281. "We have 4 kids and nearly $1M in debt. Are we screwed?”

Ramit unpacks what happens when inconsistent income, mounting debt, and years of avoiding difficult money conversations leave a couple in their 40s feeling like they’re running out of options. Ramit Sethi of I Will Teach You to Be Rich talks with Rebecca and Matthew, who have been married for 16 years and have four children. They earn around $185,000 a year, but their income is unpredictable, their fixed costs are at 84%, and they have just $1,000 in savings and $45,000 invested. They also have more than $633,000 in debt plus another $350,000 in law school loans that could bring their total debt close to $1 million. Their biggest challenge isn’t simply learning how to budget. Rebecca feels constantly in the dark about when they’ll get paid and where their money is going, while Matthew avoids difficult conversations and tries to solve financial problems on his own. Ramit helps them confront the chaser-avoider dynamic they’ve repeated for years, why borrowing money and moving cash between accounts has never solved the underlying problem, and whether Matthew may need to walk away from his business and choose a stable income to protect their family’s future. A special thanks to our new partners at Monarch for sponsoring this episode. Try Monarch for free today, and get 50% off your first year of Monarch’s core tier at monarch.com/ramit, promo code RAMIT. When you sign up with my link only, you’ll get your Monarch account customized with my exact CSP categories so you can see exactly how you’re stacking up to your plan each month. That’s monarch.com/ramit, promo code RAMIT. In this episode, we uncover: How inconsistent income has made it almost impossible for them to plan their finances Why Rebecca says their financial situation feels “hopeless” How their money system keeps them overspending, borrowing, and blaming each other Why their $633K of debt could actually be closer to $1 million How Matthew’s $350K law school debt has doubled since graduation Why 84% fixed costs, 1% savings, and 0% investing are putting their future at risk How their spending reveals they’re regularly buying things they haven’t actually planned for Why Rebecca says she feels in the dark about money, paychecks, and their financial situation. How their chaser-avoider dynamic mirrors the money patterns Matthew saw growing up Why Matthew may need to leave his business for a stable job and why earning more alone won’t fix their relationship with money Chapters: (00:00:00) Introduction (00:07:56) The money arguments keeping them stuck (00:22:25) Ramit opens up their finances (00:40:54) Why their fixed costs are so high (00:51:48) The spending they couldn't afford (01:05:08) Why Matthew avoids money conversations (01:14:11) Creating new rules to manage money together (01:23:16) Should Matthew leave his business? (01:32:30) The difficult financial choices facing their family (01:43:41) What their retirement could look like 💡 RAMIT’S PODCAST NEWSLETTER • I share new ways to think about money every Saturday. Get the emails here: https://iwt.com/podcastnewsletter 🙌 GET HELP FROM RAMIT SETHI • Order my new book: Money for Couples: https://iwt.com/moneyforcouples • Take control of your money with the Conscious Spending Plan: https://iwt.com/csp • Optimize your credit cards with the 1st chapter of my book: https://iwt.com/chapter1-pod • Join my Rich Life: Road to $100K program: https://iwt.com/100k • Listen to my book — now on Audible: https://amzn.to/48zko28 🤳 CONNECT WITH RAMIT SETHI • Instagram: https://www.instagram.com/ramit/ • X: https://twitter.com/ramit ✅ SUBSCRIBE SO YOU DON’T MISS ANY EPISODES https://youtube.com/user/ramitsethi/featured/ This episode brought to you by: DeleteMe | Get 20% off all consumer plans when you go to https://joindeleteme.com/ramit and use promo code RAMIT at checkout Factor | Head to https://factormeals.com/ramit50off and use code RAMIT50OFF to get 50% off and one free breakfast item per box for one year, while supplies last until 10/31/2026. See website for more details. Facet | As of the date of this recording, Facet is waiving the enrollment fee for new annual members, and for my audience, Facet is offering $300 into your brokerage account if you invest and maintain $5,000 within your first 90 days. Head to facet.com/ramit to learn more about which membership option is best for you. Offer has been extended to 12/31/2026. #FacetAd Wispr Flow | Try Wispr Flow for free at wisprflow.ai/ramit MasterClass | For unlimited access to every class and at least 15% off any annual membership, go to https://masterclass.com/ramit Monarch | Try Monarch for free today, and get 50% off your first year of Monarch’s core tier with code RAMIT at monarch.com/ramit Want to know exactly when you’ll hit your first $100K? Rich Life: Road to $100K gives you a step-by-step system to automate your money, accelerate your timeline, and build your Rich Life along the way. Join today: iwt.com/100K Connect with Ramit: Get my new book, Money For Couples Get Money Coaching with Ramit Download the Conscious Spending Plan Listen to my book—now on Audible Get my New York Times best-selling book Get my no-numbers journal Other episodes Instagram Twitter YouTube Apply to be coached for free on this podcast at https://iwt.com/apply

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Speaker 00

  So many years, it was like, well, don't spend that. Well, don't spend that.

• 0:06Ramit Sethi?

  Your debt is between $633,000 and $1 million.

• 0:10Speaker 02

  Wow.

• 0:10Ramit Sethi?

  How do you feel about your numbers?

• 0:13Speaker 00

  Despair.

• 0:14Speaker 02

  Embarrassed. It's heavy. It's like a burden that you carry around.

• 0:18Speaker 00

  I don't feel like I have a lot of control because I just am like waiting on him to give us paychecks all the time.

• 0:23Speaker 02

  It feels like you're putting all the burden on me to come with a plan.

• 0:26Speaker 00

  I need communication of a person that thrives on knowing what's going on.

• 0:30Ramit Sethi?

  Do you resolve your money conversations or do they just get swept under the rug?

• 0:34Speaker 00

  They just move to a new day.

• 0:36Ramit Sethi?

  What's that feel like?

• 0:37Speaker 00

  Overwhelming, hopeless.

• 0:39Ramit Sethi?

  What's gonna happen if you get hit by an emergency expense?

• 0:42Speaker 00

  We'll lose our house.

• 0:44Ramit Sethi?

  Yes.

• 0:44Speaker 00

  We'll always be broke.

• 0:46Ramit Sethi?

  No, it's one thing if it's just the two of you, but you have four kids. I'm not okay with it. You have to change and probably change radically.

• 0:58Ramit Sethi?

  Today I'm talking to Rebecca and Matthew. Forty-three and 42 years old. They have four children and they live in an expensive area. And every single month, they spend more than they make. They're in a pretty difficult financial situation. And to figure out what's going on, I realized I needed to go deeper with their numbers. So today, we're doing something new. I'm gonna be able to go deeper into the details of our guest's spending. How much they actually spend on eating out and vacations and even random Amazon purchases. I can now see it all and so will you. And sometimes what we see is not gonna equal what they tell me. We found a great partner to help with these financial drill downs.

• 1:41Ramit Sethi?

  Monarch, which is a private personal finance app that brings all of a household's accounts into one clean dashboard, including checking, credit cards, loans, and investments. You can now try it for free and get 50% off your first year off of Monarch's core tier using code RAMIT at monarch.com/ramit. So let's take a peek in their Monarch account to see what jumps out. Credit cards, $13,000. I kinda wanna see what's getting spent on their credit cards. Let's take a look. I see a lot of assorted spending at Amazon and Target. As recently as a couple of months ago, they spent $214 on interest charges.

• 2:25Ramit Sethi?

  And then just a few days prior to that, $40 on a past due fee. So they're probably spending thousands of dollars a year on just fees. Let's take a look at their transactions. Carmel Valley Lodge for $526, and that's just a few days ago. So we have a couple that's in hundreds of thousands of dollars of debt, spending $500 at a hotel. I'm definitely curious about that. Church giving, $550 a month. I have questions. You know what? Now that I'm looking at it, there's a lot of frequent shopping here. All right, I have a lot of questions. Let's go meet Rebecca and Matthew. In your application Rebecca, you wrote something that caught my eye. I wanna read it.

• 3:08Ramit Sethi?

  You wrote, "We are midlife in our 40s. We are basically no savings and hardly anything in our retirement. And my husband has taken from that retirement to make ends meet at different times. I don't see how we will sustain our relationship and family long term without a major shift. It's feeling hopeless to me a lot of the time." Do you still feel that way?

• 3:36Speaker 00

  Yes, I do.

• 3:38Ramit Sethi?

  Where were you when you wrote that and what was going on in your life?

• 3:44Speaker 00

  Ironically enough, we were on a road trip and we were actually listening to your podcast in the front of the car while our kids were on their headphones in the back. And I just said, you know what? I'm tired of this. Like, we need help.

• 3:59Ramit Sethi?

  How long have you felt tired of your financial situation?

• 4:03Speaker 00

  Probably most of our marriage, but particularly in the last, maybe five or six years, has been hard.

• 4:11Ramit Sethi?

  Got it, got it. How long have you been married?

• 4:14Speaker 00

  We've married 16 years in a couple of weeks.

• 4:16Ramit Sethi?

  Wow, congratulations.

• 4:18Speaker 00

  Thank you.

• 4:19Ramit Sethi?

  Okay, and how many children?

• 4:21Speaker 00

  Four.

• 4:21Ramit Sethi?

  Four kids, okay.

• 4:22Speaker 00

  Yes.

• 4:23Ramit Sethi?

  What are their ages?

• 4:25Speaker 00

  12, 10, 8, and 5.

• 4:27Ramit Sethi?

  Great, okay, great. All right, so married 16 years, four children. And you mentioned that in the last five or six years, money has become more challenging. What happened five or six years ago?

• 4:38Speaker 00

  We both run our own businesses, so there's not a lot of guarantee of any income when you do that. And then I think just maybe a lack of accountability about discussing really what our true financial situation looks like. That has made it hard for me because I kind of feel like I'm in the dark a little bit about it.

• 4:59Ramit Sethi?

  What's the dynamic? Does one of you ask the other about their business or do neither of you talk about it? How would you describe that dynamic?

• 5:07Speaker 00

  I feel like I'm over here being like, hey, when do we get paid? Like, what does that look like? And then, you know, I'm not always given a lot of answers. And then I will say my business is rather small. I don't make a lot. Mostly my money just goes to like groceries and...

• 5:24Ramit Sethi?

  So when you ask, hey, when are you getting paid? What's the response you get?

• 5:29Speaker 00

  Sometimes it's like, oh, I can do it on Friday. And then sometimes it's like, yeah, well, we already took that other part. So I don't know, I'll let you know. I don't feel like I'm able to plan. I don't know how to function when we don't have like any consistency.

• 5:46Ramit Sethi?

  Yeah. And out of curiosity, why are you the one who quote, "has to plan"?

• 5:52Speaker 00

  I mean, I don't have to, but I think I'm told a lot that I am not good with the money and that I need to understand the budget and I need to do these things. But it's really hard for me to understand a budget or how to do like monthly cash flow when there's no consistent monthly cash flow.

• 6:11Ramit Sethi?

  Who tells you you're not good at planning?

• 6:15Speaker 00

  Matt.

• 6:16Ramit Sethi?

  Okay. So Matt says you're not good, then why are you the one managing it?

• 6:21Speaker 00

  I mean, I don't technically manage the actual budget, but I am the one who is doing all the household shopping, taking care of the kids' needs and things like that. So when there is no money, it definitely is felt by me.

• 6:35Ramit Sethi?

  All right. Matt, what's your reaction to what Rebecca said about how she feels about money in the household?

• 6:41Speaker 02

  I think it makes a lot of sense based on our situation. She has such good reason, I think, to feel like that, to like have the inconsistency wear on her.

• 6:55Ramit Sethi?

  What's the dynamic of money management in your household?

• 6:59Speaker 02

  It's varied over time, but for the last number of years, we put money into a joint account from our business. And then I pay most of what I try to describe as the fixed bills. And then we've typically have the agreement that we'll then move money into a joint flexible spending account. And that's where we can spend however much we want until it's gone. But that's, that money's usually gone really quick. And so we're then left pointing fingers about why there's not enough money left and what we should now need to pay for that we can't, et cetera.

• 7:44Speaker 02

  And then we try to steal from different sources to kind of pay for everything else.

• 7:50Ramit Sethi?

  Does it work?

• 7:51Speaker 02

  No, no, we wouldn't be here if it worked.

• 7:56Ramit Sethi?

  Wait, this is a dynamic that I see a lot with my guests. They go, we're doing this thing and they describe it in exhaustive detail. And then they just look so depressed. And I go, hey, does it work? They're like, no, this thing sucks. It's actually very human to have something that's not working and we just keep doing it. And one of the greatest gifts that I can give is to give you a bird's eye view of what's happening with your money, maybe even how you're relating to each other. And then, once you see it in a different perspective, it actually becomes very obvious what needs to change. Okay? When was the last time that the two of you really disagreed about money?

• 8:37Speaker 00

  Um, like literally two days ago.

• 8:40Ramit Sethi?

  Amazing. Take me there. In fact, just role play it and I'll just watch.

• 8:45Speaker 00

  You know, I asked Matt about a plane ticket that I needed for a trip that he really encouraged me to go on with my mom and then it just kind of unfolded from there and it was like.

• 8:55Ramit Sethi?

  Talk to Matt as if it's 48 hours ago.

• 8:58Speaker 00

  So I'm just feeling really nervous because we need to get this ticket and if we don't get it soon, I might not be on the same flight as my mom and my aunt. So how are you going to pay for that?

• 9:10Speaker 02

  You're gonna have to let me use some credit, some borrowed money to be able to buy the ticket if you want to buy the ticket right now.

• 9:19Speaker 00

  So the money that was borrowed is earmarked for the house repairs that we have. And I have a really bad feeling about taking that because in the past, we've done stuff like that and you've told me it would get put back and it doesn't. And so I'm really not super interested in taking money from a specific account that is being held for the repairs and not knowing when or if that will ever get put back.

• 9:45Speaker 02

  It's not helpful to leave it in one place for a project that we're not even starting yet and then try to pay money from some other place for this flight that I really want you to get to take. So it's not different to spend some of that on this flight since we have to pay for both things and we have to use whatever's available right now.

• 10:06Speaker 00

  I hear that. I just think when you agreed to, or actually when you encouraged me to go on this trip, that money wasn't like a factor. And so I don't understand how you were going to pay for it if you now have to rely on that.

• 10:21Speaker 02

  It feels like you're putting all the burden on me to come with a plan, to figure out a way to pay for it, to now do it. And then when I'm coming up with a short-term solution, you're trying to tell me that it's not good enough, but you're not helping with the solution. You don't have any other ideas. So I've got to do what I can do right now. And it's one more thing that you're putting on me that I feel like I have to be responsible for and solve.

• 10:43Ramit Sethi?

  Okay, let me pause you right there. So first of all, thank you. That, I can tell that was pretty real. Did you resolve it?

• 10:51Speaker 00

  Nope.

• 10:52Ramit Sethi?

  Okay. Do you resolve your money conversations or do they just get swept under the rug?

• 10:57Speaker 00

  They just move to a new day.

• 10:59Ramit Sethi?

  Mm-hmm. That's been going on for years, right?

• 11:01Speaker 00

  Yes.

• 11:02Ramit Sethi?

  Okay. What does that feel like, Rebecca?

• 11:04Speaker 00

  Overwhelming, hopeless, frustrating.

• 11:10Ramit Sethi?

  Okay. Matt, what does it feel like to you to have these conversations about money?

• 11:14Speaker 02

  It's heavy. It's like a burden that just, you carry around all the time. And then frankly, you tiptoe around because you think if we open that conversation up again, it's all these old wounds, it's all these old conversations that never got resolved. I'd rather not have them.

• 11:31Ramit Sethi?

  Yep. Can I ask you to do something? It's gonna be a little challenging, but I think it's important. I'd like for you to zoom up and look down on the two of you, almost as if the two of you are chess players, and tell me what roles each of you were playing in that conversation.

• 11:48Speaker 00

  In a way, I was just, I'm trying to keep us accountable a bit because I feel like that idea of robbing Peter to pay Paul is like what we always do and it's super hard.

• 12:03Ramit Sethi?

  And did you succeed?

• 12:04Speaker 00

  No.

• 12:05Ramit Sethi?

  Okay. Do you succeed normally?

• 12:08Speaker 00

  No.

• 12:08Ramit Sethi?

  Okay. But you keep playing that role?

• 12:11Speaker 00

  Yeah.

• 12:11Ramit Sethi?

  And what's the thinking there? Maybe if I ask another time, another way, Matt will have a magical answer?

• 12:19Speaker 00

  I guess, yeah.

• 12:21Ramit Sethi?

  It's pretty interesting. Matt, what was your role that you played in that conversation?

• 12:26Speaker 02

  I feel like I'm over here and she's coming to me kind of hat in hand saying, can we do this thing? And then I have to say, yes, or no, we can, or we can only do it in this way. And then I become super defensive about it because I say, you're coming to me for all the answers. If you want a different answer, then we have to do something differently. So I feel like I'm kind of put in the spot where I'm gotta provide, figure out the way to do it, and then parry with her over the way that it's done.

• 13:06Ramit Sethi?

  That's quite insightful. Rebecca, what do you think about that?

• 13:10Speaker 00

  I mean, he's not wrong, but I think from my perspective, it's like, I'm not sure what else to do because not only is he the main breadwinner, but he's also his own business owner. And so he decides when we get paid. And so I'm coming to him because he's the person who pays us.

• 13:28Speaker 00

  And if he's not paying us consistently, or there's no money, or he makes a commitment for us, like this plane ticket, and then I'm expecting him to come up with how to pay for it because he makes all the money. So.

• 13:42Ramit Sethi?

  You just said, which caught my eye, was, I don't know any other way to do it. Should you have to go to him and then Matt has to decide on a whim whether it's okay or not, or if the money should come from here or there?

• 13:54Speaker 00

  Should I have to do that? No.

• 13:55Ramit Sethi?

  Cool. Why do you do it?

• 13:57Speaker 00

  Because I don't have any personal money. And if he's not paying us, I have no way to pay for it. So I have to go to him.

• 14:04Ramit Sethi?

  Good answer. You two are married with four children. You've been married for 16 years. This is easy for me to say and very difficult to do, but let's just wipe away the many, many years of financial wounds, just for one second. Yes, Matt earns more than you, Rebecca, but should the lower earner have to go to the higher earner and ask for permission to spend money on certain things?

• 14:27Speaker 00

  No.

• 14:28Ramit Sethi?

  Okay, cool. What should happen instead?

• 14:32Speaker 00

  We should be having a joint account with actual money available in it to be able to buy things we need.

• 14:39Ramit Sethi?

  Great. Agreed. And maybe there should be some set of rules as to, these are the things that we don't need to talk about. Anything above this amount, we talk about. And here are our core values. And for example, if it is something relating to safety, we are going to spend more there. But if it's something relating to, I don't know, fancy food, we are not. What do you think?

• 15:02Speaker 00

  Yeah.

• 15:03Ramit Sethi?

  Okay. It seems painful to have these conversations over and over and not come to a resolution.

• 15:12Speaker 00

  It is.

• 15:14Ramit Sethi?

  Okay. Matt, what about you? You want to be in the position of having your wife come to you and ask you, and then you have to quote, parry her questions?

• 15:23Speaker 02

  No, no. As you describe it, you think, gosh, this isn't that hard. But as soon as you're in it, you're right back into the old routines.

• 15:31Ramit Sethi?

  What do you think would have to change? What would you have to do differently, Matt, in order for this dynamic to change?

• 15:36Speaker 02

  I'd have to be a lot more, I think, a lot more open with Rebecca about what's available and asking for ideas or her involvement about if we can't do it today, you know, what can we do this week to make it possible for next week or the week after?

• 15:58Ramit Sethi?

  Okay. Rebecca, what would you need to change in order for this dynamic to change?

• 16:02Speaker 00

  I guess just being better about the monies that are available to me and trying to save more of the money that we're bringing in. But beyond that, I don't feel like I have a lot of control because I just am like waiting on him to give us paychecks all the time. So I don't, I don't know what else I could personally do.

• 16:23Ramit Sethi?

  This all seemed very, like, traditional to you.

• 16:27Speaker 00

  Yeah.

• 16:27Ramit Sethi?

  Wife comes hat in hand, hey, primary earner, I'd like to spend this money. Can I? And then he goes, I don't know. You seem to be spending too much at the grocery store. I mean, is this not the tale as old as time? I fucking hate this story.

• 16:45Speaker 02

  Yeah. And I, for one, feel like I do a lot better with accountability and someone who's in the trenches with me that feels like, hey, these are the rules we have, or these are the things we're saving for. Let's do it together.

• 17:01Ramit Sethi?

  Oh, you want somebody, quote, in the trenches with you, creating rules with you. Okay. Rebecca, are you not in the trenches with the money?

• 17:10Speaker 00

  I don't know how to be in the trenches because I'm not great at budgeting and the fact that like, we don't have consistent paychecks. And so I don't have a way to.

• 17:22Speaker 00

  Help myself plan or learn with him in the trenches like

• 17:26Ramit Sethi?

  So what's the solution?

• 17:28Speaker 00

  Consistent paychecks, like literally, I don't understand why we can't do that. And I've asked, and I feel like I'm constantly nagging him like, when's the paycheck coming? Is it coming? When's it coming? You said every Friday, you said every other Friday you

• 17:41Ramit Sethi?

  Matt, she wants consistent paychecks. That sounds reasonable to me. What's the problem?

• 17:47Speaker 02

  It's a super reasonable request. Um, I think part of it is, uh, struggle with consistent revenue in my business. And so sometimes the amount of money that's coming down to us isn't as much as we'd like. So it's probably at the top end starts with not enough revenue.

• 18:10Ramit Sethi?

  I'm noticing a few clues and I don't yet know what to make of it, but are you picking up on them too? They make a lot of circuitous arguments. If this, then that, but I'm not sure. And what about you? And it's just this never ending loop. And she's upset. I would be upset too, if I had these negative money conversations all the time and they never actually got resolved. And then you just look at how confusing everything is. It starts to kind of fit together. We have this account, but we have to take this money out and pay this, but it's for a renovation. It's just a lack of clarity everywhere. So I want to keep digging so I can try to get to the root of what's going on here, but are you seeing this too?

• 18:56Ramit Sethi?

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• 20:22Ramit Sethi?

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• 21:07Ramit Sethi?

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• 21:36Ramit Sethi?

  What do you say? We take a look at your numbers? How do you feel about your numbers?

• 21:41Speaker 00

  Despair.

• 21:42Ramit Sethi?

  Despair. Wow.

• 21:43Speaker 00

  Yeah.

• 21:44Ramit Sethi?

  That's a strong word. Okay. Matt?

• 21:46Speaker 02

  Embarrassed.

• 21:47Ramit Sethi?

  Embarrassed. Okay. Matt, can you read off the word in bold and the number in full next to it for this entire box, please?

• 21:54Speaker 02

  Assets, 840,000. Investments, 45,000. Savings, 1,000. Debt, 633,500. Law school debt, an extra huge amount. The total net worth of 252,500.

• 22:14Ramit Sethi?

  What do you think about those numbers?

• 22:16Speaker 02

  Well, they're certainly not what I would have expected 20 years ago, when I thought where I would be when I was in my 40s.

• 22:24Ramit Sethi?

  You thought you would have more?

• 22:25Speaker 02

  Yeah, I assumed I would be much, much better off than that.

• 22:30Ramit Sethi?

  Okay. Rebecca?

• 22:31Speaker 00

  Makes me feel really insecure and um, like I don't really know how to get out of it.

• 22:41Ramit Sethi?

  Mm hmm. Both of those resonate with me a lot. The idea that I thought I would be further ahead and then like one day in my 40s, I wake up and look at it and oh my God, like how did we get here? We should be so much further along. And insecurity, like you mentioned despair. What am I going to do? And so the only thing that I can resort to doing is asking and asking, and it comes across as you put it nagging, but I need some answers. I need some clarity. When I looked at this, um, I noticed that your debt of 633,500 dollars did not include

• 23:23Ramit Sethi?

  your law school debt. Law school debt is a very, very substantial $350,000. Why is that not counted on your debt amount?

• 23:35Speaker 02

  Didn't it put it down because it's been on a debt repayment plan. So we haven't made payments on it in a number of years. And so we've made payments on it for a decade or so. And then the allegedly it gets forgiven at the end of the 20 or 25 years.

• 24:00Ramit Sethi?

  Is interest accruing?

• 24:01Speaker 02

  Oh, yes.

• 24:02Speaker 00

  Oh, yes.

• 24:03Speaker 02

  It's twice as much as it was when I finished school.

• 24:07Ramit Sethi?

  Damn. But did you know 20 years ago that you were going to be forgiven?

• 24:11Speaker 02

  Well, sort of. In the first year, I did a consolidation with the government loans and got onto an income based repayment plan.

• 24:23Ramit Sethi?

  Income based repayment plan, but not loan forgiveness?

• 24:26Speaker 02

  Well, the plan, the income based repayment plan was you make your payments as prescribed for 25 years and then the balance is forgiven. So at this point, it's ballooned so out of control that it feels way, it feels like it doesn't help to even think about trying to pay it down. It helps to just think about, how can we get through another 10 years? And hopefully that plan still exists and it gets, it gets forgiven then.

• 24:54Ramit Sethi?

  And if not?

• 24:55Speaker 02

  We're going to be having, we're going to be talking to you again.

• 24:59Ramit Sethi?

  No, that's not what's going to happen. What will happen? Rebecca?

• 25:03Speaker 00

  We'll have to make a lot of sacrifices to get it paid off. I don't know what else we would do.

• 25:09Ramit Sethi?

  So right now you are making the bet that the income based repayment plan, the forgiveness part of that is going to forgive all of this? Is that the bet?

• 25:21Speaker 00

  Whatever's left over is supposedly what's supposed to happen. Yeah.

• 25:25Ramit Sethi?

  Mm hmm. And have you checked on the current status of that program?

• 25:29Speaker 02

  Yes. I, leading up to this call, um, forgiveness at the end of 25 years plan was, was still available.

• 25:36Ramit Sethi?

  Still available?

• 25:38Speaker 02

  Yeah.

• 25:38Ramit Sethi?

  Okay. So just to

• 25:40Speaker 00

  That's news to me. So that's good.

• 25:42Ramit Sethi?

  Oh, wait, how come? How come you didn't communicate this to Rebecca?

• 25:47Speaker 02

  I don't know. Probably chalk it up on the list of things that I don't communicate to her.

• 25:51Ramit Sethi?

  Why?

• 25:54Speaker 02

  The positive way would be, oh, I don't want to burden her or she doesn't need to worry about it right now. Um, the negative would be, you know, I'm going to get it all figured out and then I'll talk to her about it.

• 26:05Ramit Sethi?

  Who grew up in the Midwest?

• 26:08Ramit Sethi?

  Neither?

• 26:09Speaker 02

  No, but we, we grew up with Midwest sensibilities.

• 26:16Ramit Sethi?

  Okay. I don't want to burden my little flower of a wife because she's so delicate. I better not tell her that we're still on track for loan forgiveness. I better not even burden her with good news, much less bad news. Anybody see how absurd this sounds?

• 26:34Speaker 00

  Yes.

• 26:34Ramit Sethi?

  It's a very old gendered sort of thing. And it just, it oozes into American culture in so many different ways. Let me just bottle it up because I'm a man and I can take it, but my wife, no. Meanwhile, is it working?

• 26:48Speaker 00

  No. It makes me very frustrated. I need communication. I'm a person that thrives on knowing what's going on and I feel very in the dark 90% of the time.

• 26:59Ramit Sethi?

  Yes. It's not acceptable. It's not acceptable to be in the dark and it's not acceptable to even take bad news or good news on yourself and not enlist your partner because you're actually demeaning your partner. Oh, my partner is not capable of handling this bad news. Hey, maybe it's going to be hard. Maybe your partner's going to cry. Maybe your partner's going to be pissed. So be it. But to take it on yourself and actually not be effectively managing this stuff anyway, it's just not acceptable. So we're going to fix that today. So your debt is between 633,000 and a million dollars.

• 27:33Speaker 02

  Wow.

• 27:33Ramit Sethi?

  It's unclear what will happen with the law school debt, but what you are telling me, Matt, is that based on your recent investigation, you are still on track for that entire amount to be forgiven? Is that correct?

• 27:50Speaker 02

  The unpaid balance. Yeah.

• 27:51Ramit Sethi?

  And then when would that term be that it would be forgiven?

• 27:55Speaker 02

  About 10 years.

• 27:57Ramit Sethi?

  10 years. And just to confirm, that include the interest as well?

• 28:01Speaker 02

  That's the, yeah, unpaid balance. So I think it's principally an interest.

• 28:06Ramit Sethi?

  Okay.

• 28:07Speaker 00

  Can I ask a question, Ramit?

• 28:09Ramit Sethi?

  Please.

• 28:10Speaker 00

  Um, at one point you had said that it was based on you making payments for 25 years, but because of COVID, we have been in this like basically forced forbearance. Are those years, are they giving us those years or are they counting those years against us?

• 28:28Speaker 02

  I don't know.

• 28:29Speaker 00

  How do we find that out?

• 28:32Speaker 02

  It's a good question. I don't know.

• 28:33Ramit Sethi?

  Do you notice Rebecca, that even in that subtle sentence, you started to take on the responsibility of that?

• 28:38Speaker 00

  Yeah.

• 28:39Ramit Sethi?

  Probably do that a lot, right?

• 28:43Ramit Sethi?

  It's okay. Rebecca, I share your frustration. Like, we're talking about $350,000 of additional debt. I need [bleep] answers.

• 28:54Speaker 00

  Yeah.

• 28:54Ramit Sethi?

  And I need crisp answers. I need them written down. Because candidly, I don't trust what you're telling me, Matt. I don't trust that you know. I don't trust you're asking the right questions. Give me answers and don't make me drag it out of you.

• 29:07Speaker 00

  Yeah. I would agree with everything you said.

• 29:10Ramit Sethi?

  Yes. Matt, if you want to shift some of the dynamic here, this, this thing about letting Rebecca pull teeth and, and ask a million questions and then you begrudgingly give her one piece of information, which is incomplete, is just not gonna fly.

• 29:25Speaker 02

  That's, that's understandable.

• 29:28Ramit Sethi?

  It's a total reframe of, I realize that I have not been communicative and I am going to bend over backwards to share everything. And I'll even tell you the things I don't know. Because here are the things, if I were in your position, I would be wondering about. I tried to do XYZ, I couldn't get the answer. Here's what I don't know. Here's my plan to go find out the answer. Exhaustive. That's the new role that you will be playing. I think it is shocking, the way that he talks about his student loan. I don't want any graduate in America to have hundreds of thousands of dollars of student loans that just accumulate with no ability to discharge. I don't want that. But the fact is, here they are.

• 30:10Ramit Sethi?

  And when we're talking about hundreds of thousands of dollars of debt in your 40s, this isn't something you just go, I don't know. I, I hope it works out for the best. Hope is not a strategy. We need to actually call our lender. We need to get answers. We need to get it in writing. If you have to pay hundreds of thousands of dollars of debt, then you need to know, so that you can start to make a plan. We're not talking about $10 for cutlery from Costco. I don't care about that. We're talking about hundreds of thousands of dollars. We're talking about an upset spouse. We're talking about children who may or may not be safe. I was, I don't know. No, you need to know. For some things in life, you need to know. Do my kids have their seatbelt on? You need to know. Is my house safe? You need to know.

• 30:55Ramit Sethi?

  Am I going to be on the hook for hundreds of thousands of dollars of debt? Or is it going to be forgiven? You need to know. But just the way that Matt reacts to the mere presence of the debt is starting to give me some serious clues. The hope, against all odds, that it will just be taken care of? The lack of clarity and planning? There's something here, I'm willing to bet, is going to show up in other places. If you walked into a mechanic and they said, sure, we can fix your brakes, it's gonna cost 1.5% of whatever's in your investment account. Would you pay that? Of course not. It would be insane. And yet, that is what so many people do when they pay a percentage-based financial advisor.

• 31:38Ramit Sethi?

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• 32:23Ramit Sethi?

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• 33:04Ramit Sethi?

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• 33:49Ramit Sethi?

  it gets names right the first time, and it can format bullet points and lists on the fly. I find that particularly useful. So if you send tons of emails and messages every day, if you want to be able to capture your own ideas just by talking, Whisperflow is a no-brainer. Get one month of Whisperflow Pro for free at wisprflow.ai/ramit. That's wisprflow.ai/ramit. W-I-S-P-R-flow.ai/ramit. Or click the link in the description. As for today, I am going to assume that the law school debt indeed will be paid off. Let's move on now. I like to look at income.

• 34:33Ramit Sethi?

  Rebecca, can you read off the combined gross monthly income, please?

• 34:37Speaker 00

  $15,488.

• 34:39Ramit Sethi?

  Okay, so that's $185,000 per year. How do you feel about that number?

• 34:44Speaker 00

  Um, now, looking at our debt, not super great, but it's not horrible.

• 34:50Ramit Sethi?

  Matt?

• 34:51Speaker 02

  Well, I think the number misleads a little bit because what that number is, is the combination of all the personal expenses we pay from our business, plus our draw, plus Rebecca's business revenue. So it looks, I think, a bit better than it feels because plenty of times, we don't maybe see that amount of money.

• 35:16Ramit Sethi?

  Well,

• 35:19Ramit Sethi?

  the way that you feel about money is extremely uncorrelated to how much you have in the bank. I'm not surprised you feel bad about money. You have $633,000 of debt. You could triple your income and you'd still feel bad about it.

• 35:30Speaker 00

  Yeah.

• 35:31Speaker 02

  Sure.

• 35:31Ramit Sethi?

  So what we need to do is, we need to start by looking at numbers. And we need to get aligned on what is happening with the math. And then we can work on the feelings part about it as well. You make $185,000. What's this thing about, you know, it's spiky?

• 35:45Speaker 02

  Good month, we'd take somewhere in that $12,000, $15,000 of draws. Or maybe we'd pay an extra thing that we owed that was a few thousand dollars. A bad month, we'd take $6,000, $9,000 in draws.

• 36:03Ramit Sethi?

  Uh huh, I, I don't like ranges. Give me a number. What's a bad month? It's not six to nine. Those are vastly different numbers.

• 36:10Speaker 02

  Really bad month, $7,000. Good month, $15,000.

• 36:14Ramit Sethi?

  Great. All right, and then Rebecca, you take home 20, or you make $2350 a month? What is that from?

• 36:21Speaker 00

  Um, I am very minimal part-time stylist. So I do a few clients a week, when I can fit them in between taking care of our kids.

• 36:31Ramit Sethi?

  Got it. And, um, your young, your youngest, are they in school?

• 36:37Speaker 00

  She will be starting this month.

• 36:39Ramit Sethi?

  Okay. What's that gonna do for your time?

• 36:43Speaker 00

  Um, it'll do a lot, actually. Because after the first two weeks, she'll be in school. Even though she's in kindergarten, she'll be.

• 36:48Ramit Sethi?

  What a blessing.

• 36:49Speaker 00

  Yeah.

• 36:50Ramit Sethi?

  Oh my God. Do you think that that will affect your income at all?

• 36:54Speaker 00

  Yeah, I mean, it could, definitely. I, um, I haven't really been open to expanding my book because of the fact that I had such limited time. So it might take a bit and a little bit of creativity to figure out how to get that to happen, but it's certainly an option. Yeah.

• 37:11Ramit Sethi?

  Great. Okay. All right, so the two of you, it says your gross monthly income is $15,488, but then it says your net is $15,088. Can anyone tell me how they're paying almost no taxes?

• 37:25Speaker 00

  Oh, I don't know.

• 37:27Speaker 02

  We do owe a lot of taxes, I mean. But the design is that we're saving, saving for taxes in the business and then taking tax draws. And that has not happened for probably two years.

• 37:42Ramit Sethi?

  Is this a healthy way of setting your accounts up?

• 37:44Speaker 00

  No. It stresses me out.

• 37:46Ramit Sethi?

  Yeah, so why do you do it?

• 37:48Speaker 02

  Part of it's probably aspirational, that it's, could work if everything went right.

• 37:54Ramit Sethi?

  Come on, is this not the Arrested Development meme? Like, it's never worked for anyone, but it could work for us.

• 38:03Speaker 00

  I'm also fine if he wants to pay some of our bills out of his business. I just asked him recently, could he make a list of exactly which ones are coming from the business and exactly which ones are coming from our draw? So that I know what's going on, because I don't even know.

• 38:18Ramit Sethi?

  Okay. And what was the response?

• 38:22Speaker 00

  Uh, yeah, I'll do that. But then it's like, weeks go by and it doesn't happen. And then I have to ask him again. And then he gets mad, and then I ask him again, and then he gets mad. And it's just like, not, there's no conclusion.

• 38:35Ramit Sethi?

  What do you two get out of this dynamic?

• 38:37Speaker 00

  It makes me want to rip my hair out. I don't know what else to do. I,

• 38:42Ramit Sethi?

  Okay.

• 38:42Speaker 00

  I don't know how else to approach it.

• 38:45Ramit Sethi?

  When I was learning how to tie a knot, I didn't know how to tie a knot. So what did I do to learn how to tie a knot?

• 38:50Speaker 00

  Ask someone for help?

• 38:51Ramit Sethi?

  Yeah, I went to Cub Scouts. Weebloos love teaching you how to tie knots. What have you done, if anything, to learn a different way?

• 38:59Speaker 00

  Nothing, really. I mean, I listen to podcasts and try to understand more about financial planning, but I don't know a lot.

• 39:07Ramit Sethi?

  Okay, fair enough. Matt, what do you get out of this dynamic?

• 39:11Speaker 02

  I either get to escape and deal with it later, or I get to solve the problem and then, you know, feel like I'm the hero.

• 39:17Ramit Sethi?

  You're the hero for now, yes. Or, I don't want to deal with this. Let me use a variety of conscious and unconscious techniques to avoid this.

• 39:26Speaker 02

  Yeah.

• 39:26Ramit Sethi?

  And Rebecca gets to feel slightly in control because you're looking at the numbers and worrying. You get to feel worried. I'm gonna guess that's a familiar feeling to you, Rebecca. You feel worried about other things, too?

• 39:41Speaker 00

  Yeah.

• 39:42Ramit Sethi?

  And felt that way for a long time, or no?

• 39:44Speaker 00

  No, I wouldn't say so.

• 39:46Ramit Sethi?

  Okay. And get to, in a way, say, I'm not the higher earner. I'm throwing my hands up. I don't know what else to do.

• 39:57Ramit Sethi?

  Absolve me.

• 40:00Ramit Sethi?

  So both of you playing a role here. Getting something out of this. Let's continue on with the CSP. I see fixed costs. What's that number Rebecca?

• 40:09Speaker 00

  Eighty-four percent.

• 40:10Ramit Sethi?

  Okay, that's pretty high. We like to see that number below 60%. So right there, that explains so much. That explains why you feel stressed out. I mean, in addition to the debt. Taking a look at your expenses, your housing is about 32%. I mean, it's a little on the high end, but you have four kids. Okay, but the problem is you have other expenses. Your utilities are 1350. Your debt payments are at $2,110. So that's a lot. And do you know when your debt will be paid off?

• 40:43Speaker 02

  Oof, no, of course, we don't know that.

• 40:45Ramit Sethi?

  Okay. Groceries at 1,600, a little on the high end, but then again, you have a large family. Clothes are reasonable, phone is reasonable, kids, school, $800 a month. What is that?

• 40:55Speaker 00

  It was our daughter's preschool and now it's rolling into our son's junior high.

• 41:01Ramit Sethi?

  Is it private?

• 41:02Speaker 00

  It's private, yeah.

• 41:03Ramit Sethi?

  Ah, okay. Subscriptions are at 200. It seems somewhat pretty reasonable. Church giving 550, is this tithing?

• 41:12Speaker 00

  Yes.

• 41:13Ramit Sethi?

  And miscellaneous, our CSP automatically builds this in at $1,574 a month. Would you say that that's accurate?

• 41:21Speaker 02

  It might be a little high, but I'm sure that's reasonable.

• 41:23Ramit Sethi?

  Okay. Down the road, moving here, it's kind of no surprise that you don't have a substantial amount of investing. You don't invest. Savings are at 1% and that money is a college fund for your kids. $200 a month. What's the thinking there?

• 41:40Speaker 02

  We, as self-employed, they help around the business. They have little Roth IRAs that we put a couple hundred dollars into with the idea that they take it out for college or they save it to roll it through to their own retirement.

• 41:56Ramit Sethi?

  Uh huh. And then finally guilt free spending at $2,173 or 14%. What do you think about that?

• 42:03Speaker 02

  I'm sure it's low.

• 42:05Speaker 00

  Yeah, it's, I'm sure that that's low as well.

• 42:07Ramit Sethi?

  You think it's more, you spend more?

• 42:09Speaker 00

  Yeah.

• 42:10Ramit Sethi?

  Now, I am curious about some of the numbers. I wanted to drill down a little bit. You connected your accounts using Monarch. And I would like to drill into some of those numbers so that we can start to get a better sense from your CSP down to the actual transaction level. Can I do that?

• 42:33Speaker 02

  Yeah, sure.

• 42:34Ramit Sethi?

  All right, great. So you have not tweaked any of this. You have basically just connected your accounts and then you gave us access, but you haven't re-categorized anything. So there's probably going to be a few mistakes here. No big deal. Let's just go through it. We're going to find some valuable stuff regardless. I noticed that your transportation, you have $0 spent on that. I assume a paid off car or cars?

• 42:59Speaker 00

  Yes.

• 43:00Ramit Sethi?

  Okay. Let's take a look at transportation, which actually shows $206. And I want to look over the course of a year. So this is how much you spent on transportation. What's that number?

• 43:13Speaker 00

  $3,414.68.

• 43:16Ramit Sethi?

  What does that tell you?

• 43:18Speaker 00

  Is that including like gas or that's just like cars?

• 43:21Ramit Sethi?

  Here, I'll show you. Let's take a look at the actual transactions. Gas, gas, gas, car wash, gas. What do you think about that?

• 43:28Speaker 02

  I think it just shows we aren't really thinking about the true cost of things when we're thinking about how much money we have available.

• 43:36Ramit Sethi?

  Yes. Because you said zero and the actual number is like 300 bucks a month. And that's just a tiny, tiny example. Rebecca, what do you make of that?

• 43:49Speaker 00

  We're just not aware. We're not paying attention to what's going in and coming out.

• 43:53Ramit Sethi?

  Correct. What else?

• 43:56Speaker 00

  We're not communicating about it for sure.

• 44:00Ramit Sethi?

  Yeah. Is this a pleasant surprise or like an unpleasant surprise?

• 44:05Speaker 00

  Unpleasant. I mean, it's also pretty much known. I would think both of us, you know, knew that. We just don't do anything about it.

• 44:14Ramit Sethi?

  Oh. Why?

• 44:17Speaker 02

  Well, I think it's definitely showing how little control and concern for our real money that we have. Like how little we really pay attention to the numbers, how little we look at it on an ongoing basis and how little we really plan for at the next.

• 44:34Ramit Sethi?

  Why?

• 44:35Speaker 00

  I think in some regards from my vantage point, it's like, I don't know how to budget well and I need to learn. Like I don't have the skills.

• 44:45Ramit Sethi?

  If that were just the case, like I need to learn this, wouldn't you have learned it 10 years ago? Or five years ago or three years ago?

• 44:51Speaker 00

  Probably.

• 44:52Ramit Sethi?

  So is there something potentially deeper here than I need to learn how to budget?

• 44:56Speaker 00

  Money is just really, it's like, it's a topic that is hard. Like I feel like we've always thought about it for our entire marriage, for our basically entire existence together. And I just, I feel kind of hopeless about it. And I feel like I'm looking to him to help me learn, but I don't feel like he knows either. And so it's just really like daunting.

• 45:19Ramit Sethi?

  That's actually super honest. I think that's really revealing. If you feel hopeless about something, which you totally have the right to be, I would feel hopeless in your position from what you have told me, then you're not going to want to learn about it. People do not learn something when they feel hopeless. They give up. And your reaction Rebecca is I've given up.

• 45:46Ramit Sethi?

  Matt, you do it, but you don't actually say that. You ask him lots of leading questions. Where's the money coming from for the flight? I thought you were going to, when are we going to get paid? Lots of these type of questions. What you are really saying, it seems to me is like, please take some of this burden over because I don't know how to do it. But he doesn't hear that and also he doesn't do it. So Matt, you just, your worldview is I don't like talking about this. And every time I talk about it, we get in a fight. And so I'm just going to try to get this conversation over as quickly as possible. Both of you are basically tossing the ball back to, back and forth, and neither of you wants to actually take the lead or even be a teammate.

• 46:27Ramit Sethi?

  Now, it's one thing if it's just the two of you, but you have four kids. I'm not okay with it. Why am I not okay with it? But you two seem to be okay with your financial situation.

• 46:37Speaker 02

  I think we both feel like budgeting and planning becomes telling ourselves no.

• 46:44Ramit Sethi?

  Yes.

• 46:45Speaker 02

  And I don't want to do that. And I know Rebecca doesn't like to feel that. So I think we don't see it as some way that it'll give us freedom and possibility and hope for the future. I think we both see it as going without.

• 47:01Ramit Sethi?

  Are you free right now?

• 47:05Speaker 02

  No.

• 47:07Ramit Sethi?

  Here is my challenge today. My challenge is not to get them some magical other side of the rainbow where all of their numbers are dialed in. That is simply not realistic for the scenario that they are in. My goal is to be able to get them to understand how serious this is, that they cannot keep doing the same thing they've been doing, having the same old conversations and the same old, we can't do that anymore. That is yesterday. Today's a brand new day. And the hardest part of it is that it was actually better yesterday. At least that's the way they are going to see it. Because yesterday they could go out to restaurants and concerts and hotels, but that's not how I see it though. I see it as, hey, we were not living a rich life yesterday.

• 47:50Ramit Sethi?

  We were just ignoring our numbers and racking up a bunch of debt, hundreds of thousands. Today, we actually get to be united. No, we probably don't get to go to hotels anymore. No, we probably don't get to go eat out this often. But what we do get to do is use money to connect and to be ruthless about honing in on a rich life goal. And that might be as simple as paying off our debt. One of my colleagues recently took Matthew Walker's Science of Better Sleep class on MasterClass. And he said, I've always thought I had pretty low sleep needs. I used to run on four or five hours of sleep, but in reality I was just building up sleep debt. The number of people that can actually run on that amount of sleep is tiny.

• 48:34Ramit Sethi?

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• 49:16Ramit Sethi?

  MasterClass keeps adding new classes, so there's never been a better time to get in. Right now, as a listener of this show, you get at least 15% off any annual membership at masterclass.com/ramit. That's 15% off at masterclass.com/ramit. Head to masterclass.com/ramit to see the latest offer.

• 49:38Ramit Sethi?

  I want to thank our new partners at Monarch for setting up our couples on their platform to see their exact conscious spending plan categories. Monarch is a private, personal finance app that brings all of a household's accounts, checking, credit cards, loans, and investments into one clean dashboard on your phone or computer. One of the biggest reasons I chose to partner with them is that Monarch is built for couples. You can add your partner or even your financial planner at no extra cost, so everyone can see the same financial picture with shared goals. This turns your monthly money meeting into calmer check-ins where everyone is on the same page. One thing I love about Monarch is it allows you to save up for your rich life goals. If you want to save for a wedding, or an amazing vacation, an emergency fund, a house,

• 50:23Ramit Sethi?

  a baby, college, retirement, Monarch makes it really easy. You set your goals up, you tell it how much you want to save towards that goal every month, Monarch lets you see your progress visually along the way. Try Monarch for free today and get 50% off your first year of Monarch's core tier with code REMIT at monarch.com/ramit. And when you sign up with my link only, you'll get your Monarch account customized with my exact CSP categories, so you can see how you are stacking up to your plan each month. That's monarch.com/ramit with code REMIT. Let's look at your accounts. So I'm looking at your, you have several checking accounts. Why?

• 51:07Speaker 00

  So I have one that just is my name only, that is for my business money to flow through.

• 51:14Ramit Sethi?

  Mm-hmm.

• 51:15Speaker 00

  And then we have one that we use for like, you know, to swipe at the grocery store.

• 51:19Ramit Sethi?

  Isn't grocery store bills?

• 51:21Speaker 00

  Yeah, but I think he, the idea was like, anything that was like, set up on like, a pre-draw kind of thing, came from that bills account.

• 51:30Ramit Sethi?

  Why?

• 51:31Speaker 00

  And then the more flexible things, because in the past, we've had issues with there not being money if we don't separate it out.

• 51:39Ramit Sethi?

  Well, considering you have $633,000 or a million dollars of debt, I don't think your system is working.

• 51:45Speaker 00

  No.

• 51:46Ramit Sethi?

  So what I'm trying to do is help you deconstruct the logic that brought you here.

• 51:51Speaker 00

  Yeah.

• 51:52Ramit Sethi?

  You set up accounts instead of fixing your spending behavior.

• 51:55Speaker 02

  Hmm.

• 51:56Speaker 00

  Sure.

• 51:57Ramit Sethi?

  You all cannot account your way out of this. You have to change, and probably change radically.

• 52:03Speaker 02

  Hmm.

• 52:05Ramit Sethi?

  So when you tell me like, we don't like to tell each other no, I don't know. One way or another, you're going to either change the way that you react to the world in a dramatic way, or you're not, and you will continue on as this is. We'll see. If we look at the rest of your accounts, we have some investments here. This adds up nicely to $50,000 or so. We have your house, we have loans of $510,000. What's this?

• 52:33Speaker 00

  That's our mortgage.

• 52:35Speaker 02

  Mortgage.

• 52:36Ramit Sethi?

  That's your mortgage, okay. And then, and if we look at some of your other loans, we have credit cards at $13,000, so you're carrying payments on that, correct?

• 52:45Speaker 00

  Yes.

• 52:46Ramit Sethi?

  So like, if we look back just a few months here, we have an interest charge for $214, and

• 52:53Speaker 00

  Yeah.

• 52:54Ramit Sethi?

  Five days before that, a past due fee of $40.

• 52:57Speaker 00

  Yeah.

• 52:58Ramit Sethi?

  Okay. I see a hotel. What is this hotel for?

• 53:01Speaker 02

  I think that was actually a dinner.

• 53:03Ramit Sethi?

  Okay, got it. Let's just take a look at some more of your spending here. So I saw this

• 53:11Speaker 02

  God, it is so uncomfortable to see the real cost of these things. Jeez.

• 53:16Ramit Sethi?

  Really? How come?

• 53:18Speaker 02

  It just feels, it just feels even worse when you see like, the real numbers versus writing down your voluntary numbers.

• 53:23Ramit Sethi?

  Yeah, this is the beauty of actually going deeper to be able to see what you're truly spending. What's this Carmel Valley Lodge spent yesterday?

• 53:34Speaker 00

  We just went away for our anniversary for two nights.

• 53:37Ramit Sethi?

  $526. Okay, let's talk about it. How did you decide how much you could spend?

• 53:45Speaker 00

  It was a surprise to me, so it wasn't talked about, so I guess technically I didn't decide, but

• 53:52Ramit Sethi?

  Okay. How'd you decide, Matt?

• 53:54Speaker 02

  A sense of what felt like we could afford, and

• 53:59Ramit Sethi?

  A sense?

• 54:00Speaker 02

  Yeah.

• 54:01Ramit Sethi?

  Hold on.

• 54:02Speaker 02

  A vague sense.

• 54:03Ramit Sethi?

  Let me smell. Can I afford this new sweater? Yes, I can. Bring it on. Is that how it works?

• 54:09Speaker 02

  That's, that's how it sort of worked, yeah, yeah.

• 54:12Ramit Sethi?

  You know

• 54:13Speaker 00

  That actually came up in our discussion that we were reenacting earlier.

• 54:18Ramit Sethi?

  Yeah.

• 54:19Speaker 00

  Because I told him, I'm like, you knew that this flight was coming. How did you decide that we had money for this weekend, but we didn't have money for my flight, and you wanted to borrow it from the money that I'm saving for our house repairs? Like, how did that? I just did not understand that thought process.

• 54:38Ramit Sethi?

  So I love the language you're using. It's super honest. You said, "I'm trying to understand, but I don't understand it. I want you to get real with me right now." When you simulated that conversation you had 48 hours ago, you asked Matt, "Where did you plan for the money to come from?" You asked over and over and over again. You're trying to understand.

• 54:58Speaker 00

  Yeah.

• 54:59Ramit Sethi?

  You know the answer. What is the actual answer, without you having to ask him 50 times? What is the actual answer?

• 55:05Speaker 00

  We don't have the money.

• 55:07Ramit Sethi?

  That's correct.

• 55:08Speaker 00

  We didn't have the money for the trip, and we don't have the money for the flight.

• 55:11Ramit Sethi?

  That's correct. That is the truth. The dynamic here, as painful as it is to realize, is that Rebecca, you are asking questions over and over to avoid the reality of the situation. Matt never planned it. Matt never had the money. It's easy for Matt to say, "Go on this flight." Of course I want you to, but he never planned it. And then Matt simply does not want to say, "I don't know, I never had it. I never had a plan." So he avoids it, but Rebecca, you avoid it too by asking questions instead of looking at the honest truth that everyone else can see.

• 55:47Speaker 00

  Yeah.

• 55:48Ramit Sethi?

  What are we gonna do about this?

• 55:50Speaker 00

  Stop.

• 55:51Ramit Sethi?

  Yeah?

• 55:52Speaker 00

  Stop behaving like that.

• 55:54Ramit Sethi?

  Good. What else?

• 55:56Speaker 02

  I don't know that it has to be like this. What I'm hoping is that we get to a place where we can both see that, and then both work towards whatever it is that we want to do.

• 56:07Ramit Sethi?

  This conversation is not gonna change anything. I hope you change, but this amorphous conversation, this is not, no, it's you. A different way of saying that would be, "Wow." Actually, why am I telling you what to say? You know what to say, Matt. You're pretty intelligent. What needs to change?

• 56:27Speaker 02

  Well, we need to change, but we need to actually look at our numbers, and then actually save for the things that we want to spend on.

• 56:37Ramit Sethi?

  Okay, let's go back to that conversation about the flight that Rebecca was gonna take with her mom. What would you do differently?

• 56:43Speaker 02

  I think the right answer, maybe you tell me, is to say, "Honey, we, let's put aside the $200 right now, so that in four weeks, you're buying the flight," or "two weeks," or whatever, "and not to try to just point fingers back about, you know, we don't have the actual money for this."

• 57:06Ramit Sethi?

  Save $200 for, what does that mean? For a flight?

• 57:10Speaker 02

  Well, like, save towards the flight versus just

• 57:12Ramit Sethi?

  Where? Where's the money coming from?

• 57:14Speaker 02

  From, it's gonna have to come from spending less on something that we would normally pay for.

• 57:18Ramit Sethi?

  On what?

• 57:19Speaker 02

  Whether that's the food, whether that's the household shopping, whether that's the event that we wanted to go to, that we don't go to instead.

• 57:28Ramit Sethi?

  But like, if you are the one who's answering this question, then you can't just throw the ball back and say, "Rebecca, it's gotta come from this, or that, or this, or that," which all, by the way, happen to be that this stuff that she spends on.

• 57:40Speaker 00

  Yeah.

• 57:41Ramit Sethi?

  That's not how you do it.

• 57:42Speaker 02

  Right.

• 57:43Ramit Sethi?

  So where does it come from?

• 57:44Speaker 02

  Can't come from our power bill, can't come from our HOA costs, can't come from our insurance.

• 57:52Ramit Sethi?

  Don't tell me where it can't come from. Tell me where it would come from.

• 57:54Speaker 02

  Yeah, so it has to come from, I don't, I don't know. I guess, I don't know, because it does feel like I'm just telling Rebecca, "Well, you need to, you know, skip the target run, and then we could do it." And I don't, I don't want to say that, that doesn't seem even true or fair.

• 58:12Ramit Sethi?

  So then, the two of you right now are acting as competitors. It's like the two of you are boxing each other. What would it look like if the two of you were actually a team right now?

• 58:22Speaker 00

  We would sit down together, look at the numbers, and then come to the realization that we actually can't buy the flight.

• 58:28Ramit Sethi?

  Okay, shall we look at those numbers right now?

• 58:30Speaker 00

  There's no money to do it.

• 58:31Ramit Sethi?

  Great, where would you look? Let's do that right now. I love your answer. Where would you do that?

• 58:35Speaker 00

  Well, we do have a budget.

• 58:37Ramit Sethi?

  Huh? You do?

• 58:39Speaker 00

  Yeah.

• 58:40Ramit Sethi?

  Matt, pull it up. Ooh, okay, okay, okay. When was this used last?

• 58:46Speaker 02

  This was used last year.

• 58:47Ramit Sethi?

  Why'd you stop using it?

• 58:49Speaker 00

  I don't really understand it. Also, back to the reoccurring issue of like, there's not a consistent paycheck, I don't understand how to budget if we don't have a day of the month where the money comes in every month, and then we tell our money like, what to do. I need to see that happen in order to participate in it.

• 59:08Ramit Sethi?

  Matt, you kept this budget? Why'd you stop using it?

• 59:11Speaker 02

  It felt like a reminder of all these rules and failures.

• 59:15Ramit Sethi?

  Yeah.

• 59:16Speaker 02

  And so it was mocking us with, this is what it could be or should be, and so eventually you're just reminding yourself of what you could have done or should have done, that you didn't actually do.

• 59:25Ramit Sethi?

  That's actually really honest, and that's a really honest way that humans behave. We don't like to do something that we are failing at over and over. When people are failing at something, they don't magically become interested in self-development, they just give up. And that's exactly what's happened here.

• 59:45Speaker 02

  Yeah.

• 59:46Ramit Sethi?

  You stop tracking it, you stop talking about it, the only way you talk about money is a fight, and then you bury the fight, only to reoccur three days later, and on and on, and here we are 16 years later, four children, obviously watching this and learning from the way you behave around money as well.

• 1:00:02Speaker 00

  Yeah.

• 1:00:06Speaker 02

  Ouch.

• 1:00:07Ramit Sethi?

  The truth is, when it comes to that airline flight,

• 1:00:12Ramit Sethi?

  it's actually a beautiful microcosm of the dynamic you both have around money.

• 1:00:18Ramit Sethi?

  That conversation should have never happened that way in the first place. The solution should have been designed way earlier. We are both teammates. We love each other. What are our roles? We need to talk about that first. Next, we need to decide on what are our core rich life vision? What are we spending more on? What are we spending less on? And right now, as a couple that makes $185,000, it is not acceptable for us to be in credit card debt. It is not acceptable for us to have all this debt and not even know about it, not track our gas, not track all this stuff.

• 1:00:51Ramit Sethi?

  This is where we are putting our time and attention. Right there, that airplane ride should have never come up because both of you would know that's not part of our rich life right now. And certainly, one person could not say, oh, you should do it. How can that person say you should do it when they don't know where the money's going to come from? And the other person shouldn't even be entertaining the idea. No one should be talking about this because it's not on your list. You can see by having a clear team vision that the two of you are not even going to bring up things that are going to lead to a fight. Why would you? You're focused on winning, not on fighting. But none of that is happening. And so what you find yourselves doing, fighting over the price of Target? It's so irrelevant. Instead of realizing, oh, my God, we are spending tens of thousands of dollars more per year than we even realized.

• 1:01:37Ramit Sethi?

  What are you noticing as I'm saying this to you? Rebecca?

• 1:01:40Speaker 00

  That we really just need to hone in and cut out all the noise and focus together as a team to achieve our goals.

• 1:01:50Ramit Sethi?

  Great. Matt?

• 1:01:53Speaker 02

  We can't avoid talking or planning this stuff together. And I can't point fingers of, well, you know, stop doing this. We have to actually review what we're going to do together, plus what we've done, and then be able, like you said, not have to even have the conversation when it's, should we go to dinner? Should we not? Should we go to the concert? Should we not? We would already know the answer, yes or no. But we would already know in a better, healthier way.

• 1:02:24Ramit Sethi?

  Would you be comfortable if the answer to those questions was no?

• 1:02:27Speaker 02

  Oh, obviously, that would be new for us.

• 1:02:30Speaker 00

  But I think it's necessary.

• 1:02:32Speaker 02

  Yeah.

• 1:02:33Ramit Sethi?

  What just happened right there?

• 1:02:35Speaker 00

  I don't know. I mean, I'm taking control, I guess.

• 1:02:38Ramit Sethi?

  Yeah. But Rebecca, don't you say that kind of thing a lot? We need to do this. I need that. I need this. Don't you say that a lot?

• 1:02:46Speaker 00

  Yeah.

• 1:02:47Ramit Sethi?

  Does it work?

• 1:02:48Speaker 00

  No.

• 1:02:48Ramit Sethi?

  But you just did it again.

• 1:02:50Speaker 00

  Yeah.

• 1:02:50Ramit Sethi?

  What I'm trying to show you, Rebecca, is that there might be a different way of interacting. So Rebecca, Matt just said, oof, that would be new for us. What could be a different reaction you might have?

• 1:03:04Speaker 00

  Gosh. It would be new, but it would be great if we could do it together. And it would be really helpful.

• 1:03:13Ramit Sethi?

  Are you curious why he said, oof, that would be new for us? Instead of telling him, hey, we need to do this.

• 1:03:20Speaker 00

  Because we both just do whatever we want all the time and we don't talk about it.

• 1:03:24Ramit Sethi?

  You know the answer already?

• 1:03:26Speaker 00

  Yeah.

• 1:03:26Ramit Sethi?

  You know why he said that?

• 1:03:28Speaker 00

  Yeah, because it'll be really hard. He'll have to tell himself no, and he'll have to tell me no. And it'll be like, you know, that's challenging.

• 1:03:34Ramit Sethi?

  You've been married a long time. Would you say you can pretty reliably predict what the other person's going to do?

• 1:03:39Speaker 00

  Yes.

• 1:03:40Speaker 02

  I think so. But I think maybe even we've both smart and know each other well. And so probably even to our own detriment, we feel like we know what the other person's going to say and do.

• 1:03:50Ramit Sethi?

  Do you know why the other person does what they do with money?

• 1:03:53Speaker 02

  Yes.

• 1:03:54Speaker 00

  No.

• 1:03:55Ramit Sethi?

  No? But you just told me. You already know him. You already know his answer. You know why. You're not curious.

• 1:04:00Speaker 00

  I mean, I guess I am curious because I don't really always know what he's going to do because he doesn't really communicate with me about it.

• 1:04:07Ramit Sethi?

  Keep going.

• 1:04:08Speaker 00

  Do you think that going forward, you can start having important conversations with me about this stuff? So that I do understand what's going on with you?

• 1:04:18Speaker 02

  It's scary to be open and honest about some of this because I feel like I want to be positive and optimistic or I want to be able to provide you or the kids or myself with something and not have to worry about things we feel like shouldn't be that big of a deal financially. But...

• 1:04:39Speaker 00

  Why? Why do you want to feel like that?

• 1:04:42Speaker 02

  It feels like I'm inadequate as a provider or planner, and I don't want to say no to some of these things. Also want to feel like I'm in control, that I'm saving the day sometimes by making something work.

• 1:04:58Speaker 00

  Why do you feel like that?

• 1:05:00Speaker 02

  I don't know. But I definitely watched, you know, my own dad try and run his own business and try to keep it to himself and then suddenly be a hero and buy a boat or be the hero and figure out a way to provide something. So I feel like I want to take the burden on and then keep it from you and provide something that, you know, I feel like you deserve or that the kids deserve. But I don't, maybe I don't know which one.

• 1:05:30Speaker 00

  Do you know what I actually want?

• 1:05:32Speaker 02

  Do you want me to guess?

• 1:05:33Speaker 00

  I guess, if you don't know.

• 1:05:35Speaker 02

  Well, I think you want a yes from me. But about, I think you want to be able to say yes to the things that you want to do when you want to do them. But underneath that, I think you want a real sense of security and stability.

• 1:05:55Ramit Sethi?

  How come Rebecca's asking questions and Matt's just answering them like this is a job interview? Matt, do you ask Rebecca questions about money?

• 1:06:03Speaker 02

  Oof, I don't know that I do.

• 1:06:06Ramit Sethi?

  Do you ask Rebecca questions about anything?

• 1:06:09Speaker 02

  I think I ask, how was your day? How was this? Did you see this? Maybe I don't ask, how do you feel about bigger life things? How do you feel about where we'll be in 10 years financially?

• 1:06:24Ramit Sethi?

  I'm talking about any questions. What do you think about this? Rebecca, you're shaking your head no.

• 1:06:30Speaker 00

  I feel like our life is like so fast-paced and we don't connect a lot.

• 1:06:36Speaker 02

  Wow, that's devastating to hear. But you, even right now, it's dawning on me that that might be really accurate.

• 1:06:47Ramit Sethi?

  Look at the role you're playing, Matt. She's asking you questions and you're not asking her anything back. You're just dead-ending her. Why?

• 1:06:55Speaker 02

  I don't, maybe I'm scared to hear your answers. Or maybe I think I already know them. And so I'm not being curious about how you really feel.

• 1:07:05Ramit Sethi?

  What are you both discovering right now?

• 1:07:06Speaker 02

  I think I'm seeing for the first time with more clarity that we're not being equal partners. And that's maybe because I'm not inviting Rebecca in or seeking her to be involved in the way that I should.

• 1:07:24Ramit Sethi?

  And Rebecca?

• 1:07:25Speaker 00

  I would definitely agree with that. And I would invite more openness so that I feel like I can participate.

• 1:07:34Speaker 00

  I feel like I'm kind of over here, running parallel next to him, but not really knowing what's happening in his lane.

• 1:07:42Ramit Sethi?

  Yeah. You two are exhibiting what I call, in the Money for Couples book, the chaser-avoider dynamic. One person's chasing, that's Rebecca. Please give me answers. Please give me answers. Please give me clarity. Please answer this. And the more you chase, the more Matt avoids. And it becomes this cycle. And it's actually like tying the knot tighter. And in part, I think, Matt, there's something to the idea that you don't respect Rebecca.

• 1:08:08Ramit Sethi?

  I don't, and Rebecca, you've even said multiple times, I don't know how to budget. Money's hard. I'm not so good at it. But I actually think you could become very good at it. I think both of you may not be particularly skilled at money, but money is a skill like anything.

• 1:08:24Ramit Sethi?

  What if you're, what if one of your kids told you, I'm not good at reading? What would you tell them? Oh, that's okay. It's fine.

• 1:08:32Ramit Sethi?

  Did you say that to them?

• 1:08:33Speaker 00

  No.

• 1:08:34Ramit Sethi?

  Hell, no.

• 1:08:35Speaker 00

  Absolutely not.

• 1:08:37Ramit Sethi?

  Pick up that book and read it until your eyes bleed. Oh, sorry, sorry. That's Indian parents.

• 1:08:44Ramit Sethi?

  We would never accept a kid telling, I can't spell, I can't read, I don't know how to ride a bike. We actually approach it in a fun way. But when we're adults, we don't do that with money. And Rebecca, I see you tearing up a lot today.

• 1:08:59Speaker 00

  Yeah, it's hard.

• 1:09:00Ramit Sethi?

  Yeah. What's going on? Why do you think that's happening?

• 1:09:03Speaker 00

  I see what you're saying. And I feel like I'm kind of caught in like a mouse wheel and I don't know how to change it.

• 1:09:11Speaker 00

  Like I know in my mind, like inherently, we need to meet and have meetings together. And I'll ask him about it. And I feel like I just get pushback.

• 1:09:20Ramit Sethi?

  Yes, you do. You do. You're right.

• 1:09:24Speaker 00

  Or I'm blamed, like, oh, well, you don't put it on the schedule. Well, you don't make time for it.

• 1:09:28Ramit Sethi?

  It does not come to fruition because of the dynamic that you have both adopted invisibly. Rebecca is the beseecher. Please schedule the meeting. Please answer my questions. Please give me $200 for this. Please, please, please.

• 1:09:47Ramit Sethi?

  I really dislike this. I really dislike this dynamic. It almost always is the lower earner and it almost always is the woman in a heterosexual relationship. I don't like it. And then the guy, in this case, is, well, you didn't do this. Or, I don't know about that. Or you make the decision. And if you had just done it this way, this perfect sequential order, then maybe I would have given you an answer. I hate that.

• 1:10:15Ramit Sethi?

  Both of you are nodding.

• 1:10:16Speaker 00

  Yeah, because you're describing it exactly. It happens weekly.

• 1:10:21Ramit Sethi?

  So what is the different solution? Of course, Matt needs to change. Of course Rebecca needs to change. Yes, and I hope you do. But what if you don't?

• 1:10:29Speaker 00

  We'll always be broke.

• 1:10:30Ramit Sethi?

  Yes.

• 1:10:31Speaker 00

  Our kids won't learn how to be good with money.

• 1:10:35Ramit Sethi?

  Yes.

• 1:10:36Speaker 00

  Repeat the cycle and we'll somehow have to try to help them even when we're broke.

• 1:10:41Ramit Sethi?

  You will not help them.

• 1:10:43Speaker 00

  We won't be able to.

• 1:10:44Ramit Sethi?

  And then what?

• 1:10:46Speaker 00

  It'll just keep repeating itself.

• 1:10:49Ramit Sethi?

  Your 12 year old, your 10 year old, and on and on. As they meet a potential partner,

• 1:10:56Ramit Sethi?

  they will spend more than they make. They will think it's normal. My parents did it. And is this similar, Matt, to you mentioned your dad? When you grew up, your dad was an entrepreneur?

• 1:11:08Speaker 02

  Yeah, he had a small business like I do.

• 1:11:09Ramit Sethi?

  Uh huh. And what did he, what happened with him and money?

• 1:11:12Speaker 02

  Not very great with it. Never any kind of long-term planning.

• 1:11:19Speaker 02

  Retirement, nonexistent.

• 1:11:22Ramit Sethi?

  Was he married to your mom?

• 1:11:24Speaker 02

  Uh huh.

• 1:11:25Ramit Sethi?

  And what was their dynamic?

• 1:11:27Speaker 02

  She was the chaser and he was the avoider.

• 1:11:30Ramit Sethi?

  Yeah. And how long did that last?

• 1:11:32Speaker 02

  They got divorced.

• 1:11:35Speaker 02

  And he's now older and still very much, you know, working and probably needs to work.

• 1:11:42Ramit Sethi?

  Do you think that you are on track to be in that same position?

• 1:11:47Speaker 02

  Yeah, I think I am on track to be in that exact same position.

• 1:11:51Ramit Sethi?

  Does it concern you? It would concern me.

• 1:11:53Speaker 02

  It does concern me.

• 1:11:56Ramit Sethi?

  And Rebecca?

• 1:11:57Speaker 00

  Yeah.

• 1:11:58Ramit Sethi?

  What was your family like with money?

• 1:12:00Speaker 00

  We never had a lot of it, but my dad did the most that he could with it. My parents were budgeters. I saw them like sit down on weekends and go over budgets together and they did it all together.

• 1:12:13Ramit Sethi?

  You know, many people, I would say most people, essentially mirror what they saw their parents doing with money. Do you see that here?

• 1:12:23Speaker 00

  Yeah.

• 1:12:24Ramit Sethi?

  Matt's is quite obvious.

• 1:12:25Speaker 00

  Yeah.

• 1:12:25Ramit Sethi?

  Dad runs a business, sporadic income, wants to be the hero, not particularly skilled at money, resists his wife who pursues him and he just puts his arms, this is like, no, I'm, I'm the decider. I'm the hero. What's that phrase, like father, like son? We mirror what we see from our parents. And Rebecca, a family of budgeters. And so you think of the world in terms of, am I tracking things right? Am I budgeting? Am I noting it down correctly? Can't budget your way out of this situation. But even that, you should know that you're spending $4,000 a year on gas. And you're not doing that in part because it's helpless.

• 1:13:05Speaker 00

  Yeah.

• 1:13:05Ramit Sethi?

  I'm helpless. And in part, it's very rational. I ask him questions. He doesn't give me anything. So what am I supposed to do? You two have a choice to make today. You can echo or mirror what your family dynamics were, or you can change it. What do you want to do?

• 1:13:21Speaker 00

  I would really like to meet regularly and have some very open and honest conversations about what our month to month looks like each month and what, you know, the things that we want to do that month look like. And if we can't do them, we need to say no.

• 1:13:39Ramit Sethi?

  Great. That's good. That's one thing I hear you loud and clear. Matt, your turn.

• 1:13:43Speaker 02

  I'd like to feel like I'm not trying to come up with plans and solutions all by myself. So I'd like to feel like we're in this together and we have pre-arranged rules about what we're going to do or how much we're going to spend. And then we're going to help each other, keep those things, keep those to be true.

• 1:14:03Ramit Sethi?

  Great. What are the rules?

• 1:14:05Speaker 00

  Can we have consistent paychecks? Is that even a possibility? Because sometimes it doesn't feel like it.

• 1:14:11Ramit Sethi?

  Sorry, we don't ask questions about can we do this? We, as teammates, create rules and then we say, tell me what you think about that. Rebecca, I'm shifting you from asking, please, because I'm shrinking myself. No, stand up. You're an equal partner in this. Just because you make less, doesn't mean you are smaller. You're an equal partner.

• 1:14:35Speaker 00

  We have to have consistency on paychecks in order to be able to function as a household.

• 1:14:41Ramit Sethi?

  Well done. Beautifully done. That is the beginning of the new chapter of your life. You're not asking questions anymore. Can we please do this? No, this is what we need. And if you disagree, I'm open to it. Tell me why. Show me. But this is what we need. And unless you've got a better suggestion, that's how we're going to do it.

• 1:15:00Speaker 00

  Yeah.

• 1:15:00Ramit Sethi?

  Boom. Okay, Matt, go ahead and respond to that.

• 1:15:03Speaker 02

  Sure. We can do a paycheck,

• 1:15:08Speaker 02

  like $9,000 a month, split up in two paychecks. And so if we did one at the beginning, we could do one in the middle. And that's a small enough amount that I'd feel comfortable with that.

• 1:15:21Ramit Sethi?

  In a normal conversation, don't we say, what do you think? How does that strike you? Like, why are you still adopting this role of, I'm this terrified person whose job is to answer my wife's questions? You gotta get over that. Teammates don't treat it that way. Teammates are eager to say, what do you think? Hey, I could be wrong. Does that work for you? How could we improve that? Ask the follow-up question.

• 1:15:45Speaker 02

  What do you think, babe? How can we make 9,000 work?

• 1:15:48Speaker 00

  I am totally happy to do that. I think that that would actually help me in the long run because I would know what to expect and then I would be able to plan accordingly.

• 1:15:59Ramit Sethi?

  But great, great. Round of applause. This was a, like 16 years of work, just right there, culminated. Great. How come I'm the only one clapping? I'm literally saying clap, clap. Yes, no jokes. You might have to be theatrical with this stuff. It feels foolish. Why are we clapping to my husband and wife? This is crazy. Because the way you talk about money is so toxic and negative right now that you might actually need to freaking dance a little. We gotta start feeling good about money because feeling hopeless does not change anything. So you just had a major breakthrough? I think that's awesome. We're going to incorporate that into the CSP in just a minute. What are your other rules? Go ahead, Matt, you got one?

• 1:16:39Speaker 02

  Yeah. I, Rebecca, I propose that we have a certain amount that's set aside. It's going to be that slush fund for things like dining out and concerts, et cetera. So that if there's no money there, then we both know what the answer is. Do you think that would work?

• 1:16:58Speaker 00

  Yeah, I would prefer that. Because then I know exactly what our options are.

• 1:17:03Ramit Sethi?

  Okay, great. I love that. But do we know the actual amount?

• 1:17:06Speaker 02

  Yes. So it's, it's going to have to be really small. And if we can't add to it, then we can't do it.

• 1:17:12Ramit Sethi?

  So sorry, where's my calculator? I didn't, I'm going to type in really small on my calculator. Why are you both avoiding getting specific? Do you realize you're doing that?

• 1:17:24Speaker 02

  Yes.

• 1:17:25Ramit Sethi?

  You're doing it because it makes you uncomfortable to actually be specific and answer questions because then you have to follow through. But if you leave it vague enough, oh, really small, then later we can fight about it. You're actually giving yourself more heartache down the road because you're refusing to be specific now. You're kicking the can down the road.

• 1:17:44Speaker 02

  Yeah.

• 1:17:44Ramit Sethi?

  That's a pattern I want you to notice about yourself. Change it now, Matt. Go ahead.

• 1:17:48Speaker 02

  Let's do $200. And maybe that's too much, maybe that's too little. But if we know that that's the number, I think that would help.

• 1:17:57Speaker 00

  Where are we putting that?

• 1:17:59Speaker 02

  We could put it in one of the, one of those savings accounts that we already have. Does that seem like a good idea? Or should we take it out and have it in cash at the house?

• 1:18:09Speaker 00

  Cash at the house is fine.

• 1:18:11Speaker 02

  Okay.

• 1:18:11Ramit Sethi?

  First of all, Matt, good job asking questions. I noticed it already. You're doing a great job. Rebecca, I love the dynamic change here. Both of you are like, it feels like a team, right? This is cool. My suggestion to you is y'all have a history of overspending. So it's cash.

• 1:18:27Speaker 02

  Okay.

• 1:18:28Ramit Sethi?

  200 bucks a month, cash it is. And when the cash is out, it's over. It's called the envelope system.

• 1:18:32Speaker 00

  Yeah.

• 1:18:33Ramit Sethi?

  Done. All right. What other, do we have any more rules?

• 1:18:36Speaker 00

  I propose that we meet at least once a month, but I'm wondering if we should meet at both paycheck deposit intervals so we can talk about it when it hits the account.

• 1:18:47Speaker 02

  Sure. Yeah, I think twice a month would be a great idea.

• 1:18:51Ramit Sethi?

  What day? What time?

• 1:18:53Speaker 02

  A Sunday afternoon would be great. And if that's too exhausting, then I would say like a middle day of a workday.

• 1:19:01Speaker 00

  Okay. If we're doing that, are our paychecks going in on Friday? Like, what is that looking like? And how are they getting deposited?

• 1:19:09Speaker 02

  You know, you probably want to meet, you know, a handful of days in the month or the second or the first. But that's a day that's going to move around. So what do you, I'm, I'm down for whatever you want.

• 1:19:19Speaker 00

  I would like you to select it based on your business and how you run it and then stick to that.

• 1:19:25Speaker 02

  Yeah, that's fair. Then let's do, let's do the first in the 15.

• 1:19:31Ramit Sethi?

  Perfect. And if it falls on a weekday, then, or weekend, then you can pay the day before.

• 1:19:38Speaker 02

  Okay.

• 1:19:39Ramit Sethi?

  What do you notice is happening in this back and forth now?

• 1:19:42Speaker 00

  We're both contributing.

• 1:19:43Ramit Sethi?

  Yes.

• 1:19:43Speaker 00

  And I'm not feeling like so out of control.

• 1:19:49Ramit Sethi?

  Yeah. What else? Matt?

• 1:19:51Speaker 02

  I think we're both speaking up and kind of discussing and negotiating, if you will, but coming to an answer instead of just one person throwing it out and the other one.

• 1:20:01Ramit Sethi?

  Rejecting.

• 1:20:02Speaker 02

  Going with it or rejecting it.

• 1:20:03Ramit Sethi?

  Yeah, agreed. I feel like you've made more decisions in the last two minutes than you've made in maybe 10 years. Do you notice like it's, it's focused on key decisions that need to be made? We're not talking about what happened last week and feelings and you always do this, none of that. It's just like, this is what I want. Okay, respond to it. And do you notice that by you, each, each of you taking the first step and saying, this is what I propose, it actually shortcuts so much heartache and difficulty.

• 1:20:30Speaker 00

  Yeah.

• 1:20:31Speaker 02

  Yeah.

• 1:20:31Ramit Sethi?

  In many ways, in many relationships, when people ask questions of the other person, what they are doing is, yes, they want clarity, but they're also avoiding making a decision themselves.

• 1:20:43Ramit Sethi?

  Each of you is responsible for being proactive. Each of you, that's what a team is. A team does not only ask the other person. I know that we think of asking questions as being respectful, but in many ways, it's intellectually lazy. Because it would be better for the person to say, "This is what I think. Here's the research I've done. This is my proposal. Now, tell me what you think." That's how we do it at work. Sure. That's what we can do here, too. Okay, great. We're gonna go into the CSP and we're gonna make some other changes. Anybody have anything they need to cover before we do that?

• 1:21:13Speaker 00

  I just have one question.

• 1:21:15Ramit Sethi?

  Yes.

• 1:21:15Speaker 00

  Because his business is his and sometimes the income is varied. How do we handle that when he comes to me and says, "Oh, I can't do the first. Like, there's no money to deposit or..."

• 1:21:26Ramit Sethi?

  Excellent question. First of all, when you make above $9,000, that needs to go into a reserve fund, a special savings account, and this is never touched. Never touched, except in the one case I'm gonna share with you. So let's say one month you make $15,000. That's an extra $6,000. That goes into that reserve account. Then, there might be a month where you make $8,000. Okay, well, you pull $1,000 out and you simulate a stable paycheck. Over time, you wanna get that number to about six months. Okay? Six months, so six times $9,000 is what you wanna have in that account. "Sounds like a lot of money." Yes, keep it there.

• 1:22:11Ramit Sethi?

  That's the mechanics of it. But the second thing is, you need to make that $9,000. Like, we can come up with a rule right now. If there are, I don't know, three months missed consecutively, then it's time to shut that business down and go get a job. If you can't do it, this business is over and it's time to go get a job. How do you feel about that, Matt?

• 1:22:31Speaker 02

  That's something we talked about. That Rebecca's even raised before.

• 1:22:35Ramit Sethi?

  I mean, if that's been raised, do you wanna just go get a job? It would solve a lot of different problems.

• 1:22:41Speaker 02

  We've talked about that, too.

• 1:22:42Ramit Sethi?

  How much can you get paid?

• 1:22:43Speaker 02

  Probably something more like $14,000 to $18,000.

• 1:22:47Ramit Sethi?

  But right now, it currently says you make $15,000 a month.

• 1:22:49Speaker 02

  Right. That's why we're talking about $9,000. It's like a very baseline, easy, attainable number. But that, if we can't make that minimum number a couple of months in a row, then we should probably not be doing this business.

• 1:23:05Ramit Sethi?

  Why not just go get a job?

• 1:23:07Speaker 02

  Well, like, you can see, even in this hard times, we're at $15,000 collectively. And so, going to get a job without the upside, where we make $14,000 or $15,000 feels good for the stability, but it also feels like that's not the key to maybe long-term wealth.

• 1:23:27Ramit Sethi?

  What do you do for a living?

• 1:23:29Speaker 02

  I'm a civil attorney.

• 1:23:31Ramit Sethi?

  I'm gonna be real direct with you about this. Seems to me you're a bit of a dreamer. And the way I see it, you have no retirement. You have maybe $20,000 a year to live off of, plus social security. We're not talking about long-term wealth. We're talking about preventing you two from being homeless.

• 1:23:48Speaker 02

  Sure.

• 1:23:48Ramit Sethi?

  We're talking about what's gonna happen if you get hit by an emergency expense, which almost certainly will happen in the next 15 years with four kids. The idea that I make nine, I can consistently make $9,000 with upside, but I could make $15,000 consistently at a job? I'm just gonna tell you qualitatively, it's a no-brainer.

• 1:24:10Speaker 00

  I've repeatedly asked him, "Hey, when is it time to pull the plug?"

• 1:24:15Ramit Sethi?

  Okay, you asked.

• 1:24:17Speaker 00

  Yeah.

• 1:24:18Ramit Sethi?

  Do you notice that?

• 1:24:19Speaker 00

  I can't, I don't wanna force him out of it.

• 1:24:21Ramit Sethi?

  Wouldn't wanna force my financial and intimate partner into making a decision that serves our family. Why?

• 1:24:28Speaker 00

  I feel like I want him to feel like his business is successful, and so I wanna support it, but it's really hard.

• 1:24:36Ramit Sethi?

  What is with this tiptoeing around partner's feelings? $633,000 to $1 million in debt, and I want him to feel successful?

• 1:24:46Speaker 00

  And when you put it like that, it's clearly not successful, so...

• 1:24:50Ramit Sethi?

  It's not. And it's okay, it's okay. There are things we try in life that don't work out. Better to call the ball. I actually think you can create amazing turnarounds once you get focused with two people.

• 1:25:04Speaker 00

  Yep.

• 1:25:05Ramit Sethi?

  But you cannot do it independently. You cannot do it by ignoring the reality of a situation. You have $633,000 to $1 million of debt. It's actually getting bigger, not smaller.

• 1:25:14Speaker 00

  Yeah.

• 1:25:15Ramit Sethi?

  By the way, I'm looking at your Monarch account. Let me show you something. We're talking about income, right? Do you see the actual income? What is that income for last month?

• 1:25:26Speaker 00

  $13,558.

• 1:25:29Ramit Sethi?

  Yeah. What is it the month before?

• 1:25:31Speaker 00

  $4,103.

• 1:25:33Ramit Sethi?

  And what is it the month before?

• 1:25:35Speaker 00

  $9,779.

• 1:25:37Ramit Sethi?

  Okay, and I'm gonna keep going back. Matt, you read it off.

• 1:25:40Speaker 02

  $1,887.

• 1:25:42Ramit Sethi?

  And then?

• 1:25:42Speaker 02

  $13,824.

• 1:25:44Ramit Sethi?

  And then?

• 1:25:45Speaker 02

  $11,965, $7,508.

• 1:25:50Ramit Sethi?

  What are you noticing?

• 1:25:51Speaker 02

  May not be totally correct, but the point is correct, which is that it's inconsistent and not, not great.

• 1:26:00Ramit Sethi?

  Yes. So if it's already inconsistent as recently as a few months ago, what are you gonna do if you make $2,000 one month? You cannot sustain this spending. You know you're actually spending more than you make every single month?

• 1:26:14Speaker 02

  Yeah.

• 1:26:15Ramit Sethi?

  Are you aware of that?

• 1:26:16Speaker 00

  Yes.

• 1:26:17Speaker 02

  Feels like it.

• 1:26:19Ramit Sethi?

  It's real.

• 1:26:21Speaker 00

  Yeah.

• 1:26:22Ramit Sethi?

  So if that's the case, pretend it's not you. You hear that my wife and I are spending more than we make every single month. What would you tell us to do?

• 1:26:31Speaker 02

  Spend less and make more.

• 1:26:32Ramit Sethi?

  Okay. That's it? Just as simple as that? I'll be like, "Yeah, I know, but it's hard. You know, we're trying and we got this accounting. Hopefully, this thing works out." What would you say to me?

• 1:26:42Speaker 02

  Say, "Gosh, for me, that sounds like kind of vague dreamer talk. What are you really spending your money on?"

• 1:26:49Ramit Sethi?

  Great. Okay, now turn that question around on the two of you. What's the answer?

• 1:26:53Speaker 02

  Well, we still spend on the things we have to, which are utilities and our mortgage and our HOA. And then, we are still spending as much as we want to on whether it's our food or our travel or our home stuff or stuff for the kids. And we're really not changing that based on how much money comes in.

• 1:27:17Ramit Sethi?

  Okay. Rebecca?

• 1:27:19Speaker 00

  I've said, you know, you need to look at this in a constructive way, and we need to set a date of when this isn't gonna work anymore.

• 1:27:27Ramit Sethi?

  Cool. When was that date?

• 1:27:28Speaker 00

  It's supposed to be October.

• 1:27:31Ramit Sethi?

  Okay, and what are you on track for? Is it gonna happen or not?

• 1:27:34Speaker 00

  He needs to get a job, a different job.

• 1:27:37Ramit Sethi?

  Why don't you tell him that?

• 1:27:38Speaker 00

  Matt, this is not sustainable, and you have to get a different job if you're not gonna make more money.

• 1:27:43Ramit Sethi?

  We need this because, and then pin it to your North Star. What is your North Star as a family?

• 1:27:52Speaker 00

  We don't want to perpetuate money trouble for our four children. We need to be setting a better example, and so we have to make different choices.

• 1:28:02Ramit Sethi?

  Beautifully done, Rebecca. Beautifully done. Matt, what's your response?

• 1:28:08Speaker 02

  So she has expressed that before, and then I think she's just trusted me that, that having self-employment is still better than a consistent paycheck.

• 1:28:18Ramit Sethi?

  Matt, that's not true. It's point-blank not true. Look at your wife. She's been crying for the last two hours. She cannot even get straight answers on when, how much money is coming in. You're actually making way less than you thought. It's super sporadic, and you're in increasing amounts of debt. How is this better?

• 1:28:41Speaker 02

  The, you know, times where we've had extra money and we've bought a house, or we've bought a car, we've done these other things, that wouldn't happen. And then the times that I've had freedom, where we've been able to be home or be available or, you know, be with the kids or be with her or travel or whatever it is, those things would be different. And so, it could be better for us. I certainly acknowledge that. But I think reasonably, we've looked at it and decided, and after giving a lot of thought, that it wasn't...

• 1:29:12Ramit Sethi?

  Well, it's not a convincing answer. The hardest person in a relationship is the partner of a dreamer. And Matt, I don't get the chance to talk to a lot of dreamers that often. A dreamer is somebody who often lives in the clouds. They don't look at numbers. When they look at numbers, they create narratives to avoid the reality of the situation. And oftentimes, they are subsidized in some way by somebody else. Often, it might be their spouse or their parents or whatever. But if they were not, if they did not have that kind of support, their world would crash and burn very quickly, and they would very quickly adapt. Now, I don't want you to have to get to the point of crashing and burning,

• 1:29:55Ramit Sethi?

  but the person for whom it's the hardest is the partner of a dreamer, because they try valiantly to convince them using data and stories and examples and all kinds, and bringing them on a podcast, and they just don't listen.

• 1:30:09Ramit Sethi?

  So Matt, I hope you change. I hope you listen. I've tried my best, but I don't get the sense that you are actually listening or willing to substantially change. I think you're willing to have a couple of meetings a week. I think you're willing to maybe do 9,000 a month until you don't, and then it's going to be back to the old ways. So I think unless you want to change something, I'd rather spend my time with Rebecca, talking about what your next steps might be, Rebecca.

• 1:30:36Speaker 00

  Yeah.

• 1:30:37Ramit Sethi?

  I want to show you the numbers. So if we see here that you are currently spending 84% of your fixed costs, okay? And let's say that this number actually goes down to 9,000 instead of 13,000 of Matt's income.

• 1:30:55Speaker 00

  Okay.

• 1:30:56Ramit Sethi?

  Okay. You're now spending 115%. And by the way, this net income needs to actually realistically go down. So that would need to go down to about, let's just say 6,500. You're now at 143% fixed costs. Now, sure, you can cut down a little bit on your groceries. All right, fine. You want to bring it down to 1,500, maybe even 1,400. All right, we'll nibble around the edges. You're at 140%. You want to cut down on your subscriptions to $150? Fine. Doesn't even change your number. You're at 140%. What are you noticing?

• 1:31:33Speaker 00

  This is like absolutely unsustainable. We'll lose our house.

• 1:31:37Ramit Sethi?

  Yes.

• 1:31:40Ramit Sethi?

  Rebecca, I know you're upset. I want to acknowledge that. This is really hard. There is no easy answers here. Your back is against the wall, and so you have to start making some very difficult choices. Now, in light of the severity of this situation, my hope is that you actually get angry, and that you actually say, that's enough. Enough is enough, and I'm going to take bold action. And one way or another, I am going to protect myself and my children. And I sure hope Matt comes along. I hope he does. I will provide him a clear road, but I am putting myself and my children first. How does that strike you?

• 1:32:26Speaker 00

  It's intense, but I understand what you're saying.

• 1:32:30Ramit Sethi?

  I wish that I could be more gentle about the options. A lot of times, people come on, we can fiddle around the edges, but there, those options are unavailable to you now.

• 1:32:39Speaker 00

  Yeah.

• 1:32:40Ramit Sethi?

  I would like to show you a few things that you may want to keep in your back pocket as knowledge. That may have been the only time I have ever done that on this podcast. Matt is a dreamer, and as you know from my Money for Couples book, dreamers are the most difficult money type to work with. And I have really been trying on today's conversation, and I hope that Matt changes. But I have to take drastic action because they are in their 40s and they are in a severely dangerous financial position, compounded by having four children. I have to get through to this couple, and if that means that I have to talk directly to Rebecca, and whether or not Matt comes along, I hope he does, but right now, I'm

• 1:33:25Ramit Sethi?

  focused on Rebecca and letting her step into who she can be. I'm going to put these on screen. I want to acknowledge that all of this is incredibly difficult with variable income. So you were very, very astute to say that the number one rule you need in this relationship is a stable income. I totally agree. None of this works without a stable income. You need that. And therefore, I genuinely hope that Matt, you are hearing this, closing the business down and getting a stable job is the single best thing that you could do for this family. Whether that happens or not, Rebecca, you need a stable predictable

• 1:34:06Ramit Sethi?

  income, whether it's coming from Matt's business or ideally his full-time job. My suggestion in looking at your spending here on fixed costs, what are some of the things that you could change here?

• 1:34:17Speaker 00

  I can do my very best to change our groceries, for sure.

• 1:34:20Ramit Sethi?

  Yes, maybe you bring that down a couple hundred bucks. What else? Look at the big stuff.

• 1:34:24Speaker 00

  Our kid's school, which would really be difficult for me.

• 1:34:28Ramit Sethi?

  For you?

• 1:34:29Speaker 00

  Yeah. I don't, I'm just not super interested in him going to our available public school. It's not in his best interest.

• 1:34:39Ramit Sethi?

  I mean, is it in his best interest to have parents who fight about money every two days?

• 1:34:45Speaker 00

  No.

• 1:34:46Ramit Sethi?

  Again, no easy choices here, but what I'm trying to do, Rebecca, empower you to make bold choices. And in my experience, even when I've had to make bad decisions, if I did them boldly and I did them intentionally, I can create the narrative around it. I'm going to give you an example. I know you'd hate to have to take your kid out of this school. And maybe you do, maybe you don't. That's up to you.

• 1:35:12Speaker 00

  Yeah.

• 1:35:12Ramit Sethi?

  Here's a good way. We have decided that we are prioritizing stability in our family. For too long, we have let money just flow through our fingers. We have not been a unified team. We have not looked at our spending. We have not made priorities, and now we are. And our priorities are debt payoff, building a healthy savings account. And that means we're going to have to make some tough decisions. And one of those decisions is, my son is going to have to go to the public school. He's going to make friends, and he's going to have a great time, and he's going to adapt because he is strong. That's a story that I want you to think about. It would be doubly powerful if Matt were on board.

• 1:35:53Ramit Sethi?

  That's not up to me. But Rebecca, you can control the story you tell yourself and the story that you communicate to your kids. Next, what do you see for spending?

• 1:36:04Speaker 00

  I don't know what the miscellaneous spending is, but definitely if it's miscellaneous, it's not really a need. So.

• 1:36:12Ramit Sethi?

  Agreed. But I think miscellaneous is actually really helpful because, for example, you did not capture things like gas.

• 1:36:19Speaker 00

  Yeah.

• 1:36:20Ramit Sethi?

  You did not capture things like car repair and a variety of other things. Here's my suggestion for you. You can't afford to have that much miscellaneous right now. I'm going to bring it down to 500, which is an extra $1,000 a month that you now have. And what about this church giving?

• 1:36:36Speaker 00

  I think we need to look at what is reasonable and maybe talk that over together about what that looks like.

• 1:36:43Ramit Sethi?

  So why don't you just talk about it right now?

• 1:36:45Speaker 00

  How are you feeling about that number?

• 1:36:47Ramit Sethi?

  Not interested in questions. I'm interested in proposals.

• 1:36:50Speaker 00

  Oh, gosh, I don't even know.

• 1:36:51Ramit Sethi?

  Your mental model that you are about to do is, I'm the non-breadwinner who's non-knowledgeable about money, and can you please tell me, guide me respectfully? [BLEEP] that. The new mental model is, I am in charge of this family financially. I need to provide leadership, because I have not gotten what I've been asking for for 16 years. And while I hope that my partner steps up as a teammate, right now, I need to step forward. I mean, my dream for the two of you is to be partners. That's my dream. But if you can't be partners, then somebody's got to lead.

• 1:37:34Speaker 00

  Yeah.

• 1:37:35Ramit Sethi?

  Who is that person that's going to lead?

• 1:37:37Speaker 00

  I will be leading for now.

• 1:37:39Ramit Sethi?

  Love that. So as a leader, a leader might ask their team for input, but a leader also has a vision. What is your vision for, for example, how much needs to be given to the church every month?

• 1:37:52Speaker 00

  I would like to see, like, for the time being, $200 to go, and the rest of it has to be used to pay off debt.

• 1:37:59Ramit Sethi?

  Great. And then ask the question to Matt, if there's anything you need from Matt right now. Go ahead.

• 1:38:05Speaker 00

  Can you come to an agreement for that until we feel more stable?

• 1:38:09Speaker 02

  Yeah, thanks for asking, babe. I would think that's a good number. So, good idea.

• 1:38:13Ramit Sethi?

  Great. 200 it is. All right. Just to note, you're down to 124% fixed costs.

• 1:38:19Speaker 00

  I mean, nobody really needs $300 worth of clothes. Honestly, we have plenty of clothing at our house.

• 1:38:25Ramit Sethi?

  Okay, great. Goodbye. Love it. I love how decisive you're being. Can you make more money, Rebecca?

• 1:38:30Speaker 00

  Yeah.

• 1:38:31Ramit Sethi?

  How much more?

• 1:38:32Speaker 00

  A lot more. Maybe you probably remember better than me, but like, when I was working full-time, I feel like I made like.

• 1:38:38Speaker 02

  Four or five. Yeah.

• 1:38:40Speaker 00

  Yeah.

• 1:38:40Speaker 02

  On a really good month.

• 1:38:41Speaker 00

  Yeah.

• 1:38:42Ramit Sethi?

  Let's, let's put 4,000. I think that brings you down still to about 27, I don't know, 2,800 with taxes. So it's better, 114%, but unsustainable still.

• 1:38:53Speaker 00

  Yeah.

• 1:38:54Speaker 02

  Ramita, is your point that the monthly income just needs to go up, right? There's not, there's not ways to reduce this?

• 1:39:02Ramit Sethi?

  That's, that is correct. Let's take a look. So if, I want to show you, because you can actually see your future. This is like a simulator for yourself. So if, for example, instead of $9,000 a month, you made $15,000 a month, what would the take-home on that be? Maybe like 11K?

• 1:39:18Speaker 02

  11.5.

• 1:39:19Ramit Sethi?

  Yeah, 11.5. Look at what just happened to your fixed costs. It went from 114% to 74%.

• 1:39:25Speaker 00

  Yeah.

• 1:39:26Ramit Sethi?

  What does that tell you?

• 1:39:27Speaker 00

  That's the only way forward.

• 1:39:29Ramit Sethi?

  Yes. There's no amount of tweaking groceries or clothing, and even that still requires more, but that is a big step forward.

• 1:39:41Speaker 00

  It's really hard for me to hear that, because for so many years, it was like, well, don't spend that. Well, don't spend that.

• 1:39:49Ramit Sethi?

  Yes.

• 1:39:50Speaker 00

  And it's really blaring in my face that there's not a lot I could have done to change it, even though it felt like it was on me to fix it.

• 1:40:00Ramit Sethi?

  This conversation is hard for so many reasons. So many. Of course, there are financial decisions you made that were not great. The fact that you have a vacation taken as recently as like a week ago for $500, that's a financial mistake. The dynamic that the two of you have allowed is the actual problem here. Could you make more money? Sure.

• 1:40:30Ramit Sethi?

  Would that fix anything if you just increased your income by $5,000 a month? Not a single thing. The dynamic of Rebecca asking for permission, asking, asking, asking for information, treating yourself small,

• 1:40:47Ramit Sethi?

  and also being a busy mom of four, that's real. That's not easy. I don't think any of us could understand what that is like. In addition, asking Matt not getting answers back, getting a lot of kind of confusing messages. We don't have money, but let's go on this vacation. Like, stop spending money at Target, but also I can pull money out magically from this business, which you have no visibility on. Matt feeling put upon. Every time we talk about money, it's bad. I'm failing. Am I living to basically what my dad did? This whole dynamic, you'll notice there's no joy, there's no success, there's no possibility. So everybody just shuts down and goes like, ah, whatever.

• 1:41:31Speaker 00

  Yeah.

• 1:41:32Ramit Sethi?

  That's it, right?

• 1:41:33Speaker 00

  Super accurate.

• 1:41:34Speaker 02

  Yeah.

• 1:41:35Ramit Sethi?

  But what are you going to do? Because we could spend a lot more time, and I would encourage you to do so in therapy of analyzing what got you here. I think there's a lot of threads to pull on. I think it's really, really beneficial for you to both explore that, whether solo or as a couple as well. But you brought me here to help you. So what are we going to do about it? I want to put this CSP back on screen. We're going to do a little bit more numbers, and then I just want to hear from you. Right now, I still have your $800 a month on your children's school. Do you want to keep that? Or do you want to remove it and see what happens?

• 1:42:11Speaker 00

  I think it's really important to me.

• 1:42:13Ramit Sethi?

  Okay, so you're at 74%, which again, that number-

• 1:42:17Speaker 00

  But that would entail Matt getting a different income.

• 1:42:20Ramit Sethi?

  Yes.

• 1:42:20Speaker 00

  Right?

• 1:42:21Ramit Sethi?

  You would have to be making $15,000 a month.

• 1:42:24Speaker 00

  Yeah.

• 1:42:25Ramit Sethi?

  And I want to point something out. You would be investing essentially 0% and you would be saving-

• 1:42:31Speaker 00

  Zero.

• 1:42:32Ramit Sethi?

  Essentially 0%. Now, you do have a little bit of money left over, $3,300 a month. You could allocate that as you see fit. We could do that if you want to go through the exercise. But I just want to point out, you're saving and investing nothing.

• 1:42:43Speaker 00

  Yeah.

• 1:42:44Speaker 02

  Ramit, with those numbers, how much could we save and invest?

• 1:42:47Ramit Sethi?

  Probably $2,000 a month.

• 1:42:49Speaker 00

  If we do that long term, I mean, what does retirement even look like?

• 1:42:52Ramit Sethi?

  Excellent question. So let's take a look. Let's say that you retire in what, 22 years or so?

• 1:42:57Speaker 02

  Sure.

• 1:42:58Ramit Sethi?

  You have currently $45,000. I'm using my calculator. You can just search for Ramit calculator. And right now, you're investing, let's just say, basically $100 a month. You're going to invest for 23 years. You would have $292,000. What does that tell you?

• 1:43:23Speaker 00

  That is not okay.

• 1:43:25Ramit Sethi?

  That would be $12,000 a year you could withdraw every year to live on.

• 1:43:29Speaker 02

  That's, sounds like the Chipotle budget.

• 1:43:31Ramit Sethi?

  So what do you want to do?

• 1:43:32Speaker 00

  We have to invest more.

• 1:43:34Ramit Sethi?

  I mean, you could take $2,000 a month. We can add that. You'd have $1.5 million, $60,000 a year.

• 1:43:42Speaker 00

  Yeah, it's not great.

• 1:43:44Ramit Sethi?

  Let's not forget social security, and maybe if you gave it an extra year, let's just say, $1.7 million. It really grows substantially by that point.

• 1:43:55Speaker 00

  Yeah. I mean, at this interval, that's really our only option, so we have to do it.

• 1:44:01Ramit Sethi?

  Not really. That's not true. Can I show you?

• 1:44:03Speaker 00

  Definitely, please.

• 1:44:04Speaker 02

  Yeah, for sure.

• 1:44:05Ramit Sethi?

  I would get so aggressive, it would be insane. Okay, I would take, uh, let's see. Clothes, yeah, good. Children's school, love you, my son or daughter, but not anymore. Well, I love you still, but you're not going to that school. That's me. Again, it's just me. Subscriptions, fine. Church giving, I also love the church, but I love volunteering on Sunday and not writing a $200 a month check that we can't afford. Finally, miscellaneous, no way. That's, I'll give you 350. I noticed that you have like money spent on car washes and stuff like that. Who gets the car washed?

• 1:44:43Speaker 02

  Right now, both of us.

• 1:44:45Ramit Sethi?

  Oh, great. You know who's doing the car washes from now on? Your 12-year-old and your 10-year-old. I grew up with four kids in my family. I don't think my parents have ever paid for a car wash in my life. And I use that as an example. It's not about the car wash, which was like $21.99 that I saw in Monarch. It's about getting your kids involved together. Not in a punitive way, but rather, we are a family and we all have a part to play. That's how we do it. Okay, moving along. $1,500 a month.

• 1:45:14Ramit Sethi?

  Oh, yeah, kids IRA, not, not in this world. They can figure that out later. I'm sorry. Parents didn't save enough early enough, so you're going to have to figure that out yourself. And we can guide you. We can take you to resource centers like my parents did, but we simply don't have money for it. Okay, 9% for four kids. You could get a little bit more aggressive. We need to fix your car amount. Car, this is 300 bucks a month. Can you spend less on gas or no?

• 1:45:43Speaker 00

  No.

• 1:45:44Ramit Sethi?

  300 bucks a month. All right, fine. Let's take a look at where we are now. According to me, in this simulation, you all are not going on vacation for the next decade.

• 1:45:57Speaker 00

  Yeah.

• 1:45:58Ramit Sethi?

  I'm not kidding. I want you to think like, like, I grew up in an immigrant family. We didn't go on vacations. We drove our van down to visit our family, and that was it. We didn't go on the, to these places. We didn't have the money for it.

• 1:46:13Speaker 00

  Yeah. I mean, I grew up in the same. We didn't go on vacations. We didn't fly. I didn't fly till I was in high school.

• 1:46:19Ramit Sethi?

  Then why is it that you spend dramatically differently today?

• 1:46:23Speaker 00

  I feel like you're right that I haven't been assertive enough about the things that I think we actually need.

• 1:46:31Ramit Sethi?

  Yes. And hoping that Matt would magically rise up and make wise decisions has not worked. And Matt, I actually think you are capable of doing that with Rebecca.

• 1:46:42Speaker 02

  Sure.

• 1:46:43Ramit Sethi?

  But if both of you are not going to do it, then one of you has to start. And the way I see it,

• 1:46:51Ramit Sethi?

  if we are looking at this, we have $2,050 a month.

• 1:46:59Ramit Sethi?

  That gives you $1.7 million at retirement, or $70,000 a year, plus social security. We're talking about about $100,000. Keep in mind that presumably by then, your house will be paid off. Do you have a home equity line of credit?

• 1:47:17Speaker 00

  No.

• 1:47:18Ramit Sethi?

  Thank God.

• 1:47:20Ramit Sethi?

  Credit cards get paid off immediately. Those get prioritized first.

• 1:47:25Ramit Sethi?

  Am I reading this right? You have $65,000 in IRS debt?

• 1:47:30Ramit Sethi?

  Because you never save for taxes?

• 1:47:32Speaker 02

  No.

• 1:47:33Ramit Sethi?

  Another reason that this business is not working. It needs to be shut down tomorrow and get a nine-to-five job. It's not a failure, it's success. You're moving boldly. Call the IRS and negotiate that debt. They will often, though not always negotiate the debt, but you tell them your hardship. Try. Medical, call that and negotiate that immediately. Lending club, not sure what you can do about that. Family loan, $21,500. What?

• 1:47:59Speaker 00

  Yeah. We have a home that had some significant issues that we had to take care of, like water intrusion problems. We borrowed money from my mom, but we're paying it back.

• 1:48:15Ramit Sethi?

  I mean, you can go even bolder if you want to. Do you want to?

• 1:48:18Speaker 00

  At this point, I don't think it's about what we want. I think we don't really have a choice.

• 1:48:23Ramit Sethi?

  I love that. If you were a very frugal family because you had to be, then you could cut even more. Because at this stage, every $100 actually makes a lot of difference. So now we're really at the margins, but I just want to show you a couple of things that a very, very frugal family in severe financial distress would do. Subscriptions would go down from $150 to $50. Miscellaneous would go down to 200, and you would be dialed in. You would be meeting twice a week about money. You would have a number, and each of you would have ownership over it. For example, this is how much we're spending on household expenses. One person owns that number, and it is their job to stay underneath it.

• 1:49:03Speaker 00

  Yeah.

• 1:49:03Ramit Sethi?

  Okay?

• 1:49:05Ramit Sethi?

  Groceries, I hate to say it, but would probably come down. And it would be like very simple meals. Eating out, not happening. Yeah, and you would take this number down, and you'd have a couple, a couple hundred extra dollars, and I would put that directly into savings. So you're now at $1,700 a month. Still lower than I'd like, but not bad, not bad. Thoughts?

• 1:49:26Speaker 00

  For me, it just feels much more calming. It doesn't feel restrictive. It feels like we actually have control.

• 1:49:39Ramit Sethi?

  And Matt, what about you? I want to check in with you.

• 1:49:41Speaker 02

  Yeah, it does scare me in the sense of feels like a lot of, gosh, we're going to have to say no so many times, or we're not going to be strong enough to do it, but but it does feel doable.

• 1:49:55Ramit Sethi?

  Matt, if your mindset can shift to, we are going to win at building our rich life, then suddenly becomes actually quite easy and fulfilling to reduce spending on certain areas and lavish other areas. Now, in your case, it's not lavishing hotels and vacations. That's not going to happen. It's just not. If you were to lavish money, where would you lavish it, Matt, based on what we've discussed today?

• 1:50:25Speaker 02

  On our emergency fund and then our retirement.

• 1:50:27Ramit Sethi?

  Yeah, yeah, yeah. That would be the rich life that at least Rebecca has talked about in terms of stability, predictability.

• 1:50:35Speaker 02

  Sure.

• 1:50:36Ramit Sethi?

  And lavishing. I mean, $2,000 a month is a lot of money. So I will encourage both of you to, to reframe the way you see this as winning, not losing. Because you can get good at something if you see it as winning. But if you see it as losing, you'll never get good.

• 1:50:55Ramit Sethi?

  I think this is one of the most challenging couples that I've ever spoken to. There are layers upon layers of disconnection. There are gender roles, there's religion, there's family upbringing, children. There are just so many things and each of them is pulling in a direction that brings them apart instead of bringing them together. Could they change? Of course, anybody could change. And a couple, when they focus, can change faster than you ever thought possible. But it takes near flawless execution and that's really hard. What do I think will happen? I think that Rebecca and Matthew have seen something today, especially Rebecca.

• 1:51:39Ramit Sethi?

  And I think that they will realize what they have been doing has not worked. I think that Rebecca will make some changes. I think that she will set higher expectations for what she wants or even demands. Will Matt rise up to them or not? I truly hope so. What I think the ultimate dream that I have for them is to create a powerful vision and to do it together, to get out of the weeds. I saw the look on Rebecca's face when we started to really go through the numbers. And when I said, "Hey, do you mind if I just show you what I would do?" And when I did that, it almost was visible that it was dawning on her, "Oh my gosh,

• 1:52:23Ramit Sethi?

  there's a level of boldness that I never even contemplated." I think in part because she felt she always had to accommodate Matt. But what if she took bold action? I saw it. Now, can she make those bold choices? She could. Will it be harder for her to make those changes than for somebody else? Yeah. But ultimately, sometimes we are able to break free of some of the constraints that were set upon us or we even accepted being set upon us. That's what I'm always hoping for. I want to thank our partners at Monarch for setting my guests up with one free year of the Monarch service so they can stay on the same page with their money.

• 1:53:07Ramit Sethi?

  And if you want your own Monarch account with my exact conscious spending plan categories already built in, go to monarch.com/ramit. Try it for free and get 50% off your first year of Monarch's Core Tier. Use the code RMIT to get it.