. And I think that's really helped kinda refine what we want in our rich life. [01:44:53] Dave: And also planning for vacation too. So look forward to giving you a future follow up. [01:44:58] Mikaela: It's been three weeks since we spoke to Ramit and I feel like we've definitely tried to make some changes in our household, um, including myself. Um, I'm trying not to make the price of something, the first thing I look into on a purchase and the priority. [01:45:16] Mikaela: Um, so it's definitely taking some getting used to, but I feel like I am trying to purchase things that I want not based off of. Am I getting a good deal or not? Um, I also have a deep clean scheduled with the cleaners, and then after that we'll have them be coming more regularly to our house to help me and take that lift off of me. [01:45:40] Mikaela: But thank you again for the conversation. I feel like it was definitely a huge help for us to realize, to just enjoy life and we. Have the money to be able to do the things that we want and we don't have to just focus on saving, saving, saving. So thanks again [01:46:00] Ramit: and I have a very exciting update because six months later, here's what they have to say. [01:46:06] Mikaela: Hey Leigh, we just wanted to let you know that we actually did book the trip that we talked about on your podcast. We ended up going to Spain and we are currently in Valencia. Um, we did 10 days and when, yeah, 10, 12 days. Um, did Madrid, uh, Barcelona, Valencia, and then we'll end back up in Madrid. We did bring our kids, but like you recommended, we did invite some family to help us. [01:46:36] Mikaela: Um. Just coordinate travel and then help let us get some days and dates in and um, dinners in. So that was very nice. Um, but yeah, we've been having a great time, um, [01:46:50] Dave: done almost no museums, but looking at a lot of the architecture, eating food, not worrying about a bill or prices or anything. Uh, the kids have been spoiled with ice cream and churros every day pretty much. [01:47:04] Dave: And coffee, um, coffee for us, it's been, it's been an exciting one. We've got a little bit more planned for the next couple of days. Uh, we've definitely looked back and we'll do a tour guide or something in the, in the future, uh, because I think it was a bit stressful leading up to it. And just kind of the coordination around metro versus taxi and matter of convenience here was, uh, definitely something that created additional stresses that we realized that we. [01:47:30] Dave: Gonna put this on ourselves. So [01:47:32] Mikaela: yeah, [01:47:32] Dave: things a little change, but excited to see a couple of cities and make it happen. So [01:47:37] Mikaela: yes, and we have you to think, because before this was always a what if, like wanting type travel. But now after the podcast, you definitely made us realize like, what are we waiting for? [01:47:50] Mikaela: We have the budget and we were able to have the stream vacation and you've definitely changed our lives and how we think about our budget and just our rich lives and, um, not stressing so much over the money. So thank you again for that. [01:48:08] Dave: Extra nugget for you. We're averaging 19,000 steps a day, so exploring a lot, and it's been awesome. [01:48:15] Ramit: Listen up. If you want my help with your specific money questions. There are only two ways to get it. First, you can apply to be on this podcast at iwt.com/apply. Or second, you can join my money coaching program instantly at iwt.com/money Coaching. In that program, you get access to live virtual events, monthly group coaching calls, live q and ass, and an amazing, huge community of other people like you. [01:48:43] Ramit: Check it out at iwt.com/money coaching.

#worth #1.5M #refuse #buy #pants

27 Cheap Snacks On a Tight Budget That Keep You Full

admin — Thu, 30 Apr 2026 09:28:03 +0000

This post may contain affiliate links that at no additional cost to you, we may earn a small commission. Read the Disclosure Policy for more information.

Last Updated on April 30, 2026 by Katie

When money is tight, snacks can feel like a luxury. They don’t have to be.

The best cheap snacks on a tight budget are healthy snacks that are simple, filling, and easy to keep around for rough days.

That matters even more in 2026, because food-at-home prices are still expected to creep up, and many low-income households are working with less room in the grocery budget while saving money on groceries.

The ideas below are easy snacks to make that cover fruit, vegetables, dairy, grains, beans, nuts, and a few mix-and-match basics, so you can snack without blowing cash between meals.

To save even more, you might like these dirt-cheap meals under $5.

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Key Takeaways

Focus on filling whole foods like popcorn, bananas with peanut butter, hard-boiled eggs, yoghurt, and roasted chickpeas, all costing $0.10 to $0.80 per serving to stay full without spending much.

Stock bulk basics such as oats, rice, beans, peanut butter, and popcorn kernels—they’re versatile for snacks and meals, and store brands keep prices low.

Buy seasonal produce and pair fruits/veggies with dips like hummus or yoghurt for fibre, protein, and crunch on a tight budget.

Batch prep once a week (boil eggs, slice veggies, make energy balls) to avoid waste, impulse buys, and keep grab-and-go snacks ready all month.

Rotate 3-4 favourites to cover nutrition without boredom, proving nutritious snacks are easy and affordable even when money’s tight.

27 Cheap Snacks On a Tight Budget You NEED to Try

Discover 27 nutritious snacks on a tight budget that keep you full without breaking the bank.

1. Popcorn

Popcorn is one of the cheapest whole-grain snacks you can buy, and a bowl looks bigger than it costs.

Air-pop it or make it on the stove, then add salt, chilli powder, or cinnamon.

Rough cost: $0.10 to $0.25 a serving.

2. Bananas and peanut butter

Bananas are easy, filling, and still one of the better fresh fruit buys in the US, with recent national averages around $0.66 per pound.

Eat one plain, or slice it and add peanut butter for more fat and protein.

Rough cost: $0.20 to $0.45.

Learn more about cutting monthly expenses here.

3. Carrots with hummus or dip

Carrots are cheap, crisp vegetables that are easy to portion into bags or containers.

Pair them with hummus for fibre and a little protein, or use ranch or yoghurt dip if that’s what you have.

Rough cost: $0.30 to $0.70.

4. Apples with peanut butter or yoghurt dip

Apples hold up well as fresh fruit, travel well, and help curb sweet cravings.

Slice them into wedges, dip them in peanut butter or yoghurt, or turn them into simple apple nachos with cinnamon.

Rough cost: $0.35 to $0.75.

5. Plain yoghurt or yoghurt with fruit

Yoghurt is one of the better low-cost dairy snacks because it gives you protein and calcium in one cup.

Plain yoghurt is usually cheaper, and fruit or a spoonful of honey fixes the flavour fast.

If you shop at Aldi, these snacks under $1 per serving show how often yoghurt, hummus, nuts, and string cheese make the budget list.

Rough cost: $0.40 to $0.80.

6. Hard-boiled eggs

Hard-boiled eggs are one of the most filling, high-protein snacks for the price, especially when you need protein that lasts longer than chips.

Boil a batch at the start of the week, then grab one with salt or hot sauce.

Rough cost: $0.20 to $0.40.

7. Peanut butter rice cakes

Rice cakes give you crunch, and peanut butter keeps the snack from feeling flimsy.

Add banana slices, cinnamon, or a few sunflower seeds if you want more staying power.

Rough cost: $0.20 to $0.45.

Further reading: 13 things to stop buying to save thousands.

8. Roasted chickpeas

Roasted chickpeas are crisp, salty homemade snacks packed with fibre, and much cheaper than many packaged snack bags.

Start with canned chickpeas, dry them well, then roast with salt, garlic powder, or paprika.

For seasoning ideas, this chickpea recipe keeps the method simple.

Rough cost: $0.15 to $0.35.

9. Hummus with vegetables or pita

Hummus works as a dip, spread, or quick side snack, so it stretches further than it looks.

Pair it with vegetables like carrots, celery, peppers, crackers, or pita for a snack with fibre and some protein.

Rough cost: $0.30 to $0.75.

10. Cheese sticks or cottage cheese with fruit

Cheese sticks are easy when you need grab-and-go food. Cottage cheese is better at home, and fruit or black pepper makes it more interesting.

Both give you high-protein snacks and calcium.

Rough cost: $0.35 to $0.80.

11. Oatmeal muffins or banana bread

These are smart make-ahead snacks because oats, flour, and ripe bananas are low-cost staples.

They also work for breakfast, which helps stretch your food budget across two meals.

Rough cost: $0.15 to $0.40.

12. Tortilla wraps or cheese quesadillas

Tortillas are one of the handiest, cheap snacks on a tight budget because they can hold almost anything for sweet and savoury flavours.

Add cheese, beans, or leftover vegetables, then toast them for crunch, or try tortilla chips as a crunchy alternative.

If you’re trying to stop buying overpriced workday food, these frugal living tips for work snacks make the case for packing your own.

Rough cost: $0.25 to $0.70.

13. Frozen grapes or frozen blueberries

Frozen fresh fruit feels like dessert, but it can cost less than packaged sweets.

Freeze grapes or blueberries in a single layer, then snack on them straight from the freezer.

Rough cost: $0.20 to $0.60.

14. Celery sticks with peanut butter

This old-school snack still works because it’s crunchy, a little salty, and a little sweet.

Celery adds fibre and water, while peanut butter brings healthy fat and protein.

Rough cost: $0.25 to $0.50.

15. Almonds or sunflower seeds

A small handful goes a long way because nuts and seeds are dense and filling.

Almonds cost more, so sunflower seeds are often the better pick when money is extra tight.

Rough cost: $0.20 to $0.60.

16. Chips and salsa

This one feels fun, which matters when budget food starts to feel dull.

Chips stretch further when you use salsa with every bite, and homemade salsa can cut the cost even more.

Rough cost: $0.25 to $0.60.

17. Chia pudding or overnight oats

Both are prep-ahead snacks that also work as a light breakfast.

Mix chia seeds or oats with milk or yoghurt, then add fruit, cinnamon, or a little honey after it sets.

Rough cost: $0.25 to $0.70.

18. Plantain chips or apple chips

These are good when you want something crunchy but a little sweeter than regular chips.

Store-bought bags can cost more, so homemade versions win if you already have ripe plantains or apples.

Rough cost: $0.25 to $0.70.

19. Granola bars or trail mix

These are easy to pack for work, school, or long bus rides.

Homemade trail mix is often cheaper, especially when you use oats, peanuts, raisins, and a few seeds instead of expensive add-ins.

This Budget Bytes trail mix guide has smart ideas for keeping the cost down.

Rough cost: $0.20 to $0.80.

20. Rice with beans

Rice and beans aren’t only dinner food.

A small bowl is one of the most filling, cheap snacks on a tight budget because it gives you carbs, fibre, and protein for pennies.

Rough cost: $0.15 to $0.45.

21. Crunchy pasta chips

Cook cheap pasta, season it, then bake or air-fry it until crisp.

Dip it in marinara, hummus, or yoghurt dip when you want a snack that feels different without costing much.

Rough cost: $0.15 to $0.40.

22. Cucumber slices or bell pepper strips

Both are fresh, crunchy, and easy to prep in advance.

Cucumbers are usually cheaper, while bell peppers bring more colour and vitamin C when you catch a sale.

Rough cost: $0.25 to $0.70.

23. Orange or pear

These fruits travel well and don’t need prep beyond a rinse.

Oranges give you vitamin C, while pears bring fibre and a softer sweetness that feels more satisfying than candy.

Rough cost: $0.30 to $0.70.

24. Canned tuna on crackers or bread

When you need a snack that feels closer to a small meal, tuna is a strong option.

Mix it with a little mayo, mustard, or seasoning, then pile it onto crackers or toast.

Rough cost: $0.50 to $0.80.

25. Rice cakes with toppings

Rice cakes are cheap, shelf-stable, and easy to dress up.

Go sweet with yoghurt or jam, or go savoury with peanut butter, cheese, or even hummus.

Rough cost: $0.15 to $0.50.

26. Homemade energy balls

Homemade snacks like energy balls usually need oats, nut butter, seeds, and a little dried fruit, so they use store-bought ingredients efficiently.

Make a batch once, then portion it for the week.

Rough cost: $0.20 to $0.45.

27. Yoghurt popsicles

Yoghurt popsicles feel like a treat, but the base is cheap and simple.

Mix yoghurt with fruit, freeze in molds or cups, and you get calcium, some protein, and a cold, sweet snack for less than most store pops.

Rough cost: $0.20 to $0.50.

These easy snacks to make fit any tight budget and transition perfectly into tips for keeping costs low all month.

How to Keep Snack Costs Low All Month

To make sure your grocery shopping costs stay low, look at the following tips.

Buy store brands, bulk items, and seasonal produce

Store brands and generic brands usually cut the price first, and the difference adds up fast over a month.

Buy in bulk oats, rice, beans, peanut butter, popcorn kernels, and pasta; they are especially useful because they work well in snacks and meals.

Seasonal produce at the grocery store helps too, because out-of-season fruit and vegetables can wreck a tight grocery plan.

This guide to saving money on groceries is helpful if you want to cut the whole bill, not only snack costs.

For the bigger picture, U.S. News’ cheap foods list backs the same idea: basic foods usually give you more food for less money than heavily processed snacks.

Prep a few snacks once and use them all week

Batch prep simple snacks saves money because food gets eaten before it goes bad.

Wash grapes, slice carrots, boil eggs, mix chia pudding, or make a tray of energy balls on one day, then keep everything ready in clear containers.

This prep-ahead habit also helps maintain energy levels throughout the day.

This also helps you skip impulse buys. That’s a bigger deal right now, because many low-income households are cutting snack spending first as budgets tighten.

When food is ready to grab, you’re less likely to spend $3 on a snack that would’ve cost 40 cents at home.

Further reading: How to stop living paycheck to paycheck.

Frequently Asked Questions

What are the cheapest snacks under $0.25 per serving?

Popcorn, roasted chickpeas, rice with beans, crunchy pasta chips, and oatmeal muffins top the list at $0.10 to $0.25.

Air-pop popcorn or roast canned chickpeas with basic spices for crunch without the cost. These keep you full on whole grains, fibre, and pennies.

How do I keep snack costs low all month?

Buy store brands, bulk staples like oats, rice, beans, and peanut butter, plus seasonal produce to cut prices.

Prep a few snacks weekly—like boiling eggs or slicing carrots—so nothing goes bad and you skip pricey impulse buys.

This habit stretches your grocery budget across meals and snacks.

Are these snacks healthy and filling?

Yes, they cover fruits, veggies, grains, dairy, beans, nuts, and proteins for balanced nutrition that curbs hunger.

Pairings like apples with peanut butter or carrots with hummus add fiber, fat, and protein for longer satisfaction than chips.

Most are whole foods that beat processed options in value and health.

Can I prep these snacks ahead for the week?

Absolutely—batch boil eggs, roast chickpeas, freeze grapes, or mix chia pudding on one day for easy grab-and-go all week.

Store in clear containers to portion right and avoid waste. This saves time and money, especially for work or busy days.

What’s a good starter snack list for beginners?

Start with popcorn, bananas and peanut butter, hard-boiled eggs, plain yoghurt, and celery with PB—they’re simple, cheap ($0.10-$0.45), and use easy-to-find basics.

Rotate them to keep things fresh without overbuying. Build from there as you spot sales on carrots or rice cakes.

Final Thoughts On the Best Cheap Snacks On a Tight Budget

Eating on a low income doesn’t mean settling for boring food or staying hungry between meals.

The best cheap snacks on a tight budget are usually the plain ones: popcorn, eggs, bananas, oats, beans, yoghurt, and a few smart add-ons.

Start with three or four snacks you know you’ll eat, then rotate them through the week.

A small stash of cheap basics can carry you through busy days, low-pay weeks, and those moments when the kitchen looks empty but dinner is still hours away.

These affordable snacks prove that nutritious, satisfying options are within reach for any budget.

Summary

Article Name

27 Cheap Snacks On a Tight Budget That Keep You Full

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27 Cheap Snacks On a Tight Budget That Keep You Full

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Katie Lamb

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Remote Work Rebels

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#Cheap #Snacks #Tight #Budget #Full

11 Bad Money Habits That Are Keeping You Broke

admin — Wed, 22 Apr 2026 09:39:37 +0000

This post may contain affiliate links that at no additional cost to you, we may earn a small commission. Read the Disclosure Policy for more information.

Last Updated on April 22, 2026 by Katie

Your paycheck hits, a few bills clear, and the balance drops faster than it should. That cycle usually comes from repeated choices, not one giant mistake.

Recent Bank of America data shows that about one in four US households live paycheck to paycheck in 2026, and a YouGov report on debt, savings, and investing found that many Americans feel they are merely keeping up or falling behind.

Money pressure also spills into the rest of life, because stress can hurt sleep, focus, and energy.

The good news is that bad money habits can change.

Below are 11 common habits that drain cash, raise anxiety, and make saving feel impossible, plus simple ways to break them.

Also, check out these simple ways to cut monthly expenses and save big.

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The Daily Bad Money Habits that Drain Your Paycheck First

Daily spending leaks are easy to brush off because each one seems small.

Over time, though, they can swallow raises, tax refunds, and any hope of getting ahead.

1. Spending more than you earn, even by a little

Overspending does not need to be huge to hurt you. Going over by $75 or $100 a month can push you toward credit cards, overdrafts, and late fees.

That gap also creates mental strain. When every dollar already has a job, even a minor surprise can trigger worry, shame, and lost sleep.

In 2026, with about one in four households living paycheck to paycheck, this habit is common and costly.

Quick steps to make a fix:

Compare your take-home pay to all monthly spending.

Cut one nonessential expense this week.

Review your budget every payday, not once a month.

Further reading: How to stop living paycheck to paycheck.

2. Buying on impulse and telling yourself it was a good deal

Impulse spending usually feels smart in the moment.

The item is on sale, delivery is fast, and you promise yourself you “needed” it anyway. Later, the pattern shows up in your statements.

Many people do not realize how much they spend until they check receipts, credit card charges, and app purchases side by side.

A good pause button is this question: “How many hours did I work for this?”

Quick steps to make a fix:

Wait 24 hours before buying nonessentials.

Keep a wish list instead of buying on sight.

Check your statements weekly for surprise spending.

Further reading: 13 things to stop buying to save thousands.

3. Ignoring the small stuff, like takeout, coffee, delivery fees, and app charges

A $6 coffee five times a week is more than $1,500 a year.

Add delivery fees, convenience store stops, and late-night takeout, and the number climbs fast.

These habits also hit your health when they lead to more fast food and less planning.

Research on wasteful spending, from DoorDash to dead subscriptions shows how often convenience spending slips under the radar.

Quick steps to make a fix:

Meal prep two or three easy lunches.

Bring coffee from home a few days a week.

Set a monthly cap for fun food spending.

The Bad Money Habits that Make Your Bills Feel Heavier Every Month

Bigger money problems often come from weak systems, not weak character.

When you do not plan, track, or clean up recurring costs, every bill feels heavier.

4. Not having a budget because it feels too strict

A budget gives direction. Without one, money tends to drift toward whatever feels urgent or fun that day.

That makes it harder to cover needs, enjoy wants, pay down debt, and save at the same time.

A simple plan works better than guesswork, and these budgeting tips for beginners can help you start without making life miserable.

A budget gives your money a job before your habits spend it.

Quick steps to make a fix:

Try the 50/30/20 method as a starting point.

Check your spending once a week.

Assign every dollar to a category or goal.

Further reading: Common budgeting mistakes that drain your finances.

5. Not tracking where your money actually goes

Most people can name rent, car insurance, and maybe groceries.

The rest often gets lumped into “miscellaneous,” which is where progress disappears.

Tracking shows the truth. Once you review statements, receipts, and app charges, you can spot patterns, cut waste, and stop surprise charges from hitting at the worst time.

It also lowers stress because fewer bills catch you off guard.

Quick steps to make a fix:

Use one app, notebook, or spreadsheet only.

Review the last 30 days of transactions.

Flag anything you forgot you were paying for.

6. Letting subscriptions and auto-renewals pile up

Streaming services, premium apps, memberships, cloud storage, music plans, and trials can turn into a hidden monthly bill stack.

Many free trials are built to be forgotten.

One service may cost only a few dollars, but six or seven services can chew up real money every month.

If they add little value, they are not harmless.

Quick steps to make a fix:

Audit the last two months of bank statements.

Cancel anything you did not use last month.

Share family plans where the service allows it.

The Debt and No Savings Habits that Keep You One Emergency Away from Broke

Debt and no savings make normal problems feel like disasters. Interest, fees, and panic can wipe out a lot of hard work.

7. Paying the minimum on credit cards and carrying the balance

Minimum payments keep debt around for years. Meanwhile, high credit card interest keeps pulling money away from your future.

That is why this habit is so damaging. Long-term investing may grow wealth over time, but credit card interest often runs much higher, so debt can outpace your progress fast.

A 2026 WalletHub credit card debt survey also shows how many people are still struggling to get balances under control.

Paying only the minimum gives interest first claim on your paycheck.

Quick steps to make a fix:

Pay the full balance whenever you can.

Use debit or cash for daily spending if cards tempt you.

Call and ask for a lower rate or hardship option.

Further reading: 10 practical tips to help you pay off debt fast.

8. Having no emergency fund for the stuff life always throws at you

Car repairs, medical bills, job cuts, and last-minute travel are part of life.

Without cash set aside, many people reach for credit and make a bad month even worse.

A starter emergency fund can break that cycle. Start small, then build toward three to six months of basic expenses.

Even a few hundred dollars can lower fear and help you think clearly when something goes wrong.

Quick steps to make a fix:

Save a small fixed amount from every paycheck.

Keep the money in a separate savings account.

Use tax refunds or bonus money to build it faster.

Further reading: How to build an emergency fund on a low income.

9. Using payday loans or other high-cost borrowing to fill gaps

Payday loans can look like a quick fix. In practice, high fees and short repayment windows often turn a small shortfall into a bigger mess.

That cycle is hard to escape because the next paycheck is already spoken for.

If you are stuck, focus on cheaper ways to buy time and protect cash flow first.

Quick steps to make a fix:

Ask utility or medical providers for a payment plan.

Check local credit unions for safer small loans.

Build a $250 to $500 buffer as your first goal.

The Mindset Bad Money Habits that Stop You from Building Real Wealth

Staying broke is not always about income alone.

Habits, pressure, and short-term thinking can block progress even when you earn more.

10. Trying to keep up with other people’s lifestyle

Social pressure gets expensive fast.

Dinners, trips, clothes, cars, gifts, and upgrades can start to feel normal when everyone around you spends freely.

Social media makes it worse because you compare your full financial life to someone else’s highlight reel.

The cost is not only financial. It can also wear down your confidence and make you spend for approval instead of peace.

Quick steps to make a fix:

Unfollow accounts that push you to overspend.

Set a monthly social budget before invites arrive.

Choose your goals over appearances.

Further reading: 10 smart habits of debt-free people.

Many people pay everyone else first and hope to save whatever is left. Usually, nothing is left.

That delay hurts in three ways. You miss the habit of paying yourself first, you miss years of compound growth, and you miss chances to raise income.

If your job offers a 401(k) match, that is money you should try hard not to leave on the table. Even a small Roth IRA or index fund contribution can build momentum.

If you need help changing your patterns, these easy ways to fix bad money habits are a strong next step.

Quick steps to make a fix:

Automate savings on payday, even if it is small.

Contribute enough to get the full employer match.

Start investing with a low, steady monthly amount.

Pick one realistic side hustle to boost cash flow.

Final Thoughts on Bad Money Habits

Your paycheck may feel like it disappears in seconds, but habits are often the real reason money never sticks.

That is hard to face, yet it is also good news, because habits can change.

You do not need to fix all 11 at once. Start with one or two bad money habits, build a simple system around them, and repeat it every payday.

Little by little, your money starts staying where it belongs, with you.

Summary

Article Name

11 Bad Money Habits That Are Keeping You Broke

Description

11 Bad Money Habits That Are Keeping You Broke

Author

Katie Lamb

Publisher Name

Remote Work Rebels

Publisher Logo

#Bad #Money #Habits #Keeping #Broke

257. “We really want a house

admin — Tue, 21 Apr 2026 11:12:25 +0000

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Molly and Jason are 45 and 46, living together with a 2-year-old daughter. They earn $142,000 a year combined. They have $0 in savings, $46,000 in debt, and a net worth of just $4,842. They dream of buying a house, investing in real estate, and retiring early. But when Ramit opens their Conscious Spending Plan, the picture is stark. Fixed costs at 77%. No savings rate. $25,000 in credit card debt in Molly’s name that Jason can’t fully account for. And a financial system built entirely on Venmo transfers, separate accounts, and crossed fingers.

What Ramit finds underneath the numbers is a relationship where one person is managing everything alone, and the other has quietly checked out. Molly researches, opens accounts, tracks the bills, and covers the overdrafts. Jason works, pays rent, and sends Venmo transfers when asked. Neither of them planned financially before having a baby. Neither of them has seen what a real financial partnership looks like.

But something shifts. When Ramit shows them that working together they could reach $1.75 million by retirement, something clicks. They stop explaining why things are the way they are and start talking about what they are going to do.

In this episode we uncover:

Why two people earning $142,000 a year can have $0 in savings and $46,000 in debt

The Venmo money transfer system that has kept them financially disconnected for years

What it looks like when one partner manages everything alone while the other disengages

How $4,000 in annual subscriptions disappears when nobody is looking at the full picture

Why dreaming about real estate investing is the wrong move when your own finances are on fire

The moment Jason admits he feels resentful and apathetic about money

The plan to sell the truck, wipe the credit card debt, and combine finances for the first time

What Ramit means when he says the biggest savings anyone can make is on housing costs

The follow-up update from Molly and Jason

Chapters:

(00:00:00) “We wanna be rich. We have $0 in savings”

(00:03:01) Meet Molly and Jason

(00:10:00) How often do you talk about money?

(00:14:00) Jason completely disengaged

(00:19:00) No decisions are ever made

(00:30:00) Dreamers who won’t save $250 a month

(00:34:11) Opening the Conscious Spending Plan

(00:40:15) Fixed costs at 77%

(00:46:50) Separate accounts, Venmo transfers, no shared vision

(00:59:20) “Resentful. And apathetic.”

(01:03:00) Money psychology and upbringings

(01:17:46) “You’re gonna sell a truck and pay off debt”

(01:41:13) Follow-ups

This episode is brought to you by:

Gelt | Book a tax consultation with Gelt at https://joingelt.com/ramit. As a member of my community, you can skip the waitlist

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Leesa | Go to https://leesa.com for 20% off select mattresses PLUS get an extra $50 off with promo code RAMIT, exclusive for my listeners

Fabric by Gerber Life | Join the thousands of parents who trust Fabric to protect their family. Apply today in just minutes at https://meetfabric.com/ramit

MasterClass | For unlimited access to every class and an additional 15% off any annual membership, go to https://masterclass.com/ramit

If you or your partner get stressed spending $150 on dinner, or are covering up spending, I’d like to help. Apply to be coached for free on this podcast at iwt.com/apply

Transcript:

[00:00:00] Molly: I think we both wanna like really make some money. Like I will teach you to be rich. Like we wanna be rich, we wanna buy our first house.

[00:00:06] Ramit: I’d like to retire early. I know that sounds crazy. Once we look at our numbers, $0 in savings and do you have a daughter?

[00:00:13] Molly: We just spend money and then figure it out afterwards.

[00:00:16] Ramit: Do you ever actually go and look into your spending and find out what happened?

[00:00:20] Jason: Not very often.

[00:00:22] Molly: We should make enough money to not be in our position that we’re in, and that’s why it’s just a confusing web. I don’t even know how to like unravel it.

[00:00:30] Ramit: You spend over $4,000 a year on subscriptions alone.

[00:00:33] Ramit: Right.

[00:00:35] Molly: I just knew it was bad, but I did not know that much.

[00:00:38] Ramit: You feel very disconnected on money.

[00:00:41] Molly: We’ve been together for three years and it seems like we just never get ahead. We’re always kind of living paycheck to paycheck.

[00:00:47] Jason: I feel resentful on the fact that I feel like I’m working really hard all the time so that we have money.

[00:00:53] Molly: I sometimes look around, I’m like this is what I wanted. I got what I wanted and I’m still unhappy.

[00:01:00] Ramit: How many times have you talked to someone who has big dreams? They wanna retire at 45, they wanna buy a 20 acre property. They wanna travel all the time. But when you look at what they are actually doing to make that dream a reality, they haven’t taken any concrete steps.

[00:01:16] Ramit: We know people like this, they talk about all the things they wanna do, but often they don’t have any idea where last month’s paycheck went. It’s like people who talk about all these advanced weightlifting techniques, but they’re not even consistent about getting to the gym three times a week. Today’s guests, Molly and Jason, are 45 and 46 with a 2-year-old daughter, and they have big dreams.

[00:01:36] Ramit: They wanna buy a house, they want to invest in multifamily properties, and they want to retire early. But when you hear what they’re actually doing with their money, you’re gonna realize it doesn’t add up. I’m looking at their conscious spending plan. This shows me a very simple overview of all their numbers.

[00:01:53] Ramit: And if you want help with your own conscious spending plan, you can join my money coaching program at iwt.com/money Coaching. Here are their numbers. Household income, $142,000 a year savings, zero debt, 46,000 net worth 4,000. Lemme put it in another way. They make nearly $143,000 a year and they have $0 in savings.

[00:02:21] Ramit: They live together. They have a child together, but they keep completely separate finances. In fact, she asks for money, he decides and sends it to her. She manages everything alone while overdrafting to cover bills, and neither of them can explain where his paycheck actually goes each month. They’re stuck in the same cycle, month after month.

[00:02:41] Ramit: Wondering. Why Nothing ever changes. Now I have a quick favor to ask. Molly and Jason, were brave enough to come on money for couples and share their story with us. As you listen and you watch, I’m gonna ask that you keep your comments respectful and constructive. That is the type of community I want for my show.

[00:03:01] Ramit: Let’s get started now with Molly and Jason. Molly, you wrote to us in your application quote, we live paycheck to paycheck, have virtually no savings, and I’m trying very hard to get us out of this whole, what do you mean by that?

[00:03:17] Molly: Spend a lot of time researching like what we can do to what we need to do because after having a child in our forties and, and looking around reading the room, I was like, we are not doing well.

[00:03:30] Molly: And the price of daycare went up at the be in the fall and two out of the three months that we, it’s since it’s gone up, it overdraws my account.

[00:03:40] Jason: Why money’s still very tight, but we always paid every month. We’ve always been able to pay it,

[00:03:45] Molly: but then like it’s a little scary every month. It comes out on the first, so it’s like there’s just never enough and so the excess goes, comes from my credit card.

[00:03:55] Ramit: I got you. A couple of questions about just account structure. Do you two have combined finances or not?

[00:04:01] Jason: No. They’re not combined.

[00:04:03] Molly: You,

[00:04:03] Jason: I send her money multiple times a month.

[00:04:06] Ramit: What? What does that look on Molly’s face, Molly?

[00:04:09] Molly: It is combined, like we spend everything together. We’re a unit that spends money, but the fact that like most of the bills come out of my account, but the money goes into his account and then he sends me money.

[00:04:24] Ramit: Hold on. What in the hell? Try that again with me.

[00:04:27] Jason: Most of the utilities and other expenses like medical, are all in Molly’s name. Mm-hmm. They go through her account. I. Just send her money for most of it and I pay the rent myself.

[00:04:41] Ramit: Questions? How do you send the money?

[00:04:44] Jason: Venmo.

[00:04:45] Ramit: Okay. And you two are married, correct?

[00:04:47] Ramit: No,

[00:04:48] Jason: no, we’re not married.

[00:04:49] Ramit: Not married. You live together?

[00:04:50] Molly: Mm-hmm.

[00:04:51] Jason: Yes.

[00:04:51] Ramit: And kids. How many kids?

[00:04:53] Molly: One. She’s two.

[00:04:55] Ramit: Okay. When did money become a source of tension for the two of you?

[00:05:00] Molly: When I stopped working and had a baby.

[00:05:03] Ramit: And was that when your daughter was born or was it while you were pregnant?

[00:05:08] Molly: I basically worked up until she was born.

[00:05:11] Ramit: Okay, because of financial reasons or were you just enjoying work or were there other reasons?

[00:05:17] Molly: I enjoyed work. It was physically active, which I like, but also I was trying to build up an egg, a little nest egg. ’cause I didn’t, we didn’t really have a plan.

[00:05:28] Ramit: I see. Did you two talk about the financial part of having a baby?

[00:05:33] Molly: No.

[00:05:34] Ramit: No, I don’t think we

[00:05:35] Jason: really did.

[00:05:36] Ramit: Molly la Molly, why’d you laugh when I asked that question?

[00:05:38] Molly: Because do you think that would be like an important conversation we have with, you have nine months to have it, but we definitely did not.

[00:05:45] Ramit: Okay. How did you come up with the system that you have developed where you have separate accounts?

[00:05:52] Ramit: He transfers money to her. How’d that come about?

[00:05:56] Molly: I’m the responsible one and the couple that does the, you know, let’s open the energy account, let’s open the water bill. Let’s do all like, and I’m home, so it makes sense for me to do that too. The admin, if you will.

[00:06:10] Ramit: Got it. What’s the thing about her daycare that comes out of your account?

[00:06:16] Ramit: Explain that one to me

[00:06:17] Molly: again. This is all the things that I have set up. So I found the daycare, for instance, I am the one who’s communicated with them. I signed us up. Um, I’m the one who goes out and, you know, I got our health insurance signed up for that. I get all of her stuff. I pretty much take care of those things in our household.

[00:06:40] Molly: That’s all me.

[00:06:41] Ramit: How would you describe each of your roles with money?

[00:06:46] Molly: My role with the household money is trying to make it all work. It’s like almost flying by the seat of my pants.

[00:06:54] Jason: I guess. My role isn’t that large at this point. I go to work, I work full time and basically send as much money as I can above rent.

[00:07:03] Ramit: Are you the primary earner?

[00:07:05] Jason: Yes.

[00:07:06] Ramit: Okay. That’s your role then, right? I mean, if we’re gonna simplify it,

[00:07:10] Jason: yeah.

[00:07:10] Ramit: So you’re the primary earner, but it sounds like you do not track much of the money or organize or manage most of the money. Would that be fair to say?

[00:07:20] Jason: Yes.

[00:07:21] Ramit: Alright. So you make the bulk of the household income and then.

[00:07:25] Ramit: Do you send all of it to Molly or some of it

[00:07:29] Jason: Definitely don’t send all of it. I send what I think is, as much as I can afford to send.

[00:07:34] Ramit: Does it come up when Molly, you need Jason to transfer money over? And he says, I don’t know if I have that much.

[00:07:41] Molly: Couple times a month.

[00:07:42] Ramit: Okay.

[00:07:43] Molly: At least. Yeah.

[00:07:44] Jason: And then we’ll negotiate and maybe change the amount.

[00:07:48] Ramit: How do you decide that?

[00:07:49] Jason: Usually based on how much is in my bank account.

[00:07:52] Ramit: You’re checking, right?

[00:07:53] Jason: Knowing what I, yes.

[00:07:54] Ramit: Hold on, explain. So you get paid what? Like every two weeks or four weeks?

[00:07:58] Jason: I get paid every week.

[00:08:00] Ramit: Every every week. All right, so every week. What do you do like on Friday? Do you log into your checking account and then how does it work?

[00:08:07] Jason: Sure, yeah. I log into my checking account. I look at how much money I have. Yes, that’s true when I get paid. And at that point it’s always time to send money. There’s always a need for money.

[00:08:17] Molly: Often, he doesn’t just send me money, I have to ask, Hey, I need more money. We have all these bills coming out, beginning of the.

[00:08:23] Molly: It’s just kind of like literally counting days to being like, when can he get money that he can then send me money and it will take this much time because it’s Venmo. And then I have this many days before it’s absolutely late and we get a fi, like a, a, a fee. I guess that’s what I mean. It’s like very much living in this moment of scrambling.

[00:08:41] Ramit: You like it?

[00:08:42] Molly: No, and I don’t like try, I, I, I’ve tried to do budgeting software, but it’s too confusing. I just give up because I have no idea how much is coming. Money’s coming in. I just end up being really like, yeah. Confused.

[00:08:57] Ramit: Mm-hmm.

[00:08:58] Molly: It’s too hard to figure out by myself.

[00:09:00] Ramit: And when you ask Jason for help, or do you ask him for help?

[00:09:04] Molly: I have, yeah. I’ve asked him for help, but often when we. Talk about money or like even just getting into details. It never, it’s just not fruitful. It doesn’t ever flow well. I admittedly sometimes come in hot. Sometimes I’m already upset. Right. I’m not preemptively being like, Hey, we’re both in a chill mood.

[00:09:25] Molly: Let’s talk.

[00:09:26] Ramit: You don’t do that.

[00:09:28] Molly: No. We talked about trying to set that up, but it never happened.

[00:09:32] Ramit: How often do you talk about money?

[00:09:34] Molly: Once a week. But it’s not like a productive way of talking about money. We just spend money and then figure it out afterwards.

[00:09:44] Ramit: That’s fair. How much visibility do each of you have into each other’s spending and finances?

[00:09:51] Molly: I have limited into his, but more than he probably doesn’t to mine because I have accessed his account and like when I was trying to figure out different budgeting software I’ve used, I’ve gone into his account, but he is never looked at mine.

[00:10:05] Jason: Right.

[00:10:06] Ramit: Do you care to Jason?

[00:10:07] Jason: Honestly, I haven’t cared that much.

[00:10:09] Jason: No, haven’t.

[00:10:10] Ramit: Do you ask Molly questions about money

[00:10:13] Jason: as far as our day-to-day expenses and monthly, or just day-to-day life? No.

[00:10:19] Ramit: Do you ask Molly questions at all?

[00:10:21] Jason: Sometimes not a lot of questions,

[00:10:25] Ramit: Molly.

[00:10:27] Molly: I don’t know why that makes me emotional. Yeah. It’s a lot of me, I feel like trying to, I guess, be curious about this.

[00:10:40] Ramit: I suspect it’s not just this.

[00:10:42] Molly: Yeah. Like every, I mean like I’m in charge of all the things.

[00:10:47] Ramit: Mm-hmm.

[00:10:48] Molly: And he is like, trust me with that, but it’s, it’s like a lot to constantly figure out.

[00:10:53] Ramit: Mm-hmm.

[00:10:55] Molly: Like finding the pediatrician or like, even when she was born, like figuring out what she’s gonna sleep in or where she sleeps, or what she eats or what we do.

[00:11:02] Molly: Like, that’s all on me, for sure.

[00:11:03] Ramit: Mm-hmm.

[00:11:05] Molly: He works also a lot and he has since day one. So I was, he was home for one week when we had our daughter, and then I was in the middle of nowhere with a newborn. Mm-hmm. And then we moved into a new state and like some things would’ve been better with community, but then now he’s gone even longer.

[00:11:25] Molly: He’s gone like 60 hours a week. And I’ve just learned to like, deal with it. But it’s, it just feels like a lot of the responsibility of like our family is on me.

[00:11:39] Ramit: You all familiar with this phrase, uh, emotional labor? Have you heard of this?

[00:11:44] Molly: Mm-hmm.

[00:11:45] Ramit: A little

[00:11:46] Jason: bit.

[00:11:46] Ramit: When we think of work in America, a lot of times we think of like who’s going out to mow the lawn or, or go to work or things like that.

[00:11:54] Ramit: But there’s like a lot of emotional load that is often invisible. What do you notice about the emotional labor in this household, Jason?

[00:12:03] Jason: I think it definitely falls mostly on Molly.

[00:12:06] Ramit: Mm-hmm. Did the two of you agree on that?

[00:12:08] Molly: No.

[00:12:09] Jason: No. I don’t think we agreed on that.

[00:12:11] Ramit: It just usually falls to mom. That’s part of the reason that you’re crying, Molly, is that it doesn’t feel fair and it’s not fair.

[00:12:20] Jason: Uh, I know it’s a lot and I feel bad. I feel I know I can do better.

[00:12:24] Ramit: Why haven’t you?

[00:12:25] Jason: I have offered to, and I still would like to, and I haven’t done enough with that. I’d like to take over more of the bills, take care of that as well, but I haven’t done anything about that.

[00:12:35] Molly: Why?

[00:12:37] Jason: Because I’ve been, it’s not been a focus.

[00:12:40] Jason: I haven’t focused on it and I should.

[00:12:42] Ramit: Jason says he hasn’t focused on taking over the bills, but notice what just happened. Molly described their entire financial system, daycare overdrawing, her account Venmo transfers, negotiating amounts multiple times a month. She is tracking when bills are due. She’s tracking when his paycheck hits even how long Venmo takes to transfer.

[00:13:03] Ramit: And Jason’s response, I haven’t focused on it. That’s not very satisfying. In fact, that’s not acceptable. Here’s what I’m seeing that they can’t see yet. Jason completely disengaged and not just from the money, but from Molly and the family responsibilities, I think in some ways, even from himself.

[00:13:23] Ramit: Meanwhile, Molly has fallen into the trap that is so familiar to many of my guests, especially women, on this show of carrying the mental load of assuming the role of someone who has to ask permission of their partner and of being okay with a partner who doesn’t actually act like a partner. And I actually hate that.

[00:13:43] Ramit: I hate when people play small with their money, but especially women because I want all of us to be able to live a rich life. That is why I spend so much time talking about the taboo topics of money and gender and social class. On this show. I want you to know just because your parents didn’t teach you about money, you can still get very educated and live an amazing rich life.

[00:14:08] Ramit: You can redefine how traditional responsibilities and roles go in a family. Just because one person earns more doesn’t mean they have more power. You can decide what your rich life is, and that is what brings me back to this couple. Not only do we see this very common, and in my opinion, dysfunctional dynamic, but she’s not actually good at managing money either.

[00:14:32] Ramit: This is a very common toxic cycle. One person, the avoider, opts out, so the other person. Compensates by controlling everything. But actually most of the time, neither one of them is very competent at money. You cannot live a rich life in this dynamic. You can’t even manage a paycheck. So if you recognize yourself in this dynamic, whether you are the avoider or the one who’s trying to carry everything on your shoulders, please understand this.

[00:14:58] Ramit: An unequal partnership with money always reflects something much deeper. This is not just about money. This is about something way, way deeper. In fact, the money is simply a symptom of much deeper beliefs. And today we are gonna find out what those beliefs are. If you filed a tax extension this year, I am talking directly to you.

[00:15:22] Ramit: Please don’t wait until October. I know it feels like it’s ages away, but it’s gonna be here sooner than you think. And taking this time to plan for your taxes. Is a great opportunity. Don’t wait until the last minute to get organized for your tax extension. Instead, work with Gelt to get a tax strategy in place right now.

[00:15:44] Ramit: Gelt is a modern CPA firm that helps your business take control of your tax strategy year round. They help you think strategically like how to structure your business, what key deductions might be applicable to you, and how to use the tax code appropriately. Right now, they have two exclusive Q2 offers.

[00:16:00] Ramit: The quick hit tax meeting, a 30 minute call for business owners on extension to identify everything that needs to be done before filing, and the refund, Aon or gout will go back through your recent returns and identify deductions you missed. Both of these offers are only open for a limited time, so if you are self-employed or you’re a business owner, now is the time to get proactive about your tax strategy.

[00:16:25] Ramit: The smartest tax move you can make right now is not waiting until January. Gelt is taking on Q2 clients now and there may be money. From the past year still on the table, find out if you [email protected] slash ramit. There’s a pretty cool TikTok trend going around right now that I really love. It’s called admin nights.

[00:16:45] Ramit: Basically, you get your friends together, you get some snacks, maybe some drinks, and you do all the infrastructure stuff in life that most of us skip over. If you’re gonna set up an admin night, here’s my suggestion for you. Use Zocdoc to book your health appointments and you will be done fast. Zocdoc is a free app and website that helps you find and book high quality in-network doctors so you can find someone you love.

[00:17:12] Ramit: They have over 150,000 doctors across all 50 states in 200 plus specialties, including mental health, dental, primary care, whatever you need, just filter for doctors based on insurance location ratings, even virtual care options, and zocdoc appointments happen fast. Usually within 24 to 72 hours. You can look through your options, book an appointment, and you are done.

[00:17:36] Ramit: If I needed to find a new doctor today. Zocdoc is what I would use. Stop putting off those doctor’s appointments and go to zocdoc.com/ramit to find and instantly book a doctor you love today. That’s ZOCD c.com/ramit zocdoc.com/ramit. And I wanna thank Zocdoc for sponsoring this message. If you or your partner has fallen for a scam, I want to help, especially if you’ve recently fallen for an email or text scam, or you’ve gotten bad financial advice from someone who did not keep their promises.

[00:18:11] Ramit: Or maybe you just have not even told your partner because you are embarrassed. If this is you, I want to talk, apply for free coaching with me by being on my podcast. Apply today at iwt.com/apply. That’s iwt.com/apply. Can we go back to the a, a recent time where you remember the last time that you were talking about money?

[00:18:36] Molly: It was. Basically in the kitchen and

[00:18:41] Ramit: do it as if I’m there. Just watching. Go ahead.

[00:18:44] Molly: Okay, so after we pay rent, then what’s left?

[00:18:49] Jason: I just paid the rent. I barely have enough money to get to Next’s paycheck. I’m not sure where it all went, but I felt like I was lucky to have rent this month, which is strange because we had an extra check this month.

[00:19:04] Jason: I

[00:19:04] Molly: dunno. Yeah, this was supposed to be a bigger month. Not only do we have an extra check, but we had an extra, we got our depo deposit back from our last rental, so this should have been a huge month. I thought in my mind, which is crazy, that I was like, oh, we could put a lot, you know, a certain amount of money towards some of our credit card debt.

[00:19:24] Molly: Like this would be the month.

[00:19:26] Jason: Yeah, I kind of did too. I don’t know what happened. I’m not sure.

[00:19:30] Molly: You just have no idea?

[00:19:31] Jason: Not really. I mean, the money just kind of went. I don’t know what happened to it.

[00:19:38] Molly: I mean, you can look at your account,

[00:19:40] Jason: right? Yeah.

[00:19:41] Molly: And see,

[00:19:42] Jason: I will look at it. I’ll check it out. I’ll see. I’m pretty sure it’s no different than any other month, which it doesn’t help, but I don’t know what happened to it.

[00:19:53] Ramit: Okay, so what happened in that conversation? If you both zoom up and you almost look at the two of you as players, how would you assess what just happened in that conversation? Molly?

[00:20:06] Molly: What happened and what happens a lot is I just, I get really mad. I kind of give up halfway through the conversation. ’cause I already know that it’s, I’m not gonna get any clarity and he just gets mad because I feel like he thinks I’m pestering him about something that.

[00:20:30] Molly: Is trivial. Somewhere in him. He knows it’s not trivial, but the fact like I’m questioning him and don’t, and that he knows I don’t trust him, he gets then defensive and mad. I go into like a fugue state almost, where I’m just like, this is pointless. Yeah. Like he can’t do what I need him to do.

[00:20:49] Ramit: All right.

[00:20:50] Ramit: Jason, what about you? If you zoom up, how would you assess that conversation? What happened?

[00:20:54] Jason: I think like many of these conversations, uh, just put me in a defensive state of mind. Mm-hmm. And I just kinda shut down. I’m like, well, it is what it is. The money’s there not there. I don’t know what else to say about it.

[00:21:06] Jason: It got spent on something and I think part of it is being caught off guard with something I wasn’t prepared for. I’m not always, I’ll admit, I’m not always in the mood just talking about money. So I think ’cause it never seems to go anywhere, that is a very typical cycle of how the conversation goes.

[00:21:24] Jason: Typical example.

[00:21:26] Ramit: She’ll bring it up, you’ll be defensive and then it will dwindle off. In other words, no decisions are made. Mm-hmm. You just spin and then it comes up 2, 3, 6 weeks later again.

[00:21:36] Jason: Right. That happens quite often.

[00:21:39] Ramit: Does that feel good? Seems frustrating.

[00:21:43] Molly: Yeah.

[00:21:43] Jason: Very frustrating.

[00:21:45] Molly: Yeah. I feel like it’s a big part of why, for whatever reason, our finances, like we should make enough money to not be in our position that we’re in and that’s why it’s just a confusing web.

[00:21:59] Molly: I don’t even know how to like unravel it.

[00:22:01] Ramit: Jason, do you ever actually go and look into your spending and find out what happened?

[00:22:06] Jason: Not very often. Downloaded rocket money. Mm-hmm. And added that to my account.

[00:22:11] Ramit: Account. And

[00:22:12] Jason: where

[00:22:12] Ramit: would this, where’d the money go?

[00:22:14] Jason: There’s still a lot of spending that’s unaccounted for, so I need to dig deeper.

[00:22:17] Jason: A lot of average daily spending. What?

[00:22:21] Ramit: Hold on. That doesn’t work on me. If you downloaded Rocket Money, which is a great tool. Then it shows you line by line where the money went. So where’d the money go?

[00:22:30] Jason: Daily spending, whether it was groceries, eating out, um, definitely subscriptions.

[00:22:36] Ramit: Can we just look at rocket money?

[00:22:37] Ramit: Do you have it?

[00:22:38] Jason: I have it on my phone. I could suppose I could,

[00:22:40] Ramit: yeah.

[00:22:41] Jason: Pull it up.

[00:22:42] Molly: He has, which he didn’t mention. He says a lot of it goes to subscriptions, but he has like double subscriptions.

[00:22:47] Ramit: All right. What do you got, Jason?

[00:22:48] Jason: I do.

[00:22:48] Molly: Okay.

[00:22:50] Jason: I do have some doubles. So for subscriptions, I have, let’s see, 1, 2, 3, 4, about 12, no 14 subscriptions.

[00:23:01] Jason: How much is the total? 43 68 per year for 18 subscriptions,

[00:23:07] Molly: 4,000,

[00:23:09] Jason: 4,368 per year for 18 subscriptions.

[00:23:14] Molly: I just knew it was bad, but I, I did not know it that much. Okay. Not even close.

[00:23:21] Ramit: Okay. And Jason, did you know?

[00:23:23] Jason: No. No, I did not.

[00:23:24] Ramit: So far, we know that you spend over $4,000 a year on subscriptions alone.

[00:23:29] Jason: Right?

[00:23:30] Ramit: What does that tell you?

[00:23:31] Jason: Seems like I could cut that amount, but I could, I would hope.

[00:23:36] Ramit: How would you describe your familiarity with your own spending, Jason?

[00:23:40] Jason: Not great. I think I could be a lot more familiar with it.

[00:23:43] Ramit: Alright. And Molly, how would you describe your familiarity with your own spending?

[00:23:48] Molly: I, I mean, I guess I, I know pretty much what I’m spending.

[00:23:53] Molly: Yes.

[00:23:53] Ramit: Okay.

[00:23:54] Molly: So good ground about concise answer for you.

[00:23:57] Ramit: You wrote something that caught my eye quote. I don’t fully trust him about how and where he’s spending money because he hasn’t been super forthcoming in the past about investing in the stock market. Can you tell me more about that?

[00:24:15] Molly: I knew he was.

[00:24:17] Molly: Using Robinhood and doing, you know, day trading or, um, options and things that I’m not super familiar with. To be honest, I didn’t know how much money he was funneling into that because that’s just not how our accounts work. How

[00:24:32] Ramit: much money are we talking about?

[00:24:33] Molly: I don’t know.

[00:24:33] Jason: It was a hundred times 200 a week.

[00:24:38] Ramit: 200 a week. So 800 a month.

[00:24:41] Jason: Yes, that’s right. I just wanted to make sure. Yeah,

[00:24:44] Molly: and I didn’t know that,

[00:24:45] Ramit: Jason, what was going on with these investments?

[00:24:49] Jason: So what Molly is referring to with the, um, automated withdrawals, that was just a long-term investment account. I wasn’t actually doing any of my own, like option trading or anything like that.

[00:25:02] Jason: It was just

[00:25:03] Ramit: what was the options trading about?

[00:25:05] Jason: So the options trading was on a different platform and uh, it had a friend. That was actually very successful last year. So I started getting some tips from him and I put a little money here and there. Um, I started with probably $500 and I think I only ended up adding another thousand on top of that.

[00:25:25] Ramit: Mm-hmm.

[00:25:25] Jason: Either way. Not as successful as him. Still had a lot to learn. So, kind of up and down.

[00:25:31] Ramit: What did you loop Molly into what you were doing

[00:25:34] Jason: as far as the options? I didn’t explain it a whole lot as far as the money I put in there. I probably wasn’t that specific.

[00:25:42] Ramit: Why

[00:25:42] Jason: not much? Um, I guess I probably thought I was going to do better than I did, and so I expected to have better news.

[00:25:52] Ramit: Can I ask you guys a question? No. Like just in, just speaking to you just for a little bit So far. Yeah. You feel very disconnected on money? Oh

[00:26:01] Molly: yeah. Like

[00:26:01] Ramit: extremely disconnected

[00:26:03] Molly: from each other or from money?

[00:26:05] Ramit: Uh, both.

[00:26:06] Molly: Yeah,

[00:26:07] Jason: we were having a conversation about this a little bit the other day, and we were talking about how we went from being two single people in our forties three years ago to basically married with children.

[00:26:20] Jason: Um, and both of us have traveled a lot when we were younger and just kind of lived a single life, and I feel like I’m still spending money that way, and I haven’t, you know, haven’t been able to switch gears in the way that I should, basically living as if we’re single. And I think that’s part of the problem.

[00:26:38] Molly: Yeah. I feel like in some ways, like the way I think about like our finances together is like, it just feels like a disaster. And I just, like, every time I like put a lot of energy into figuring it out or unraveling it, it just seems like it goes nowhere and I just like don’t, then I just kind of get, I just like tune it out or something.

[00:26:59] Molly: I don’t know.

[00:27:00] Ramit: That’s actually very common. That’s very common. All of us, me included, we like to pay attention to stuff where we feel competent, where we feel good. And so for some people that’s parenting or cooking or fitness or money or, or even cleaning the house. But conversely, we don’t like to spend time on stuff where we feel incompetent, where we feel out of control.

[00:27:31] Molly: Yeah.

[00:27:32] Ramit: Honestly, if there’s something in your life that you avoid, ’cause you’re just like, I don’t like this, and it’s like, uh, I don’t like using pledge on this wood table, who cares? Right? It’s not gonna hurt anybody to a large extent, but relationships and money and safety for the family, those are things that are actually important.

[00:27:52] Ramit: So avoiding them, it’s gonna get you one way or another, whether it’s today or tomorrow.

[00:27:58] Jason: Right.

[00:27:59] Ramit: Molly, you also wrote in your application quote, we have similar goals, but for some reason when we talk about our present money issues, there’s hurt and frustration. What are the similar goals that you both,

[00:28:13] Molly: we don’t wanna be poor.

[00:28:15] Ramit: Are you poor?

[00:28:17] Molly: No. No, but we are probably pretty low middle class.

[00:28:22] Jason: I feel Paycheck to paycheck is borderline.

[00:28:25] Molly: We’re probably pretty poor, I guess. Yeah. We don’t wanna just be like a little bit over living paycheck to paycheck. I think we both wanna like really make some money. Like I will teach you to be rich.

[00:28:37] Molly: Yes. Like we wanna be rich.

[00:28:38] Jason: Oh, absolutely. We like to be well off. I would like to be well off. Okay. I’d like to be successful. Okay. Like to actually retire early. I know that sounds crazy. Once we look at our numbers, at least to me it seems like a, you know, long hill to climb. But yeah, I would like to figure out ways to make good money.

[00:28:59] Jason: And, you know, just be a lot better off than we are now.

[00:29:03] Ramit: Okay. Molly, had you agree or see things

[00:29:05] Molly: differently?

[00:29:06] Ramit: I agree.

[00:29:06] Molly: Yeah. We want to travel, we want to spend time with our daughter and we want to, we have a similar goal and like how we wanna get there with real estate and stuff like that. Like we have a shared vision mm-hmm.

[00:29:25] Molly: On what that looks like, I guess. But not on how to get there.

[00:29:31] Ramit: Wait.

[00:29:31] Molly: We have a shared vision of like what would be great and I think on how we get there, there’s similarities, but like, it’s lit. Like, but the literal brass tacks of, of the daily work it takes to get to even next year is where we, like, maybe next year we have a similar goal.

[00:29:49] Molly: We wanna buy our first house, but to how to get that is where things I think. Different.

[00:29:56] Jason: Um, what we would wanna do first, we’d be looking at multifamily units that need to be remodeled, Uhhuh, some sort of state of disrepair that’s not too far gone where it would make sense to make improvements and eventually resell or rent.

[00:30:13] Ramit: Okay. And like, have you, where are you on this process? Have you run numbers? Have you purchased a property? Where are you on that?

[00:30:21] Molly: Um, basically we’re at the, like this, I, I mean, the kind of research stage. I, I have looked into different ways of like how we would get a loan, like FHA 2 0 3 K. I’m kind of like, that’s been my fun project to research.

[00:30:39] Ramit: Is that a goal or is that just something that one day you’d like to have? Sounds like a dream.

[00:30:44] Molly: I guess it hasn’t moved from, from dream to goal yet, to be honest.

[00:30:49] Jason: I, I kind of like the way you put that, Molly. That’s a good way to put it. We’ve talked about starting with some sort of real estate investment maybe next year, but as far as actually putting any kind of plan together, very little.

[00:31:04] Ramit: Mm-hmm. And what does that feel like?

[00:31:07] Jason: It feels like we’re not going anywhere. I mean, we’re just still stuck in the same place.

[00:31:14] Ramit: Mm-hmm.

[00:31:15] Molly: Yeah. I keep having this thought where it’s like free beer tomorrow. It’s just like always tomorrow. It’s always next year. Yeah. I, the, the goalpost is always moving, I guess if there ever was one.

[00:31:28] Ramit: This reminds me of an email I sent out to my readers years ago. It’s one of the favorite responses I’ve ever gotten. I asked the question to my email list, what is something you claim you want to do, but you actually don’t do it? And one woman wrote back saying, I claim I wanna run three times a week, but I don’t.

[00:31:45] Ramit: So I replied to her, I talked to a lot of people on my email newsletter and I said, why don’t you just go for a run once a week? And she wrote back basically incredulous. She’s like, why would I go for a run once a week that doesn’t do anything? And I thought, what a perfect example of human behavior. She would rather dream about running three times a week than actually go for a run once a week.

[00:32:07] Ramit: How many of us do the exact same thing in different parts of life? We would rather dream about living this multimillionaire life rather than actually read. I will teach you to be rich and money for couples and take control of our money. That’s Jason and Molly. They would rather dream about real estate investing rather than save $250 a month.

[00:32:30] Ramit: They’d rather talk about retiring early than figuring out where Jason’s last paycheck actually went last month. I like dreams. I encourage people to dream bigger. I want them to tell me what they really want. But I always go one step further. I want a plan to reach those dreams. Without a plan, you’re just fantasizing.

[00:32:50] Ramit: That’s not my job. This isn’t the Ramit Satis Fantasy show. My job is to help you engineer a rich life, and that’s what I’m doing with my own life. I’m here to engineer a rich life while I’m alive. If you wanna go to Japan, tell me when. Tell me where you’re gonna stay. Tell me what you’re gonna do, how much it’s gonna cost, and how you are gonna set that money aside.

[00:33:09] Ramit: Fantasy is something that feels good to think about, but a plan makes it a reality. Children fantasize adults plan. If you wanna learn the skill of turning your dream into a reality, you don’t have to do it alone. You can join my money coaching program. I’ll show you exactly how this is one of the most valuable skills you will ever develop.

[00:33:30] Ramit: Join at iwt.com/money coaching. Now let’s look at their numbers. Alright, let’s take a look at the numbers here. I’m gonna throw ’em up on screen. Let’s go with Molly first. Molly, can you read the word in bold and the number in full next to it for this entire box please?

[00:33:49] Molly: Sure. Assets, 28,000 investments, 23,482.

[00:33:55] Molly: Saving zero debt, 46,640. Total net worth 4,842.

[00:34:03] Ramit: What do you think about those numbers?

[00:34:05] Jason: I was mainly focused on that debt number. Mm-hmm. I don’t like that number.

[00:34:10] Ramit: You don’t like it? Okay.

[00:34:10] Jason: Way higher than I realized. And it seems like a lot.

[00:34:14] Ramit: What’d you think it was?

[00:34:15] Jason: I thought it was closer to roughly. And this is mostly guessing ’cause I haven’t really looked at the numbers about 18.

[00:34:22] Molly: I knew that you were gonna

[00:34:23] Jason: say

[00:34:24] Molly: that.

[00:34:24] Jason: 46

[00:34:25] Ramit: 18. So it’s more than double what you thought. Quite a

[00:34:29] Jason: bit higher. Yeah. I

[00:34:30] Molly: think we should mention here too, like. My problem is that like I had better credit and like the, so both of our vehicles ended up being in our name. In my name, like in my credit cards that we have, I use, that I’ve used for our family for big purchases or big things is all in my name.

[00:34:50] Molly: So like a lot of the big debt, it’s all in my name. So that’s why I’m, I’m aware of that.

[00:34:56] Ramit: You’re aware of that.

[00:34:58] Molly: That’s why I’m aware of the numbers more than he is

[00:35:01] Ramit: the

[00:35:01] Jason: amount of debt.

[00:35:02] Molly: The amount of debt we have.

[00:35:04] Ramit: It sounds like Jason has bad credit. So Molly took on all the debt and now the debt is in her name.

[00:35:11] Molly: Yeah.

[00:35:12] Ramit: And by the way, all the emotional labor and having to manage it is all in Molly’s name and Jason’s like, cool. I get a vehicle and I don’t really have to worry about it. I agree. I don’t think it’s fair.

[00:35:22] Molly: Yeah, it doesn’t feel fair and it’s probably why I am. Am angry.

[00:35:29] Ramit: Tell me more about that.

[00:35:30] Molly: Well, I just feel like I’ve had to process, I feel like a lot of my resentment and anger alone because I don’t wanna be that person and I don’t wanna be that for our daughter, but I am am.

[00:35:42] Molly: I’m just kind of mad. I’m just feel like it’d be great if like one of these big things was not on me, but I also don’t know if I can, it’s never, he’s never stepped up to like change it. I would have to be the one to get him to change. You know? Like, okay, now you’re gonna do this. Like, it’s still me guiding him through it.

[00:36:06] Molly: I guess. Maybe, maybe not.

[00:36:08] Ramit: Maybe not. Maybe there’s other ways

[00:36:10] Molly: maybe.

[00:36:12] Ramit: But I think we can all sense your resentment. Jason, I can sense your detachment from this. It’s kind of like I’m not connected to the money. I send over money once in a while. Can’t send over what she wants, so I negotiate, but like she deals with it and like, I should probably be better, but like, I’ll do better.

[00:36:33] Ramit: I’ll try to do better. That’s, that’s essentially the conversation so far. Would you both agree or disagree?

[00:36:40] Jason: No, I agree.

[00:36:41] Molly: Yeah. Yeah, I agree.

[00:36:42] Jason: Guess what it’s been. You think you want

[00:36:44] Ramit: a soft mattress? You think you wanna jump on your bed among 58 pillows in a Ralph Lauren catalog and sink into the mattress? No, you don’t.

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[00:39:30] Molly: fabric.com/ramit.

[00:39:34] Ramit: Jason, can you read off the combined gross monthly income please?

[00:39:39] Jason: Gross monthly income combined is 11,900.

[00:39:45] Ramit: What do you both do for a living? Jason?

[00:39:47] Jason: I am, um, project manager slash site superintendent for a residential construction company.

[00:39:54] Ramit: Okay. And Molly?

[00:39:56] Molly: I work remotely doing HR and benefits and then I work for my friends deli on the weekends just, and then I stay home with our daughter.

[00:40:06] Ramit: Got it. The HR role, is that part-time?

[00:40:10] Molly: Yeah, it’s remote part-time.

[00:40:11] Ramit: Cool. Alright. Combined on an annual basis, the two of you as a household make $142,800.

[00:40:19] Ramit: What do y’all think about that household income?

[00:40:21] Jason: I think it, considering where we live, it’s average

[00:40:26] Ramit: considering what part of the country do you live in?

[00:40:28] Molly: We live in the like Tahoe area.

[00:40:31] Ramit: Yeah. Oh, alright.

[00:40:33] Molly: But not on the expensive side, but

[00:40:34] Jason: not up on the mountain. I mean it’s,

[00:40:36] Ramit: can I go out on a limb and just guess that you all make a lot more than the median salary in your area?

[00:40:43] Ramit: Would that be fair to say?

[00:40:44] Molly: I bet we do. Yeah,

[00:40:45] Jason: maybe we do.

[00:40:46] Ramit: Okay. Okay. Alright.

[00:40:47] Jason: Know for sure,

[00:40:48] Ramit: so you make 142,000. What do you think about that number, Molly?

[00:40:52] Molly: It it’s like a total that I had never thought I would make personally, like I didn’t think that would be attached to me.

[00:40:59] Ramit: Yeah. What’s further confusing is that the two of you don’t combine your money.

[00:41:03] Ramit: So we have Jason making 9,500 a month gross or roughly one 20 KA year, AP approximately. And then we have Molly making 2,400, which is considerably different. So the thing is every month you can see the dynamic that has been set. Molly has to go to Jason, please transfer this money. And then what is Jason’s role?

[00:41:27] Jason: Look at my account and send what I think I can send.

[00:41:32] Ramit: Like how do you know what you can send?

[00:41:35] Jason: Well, based on what I think I’m gonna spend the rest of the week, which is hard to say.

[00:41:39] Ramit: I can’t even get a straight answer myself. How do you think Molly feels?

[00:41:43] Jason: Oh, I know. I, I don’t like it either. I wish I need to change.

[00:41:48] Jason: We need to change our setup.

[00:41:49] Ramit: You do need to change your setup. But what is happening here is Jason, do you believe that you have control over your own behavior?

[00:41:58] Jason: Yes.

[00:41:59] Ramit: Oh, so then why do you say we need to change our setup versus, I had changed my own setup last week.

[00:42:06] Jason: That’s a good point. I feel like I could initiate way more than I do.

[00:42:12] Ramit: But you don’t. Why?

[00:42:13] Jason: Because I feel too tired at the end of the day. I don’t take enough time. Um, I could, I’m sure I have a lot of excuses I could say, but

[00:42:21] Ramit: yeah,

[00:42:21] Jason: bottom line is

[00:42:23] Ramit: I think you just don’t do it. ’cause you don’t have to.

[00:42:25] Jason: Maybe that’s it.

[00:42:26] Ramit: Molly’s just gonna come. Beeching. Oh, please, please, please. And then, so the role of the beggar.

[00:42:31] Ramit: Is the role that has been established. Please, please, please transfer over money for our household. And then Jason is the decider. He crosses his arms and he says, Hmm, I can do this much, but not this much. That’s the way it’s gonna be. That’s the roles you’ve established for yourselves. The rest of the CSP, I’m gonna move through it quickly here.

[00:42:48] Ramit: Your fixed costs are at 77%. Typically that number should be at 50 to 60%. At 77, you can immediately understand why you feel stressed out. Bottom line, which leaves less for the rest of your money. Let’s see where it’s going. Investments 3%. That explains why you have relatively low investments for your age at a total of $23,000 savings at 1% or $125.

[00:43:13] Ramit: Well, we know that’s not true. I bet you set that up in the last two weeks. True or false?

[00:43:16] Molly: Well, that’s what fun One is that that actually it’s a automatic transfer and they always end up spending it.

[00:43:24] Ramit: The reason that you don’t have any savings is that you don’t save money and you have a young. Daughter.

[00:43:31] Molly: Yeah.

[00:43:33] Ramit: Okay. And finally, let’s look at guilt-free spending 25% or $2,200 a month. Is this number accurate?

[00:43:39] Molly: I actually had to adjust it because I went back over everything the last three months. And like, we’ve had some big months for, because we moved and for a lot of reasons. But, um, it does change. But it was on average of the last three months probably at least that.

[00:43:57] Molly: Yeah.

[00:43:58] Ramit: You all find that when you talk about money, you don’t give each other a straight answer? I don’t think we know as much as we should. I think that’s part of the problem.

[00:44:06] Molly: I think we both operate in a similar way, which is not in like hard, like not in like specific details. It’s,

[00:44:14] Ramit: mm-hmm. Yeah. A lot of feeling.

[00:44:16] Molly: A lot of feeling, a lot of

[00:44:18] Ramit: guessing.

[00:44:19] Molly: Guessing.

[00:44:20] Jason: Mm-hmm.

[00:44:20] Ramit: I think I’m gonna spend this much next month. Yeah. I’m not sure where the money went. And on and on and on. You all know why you are able to do that, right? A couple that’s making a third of what you make. They don’t have the luxury in operating the way you are.

[00:44:35] Molly: Mm-hmm.

[00:44:36] Ramit: They track it.

[00:44:38] Molly: Right.

[00:44:38] Ramit: They have to know. They can’t be like, oh, I’m, I didn’t realize I’m spending $4,000 a year on subscriptions. That’s just not an option.

[00:44:45] Molly: Exactly. Yeah.

[00:44:46] Ramit: So your income in part has allowed for you to become sloppy with your financial setup. But that’s not all because y’all could make double or triple and it would still be the same dynamic here.

[00:44:59] Ramit: Mm-hmm. The two of you do not talk about money regularly. You certainly don’t do it proactively. It’s not positive. I wanna understand a little bit more about how you were raised, but I’m gonna guess that you did not have great financial role models for thinking ahead, planning long-term. Okay. Molly’s smile indicates that I was right about that, Jason.

[00:45:18] Jason: Definitely not.

[00:45:19] Ramit: There’s no worry about failure. I don’t think that basically, to put it bluntly, I don’t think you felt the pain of actual failure, like running out of money and not being able to feed your family.

[00:45:31] Molly: Yeah,

[00:45:32] Ramit: I don’t think that’s happened.

[00:45:33] Jason: No, no, you’re right.

[00:45:35] Ramit: I would like to just pause for a second.

[00:45:36] Ramit: What are you noticing already in this conversation?

[00:45:40] Jason: We’re not aligned in our finances in the way that we should and that we need to spend a lot more time working on them together. Okay. Molly?

[00:45:48] Molly: I don’t know. I, I, I in some ways feel like more hopeless right now than I did at the beginning.

[00:45:54] Ramit: Tell me

[00:45:54] Jason: more.

[00:45:55] Molly: I just, I guess I, I feel like, yeah, like I we’re just so not aligned.

[00:46:01] Molly: Um, and neither of us we’re both bad at the same things. Um, which

[00:46:08] Ramit: is,

[00:46:08] Molly: which is. Be being, I think, responsible in when it comes to our finances, um, being responsible when it comes to having boundaries and, and making sacrifices and, and like, just we, we could have gotten ourselves outta this situation much sooner.

[00:46:24] Molly: Mm-hmm. But neither of us did, and almost combined we’re like even worse

[00:46:30] Ramit: when Molly said she felt hopeless looking at their numbers. Notice what I did not do. I did not try to make her feel better. The truth is that they’ve dug themselves into a really serious financial situation, and I don’t think that either of them have truly suffered as a result of that.

[00:46:49] Ramit: Let’s take a look at the facts. Jason thought their debt was 18,000. It’s 34,000. He was off by basically half all of that debt sits in Molly’s name because he has poor credit. He’s spending $4,000 a year on subscriptions he didn’t know about. And he was secretly day trading hoping to surprise her with gains that never came.

[00:47:10] Ramit: This is not acceptable. They don’t need someone to tell them it’s gonna be okay. They actually need the gift of consequences. Remember, in life, suffering is not always something to be avoided. Any Asian or Indian person here is like, yeah, what are you talking about? Life is suffering. That’s why I suffered studying so hard in high school.

[00:47:30] Ramit: I was telling my nephews the other day, I took them on a college tour at Stanford and they are in the midst of SAT prep and we were talking about it, how’s it going? And you know, I asked them, and they have it tougher than I did because they have the allure of these addictive phones. I did not have that back then, but one thing I shared with them was I worked really hard on my SATs.

[00:47:53] Ramit: I took it multiple times. I took a class I really studied, and when I think back to all the work that I put in, it was hard. I don’t remember all those hours. What I do remember is getting a good score, getting into Stanford, meeting friends who have become lifelong friends, getting these amazing career opportunities and all of the things that came with working hard.

[00:48:22] Ramit: Did I suffer studying for the SAT? Yeah, it was hard. Did I suffer getting really good grades? Yeah, it was really hard. But sometimes suffering is not something to be avoided. It’s actually something to be embraced. Do you know why Molly and Jason have not embraced suffering? Do you know why they haven’t even faced consequences?

[00:48:42] Ramit: Because their income of $142,800 a year has actually enabled this dysfunction. They make enough that they’ve never really felt true financial pain, so they’ve never really been forced to change. As I always say, if you still have a roof over your head and internet and your phone, most people think it’s fine.

[00:49:02] Ramit: That’s why they operate in vague feelings. Like, I think I spent this much, I’m not sure where it went, because they can afford to stay sloppy. A couple making a third of what they make does not have that luxury. They have to track every dollar, but Molly and Jason do not. In fact, they’re living like two single people who happen to have a baby together.

[00:49:22] Ramit: Separate accounts, Venmo transfers, no shared vision. Deep down, I think they know this isn’t sustainable and that is why they dream rather than plan. Now we need to find out if they are willing to do something about it. I will say that the good news is any couple can change their dynamic. Any couple can.

[00:49:43] Ramit: I’ve seen it happen in a lot of places. Molly, I actually don’t mind that you feel even more hopeless now. I don’t mind it and that’s why I’m asking you to tell me a little bit more. I want to hear you understanding the, the depths of the challenge here. Like there’s no easy math fix where I go, Abra cadabra and everything goes to the way it should be.

[00:50:07] Ramit: Do you? Do you get that?

[00:50:08] Molly: Yeah. I think reality is, has been setting in.

[00:50:11] Ramit: Okay.

[00:50:12] Molly: There is no magic wand.

[00:50:13] Ramit: Good. That’s great. That’s actually the lesson, key lesson of life.

[00:50:17] Molly: Yeah.

[00:50:17] Ramit: There is no magic wand. It actually takes a lot of work and sustained consistency. Would you say that the two of you are good or bad at sustained consistency, realism, holding each other accountable.

[00:50:32] Ramit: Good or bad?

[00:50:33] Molly: Bad.

[00:50:34] Ramit: Bad. I can work with that.

[00:50:36] Molly: Okay.

[00:50:37] Ramit: I can work with a couple that is honest about their shortcomings and open to making radical change. Actually, one of my favorite things to do.

[00:50:45] Molly: Okay, good.

[00:50:46] Ramit: I looked at your housing costs, your mortgage 2000 bucks, utilities 4 25, which is a percentage of 20.2% of gross.

[00:50:57] Ramit: That’s not bad.

[00:50:59] Molly: That’s not bad. And we actually recently, we moved in September to a lower rent. It’s rent, it’s not mortgage. Um, we actually moved to lower our rent, so that was

[00:51:09] Ramit: great. Really?

[00:51:10] Molly: Yeah.

[00:51:10] Jason: Yes we

[00:51:11] Ramit: did. You specifically said, we gotta get a lower rent, so let’s move to a smaller or or less desirable place.

[00:51:16] Jason: And we were talking about that for several months before.

[00:51:19] Ramit: I’m pleasantly surprised. How did you decide to do that? Most couples don’t.

[00:51:24] Jason: I think it’s probably ’cause it’s the biggest glaring number.

[00:51:27] Ramit: Mm-hmm.

[00:51:28] Jason: That faces us for our expenses.

[00:51:30] Ramit: Truthfully, the biggest savings that anybody can have is reducing their housing costs.

[00:51:36] Ramit: That’s also the hardest one because moving, whether you’re renting or certainly owning is a big challenge. It’s uprooting everything. Sometimes there’s kids involved with school districts and on and on and on. Though almost nobody does it. So I’m pleasantly surprised because it tells me you can do hard things.

[00:51:53] Ramit: That’s actually giving me more confidence about your. Ability to change as a couple. Great. Alright. You have debt. I wanna understand this debt. You have $46,640 of debt. What kind of debt is that?

[00:52:08] Molly: Let’s see, 20. One of that is two vehicles.

[00:52:13] Ramit: What’s the interest rate?

[00:52:14] Molly: The interest rate on the truck and I don’t, oh, I think it’s like 4%.

[00:52:21] Molly: I actually don’t know that one.

[00:52:22] Ramit: Fine. And what’s the other?

[00:52:24] Molly: The, the van is like seven.

[00:52:26] Ramit: Okay. Alright. What else?

[00:52:28] Molly: The rest of it is credit card debt,

[00:52:30] Ramit: $25,000 of credit card debt. Why?

[00:52:33] Molly: Great question. Uh, first

[00:52:35] Jason: one was moving across the country.

[00:52:38] Molly: Yeah.

[00:52:39] Jason: Then we bought some furniture.

[00:52:42] Molly: I mean, we did have to re, I mean like when we moved we did have to buy some stuff because we got rid of so much and we didn’t wanna like move it across the country.

[00:52:50] Molly: So getting reestablished, I guess, cost money, but then a lot of it was like. Unexpected bills. Like we had to get a new transmission in our vehicle. We had to get tires. We’ve had dog teeth pulled. And then a lot of like, you know, I have spent money on my credit card to cover like daycare costs. Um, just

[00:53:16] Ramit: why, why?

[00:53:18] Molly: Because it wasn’t, because it’s like it would withdraw from my account and then it just goes to my credit card. If there wasn’t enough in there,

[00:53:25] Ramit: what the, why, why not? Yeah. Get Jason to transfer the $9,500 per month in gross income that he makes.

[00:53:33] Molly: Great question. It just doesn’t, I’ve, I’ve told him before we’ve had this conversation, Jason and I, where I’m like, just transfer the money to me regardless when you get it.

[00:53:44] Molly: I’ll pay the rent. I’ll do it all. And he’s like, we should do that. We should. And then that’s it.

[00:53:51] Jason: That is a great question. I want to be able to transfer more and I, I need to spend more time figuring where all the money is going. I know I can do better day-to-day spending, but the money is not always there.

[00:54:05] Jason: There’s a lot of food spending.

[00:54:07] Ramit: How much

[00:54:08] Jason: I might spend as much as 20, 25 per day.

[00:54:12] Ramit: Alright, so it’s a lot of money. It’s all, that’s where some of it’s going, not all of it. ’cause you make $6,950 a month net. Alright? Your debt payments are $1,375 a month. And did you tell me that’s a minimum?

[00:54:30] Molly: Probably should be.

[00:54:31] Molly: I think we should.

[00:54:33] Ramit: Why can’t I get a straight answer?

[00:54:35] Molly: Well, because I don’t know what he spends. What he spends.

[00:54:38] Ramit: Well then why then, Molly, why are you answering for him?

[00:54:40] Molly: I don’t know.

[00:54:41] Ramit: You’ve done this several times. This is debt

[00:54:42] Molly: payments.

[00:54:43] Ramit: Hold on. When I ask about the debt, you answer for him. When I ask about the vehicles, you answer for him.

[00:54:51] Ramit: Why is it that you feel that you are taking on so much emotional load? But when I ask questions, you are the first one to answer it.

[00:54:58] Molly: Because I feel like he doesn’t know.

[00:54:59] Ramit: Well, why don’t you let him try? Let him fail. What’s the worst that would happen?

[00:55:03] Molly: You’re right.

[00:55:04] Ramit: And in how many other places of your relationship have you stepped up to save the day?

[00:55:09] Ramit: Because you’re afraid he doesn’t know the answer.

[00:55:11] Molly: A lot.

[00:55:12] Ramit: Do you see that you are perpetuating the very dynamic that has caused you to be stuck? As we are talking, you guys know it’s okay to say, I don’t know.

[00:55:23] Molly: Maybe not.

[00:55:24] Jason: I guess not. I guess not.

[00:55:26] Ramit: Yeah, that’s an honest answer.

[00:55:28] Molly: Yeah.

[00:55:28] Ramit: I actually find that the smartest people I know are very comfortable saying, I don’t know.

[00:55:32] Ramit: Think about the dynamic that’s happening right now. Yeah. You guys came to me ’cause I’ve written books on money and I know this stuff. It’s okay that you don’t know this. It’s totally okay. That’s why you’re here. Do you see what I meant when I said that money is just a symptom of how you feel about yourselves and your relationship?

[00:55:51] Ramit: When Molly keeps answering questions for Jason, she’s actually not helping him. She’s protecting him from having to admit he doesn’t know, and Jason is letting her do it because as long as she’s the one managing everything, he can wash his hands, clean of responsibility. She manages the money, she answers questions for him.

[00:56:09] Ramit: It’s not the dollar amount here. That’s not the issue. It is their dynamic. Molly gets to feel competent and in control. In fact, she has this virtue of, I’m protecting Jason. Jason gets to stay disengaged. He gets to avoid discomfort. I don’t know. I haven’t thought about it. I don’t know. Do you know this dynamic?

[00:56:28] Ramit: Have you ever seen this dynamic? Are you in this dynamic? This is really common. Where do you think they learned it? We’re gonna find out in just a second or after this. You know, mother and Father’s days are coming up and I have a great gift idea for you to give to them. Give them a subscription to Masterclass.

[00:56:47] Ramit: This episode’s sponsor, they have tons of great classes your parents would love, like developing good, repeatable habits with Atomic Habits. Author James Clear, designing stunning floral arrangements with Maurice Harris or People Intelligence with Vanessa Van Edwards. We all love to see our parents.

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[00:57:56] Ramit: That’s 15% at masterclass.com/ramit. Head to masterclass.com/ramit to

[00:58:03] Molly: see the latest offer.

[00:58:05] Ramit: Going back to your childhood, what do you remember your family saying about money when you were young?

[00:58:10] Jason: Very little talk about money. I had kind of a unique upbringing. I grew up in essentially what you might call a cult, a community where a bunch of family lived together, shared, pooled all their money.

[00:58:23] Ramit: Wow.

[00:58:24] Jason: Uh, it was a whole farm, so had our own livestock. Massive gardens fed our own livestock from the farm as well. Some of the fathers worked in a town nearby.

[00:58:37] Molly: Mm-hmm.

[00:58:37] Jason: And basically pooled all their money together though, just about all of it. And, uh, never really a lot of talk about money. I was always outdoors on a farm.

[00:58:48] Jason: Never really had to think about it that much until I was about 15 and then moved away. I got my first job, uh, working for a contractor and started to realize what money was all about. That was the same year that my dad actually passed away.

[00:59:04] Ramit: At 15.

[00:59:05] Jason: At 15, yes. So I’ve never really got to see him in the real world.

[00:59:10] Jason: Never got any advice from him as far as how to, how to use my money, what to do with it. As far as I remember, I think he only ever saved money. I don’t think he ever invested it. He just had a savings account, saved whatever he could. I didn’t grow up with a lot, but I never felt like that.

[00:59:27] Ramit: Was this a, you called it a sort of cult, was it a religious cult?

[00:59:32] Jason: It was. You can look it up on Wikipedia.

[00:59:35] Ramit: What’s it called?

[00:59:36] Jason: It’s called the Move. The

[00:59:38] Ramit: Move.

[00:59:38] Jason: It’s all over the world.

[00:59:39] Ramit: It’s still in existence.

[00:59:41] Jason: The, I guess it is in small pockets. I don’t think it’s as big as it once was, but it definitely is around.

[00:59:45] Ramit: Was it normal for people who grew up in this cult to leave and to not go back?

[00:59:51] Jason: I think during my generation, ’cause it was multi-generational, it definitely became quite a norm.

[00:59:58] Ramit: Hmm.

[00:59:58] Jason: Many people my age left and never came back.

[01:00:01] Ramit: Did your mom stay in it?

[01:00:03] Jason: My mom stayed into in it, uh, in spirit. But once my dad passed away, she moved, she wanted to be close to her relatives, so we moved back to the Midwest from Canada.

[01:00:12] Ramit: Got it.

[01:00:13] Jason: Yeah. She still very much keeps in contact with many people from there.

[01:00:17] Ramit: Oh, for, okay. Alright.

[01:00:18] Jason: Yeah.

[01:00:19] Ramit: Understanding that money was not talked about when you were a kid. I get that. How much focus was there on like, thinking ahead, long-term planning?

[01:00:30] Jason: I have a very clear memory of this because I was very surprised when we moved down to the Midwest.

[01:00:36] Jason: I was my last year of high school and I was, went from a tiny little private school within our own community to a public school mm-hmm. With 460 fellow graduates, and I lived with my aunt and uncle because my mother and my two sisters only had enough room in their apartment for them. My aunt and uncle lived right down the road.

[01:00:55] Ramit: Mm-hmm.

[01:00:56] Jason: And the very first thing I started doing was, you need to go to college, you need to get all these. You’re very bright. You can get all these, you know, advanced education classes while you’re in high school, blah, blah, blah. Start applying. This is what you need to do, you’re gonna do it. And I got scholarships.

[01:01:13] Jason: I got a full ride I college that year, just from that last year of high school, which I don’t know how that happened, but,

[01:01:19] Ramit: wow. What do you take away from that? That’s pretty interesting. Pretty impressive too.

[01:01:24] Jason: I felt pretty good to get a scholarship full ride, just to college. I, I honestly, like I said, I felt pretty good.

[01:01:32] Jason: I wasn’t probably as excited as some people would be ’cause I just didn’t have that in my upbringing.

[01:01:37] Ramit: Do you get excited in general? Like excited, physically excited?

[01:01:41] Jason: Not often.

[01:01:42] Ramit: Yeah. Do you smile in pictures?

[01:01:44] Jason: I don’t smile often.

[01:01:45] Ramit: Molly, I noticed that you’re nodding and, um, you’re noticing this, right?

[01:01:50] Molly: Yeah.

[01:01:51] Molly: Yeah. What

[01:01:51] Ramit: are you taking away so far?

[01:01:53] Molly: He gets excited, but not like, yeah, like there’s maybe we, it would be hard pressed to know that he is.

[01:01:57] Ramit: Jason, why do you think I bring this up?

[01:02:00] Jason: I think, uh, a lot of this financial issues that Molly and I have had brings up talks that never end well. Yeah. And I think that by me not showing emotion, I often show that I don’t care.

[01:02:16] Ramit: Yes.

[01:02:16] Jason: And I think that has an emotional weight and effect on her.

[01:02:22] Ramit: I’m jumping in quickly because sometimes when couples are this disconnected, they need a visual tool to help them identify what they’re actually feeling. So I wanted to try something. I pulled up this beautiful visual called the Wheel of Emotions.

[01:02:36] Ramit: I learned about this in therapy. It’s a color coded chart that breaks down feelings into specific categories that go beyond happy, sad, or angry. There are hundreds of emotions on this wheel. You can find it. Just search for Wheel of Emotions. And I asked each of them to pick two or three words that describe how they feel about money in their relationship.

[01:02:57] Ramit: Let’s listen as they go through the exercise. It’s very illuminating. Can we just do a quick exercise right now? How do you both feel about money in your relationship? Be really honest. How do you feel about money? You could pick two or three. Feel free. Jason

[01:03:13] Jason: embarrassed.

[01:03:14] Ramit: Mm-hmm.

[01:03:15] Jason: Resentful

[01:03:16] Ramit: and apathetic.

[01:03:19] Ramit: Thank you, Molly.

[01:03:21] Molly: That’s interesting. That’s really interesting. I have two of the same of yours. Um, embarrassed, resentful, and then overwhelmed.

[01:03:33] Jason: Wow. I almost picked that one too.

[01:03:36] Ramit: Now I would love for the two of you to discuss what you just learned.

[01:03:40] Jason: I, I think the resentful one is interesting.

[01:03:42] Molly: Yeah.

[01:03:43] Jason: Between us.

[01:03:44] Molly: Why do you feel resentful?

[01:03:46] Jason: I think resentful in the fact that I feel like I’m working really hard all the time so that we have money, and I feel like I also want to improve in a lot of ways in our financial stability, in our financial life together. So I feel like I’m being attacked sometimes and I resent that.

[01:04:09] Ramit: Hold on. Now toss the ball. Back to Molly. Jason,

[01:04:13] Jason: what about you? Where does the resentful come from?

[01:04:17] Molly: I guess I feel resentful that there was never like a decision made that this is the, the role that we would play. It was just assumed that because you make more money, this is where you would be, and that I would be the stay at home mom and we’re two year, two plus years in that I would still just have to take the brunt of if there’s no school or if there’s she’s sick or like that This.

[01:04:44] Molly: That it would be just assumed this is where I would be.

[01:04:48] Jason: Okay.

[01:04:49] Ramit: Can I ask you guys, did you think you would end up in this dynamic with your money when you were younger?

[01:04:56] Molly: I don’t think so. No. And what’s weird is that like I am, I, and I, I guess it’s not weird ’cause it happens all the time, but I, I am like living my mother’s role.

[01:05:09] Molly: It’s just so bizarre.

[01:05:10] Ramit: You don’t say, tell me, let’s go back. What, what do you remember about your family? What’d they say about money when you were younger?

[01:05:18] Molly: I had no, I, I did not even really think about it until my parents got divorced. I knew we were not as well off as some of my friends ’cause we lived in the neighborhood next to the rich people.

[01:05:29] Molly: But when we moved out with, I moved in with just my mom and I, that’s when I knew we were struggling financially. And she had to pay how, because that’s why she had to work nights on top of her day job.

[01:05:43] Ramit: Ah. What did she say?

[01:05:45] Molly: She told me she didn’t wanna take any money from my dad for alimony, and that’s why she has to get a second job.

[01:05:51] Ramit: Why, why did she not wanna take alimony?

[01:05:54] Molly: Because she wanted to get divorced.

[01:05:55] Ramit: What do you make of that

[01:05:57] Molly: now? I think that was the first time that she could have control over something she didn’t have control of at all in their relationship. So her deciding not to take money from him was almost like, uh, taking her power back or something.

[01:06:12] Ramit: And when your parents were together when you were younger, was your dad the primary earner? And if so, what did your mom do? Did she work or not?

[01:06:21] Molly: He was a primary earner and she was at home with us, but I don’t, she went back to work when I was pretty young.

[01:06:28] Ramit: Okay.

[01:06:29] Molly: Then she remarried and I had to move, um, out of the state.

[01:06:35] Molly: Hmm. Yeah. She, she ended up marrying someone that. Is, you know, had a lot of money in a way of like land and he never spent very much. He’s very, uh, frugal.

[01:06:49] Ramit: What lessons do you take away from her relationship with money?

[01:06:53] Molly: She has a very weird relationship with money. Um, I don’t like it. She told me that with my father.

[01:07:01] Molly: She had no control and so she never, he said, don’t worry about it. While he was like racking up debt and kind of ruining his own financial picture and ours as a family, when she remarried, she kind of took this role on as like not wanting, she doesn’t wanna spend too much money. She hides like, she like squirrels away.

[01:07:27] Molly: Money that she can then like, give to us. Mm-hmm. She doesn’t wanna tell him, although I don’t think he would care, but that’s how she feels about it.

[01:07:35] Ramit: Why does she do that?

[01:07:37] Molly: She doesn’t want to appear to be like a gold digger, I guess, if you will. Yeah. Or that she’s after his money. He doesn’t wanna appear to be greedy.

[01:07:46] Ramit: Hmm. What image do you think you might be trying to uphold as it relates to money?

[01:07:52] Molly: I think for me, I try to uphold an image of like, we’re doing fine. We’re doing okay.

[01:07:57] Ramit: And then you mentioned to me that you said, it’s ironic that I’m living my mother’s life. What did you mean by that?

[01:08:04] Molly: I have somehow gotten myself like in this dynamic where I don’t know where money’s coming from and I don’t know what’s happening and I just have to be okay with it or be silently resentful of it.

[01:08:25] Ramit: Do you

[01:08:26] Molly: I probably am like, yeah, I’m, I’m, I’m maybe not as silent as, as she was, but, um, I am resentful of not having. Control of more of our finances.

[01:08:38] Ramit: Do you have a relationship with your dad?

[01:08:41] Molly: Oh yeah. No. He’s passed away three years ago, four years ago.

[01:08:44] Ramit: I see. Okay. Oh, sorry to hear that.

[01:08:46] Molly: He was in love with Disney World and we would go almost every other year.

[01:08:53] Ramit: Mm-hmm.

[01:08:54] Molly: And it was never with money that he had saved up. It was always on the credit card. And he would just go all out.

[01:09:01] Ramit: Oh,

[01:09:01] Molly: all out. He would just spend, he, he loved spending money that he didn’t necessarily have, although I didn’t know that at the time.

[01:09:09] Ramit: Mm. And then did he rack up credit card debt?

[01:09:11] Molly: Yes, a ton.

[01:09:13] Molly: And then his house had to, he kept borrowing against his home or my childhood home. And then that got foreclosed and then he had to file for bankruptcy on top of that. Luckily had a pension from, he worked for the government, so that was what kind of saved him in the end. But he went bankrupt and. Um, never really planned for the future.

[01:09:34] Molly: Lived with my brother for the last, like, eight, 10 years of his life, had dementia. Um, I see. Yeah. So when he died, I, we, I got like a, a small check from his life insurance and that was actually part of our moving costs, but that went into us moving.

[01:09:51] Ramit: When you look back at money, young childhood, until you graduated from college, what are the lessons that you take away from your experiences?

[01:10:00] Molly: I had a very, like, negative view of money. Like I said, my, the neighborhood I grew up in was a little bit more like lower class to like, the really expensive houses were very close to where we lived and that’s where all my friends lived. So I knew I was not there and I think I internalized that into to being like.

[01:10:24] Molly: I don’t care. I don’t care about money. Like I don’t want it. Mm-hmm. I know in my twenties that then translated to like living very much by the moment and living experiences and spending everything I had to go out of the country and then coming back broke and thinking that I was like winning because I was like, all these people are in the rat race and I’m like living these experiences, you know, I’m living life.

[01:10:52] Ramit: That’s very perceptive. Okay. And did that change at some point?

[01:10:57] Molly: It kind of changed in my mid thirties. Um, it was like kind of when I started to focus more on my career and kind of saw the writing on the wall. I wanted a family, I wanted to be more responsible and that’s when that kind of shifted and I was like, whew, maybe I should have invested a little more into, you know, not just living for the moment.

[01:11:19] Ramit: You ever go to therapy?

[01:11:21] Molly: I have, yeah.

[01:11:22] Ramit: Oh. Like, do you still go?

[01:11:26] Molly: I haven’t gone recently, no. Okay. And it was definitely when I was still single and we, I didn’t have any kids.

[01:11:34] Ramit: What’s occurring to you right now?

[01:11:37] Molly: Actually, I’m thinking about, I, I really wanted to have children and I didn’t see that happening ’cause I was in my late thirties and she, I remember my therapist being like, you know, be careful what you wish for.

[01:11:50] Molly: She’s like, this isn’t just getting a partner and a kid isn’t me mean, you’re like gonna suddenly be happy. It’s a lot of work and a lot of that sometimes makes people really unhappy. I sometimes look around, I’m like, this is what I wanted. I got what I wanted and I’m, and, and I am still unhappy.

[01:12:07] Ramit: That’s quite profound.

[01:12:10] Ramit: I’m appreciating you letting that moment sit here for just a second as we. Both of us, and I think Jason as well, all three of us just grapple with the enormity of what you just said. The idea that we can really set this big intention, we can even make it happen. And as the old saying goes, wherever you go, there you are.

[01:12:33] Molly: Yeah.

[01:12:34] Ramit: And it’s not about having a daughter, I’m sure she’s beautiful. It’s not about being in a relationship, but it’s about like, am I getting what I wanted and what I needed? And perhaps even more deeply do I even know what I want? Do I even know what makes me happy?

[01:12:55] Molly: I don’t think I know what would make me happy.

[01:12:57] Ramit: Mm-hmm.

[01:12:59] Molly: I don’t know when there’s like the moment when you’re like, and I, and I know this to be true, but like where I’ll feel like I can take a breath and just kind of like, okay,

[01:13:11] Ramit: it’s interesting. I notice you’re crying at that.

[01:13:14] Molly: Yeah.

[01:13:14] Ramit: Why?

[01:13:17] Molly: Because I feel like I’ve just been holding on really tightly for a while and I, I’m like waiting for the other shoe to drop.

[01:13:24] Ramit: Molly says she got everything she thought she wanted and she is still unhappy. I appreciate the honesty. Actually, I think that might be the subtitle for the American Dream.

[01:13:37] Ramit: I got everything I thought I wanted and I’m still unhappy. So I asked Molly after hearing that if she could tell Jason directly what she needs to him, listen to her response.

[01:13:50] Molly: To me it feels like you think I kind of spend money all willy-nilly and if I were to get all of the money saved, I was the one that was receiving all of the money that we spend throughout the month that I would just spend it all.

[01:14:02] Molly: But I don’t think you understand like how hard I try to stay within certain lines and like I think you actually spend. A lot of money without consequence. I think you spend a lot more money than you think you do without any thought. To like us as a whole, I need to have control of our finances. I need to be in charge of it.

[01:14:28] Ramit: It’s quite interesting, Molly, that you said, I feel like I’ve been holding on really tightly, but you also said, I want more control over the money. How do you reconcile that?

[01:14:40] Molly: I think I want to have more control because I don’t trust him to have some of that, you know it coming up right now, it’s like this and this happens a lot.

[01:14:51] Molly: I was like, I’m thinking, I think about my mom and the way she was with money and then my dad just gets a pass.

[01:14:57] Jason: Oh.

[01:14:58] Molly: When I think about that dynamic, a lot of my mom would get a lot of the brunt of like my bad feelings about that time and my dad would just get a pass because he wasn’t someone I actually looked at as being responsible.

[01:15:11] Ramit: Make the connection to this relationship. Molly, go ahead.

[01:15:14] Molly: God,

[01:15:14] Ramit: make it say it out loud.

[01:15:18] Molly: I’m trying to, it’s all coming to be right now. It’s all, um, yeah, I guess I don’t, I don’t expect my partner now to make responsible decisions. I can’t trust him to be responsible with our money because I, I’ve never seen that before.

[01:15:34] Molly: I guess it’s never been modeled and I don’t see it in him now.

[01:15:37] Ramit: Jason, what would you say to Molly if you knew that she would listen when it came to money?

[01:15:42] Jason: Molly, I think if I were to take over more of the bills, which we’ve talked about, which I’ve never done, I would like you to know that I would be willing to take that off your plate, reduce the amount of finances that you have to take control, and also share actual accounts where you have access to all the, all the income.

[01:16:05] Jason: I think that would be something that you could trust me with.

[01:16:09] Ramit: Okay. What do you both think of that, what you just heard from each other?

[01:16:13] Molly: I think it’s a little conflicting views on how to do the money management in our home like daily.

[01:16:21] Ramit: Mm-hmm.

[01:16:22] Jason: I just know in the beginning you said you have everything in your name, which is a lot of responsibility, so I feel like I could share that responsibility more.

[01:16:31] Ramit: What I’m hearing on a positive side is that you’re both willing to change the way you’ve set it up. That part is good. I think you perhaps are not thinking about the ramifications of some of these things. Like if one person is in charge of the money and then they get hit by a bus. Yeah. The other person has no idea what’s going on.

[01:16:47] Molly: True.

[01:16:49] Ramit: And do you have a daughter? So that’s not a good position to be in. You also have $0 in savings. So just to be very blunt, Molly, if you got hit by a bus tomorrow, what do you think would happen with Jason and your daughter?

[01:17:02] Molly: There’d be a lot of scrambling for him to figure out. A lot of passwords or how to, who to talk to about literally all of our debt.

[01:17:11] Molly: And so yeah, there needs, we’re, we’re playing, we’re each playing like, I feel like a really individual role like this is, that’s how, yeah, I’m realizing and it’s not like this group decision making or group dynamic when it comes to our finances. We’re both just doing our own thing.

[01:17:30] Ramit: Why are you not married?

[01:17:31] Ramit: Out of curiosity? No judgment. Just curious.

[01:17:33] Molly: For me it was financial to be

[01:17:35] Ramit: honest. Really?

[01:17:36] Molly: Yeah.

[01:17:37] Ramit: Tell me more.

[01:17:38] Molly: We had really bad credit and my credit was really good. And when we had talked about like combining, I was like, and I kind of told him at some point, maybe this was before we had the baby, but I was like, I don’t seem having like a contract together being the best decision for me.

[01:17:56] Molly: Like you’re not a good financially sta speaking, it would not make sense for me to do that.

[01:18:02] Ramit: Can I ask a personal question? Feel free to not answer this. How were you uncomfortable getting married for financial reasons, but you were willing to have a kid together?

[01:18:12] Molly: I think I didn’t think it was gonna happen.

[01:18:15] Molly: I didn’t think we were gonna get pregnant.

[01:18:17] Jason: I would be happy to get married. I just never thought of it as a huge priority. I didn’t think of anything in regard to financial. By the way, my credit has improved quite significantly since we met.

[01:18:28] Ramit: That’s good.

[01:18:29] Molly: That’s true.

[01:18:29] Jason: Um, on my own because we don’t have anything combined.

[01:18:33] Jason: But, um, I don’t have any other reason than just didn’t feel like it was one way or the other about it. I didn’t feel like we needed to.

[01:18:41] Ramit: Alright. So if this were to happen, if you were to be able to start to achieve some of these goals working hand in hand, it would feel great. What’s stopping you from doing that now?

[01:18:54] Molly: I just, I need his help. I just don’t wanna do it all on my own.

[01:18:58] Ramit: Okay. Jason, what’s stopping you from accomplishing what you want?

[01:19:03] Jason: Not taking the time to make a plan and actually sit down and do it. I’ve done some of the things, but I could do a lot more.

[01:19:10] Ramit: What if you don’t, Jason?

[01:19:12] Jason: What if I don’t? Then I feel like we’re just gonna keep going with the same cycle, uhhuh and being out, and then what will

[01:19:17] Ramit: happen?

[01:19:19] Jason: Then all of a sudden we’re 50 and then all retirement is looming around the corner. Our daughter’s gonna graduate and we’re gonna be stuck in the same situation, but much. And

[01:19:29] Ramit: then what?

[01:19:30] Jason: And now we’re looking forward to an uncomfortable later life. Could be any number of things. Not good,

[01:19:37] Ramit: like

[01:19:38] Jason: moving in with relatives, or not having money for their daughter to go to college, or having no retirement fund, not doing any of the other things we’d really like to do, like travel, and actually have.

[01:19:54] Jason: A rich life, you know, an enjoyable lifestyle.

[01:19:56] Ramit: What about for you, Molly? What if nothing really changes?

[01:20:00] Molly: To be honest, I just, I don’t see how we can, how we would be able to like, stay together. It’s super harsh to say that, and I don’t want that, but I, I wouldn’t be able to live like this forever.

[01:20:10] Ramit: How long could you go

[01:20:12] Molly: until it felt like there was like no hope left?

[01:20:17] Molly: That sounds terrible. No. Until, I guess I don’t know, until it really felt like there was this, is that the, the partnership is not partnering?

[01:20:27] Ramit: Well, it’s not today.

[01:20:28] Molly: No, it’s not today.

[01:20:29] Ramit: And you’ve tried many, many times to get him involved. So the partnership is not partnering. So what else?

[01:20:36] Molly: I don’t know. I don’t know when would be the point of no return.

[01:20:41] Ramit: Okay. I don’t expect an answer to that very difficult question, but I do think that it is valuable to ask. What if nothing changes? And I think that that is worth discussing probably more with the therapist. It’s not working. ’cause I can see your CSP, but more importantly, it’s not working Between the two of you, you’re totally disconnected about money.

[01:21:07] Ramit: Let’s talk about where you are today and where you want to go. When you think about your money situation as we’ve discussed it today, what part feels like the hardest part to face?

[01:21:17] Molly: The retirement and savings.

[01:21:21] Ramit: Okay.

[01:21:22] Molly: Like literally the, the, as far as like numbers go, we’re, we’re trying to pay off our debt.

[01:21:26] Molly: That’s our biggest first thing, which we do have a plan for just to sell our truck. Um, it’s almost paid off and I think we could get about 15,000 for it. And, and, and then put that all towards our credit card debt.

[01:21:41] Ramit: You’re gonna sell a truck and put it towards your high interest debt. This is the greatest day of my life.

[01:21:49] Ramit: I never hear this. Never. I can’t believe it.

[01:21:55] Molly: Hey,

[01:21:56] Ramit: well done. All right. Now, if the two of you can start to move forward in things like paying off your debt, what would that feel like to do it together?

[01:22:08] Molly: Incredible.

[01:22:09] Jason: I would feel, yeah, I, I would think that would be amazing.

[01:22:12] Molly: Such a, like, like the, I could just feel like the weight off my, I mean, it would just be really great.

[01:22:19] Molly: Great step.

[01:22:20] Jason: Well, we have talked about some of that in a way where we up our daughter’s daycare to full-time to where she could, to where Molly could possibly at least get a closer to full-time remote job perhaps.

[01:22:33] Ramit: Great. I think that’s an option. What about your work on the family finances, Jason?

[01:22:38] Jason: I think I would like to take over more of the bills.

[01:22:41] Jason: I think I could easily help with that. Put them in my name. So I’m the one that has to keep track of them. I

[01:22:46] Molly: mean, that would be huge.

[01:22:47] Ramit: Molly, what would it take for Jason to regain your trust?

[01:22:50] Molly: We, I, I think it starts with weekly meetings.

[01:22:54] Ramit: Mm-hmm.

[01:22:54] Molly: And showing up for that. Like picking, picking a day that works for him where he’s not too tired.

[01:23:01] Molly: ’cause it’s true, he does come home midweek and he is worked a long day and maybe not the best day to do that. So like, setting a schedule, sticking to it for the next six weeks would be huge.

[01:23:12] Ramit: And what happens in these meetings,

[01:23:14] Jason: we can see how we are on paying off our debt and we can discuss any number of changes we made, such as dropping subscriptions, what bills we have for that month, just basic things like that too even helps I think, just to know what we have months, a month.

[01:23:29] Jason: So we’re not always wondering like, I am what I have in my account and what I have to spend.

[01:23:35] Ramit: Can I, can I add something to it? We don’t operate on a weekly basis. That’s not how we think about money. That’s too short term. You’ll never actually achieve anything consequential if you’re thinking on a weekly basis.

[01:23:48] Ramit: Second, you don’t think about how much you can afford to send to your partner. The money goes there first, and then what’s left over after hitting all of these other goals is what you can afford to spend on things like eating out total recalibration of the way you think about money. Right now, lunches and all this other stuff is coming first.

[01:24:11] Ramit: It’s actually the opposite. How’s that strike you?

[01:24:14] Jason: No, I, I agree. I, I think that’s the way it needs to be.

[01:24:19] Ramit: Alright.

[01:24:19] Jason: I would love to set up a joint account.

[01:24:22] Ramit: Yeah.

[01:24:23] Jason: I think that would be the be the easiest way. I mean,

[01:24:25] Ramit: I agree. Uh, yes. How come it’s so easy all of a sudden? How come you haven’t already done this?

[01:24:30] Ramit: Tell me the answer to this question. ’cause that is the real thing going on here.

[01:24:34] Jason: I haven’t because I haven’t felt the urgency or I guess I haven’t realized that that’s probably the best way to avoid the constant issues that we have with money when we talk. In fact,

[01:24:44] Ramit: why is it that a guy like me has to come in and and tell you this for you to believe it?

[01:24:49] Jason: I’ve been used to running my own finances my whole life. I suppose that’s part of it. And I make money and I put it in my account and then I disperse it. And I think it’s just been a habit. And I guess adjusting to family life financially has not, I guess it hasn’t been as smooth the transition as I thought it would be.

[01:25:10] Jason: I’ve been apathetic, that’s why I picked that word. ’cause I know I have been and lazy in a lot of ways. I work hard at work, but I don’t take it home as much as I should.

[01:25:21] Ramit: I appreciate that. That is candid. That to me is the truth. And Molly, what role do you think you play in this dynamic?

[01:25:29] Molly: Oh, um,

[01:25:31] Ramit: hold on. Are you, are you still, before you answer my question, were you struck by his response?

[01:25:36] Molly: I, I, when he said lazy, I was actually surprised he said that. ’cause I’ve kind of thought that, I don’t know if I’ve ever said that. I definitely have never told him that.

[01:25:45] Ramit: Why?

[01:25:45] Molly: I, I think it’s scary for me to think that I am with someone that’s lazy.

[01:25:50] Ramit: Wow.

[01:25:51] Molly: Whoa. I

[01:25:54] Ramit: Y’all are really peeling it back today. This is honest.

[01:25:58] Ramit: Molly, talk more about that. It is scary for me to think that I’m with somebody who’s lazy.

[01:26:02] Molly: I think I am trying to like, hold together an image of where I want us to be or where I think we should be. And I am not facing the reality of like where we are and who we are showing up as. In this relationship?

[01:26:21] Ramit: Where was there? Where was it that I heard this word image before. Who else had an image?

[01:26:26] Molly: Oh, my mom. Yeah, totally. Totally. It’s like just ignore what’s happening if it appears to be fine to other people. Yeah.

[01:26:37] Ramit: I find this to be quite startling, quite honest, quite surprising that the two of you have never actually been this honest with each other before.

[01:26:45] Ramit: It’s almost like we can be delicate and polite ourselves right into total disconnection.

[01:26:51] Molly: Yeah.

[01:26:52] Ramit: I don’t wanna operate a relationship on the surface level. I don’t. Not with my wife or my partner. So I find all of these things to be happening here. But I see you both making progress, step by step, talking about it, using different words than you used at the beginning of our conversation.

[01:27:10] Ramit: That part I like.

[01:27:12] Molly: Yes? Yes.

[01:27:12] Ramit: Alright, I’m gonna put these numbers up, up on screen. Your debt payments, $1,375 are. Considerable. You also have $785 of car payments. It’s doable with your income, but it adds up. You have $1,100 of groceries. Again, it’s doable, but it adds up. What’s the vision here? What are you gonna try to accomplish?

[01:27:33] Jason: Can we reduce our fixed costs so we can get an emergency fund and some savings? I would love to do that for a start.

[01:27:41] Molly: Huge. Yeah.

[01:27:42] Jason: Love it. Pay off and pay off our credit card debt.

[01:27:44] Ramit: Fantastic. Molly, what do you say?

[01:27:47] Molly: Yeah, I think by the first step I want, I see. Like I really wanna sell the truck and get the credit card debt down.

[01:27:53] Ramit: Love it.

[01:27:53] Molly: If we sold the truck, then it would be $365 less a month for the car payment

[01:28:01] Jason: and less for the insurance.

[01:28:03] Molly: Yep.

[01:28:04] Ramit: You’re down now to 72%. Good progress.

[01:28:07] Jason: Well, definitely subscriptions. I have a couple of doubles that I just found when I looked at it. Plus we don’t need nearly that many.

[01:28:15] Ramit: Just tell me the number right now.

[01:28:16] Ramit: It’s $545 a month.

[01:28:18] Jason: Okay. I think we can, I think, go ahead.

[01:28:21] Ramit: No, Jason, stop answering for him. Molly. Maureen?

[01:28:25] Jason: I could drop it down to 180.

[01:28:27] Ramit: You can drop it to 180. Okay. And then what about Molly?

[01:28:31] Molly: 35.

[01:28:32] Ramit: 35 bucks?

[01:28:34] Molly: Yeah. Most of the stuff is in his name.

[01:28:35] Ramit: Two 15. Alright, we’re down to 68%. Not bad. Not bad.

[01:28:39] Molly: I do have to make an addendum.

[01:28:41] Molly: Our health insurance is going up, so the insurance line, it’s gonna be probably 365.

[01:28:47] Ramit: You’re back to 73%. Looks like we gotta take something else off. Groceries,

[01:28:52] Molly: we could go down to 900 for sure.

[01:28:54] Ramit: Alright, 900. We’re down to 70%.

[01:28:57] Molly: Still so much.

[01:28:58] Ramit: What are y’all thinking so far?

[01:29:00] Molly: The debt payments is a lot.

[01:29:02] Ramit: Yep. So let me give you some numbers on your debt payments.

[01:29:06] Ramit: I’m just talking about your credit card debt at $25,000. Okay? If you pay that off at a thousand dollars a month, it’s gonna take you 37 months, which is three years, and you’re gonna pay $12,000 in interest. Yeah. If, on the other hand, you pay off $2,000 a month, you’re gonna pay it off in 15 months with $4,700 in interest.

[01:29:31] Ramit: Okay. So you can see that the numbers become quite different. Mm-hmm. Now, if you put $15,000 of that truck sale towards the credit card debt, then $2,000 pays it off in five months with $730 of interest, what do you notice?

[01:29:48] Jason: Lot of less interest. A lot less interest,

[01:29:51] Ramit: and a lot faster. A

[01:29:52] Molly: lot faster, A lot faster.

[01:29:53] Molly: Yeah.

[01:29:54] Ramit: C, can I ask you something? You got anything else in that garage of yours that you can sell?

[01:29:58] Molly: Yeah, a couple things.

[01:30:00] Jason: Yeah. We have a full garage.

[01:30:02] Ramit: You know what? 70% of the American households I talked to have like a bunch of stuff in their garage that actually could sell for something meaningful. Yeah. Is that you?

[01:30:11] Jason: We do have some things that we’ve been meaning to sell. Yes.

[01:30:14] Ramit: This is the easiest thing you can do. Ever get rid of it. Okay, great. The more money you do now, the more you can pay that debt off quickly. Alright, we gotta go to the other stuff on this CSP because it’s driving me insane. Investments are at 3%.

[01:30:30] Ramit: Savings are at essentially zero. Meanwhile, your guilt-free spending is 25%. I suspect it’s actually higher than that. What does this tell you?

[01:30:40] Molly: This is clearly us living in the moment, again, like just how we have always lived.

[01:30:46] Ramit: Yep. Yeah. So what do you wanna do?

[01:30:48] Molly: I wanna make some sacrifices and. Really tighten our budget and I’m ready to like spend, you know, the next year or so, however long we need to, I guess, to really like get ourselves into a better spot.

[01:31:02] Jason: Let’s get specific, I need to, I’ll skip coffee every day and no lunch. How are you gonna eat?

[01:31:09] Molly: Yeah, I’d have to like, probably spend a little more on like, lunches stuff for him. If I, if we were to do that, yeah, there would be some change. I, we’d probably have to, I think a thousand dollars would be safer for groceries.

[01:31:21] Molly: Like more realistic.

[01:31:22] Ramit: Mm-hmm.

[01:31:23] Molly: Just being honest there. Yeah.

[01:31:25] Ramit: I appreciate the honesty. We need it. And then, you know, we said that you eat out 12 times a week, let’s just average that ’cause it was like, let’s say 20 bucks for lunch and then coffee is what, like eight bucks?

[01:31:37] Jason: Uh, the ones I get are five. Not more than

[01:31:38] Ramit: five.

[01:31:39] Ramit: Five. Alright, so we got like 20. So let’s just for easy math, can we just say an average of 10? I think that’s fair. Alright. And so that’s, uh, 120 a week. 480 a month. I don’t know. Are you going to zero? That feels a bit aggressive. I, I don’t think you’re gonna go to zero.

[01:31:58] Jason: I can definitely go to zero. I can definitely go to zero on lunches.

[01:32:01] Jason: I know I can. I’ve done that plenty before. I got new, I have it recently. I’m a hundred percent sure I can do that. Coffee. I feel like I’ll go out for coffee more occasion. You know, occasionally. Not all the time.

[01:32:13] Ramit: So $240 off your conscious spending plan. Let’s take a look. Oh, that’s not gonna cut it. Can I show you a different way to do this?

[01:32:21] Molly: Yeah.

[01:32:22] Ramit: What y’all need to do is literally pay yourselves first, which means put the amount that you want to save every month there. Start with that. Don’t start with like, oh, I gotta have coffee. Nah, if you have coffee, money left over, great. Otherwise you don’t get coffee.

[01:32:39] Jason: Yeah.

[01:32:40] Ramit: So how much goes into investments?

[01:32:42] Ramit: The number recommended is five to 10%. You’re in your forties and you have very little investments. You need more than 10%. I’m gonna offer the number 15%. It is. That’s what happens when you don’t pick a number. Ramit safety picture.

[01:32:53] Molly: Okay.

[01:32:54] Ramit: Okay. 1100 right on the money. Boom. There you go. How much you wanna do for savings?

[01:32:59] Ramit: Five to 10% is recommended. Y’all need more than that.

[01:33:02] Jason: 10%?

[01:33:03] Ramit: Nope. Go higher than that.

[01:33:05] Molly: 12%.

[01:33:05] Jason: I would need more than that. Okay. 15%.

[01:33:08] Ramit: Good. Great. Alright. Y’all have $135 a month to spend on everything Now. I don’t think that’s realistic, do you?

[01:33:16] Molly: No.

[01:33:17] Ramit: No.

[01:33:17] Jason: Uh, maybe not.

[01:33:19] Ramit: Actually until now, I don’t even still fully understand where your money is going on a monthly basis, do you?

[01:33:27] Jason: Not fully, no.

[01:33:29] Ramit: So then why not simply start over? Create a joint account where the bulk of the money, the ba, the gross income that comes in every month is $11,900. The net is 86 50. Why not literally take $8,000? Send it to the joint account. Each of you can have 300 bucks to do whatever you want with, go enjoy whatever you want, but your future is together.

[01:34:00] Ramit: $8,000 every month. Net comes into that joint account and that’s the money you use to decide where it goes.

[01:34:09] Molly: Mm-hmm.

[01:34:09] Ramit: When that money is in one joint account, suddenly it’s gonna be very clear where that money’s getting spent.

[01:34:15] Jason: I a hundred percent agree.

[01:34:16] Molly: I agree.

[01:34:17] Jason: I think that’s the best.

[01:34:18] Ramit: Alright.

[01:34:19] Molly: Okay.

[01:34:20] Ramit: That’s it.

[01:34:21] Ramit: That’s all we, that’s all we need to do. Just put it in a joint account and we’re golden.

[01:34:24] Molly: Yeah, that’s a great start.

[01:34:26] Ramit: What’s gonna happen then in,

[01:34:29] Jason: I hope? Well, yeah, thinking about it that way though, investment and savings first, uh, makes huge sense to me. And then what we have, whatever we have, we have.

[01:34:39] Ramit: I wanna add one more bit of good news for you.

[01:34:41] Ramit: Once you pay off that debt and you pay it off aggressively, if you take that $2,000 that you were putting towards debt. You invest all of it, you literally just flip a switch and you send it to your investment account Every single month, you will have not 1 million, but 1.75 million in 25 years. That actually starts to be really cool.

[01:35:08] Jason: Yeah.

[01:35:08] Molly: Okay.

[01:35:09] Ramit: That’s amazing difference. Remember that 1.75 million does not include any raises that you might get. It does not include your ability to pay off the debt faster by selling bikes, et cetera, et cetera. It doesn’t include any upside. It also doesn’t include any downside, like a layoff, which is why I want you to have a savings.

[01:35:28] Ramit: But do you start to see, it starts to become more comfortable, more achievable? If you can operate as a team.

[01:35:36] Jason: Yes. Yeah.

[01:35:36] Ramit: What do you think?

[01:35:37] Jason: I, I see that. Yes.

[01:35:38] Molly: I like that. Yeah.

[01:35:39] Jason: I’m looking forward to it.

[01:35:40] Ramit: Alright.

[01:35:41] Molly: I like, I like the reality I that you’re speaking here.

[01:35:44] Ramit: Yeah. So,

[01:35:46] Jason: yeah.

[01:35:46] Ramit: Can, let me tell you where there are some holes in your plan.

[01:35:49] Ramit: ’cause there are some holes.

[01:35:50] Molly: Yeah.

[01:35:50] Ramit: And you two are gonna need to figure it, ’em out together.

[01:35:53] Molly: Okay.

[01:35:54] Ramit: First of all, right now you still only have $135 a month on discretionary spending. That’s simply unsustainable. That is 2%. And from a couple that currently is probably spending more like 30%. That’s just impossible for you to achieve.

[01:36:13] Ramit: I think you too might be able to realistically achieve 10% if you were totally dialed in as a team. Yeah. Completely dialed in. That 10% is like, we eat out once a month and we basically never go out for coffee or random stuff. Everything. And maybe just maybe we take a very modest vacation once a year, but like 2% it’s not possible.

[01:36:34] Ramit: So you’re gonna have to make some adjustments in your CSP.

[01:36:37] Molly: Okay.

[01:36:38] Ramit: You may have to dial down your investment contributions, but like that’s money you’re not gonna have later.

[01:36:46] Molly: Yeah.

[01:36:47] Ramit: So that’s a tough one. You may have to dial down your savings. I really would not like to see that. But that might have to happen.

[01:36:53] Ramit: Or more likely, you probably have a bunch of money you’re just spending without even thinking about it.

[01:36:58] Molly: Yeah.

[01:36:58] Ramit: I bet you there’s at least two, 300 bucks a month of random that is just like absorbed into the ether. Find it, fix it, put it towards your discretionary spending.

[01:37:08] Molly: Okay.

[01:37:09] Ramit: Yep. Okay. Next up, just a couple things.

[01:37:11] Ramit: As far as it currently stands, you cannot buy a house no time soon. As far as real estate investing, I don’t know where you would get the money and taking out a loan. It’s all great if it works, but if it doesn’t, then you’re really, so would I do that? I know as a GC you have a lot of experience to be able to do that and save money.

[01:37:32] Ramit: Mm-hmm. I would be extremely cautious about doing that anytime in the near term future. I wouldn’t even think about it until I had a clear trajectory for my retirement to have enough until I had at least, at least 12 months of an emergency fund. I’m talking big. That’s a lot of money.

[01:37:51] Jason: Yeah,

[01:37:51] Ramit: and, and everything was dialed in with the two of you as it relates to money.

[01:37:55] Ramit: So basically I wouldn’t think about it for the next five years. Plus your daughter, you can’t afford to pay for her college, not now. And the money you are putting aside for her. Whatever that number is. I would rather have you put that money towards your debt. She has time. You two have far less. She has the opportunity to take out loans or go to a community college or get scholarships.

[01:38:18] Ramit: The two of you have none of those things later in life. It is possible if you all were to triple your household income, you could do those things. Yes. And you were to get totally dialed in on all the investing and saving and all that. Yes, you could do it, but you’re in your forties and until now, like you don’t even share accounts.

[01:38:38] Ramit: So I think it’s important to start being realistic with what is likely and what is not. Early retirement, probably not likely. Could you? Sure. If everything went right. But I don’t make a life plan based on every single thing going perfectly. Right.

[01:38:53] Jason: Mm-hmm.

[01:38:54] Ramit: Are you hearing the urgency of what I am sharing with you?

[01:38:58] Molly: Yes. Yeah. Yeah.

[01:38:59] Ramit: Molly, how are you feeling right now?

[01:39:01] Molly: Bummed.

[01:39:01] Ramit: Mm-hmm.

[01:39:03] Molly: It’s pretty bleak.

[01:39:06] Ramit: That’s an interesting word you chose? Bleak. Bleak. Because,

[01:39:11] Molly: because I guess I, you know, a lot of our plans to get ourselves in a better situation kind of feel like they’re not gonna be possible.

[01:39:24] Ramit: Oh, like, like the are you mean the real estate investing one?

[01:39:28] Molly: I kind of, I thought that would be a good leverage for us because of our, like, combined talents. I just worry now like that’s, and even if it’s like a dream we can do in like five years from now, that would be cool. I just see, I see it as a way to help get us farther along than we can with just, you know, like you said, if I just, if I made $50,000 more a year, that’s not, that’s not gonna change things.

[01:39:56] Ramit: Can I make an observation?

[01:39:58] Molly: Yeah.

[01:39:59] Ramit: So first of all, I don’t mind that you’re upset. I would be upset in your situation as. This is probably the first time you’re hearing somebody just give you some blunt feedback.

[01:40:10] Molly: Yeah.

[01:40:11] Ramit: First of all, I’m not the ultimate authority with money. Nobody is. You too will decide what is right for you.

[01:40:18] Ramit: And if after a few years you go, Hey, we actually want to do this real estate investment and we have the skills and we’ve carefully run the numbers, that’s totally up to you. But more importantly, I actually don’t consider this bleak. Bleak is if you don’t do anything for differently for five years, then your situation is bleak.

[01:40:40] Ramit: And I mean it. It gets really bad, really fast. You all still have time. Bleak means you can’t ever eat out. You can still eat out a little bit. You have to be way more thoughtful about it.

[01:40:56] Molly: Yeah.

[01:40:56] Ramit: My family growing up once every six weeks or so with a coupon, I wouldn’t call it bleak. It was a big deal for us to go out to pizza.

[01:41:04] Ramit: That’s not bleak. You two are gonna end up with at least $1.75 million if you are totally dialed in, possibly more. And one other thing, if you actually do increase your income by $50,000, Molly, after getting all of this stuff dialed in, that makes a massive difference to the overall financial picture, like gargantuan.

[01:41:29] Molly: Okay?

[01:41:30] Ramit: That could actually allow things like real estate investing, et cetera. So don’t discount that, but right now, if you were to do it today, it would be largely meaningless.

[01:41:41] Molly: Okay,

[01:41:41] Ramit: fix this. Fix what is happening. It’s almost like there’s a fire in your house. Yeah. And you two are focused on building a deck, the deck, put the fire out.

[01:41:51] Ramit: We’ll deal with that later. That is my approach.

[01:41:54] Molly: Okay.

[01:41:54] Ramit: Alright.

[01:41:55] Jason: Yes. Okay. Love that approach.

[01:41:57] Ramit: Jason, what about you? How are you feeling hearing this?

[01:41:59] Jason: I love the idea of combining our, getting a combined account and. Savings and investment first. I love that whole plan. I think it’s hugely helpful just to, my thought process.

[01:42:11] Molly: It’s kind of like a puzzle that we’re, we both like puzzles and we have to figure it out together.

[01:42:17] Ramit: Totally. We have, we have this much, we have, we know that we have to prioritize paying off the high interest debt ’cause it’s drowning us. So we already have this much taken away every single month for the next roughly six months.

[01:42:29] Ramit: What else can we do now? And then what can we change on month seven? It’s like a puzzle. It’s a three dimensional puzzle. I love the way you described that.

[01:42:38] Molly: Can I say one thing?

[01:42:39] Ramit: Yeah.

[01:42:40] Molly: I, I, that just thought about it was like, if we, like our powers combined, if we’re both motivated and working on this together, like that’s where I can just, it’s like the, I just know that we could get some momentum that would make us both feel really excited and want to like just to see the fruit of that labor.

[01:42:59] Molly: I know we would. Yeah, like our powers combined. That’s what I keep thinking, like we could make some real change and like real awesome things happen.

[01:43:08] Ramit: I agree. I agree. Do you agree, Jason? I agree.

[01:43:11] Jason: I definitely agree.

[01:43:12] Ramit: Amazing. The two of you working together?

[01:43:14] Molly: I, I would look.

[01:43:17] Ramit: I asked Molly how long she could keep living like this.

[01:43:20] Ramit: She couldn’t answer. She is finally seeing what we have been seeing this entire conversation. Jason’s disengagement goes beyond money. It’s about everything and her response, which is to take on the debt in her name to try more and more to stack on responsibilities on our shoulders and manage everything alone simply perpetuates this.

[01:43:45] Ramit: But I also noticed that Jason called himself lazy and that was quite interesting. On one hand, I appreciate the candor on another hand. People who are not behaving as good partners often employ this strategy of admitting something as a way to cleanse themselves of responsibility. If I can be really blunt, I’m not interested in you admitting you’re lazy.

[01:44:09] Ramit: I’m interested in what you do about it. Molly admits she doesn’t trust Jason to be responsible with money because she’s never seen it modeled not in her dad, not in her partners. That’s a brutal realization. Neither of them knows how to be responsible with money. They didn’t have role models who could teach them.

[01:44:25] Ramit: Okay, fine. I hear that. If you have never seen what it looks like to be a responsible, loving partner, then it’s unlikely you just trip and fall your way into it. But you’ve got to be able to learn. There is an infinite amount of cheap and free information online. There’s resources everywhere. They had a chance to talk to me.

[01:44:47] Ramit: Now it’s up to them. I will say they moved to a cheaper rent without me telling them to, they already have a plan to sell the truck and pay off debt. And when I showed them it’s possible to have $1.75 million if they work together. Maybe they saw the possibilities. Do you think they can do it? I actually have their follow-ups for you right now.

[01:45:08] Molly: Hi.

[01:45:09] Jason: Hi.

[01:45:11] Molly: Hope you’re all Well, I think we had a couple day emotional hangover after the

[01:45:17] Jason: Yeah, there was a little bit. It was good though.

[01:45:19] Molly: It was great. It was a lot.

[01:45:21] Jason: My biggest surprise from the conversation I think was how in depth we got about our personal relationship.

[01:45:29] Molly: Yeah.

[01:45:29] Jason: Versus um, just talking about money.

[01:45:33] Molly: Yeah.

[01:45:33] Jason: And I think that was really important and really eye-opening and very helpful in a lot of ways. Also brought up a lot of things that I wasn’t aware of, just

[01:45:46] Molly: mm-hmm.

[01:45:46] Jason: Not even money. Related. But

[01:45:48] Molly: yeah, I

[01:45:48] Jason: think it was good.

[01:45:49] Molly: That was probably my biggest surprise too, is like I didn’t expect us to be so vulnerable and honest about kind of bigger picture stuff that like money is a, um, a little bit of a, a reflection of things than our relationships.

[01:46:05] Molly: So yeah, I would agree. The biggest takeaways for me were, I guess just like how urgent it is to start saving. I mean, I knew, I know that I knew that, um, cerebrally, but I think just the talking about the conversation about our retirement and like, it just made things very real and having numbers of like, what if we wanna get to this certain target for retirement, like how much we need to save each month.

[01:46:35] Molly: I think that was a real big takeaway for me and like just made it very real,

[01:46:41] Jason: I guess also. The reality of the fact that we need to really stick to that for a while. Yeah. And not necessarily buy a house.

[01:46:52] Molly: Yeah.

[01:46:52] Jason: You know, and just really tighten our expenses. Stick to what we learned in the, you know, during the interview.

[01:47:01] Molly: Like I make sense now. I’ve been thinking about, it’s like we just have to get this right for a while and like automate the way our finances work and the way our savings and our bills and all that stuff. Like get that just so dialed that it will make sense. It’ll start, I feel like we’ll be able to come up for air and be like, oh, this is, this is what this feels like when you’re not just in like survival mode.

[01:47:27] Jason: Right. I think we definitely want to open a joint bank account. Yeah. And all, all our money through there first, so we can easily, you know.

[01:47:37] Molly: Yeah,

[01:47:37] Jason: see everything

[01:47:38] Molly: together.

[01:47:38] Jason: Have to elaborate too much on that.

[01:47:40] Molly: That and t Today is Sunday, so we’re doing our first meeting after this video. We’re gonna do our first, uh, financial meeting.

[01:47:46] Molly: We’re gonna do it on Sundays when our daughter is napping and talk about this stuff. And then moving forward into the week, you know, take what we’ve talked about into the week, which I think will be su super helpful. I wanted to give a little update since we recorded, uh, we’ve had some steps forward.

[01:48:07] Molly: We’ve had some setbacks, but overall, I feel we have a lot of forward momentum in our financial life together. The biggest change isn’t even really about the numbers, but how we talk about money and we can, we can have a talk about our finances without feeling judged or getting defensive. Or honestly just avoiding it all together.

[01:48:34] Molly: And that has been a huge shift for us and has changed our relationship completely. I did lose my job at the beginning of the year, which was a setback, but weirdly, it actually shook us out of a cycle that wasn’t working anyways. And I did find a new job recently where I’m making more money, so that has felt like a big win.

[01:48:56] Molly: We have been holding regular money meetings, not perfectly, but consistently enough to matter. We’re selling the truck soon, which is going to pay off a huge chunk of debt and credit card debt specifically. And then, um, with the goal of being completely out of credit card debt in by June, which. Is massive for us.

[01:49:20] Molly: I’ve also took all of my old retirement accounts from past employers and rolled it over into the new account. Um, so it’s not just sitting idly anymore. We’ve created new benchmarks for savings for retirement, which was a huge thing. So that has felt really incredibly relieving. But more than anything, most importantly, we have a plan now, and that alone has felt so huge and honestly, life changing.

[01:49:51] Molly: We are both just so incredibly grateful to Ramit, um, to this experience and to the team. We, I started the money coaching program, which has been incredible so far, and we’re still feeling the support and that’s just been super helpful for us in our journey. So yeah, we’re just so thankful and. Yeah. Thanks.

[01:50:14] Molly: Bye.

[01:50:16] Jason: Hi, Ramit. Uh, I wanted to share an update since our recording. Things have definitely improved for us. Um, we’re having financial meetings much more consistently now. Uh, they’re far more comfortable collaborative and a lot less tense. I genuinely

[01:50:33] Ramit: feel like we’re on the same team when we talk about money.

[01:50:36] Jason: I’ve taken on personally more responsibility with our household finances to help lessen burden on my partner. And that shift I think, has made a meaningful difference. I’ve been asking more questions, um, so I can be more informed and involved in our finances, and I think that’s helped me feel more engaged and accountable.

[01:50:59] Jason: And it’s helped us operate more like True partners rather than just avoiding tough conversations. I’ve increased my retirement contribution by a few percentage points and plan to continue raising it over the next couple months until I reach at least 15%. Also, I’ve been using Rocket Money a lot more intentionally, uh, which has really been helpful in tracking spending and staying proactive.

[01:51:28] Jason: I think overall we’re collaborating in a much healthier way, and there’s more openness, more teamwork, and it feels sustainable. And I think we’re really building, building momentum. So thank you again for this opportunity and thank you so much for spending your time with us. Um, appreciate it.

[01:51:48] Ramit: Listen up. If you want my help with your specific money questions, there are only two ways to get it.

[01:51:53] Ramit: First, you can apply to be on this podcast at iwt.com/apply. Or second, you can join my money coaching program instantly at iwt.com/money Coaching. In that program, you get access to live virtual events, monthly group coaching calls, live q and as, and an amazing, huge community of other people like you.

[01:52:17] Ramit: Check it out at iwt.com/money coaching.

#house

256. “We moved abroad for fun. Now we can’t afford to leave”

admin — Tue, 14 Apr 2026 19:20:03 +0000

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Ramit Sethi of I Will Teach You To Be Rich talks to Liza and Bradford, a couple with three kids living as expats in Colombia, South America. They earn $120,000 a year, have $273,000 in net worth, and by expat standards, they’re living well. But they have $1,500 in savings, zero savings rate, and they’ve been cycling in and out of debt for years. And Liza has been pushing to move back to Canada nearly every single day for five years.

When Ramit opens their Conscious Spending Plan, the problem isn’t the income. Investments are protected like a sacred object. Savings don’t exist. And a line of credit stands in as a de facto emergency fund. On paper, they look fine. In practice, one bad month away from going back into debt.
But the money is only part of the story.

What Ramit uncovers is a dynamic that has quietly been draining both of them. Bradford takes on every financial burden alone, working two, three, four jobs whenever money gets tight. And every time he does, Liza loses her sense of purpose and reason to contribute. Neither of them realised how much damage this pattern was doing. But after years of it, they’re both stuck.

In this episode we uncover:

● The expat “money hack” that became a trap, and why Liza feels stuck abroad
● Why moving back to Canada wouldn’t actually improve their finances
● Bradford’s taxi fleet business that lost between $60,000 and $100,000, and what it revealed about their patterns with money
● The debt cycle they keep celebrating as a win
● Why Bradford’s “efficiency” mindset is quietly disempowering Liza
● How Liza’s self-worth became tied to what employers will pay her
● What it looks like when a couple finally builds a shared financial vision
● The follow-up: what Liza and Bradford did differently after the episode

Chapters:

(00:00) Cold open: Can we afford to leave?
(01:08) Episode intro + financial breakdown
(02:31) Meet Liza and Bradford
(05:07) The “money hack” that became a trap
(09:30) Five years of the same argument
(25:00) The debt cycle begins
(32:30) Opening the Conscious Spending Plan
(38:00) How much can Liza actually earn?
(41:39) The line of credit problem
(45:52) Breaking down their system
(01:30:00) The pattern hurting both of them
(01:33:30) What do you each need?
(01:47:00) Follow-up

This episode is brought to you by:

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Netsuite | Get the free guide “Demystifying AI” at https://netsuite.com/ramit

Wispr Flow | Try Wispr Flow for free at wisprflow.ai/ramit

If you or your partner get stressed spending $150 on dinner, or are covering up spending, I’d like to help. Apply to be coached for free on this podcast at https://iwt.com/apply

Calling LA couples: Apply to be coached for free on this podcast at https://iwt.com/apply

Transcript:

[00:00:00] Liza: I’m Colombian, but I grew up in Canada. I wanted to come back and live here as an adult, as a fun experience for like a year or so. But we’ve been here almost seven now. I didn’t sign up to come here forever.

[00:00:10] Ramit: If you were to move back to Canada tomorrow, would you be able to afford it?

[00:00:13] Bradford: I mean, we could get there.

[00:00:15] Bradford: I don’t know if we’d survive a month without like the food bank.

[00:00:18] Liza: I feel like everything in North America has gotten more expensive. Thinking of going back suddenly. It feels like a big leap.

[00:00:23] Ramit: Why is this question about moving back to Canada coming up now?

[00:00:27] Liza: My financial situation kind of changed recently.

[00:00:30] Liza: Then I feel like this desperation of, oh, I need to go find something else.

[00:00:34] Ramit: I mean, I can understand it when things get hard sometimes you just wanna say like, I wanna go home.

[00:00:39] Liza: Yeah.

[00:00:39] Bradford: I don’t want my kids to have the same life that I had where, you know, like I did a few things, but. Later found out it was all my grandparents.

[00:00:47] Bradford: I don’t want to be 70 and and working.

[00:00:50] Ramit: As you sit here and think about the numbers, what does it feel like to you?

[00:00:53] Bradford: I mean, the first word that comes to mind is hopeless. If I’ve gotta put more than that away, I don’t know how to do that without basically just living for retirement [00:01:00] and forgetting how to live my life right now.

[00:01:03] Ramit: Bradford and Lisa moved to Columbia six years ago with three children, and they had a simple plan, try it for a year, have an adventure, but now they’ve been there almost seven years and they are stuck. When they look at their finances, they realize they might not actually be able to afford to leave.

[00:01:21] Ramit: That’s because for years they’ve been cycling through the same old pattern. Get into debt, pay it off, then get right back into debt. I’m looking at their conscious spending plan, which we call their csp. If you want my help with your own csp, you can join my money coaching program at iwt.com/money Coaching.

[00:01:40] Ramit: Let’s take a look. Assets $120,000. Investments, $153,000 savings, $1,500. Keep in mind, they are a family of five debt, $1,300, total net worth $273,000. Their [00:02:00] fixed costs are 68%. A little bit high, but not super crazy investments. 14% savings, 0% guilt-free spending 17%. Okay. I’m noticing 0% on savings, which is the problem.

[00:02:16] Ramit: No savings automatically limits your options like the option to move back to Canada. I’m curious for you, as you are hearing this, what is a time that you felt stuck because of money? Tell me in the comments and please know that I read every single one. And now let’s meet Bradford and Lisa, calling couples from la.

[00:02:38] Ramit: I want to talk to you on the upcoming season of Money for Couples. I am excited to be recording episodes in person live in studio. So if you are struggling with debt, retirement, supporting aging family members, overspending, or talking to your partner about money, apply to the podcast right now. I’ve done some podcast episodes in [00:03:00] person before.

[00:03:00] Ramit: Honestly, I love them. So if you are LA based and you essentially want a free three hour coaching session with me, you can apply right now at iwt.com/apply. Again to be on the podcast. It’s iwt.com/apply. In your application you wrote, we are looking to return to living in Canada, but we are afraid that we are stuck abroad in Columbia, south America because we have been priced out of life.

[00:03:30] Ramit: In North America with rising prices. Okay. If you were to move back to Canada tomorrow, would you be able to afford it?

[00:03:37] Bradford: I mean, we could get there. I, I don’t know if we’d survive a month without like the food bank or like something, I don’t know.

[00:03:45] Ramit: That sounds like No, to me,

[00:03:46] Liza: no, because we would have to find new jobs, so we would have to start over from scratch.

[00:03:51] Ramit: How did you decide to move to Columbia?

[00:03:53] Bradford: I got surplused in my job and we had always talked about it. Uh, I’m a teacher, and so we were [00:04:00] like, you know what, maybe this is the right time. At roughly the same time somebody from a school here contact me, said, I have a calculus position open. Do you want it? And we kind of went Okay.

[00:04:10] Bradford: And then we sold everything and moved in a month.

[00:04:13] Ramit: Cool. How long ago was that?

[00:04:14] Liza: It was almost six and a half years.

[00:04:16] Ramit: Wow.

[00:04:16] Liza: And by the way, I’m Colombian, but I grew up in Canada, so I wanted to go, come back and live here as an adult, as a, as a fun experience for like a year or two or so. But we’ve been here.

[00:04:26] Liza: Almost seven now.

[00:04:27] Ramit: Wow. So you plan to be there for like a year and it’s been now six and a half years.

[00:04:30] Liza: Yeah.

[00:04:30] Bradford: Yeah.

[00:04:31] Ramit: That’s pretty cool. What an adventure. What was the transition like moving from Canada to Columbia?

[00:04:36] Liza: I would say it was fast. Like we decided, sold everything car house furniture within six weeks and we were here.

[00:04:44] Ramit: Wow.

[00:04:44] Liza: Um, partly lack of planning, but we’re also very la like adventurous on. We don’t mind being spontaneous, but we don’t plan for big transitions like this one. Um, so it was quick.

[00:04:55] Ramit: Let’s talk about how much it cost in Columbia versus [00:05:00] Canada. Were you saving money when you moved to Columbia?

[00:05:03] Liza: Yes, if you’re comparing rent to rent or gas to gas or whatever, yes.

[00:05:08] Bradford: Mm-hmm.

[00:05:08] Liza: But the income here is less. So we’re about the same. I would say

[00:05:11] Bradford: part of what’s drawn us to stay is that the things that are cheaper are the fun things. So with a family of five, you know, we can go out for dinner or bowling or the movie and like, we don’t even think about it. It’s like, it’s so cheap.

[00:05:22] Bradford: It’s like, yeah, of course we’re gonna go do that.

[00:05:24] Ramit: Mm.

[00:05:24] Bradford: Whereas, you know, like our utilities are, you know, somewhat similar. Although they’re better now in, in Meine they were worse on the coast. So there’s certain things that are more expensive. Um,

[00:05:34] Ramit: uh, how old are your children?

[00:05:35] Bradford: Three, nine and 11.

[00:05:37] Ramit: Okay. Alright, great.

[00:05:39] Ramit: Um, Lisa, in your application you called your lifestyle, two things that I found very interesting. The first, you called it a money hack, but then you said it now feels like a trap.

[00:05:52] Liza: Yeah,

[00:05:52] Ramit: can you tell me about that?

[00:05:53] Liza: So, yeah, when we came, we thought many people here that are expats, they live here cheaply and they’re making dollars, and [00:06:00] so they can live really well here because it is cheaper to, to live that way.

[00:06:03] Liza: For me, it feels more like a trap because I haven’t been able to get traction here with any kind of jobs. Um, if I work virtually, which I have been doing, freelancing and all that, it’s, you know, I have to hustle to find contracts and all that. And the jobs here that I have applied for or tried to get, they just pace a little that it feels sad for me to be like, maybe here it’s a good salary for the average person, but for me, with a North American perspective.

[00:06:27] Liza: It’s s difficult to be like, oh, I’m gonna work 40 hours a week for so little money. It’s, it’s shocking. So

[00:06:33] Ramit: can you give an example, 40 hours a week for how much?

[00:06:35] Liza: For example, $1,200. So that seals to me like it’s a waste of my time. ’cause I’m like, oh, I’ll be making like in Canadian dollars, like I think I count like $7 an hour and I’m like, that seems sad because minimum wage in Canada is 15.

[00:06:48] Liza: So I could even just go work any minimum wage job and do. Okay. So

[00:06:51] Ramit: And what do you mean by the word trapped? Trapped abroad?

[00:06:55] Liza: Two reasons. One, I think Bradford is very happy here. Uh, he has found a good job [00:07:00] here that he enjoys. He goes out and does things and uh, and I think also he just content to live where we are.

[00:07:06] Liza: Um, I am not as happy here. And so in a sense I feel trapped because we are at odds. He, he’d be happy to stay here forever and I’m not.

[00:07:14] Ramit: Okay.

[00:07:15] Liza: Um, and then on the other side, I feel like everything in North America has gotten more expensive. Thinking of going back suddenly. It feels like a big leap to be like.

[00:07:23] Liza: Now we’re used to paying this much, and now we have to pay $2,000 more a month for rent, or we have to pay, you know, whatever, extra for food. And so I feel like I don’t even know how to make that that work. I guess.

[00:07:33] Ramit: Why is this question about moving back to Canada coming up now?

[00:07:37] Liza: For me it’s because I haven’t found anything here.

[00:07:40] Liza: Like for me, like financially, like in terms of work, it just seems really hard for me to find traction here.

[00:07:45] Ramit: Mm-hmm.

[00:07:46] Liza: But I feel like well at least there, if I go work minimum wage, I’ll make more. Now does it mean that I’ll, I’ll have more buying power? I don’t know, but it just feels really crappy for me to be here and be, you know, if I get offered $7 [00:08:00] an hour, I’m like, dear, see Lake.

[00:08:02] Liza: That seems really sad, so.

[00:08:03] Ramit: Mm. It’s interesting the words you used a lot of feels,

[00:08:08] Liza: yeah.

[00:08:08] Ramit: And seems, mm-hmm. It feels sad. I could be making more in Canada minimum wage. It seems like I should be making more. What do you make of that?

[00:08:18] Liza: Maybe there’s no numbers to back it up. I’m going by a feeling.

[00:08:23] Ramit: Do you do that a lot?

[00:08:24] Liza: Probably. He is the mask guy. He is the calculus teacher. I more go by how I feel.

[00:08:30] Ramit: And, um, what about for you, Bradford? Why now? Why is this discussion about going back to Canada, coming up?

[00:08:35] Bradford: It is a sad prospect to feel like she’s in her best money making years and she’s being offered jobs that pay very little.

[00:08:42] Bradford: It probably doesn’t help when, you know, like she, she sees like, like she said, I do well, I make a mix of pesos and US dollars. Um, I also get, uh, Canadian dollars. We run a company as well. Uh, and so we get Canadian from that. I think the other thing though, to add to it that wasn’t mentioned is just, uh, [00:09:00] probably our parents, uh, you know, like they are, our fathers are both 70.

[00:09:04] Bradford: Uh, my mother’s had some health issues last year and so what we’re trying to figure out is like. Do we need to go back to be closer so that we could see them more? And so I think like that’s, that’s sort of the debate that I think we often talk about as well.

[00:09:17] Ramit: Got it, got it, got it. Okay. When you talk about moving back, first of all, how often do you talk about it?

[00:09:24] Liza: For me? Daily.

[00:09:25] Bradford: I was gonna say,

[00:09:26] Ramit: so like how did the conversations go? Can you just walk me through one of, let’s do yesterday’s.

[00:09:30] Bradford: How about today? An hour ago

[00:09:32] Liza: I got called back for this job, the pay is $1,200. That’s why it was fresh in my mind and I said, I’m gonna have to go back and even if I have to leave you here, I will go.

[00:09:42] Liza: And then you can come later with the kids when the school year ends. So when you finish your contract or whatever, but I may just have to leave.

[00:09:48] Ramit: It sounds like it’s coming up very quickly. Am I reading that correctly?

[00:09:52] Liza: Yeah, for sure.

[00:09:53] Ramit: Bradford, what is your response to that?

[00:09:55] Bradford: Oh, my response, like today was literally, oh.

[00:09:59] Bradford: Can we just not [00:10:00] talk about that today? I think that was my exact words. Honestly, I’m scared about the idea of her leaving for a month, two months, three months, whatever it ends up being. Uh, taking probably our youngest. ’cause I can’t imagine that our three-year-old would do well just here with me and the older two.

[00:10:14] Bradford: I don’t do well away from Lisa. I like, I’m always like, oh, let’s go together. And she’s like, oh, just go on your own. So that really scares me, the idea of her needing to go back. But I, I also understand she’s, you know, she doesn’t feel like she’s contributing to her life, let alone our life, I think sometimes here.

[00:10:32] Bradford: And so I’m try, I, I’m sympathetic.

[00:10:34] Ramit: What is the role that each of you is playing in these conversations?

[00:10:37] Liza: I push and he retreats maybe?

[00:10:40] Bradford: Yeah.

[00:10:40] Ramit: Mm-hmm.

[00:10:41] Bradford: Yeah, I think she’s right. I am very happy here. Um, but I am not oblivious to the fact that she’s not as happy as I am here.

[00:10:48] Ramit: And is this how the conversations go each time?

[00:10:50] Liza: Most of the time.

[00:10:51] Ramit: And they’ve been going on for a long time.

[00:10:53] Liza: Probably five years least until I felt like it was no longer, oh, we’re here for fun.

[00:10:57] Bradford: I’m feeling a little bit like a jerk right now because I think, I think it [00:11:00] probably has usually been her saying, maybe we should go back. And I’m usually saying, maybe we should stay.

[00:11:04] Bradford: I don’t know if it’s ever been the other way around.

[00:11:06] Ramit: Each of you has your position in the boxing ring. You’re each at an opposite corner. You’re, it’s almost like, you know, maybe tug of war is a better metaphor. You’re each pulling, no one is giving anything, and over time it’s just become calcified. Each of you is in your position, you’ve dug your heels into the sand.

[00:11:24] Ramit: How have you approached it? ’cause as recently as this morning, Lisa, you said like, I’m going, maybe I need to go back. You can come back later. That’s one approach. How else have you approached navigating this huge life decision?

[00:11:38] Liza: So there’s the odd comments like this morning where I mentioned it in passing.

[00:11:40] Liza: Um, then there’s the times where I’m like, no, we need to make a decision. And so we set us up time. For example, we did that in July. I got my mom to stay with the kids. We went away overnight. Um, we sat down, we discussed it, and we made a plan sort of, and the plan was, yeah, we’ll stay here. For me it was one to three years for [00:12:00] Brads, two to three years is the reality that we decided as we transition out and then we will go back.

[00:12:04] Liza: That was the decision that we took the time to do. But then we came back here and immediately the breath’s always like, oh, maybe we could stay longer. Maybe we could take six months, maybe another year, maybe. You know? And so for me it just feels a little bit exhausting. ’cause even when we take the time to plan to like, yes, we’re gonna sit down and decide this, then there’s flip flopping back and forth.

[00:12:26] Ramit: I see. That’s interesting. Thank you for letting me know that. First of all, great work on. Taking time away and really giving yourself the time and space to make a big decision. That’s awesome. I’m a little confused. As it sounds like you both agreed it would be two to three years and then you would go back, right?

[00:12:43] Liza: I said one to two. He said two to three.

[00:12:45] Bradford: So we kind of settled on two.

[00:12:46] Ramit: You settled on two. Okay, great. So you come back and then what is this thing about an extra six months? What is that?

[00:12:52] Liza: It’s just that Bradford is Austin, uh, saying, well, we could stay forever. Well, we could buy an apartment here. Well, so it sealed like, even though we [00:13:00] set aside the time to make a decision and technically we decided.

[00:13:02] Ramit: Mm-hmm.

[00:13:03] Liza: Just like in the off commons when I’m always saying we should leave now, or you know, I’m gonna leave and you stay here. Um, in the same manner. He’s like putting in little comments of like, well, maybe we could stay longer or maybe we should buy an apartment here. Maybe.

[00:13:16] Ramit: Why do you do that, Bradford?

[00:13:17] Bradford: I don’t think I realized I did. Um, I actually feel kind of the exact opposite in the sense of like, I’ve already told my boss like I’m done in two years. So in my mind, like it is two years and, and as much as like. I think maybe I do make those comments. I think I’m also feeling them coming the other direction where it’s like, well, I’ll leave next month ’cause there might be a job.

[00:13:39] Bradford: And, and for me, like, I think that’s why then I retreat. Like I don’t, I don’t wanna entertain that. We said two years, let’s just do two years. Maybe. I didn’t realize that I was doing, making those comments that often.

[00:13:49] Ramit: Can I, can I interrupt? I feel like we’re all in a big rush to get to the end here. Does anybody else feel that energy, Lisa?

[00:13:57] Liza: No, I don’t. But I

[00:13:58] Ramit: You’re, you’re raising your [00:14:00] hand.

[00:14:00] Liza: Part of the reason I interject comments that are more rush is because my financial situation kind of changed recently. Like I had a lot, I had two diff two contracts that were big, that were recurring and they both dried up pretty permanently, let’s say for now than I feel like, kind of like this desperation of like, oh, I need to go find something else because we can’t afford to live without us both working, I think.

[00:14:24] Ramit: Is that true? No.

[00:14:26] Bradford: No, we, we, we have lived before with just me working. It’s certainly not as glamorous or, you know, I’m a lot more tired, but I’m very entrepreneurial. So even though I do have a teaching job, I have always had something else that I’m doing. And whenever we need money, for whatever reason, I find more money.

[00:14:43] Ramit: Mm-hmm.

[00:14:44] Bradford: But to, to answer the original question, we can live if just I’m working, but it’s, it’s certainly not as nice.

[00:14:50] Ramit: Do you agree with that, Lisa?

[00:14:51] Liza: No, I don’t think so. ’cause we wrote down the numbers, it comes out to a number and what you make is maybe two thirds, maybe half, depending on what it is. So it [00:15:00] means no going out, no investing.

[00:15:02] Liza: No. So that’s not really living, like we’re just existing and paying just our rent on our gas. Like

[00:15:07] Ramit: that’s a very interesting difference in the way that you both look at money.

[00:15:12] Liza: Yeah. And never would’ve that.

[00:15:15] Ramit: Can you think of a time in the last six months when you were not on the same page with money?

[00:15:20] Bradford: The money itself, I feel like were on the same page, but the stuff surrounding it, like.

[00:15:25] Bradford: Not always.

[00:15:26] Ramit: Well what is an example of this stuff? Surrounding it?

[00:15:29] Liza: Like the way to get somewhere for example?

[00:15:31] Bradford: Yeah.

[00:15:31] Liza: If we lose an income, I hunker down and survive. I cut things down and Bradford is like, no, I’ll go and I’ll work 10 more hours a week. And I’m like, you don’t have 10 hours a week. But I would agree with him like it’s not like we have money fights where we argue about it.

[00:15:44] Liza: Like the day-to-day spending and earning is similar and we’re very supportive in the way we do that. But I think the stuff surrounding is the way we would go about things. I feel like together as a team, we are lacking in financial things. I guess it’s not about Bradford [00:16:00] versus Lisa fighting, it’s more like how do we move forward together?

[00:16:03] Ramit: What do you think the answer is? How do you move forward together?

[00:16:06] Liza: I don’t know.

[00:16:07] Ramit: Well you said you’re not fighting right?

[00:16:09] Liza: Well and maybe we don’t fight ’cause we retreat or we agree or too agreeable and we don’t actually like have the deeper conversations.

[00:16:15] Ramit: When you think of the word fight, what’s the visual that comes to mind?

[00:16:19] Liza: A little bit of yelling, deliberate disagreement. Maybe some tears on my part. Frustration on his part.

[00:16:26] Ramit: In my head, I’m thinking people yelling, doors slamming. Mm-hmm. Somebody sleeping on the couch, like that’s the visual I have of a fight. But the fact is that is not always how fights happen. Fights can happen by simply avoiding the conversation.

[00:16:45] Ramit: Well, that’s true. Or by simply becoming stuck for five and a half years, we just might not use the word fight. We might use the word strong disagreement or wedge in the relationship, but we shouldn’t let the image of a drop down, [00:17:00] scream, fight stop us from articulating if we’re having years long disagreements.

[00:17:05] Ramit: What do you think, Lisa?

[00:17:06] Liza: That makes sense. And that’s why I think that perhaps we, our fights or our disagreements are based on avoidance a little bit maybe.

[00:17:13] Ramit: What do you think, Bradford?

[00:17:14] Bradford: I think we fight around money, but not necessarily about money.

[00:17:18] Ramit: What’s the difference?

[00:17:19] Bradford: We’re not fighting about like, we don’t have enough money, or how are we gonna do it?

[00:17:23] Bradford: Or, you lost your job, or I lost mine. Or the fight is more like, okay, well if we wanna do that, then what are we gonna do? And I just buckle down and do it. I just like go and find another job or another contract or something. And, and Lisa kind of is upset that I’m killing myself.

[00:17:42] Liza: Although it might be related to what you asked about me feeling like money will work out, because the reality is, were you married for a long time?

[00:17:49] Liza: And he does, he figures it out. So I, I don’t have to worry about it because in some way or another he does.

[00:17:54] Ramit: So can I just ask a provocative, obvious question? Mm-hmm. Like, why don’t you just [00:18:00] let it work out, Lisa, if you’re worried, why don’t you just let him work extra and then what’s the problem?

[00:18:06] Liza: I just feel bad.

[00:18:07] Liza: We’re very good at paying off debt. We’re very bad at saving. That’s actually something I say a lot. And so what that means is that we don’t have debt because that’s what we always put our time, effort, and everything into. But when there’s, in seasons like that, usually Bradford works way too much and he really does kill himself sometimes.

[00:18:27] Liza: He is like, had like so much stress that he has, like physical issues and all that. I don’t want him to live like that. And I, I also feel a little bit of pride, uh, like pride in like contributing. And as we said earlier, I disagree. I don’t think we can afford to live a good life if I’m not also working.

[00:18:44] Ramit: So far, we’ve been talking for a few minutes.

[00:18:46] Ramit: If you had to zoom out and assess what you have heard from yourself, what word or words would you use to describe [00:19:00] the way that you’ve communicated the situation?

[00:19:02] Bradford: Maybe in. Defensive like I’m feeling, I’m feeling defensive, at least like, like I need to defend what I’m saying or what is being said when you two are speaking or,

[00:19:13] Ramit: all right.

[00:19:13] Ramit: Defensive. Lisa,

[00:19:15] Liza: maybe. Erratic.

[00:19:16] Ramit: Erratic.

[00:19:17] Liza: That might be partly because like I have a DH, D, and so I’m all over the place a lot. I just feel like I’m always the one that’s kind of changing the plan and partly because perhaps the reason I think, oh, if I go to Canada is better ’cause I want to find the next shiny new thing that I can tap into or the new situation I can get into.

[00:19:35] Ramit: I do feel a bit of chaos. There’s a lot of things swirling around. I’ll give you a couple of examples. We don’t fight about money. We fight around money. Mm-hmm. Like what? I don’t quite understand that.

[00:19:51] Liza: Yeah.

[00:19:51] Ramit: But then in your application you wrote quote, we argue constantly about when to return and how we [00:20:00] keep delaying because we don’t know how to set up a plan to help us succeed.

[00:20:03] Ramit: Yeah. So

[00:20:04] Liza: yeah,

[00:20:05] Ramit: I’m kind of like what’s happening right now.

[00:20:08] Liza: I mean, I think that’s actually is very similar to what Bradford said because we’re not fighting about the actual money. It’s a situation like, it’s like what is the plan?

[00:20:17] Ramit: Then can I ask you like, why did you, why did you come to see me?

[00:20:20] Liza: Because I think you can help people go deeper in terms of the reason why they can’t plan around money.

[00:20:26] Liza: You always say it’s not necessarily about the money or the budget as much as the psychology or the the reason behind it. And so I feel like the deeper issue is not so much the budget, it’s how do we get to these decisions that we agree on

[00:20:41] Ramit: right away? Something is puzzling me about Lisa. Do you notice that she’s talking fast?

[00:20:47] Ramit: She’s got this frantic energy. There’s a lot of overexplaining and I picked up on something else just listening. This constant equivocation, a lot of, well, there’s this, but there’s [00:21:00] also that caveats everywhere. I ask a simple yes or no question, neither of them can answer it. If I am feeling this confused, just listening to them for a few minutes, imagine how hard it must be for them.

[00:21:15] Ramit: I feel a lot of compassion for them because when you are stuck in a situation that is complex, a lot of times we become so muddled that we can’t even see the situation clearly. All of us probably have a friend who’s been in a bad relationship and they just go back and forth and circle around, and to you it might be really obvious what to do, but to them, they are stuck.

[00:21:38] Ramit: Now, they told me they don’t fight about money, but they fight around money. Honestly, that’s not an acceptable answer. It’s too confusing. Someone who understands their money can give me clear, simple answers. Someone who doesn’t understand their money situation uses a lot of random words to dance around the topic.

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[00:25:17] Ramit: All opinions are my own and not a guarantee of a similar outcome.

[00:25:21] Bradford: So when you disagree about or around money, it’s about

[00:25:25] Ramit: primarily going back to Canada, is that right?

[00:25:28] Liza: How to earn money and how to, like for example, if I can’t make money or if I’m offered very little money, Brad was like, oh, don’t worry about it.

[00:25:36] Liza: I will just work an extra three hours ’cause I get paid X amount. And so it would take you away longer to make it and I appreciate that, but I dunno, it’s not always like. Fair. I guess, in my opinion,

[00:25:47] Ramit: keep going.

[00:25:48] Liza: I just feel bad that it always has to happen that way, or it often does. So if I have potential to have a career somewhere else or to do better elsewhere, then does that matter?

[00:25:58] Liza: I don’t know, [00:26:00] because just because it can make more money doesn’t mean that what I want in my career or if I want a different job, that it doesn’t matter. You know what I mean? Sorry.

[00:26:12] Ramit: It’s okay. These are pretty big questions.

[00:26:15] Liza: Yeah.

[00:26:16] Ramit: You mentioned the word contributing earlier. I wanna feel like I’m contributing.

[00:26:20] Liza: Yeah.

[00:26:21] Ramit: How much does that play in here?

[00:26:22] Liza: A lot.

[00:26:24] Ramit: Hmm.

[00:26:24] Liza: Like for me, it’s not about percentage and I’m, I’m grateful that I’m not like other people that do 50 50 all the time because. He does one more than me. So I, I am grateful I don’t have that burden, but I also prefer contributing. I like to contribute because a lot of times I’m like, well, we don’t have the money, so I’ll, I won’t do X or Y or I won’t buy this, or, but if I’m contributing, I’m like, you know what?

[00:26:44] Liza: Whatever I worked, we don’t have any issues. I have extra income. I’ll go buy this thing where I’ll do this experience for myself, which when I’m not contributing, I don’t feel like I, I do it.

[00:26:55] Ramit: It’s kind of a tough box. You’ve put yourself into the idea that I, [00:27:00] Lisa, want to contribute financially. Not that I need to make 50 50, but I wanna contribute meaningfully.

[00:27:06] Ramit: When I tell Bradford I wanna do that, he tells me, yeah, you should do it or get a job, but you also don’t have to. I’ll work more, but I feel bad when he does that. So I want to contribute, so then I go and look for jobs, and when I get an offer, I feel bad because it’s not as much as I. Maybe could make in Canada.

[00:27:30] Ramit: So now I feel bad and now I’m contributing. Oh. And if I made my own money, then I would feel more comfortable spending it on myself. But because I don’t, I can’t. So I feel bad.

[00:27:43] Liza: Yeah.

[00:27:44] Ramit: What do you notice about that whole cycle?

[00:27:45] Liza: I put myself on the box and I create the issue.

[00:27:48] Ramit: You put yourself in a box and it’s almost like you, you’re like squeezing it shut with each way that you think about it.

[00:27:56] Ramit: It’s just like you’re tightening the knot. The knot is like [00:28:00] self-created. Mm-hmm. Like we could walk out of this jail cell of self-creation overnight, but you have created a way of thinking about it that each time you think about money and earning, it actually tightens the sell. How does that strike you?

[00:28:15] Liza: I kind of agree, and I kind of disagree

[00:28:20] Ramit: when I said it out loud. It sounded like every layer is designed to keep me, Lisa Small.

[00:28:30] Liza: Yeah.

[00:28:31] Ramit: And the more I went around it almost seemed like more and more panicked. What’s your take on that? Do you agree? Yeah. It’s okay if you disagree.

[00:28:38] Liza: I would not put that burden on myself as much if Bradford made way more money.

[00:28:42] Liza: And so that’s where that comes in, is more that I see the need and I wanna step in and help.

[00:28:48] Ramit: That’s fair. I hear you loud and clear on that. I, I appreciate you saying that. Uh, you also mentioned in your application, Lisa, that you and Bradford are quote, stuck in a [00:29:00] cycle of getting in and out of debt.

[00:29:03] Liza: Yeah.

[00:29:03] Ramit: Tell me a little bit about what kind of debt and why you found yourself in and out of it.

[00:29:08] Liza: So it started, same with student loans. We paid off 120,000 I think, in student loans with interest in five years.

[00:29:16] Ramit: Wow.

[00:29:16] Liza: Um, so it was like hunker down, pay everything, put everything into it, and we did it. That gave us the freedom to come to Columbia.

[00:29:23] Liza: ’cause before that we didn’t wanna come here and have a payment back home that we had to make. So that was that. And over the years, whenever there’s been need, instead of being like, well let’s have an emergency saving, as every money person talks about, we have open lines of credit in our mind. It makes more sense to invest the extra money we have lying around.

[00:29:46] Liza: And then if we run into a tight situation, we use a line of credit ’cause it’s got a low, like a 4% in like, um, interest or something. And then we pay it off. You know, there’s been times when it happened, like we moved with to a furnished place here when we [00:30:00] furnished our apartment from scratch and we bought a car at the same time.

[00:30:04] Liza: It was a big bunch of money that had to come out at once. We put in lines of credit and all that, and then we’re like swinging back to, okay, repayment mode. Do

[00:30:11] Ramit: you like being in debt?

[00:30:12] Liza: No. That’s why we run away from it and we try to pay it off as soon as we can.

[00:30:16] Ramit: How many lines of credit do you have today?

[00:30:18] Liza: We have two.

[00:30:19] Ramit: Okay. You wanna ask me how many lines of credit I have?

[00:30:22] Liza: How many lines of credit do you have for me?

[00:30:23] Ramit: Zero.

[00:30:25] Liza: Well,

[00:30:25] Ramit: why is it that somebody who has more money has zero lines of credit versus somebody who doesn’t and actually has struggled in and out of debt and says they don’t like debt? Has two lines of credit.

[00:30:37] Liza: You don’t see the need to go into debt because you have planned for it, though.

[00:30:42] Ramit: That is partially true in the same way that you don’t see the need to drink poison for an after dinner drink. It’s not that I don’t see the need to, I am actively against it.

[00:30:56] Liza: Yeah.

[00:30:57] Ramit: How do you feel about that?

[00:30:58] Liza: No, I agree with you.

[00:30:59] Liza: I think it’s [00:31:00] better not to get into debt. I really do. Huh. But when the need arises, I don’t know where it else to go. So we have it, but then we pay it off quick. So that’s, that’s where the, the mental gymnastics comes when it’s like, well, it’s fine because

[00:31:12] Ramit: yeah, I feel like I’m in like a gymnastics class right now.

[00:31:14] Ramit: We borrow

[00:31:14] Liza: debt. We,

[00:31:15] Ramit: I don’t want debt. We debt, I hate debt, but if it comes up, we have it, but then we pay it off quickly

[00:31:20] Liza: when you don’t have enough to invest for retirement and to all that, I would rather put any extra penny we have, which we do have sometimes into, uh, whatever index stocks or anything that’s gonna help us long term.

[00:31:33] Liza: Mm-hmm. Rather than have $20,000 in a bank account that just sits there with minimum pay savings in case we ever need it. In the past, it seems like we were taking it from the line of credit and then we would pay it off within a few months. And so it doesn’t seem like it’s necessary because we don’t have infinite amount of money.

[00:31:50] Liza: I dunno. Do you disagree, Brad? I don’t know. You’ve been quiet for a while, so

[00:31:53] Bradford: I dunno. As someone that understands math really well that like. You know, investing that money at [00:32:00] 10% in index stocks and then later if we need to like say buy a car getting dinged at 4% for three months while we pay off the car, that is ultimately better.

[00:32:12] Bradford: Or the other thing we’ve done sometimes is pull money out of those index stocks. Um, that’s probably more rare because we are, I don’t know, we’re, we’re, we are, like she said, we’re good at paying off debt. And so I think that, like, understanding those numbers, for me it makes sense to do it that way, you know, to guarantee that no matter what, we’re putting a thousand dollars a month into index stocks.

[00:32:34] Bradford: Um, and if that means that we don’t have quite enough to buy a car next month, then we’ll pay that off for two months at 4%.

[00:32:42] Ramit: Or for Lisa to feel like she’s in a prison of her own creation because she’s not contributing enough financially, therefore bringing her to tears. Is anybody missing this?

[00:32:58] Liza: No. I

[00:32:58] Bradford: see.

[00:32:58] Bradford: No, no. I’m, [00:33:00] I’m, I’m definitely not.

[00:33:01] Ramit: I mean, you’re talking to a guy who loves investing. I love it. I, I want automatic investing, but I don’t want to see somebody in a relationship cry and, and talk about money in a negative way every single day for five and a half years. There’s a mismatch that’s not a rich life, that’s just being blind and blindly putting your money into something without actually understanding why.

[00:33:23] Ramit: How’s that strike you, Lisa.

[00:33:25] Liza: I agree. And I think part of the reason we invest so much is because, literally, this is funny ’cause Brad Farley says, I don’t wanna work forever ’cause I work so hard. So we do have to make sure we put some money aside so for the future. Otherwise we’re literally not either never gonna retire or we’re not gonna be able to live.

[00:33:40] Liza: And it seems like the goal right now is at least investing because we’re running outta time.

[00:33:44] Ramit: Y’all have a very good reason for everything.

[00:33:47] Liza: Yeah.

[00:33:47] Ramit: But is it working? Yes or no? But

[00:33:49] Bradford: think for me it is working. If I isolate myself. If I, wait, wait,

[00:33:55] Ramit: hold on. If I isolate myself, not include my wife and my three [00:34:00] kids, it’s great.

[00:34:01] Ramit: Yes. I love it. There’s just, uh, 1, 2, 3, 4, uh, problems with that.

[00:34:09] Bradford: Yeah.

[00:34:09] Ramit: Okay.

[00:34:09] Bradford: No, I, I, I, I agree. I completely agree. And, and I think that’s the emotional side is not working. Obviously for Lisa, the numbers work, but that doesn’t mean the, maybe the emotional state is working.

[00:34:22] Ramit: I don’t, I don’t even know if the numbers work.

[00:34:24] Ramit: ’cause Lisa herself said, we don’t have enough to live the kind of life we want if just Bradford is earning. So it’s unclear to me if even the numbers work, Lisa, is it working?

[00:34:35] Liza: It feels like it’s just an income issue for us, I think. ’cause we’re, you

[00:34:37] Ramit: know, just make more and everything will be okay.

[00:34:39] Liza: That’s how I see it, I think.

[00:34:41] Ramit: Okay. You could be right. You could be right. Yeah. If that is the case, why not just take that job in Columbia, 1200 bucks a month. Problem solved.

[00:34:51] Liza: Yeah. Well. Yeah, that might be what we have to do.

[00:34:55] Ramit: Is that not it?

[00:34:56] Liza: Uh, probably not because there’s also the deeper issue. Like I [00:35:00] feel crappy as a, an adult making so little money considering what I know mm-hmm.

[00:35:06] Liza: That I could be making elsewhere.

[00:35:08] Ramit: It is interesting that, in asking both of you, is it working or not? I did not get a clear answer from either of you. To me, that speaks to how muddled all of this is. It’s actually not, like, think about it, it’s not clear if you’re gonna go back to Canada. It’s not clear when it’s not clear if you need to make more money or not.

[00:35:29] Ramit: None of this is clear. No wonder it’s so frustrating. I would probably be crying myself if I were in this situation. Yeah. What I would like to encourage you to do is to not accept this muddled way of thinking for your life. It’s actually not okay to go through life feeling super muddled and doing the thing where each.

[00:35:52] Ramit: A big question in life is like, well, yeah, it’s actually good, but no, it’s actually not. And then like playing both sides of the equation. Like [00:36:00] you’re actually supposed to pick the thing that is best for you, and that might mean making the wrong decision. Sometimes. Who cares? That might mean closing certain doors.

[00:36:09] Ramit: Who cares? As long as you both make the decision that is right for the two of you, you can always correct it later down the line, but you have to be willing to actually call the ball, Hey, this is not working, or this is working. Actually we don’t make enough, or we do make enough. But it has to be crystal clear.

[00:36:26] Ramit: And if I were you, I would encourage you to get a little bit more impatient with the ambiguity of the whole situation.

[00:36:33] Liza: Yeah, that’s true.

[00:36:34] Ramit: In order for us to bring this down to being a little bit more concrete, I’d like to take a look at the numbers. So you both completed the conscious spending plan. What was that process like for both of you?

[00:36:47] Bradford: Emotional.

[00:36:48] Ramit: Oh. Emotional.

[00:36:50] Liza: I was frustrated.

[00:36:51] Ramit: Oh, tell me more.

[00:36:53] Liza: I was frustrated by Brad Bradford because he was getting stuck on some numbers and I was [00:37:00] trying to get the math right in certain ways.

[00:37:03] Bradford: Yeah, it was emotional because I guess, yeah, like there was some arguments there and, and frustrating because our income is so variable.

[00:37:11] Ramit: That’s kind of interesting, even putting down numbers, what should be black and white, both of you described it as emotional and like, if we can’t fill out a spreadsheet, how are we gonna decide if we’re gonna move back to Canada?

[00:37:26] Liza: No.

[00:37:27] Ramit: It reminds me of couples that are planning their wedding and, you know, planning a wedding is the first complex project that most couples go through.

[00:37:38] Ramit: And I remember when we got engaged, I went out and asked a lot of friends, married friends for their advice, and, uh, my brother-in-law, he said. This is gonna be the best year of your life. Like you’re gonna have an awesome time planning the wedding. You’re gonna get to know each other. You’re gonna just have an amazing time.

[00:37:56] Ramit: I loved my brother-in-law’s response because [00:38:00] we chose to make it an awesome year, and that microcosm of planning this complex part of life, it really shows how two people handle complexity and ambiguity and certain numbers. So the CSP to me is like, it’s like a diagnostic tool and I think it’s quite illustrative of how the two of you approached it.

[00:38:24] Ramit: Alright, let’s take a look at the numbers. Lisa, can you read off the word in bold and the number in full next to it for this entire box, please?

[00:38:32] Liza: Sure. Assets, $120,000. Investments 153,670. Savings 1500. Debt. 1300 total net worth. 273,870.

[00:38:48] Ramit: Alright. What do you think about those numbers?

[00:38:50] Liza: It’s higher than I anticipated they would be.

[00:38:53] Ramit: What’d you think it would be?

[00:38:54] Liza: I thought all we had to, our name was our $20,000 carve.

[00:38:57] Ramit: What the, you thought you, you’re, hold on.[00:39:00]

[00:39:02] Ramit: God, I love my job. What the, you thought your assets were $20,000 and it, and then you looked between the couch cushions and you discovered it’s actually $120,000. Is that what you’re telling me?

[00:39:15] Liza: I guess so, yeah.

[00:39:17] Ramit: Alright. That’s pretty cool. Oh, just a random question. Um, Lisa, when you discovered that your assets were 1, 2, 3, 4, 5, 6 times higher than you thought, did it make you feel any better about money?

[00:39:29] Ramit: Yes or no, please.

[00:39:30] Liza: Yes. Really? Yeah, it actually did because, because I felt less behind on, let’s say investing, for example.

[00:39:39] Ramit: Okay, let’s keep going on this then. So you felt better. Like, we don’t have to invest every last dollar. Okay, great. Did you stop the monthly investments that you’re making?

[00:39:47] Liza: No, I did.

[00:39:49] Ramit: Did you close the lines of credit that you have?

[00:39:51] Liza: No. No. It’s a backup plan. So,

[00:39:54] Ramit: uh, and then what about you, Bradford? What do you think about these numbers?

[00:39:57] Bradford: They’re about what I thought they would be, but I also felt like I [00:40:00] didn’t have a lot of faith in them.

[00:40:02] Ramit: Why?

[00:40:03] Bradford: Because so, so much of our money, whether it be the income or whether it be the investments, feels insecure.

[00:40:14] Ramit: Huh? What, what’s insecure about investments?

[00:40:18] Bradford: The ones that are in Canada? Um, I feel like those are fairly secure.

[00:40:24] Ramit: Okay.

[00:40:24] Bradford: And when it comes to my money that’s here in Columbia, um, I mean. I literally have friends, they can’t get their retirement ’cause the government has just seized it.

[00:40:33] Ramit: Really?

[00:40:33] Bradford: So real.

[00:40:35] Ramit: Whoa. Can you pull it out?

[00:40:36] Bradford: Not until I retire.

[00:40:38] Ramit: Oh, it’s locked up there. So, okay.

[00:40:39] Bradford: It’s locked until I retire.

[00:40:41] Ramit: Gotcha.

[00:40:41] Bradford: And then who knows if it’s there ’cause of the, the people in power right now.

[00:40:46] Ramit: Damn. Alright. That’s pretty interesting. I did not know that.

[00:40:49] Liza: Another reason to go back to Canada. No, I’m kidding.

[00:40:53] Ramit: No, I think that’s valid. If, if you feel insecure that the money you are putting in meticulously every single month is [00:41:00] like actually at risk, like a 50 50 shot, you can even actually ever get it, then that is a very valid part of your decision making to go back to Canada.

[00:41:10] Ramit: Okay, let’s keep going down these numbers. I would like to look at the income and this time I’d like to ask Bradford, your gross combined monthly income, what is that number?

[00:41:21] Bradford: Uh, 10,066.

[00:41:23] Ramit: That’s the two of you. So that means that collectively your household income is $120,792. By a show of hands, who here knew that number neither hand is going up.

[00:41:35] Ramit: Thank you very much.

[00:41:36] Bradford: No.

[00:41:37] Ramit: Keeping my average it’s at 50%, but I have had a couple of random couples recently who both of them knew it, so thank you. Now please tell us, just for fun, how did you not know your own household income?

[00:41:50] Bradford: My salary here in Columbia is literally different every single month. And when I try to ask the why try to pass the accountant, why none of them can tell me.

[00:41:59] Ramit: This [00:42:00] is like a classic like different country thing where you go to a different country and you’re just like, how can you not answer this simple question? And they just go like. They just don’t have an answer for you. Literally. I’ve had this stuff happen in India too.

[00:42:13] Bradford: That’s exactly what’s going on.

[00:42:15] Liza: And for me, it’d be easy if I could be like, okay, I make this much times 12, let’s, but I can’t, ’cause like I said, someone once I make a lot and some I, some once I don’t.

[00:42:23] Liza: So it was really hard to figure out.

[00:42:24] Ramit: But we’re in the ballpark. Would you agree?

[00:42:27] Bradford: Yeah. Like, like for instance, if we change the question, do we know that? Like that’s roughly what it is. I would say yes. Like I, I know that we roughly make 10 grand a month.

[00:42:35] Ramit: Did you know that Lisa?

[00:42:37] Liza: No. And for me that number’s hard.

[00:42:40] Liza: ’cause I can look back and see that, but like I said, two of my clients have dried up right now, so I don’t know what’s gonna happen. Like, can I say, okay for the future I’m gonna calculate this much a month. I don’t think I can because I don’t know.

[00:42:53] Ramit: So can I ask you your, what is your approach to that? If I were to say, Lisa, how much are you gonna make in the next 12 months?

[00:42:59] Ramit: What would your answer [00:43:00] be?

[00:43:01] Liza: I don’t know if I can make that same amount of money next year.

[00:43:04] Ramit: Maybe you can’t. Could you make a thousand dollars a month?

[00:43:08] Liza: If I take that $1,000 job, I could make a thousand dollars. So let’s say yes.

[00:43:12] Ramit: Great. Could you make $2,000 a month?

[00:43:15] Liza: Yes, I can probably on average make $2,000 a month.

[00:43:19] Liza: Yeah.

[00:43:19] Ramit: Great. Let’s keep going. Could you make $3,000 a month?

[00:43:23] Liza: I don’t feel secure in saying yes to that.

[00:43:26] Ramit: Okay, good. Fair enough. I appreciate the honesty. So 2000 a month, that’s the number?

[00:43:30] Liza: Sure. Yeah.

[00:43:31] Ramit: Okay. I’m gonna go out on a limb and guess you have never gone through the exercise we just did of how much can I safely, conservatively make for the next year.

[00:43:46] Ramit: True or false?

[00:43:47] Liza: I would say false. I did it once. After listening to you Uhhuh, we projected a budget and we decided that to live the kind of life that we wanted, I had to make $40,000 a year.

[00:43:58] Ramit: Okay.

[00:43:58] Liza: And so [00:44:00] that maybe gave me a little bit of a kick in the pants, be like, okay, I gotta make sure I meet that target.

[00:44:04] Liza: And I think I met it. I don’t know for sure if I did in the last year, but.

[00:44:08] Ramit: You beat it, you made 50,000.

[00:44:10] Liza: Okay, well there you go. But that’s about the only time I would say I’ve done that. ’cause I, I’m more reactive than, that’s why I need help with planning.

[00:44:18] Ramit: You talk to your therapist about this?

[00:44:20] Liza: No.

[00:44:21] Ramit: Why?

[00:44:22] Liza: Like, I don’t have, I don’t have a therapist that I meet with regularly right now.

[00:44:25] Liza: Once in a while they help me with executive functioning. Um, just like, you know, tips and things like that.

[00:44:30] Ramit: Can I suggest that you do?

[00:44:31] Liza: Sure.

[00:44:32] Ramit: I think it would be really good. Okay. I think that part of planning can be helped with techniques and strategies.

[00:44:40] Liza: Okay.

[00:44:41] Ramit: That therapists are really, really good at. So I want to definitely suggest that to you and potentially both of you could go, but certainly individually would be really good.

[00:44:49] Liza: Sure.

[00:44:50] Ramit: One thing that I am pleasantly surprised is that you actually did plan out a number. The two of you sat down and talked about how much you need to make. And guess what? You nailed it. [00:45:00] Not only did you make 40,000, you made like 48,000. Very impressive. Hearing the way you talk about money, I can understand a little bit more about why it feels overwhelming, why also you might like feel like I gotta get to Canada.

[00:45:15] Ramit: Like this doesn’t feel good. From my perspective, it seems frantic and frenetic, but when I’m hearing you explain a little bit more, I’m starting to understand more. Okay. Of why you are feeling that way. Most people are very hesitant to put a number in the ground and commit to making it in the next year, especially beginning.

[00:45:41] Ramit: Entrepreneurs, first of all, they often look at things month to month. Like they’re not thinking about a year down the road. I’m sure it’s much easier and much more common for you to think about what happened last month.

[00:45:53] Liza: Yeah.

[00:45:53] Ramit: Than what’s gonna happen next year. Right?

[00:45:55] Liza: Yeah.

[00:45:55] Ramit: Okay. That’s common. The next thing, beginning entrepreneurs, they don’t really [00:46:00] know how to project.

[00:46:02] Ramit: And so they shy away from it. The feeling is if I say I’m gonna make 4,000 a month and I don’t, then I am a

[00:46:09] Liza: failure.

[00:46:10] Ramit: Failure. So therefore I don’t even want to say any number at all. How much of this resonates with you?

[00:46:17] Liza: A hundred percent, yes. Yeah, that’s cool.

[00:46:19] Ramit: Yes. This is very common, but the ironic thing is that when you actually did pick a number, you crushed it.

[00:46:26] Liza: Yeah, that’s true.

[00:46:27] Ramit: What do you make of that?

[00:46:28] Liza: I guess I’m not as pathetic as I thought.

[00:46:32] Ramit: I don’t know. I don’t think you’re pathetic. Bradford. Do you think she’s pathetic?

[00:46:36] Bradford: No.

[00:46:37] Ramit: Okay. Lisa, do you think you’re pathetic?

[00:46:39] Liza: Sometimes.

[00:46:40] Ramit: Okay. Well, two and a half of us on this call do not think you’re pathetic. I would really like it for it to be three.

[00:46:45] Liza: Okay.

[00:46:47] Ramit: I think we’re gonna get there. I think that every beginning entrepreneur struggles with the same thing you do right now, which is putting a stake in the ground and committing.

[00:46:54] Liza: Yeah.

[00:46:55] Ramit: I don’t think you actually even need to commit to making 4,000 a month. If you don’t feel [00:47:00] comfortable, but you feel comfortable saying 2000 a month and you know that you can hit that number, then we’ll make a life around 2000 a month.

[00:47:07] Ramit: How about that?

[00:47:09] Liza: Okay.

[00:47:09] Ramit: That’s the way that we proceed. I love that Lisa was willing to go there with me to really look at her income goals and to map out what her next year could look like. She’s clearly in a tough spot. Her business is slowing down and she and Bradford don’t have any real savings to lean on.

[00:47:25] Ramit: So when something comes up, they use their line of credit. Now we need to talk about a line of credit because a lot of you are way too casual with a line of credit. A line of credit lets you borrow money when you need it. Okay, that sounds kind of responsible, right? It’s like just in case money. But what blows my mind is how many people treat their line of credit like a piggy bank.

[00:47:48] Ramit: Hey everybody, I’m gonna use my line of credit to renovate my kitchen. I’m gonna use my line of credit to take a trip. Some people on this podcast have used a line of credit to buy a freaking [00:48:00] mattress. Now, I gotta tell you, my mind cannot comprehend using sophisticated financial instruments to add backsplash tiles to your kitchen.

[00:48:09] Ramit: And when I tell people I would never take out debt to pay for a luxury, they look at me with complete bewilderment. Well then how would we ever pay for it? Oh, I don’t know. How about saving money for it? Like you think I’m taking out debt to go to Disneyland? Who told you this is okay? And you can tell this makes people really mad.

[00:48:30] Ramit: The idea that maybe they should not use a freaking line of credit to buy. Bagels, which is one reason that they justify things like home renovations or mattresses as investments. Those are almost never investments. And you know, just as I know that we should not be using debt to pay for luxuries. You don’t need another financial product.

[00:48:52] Ramit: You certainly do not need to leverage debt. You wanna leverage something, leverage reading my book, build up savings, and then you earn the right [00:49:00] to be able to buy nice things. Lisa has created a mental and financial prison self for herself, and with every decision she tightens the lock just a little bit more.

[00:49:11] Ramit: She wants to feel valued, but then she looks at a $1,200 job offer in Columbia and compares it to what she could make at minimum wage in Canada at $15 an hour. And she thinks I’d be worth more at Tim Horton’s. You’re letting Tim Horton’s decide how you feel about yourself if I let other people. Tell me how I should feel about myself then.

[00:49:33] Ramit: Peter 5, 5, 3, 9. Calling me a libtard would ruin my day every morning. Listen, Peter can barely wash his own ass much less make intellectual distinctions about political philosophy. I’m gonna let him decide how I feel about myself in what world. This is what happens when you shrink your field of vision down so small that the only thing you can see is what companies are [00:50:00] willing to pay.

[00:50:00] Ramit: You guys an income does not determine your value. A rich life is so much bigger than that. Ironically, she wants to be valued in her relationship, but she keeps allowing herself to be shrunk down, and Bradford also is playing his part, perpetuating this dynamic. The question I have is, are they actually willing to redefine this dynamic?

[00:50:23] Ramit: We’re gonna find out right after this, one of my life philosophies. Is to fight for simplicity, and the more successful I’ve become, the more I lean into this, I don’t have 12 different credit cards to optimize points. I don’t work with brands who have tons of complicated requirements, and even in my own business, we have streamlined our systems.

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[00:51:27] Ramit: If I’d had a system like this back when I was building IWT, it would’ve changed everything. If your revenues are at least in the seven figures. Get our free business guide demystifying ai at netsuite.com/ramit. That’s netsuite.com/ramit. I know that some of us think better when we write our thoughts out, but for a lot of us, including me, I’m better when I can think out loud.

[00:51:54] Ramit: If that’s you, I recommend you check out Whisper Flow to save you tons of time to bring [00:52:00] your ideas to the page. Whisper flow turns your voice into clean final draft writing inside whatever app you’re already using. Email, slack docs, even text messages, and it works on Mac, windows, and iPhone. So instead of spending all of your time responding to messages, especially while sitting at a computer, you can hit a hotkey speak, and the text appears.

[00:52:21] Ramit: It’s accurate, it’s fast, it’s all formatted. So you can get back to work. Here’s what my friend said about it. Whisper is amazing because it learns the way you speak. So you can send this rambling note as a text message and it kills all the filler words and it perfectly formats it for you. They said it’s much better than using the Apple voice to text feature.

[00:52:39] Ramit: The spelling is way better. If you wanna buy your time back and get back to what matters, check out Whisper Flow. Try it for [email protected] slash ramit. That’s whisper flow.ai/ramit, W-I-S-P-R flow.ai/ramit. Or click the link in the [00:53:00] description below. Okay, so $120,000. Isn’t that a lot of money in Columbia?

[00:53:06] Ramit: It’s a lot, right?

[00:53:08] Bradford: Uh, yeah it is.

[00:53:09] Ramit: What the hell? All right, let’s take a look at the rest of the numbers. ’cause now I’m very curious. Fixed costs are at 59%. I have no issue. I don’t even need to go through it. Investments are at 13%. I certainly appreciate that. I can tell that investing is very important to you.

[00:53:28] Ramit: 13% of net, that’s a solid number. Very nice. Savings are at zero. Okay. I can also tell the savings is not important to you. It’s very clearly revealed right there on screen. And then finally, guilt-free spending 28%, $1,963 a month on guilt-free spending. Is that number accurate?

[00:53:51] Liza: That’s probably accurate, but remember we have three kids.

[00:53:53] Ramit: You don’t need to justify it.

[00:53:54] Liza: No, but what I mean is that’s where it’s going.

[00:53:56] Ramit: Oh, it’s all to the kids, not to us, just to the kids.

[00:53:59] Bradford: So I want, I [00:54:00] wanna, I wanna comment on that. ’cause actually, I think that’s important.

[00:54:02] Ramit: Tell me,

[00:54:02] Bradford: um, it, I think she’s right in the sense it goes to the kids and me. Lisa does not have guilt-free spending no matter what she spends it on, she feels guilty.

[00:54:10] Bradford: Like, I mean, her mom literally sent her money to go and take a class, like a, I don’t even know, two months ago. And she still hasn’t taken the class because she can. She doesn’t, she doesn’t want to spend that money on herself. You know, like I, I feel like I have to tell her, Lisa, go do it, or she won’t, she won’t spend that money.

[00:54:30] Ramit: What’s the voice that goes through your head, Lisa?

[00:54:32] Liza: I don’t know. Maybe I need to give myself more credit and more I don’t. More enjoyment out of our money.

[00:54:39] Ramit: What is something that you have not spent on that you might like to, but Because it’s for the family, it’s for the kids. The money goes to them instead.

[00:54:48] Liza: Maybe that class. Mm-hmm. Uh, it’s just like a public speaking, like a, like a Toastmaster class. Just, I like to do that. Um, I wanna go paragliding.

[00:54:57] Ramit: That’s pretty cool. I really would love for you to be [00:55:00] able to do that, even if not today. I would love for you to be able to know exactly when you can.

[00:55:05] Liza: Yeah.

[00:55:06] Ramit: I think there’s something really powerful about the idea of, this is part of my rich life and maybe I can do it today.

[00:55:15] Ramit: And I didn’t realize it. Or maybe I can’t afford to do it, but we’re gonna set up a plan and I’m gonna know exactly what month and year I’m gonna be able to, which is in a way so anticipatory. So I would love to be able to do that with you today.

[00:55:31] Bradford: Okay. Okay.

[00:55:32] Ramit: So we got the, the key numbers, which are 59% on fixed costs, lower than 60.

[00:55:38] Ramit: That’s very nice. 13% on investments, which is typically higher than most would see, but I think it’s solid, especially for having a higher income in Columbia that allows you to invest a little bit more. We have savings is zero, which explains why you have no savings, but also your mindset of lines of credit really explains [00:56:00] it.

[00:56:00] Ramit: And then finally, we have guilt-free spending, which is high for, for a couple that has nothing in savings, and actually for a couple that has three kids and only has $1,500 in savings. I find that to be unacceptable. Hm. I’m seeing nods from both of you. Bradford, what do you think?

[00:56:20] Bradford: I guess like every time that I’ve had savings, it just feels like it’s doing nothing.

[00:56:24] Ramit: You are, and I hate to say this math brained, and I say that because on this show we have a extreme lack of math that happens. Too many people talking about their feelings, which while valid, they need to add some freaking rudimentary math. In your case, you’re looking at the world, those lenses you have, they’re not just prescription lenses, they’re lenses that talk about yield and return.

[00:56:53] Ramit: And I like return. I like it, but I don’t like fighting about money. [00:57:00]

[00:57:00] Bradford: Mm-hmm.

[00:57:01] Ramit: I don’t like talking about it every single freaking day, and I don’t like the risk of having three kids and a wife and $1,500 in savings. Which would last you one week.

[00:57:14] Liza: Yeah.

[00:57:15] Bradford: Yeah.

[00:57:16] Ramit: You see yourself as a rational person who walks around and you’re gonna optimize returns no matter what.

[00:57:24] Ramit: And yet you have put your family along with Lisa in a position where you have $1,500 in savings, meaning you are one step away from having to go back into debt. A place that you have been many times.

[00:57:37] Bradford: I do see what you’re saying. And remember I told you that in Columbia I have, there’s money in two different places.

[00:57:43] Bradford: So the money that is invested in in stocks here is quite easy to pull out. Like within a few days max. Sometimes I can pull it out immediately. So I do think of that as saving.

[00:57:53] Ramit: Hey, my freaking investment portfolio is liquid. That doesn’t mean it’s savings,

[00:57:58] Bradford: okay?

[00:57:58] Ramit: It’s meant to be [00:58:00] compartmentalized. The minute we start making these things fluid is the minute everything becomes sloppy.

[00:58:07] Bradford: I guess like the money that’s in that save that, that, um, investment account. Yeah, because it’s a different one than the rest.

[00:58:13] Ramit: Yeah,

[00:58:14] Bradford: I do think of it as separate.

[00:58:15] Ramit: Why don’t you just create a savings account?

[00:58:17] Bradford: Because it gets way less yield

[00:58:19] Ramit: savings is not supposed to get yield,

[00:58:22] Bradford: but if it can,

[00:58:24] Ramit: lemme put it this way, you guys can keep doing things the way you’ve been doing it.

[00:58:28] Ramit: When I asked you is it working, you actually couldn’t give me a response. In my opinion, having about a mo a week’s worth of savings for a family of five is not working. In my opinion. Having, um, one partner who can’t go paragliding or, or, or anything for years is not working. The fact that you cannot agree on even how to make a decision about whether to move to a different country or not is not working and the savings is just a small piece of this.

[00:58:57] Ramit: The ability to [00:59:00] transcend your current identities and turn the page to a new chapter, both of you. If you can’t do that, then you’re gonna remain stuck. And today both of you have shown an amazing ability to give me reason, after reason after reason for something, and yet not get the outcomes you actually want.

[00:59:18] Liza: Yeah.

[00:59:19] Ramit: So perhaps it’s time to put those reasons aside and maybe see how people who have more money and are a little bit savvier with money handle their finances. What do you say?

[00:59:31] Liza: Yeah, I think that’s a good idea and I’m open to it.

[00:59:34] Ramit: Okay. The good news about the CSP is that you have money, you have a high income $120,000 in Medellin.

[00:59:44] Ramit: In my opinion, if I’m looking at this as an outsider, I’m like, wow, you’re living life. Nice. I don’t think you feel that way. I actually think that the narrative you have created is that we’re like barely getting by Lisa. True or false?

[00:59:57] Liza: Ah, yeah. It’s true.

[00:59:58] Ramit: And, and the fact is, if you made an extra [01:00:00] $50,000, you’d still feel exactly the same way.

[01:00:01] Ramit: Now I know I don’t have to tell you guys about appreciating things. I’m not even gonna get into that. But I do think there’s a narrative that we sometimes concretize with our money and it’s like, ah, like we, we can’t actually live the way we want to. What if we’re actually living an amazing life and we just haven’t realized it?

[01:00:18] Ramit: Alright, lemme take a look at this CSP here.

[01:00:21] Liza: Can I just interject for a second? Because I think when I was making that amount of money, I felt more like we could live freely and we could spend freely. If we cut that down to like, the $2,000, let’s say. That’s my target.

[01:00:31] Ramit: You wanna do it right now?

[01:00:33] Liza: Sure.

[01:00:33] Ramit: Alright, let’s drop it down to 2000 and we’ll take your net down to what? 1500?

[01:00:39] Liza: Sure.

[01:00:39] Bradford: Um, mine, mine actually goes up too, ’cause I got a bonus. I’m getting bonuses this year that we didn’t put into this, so it should be at, it should be at least seven,

[01:00:48] Ramit: 7,000. Should we make this 5,000?

[01:00:50] Bradford: Yeah, probably.

[01:00:51] Ramit: Okay, watch.

[01:00:53] Ramit: Okay. Wow. Guys, what do you notice? Your fixed cost went from 59 to 64%. Hold on. [01:01:00] Just look at those beautiful faces on screen. What? What’s happening is they’re both laughing, kind of embarrassed. Can you describe what’s happening right now?

[01:01:09] Liza: I guess it’s not as big a deal as I thought. I don’t know.

[01:01:12] Bradford: You chose the right word.

[01:01:13] Bradford: Embarrassed. I was like, right.

[01:01:16] Liza: I didn’t know you were getting a bonus. That’s nice.

[01:01:19] Ramit: This, this drama that we love to put on in our lives, we love it. I don’t mind it. I love drama myself, but it is imperative that we actually look at the reality of the situation and all this circling, all this spinning, and it’s 5% more.

[01:01:40] Ramit: You have the money. To me it’s not, this money part is not that interesting. Moving up 5%, I really couldn’t care less. We could knock this out in five seconds. What to me is more interesting is what do you get out of the drama? Why is it that you did not communicate effectively on getting a bonus on how much you could conservatively [01:02:00] make?

[01:02:00] Ramit: And more importantly, what do you get out of each role that each of you has chosen to embrace? Lisa, what’s going on?

[01:02:10] Liza: I dunno, when we pay off debt is like, oh, control, like on down, like I say like. Spend less. And so I just feel like if we continue to do that, maybe that’s good. It has worked for a purpose in the past and so I guess I feel like maybe I would come on on top if I continue to do the same thing.

[01:02:27] Liza: Because you know, if we spend less and we don’t order our drinks and eventually it adds up to something maybe

[01:02:33] Ramit: Right,

[01:02:33] Liza: because it did in the past, right? When we were paying off debt quickly, it was like, oh yeah, we just spent very little and it, it worked in five years. We paid $120,000. So

[01:02:41] Ramit: Did you grow up in Canada?

[01:02:42] Liza: I moved to Canada when I was 13, but I, my childhood was in Columbia, so.

[01:02:46] Ramit: I see. And what do you remember your family saying about money when you were younger?

[01:02:51] Liza: I don’t remember ’em talking about money too much. Um. I don’t think that we had money conversations per se, but [01:03:00] um, I would say my life was very cyclical.

[01:03:02] Liza: Like there was times when we had very little money where my grandparents had to help pay for things. Um, at the same time my family in Columbia is a little bit prominent and so I had a weird dichotomy where I would go to a country club for a party, but we couldn’t pay rent.

[01:03:18] Ramit: What did you take away from that?

[01:03:20] Ramit: That’s quite a stark difference. Country club can’t pay rent.

[01:03:23] Liza: I don’t know. I feel like money comes and goes in a sense.

[01:03:26] Ramit: What does that mean?

[01:03:27] Liza: You can’t plan? ’cause situations, circumstances come, come at you and then things change.

[01:03:33] Ramit: Okay. And so therefore, what should you do?

[01:03:36] Liza: I don’t know. I guess not worry about it.

[01:03:39] Ramit: Hmm. But you worry about it a lot.

[01:03:42] Liza: Yeah, I guess it’s a small way to feel like I can control.

[01:03:45] Ramit: Ah, so growing up, it sounds like you felt, uh, I cannot control money. Yeah, one day we have it. One day we don’t. One day we’re at the country club. The next day we can’t pay rent. I can’t control it.

[01:03:58] Liza: Sometimes we were doing well and sometimes [01:04:00] we weren’t.

[01:04:00] Liza: Like for example, we were doing great upper middle class, then we moved to Canada and we’re living the immigrant like mm-hmm. So we started again from little and I feel like that was the cycle my whole life.

[01:04:10] Ramit: You mentioned that your family moved to Canada.

[01:04:13] Liza: Mm-hmm.

[01:04:13] Ramit: And it’s hard to move to another country and get traction in careers.

[01:04:16] Ramit: I understand that. Yeah. And yet here you are saying we’ve been in Columbia for 5, 6, 7 years and I wanna go back to Canada. Seems to me there’s a very strong parallel there. Why?

[01:04:31] Liza: So in Columbia, now that I’ve returned, I have access to different resources. My education, my post-secondary was in Canada and all that.

[01:04:38] Liza: And so I don’t know that I would come back to zero, but maybe I would because I’ve been gone a long time.

[01:04:43] Ramit: Weren’t you yourself saying minimum wage jobs in Canada?

[01:04:47] Liza: Well, I’m saying that I could at least make more in a minimum wage there. Job there, then I could then what they’re paying me here. So that feels like I’m being compensated better and I [01:05:00] don’t know worth more.

[01:05:01] Ramit: Stick with me on that phrase. Worth more. What does that mean?

[01:05:06] Liza: Just that I feel like companies that come here to hire, they come here because they get cheap labor. So if I’m here and I’m competing with those jobs, then that is the kind of thing that they expect is that you’re gonna get paid less. Less. But that’s not worth my time to work 40 hours a week for a month to make a thousand dollars let’s say, or 1500 or whatever.

[01:05:24] Liza: I’m like, that’s not worth it in my mind.

[01:05:27] Ramit: Is your mind giving you accurate information about the situation?

[01:05:32] Liza: We ran the numbers multiple times over the last five years and they seem similar, so, okay, so let’s say it’s about the same. Shouldn’t we go there then? And if I can make more, then maybe I’ll feel better about money.

[01:05:43] Liza: Maybe not. I don’t know.

[01:05:45] Ramit: Uh, I’m gonna tell you right now, you’re not gonna feel better.

[01:05:48] Liza: Fair

[01:05:48] Ramit: enough. I’m just gonna tell you directly. Your feelings are completely and totally uncorrelated with how much you are making.

[01:05:57] Liza: Fair enough.

[01:05:57] Ramit: What you said was extremely revealing when you [01:06:00] said worth it. The idea is that if a company pays me $15 an hour in Canada, then maybe I am worth more than a company that pays me the equivalent of $7.

[01:06:12] Ramit: Yeah. In Columbia, until you are able to find your own self-worth beyond what a company will pay you because of labor markets, then you are forever going to be chasing it. We cannot determine, in totality, our self-worth by what a company is willing to pay us. But aren’t there other things to consider? We have three kids.

[01:06:31] Ramit: They grew up here. What’s the quality of life? And on and on and on. I’m not saying don’t move back to Canada.

[01:06:35] Liza: No, no, I understand.

[01:06:37] Ramit: But we can’t make these life decisions because. I think I will make double the amount or maybe a little bit more. That’s not how we make these big major life decisions.

[01:06:46] Liza: I think it’s fine, but I don’t know how to do them then because that’s the conversation.

[01:06:50] Ramit: Okay, we’ll, we’ll get there.

[01:06:52] Liza: Okay.

[01:06:53] Ramit: I’m not here to make couples feel bad. That is not the point of this show, but sometimes things get so [01:07:00] tangled that people cannot see what is happening. They spin, they rationalize, they analyze every option to death. A lot of couples are frankly, too smart for their own good.

[01:07:10] Ramit: They spend their time seeing every single angle, but they don’t realize they’re actually just stuck in place. And you’ll notice they keep trying To help me understand, Ramit, you need to understand why we do this. Let me explain our thinking. I don’t need to understand. They need to change. You see, at a certain point, I don’t actually care why they are doing something.

[01:07:31] Ramit: I care that it’s not working and I care about their plan. Sometimes we need to spend less time making other people understand and more time changing ourselves. And to their credit, they listen. They really listen, which is rare. If you want this kind of help with your own finances, if you want someone to cut through the confusion and help you stop spinning so you can actually make major changes fast, [01:08:00] join my money coaching program at

[01:08:01] Bradford: iwt.com/money coaching.

[01:08:04] Bradford: You do not have to do this alone. Now, let’s see if they are willing to make real changes right now.

[01:08:12] Ramit: Am I gonna see your kids on this podcast in 30 years?

[01:08:16] Liza: Hopefully not. If you do your job right, you won’t.

[01:08:19] Ramit: If I do my job right?

[01:08:21] Liza: Yes. You know, we can, you can

[01:08:22] Ramit: do that. Ah, that’s quite interesting. Can I ask you a, a pointed question?

[01:08:27] Ramit: Mm-hmm.

[01:08:28] Liza: What

[01:08:28] Ramit: if. You do your job, right?

[01:08:31] Liza: Yeah, exactly. If I can do better and and be willing to change, which I am, that’s why I’m here, then I think hopefully we can do better. And the reality is like I always pause,

[01:08:41] Ramit: I already pause. Pause

[01:08:42] Liza: what

[01:08:43] Ramit: we’re talking about, something really important right now. I don’t want you running off into the next topic.

[01:08:47] Liza: Okay.

[01:08:48] Ramit: We’re talking about your kids reproducing the same messages that you yourself are reproducing, that you learned from your parents.

[01:08:57] Liza: Yeah.

[01:08:58] Ramit: How does that strike you? [01:09:00]

[01:09:00] Liza: I don’t know. It’s sad. I guess I’m at least trying to teach them, for example, something as simple as investing.

[01:09:05] Ramit: You teach them about savings,

[01:09:07] Liza: not as importantly as investments.

[01:09:09] Ramit: How would you feel if your kids turn 25 and they have two lines of credit?

[01:09:13] Liza: I don’t think I would mind if they’re empty. Like if they pay off their debt. I don’t want them to be like living on credit.

[01:09:19] Ramit: Why is it that I, the non-parent am like so. Unwelcoming of a 25-year-old kid having two lines of credit, but you’re like, yeah, whatever.

[01:09:30] Ramit: As long as it’s empty. Why is that?

[01:09:32] Liza: Until this conversation that we’re having right now, I didn’t really see the issues with it in that sense because to be honest, we keep the line of credit low. But what I mean is like they keep offering us money. ’cause we get into debt and we pay it off so quickly that banks are like, take another 10,000.

[01:09:48] Liza: And we’re always like, no, take it down. And so the reason I don’t see the issues with my kids doing that is that if, let’s say the pattern repeated itself and you ended up in the same way, I would hope that at the very least they’re not living [01:10:00] on credit forever. It’s like a good backup plan when you don’t have the day-to-day like solvency.

[01:10:04] Liza: It’s

[01:10:04] Ramit: not a good plan.

[01:10:06] Liza: No.

[01:10:06] Ramit: I don’t know how many times I can tell you this. You yourself have been stuck in debt for how many years?

[01:10:12] Liza: I dunno. Comes and goes, but I like, if you wanna just say like, how many months have we had a balance? What, like two, three years, Brad?

[01:10:19] Bradford: Way less. I would say no, the, the line of credit is almost always empty.

[01:10:23] Bradford: It’s almost always at zero.

[01:10:25] Ramit: Okay.

[01:10:25] Bradford: It’s very rarely got any balance on it. So it may maybe like 15% of the time it has a balance.

[01:10:32] Ramit: And, um, Bradford, what about you? What do you remember about your family as it came to money when you were growing up? What did they say?

[01:10:40] Bradford: It was never a conversation, never a topic.

[01:10:42] Bradford: Nothing.

[01:10:43] Ramit: Two people whose families never really talked about money. Hmm. What happened as you got older? Bradford?

[01:10:51] Bradford: As I got older, I started to realize like a lot of the opportunities I did have were because my grandparents paid for it. Mm-hmm. And not that I’m [01:11:00] necessarily saying there’s something wrong with that.

[01:11:01] Bradford: I think my parents did what they could. My dad was, you know, the only one working for the most part. And there was four of us, you know. Um, but I do know that I didn’t, I didn’t want to be that way. I mean, my dad’s 70 and he’s still working and he says he, he really enjoys it. And I do believe he does. But I also, I I don’t actually know if he could retire.

[01:11:19] Ramit: Mm.

[01:11:20] Bradford: And I don’t, I don’t wanna be that, I don’t want to be 70 and, and working. So I started to just sort of learn on my own. I mean, I try to do this for most of my life. Not just money, but just when I know better, I’ll do better, which has gotten me into trouble. I’ve definitely, why? Well, you know, like sometimes I’ve done something that I thought I knew about and I didn’t, and then we’ve lost stuff.

[01:11:39] Bradford: Um, uh, buying some taxis in, in Columbia, we owned a small fleet of taxis, and for a while we made a ton of money on them, and then it went downhill fast, probably because we didn’t understand what owning a fleet of taxis meant.

[01:11:55] Ramit: Yeah. Okay.

[01:11:56] Bradford: And so when it did go south, I couldn’t exit fast enough [01:12:00] to recuperate the money.

[01:12:01] Bradford: So, you know, we lost between 60 and a hundred thousand probably on that. Wow.

[01:12:05] Ramit: What lessons do you bring from your upbringing to this relationship?

[01:12:10] Bradford: One of them would be that if, if we did need something, it’s okay to ask. Another one would be to budget. My parents never budgeted. They still don’t really,

[01:12:21] Ramit: and you don’t keep a budget either.

[01:12:23] Bradford: No, we do.

[01:12:23] Ramit: You do?

[01:12:24] Bradford: Yeah, we do.

[01:12:25] Ramit: Okay. So the 28% for guilt-free spending, you’re tracking some of that?

[01:12:32] Bradford: Yes.

[01:12:32] Ramit: Okay. Alright.

[01:12:34] Liza: We used to do it more regularly, so lately we’ve been busier, so we do it every few months, but not as often as we could.

[01:12:39] Bradford: Yeah, it was, it was monthly for years.

[01:12:41] Ramit: This cycles of debt question is really on my mind.

[01:12:45] Bradford: Mm-hmm.

[01:12:46] Ramit: Because it hasn’t just been once or twice, it’s been for years. Do you consider the cycles of debt a problem?

[01:12:52] Bradford: So my, my answer before this conversation would’ve been no, because the end sort of justified the means now, [01:13:00] I would say yes.

[01:13:01] Ramit: Why?

[01:13:02] Bradford: I mean, if I’m being brutally honest, because you have told me that maybe it’s not a good idea and clearly, you know more than I do if I’m being really, like, I don’t know if I have more of an answer than that.

[01:13:14] Ramit: That’s actually, that’s actually a pretty honest answer, not the answer. I eventually want, but what I appreciate about that is that you, you are open to like, Hey, maybe this guy knows something. I don’t know. I don’t understand why, but like he keeps saying this. This is from your application, Lisa, you wrote biggest challenge and one of the things you wrote under biggest challenge was being stuck in a cycle of getting in and out of debt.

[01:13:41] Liza: Yeah.

[01:13:42] Ramit: You wrote that in your application, but then just a few seconds ago you said, no, it’s not a problem.

[01:13:46] Liza: I just dunno if there’s enough to go around to not like to save and do that. It’s not like we have extra to be like, oh, we’re gonna invest 2000 this month ’cause we have extra. Like

[01:13:55] Ramit: why are you jumping ahead?

[01:13:56] Ramit: You don’t even know your numbers.

[01:13:58] Liza: I don’t know.

[01:13:59] Ramit: I think [01:14:00] really what’s happening right now is you don’t want to save and so you are now creating reasons why it would be hard to save. I think that the model you have seen is that it’s okay to go up and to go down. And going down a little bit hasn’t really costed you anything.

[01:14:18] Ramit: You paid it off in a few months. The way that the two of you describe paying off your debt, it’s like a reward. It’s like an achievement every time. Have you noticed that

[01:14:25] Liza: pride? Yeah, for sure.

[01:14:26] Ramit: It’s like, oh, let’s give ourselves a round of applause. We paid off our debt.

[01:14:29] Liza: Yeah.

[01:14:30] Ramit: And with only a couple of months and, and meanwhile like Bradford’s, like we got extra yield, like round of applause.

[01:14:37] Ramit: We did a great job. So the way you have interpreted using debt is like we’re winning. When I look at it, I’m like, you guys are losing. You may feel like you have won in the short term, but being in debt for years, like what has it cost you? You don’t have anything really in savings beyond 1500 bucks.

[01:14:55] Ramit: You’ve only been lucky that a market in the last 5, 6, 7 years [01:15:00] has only gone up.

[01:15:01] Liza: Yeah, that’s true.

[01:15:02] Ramit: You’ve basically ridden a wave that has propelled every single decision anyone has made to be good.

[01:15:07] Liza: Yeah,

[01:15:07] Ramit: and it doesn’t last. You could keep doing this for a while. You can keep doing it till it wipes you. In your family, you have recreated some of the ups and downs, Lisa, that you saw.

[01:15:18] Ramit: You have the taxi business, which went up, went down. Mm-hmm. You have the debt going up, going down. A lot of people who grew up in chaotic environments reproduce that environment because that is what they know when they hear like calm,

[01:15:33] Liza: boring.

[01:15:34] Ramit: Exactly. And to a lot of people who are overs sensitized, they’re looking for control, but they are creating and responding to and influenced by chaotic environments.

[01:15:45] Ramit: Boring is death to them.

[01:15:47] Liza: Yeah.

[01:15:48] Ramit: What do you think

[01:15:49] Bradford: I want, I wanna respond to something you said ’cause I, I, I don’t know. I wanna make sure that it’s clear. Postpay off student loans. We have definitely been out of debt way more than in debt. [01:16:00]

[01:16:00] Ramit: Okay. What’s the point of this?

[01:16:01] Bradford: We’ve gone into debt twice since, since then In nine years.

[01:16:05] Bradford: It was for very small amounts. For very short times. I’m not saying that necessarily makes it perfect or not.

[01:16:12] Liza: Brad, I Seever meets point in the sense that, for example, we bought all the furniture and we had a lot, thousands and thousands of dollars in debt. And so reactionary you had to go and get another job as you’re working.

[01:16:24] Liza: Yeah. 14 hours a a day or more just to pay that off quickly. But the point is that the cycle is still going up and down instead of just being like, okay, let’s plan for it and let’s buy it that way. And if we had savings, perhaps we could have used those savings to furnish the apartment and buy the car and not have to actually be like, okay, well now we have $30,000 in debt so we better like go and work extra for six months or whatever.

[01:16:46] Liza: And I think that’s the, probably the takeaway from that. And I don’t know, I think it, it does make sense.

[01:16:53] Bradford: I, I guess my question then, to you Ramit is like, is all debt always bad or is there any form of it that is not bad [01:17:00] because maybe that’s my misunderstanding.

[01:17:02] Ramit: In general, it’s bad.

[01:17:05] Bradford: Okay.

[01:17:06] Ramit: There are exceptions.

[01:17:07] Ramit: There are, and I’ll clarify those for you, but in general. For a family that makes $120,000 in Columbia, or for our family who lives in New York and la we have a no debt policy. Why would we go into debt when we don’t need to? If we can’t afford something, then we will save for it, but we are not going to go into debt because we don’t need to.

[01:17:35] Ramit: And it actually makes our decisions so much easier. It makes it crystal clear as to what is inbounds and what is out of bounds. Never a question, never a discussion.

[01:17:45] Liza: Mm-hmm.

[01:17:45] Ramit: So the exceptions are, you know, if for example, you needed to take a mortgage, that’s pretty expensive. Most people will take a mortgage if you need to take a car loan.

[01:17:54] Ramit: That’s pretty expensive. People sometimes often take a car loan student loans. Okay. [01:18:00] Yeah. You know, you wanna be conscious of that.

[01:18:02] Bradford: Yeah.

[01:18:02] Ramit: Business loan, I really steer away from it. I don’t, I don’t take debt. I would rather just. But I’ll tell you like things like, um, going on vacation or furnishing a place, I would never, ever in a million years take debt for that.

[01:18:18] Ramit: Number one, it introduces risk because it’s just one more thing I have to think about and track. And I know these companies are expert at extracting money from me, so I’m not even gonna play the game. Second,

[01:18:29] Bradford: okay,

[01:18:29] Ramit: how much could I expect to reasonably arbitrage? What could I make an extra 500 bucks, even 5,000?

[01:18:36] Ramit: It doesn’t move the needle for either of us. So why would I take on that kind of risk to only make a tiny amount of money? What do you think?

[01:18:44] Bradford: I think I like it. I think it makes me feel a little bit better in the sense that I think the debt that I’m most upset about was probably the taxis, which is business.

[01:18:56] Bradford: So I think that’s good confirmation that that was a bad [01:19:00] decision.

[01:19:00] Ramit: Yeah.

[01:19:00] Bradford: Um, and the, you know, the other would be the furnishing. So furnishing obviously. I like that because that makes that clear. No, we shouldn’t have done that.

[01:19:09] Ramit: Good take. I love this postmortem you’re doing here. I think there’s probably more for you both to look back and be like, let’s take a look at our biggest decisions through our marriage, moving kids, furnishing, taxis, all that, and let’s just like, what did we do at the time?

[01:19:25] Ramit: No judgment, but let’s just honestly write down what we did at the time and then like what went right and what went wrong and what will we do differently?

[01:19:33] Liza: Yeah.

[01:19:33] Ramit: Enormously valuable.

[01:19:35] Liza: Yeah, that’s true. Cool.

[01:19:36] Ramit: Okay. Now if we talk about going back to Canada, so there’s this open question about should you move back to Canada or not?

[01:19:42] Ramit: And Lisa, just so I understand, the, is the main reason that you could earn double or more in Canada?

[01:19:51] Liza: Um, practically, yes.

[01:19:53] Ramit: We need to ground some of these decisions in actual numbers. If you were. To look at these numbers, which I have now [01:20:00] adjusted for you to cut your income by half.

[01:20:03] Liza: Mm-hmm.

[01:20:03] Ramit: So your gross is 2000.

[01:20:05] Ramit: Your net’s gonna be 1500 a month. Let’s say you doubled it. Would the numbers measurably improve?

[01:20:12] Liza: Probably not

[01:20:13] Ramit: correct. In fact, what expenses do you have to account for if you were to move to Canada?

[01:20:20] Liza: More childcare. The biggest issue would be we have less help. ’cause here we have a full-time maid, so I’d have to be working full-time probably outta the house if I wanna get the jobs that I talk about.

[01:20:30] Liza: And then on top of that. I would have no help.

[01:20:33] Ramit: Yep. ‘

[01:20:34] Liza: cause it cleans and takes care of our daughter and all that.

[01:20:36] Ramit: What’s gonna be in your house or apartment in Canada?

[01:20:38] Liza: Furniture. And how are you gonna get that? The, I guess now we have to plan and save. So I guess we can’t leave until that’s been saved up for it.

[01:20:46] Ramit: That’s correct.

[01:20:46] Liza: Because I know what we sell here won’t be enough.

[01:20:48] Ramit: Exactly. I know what you were about to do. About to hop on that plane and freaking take out a line of credit and then buy all this furnishing. We’re not doing that anymore. Okay. And speaking of that, how much is a plane ticket, by the way?

[01:20:59] Liza: A thousand to [01:21:00] $1,200 a person.

[01:21:00] Ramit: That’s more than you have in savings. How are you gonna pay for that?

[01:21:03] Bradford: So that’s why my thing is always about waiting at the end of every year. My school pays for all of us to fly home.

[01:21:09] Ramit: Really?

[01:21:10] Bradford: Yeah. Including if I’ve done the contract, I would. We would all get to fly home one last time.

[01:21:15] Ramit: Wow.

[01:21:16] Bradford: Yeah. So that, that’s why for me it’s always about like in a cycle of like, let’s finish the school year and then we could go back.

[01:21:21] Bradford: But I didn’t want to go back in the middle.

[01:21:23] Ramit: Alright. That sort of up my example, but that’s pretty cool. Oh,

[01:21:26] Bradford: sorry.

[01:21:26] Ramit: Sorry. No, no, no. I appreciate it. We need the honest truth. Okay. So the flights may or may not cost money depending on when you go, but basically if you had to pay, you can’t afford it.

[01:21:37] Liza: Yeah, you’re right.

[01:21:37] Ramit: Okay. Furnishing, you can’t afford that. I don’t know what it’s like in Canada to rent a place, but at least in New York they, you left and right. You gotta put one month down, then last month and 15% for some stupid broker, blah, blah, blah. So there’s gonna be some amount there.

[01:21:52] Bradford: Yeah.

[01:21:53] Ramit: And all of this to make what you made last year.

[01:21:56] Ramit: So what do you think as we’re talking out loud?

[01:21:58] Liza: I don’t know, I just feel like [01:22:00] the job market is bad and things dried up. And honestly like most of what I’ve gotten has been through networking and I’m like, oh, what network do I have here?

[01:22:07] Ramit: It sounds like you’re trying to run away from a difficult time right now.

[01:22:11] Liza: Maybe,

[01:22:11] Ramit: I mean, I can understand it when things get hard. I understand. Sometimes you just wanna say like, I wanna go home.

[01:22:17] Liza: Yeah.

[01:22:18] Ramit: What I’m trying to do is to show you that going home is not escaping your problems. Yeah. You’ll have a whole set of very real problems there, and we can reasonably predict it. Just two minutes ago you said, I don’t know, I, I have no idea.

[01:22:34] Ramit: And then you did an outstanding job of going through all the different expenses that you would encounter. Now I’m asking, you sum it all up for me. If you were to get on a plane, either solo and leave, part of your family or husband comes along, let’s say you were to double your income maybe even a little bit more, would it m materially change your [01:23:00] financial position?

[01:23:01] Liza: Probably not.

[01:23:03] Ramit: I agree. Would it make it better or worse?

[01:23:07] Liza: Probably worse because like I said, here we live like expats compared to the average person around, we can afford a lot more things than the average person. Whereas in Canada, we probably wouldn’t be able to.

[01:23:18] Ramit: So we have less money because moving to Canada has massive transaction costs, startup costs of flying there, furnishing all of that stuff.

[01:23:28] Ramit: We have uncertainty. It’s not even clear what kind of job you could get, what’s really going on here. When you talk about going to Canada,

[01:23:35] Liza: perhaps part of it is that maybe I didn’t sign up to come here forever and I don’t know, I just, I don’t know if I can come to like a full circle decision to be like, yep, because financially it makes more sense to stay here, therefore we should stay here.

[01:23:52] Liza: Because I guess that’s not what I set out to do, but I don’t know, like most of the time I’m reactionaries. It’s not like suddenly I’m like, that’s not my plan. So I, I broke the plan. [01:24:00] That’s why I feel a little bit trapped here. ’cause I don’t know if I could stay here forever. I don’t,

[01:24:04] Ramit: who’s talking about forever?

[01:24:05] Ramit: I’m not.

[01:24:06] Liza: Like, okay, fair enough. So we can make a plan and we can save, so we can furnish our place or whatever. But

[01:24:12] Ramit: I think that you all might end up back in Canada or not. I don’t know. I don’t, I actually don’t think you know either. But my take is moving back right now is reactionary and it is an escape from something that just doesn’t feel good.

[01:24:29] Ramit: And when it doesn’t feel good, I think at least in this case, your tendency is Get away.

[01:24:34] Liza: Yeah, yeah, yeah, absolutely.

[01:24:36] Ramit: If you want to have the option of eventually moving back to Canada, which I think would be great, I think the two of you didn’t move there to be there forever, so you should probably give yourself the option of going back.

[01:24:47] Ramit: Then. I think that the two of you should probably calculate how much you would realistically need to live back in Canada. That includes moving costs, furnishing, all of that stuff. But in addition, [01:25:00] how much would you need to earn to live a reasonable type of lifestyle? It’s not gonna be the same lifestyle as where you live.

[01:25:08] Ramit: It’s probably gonna be worse.

[01:25:10] Liza: Yeah,

[01:25:10] Ramit: that’s okay. But you could start putting money aside in a separate Canada break in. In case of emergency savings fund, let me just give you a simple example. Let’s say you put a couple hundred bucks a month into that thing, okay? That’s not a lot of money. It would take years for you to have enough, but at least you would know the exact month and year.

[01:25:33] Ramit: Okay? If you decided, hey, we don’t wanna wait nine years to be able to move back to Canada, then we need to cut our costs elsewhere and earn more and put more money in that savings account. That’s how we do it. And you could lower that down to maybe four years or three years. Once you get to that point where you have the money necessary, then you too can start discussing whether it makes sense or not.

[01:25:56] Ramit: But until then, I would agree on a plan. I would check in [01:26:00] every December, Hey, are we still on track? Are we still thinking four years from now, we’ll take a look at it and decide if we wanna go back or not. ’cause that’s when we’ll have enough money. Until then, I just wouldn’t think about it because you’re just driving yourself nuts.

[01:26:11] Ramit: Now. I will give you one other option. If you really wanted to move there. Not everything is only about money. And if you’re just like, we’re done here. Okay, you could do it, but you would need to really think about how you were going to do it. In my opinion, I just can’t see a way that you would do it going into debt.

[01:26:29] Ramit: I think that would be pretty risky. So what are the other ways? What could you sell? What kind of cheap place could you live in, et cetera, et cetera, et cetera. I, I simply would not go into debt. That’s out of the question.

[01:26:39] Liza: Yeah.

[01:26:40] Ramit: That strike you. Which of those approaches would you take?

[01:26:44] Liza: I mean, obviously saving and preparing for it is better and it makes sense to me.

[01:26:48] Liza: Uh, I definitely think I would end up in a bad situation if we didn’t do that.

[01:26:52] Ramit: Yep.

[01:26:53] Liza: The question is when do you pull the trigger? For example, my financial situation changed recently. If [01:27:00] I don’t have any income or as much income as we budgeted for, for three months, six months, eight months, 10 months, what does that mean?

[01:27:08] Liza: Like when do I decide, okay, well maybe I’ll start applying to jobs in person. Or maybe Bradford needs to get a fourth job or however many jobs he has. Like

[01:27:15] Ramit: excellent question. If you had savings right now, you would be able to tap it.

[01:27:20] Liza: Mm-hmm.

[01:27:21] Ramit: Okay. But you don’t, and so you have to make other arrangements and I’d like to show you what you can do.

[01:27:27] Ramit: Okay, so I’m gonna put this CSP back up on screen and I would like you to tell me what do you want to do? Because right now you have a problem. You have $0 coming in from Lisa, which means your fixed costs are at 83%, which means that you are spending more than you make every single month. What do you wanna do?

[01:27:46] Liza: We could cut clothing.

[01:27:48] Ramit: Clothing is $150 a month. Okay. Goodbye.

[01:27:51] Liza: I don’t know

[01:27:52] Ramit: groceries.

[01:27:54] Liza: Uh, yeah, we could it cheaper.

[01:27:56] Ramit: Just so everybody knows groceries are $1,400 per [01:28:00] month.

[01:28:00] Liza: Uh, maybe a thousand dollars.

[01:28:02] Ramit: Okay.

[01:28:02] Liza: What else? Brad, what do you think?

[01:28:04] Ramit: Can I point something out? Yeah. How come nobody’s talking about cutting your investments?

[01:28:08] Liza: Because Brad wants to retire at some point.

[01:28:10] Ramit: Your investments are like the most sacred thing to you of all. Yeah. Have you noticed that?

[01:28:15] Bradford: Yeah.

[01:28:16] Ramit: Like it’s like the sacred thing that no one is willing to even talk about. Yeah. No savings. Can’t talk about it. Wife can’t spend money on whatever you want for five years.

[01:28:26] Ramit: Can’t talk about it. I don’t mind investing aggressively. I love it, but the minute you say this is a requirement and everything has to work around it, then you need to get really creative. You cannot be spending $1,400 or probably even a thousand dollars on groceries. You can’t be eating out not even $500 a month.

[01:28:44] Ramit: Like if you wanna do it, fine, but you probably need to both be earning way more money. And you need to not be going out as much. You can’t have it all, not on your income.

[01:28:52] Liza: So I would say two things. One, after reading your book many years ago, I finally automated the 800. So it’s easy to not think about [01:29:00] it.

[01:29:00] Liza: I just always make sure the $800 are in the account by the date.

[01:29:03] Ramit: Okay?

[01:29:03] Liza: And I didn’t do that till five years after I read your book.

[01:29:06] Ramit: Hold on, hold on, hold on. Let me just simmer in the beautiful irony of this, it’s like I have a love-hate relationship, not with you, with myself. Like first of all, the fact that you actually read my book is so amazing.

[01:29:19] Ramit: I would say 90% of the people on this Godforsaken show don’t even read my own book, even though it’s free at every public library in the country. Second, when they read it, do they do it? Nah. They love my jokes from meet sat so funny. Ha ha. I’m not gonna do anything he says. But then I discover an amazing example here.

[01:29:41] Ramit: We have Lisa who read the book many years ago, didn’t do anything in it, but then. Left turn. Did it five years later. Yes. And goes, Hey, it was so easy. I automated it and now the money just rolls in there. I don’t even notice it, but thank you for the example. That was [01:30:00] phenomenal. Carry on.

[01:30:01] Liza: So it seems like changing it now would be hard because it’s automated and we figured it out.

[01:30:06] Liza: And the other thing is, maybe you can help us with this is do we have enough to retire at some point in our lives based on the $800 that we’re putting away? Because if it’s enough, I’m willing to cut it.

[01:30:15] Ramit: Okay. You’re willing to cut it. Are you willing to earn two to $4,000 a month?

[01:30:19] Liza: Yes. If I can find a way here.

[01:30:21] Ramit: Well, you told me that you haven’t even really applied for jobs, you’ve just

[01:30:24] Liza: No, no. Oh, sorry. I meant for the clients that I got that made me good money. Of course, I’m gonna try to my best to keep freelancing and to continue to get contracts and I’m actually like building a portfolio to offer better service.

[01:30:36] Liza: Like I, I am doing all those things. It’s just that I have no confidence right now that I can pull those kind of numbers again. Okay.

[01:30:45] Ramit: Um, Bradford, what do you say? ’cause I know early retirement or retirement is important to you, and you’ve been very disciplined about investing regularly. What do you, what’s your take on this?

[01:30:56] Bradford: That I would rather find a way to make more money or cut [01:31:00] other things than cut that retirement.

[01:31:02] Ramit: Okay.

[01:31:03] Bradford: Do I necessarily need to retire at a specific age of whatever, 55, 60, whatever it is? No, but I want to be able to have the option where I’m working maybe less.

[01:31:15] Ramit: Okay.

[01:31:15] Bradford: And so cutting it down makes me nervous,

[01:31:18] Ramit: depending on a variety of things.

[01:31:20] Ramit: The way we calculate it is you’ll have about $1.6 million when you are 65. Canada has its own unique circumstances, situations. I’ll just tell you what we would calculate in the us.

[01:31:32] Bradford: Sure.

[01:31:33] Ramit: If we were to calculate a 4% rule for safe withdrawal, this is just the back of the napkin guideline, that would mean you’d be able to withdraw about $65,000 per year in retirement.

[01:31:44] Ramit: Yeah. What do you think about that?

[01:31:46] Bradford: I think if it’s just the two of us, that’s probably enough. ’cause I, I don’t, I don’t, I don’t need to be crazy wealthy. I just need to be able to, you know,

[01:31:54] Ramit: I think 60 5K is tough. Uh, yeah. Not owning a house, which I don’t [01:32:00] think we have allotted for in this.

[01:32:02] Bradford: Right.

[01:32:02] Ramit: 60 5K is not enough.

[01:32:04] Bradford: Okay.

[01:32:05] Ramit: Not 20 years from now.

[01:32:08] Liza: Yeah,

[01:32:08] Bradford: yeah. Yeah.

[01:32:09] Ramit: So it’s not enough. And there is some, um, Canada pension plan. I don’t know if you’d be eligible for that or not. Do you know?

[01:32:16] Bradford: I would be, yeah,

[01:32:17] Ramit: you would be. So that’s like 10 K per person. Okay. So like either 75 or 85 KA year, that becomes better.

[01:32:25] Bradford: Okay.

[01:32:26] Ramit: That’s better.

[01:32:27] Ramit: But I guess what, what occurs to me is that for a couple that has like talked about money every day for years, and that is making these big life decisions and sees it differently, you actually should know these numbers. Do you see that you have been focused on one area of your numbers, but not focused on the major key numbers that matter?

[01:32:55] Liza: Yeah.

[01:32:56] Ramit: Why have you been focused on, I wanna go back to Canada, [01:33:00] or I don’t wanna save more money, use the line of credit. Why have both of you been focused on those things instead of retirement numbers? Which it seems is quite important to you

[01:33:11] Liza: because it feels more immediate.

[01:33:12] Ramit: Yes.

[01:33:13] Liza: And to be honest, if I wasn’t married to Bradford, I may not have been saving for retirement.

[01:33:18] Liza: Not because I don’t care about, because I wouldn’t have thought that way. And for him, because he works so hard and he’s always like, oh no, it’s fine. I’ll work more, I’ll work more, then of course he is like, at some point I would like to stop working so damn hard. So that makes sense to me that it would be so important to him.

[01:33:31] Liza: Whereas for me, that I’m kind of work optional in a sense, because he pulls through every time. And I think if I was single on my own, I don’t think I’d be investing in retirement that much. Probably.

[01:33:42] Ramit: That’s pretty honest. Okay. And Bradford, what about you?

[01:33:45] Bradford: I, I gotta be honest, I’m, I’m really stuck and deflated by the fact that 800 or plus a month is not enough.

[01:33:52] Bradford: ’cause I don’t know how I’m going to try and do more than that. So I’m having a hard time even answering your question. ’cause I’m really hung up on that.

[01:33:58] Ramit: Okay, let’s talk about [01:34:00] it then.

[01:34:00] Bradford: That freaks me out a lot.

[01:34:01] Ramit: Tell me why.

[01:34:02] Bradford: Because I don’t even wanna have to work full-time to 65, let alone having to work past that.

[01:34:08] Bradford: And if 800, which I felt like was sufficient, is not gonna be enough, then that means that I’ve gotta either earn more or cut back other places to put more than a thousand. Yeah. I don’t know. I don’t know, man. That really deflates me, really deflates me.

[01:34:24] Ramit: Can I, can I walk you through it?

[01:34:26] Bradford: Yeah.

[01:34:27] Ramit: Okay. First off, I totally understand feeling deflated because you have obviously worked hard and you’ve both talked about money a lot and you’ve put time into automating this, all of that.

[01:34:39] Ramit: Very important. Very notable. My first question is. Why do you think you never calculated how much this would turn into?

[01:34:48] Bradford: I did. I think, I didn’t realize that that wasn’t gonna be enough.

[01:34:52] Ramit: So as you sit here and think about the numbers, what does it feel like to you?

[01:34:57] Bradford: I mean, the first word that comes to mind is hopeless.

[01:34:59] Bradford: Um, but [01:35:00] hopeless. Yeah.

[01:35:01] Ramit: Why?

[01:35:02] Bradford: Because if I’ve gotta put more than that away, I don’t know how to do that without, without basically just living for retirement and forgetting how to live my life right now. I don’t want my kids to have the same life that I had where, you know, like I did a few things, but later found out it was all my grandparents and didn’t have anything else, and I don’t want them to have to not have help for university.

[01:35:24] Ramit: Can I point out something that I’ve noticed you’ve said several times just now?

[01:35:28] Bradford: Sure.

[01:35:29] Ramit: I,

[01:35:30] Bradford: okay.

[01:35:30] Ramit: Why is it all Bradford?

[01:35:33] Bradford: That’s the way it was for my family growing up. My mom contributed very little. Financially when I left home, ’cause I left home at 17, I think she contributed more, but before that she was just watching the kids.

[01:35:46] Bradford: Uh, so it was my dad. And I think that when it comes to Lisa, there’s been sort of two stages. One has been where she didn’t value herself very much back when we were in Canada. And so she didn’t, uh, didn’t, [01:36:00] didn’t feel she was worth more like she or she could make more or she would, she would always like under quote things, in my opinion.

[01:36:07] Bradford: Um, and then more recently it’s just been that she’s had a hard time finding work. And so then, uh, that means that it is zombie to do that, to make sure that I provide enough.

[01:36:19] Ramit: And when money topics come up, your natural instinctive response is to say,

[01:36:25] Bradford: I don’t know. I’ll find more work.

[01:36:27] Ramit: Right? Yes. I’ll find more work.

[01:36:30] Ramit: I’ll take this burden, I’ll take care of it. And what does that do to Lisa?

[01:36:36] Bradford: It belittles her, I guess. I mean, I certainly don’t think that I go there first. I try to, I also feel like I’m very supportive in trying to help her find something. I also think that I’m very driven by efficiency, and so ultimately, eventually it gets to a point where it’s more efficient for me to go and find work or more work I should say, so that I do that.

[01:36:57] Ramit: It’s very insightful, driven [01:37:00] by efficiency. Hold onto that for a second. We’re gonna come back to that. That is the key to some of your own behavior. Lisa, what are you hearing when you hear Bradford talk about how he uses the word I And he takes this earning stuff on himself, and he’s pretty dejected about the numbers.

[01:37:21] Liza: I mean, I feel bad for him, but he does take the burden on by himself, uh, a lot of times, and I feel bad that he feels bad about it. Here’s the thing, I feel like. I am very externally motivated. And for example, when we made the budget and we decided we had to make $40,000, I did it. If not much is required of me, then I probably won’t put that much effort to go do.

[01:37:46] Liza: Not that I won’t put any effort, but I won’t be as desperate to be like, I’m gonna go and make X amount of money that I need.

[01:37:54] Ramit: Okay. That’s quite interesting. Most of the time, is there an expectation? [01:38:00]

[01:38:00] Liza: Probably not, because Bradford can come in and get another job.

[01:38:04] Ramit: And then what happens when Bradford saves the day?

[01:38:06] Ramit: First of all, what happens to Bradford over time as he’s saving the day, working three jobs, what happens?

[01:38:11] Liza: She’s getting exhausted.

[01:38:14] Ramit: Yeah. Burned out physical impairment. Yes. And then what happens to Lisa as Bradford comes in and saves the day yet again,

[01:38:21] Liza: I have no purpose.

[01:38:23] Ramit: Yes

[01:38:23] Liza: or no reason to contribute.

[01:38:25] Ramit: Yes.

[01:38:26] Ramit: Disempowered feeling like it’s not working and wanting to say.

[01:38:31] Liza: Canada,

[01:38:32] Ramit: let’s go to Canada. Bradford, what are you thinking right now? I see you thinking

[01:38:37] Bradford: I’m trying not to, I’m, I was trying not to be emotional.

[01:38:41] Ramit: Why?

[01:38:42] Bradford: I don’t know. I don’t like that I made my wife feel that way.

[01:38:44] Ramit: It’s okay to tell her that.

[01:38:46] Bradford: I’m really sorry, Lisa, if I made you feel disempowered or dejected or removed.

[01:38:52] Liza: Thank you.

[01:38:54] Bradford: I am trying to figure out how to live life, but still be able to [01:39:00] retire, which means that then I’m gonna have to put more than what’s what I’m doing or what we’re doing.

[01:39:05] Ramit: Why is it important to you?

[01:39:07] Bradford: I’ve already had some pretty, uh, big changes to my physical ability, let’s say. Uh, and so I already can’t learn the way that I could even three years ago, and so I don’t want to, you know, be able to finally have time to do those things in 20 years.

[01:39:28] Bradford: Or 25 years. And I want, I don’t want my kids, I want my kids to be able to as well, you know, I don’t want them to have, to not be able to do things because we need to put away more money for retirement. ’cause I already feel like I do say no quite a bit.

[01:39:40] Ramit: Lisa, what role do you need to play in the family?

[01:39:44] Ramit: Finances.

[01:39:45] Liza: Maybe more of qual partner.

[01:39:47] Ramit: What do you hear your husband saying?

[01:39:49] Liza: That he doesn’t wanna work forever. Okay. And so maybe he just needs more support from me to carry more of the, the weight of the, the finances, I guess, which I would like to [01:40:00] do. ’cause I also get gratification. It’s not like I wanna sit on my ass and do nothing so

[01:40:05] Ramit: Great.

[01:40:05] Ramit: Can we play a game called I Need? So the game is you just, you have 15, 30 seconds and you can feel free to say everything you need as it relates to money. What do you need from your partner? This is a chance for you to say what you need, like you’ve never said it before.

[01:40:30] Bradford: I need you to earn enough for us to put into retirement so that we can retire at some point.

[01:40:38] Bradford: And I need you to acknowledge when I am working, not just when I am taking on extra jobs. I find you’re very, you’re very good, Lisa, about telling me or acknowledging what I’ve taken on like a third job or when I’ve taken on, like the extra teaching jobs at night. Um, but I need you to do that even when I’m [01:41:00] pulled back from that and maybe taking a little more care of myself.

[01:41:04] Ramit: Great. Thank you. That was awesome. Lisa, do you wanna react to that?

[01:41:09] Liza: I’m actually, I was actually surprised when he said that he wants me to, to make enough to put away for retirement. ’cause that doesn’t seem like it requires a lot of me. Even if we double the amount, that’s not that much. I can see how maybe I am way more appreciative and like outwardly verbally appreciative of rec and recognize him when he’s working extra and not working the normal job and taking care of himself and having more work-life balance.

[01:41:38] Ramit: Cool. Okay. And what do you need?

[01:41:40] Liza: I, well, I need you, Brian, to keep believing in me and encouraging me to know my worth, I guess in a sense, because that is valuable to me. I think when you say it matters to me, um, and then I also need you to, I don’t know, to not always [01:42:00] come and save me because it’s okay to require things of me, like I appreciate it.

[01:42:04] Liza: It’s not that I don’t, but sometimes I feel like I, I feel less than because. It doesn’t matter if I require anything of me or not, you know, because ultimately you’re gonna figure it anyway. So what is my value and my contribution? I don’t know.

[01:42:21] Ramit: Thank you, Lisa. Bradford, your reaction,

[01:42:24] Bradford: I’m surprised that that means something to you because I honestly, I feel like I’m annoying you when I tell you that you are more knowledgeable and more capable than so many of these people that you’ll compare yourself to.

[01:42:37] Bradford: But I can definitely continue and do it more because I, I do think that you have more knowledge and capabilities than you give yourself credit. Slower.

[01:42:48] Ramit: What about the second thing that she said,

[01:42:50] Bradford: I can definitely, I can try to back off and not try to save you and instead make it more of a team effort on how are we going [01:43:00] to do whatever the goal is.

[01:43:03] Bradford: Instead of getting frustrated and working all out of my efficiency to be like, well, this is the fastest, best way to do it, so let’s just do it.

[01:43:10] Liza: No, I appreciate that because I actually think that’s part of the pattern is that, sure, I don’t value myself enough and so you tell me that I should because of all these talents I have, and at the same time you’re like, oh no, don’t go do that for that money.

[01:43:23] Liza: Let me work an hour ’cause I make triple what you make or whatever. And so then it just kind of makes messages and it doesn’t make me believe that I capable or worth it.

[01:43:33] Bradford: I never thought about the double message.

[01:43:35] Ramit: Extremely insightful. Both of you. I really appreciate how both of you really brought total energy to that.

[01:43:43] Ramit: That’s a really hard exercise. What do I need? I myself struggle asking for what I need and I noticed just so many things that were so beautiful about that. Lisa, I really loved how you said sometimes I need you to tell me like [01:44:00] and don’t save. That was powerful. And Bradford, I really wanted to make sure you heard that.

[01:44:08] Ramit: And that is one of the keys here, which is Lisa. Lisa working on your own self-worth with the help of a therapist. Absolutely critical. Nothing moves forward from your end without that. So it’s gotta happen. Okay? In addition, this idea, Bradford, that you love efficiency. Efficiency is actually not the most important thing in your relationship and that is really important to understand.

[01:44:35] Ramit: There are times and places to be efficient, but this is actually not one of them. In fact, efficiency is poisoning what’s going on. Much better for both of you to add something to this relationship that is totally absent and that is a shared vision of what you were both going for. Right now, there is no shared vision around money.

[01:44:53] Ramit: You know what it is? It’s, Lisa wants to basically like, ah, like let’s do this, let’s do that. It’s [01:45:00] fine. It’ll, things will work itself out. Bradford is like, well, we gotta save for retirement. And so I’ll work two jobs, three jobs, four jobs. And what inevitably has happened is neither of you actually have connected at all.

[01:45:12] Ramit: It’s just the two of you kind of working in parallel, but at odds with each other. Mm-hmm. And so both of you’re like, this sucks. I, Bradford am tiring myself out. I’m getting sick. And then I just found out I, we actually don’t have enough money. This sucks. And then Lisa’s over here like, I wanna work ’cause it adds value and it contributes, but then I’m not getting paid enough so I’m not valued.

[01:45:33] Ramit: So no one is actually really connecting with each other. Do you see that?

[01:45:37] Liza: Yeah, for sure.

[01:45:38] Bradford: Yeah.

[01:45:38] Liza: Now that you say it like that. Yeah.

[01:45:39] Ramit: Okay. So what needs to happen, in my opinion, is a shared vision. You actually cannot get to where you want the way that you’ve been doing it. You have to both be active Bradford, you have to be clear about what needs to happen, as do you, Lisa, what do you both need?[01:46:00]

[01:46:00] Ramit: And then. What you’re hearing Lisa say is like, Hey, I actually want to be held to a higher standard. I don’t wanna be saved. I wanna be a part of this. And then Lisa, it’s important for you to be able to work on yourself and say like, I’m not gonna try to jump to the next shiny thing as you described it, but rather we have a vision.

[01:46:21] Ramit: I’m going to kill it. I’m gonna knock it out just like I did last time. And I know I may not have the clients today, but I know I can get ’em or I can get another job. That’s how we do it as a team. So what is the shared vision?

[01:46:34] Bradford: I think it would be to retire and have the option of moving back to Canada.

[01:46:42] Ramit: Okay. How much do you need?

[01:46:45] Bradford: We said it was 1.6, right? So I mean, I’m guessing then let’s go to like 2 million.

[01:46:50] Ramit: That’s a fair, that’s a fair assessment. So without getting into all of the calculations right now, let’s assume that you need to. Double your [01:47:00] contributions.

[01:47:01] Bradford: Okay.

[01:47:01] Ramit: Let’s just assume that I’m gonna put the CSP up and I wanna see how you’re going to double your contributions to your investments.

[01:47:10] Ramit: Alright? You currently have fixed costs of 72%. You have investments of 18%, which is $920 a month, and then savings are at zero and guilt-free spending is at 9%. Alright. What’s your plan of attack?

[01:47:24] Liza: I mean, I can make more money.

[01:47:26] Ramit: Great. How much?

[01:47:27] Liza: A thousand more.

[01:47:29] Ramit: Okay. So you wanna go instead of 2000, you wanna put 3000, right?

[01:47:32] Liza: Sure.

[01:47:33] Ramit: And how much is the net on that ballpark?

[01:47:35] Liza: Uh, 2,700. I don’t pay a lot in taxes because of my business. Yeah.

[01:47:39] Ramit: Alright. Wow. Holy, your fixed cost just dropped down to 47%. That’s ama. Oh my God. Did we just solve the whole problem in two seconds? Look at this. See, this is how it works. The money flows down, it flows to the bottom like a bucket, and you now have 41% in guilt-free spending, or $3,000 per month.

[01:47:59] Ramit: Now [01:48:00] that’s insane. Y’all do not need to be spending $3,000 if you wanna retire early. So what do you wanna do with the money?

[01:48:05] Bradford: I mean, the stock should probably go to 1.6.

[01:48:08] Ramit: Okay. Alright, so you’re now at 22%.

[01:48:11] Bradford: And then savings, I guess we need to be putting it in there as well.

[01:48:15] Ramit: Yep. Typically, people recommend three to six months.

[01:48:17] Ramit: I recommend six to 12 months.

[01:48:19] Liza: Well, it’s a lot.

[01:48:20] Ramit: It’s a lot of money. So y’all can choose. But like six month is your baseline. So that would be six months times your fixed costs, which is $21,000. You currently have 1500 bucks. So let’s pump that freaking savings account number up. What do you wanna put here?

[01:48:37] Bradford: Probably like a thousand until it’s there.

[01:48:39] Ramit: All right. Not bad. Not bad. A thousand bucks. This is gonna take you about little under two years. That’s not bad to fill up an emergency fund. That’s not bad. Yeah. Guys, this is pretty good. Look at this. So 47% fixed costs. That’s low, lower than most ’cause it’s usually 50, 60%.

[01:48:58] Ramit: And notice that we cut your [01:49:00] groceries, so that needs to change. Next up, investments are at 22% quite aggressive, which is perfect for a couple that wants to retire early and is somewhat starting in their late thirties and forties. Great, I love it. Savings are at 13%. Good. Good. It’s, in my opinion, a little low, but it’s not so bad.

[01:49:19] Ramit: I don’t mind it. It’s fine. You’re gonna get where you need to go in like less than two years. That’s totally fine. Guilt free spending at 18%. Now there is a key to this. It only works if Lisa’s earning $3,000 a month.

[01:49:35] Liza: That’s what I asked for. I am scared of it now, but yes. I asked to require more of me, so I guess I’m in for it now.

[01:49:41] Ramit: Yeah, you just, you were making 4,000 until recently. Mm-hmm. So I know you can make 3000 and I actually think the win comes when you start to beat that number. I’m not gonna hold you to it today. Nobody’s gonna hold you down. You just gotta hit this number. But in my opinion, you’ve probably seen this with your kids, people don’t really respond to [01:50:00] lower expectations.

[01:50:02] Ramit: They actually respond to higher expectations. People as part of a unit want to have a role. Everybody wants a role, kids, adults, everybody. And so to have that role and to say, look, our success is dependent on you doing your part, me doing my part, and us revisiting it. Because our, our relationship is not just about money.

[01:50:23] Ramit: It’s about our kids, it’s about our family, it’s about love, it’s about all that. But we each have a role to play. This is a business, the business of running a household. People love it. They might resist at first, but we all want meaning in life. What I would like for you to do is tighten up these calculations.

[01:50:42] Ramit: Okay? Yeah. Because there are certain things in here that are not properly accounted for that you that are really meaningful. For example, when you hit your savings number, which will happen in like a couple of years, that is a thousand [01:51:00] dollars a month that you can then start investing guys. That’s a lot of extra money.

[01:51:07] Bradford: Mm-hmm.

[01:51:08] Ramit: So you can accelerate your investments, but it is important in my opinion, that you have the savings. Why? Because the path that you have taken until now is this, look at my hand. It’s going up and down. Kind of like a stock chart up and down.

[01:51:22] Bradford: Yeah.

[01:51:22] Ramit: We don’t want that anymore. You paid off your debt.

[01:51:24] Ramit: That up and down is behind you. Never again. The new chapter of your life is like this. Look, look at my finger. It’s like a slow, steady chart. It’s going up. We are not going up and down and up and down and up and down again. Okay? Sure. There might be setbacks. Lisa, you might lose a client for a couple of months.

[01:51:40] Ramit: Okay, fine. Uh, Bradford, you might take on an extra job or lose an extra job. Okay, fine. You might have some emergency. You have to fly back to Canada for fine. But in general, we are doing this. This is the kind of life we are. Engineering means no more lines of credit. We’re not using that anymore. We are building up savings.

[01:51:59] Ramit: The savings [01:52:00] is specifically meant for emergencies. What is an emergency? Buying a new tv. That’s not a emergency. Taking a trip to go to another part of Columbia on vacation, that’s not an emergency. Somebody gets sick and you have to fly back to Canada on the next available flight. That is an emergency.

[01:52:14] Bradford: They are.

[01:52:16] Ramit: It’s going to cost you a little bit. Yeah. That 30,000 bucks could be sitting in the market earning you more, and yet you’re gonna leave it in savings because one day you’re gonna have to tap it and you’re gonna be so thankful that you don’t have to go back into this to get there.

[01:52:31] Liza: Makes sense?

[01:52:32] Bradford: Yeah.

[01:52:33] Ramit: I wanna give Bradford credit, when he saw those retirement numbers, he said out loud, I’m so dejected, I can’t even keep up with this right now. And frankly, I think that’s very powerful to admit. It’s not easy right now. The fact is they don’t have a shared vision. Look at how they operate. Bradford hunches over working multiple jobs, just saying, I’ll handle it.

[01:52:55] Ramit: Lisa’s over here thinking this sucks. I’m moving to Canada without you. And as an [01:53:00] outside observer, what I see is they are very good at coming up with reasons for why things are the way they are. But those reasons are not getting them the outcome they want. Frankly, you don’t need to be right. You need results.

[01:53:14] Ramit: And sometimes that means letting go of explaining and looking backwards and instead reorienting yourself to look forward. What do I want? What do we want? Okay, now that we’ve gotten that out, how are we gonna get there? The good news is they took the first step, they ran the numbers together, they each said what they need from each other, and they really listened.

[01:53:36] Ramit: Now they have a plan. Lisa knows her target $3,000 a month. Bradford knows he doesn’t have to carry it all alone. And they both know exactly what they have to do to make moving back to Canada a real option if that’s what they decide. Now let’s check out their follow ups.

[01:53:54] Liza: Hi Ramit. So it’s been a few days since we last chatted and I wanted to send a little follow up.

[01:53:58] Liza: So I would say that during [01:54:00] the call, my biggest surprise was the fact that our net worth is not zero. Like I really thought we had nothing to our name. So seeing those numbers on paper was really good for me to feel like, okay, our efforts are working and we are building something over time. Um, I would say my biggest takeaway is divided in two things.

[01:54:17] Liza: Number one, um, on the relationship side, as much as I really appreciate the Bradfords willing to step up and support us and meet our needs, um, whenever I’m not contributing as much as he is, I didn’t realize how much that was invalidating, um, my efforts I guess. Um, and so that was a really key moment for us.

[01:54:37] Liza: Um, and I feel like now I understand that my efforts are necessary and they are valued and that gives me a little bit of motivation to continue to work hard and, and contribute. ’cause it does bring me joy to contribute to our finances as well. So, and then on the other side, on the more practical side, I would say that, um, I realized during our call that importance of having an emergency [01:55:00] fund of some sorts.

[01:55:01] Liza: Um, because I realized when we were chatting that perhaps. If the emergency is not external, but if it’s something that happens to Bradford or I, then we could really get into trouble by using our lines of credit as a way to, um, as an emergency fund, I guess. So, um, what we decided to do for that is because our portfolio has grown a lot in the last few years and we have a good percentage of, uh, growth, we decided to sell some of our stock and we’re gonna use that to kickstart our emergency fund.

[01:55:30] Liza: I don’t know if we’re gonna have like a full six months of expensive sitting in our account, but definitely five to 10 grand we’re gonna have just sitting there in case when you jump on. So that’s about it.

[01:55:41] Bradford: Uh, so my biggest surprise, well, I think was definitely that we’re not putting enough away for retirement to, to live as well as I’d like to.

[01:55:48] Bradford: No, it just kinda shocked me. And then I think that the, the thing that surprised me the most was actually just how my efficiency was not always the best answer. Uh, you know, [01:56:00] meaning that like. Whether it meant that my efficiency was actually, and the kind of like rescuing my wife, uh, when we needed that extra little bit of money was actually like detrimental to her.

[01:56:11] Bradford: Or whether it was that, my efficiency in trying to make sure that we didn’t bother with the savings in order to make sure that that money was invested and would get more return, even if it was loosely invested and easy to pull out. And then the, the last one, the thing that we’re gonna try is actually to do that savings, to actually try having it.

[01:56:29] Bradford: Um, and so to put away, you know, 20 grand and, and then just see if that, how that changes things, uh, because. Well, we haven’t done that for a very long time, so to try it and see if that helps.

[01:56:43] Ramit: Listen up. If you want my help with your specific money questions. There are only two ways to get it. First, you can apply to be on this podcast at iwt.com/apply.

[01:56:53] Ramit: Or second, you can join my money coaching program instantly at iwt.com/money [01:57:00] Coaching. In that program, you get access to live virtual events, monthly group coaching calls, live q and as, and an amazing, huge community of other people like you. Check it out at iwt.com/money coaching.

#moved #fun #afford #leave

10 Practical Tips to Help You Pay Off Debt Fast

admin — Mon, 13 Apr 2026 12:39:50 +0000

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Last Updated on April 13, 2026 by Katie

Debt can make life feel small. It can keep you up at night, steal your focus at work, and make every paycheck feel gone before it lands.

If you’re tired of living that way, this is a practical guide, not a guilt trip. Paying off debt takes clear priorities, a change in how you handle money, and steady action.

The good news is that small moves can speed things up fast, especially when you can see the full picture and start copying the habits of debt-free people.

Read on to get my top practical tips to help you pay off debt fast.

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10 Practical Tips to Help You Pay Off Debt Fast

You don’t need a perfect income to make progress.

You do need a plan, and these tips to help you pay off debt fast can also help you stop living paycheck to paycheck.

1. Get clear on why you want to be debt-free

A strong reason gives you something to hold onto when the process gets dull or hard.

“I want less stress” is fine, but “I want to stop fighting about money” or “I want to sleep through the night” is better.

Your spending tells the truth about your priorities. If debt payoff matters right now, your time and money need to show it.

Write your reason down and keep it where you’ll see it, like your wallet, fridge, or phone lock screen.

If your money keeps drifting, your goal probably isn’t clear enough yet.

2. Write down every debt so nothing stays hidden

Debt grows in the dark. Put every balance on one page, including the lender, total owed, interest rate, minimum payment, and due date.

This step feels scary for about ten minutes.

After that, it feels like control. When you can see the numbers in one place, the mess becomes a problem you can solve, not a fog that follows you around.

3. Build a zero-based budget that puts every dollar to work

A zero-based budget means your income minus your planned spending equals zero.

Bills, food, gas, and savings come first. Then any money left goes to debt.

The point is simple: there shouldn’t be mystery money at the end of the month. If $80 always disappears, give that $80 a job before the month starts.

That’s how a budget stops being a wish and starts becoming a tool.

4. Save a small emergency fund before you attack the balance

Start with at least $1,000, or a starter cushion that fits your household. That money stands between you and the next car repair, vet bill, or bad week at work.

Without a buffer, every surprise goes back on a card. That’s how people pay off debt for three months and then slide backwards in one weekend.

A separate savings account helps, and this guide on how to build an emergency fund can help you get there faster.

5. Pick a payoff method you will actually stick with

The debt snowball targets the smallest balance first.

The debt avalanche targets the highest-interest-rate debt first. One builds momentum faster, the other saves more money on paper.

Behaviour matters more than theory. Many people stay with the snowball longer because quick wins keep them going.

That’s a big deal when card rates are still painfully high in 2026, with many offers and balances sitting around 20% to 24%, according to current credit card APR data.

If you want help tracking either method, these free budgeting apps can make the process easier.

6. Pay more than the minimum whenever you can

Minimum payments keep debt alive. Even a small extra payment can cut months off your timeline.

Say you send an extra $50 a month to a card balance. That may not sound dramatic, but over time it can save real interest and move your debt-free date closer than you expect.

The same mindset behind frugal living tips that free up extra cash works here: small moves, done often, change the whole outcome.

7. Cut spending hard for a short season

This doesn’t have to be forever. Think of it like sprinting, not punishment without end.

For a few months, cut takeout, pause subscriptions, avoid impulse buys, and trim convenience spending.

If you need ideas, start with common things to stop buying and try a no-spend week or pantry challenge. Short-term sacrifice often beats long-term dragging.

8. Sell things you no longer need and throw the cash at debt

Clutter costs more than space. It can also carry stress, guilt, and monthly payments you no longer want.

Start small with clothes, electronics, and kitchen gadgets.

Then look bigger. If a car, boat, or other expensive toy pushes your payoff date far past 18 to 24 months, it may be time to sell.

Marketplace apps, local groups, and yard sales can turn dust into debt payments faster than most people think.

Further reading:

Cutting expenses helps, but income speed matters too. A few hundred extra dollars a month can change the math fast.

Look for overtime, weekend shifts, freelance work, delivery apps, tutoring, childcare, or simple neighbourhood jobs.

Even one temporary side job can create a snowball effect. If your debt payoff feels stuck, extra income is often the wrench that finally loosens the bolt.

Further reading:

10. Track your progress so you stay motivated

Debt payoff is a long road, and long roads need mile markers. Use a chart, a checklist, a colouring tracker, or a simple spreadsheet.

The key is seeing movement. A visual tracker turns “I’m trying” into “I paid off $620.”

You can also use a free snowball vs avalanche calculator to test how one change, like packing lunch or cutting a grocery bill, shifts your date.

For more everyday savings, these ways to save money on groceries can free up money quickly.

Should I Pay Off Debt or Invest First?

In most cases, high-interest debt comes first.

If your credit cards are charging 6% to 7% or far more, and many are much higher right now, paying them down usually gives you a better return than what you can count on from investing.

There is one common exception. If your employer offers a 401(k) match, try to capture that match if you can.

That’s part of your pay. After that, focus hard on debt if you can finish within about two years.

Low-interest debt changes the picture a bit. In that case, a split approach may work.

Still, only pause investing if that money is truly going to debt and not quietly slipping into daily spending.

If money stress keeps tripping you up, work on the basics of your mindset and habits first.

What Is the Best Debt Payoff Calculator to Use?

The best calculator is the one you’ll open every month.

Look for one that compares snowball and avalanche, lets you test extra payments, and shows your payoff date and total interest saved.

Good free options in 2026 include tools from Zogby, Calculatorica, Bankrate, and newer web tools that model both methods.

A simple option like Calculatorica’s debt payoff calculator works well if you want quick scenario testing without a lot of setup.

How Can You Pay Off Debt On a Low Income?

It may take longer, but it can still be done.

Start with housing, food, utilities, transportation, and minimum payments. Then cut what you can and raise what you can.

That might mean selling items, asking for lower rates, grabbing gig work, or using the snowball to grab quick wins.

Change often starts small. If nothing changes, nothing changes. A short burst of money-saving challenges can help reset your habits and free up cash.

Should I Consolidate My Debt?

Sometimes. Consolidation can help if it lowers your rate, cuts the number of payments, and you stop using the old credit lines.

If it only moves debt around while your habits stay the same, it usually backfires.

Fees, credit requirements, and new spending can leave you worse off.

Is it Worth it to File for Bankruptcy?

For most people, bankruptcy isn’t the first move.

It can damage your credit for years, and it doesn’t fix the spending habits or income gaps that caused the problem.

That said, there are cases where it may be the right legal step, especially when repayment is no longer realistic.

Before deciding, talk with a qualified nonprofit credit counsellor or bankruptcy attorney. Get advice based on your full situation, not panic.

Should I Take Out a Loan to Pay Off Debt?

Maybe, but only if the new loan lowers your rate, keeps fees reasonable, and you won’t run the cards back up. Otherwise, it’s often just a shell game.

Be especially careful with 401(k) loans and retirement withdrawals. Taxes, penalties, job loss risk, and lost compound growth can make that “quick fix” painfully expensive.

Borrowing more without changing behaviour is not real debt payoff.

Final Thoughts on My Tips to Help You Pay Off Debt Fast

Debt feels heavy because it steals tomorrow before tomorrow gets here.

The way out is rarely one giant move. It’s usually a stack of small, honest decisions made over and over.

Start with three actions today: list every debt, make a zero-based budget, and sell one item this week.

If you need a simple push, try one of these money-saving challenges to build momentum.

Using these tips to help you pay off debt fast is hard, but it’s temporary. And every payment buys back a little more peace, choice, and breathing room.

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10 Practical Tips to Help You Pay Off Debt Fast

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10 Practical Tips to Help You Pay Off Debt Fast

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Katie Lamb

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Remote Work Rebels

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#Practical #Tips #Pay #Debt #Fast