272. "We own two houses, but can’t afford dinner out"

Ramit Sethi of I Will Teach You To Be Rich speaks with Nicole and Drew, 39 and 40, who are expecting their first child in just two weeks. They split their time between Southern California and Maui, where they each own a home. Nicole bought her house after Drew made it clear that continuing to stay with roommates was not an option. Today, they earn $296,700 a year, own $1.25 million in assets, and have a net worth of more than $500,000. But their two homes consume over 40% of their income, and once their numbers are corrected, their fixed costs rise to 85%. Despite their high income, they feel unable to eat out, attend concerts, or enjoy the life they have worked to build. Nicole is a psychology professor who plans everything down to the dollar and worries about having enough savings. Drew is a life coach and therapist-in-training who admits that she often goes by “vibes” and trusts that things will work out. With a baby arriving and their savings falling, they must decide whether Drew can realistically double her income or whether they need to sell the Maui house. In this episode, we uncover: • Why Nicole bought a house within months of Drew’s housing non-negotiable • How they ended up supporting two homes in two different states • Why earning nearly $297,000 still leaves them feeling financially trapped • Their $1.25 million in assets and nearly $1 million of debt • Why their fixed costs jumped from 77% to 85% • How their two homes consume more than 40% of their income • Nicole’s numbers-first approach and Drew’s habit of going by “vibes” • How grad school, flooding, and a $29,000 sewer repair drained their savings • Why the baby may not increase their expenses as much as expected• How Nicole’s sabbatical gives them a temporary financial window • Why their Maui house is co-owned without a clear written agreement • Whether Drew can realistically double her income after graduating • Why depending on one future income increase is a major financial risk• How selling the Maui house could release around $150,000 • Why selling could reduce their fixed costs to approximately 65% • How they could keep Maui in their lives without owning property there • How they can build a plan that does not require everything to go perfectly • Why “spaciousness” becomes the center of their new Rich Life vision • The decision Ramit believes they need to make before their savings fall further Chapters (00:00:00) Introduction (00:03:09) Two homes in two different states (00:07:03) Nicole kept her housing costs at just 12% (00:08:18) Drew’s housing non-negotiable changed everything (00:14:43) Nicole tracks the numbers, Drew goes by “vibes” (00:21:26) What does their Rich Life actually look like? (00:24:47) Ramit reviews their Conscious Spending Plan (00:25:53) $1.25 million in assets and $986,000 of debt (00:28:15) They earn $296,700 but still feel squeezed (00:29:46) Their fixed costs are higher than they realised (00:32:50) Two homes consume 40.5% of their income (00:34:50) Grad school, flooding, and expensive home repairs (00:40:16) Their real fixed costs jump to 85% (00:45:19) Can they afford their new baby? (01:06:01) Drew’s “life will provide” money mindset (01:12:00) Are they actually on track for retirement? (01:24:39) Ramit reveals their retirement projections (01:33:19) Selling could reduce their fixed costs to 65% (01:50:07) Redefining their Rich Life around “spaciousness” (01:53:04) Ramit’s final assessment This episode is brought to you by: 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. Gusto | Try Gusto at http://gusto.com/ramit and get 3 months free when you run your first payroll LMNT | Get a free LMNT Sample Pack with any order at https://drinklmnt.com/RAMIT Trust & Will | Protect what matters most in minutes at https://trustandwill.com/ramit and get 20% off DeleteMe | Get 20% off all consumer plans when you go to https://joindeleteme.com/ramit and use promo code RAMIT at checkout If you’re part of a small group listening to this podcast that is willing to take action, I built Road to $100K for you - a step-by-step program on how to reach $100K. Join Rich Life: Road to $100K at iwt.com/100K. Connect with Ramit • Get my new book, Money For Couples • Join my Rich Life: Road to $100K program • 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.

• 0:00Ramit Sethi?

  Are you feeling stuck with your money? Have you told yourself, I need to figure it out? But you haven't really done it? I understand that not everyone is going to sit down and read multiple books about money. I get that. That is why I created Rich Life, The Road to 100K. This is a step-by-step program that shows you how to build a money system that works. Like figuring out the date that you're going to have $100,000 invested, how to automate your money, and how to cut through the noise. Plus, you will get access to weekly live events and a community of like-minded people, plus a library of my best materials. This is the program that will finally help you get on track with your money,

• 0:43Ramit Sethi?

  and you can join today at iwt.com/100k. You said we cannot eat out.

• 0:50Speaker 01

  Yeah.

• 0:51Ramit Sethi?

  Because of our housing.

• 0:52Speaker 01

  Yeah. We are supporting two households in two different states. It is eating into all of our ability to do anything else.

• 0:59Speaker 02

  I don't want to just exist in the two houses. Not doing anything.

• 1:03Ramit Sethi?

  Let's take a look at the numbers. Whoa, you are essentially spending more than you make.

• 1:08Speaker 02

  Yeah.

• 1:09Ramit Sethi?

  I've sensed a chill come over the room now.

• 1:11Speaker 01

  We both really love our various home bases. For either of us to give up, that is really tough.

• 1:18Ramit Sethi?

  If you change nothing, what happens?

• 1:19Speaker 02

  I don't know.

• 1:20Ramit Sethi?

  You would not be able to pay for the houses.

• 1:22Speaker 01

  Right.

• 1:23Speaker 02

  I just need to make more money.

• 1:26Ramit Sethi?

  Well, it would work if nothing were about to change in two weeks. Is there something happening in two weeks?

• 1:32Speaker 01

  Maybe a baby.

• 1:34Ramit Sethi?

  So like, where does the baby fit in financially speaking? Have we modeled any of that?

• 1:39Speaker 01

  I'm anxious. I'm so anxious about having enough savings.

• 1:43Ramit Sethi?

  We have to make some decisions that might feel like a little uncomfortable now, but they are a lifetime of comfort.

• 1:51Ramit Sethi?

  I'm about to speak to Nicole and Drew. They're 39 and 40 years old, expecting a baby in a matter of weeks, and they both live in two different states in two different homes that they each purchased. Nicole applied to speak to me. Let me read you from her application. She wrote, "My partner basically needed me to buy a house. It was a non-negotiable for Drew to stay with me in a house without roommates, so I ended up buying a place. I'm wondering if that was a mistake." She continues on to say, "We are unable to eat out and to go to concerts because we are putting all of our funds into houses and needs. It consumes me and worries me so much." Now, if somebody said to me, "Hey, we intentionally are making this sacrifice

• 2:36Ramit Sethi?

  because we want to build equity and blah, blah, blah." Okay, but that's not what I'm hearing here. I'm hearing panic. I'm hearing regret. I'm hearing uncertainty, especially with a baby near due. I want to take a look at their numbers by pulling up their conscious spending plan. Okay, let's take a look. Assets, 1.2 million. Investments, 183,000. Savings at 67,000. Debt, 986,000. Total net worth, 516,000. Now, fixed costs, 77%, which is quite high, explains some of the panic that I heard in the application. Investments at 3%, that's quite low.

• 3:22Ramit Sethi?

  Savings at 10%, guilt-free spending at 10%. When I look at their financial situation, the word that comes to mind for me is complicated. Two houses, two different states, panic over what to do about their finances, and a baby coming in a matter of weeks. I want to get to the bottom of this. Let's begin by speaking to Nicole and Drew. Let's go back to the moment where you were filling out this application. Do you remember where you were? What was going on at that moment that called you to apply to speak to me?

• 3:58Speaker 01

  Yeah, we'd been having a lot of conversations about our housing situation, given the fact that we are supporting two households in two different states. Housing costs are the biggest part of our, I guess, CSP.

• 4:13Ramit Sethi?

  And what is the tenor of those conversations that you'd had?

• 4:18Speaker 01

  Tough. At times, it feels like we have slightly different goals, and that's okay.

• 4:26Ramit Sethi?

  Why is it tough?

• 4:27Speaker 01

  We both really love our various home bases for important reasons. I have family and community in Southern California, and that's really important to me. And Drew has family and community that, you know, she has built in Maui. And for either of us to give up that community is really tough. And it has been a conversation of can we actually support two households with our income?

• 4:57Ramit Sethi?

  I see.

• 4:58Speaker 01

  Yeah.

• 4:58Ramit Sethi?

  Okay, let me understand your living situation now. So we have Southern California, Hawaii. What's the situation with the houses?

• 5:07Speaker 01

  We are a bi-coastal couple. Drew owns a 50% share of her house in Maui, and it generates income through like rent. And I own the house here in Southern California.

• 5:23Ramit Sethi?

  The house that you own a 50% share in, is that your primary residence as well?

• 5:29Speaker 02

  Yes. It's kind of like a boarding house is the structure. It's two, three bedrooms, and then two studios.

• 5:37Ramit Sethi?

  Ah.

• 5:37Speaker 02

  Yeah.

• 5:38Ramit Sethi?

  Where do you live?

• 5:39Speaker 02

  Oh, one of the three bedrooms.

• 5:40Ramit Sethi?

  Got it.

• 5:40Speaker 02

  Yeah.

• 5:41Ramit Sethi?

  We'll look at the income later, but is the income that it generates consistent for you?

• 5:45Speaker 02

  Yes.

• 5:46Ramit Sethi?

  Okay.

• 5:47Speaker 02

  What's inconsistent is the like repairs and housing costs that I, because I'm new, so I don't have, I didn't have like the numbers all laid out yet as far as what to expect.

• 5:56Ramit Sethi?

  Do you make a profit?

• 5:59Speaker 02

  Yeah, sometimes.

• 6:00Ramit Sethi?

  Okay.

• 6:01Speaker 02

  Yeah.

• 6:01Ramit Sethi?

  And then Nicole, your house that you live in, that's your primary residence. How many bedrooms does it have?

• 6:08Speaker 01

  Two bedrooms, one bath.

• 6:09Ramit Sethi?

  Got it, okay.

• 6:10Speaker 01

  When I'm not teaching, we spend our time in Maui. And during that time, I rent out this Southern California home. And then Drew rents out the three-bedroom space when we're not in Maui.

• 6:27Ramit Sethi?

  Okay. I'm very curious to look at the numbers and see how it plays out. Okay, that's cool. And the time period, like how much time are you spending in Southern California versus Maui and vice versa?

• 6:39Speaker 01

  It depends. It's approximately 50/50, though.

• 6:41Ramit Sethi?

  Okay, like six months, six months?

• 6:43Speaker 01

  About. I spend a little bit, I need to spend a little bit more because I teach and I have to be on campus. But Drew will come a little bit later and go a little bit earlier to prepare the house in Maui.

• 6:54Ramit Sethi?

  Cool. What do you teach?

• 6:56Speaker 01

  I teach psychology.

• 6:58Ramit Sethi?

  Oh, cool.

• 6:58Speaker 01

  Yeah.

• 6:59Ramit Sethi?

  All right. What area of psychology?

• 7:01Speaker 01

  Developmental and research.

• 7:03Ramit Sethi?

  Cool. Very cool. All right, awesome. When is baby due?

• 7:07Speaker 01

  In two weeks. Less than two weeks.

• 7:10Ramit Sethi?

  What? Oh my God, congratulations.

• 7:13Speaker 02

  It could happen right here, right now. If you're lucky.

• 7:17Ramit Sethi?

  That would be the best episode ever. First baby?

• 7:21Speaker 01

  Yes.

• 7:22Ramit Sethi?

  Okay. Just so I understand, how long have the two of you been together?

• 7:26Speaker 02

  Two years. Yeah, two and a half years.

• 7:29Ramit Sethi?

  Okay. Married, unmarried?

• 7:32Speaker 01

  We're on the road to our domestic partnership.

• 7:35Ramit Sethi?

  Oh, cool. Okay.

• 7:36Speaker 01

  Yeah. Just more legal hurdles.

• 7:38Ramit Sethi?

  Okay, cool. Now, I do want to ask about the housing situation for a second. Nicole, I understand that you were living with roommates.

• 7:47Speaker 01

  Yeah.

• 7:49Ramit Sethi?

  And I think you were quite conscious of your expenses, is that right?

• 7:52Speaker 01

  Extremely so.

• 7:53Ramit Sethi?

  Okay.

• 7:54Speaker 01

  So I was a really poor grad student for a really long time and made basically no money. I covered my tuition costs, like I didn't want to take on student loan debt. And so I lived with roommates. And then even when I got my full-time job, I was living with roommates because I was, let's see, my housing costs were like 12%.

• 8:18Ramit Sethi?

  Whoa. So you were a full-time professor, living with roommates?

• 8:23Speaker 01

  Yeah.

• 8:23Ramit Sethi?

  I fucking love this.

• 8:24Speaker 01

  Yeah.

• 8:25Ramit Sethi?

  This is so.

• 8:26Speaker 01

  It was great.

• 8:27Ramit Sethi?

  Counterculture. Yeah, I love this. But just think of it. Who in America can, can even fathom the idea like, I became a full professor and I am choosing to live with roommates?

• 8:38Speaker 02

  Yeah.

• 8:38Ramit Sethi?

  No, we believe, oh, I made it to this level. Now I need an SUV, I need this house, I need that vacation, et cetera. And you were like, no.

• 8:45Speaker 01

  No, it was amazing for me.

• 8:46Ramit Sethi?

  Okay.

• 8:47Speaker 01

  I could save money. I could put money into retirement, things I'd been wanting to do for forever. I was in my 30s when I finally got this job. And I was like, oh my God, I can finally catch up. And I could go, like, I was living life so well. I could go out to eat and not worry about it. I didn't have to think about a budget because I knew I could cover it.

• 9:07Ramit Sethi?

  Yes. Okay, then, in your application, you wrote the following. "My partner basically needed me to buy a house. I was living with roommates when Drew and I met. I was intentional about saving money. It was a non-negotiable for Drew to stay with me in a house without roommates, so I ended up buying a place. I'm wondering if that was a mistake." Take me back to that conversation.

• 9:33Speaker 01

  Yeah.

• 9:34Ramit Sethi?

  What happened?

• 9:35Speaker 01

  Basically, Drew said that...

• 9:39Speaker 01

  If I wanted her to come and spend time with me, there could not be roommates. So it was like, okay, well, if I want to continue this relationship, I don't want to be fully long distance. That's gonna have to change somehow. I did want to eventually buy a house and I had been pretty aggressively saving. Like I'd been putting $4,000 a month into a fund to buy a house. And so it was like, okay, well, I could just move up the timeline a little bit. You know, instead of two years from now, I could just do it now. Um, and instead of the $4,000 a month going into a savings for this house, it will go into the mortgage for the house.

• 10:23Ramit Sethi?

  How soon after that conversation, did you buy the house?

• 10:25Speaker 01

  Three months.

• 10:27Ramit Sethi?

  Fast. Okay.

• 10:27Speaker 01

  Fast.

• 10:28Ramit Sethi?

  Drew, what was going on in that conversation for you?

• 10:31Speaker 02

  Well, you know, she couldn't come to Maui full time because of her job. And so that would have been the ideal, you know, like I have a house come here. And what was going through my mind was like, I can't live with these random people. And, you know, I just couldn't live like that.

• 10:51Ramit Sethi?

  Why?

• 10:52Speaker 02

  I think there are circumstances where it could have been okay. If there was some private space or like a better bathroom situation. It just was, for me, I felt like I was in college and I had been living a different way for so long. I couldn't go back and live like that. Yeah.

• 11:09Ramit Sethi?

  Was that like a major disagreement for you? Or was it like Drew, you said, this is what I need. And then Nicole, you were like, okay, cool. Bought the house.

• 11:18Speaker 01

  There was pushback. And actually, we had had the conversation earlier. We had had the conversation maybe six to nine months earlier. And I had said, can we wait for, I think I said, a year? And we made it six months and she was like, I can't do this anymore. Like it's gotta be either that or I'm just not coming for this next semester. And so I was like, okay, well, I saved for six more months. It's not the full year, but it's at least half of it. We can at least start looking. We can see what's within my budget.

• 12:01Speaker 01

  And so I started looking and we found ourselves very quickly.

• 12:09Speaker 02

  The housing market?

• 12:10Speaker 01

  Yeah, the housing market was crazy.

• 12:13Ramit Sethi?

  How did you decide to buy versus rent?

• 12:15Speaker 01

  Okay, so I know your philosophy on buying a house, but, um, and I think-

• 12:20Ramit Sethi?

  What is my philosophy on buying a house?

• 12:22Speaker 01

  That you should know your numbers and only do it if it's right for you.

• 12:25Ramit Sethi?

  Thank God. Yes, you are correct.

• 12:28Speaker 01

  And you personally don't own a house yet and that's okay. That's right for you. Um, and so I think at the time, the decision was right for me in terms of, I did run the numbers. It was within a percentage that was like reasonable. It was a little on the high end, you know? But it was around the like a third of my income.

• 12:50Ramit Sethi?

  Good.

• 12:51Speaker 01

  And for being in Southern California, it felt like it was okay. I was already saving the amount that I was going to be putting towards mortgage. Um, it felt like it was an okay decision at the time.

• 13:02Ramit Sethi?

  Great.

• 13:03Speaker 01

  Yeah.

• 13:04Ramit Sethi?

  All of that sounds amazing, ideal. You ran the numbers. It was roughly within parameters. You had already been saving the amount that you would then pay for the mortgage?

• 13:14Speaker 01

  Yeah.

• 13:15Ramit Sethi?

  Amazing. So you know, you've proven excellence that you can do that. Um, I want to know about a time in the last, let's say a year, where maybe you were not on the same page with money. Maybe it caused tension for the two of you. Can you think of a time?

• 13:31Speaker 02

  Yeah. We had a fight. Oh, I don't know if it became a fight, but when we were talking under the tree at, um, Nicole's parents' house, I can like see it in my mind. It was just so tumultuous and I don't actually remember what was happening, but I remember my internal state was like one of feeling so much agitation, like, you know, brewing that I wanted to just hit the eject button and just be like, I can't do this and I need to go on a walk.

• 13:59Ramit Sethi?

  What was the topic?

• 14:00Speaker 02

  It was like actual numbers about something, but I did have to like walk away, like calm myself down and then be like, okay, I can go back and I can talk about numbers for another hour.

• 14:13Ramit Sethi?

  Nicole, do you remember the topic?

• 14:14Speaker 01

  Yeah, we were talking about, um, housing and school. So Drew is currently in school right now and so paying for tuition and that's been tough. And then we've had some issues with actually a little bit of instability with the renting situation in Maui. And it's been pretty stressful. And so we were having some really tough conversations about how to make that work.

• 14:42Ramit Sethi?

  What was your perspective, like in a couple of sentences?

• 14:46Speaker 01

  Um, there needs to be enough cushion so that if things go wrong, we don't have to scramble to get just anyone.

• 14:56Ramit Sethi?

  Okay. And what was your reaction to that, Drew?

• 15:00Speaker 02

  Overwhelmed. Just like, yes, like my, my reaction is yes to, you know, we need to have somebody, we need to have a plan, you know, we need more of a cushion. Um, and then just some overwhelm.

• 15:14Ramit Sethi?

  I'm curious about the way you said yes. You're like, yes, yes, but also no.

• 15:22Speaker 02

  Well, I'm like, yes, and I don't know what the numbers are and I don't know how to make that happen.

• 15:27Speaker 01

  Yeah.

• 15:28Speaker 02

  I'm not a numbers person, but I'm getting excited about numbers in life and being more grounded.

• 15:32Speaker 01

  I think what actually made it more of a conflict was that I'm really numbers driven and practical. And it was like, okay, we're gonna need $3,000 for this. And we're gonna need, you know, X, Y, Z amount that we want to put away into a fund just for this. And how do we do that? And-

• 15:48Ramit Sethi?

  And what did you notice about Drew's reaction?

• 15:50Speaker 01

  Yeah. Um, it was too much detail.

• 15:54Speaker 02

  That's what I remember. It was like so, like the minutia of it all was so overwhelming because it was numbers almost to like the cent or something, you know? It was just really intense for me and I felt really frustrated.

• 16:09Ramit Sethi?

  Are you used to avoiding numbers?

• 16:12Speaker 02

  I mean, sort of. I have dyscalculia, but you know, that's one thing that might contribute to it. And I do feel like I go by vibes, you know? Um, and I can like feel the about of something, you know, like around about. Like I'm good with a generalized, like it could be a five to 15 and I'm good.

• 16:35Ramit Sethi?

  Okay, okay.

• 16:36Speaker 02

  There's no need to figure out if it's 895, like it's too much.

• 16:40Ramit Sethi?

  Got it. Got it. And by your smile, I'm taking you treat money differently.

• 16:47Speaker 01

  Yes.

• 16:47Ramit Sethi?

  How do you do it?

• 16:48Speaker 01

  Um, I wouldn't say that I am needing everything to be down to the cent, but I like to know to the dollar for relative things. And then I will, like I, I'm the one with the spreadsheet. And so I'll look at our 12 month average or I'll look at a six month average for things.

• 17:10Ramit Sethi?

  Drew, what do you do for a living?

• 17:12Speaker 02

  I am a life coach and I'm in grad school right now in my last year to get my therapist license.

• 17:18Ramit Sethi?

  Ah, yeah. Okay. Interesting.

• 17:20Speaker 02

  I have been on a mission since I left Taiwan where I lived my whole adult life. And since moving to the States, I've had to really like ground in to reality a little bit. I'm very much a dreamer and I've needed to, um, start looking at finances and looking at numbers and think about insurance and houses and all of these things that I never really had to consider before.

• 17:47Ramit Sethi?

  Before, how were you able to not look at those things?

• 17:50Speaker 02

  Oh, just in Taiwan, I was, it's just not such a big thing, you know? I'm not, the rent was, you know, minimal and I didn't have a car. I didn't have, you know, health insurance is, um, it's, everybody has health insurance, you know? It's not something you have to like get through an employer. So it was just a really different way of living.

• 18:09Ramit Sethi?

  Got it.

• 18:10Speaker 02

  So coming back to the States for me, or coming to the States as an adult, I felt really- Destabilized, I felt really behind. I felt there's just a big opportunity to like step into this and yeah.

• 18:25Ramit Sethi?

  I'm getting a few clues that are starting to help me piece together what's happening here. We have Drew, she's a life coach. She's not particularly interested in pinning down specific numbers. Something could cost five bucks, 15 bucks, whatever. We're in the same ballpark. And then we have Nicole, who is structured about her finances. She likes to project things. She likes to calculate things. What do you think? Are these two views on money compatible? Let me know in the comments below. There are so many similarities between personal finance and fitness. And actually, I find that a lot of people, once they get good at money, they actually transfer that to their own personal fitness. Now, part of fitness is also what you eat. And to be able to have any tools that make

• 19:10Ramit Sethi?

  this easier for you is a huge win in my book. So I'd like to introduce you to Factor, which lets you eat delicious nutrient-dense meals without all the hassle. Factor is a meal service that delivers fully-prepared, ready-to-eat meals directly to your door. And they have a lot of variety. They have over 100 rotating weekly meals, including high-protein options, keto, GLP-1-friendly. They even have a Muscle Pro Collection for strength and workout recovery. Factor meals include lean proteins, colorful veggies, and healthy fats. Plus, they are never frozen, and they are ready to eat in under two minutes. This is an easy way to try introducing systems into your health, specifically the way you eat. And if I needed healthy, ready-made

• 19:53Ramit Sethi?

  meals, this is what I would use. Let's eat real. Head to 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 October 31st, 2026. That's code RAMIT50OFF at factormeals.com. RAMIT50OFF at factormeals.com. See website for more details. When you are a business owner, you quickly realize you've got to focus on the things you can control. And there are other things you can't control, like the economy or shipping fees. Now, there's plenty of opportunity in your own business to streamline things like payroll,

• 20:34Ramit Sethi?

  onboarding, and HR. And those things you have direct control over. You can start doing that today by working with Gusto. Gusto is online payroll and benefit software built for small businesses. It's all-in-one, it's remote-friendly, and it is incredibly easy to use, so you can pay, hire, onboard, and support your team from anywhere. Whether you need help with automatic payroll tax filing, simple direct deposits, health benefits, commuter benefits, workers' comp, or 401k matches, Gusto makes it simple and has solutions for nearly every budget. It also helps you save time with automated tools built right in, like offer letters, onboarding materials, all of these things, so you don't have to create everything

• 21:15Ramit Sethi?

  yourself from scratch. Plus, it's simple to switch. Just transfer your existing data to their system, and you're good to go. Try Gusto today at gusto.com/ramit and get three months free when you run your first payroll. That's three months of free payroll at gusto.com/ramit. One more time, gusto.com/ramit. Are the two of you building towards a joint vision of a future together? Have you discussed what that is?

• 21:45Speaker 02

  Very much so. The vision is to have more of a cushion and to retire with money, like put money in towards retirement.

• 22:02Ramit Sethi?

  That's it? Wait, that's like today and 30 years from now. What about anything in between? Hold on, hold on. Nicole, I know you have a vision. Go ahead, Drew.

• 22:11Speaker 02

  Okay. Gosh, I really haven't gone there in a little bit, because I've been in the weeds. Yeah. And that feels emotional.

• 22:18Ramit Sethi?

  That's okay. Put aside this vision that the two of you have talked about. What's your vision?

• 22:24Speaker 02

  My vision is community, my friends, my family. It's one of my favorite things ever to go somewhere. Like our last one, we did Joshua Tree for a week, and just have a bunch of friends come and just be together, just totally relaxed. I love doing that. At Maui, I love hosting. I love just having friends come and just enjoying life together. I love really good food. We both love really good food and going out to amazing restaurants and trying different food. And yeah, like my dream, my vision for my life is that work is steady. It's fulfilling. It's pretty stress-free. And I just get to enjoy my family and my

• 23:07Speaker 02

  community and nature in the beautiful places that we live.

• 23:10Ramit Sethi?

  Got it. Okay. Tell me about the role of the baby. Where does he fit in?

• 23:18Speaker 02

  He came so fast. We actually thought we would have a couple more years. We were successful on our first try. So that's beautiful and amazing, and it's happening really fast. He fits in, he's going to join our lives. Like, we're bringing this baby into our lives, which are going to be filled with love and play and community. And we're just, we're bringing him into our fold, you know? We just want to bring him with us with whatever we want to do.

• 23:47Ramit Sethi?

  Got it. Okay. Now, Nicole, I want to hear about your vision.

• 23:53Speaker 01

  One of the things that actually attracted me most to Drew was the fact that we have a similar vision in terms of so deeply valuing community and work-life balance and wanting to live presently, not for the future. So even though we've talked a lot about retirement, I think that's important. I think we are talking a lot about it because we do have a little bit of concern of when that will happen. But the primary thing for us is that we're not waiting until retirement to enjoy our lives. Like, my goal, for me personally, because I think yours is maybe even a better percentage, but my goal is to not put more

• 24:37Speaker 01

  than 40% of my capacity as a human into work. And I want the other 60% for myself and my community and our child and our family, you know? I think that's really valuable. I think sometimes we spend too much of our resources and time working. And it's not to say that I don't want to work, you know? I do, and I enjoy my work. But I don't want it to take up so much of our lives. I want us to live now.

• 25:07Ramit Sethi?

  Got it. Okay, that's very helpful. Do you mind, let's take a look at the numbers?

• 25:12Speaker 01

  Yeah.

• 25:12Ramit Sethi?

  I want to understand what we're dealing with here. And then I think I'll have a lot more questions. What was it like putting the conscious spending plan together?

• 25:20Speaker 02

  It was kind of stressful. Again, probably me, because I, it's hard to find specific numbers. I'm like, it's about this number, and that's good enough. And, you know, Nicole would encourage me to like go and look and like actually find the number, which was annoying and beneficial.

• 25:42Ramit Sethi?

  And what about for you, Nicole?

• 25:44Speaker 01

  It was, I had most of it already. And the parts I didn't have, it was just fun. I enjoyed it.

• 25:50Ramit Sethi?

  Did you talk about it together?

• 25:51Speaker 02

  Yeah. Yeah, we did.

• 25:53Ramit Sethi?

  Any insights?

• 25:55Speaker 01

  Yeah. I mean, it was very clear the source of our stress.

• 25:57Ramit Sethi?

  Which is what, in a word?

• 25:59Speaker 01

  Housing.

• 26:00Ramit Sethi?

  Okay.

• 26:02Speaker 01

  You'll see, our fixed costs are crazy.

• 26:04Ramit Sethi?

  All right. Okay, let's see. Nicole, can you read off the word in bold and the number next to it for this entire box, please?

• 26:12Speaker 01

  Okay. So assets is 1,252,000. Investments, 183,764. Savings, 67,269. And debt, 986,526.

• 26:32Ramit Sethi?

  Total net worth?

• 26:33Speaker 01

  516,507.

• 26:38Ramit Sethi?

  Great. Okay, what do you think about those numbers?

• 26:40Speaker 01

  It's okay. Yeah. It's like, pretty, pretty okay. I'm more worried about the other numbers. I think the one thing that I am concerned about is that the savings, it doesn't cover us for very long.

• 26:58Ramit Sethi?

  67,000. Okay.

• 26:59Speaker 01

  Yeah.

• 26:59Ramit Sethi?

  Drew, what do you think about these numbers?

• 27:01Speaker 02

  The debt number, I know that includes mortgage, but to see it laid out is astonishing.

• 27:09Ramit Sethi?

  Astonishing means what?

• 27:10Speaker 02

  Just shockingly high. I know it's very American, and it makes sense in this context, and it feels astonishing.

• 27:20Ramit Sethi?

  Okay. Drew and Nicole, you both have mortgage, or let's say a house worth approximately similar amounts, 644, 608,000.

• 27:31Speaker 02

  Exactly.

• 27:31Ramit Sethi?

  Okay. Investments, we have, let's just say out of 183,000, the vast majority of that is Nicole's. Would that be fair to say?

• 27:41Speaker 01

  Yeah.

• 27:41Ramit Sethi?

  Okay. Same with savings. And then debt, looking at it, Drew has 11, a mortgage of 427. Nicole has a mortgage of 545,000.

• 27:54Speaker 02

  Yeah.

• 27:54Ramit Sethi?

  Okay. Let's keep going down the list. This time, Drew, I would like for you to read off your gross combined monthly income, please.

• 28:03Speaker 02

  24,725.

• 28:06Ramit Sethi?

  Okay, great. How much did you think you made per year?

• 28:10Speaker 01

  I mean, I knew how much I made. This was the hard part. I didn't know how much we made. Yeah.

• 28:15Speaker 02

  I didn't think about it.

• 28:16Ramit Sethi?

  You didn't think about it? Like, did you have a sense?

• 28:20Speaker 02

  I just knew it was enough.

• 28:21Ramit Sethi?

  Oh, okay. Okay. And in your application, do you recall what you wrote as your income?

• 28:29Speaker 02

  Oh, I do. 200K.

• 28:31Ramit Sethi?

  200K. The actual number is, can you read that number off, please?

• 28:35Speaker 02

  296,700.

• 28:37Ramit Sethi?

  Only off by 96,000 per year.

• 28:41Speaker 01

  No big deal.

• 28:43Speaker 02

  That's wild.

• 28:44Ramit Sethi?

  I love my job. What do you think about that?

• 28:47Speaker 02

  That's our combined annual income?

• 28:49Ramit Sethi?

  Yes.

• 28:50Speaker 02

  I mean, that's pretty nice. That's a nice number.

• 28:54Ramit Sethi?

  So you didn't know that till now?

• 28:55Speaker 02

  No, no idea.

• 28:56Ramit Sethi?

  Okay.

• 28:56Speaker 02

  Because it's not on the sheet. It doesn't normally come up in the CSP, right?

• 28:59Ramit Sethi?

  No, you have to multiply it by 12.

• 29:01Speaker 02

  Yeah, I didn't do that. Surprise, surprise.

• 29:03Ramit Sethi?

  That's kind of interesting, right?

• 29:05Speaker 01

  Yeah.

• 29:05Ramit Sethi?

  What did you think?

• 29:06Speaker 01

  It's not unexpected.

• 29:08Ramit Sethi?

  Mm-hmm.

• 29:09Speaker 01

  Yeah, I knew exactly how much I made and I had a sense of how much Drew makes because I know how much rental income is generated and the small amount of coaching income. So I had a sense, but I didn't know it was exactly that. I would have said probably 250, which is still pretty high.

• 29:29Ramit Sethi?

  So we're either 50 or $96,000 more than you thought. So are we done here? Are our problems solved?

• 29:37Speaker 02

  No, don't kick us out.

• 29:39Ramit Sethi?

  How can that be though? If there's a money problem and you're now making $100,000 more than you thought, aren't we done?

• 29:49Speaker 02

  That's really cool.

• 29:52Speaker 01

  No.

• 29:53Ramit Sethi?

  What does it tell you?

• 29:54Speaker 01

  Because the fixed costs are almost all of that.

• 29:57Speaker 02

  Yeah.

• 29:58Ramit Sethi?

  I see.

• 29:59Speaker 02

  Because we're still struggling every month.

• 30:00Ramit Sethi?

  I see.

• 30:01Speaker 01

  Yeah.

• 30:01Ramit Sethi?

  Do you think if you made $50,000 more, the problem would be solved?

• 30:05Speaker 01

  No, probably not.

• 30:06Ramit Sethi?

  Yeah. So I'm glad actually that we have this massive disparity that we've all confronted. And we can laugh about it because we realize 100K more than we thought and it's still not solving problems.

• 30:19Speaker 02

  Yeah.

• 30:20Ramit Sethi?

  So let's keep working our way down. Fixed costs, what's that percentage there?

• 30:24Speaker 01

  77.

• 30:25Speaker 02

  77.

• 30:26Ramit Sethi?

  77%. So that right there explains.

• 30:28Speaker 02

  Yeah.

• 30:28Ramit Sethi?

  Uh, feeling stressed out about money.

• 30:30Speaker 01

  Yeah.

• 30:30Ramit Sethi?

  Having disagreements, under a tree about money and on and on and on. That explains it right there.

• 30:34Speaker 02

  Yes.

• 30:35Ramit Sethi?

  It tells me so much about a couple when I see that number. We'll come back and drill down on that. Let's just look at the rest of these. Your investments are at 3%.

• 30:44Speaker 02

  Mm-hmm.

• 30:45Ramit Sethi?

  So I do want to note that you are contributing $1,200 a month to your pre-tax.

• 30:50Speaker 01

  Yeah.

• 30:51Ramit Sethi?

  Which is great. And on top of that, 3%, which is $600 a month. It's nice, not particularly high, but when we combine them, it's, it's fine. Savings at 10%. And then finally, uh, guilt-free spending at 10%. Is that number accurate?

• 31:06Speaker 01

  It's actually really accurate. I know that you think that that's not, it's like actually really accurate. It's actually less than that.

• 31:13Ramit Sethi?

  Uh-huh.

• 31:13Speaker 01

  It's been a lot less than that because we've been saving up a lot of money for legal funds.

• 31:17Ramit Sethi?

  Okay.

• 31:17Speaker 01

  Um, because of our domestic partnership and our, our baby and adopting and stuff like that.

• 31:24Ramit Sethi?

  How much will it cost you, uh, for legal?

• 31:28Speaker 01

  $17,000.

• 31:29Ramit Sethi?

  $17,000.

• 31:30Speaker 01

  Yeah, and I've paid off 12 of it.

• 31:33Ramit Sethi?

  So $17,000 in total to have the baby?

• 31:36Speaker 01

  Yeah.

• 31:37Ramit Sethi?

  Is that right?

• 31:38Speaker 02

  Which includes estate planning and, you know, we, we've gotten very comprehensive with our paperwork for each other.

• 31:46Ramit Sethi?

  It's good to know because, you know, some of this, like in a heterosexual relationship, you would do it.

• 31:51Speaker 01

  Yeah.

• 31:51Ramit Sethi?

  Like some legal planning, but some of it not. And I think, um, a lot of people don't know what is involved with same-sex parents having kids.

• 32:00Speaker 01

  It's so expensive.

• 32:00Speaker 02

  It's a lot.

• 32:01Ramit Sethi?

  Really expensive.

• 32:02Speaker 02

  Yeah.

• 32:02Ramit Sethi?

  Right?

• 32:03Speaker 01

  And we did it the cheap way.

• 32:04Ramit Sethi?

  Yeah?

• 32:05Speaker 01

  Yeah, we have a known donor that is a very nice human being who agreed to help us.

• 32:10Ramit Sethi?

  Got it.

• 32:10Speaker 01

  And so we just had to pay the legal fee to do the court documents so that all of us are protected.

• 32:17Ramit Sethi?

  Right.

• 32:17Speaker 01

  But if we had gone.

• 32:18Ramit Sethi?

  Otherwise it would cost tens of thousands, maybe hundreds of thousands.

• 32:20Speaker 01

  Hundreds of thousands. Yeah.

• 32:21Ramit Sethi?

  Yeah.

• 32:21Speaker 01

  So, you know, $17,000 is actually pretty affordable.

• 32:25Speaker 02

  Yeah.

• 32:26Ramit Sethi?

  I don't think a lot of people know how much it costs to have a baby if you're in a same-sex relationship. I have a couple of friends, they had a baby through a surrogate and it cost them over $250,000. That is shocking. And these are things that if you're in a heterosexual relationship, you may never think about. But I'm very, very grateful that on this podcast, we get to meet people from all different communities, all different parts of life, all different financial means to show you what it takes in order for them to live their rich life. So I'm thankful that I get Drew and Nicole here to share some of the numbers, even though they are quite modest in their situation for how much it will cost them to have a baby. Can we drill down on the fixed costs?

• 33:11Speaker 02

  Yeah.

• 33:12Ramit Sethi?

  All right, so here we are at 77%. I would like to take a look at what these numbers include. Whoa, all right. So your rent slash mortgage, all of it combined is $10,022 per month.

• 33:27Speaker 01

  Yeah.

• 33:28Ramit Sethi?

  So I see two properties here, one for $4,000, one for $6,000 per month.

• 33:33Speaker 02

  Yeah.

• 33:33Ramit Sethi?

  So right there, that's 40.5%.

• 33:37Speaker 02

  Mm-hmm. Yeah, that's crazy.

• 33:39Ramit Sethi?

  What do we know about that number? What should that number be, generally speaking?

• 33:43Speaker 01

  Less than a third.

• 33:44Ramit Sethi?

  Yeah, less than a third. We say less than 28, but it can be 32, 33 in high cost of living areas, which both of you live in. But at 40, what do we know?

• 33:53Speaker 01

  It's really high.

• 33:54Ramit Sethi?

  It's really high.

• 33:55Speaker 01

  It is eating into all of our ability to do anything else.

• 33:58Ramit Sethi?

  Exactly. And in fact, I saw that in your application. You said, "We cannot eat out."

• 34:01Speaker 01

  Yeah.

• 34:02Ramit Sethi?

  Because of our housing.

• 34:03Speaker 01

  Yeah.

• 34:04Ramit Sethi?

  Now, if you came here and you said, "Look, we've decided we are not eating out for the next five years because we made a conscious decision that we want to have these properties for this reason and we've run these numbers," I would say, "Amazing." You've done all the math? You've decided? Is that the case here?

• 34:25Speaker 02

  No.

• 34:26Ramit Sethi?

  Okay.

• 34:27Speaker 02

  I don't want to just exist in the two houses, not doing anything.

• 34:31Ramit Sethi?

  Nicely put.

• 34:32Speaker 02

  Yeah.

• 34:33Ramit Sethi?

  That's, I really like how you put that because that actually describes how so many Americans live.

• 34:38Speaker 02

  Yeah.

• 34:39Ramit Sethi?

  Let's buy a big old house and then we gotta furnish it and then we gotta maintain it. And then, for what? This is the American dream. Yes.

• 34:48Speaker 01

  And then we're trapped.

• 34:49Ramit Sethi?

  Then we're trapped. Okay, so you do not want that?

• 34:51Speaker 02

  No.

• 34:52Ramit Sethi?

  And yet nevertheless, you are here.

• 34:54Speaker 02

  Yeah.

• 34:54Ramit Sethi?

  Spending 40.5%.

• 34:56Speaker 02

  Yeah.

• 34:57Ramit Sethi?

  On housing. Okay, let's look at the rest. Utilities, insurance, car payments at 1125, that's two cars.

• 35:05Speaker 02

  That's two cars.

• 35:06Ramit Sethi?

  Okay. Debt payments at 1,071 a month. What's that for?

• 35:09Speaker 02

  For my grad school.

• 35:12Ramit Sethi?

  Ah.

• 35:12Speaker 02

  Yeah.

• 35:13Ramit Sethi?

  How much is your grad school debt?

• 35:15Speaker 02

  Oh, the debt I have right now is, is 15K.

• 35:18Ramit Sethi?

  And you're paying $1,000 a month for that?

• 35:19Speaker 02

  Yes.

• 35:20Ramit Sethi?

  Is that all you're going to incur for grad school?

• 35:22Speaker 02

  No.

• 35:23Ramit Sethi?

  How much is it going to be total?

• 35:23Speaker 02

  I'm about to have another 10, like 10,200 to, to graduate. That's what I'm going to need to pay by the end of May next year.

• 35:33Ramit Sethi?

  So 15K plus 10K.

• 35:35Speaker 02

  Yes.

• 35:35Ramit Sethi?

  25K.

• 35:35Speaker 02

  25.

• 35:36Ramit Sethi?

  Okay, where's that money going to come from?

• 35:38Speaker 02

  I don't know.

• 35:39Ramit Sethi?

  Ah.

• 35:41Speaker 02

  I don't know.

• 35:41Ramit Sethi?

  Okay.

• 35:42Speaker 01

  Yeah, that's a question we actually have that we need to figure out.

• 35:46Ramit Sethi?

  Okay, we'll, we'll see what we can do. Um, okay, I love this combination here.

• 35:51Speaker 02

  Sure.

• 35:52Ramit Sethi?

  I'd never, I, I don't mind people like tweaking the labels once in a while, that's fine, but, uh, this one is great. Clothes slash home slash home repair and renovation. Seems like it would all be in the same aisle. Okay.

• 36:07Speaker 02

  It's overalls and boots to do the, their home repairs.

• 36:11Ramit Sethi?

  And it's $1,400 per month.

• 36:14Speaker 01

  Yeah, it was really, really high this last year because Drew's house had a massive flooding incident happen. And, um, the kitchen was built in probably the seventies and hadn't been renovated ever.

• 36:28Ramit Sethi?

  Yeah.

• 36:28Speaker 01

  Um, and so it was like, well, if we have to rip out all of the flooring, we're going to have to rip out the cabinets. We might as well replace the cabinets because it's, they were.

• 36:40Speaker 02

  They had water damage.

• 36:40Ramit Sethi?

  How much did it cost Drew?

• 36:42Speaker 02

  10.

• 36:43Speaker 01

  Yeah.

• 36:43Ramit Sethi?

  10K.

• 36:43Speaker 02

  Is I think what we, yeah.

• 36:45Ramit Sethi?

  Now let me ask you a question because I learned this on Twitter.

• 36:49Speaker 02

  Okay.

• 36:49Ramit Sethi?

  People on Twitter told me that the landlord can simply pass on their costs to the tenants and tenants are paying taxes, they're paying their landlord's mortgage, all maintenance. Now, were you able to just pass on those expenses to tenants?

• 37:08Speaker 02

  I sure wasn't.

• 37:09Ramit Sethi?

  Wow. You're telling me people online don't know what they're talking about? That's so shocking. So you basically ate the costs. The money had to come from somewhere.

• 37:19Speaker 02

  Yes.

• 37:19Ramit Sethi?

  And you can try to raise rent, but you charge based on?

• 37:24Speaker 01

  Market value.

• 37:24Ramit Sethi?

  What the market will bear.

• 37:25Speaker 02

  And we actually can't raise rent in Maui right now.

• 37:28Ramit Sethi?

  Why's that?

• 37:28Speaker 02

  Uh, the Lahaina fires, they put in an emergency proclamation that you can't raise. It's still active, yeah.

• 37:35Speaker 01

  Yeah.

• 37:36Ramit Sethi?

  Okay, wow.

• 37:37Speaker 01

  Yeah, it's actually, there's a lot of housing-related things and it's good because it does need to be stabilized. Yeah, we wouldn't raise the rent anyways.

• 37:47Speaker 02

  But we, what we did is like hired contractors at the lowest cost we could and then we did a lot of the work ourselves. We laid the whole flooring ourselves.

• 37:56Ramit Sethi?

  Got it.

• 37:57Speaker 01

  Yeah, we did a lot of our own work.

• 37:59Ramit Sethi?

  That's cool.

• 38:00Speaker 01

  We became knowledgeable pretty fast.

• 38:02Ramit Sethi?

  All right, let's look at the rest of it here. We have, um, subscriptions are fine and then miscellaneous, we have 15%. Did you adjust this?

• 38:11Speaker 01

  We adjusted it.

• 38:12Ramit Sethi?

  Down?

• 38:12Speaker 01

  Yeah.

• 38:13Ramit Sethi?

  Because you know your numbers.

• 38:14Speaker 01

  I, yeah.

• 38:15Ramit Sethi?

  Fine, I believe it. All right, so we're at a total of about $17,000 a month, which, you know, is high.

• 38:22Speaker 02

  Yeah.

• 38:24Ramit Sethi?

  Is it high? I don't know. If you made $10 million a month, then no, it's not.

• 38:27Speaker 01

  Yeah, it's relative.

• 38:28Ramit Sethi?

  But it's all relative. And so what we see is 77%.

• 38:30Speaker 01

  Yeah.

• 38:31Ramit Sethi?

  That part is high.

• 38:32Speaker 01

  Yeah.

• 38:32Ramit Sethi?

  Okay.

• 38:33Speaker 02

  I mean, I guess I want to point out that starting next year, I will be able to be making more money. Like, I just haven't been so far.

• 38:43Ramit Sethi?

  You currently make $10,450 a month.

• 38:47Speaker 02

  Yes.

• 38:48Ramit Sethi?

  That's a pretty good salary.

• 38:49Speaker 02

  Well, still struggling.

• 38:52Ramit Sethi?

  You say maybe, maybe, maybe making more will positively affect the CSP. I think that's true.

• 38:58Speaker 02

  Yes.

• 38:58Ramit Sethi?

  It will.

• 38:58Speaker 02

  Yes.

• 38:59Ramit Sethi?

  How much are you gonna make? Just so we can take a look.

• 39:01Speaker 02

  Well, if I go into private practice, I can make whatever I need to make within the confines of, like, I can make whatever I need to make.

• 39:10Ramit Sethi?

  No, no, you can't. I mean, okay, make a million dollars a month. Can you do it?

• 39:14Speaker 02

  No, I don't need a million dollars. What I need to have that in 77%

• 39:19Ramit Sethi?

  Yeah.

• 39:19Speaker 02

  be what, 50? What would be like?

• 39:21Ramit Sethi?

  50 to 60%.

• 39:22Speaker 02

  Okay.

• 39:22Ramit Sethi?

  How much do you need?

• 39:23Speaker 02

  Oh, like another 12?

• 39:26Speaker 01

  More than that.

• 39:26Ramit Sethi?

  What do you need per month? Hold on. Go ahead, Drew. I like hearing you talk me through this.

• 39:31Speaker 02

  Okay, I think I might need another 12K.

• 39:33Ramit Sethi?

  Another 12K on top of this. Let's try it. So let me just, I'm just gonna, since you make, actually, now that we're looking into this, I'm like, wait a second. Wait, do you pay any taxes?

• 39:44Speaker 01

  Yeah.

• 39:45Ramit Sethi?

  Where's the taxes on this? So here's your gross, which is like, what you get paid.

• 39:50Speaker 02

  Why?

• 39:50Ramit Sethi?

  And your net is the same.

• 39:51Speaker 02

  I pay $330 in taxes, apparently.

• 39:54Speaker 01

  No, that's not true.

• 39:55Speaker 02

  I do pay taxes. I pay 4.5% on my local taxes. And then, I don't know what the government, the big government.

• 40:04Ramit Sethi?

  But like, why is this number so high? Like, what's happening here?

• 40:08Speaker 02

  I don't know. Nicole didn't fix that number for me.

• 40:11Ramit Sethi?

  Let's just fix it right now. Nicole, what is the correct number here? Do you know?

• 40:16Speaker 01

  My estimate would be like 8,000.

• 40:22Ramit Sethi?

  Yeah, maybe 8,000. Let's say that. It could be 7,800, whatever. 8,000. Okay, I want you to watch what happens to the fixed cost number. Ready?

• 40:30Speaker 01

  Yeah.

• 40:31Speaker 02

  Ugh.

• 40:32Speaker 01

  Killer.

• 40:33Speaker 02

  No, that's so. Maybe that's why I kept it at 10,000.

• 40:36Ramit Sethi?

  So for everyone listening and not watching, first of all, get on YouTube. Second of all, that fixed cost number jumped from 77% to 85%.

• 40:46Speaker 01

  Yeah.

• 40:47Ramit Sethi?

  Now we have a more accurate representation. So it's high. It's really high. You are essentially spending more than you make.

• 40:54Speaker 01

  Oh, yeah.

• 40:56Speaker 02

  Yes.

• 40:56Speaker 01

  It's tough.

• 40:56Ramit Sethi?

  Every month. I've sensed a chill come over the room now. But I would rather have the honest truth here.

• 41:02Speaker 01

  Yeah.

• 41:03Ramit Sethi?

  Oh, the numbers in the CSP are not right? I'm shocked. But actually, I don't mind. I still see comments over and over saying, why doesn't Ramit's team prescreen them and work with them to get their CSP? Because I don't want that. It's hard to get your numbers in a correct form. I want to see how you do it, because then I can work with you and help you untangle your assumptions. I want to help you understand where you might have taken a wrong turn. Now, there are some clear changes that I see in the CSP, but I'm not going to sit here and lecture them about all the things they should do. I need them to understand first how risky of a situation they are in.

• 41:44Ramit Sethi?

  If it was just the two of them working stable jobs, making $296,000, they would be at incredible risk. But guess what? One of them is an entrepreneur. That's risky. Oh, and they're about to have a baby. That's risky. They are compounding risk on top of risk. And I want to show them how precarious of a situation they are putting themselves in. It's kind of interesting how people react differently to caffeine. Some people get super jittery with coffee. Some people prefer tea. I've found it to be really fun to try to test different sources of caffeine and find what works for me. Sometimes it's a black coffee. Sometimes it's matcha. And there's a new way for you to try out a different source of caffeine, one that will not cause you to have a massive energy crash.

• 42:28Ramit Sethi?

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• 43:11Ramit Sethi?

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• 43:53Ramit Sethi?

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• 44:38Ramit Sethi?

  T-R-U-S-T-A-N-D-W-I-L-L.com/ramit. So you mentioned that you need to make, why don't we just double what you make? And let's just see what happens.

• 44:52Speaker 02

  Sure.

• 44:52Ramit Sethi?

  Okay, 16,000. And that number drops to?

• 44:57Speaker 02

  61%.

• 44:58Ramit Sethi?

  61%. So you are correct.

• 45:00Speaker 02

  Okay.

• 45:01Ramit Sethi?

  If you doubled your income tomorrow, you're in a healthy financial position, and you'd be able to do quite a bit. What do you think about that?

• 45:10Speaker 02

  I think, honestly, I think it's doable. Like, as soon as I graduate, I really do feel like I could make that amount. And it would just feel like so much relief.

• 45:21Ramit Sethi?

  Yeah.

• 45:22Speaker 02

  I think we could keep the two houses.

• 45:23Ramit Sethi?

  Great, so that is an option. So let's put a pin in that, because at least according to the numbers, that part would work.

• 45:31Speaker 02

  Yeah.

• 45:32Ramit Sethi?

  Well, it would work if nothing were about to change in two weeks.

• 45:36Speaker 01

  Yeah.

• 45:36Ramit Sethi?

  Is there something happening in two weeks?

• 45:38Speaker 01

  Oh, I don't know. Maybe a baby.

• 45:41Ramit Sethi?

  So like, where does the baby fit in, financially speaking?

• 45:44Speaker 01

  Yeah.

• 45:45Speaker 02

  Wow, yeah.

• 45:45Ramit Sethi?

  Have we, have we modeled any of that?

• 45:48Speaker 01

  A little bit. What's really great is because we will be spending the first year and a half or so of this child's life in Maui, there's a really good community that's set up there with really great community resources. So our grocery costs are actually going to go down quite a bit.

• 46:04Ramit Sethi?

  Okay.

• 46:05Speaker 01

  We'll have access to community support that will help with kind of like childcare and things like that. So we're not going to have to pay for childcare.

• 46:14Ramit Sethi?

  Great.

• 46:15Speaker 01

  As long as, actually, in either community. We've been really intentional. Like, the community here in Southern California, I have my parents that live 10 minutes away.

• 46:22Ramit Sethi?

  Great.

• 46:23Speaker 01

  And so.

• 46:24Ramit Sethi?

  So you'll be able to have childcare, let's say, at low cost? No cost? What are we talking about?

• 46:29Speaker 02

  For low cost.

• 46:31Speaker 01

  Yeah, I would say low cost.

• 46:32Ramit Sethi?

  How much?

• 46:33Speaker 02

  Like, an occasional babysitter is the only thing I think we might do.

• 46:36Speaker 01

  Exactly.

• 46:37Ramit Sethi?

  So that's like, how many times a week?

• 46:39Speaker 01

  Not even once a week.

• 46:40Ramit Sethi?

  Not even once a week?

• 46:41Speaker 01

  I would say once a month.

• 46:42Speaker 02

  What is that gonna be, like, 200 bucks?

• 46:44Ramit Sethi?

  200 bucks?

• 46:44Speaker 01

  Yeah.

• 46:45Speaker 02

  Yeah.

• 46:45Ramit Sethi?

  Okay, that's quite nominal.

• 46:46Speaker 02

  Yeah.

• 46:47Ramit Sethi?

  And diapers, food, that kind of stuff? What are we talking about?

• 46:51Speaker 01

  So food in Maui will be free.

• 46:54Ramit Sethi?

  What? Why? This is like, this is paradise?

• 46:57Speaker 02

  Pacific Birth Collective.

• 46:58Speaker 01

  Yeah, so there's an amazing.

• 46:59Speaker 02

  There is an amazing birth collective out there that offers new parents and expecting parents resources.

• 47:05Ramit Sethi?

  No kidding?

• 47:06Speaker 02

  Yeah.

• 47:06Speaker 01

  Yeah, it's really.

• 47:06Ramit Sethi?

  How are they funded?

• 47:07Speaker 02

  It's a government-funded thing, I think. Don't they get government grants?

• 47:11Speaker 01

  There's definitely grants. I'm not sure if they're government grants, but they're grants.

• 47:14Speaker 02

  Yeah.

• 47:15Speaker 01

  And they offer it to any expecting or recent parents.

• 47:20Ramit Sethi?

  No kidding.

• 47:21Speaker 01

  And it's a whole, like, you get a whole bag of groceries every week. You get access to free education classes.

• 47:29Speaker 02

  Free massages.

• 47:30Ramit Sethi?

  What is this called? Just so everybody knows?

• 47:31Speaker 02

  Pacific Birth Collective.

• 47:33Ramit Sethi?

  That's so cool.

• 47:33Speaker 02

  It's so cool.

• 47:34Ramit Sethi?

  You know, like, the fact that. I am like shocked and and we live in the wealthiest country in the world. Really speaks to the fact of how misaligned we are.

• 47:45Speaker 01

  Yeah.

• 47:46Ramit Sethi?

  The fact that like, oh, two new parents getting groceries once a week. I'm like, what? But like, isn't that something that we would be able to do or we should be able to do more broadly?

• 47:57Speaker 01

  It's amazing. It's sad, actually, that we don't have access to it here in Southern California.

• 48:03Ramit Sethi?

  I've never heard of anything like it, honestly.

• 48:05Speaker 01

  Yeah.

• 48:05Ramit Sethi?

  It's really cool.

• 48:05Speaker 01

  And it's not just like a bag of whatever's left over from the grocery store.

• 48:09Speaker 02

  It's really nice food.

• 48:10Speaker 01

  Really nice food. It's all like, for the most part, locally grown and they give you staples as well. So you can have a stock of rice and beans and canned goods and fresh vegetables. And they give you eggs and chicken and it's really an amazing resource.

• 48:29Ramit Sethi?

  It sounds like your fixed costs with baby are not going to change dramatically. Would that be fair to say?

• 48:36Speaker 02

  Yeah, I don't, I mean, barring any like medical stuff that the baby could have.

• 48:41Ramit Sethi?

  Yeah.

• 48:42Speaker 02

  That would be the only thing that could come up.

• 48:44Ramit Sethi?

  Will both of you continue working full time?

• 48:47Speaker 01

  Yes.

• 48:48Ramit Sethi?

  Okay.

• 48:48Speaker 02

  Yes. I mean, Nicole's on sabbatical.

• 48:51Speaker 01

  Yeah, so I'm lucky. I, the timing was, I don't know if it's miraculous, whatever it is, but I was able to be on sabbatical for the next year. So after I give birth, I'll have until the semester starts and then I'll have our regular unpaid leave. But I have enough sick time to take off 12 weeks.

• 49:12Ramit Sethi?

  Great.

• 49:13Speaker 01

  Um, and so I'll take off the 12 weeks and I'll start sabbatical.

• 49:16Ramit Sethi?

  Is that paid sabbatical?

• 49:17Speaker 02

  It's paid sabbatical.

• 49:19Speaker 01

  So I'll get my full regular pay for a full year to go do research, which I can do from home.

• 49:26Ramit Sethi?

  Great.

• 49:26Speaker 01

  Um, and I'm really excited about that.

• 49:28Speaker 02

  And then my income will stay the same.

• 49:30Ramit Sethi?

  Mm hmm.

• 49:31Speaker 02

  Um, yeah, minus wherever that 10 K is going to come from to finish the school.

• 49:36Ramit Sethi?

  Got it.

• 49:36Speaker 02

  Yeah.

• 49:36Ramit Sethi?

  And now going back to your income potentially increasing, because it seems much more feasible now that I know we've talked about childcare and things like that, doubling your income.

• 49:46Speaker 02

  Mm hmm.

• 49:46Ramit Sethi?

  Like you already make $10,000 a month.

• 49:48Speaker 02

  Yeah.

• 49:49Ramit Sethi?

  So is doubling your income realistic?

• 49:51Speaker 02

  Yeah, because if I'm working as a therapist, um, in addition to being a coach, then I will be able to just see more clients.

• 50:01Ramit Sethi?

  Yeah.

• 50:01Speaker 02

  And, yeah, and I'm going to be doing my own, um, private practice, most likely. So I get to charge what I need to charge.

• 50:10Ramit Sethi?

  Got it.

• 50:11Speaker 02

  Yeah.

• 50:11Ramit Sethi?

  And you're comfortable with that because earlier you mentioned, you know, not raising rent, even if you could, et cetera, et cetera. Are you comfortable charging market rates or even higher than market rates?

• 50:20Speaker 02

  I am. I, my vision for my work and what it has been for coaching is that I offer, um, like high ticket prices. But then there's an, there's an expectation or knowing that those people are paying for lower income people who can't afford care. So I will have a sliding scale essentially where I will be able to do sessions for therapy for 30 bucks, 60 bucks, like a handful.

• 50:45Ramit Sethi?

  Great.

• 50:46Speaker 02

  And then there will be people covering that who have the funds.

• 50:48Ramit Sethi?

  Okay.

• 50:49Speaker 02

  So morally, ethically, I think, yes.

• 50:52Ramit Sethi?

  Good, good answers. All right. My assessment on this is you have a high income, $300,000 is a high income, and potentially going up considerably.

• 51:03Speaker 02

  Mm hmm.

• 51:03Ramit Sethi?

  So that's great. You also have, you're in the enviable position of having a baby with very low increasing expenses. Like this is highly atypical.

• 51:16Speaker 02

  Yeah.

• 51:16Ramit Sethi?

  Amazing.

• 51:16Speaker 02

  Mm hmm.

• 51:17Ramit Sethi?

  And what I always tell people is there's this golden period. Seize it, enjoy it. Take some of the money, put it towards investments. Take some of the money, save it. Take some of the money, go out and eat. In a way, I've never had a golden period with a baby.

• 51:31Speaker 01

  Yeah.

• 51:31Ramit Sethi?

  Because baby costs always increase dramatically, but in your case, amazing. You're both going to continue working. You both have childcare. You both have food provided. It's like, okay, amazing. So what do we want to do? I do agree that your investments are low. We can look at what it's going to turn into in the future. Savings are okay. We can talk about what that means. You know, you currently have a few months of emergency fund.

• 51:57Speaker 02

  Right.

• 51:57Ramit Sethi?

  I think with the baby, you want to have more.

• 52:01Speaker 01

  Yeah.

• 52:02Speaker 02

  Yeah.

• 52:03Speaker 01

  Especially in this economy. I'd like it to be 12 months.

• 52:06Ramit Sethi?

  Exactly. We want to become a little bit more financially conservative when there are kids in the picture.

• 52:11Speaker 01

  Yeah.

• 52:12Ramit Sethi?

  So for sure, yes, good instinct. And then, you know, uh, well, what we see now is your guilt free spending is down to 1% or $273, which we know cannot be right.

• 52:22Speaker 01

  That's not right.

• 52:23Ramit Sethi?

  Which is why we have a problem.

• 52:24Speaker 01

  Yeah.

• 52:24Ramit Sethi?

  You're drawing. And so we have a problem right now, but a potentially bright future. How do we get from here to there?

• 52:31Speaker 02

  Yeah. I feel like taking this opportunity and like having, unfortunately, having felt really squeezed and really stressed did, um, prompt me to want to do so much better and to know the things and to prepare. So I think that having the goal set up for what's happening and where we're going to be putting money and what we're going to be doing, especially when I can start making more income.

• 53:01Ramit Sethi?

  Mm hmm.

• 53:02Speaker 02

  Um, and then sticking to it. And unfortunately, I think we have to keep living really low this next year, like keep our spending super low.

• 53:13Ramit Sethi?

  Okay.

• 53:13Speaker 01

  I think that realistically, what I'm seeing is that we're probably going to have to draw down some on the savings.

• 53:23Ramit Sethi?

  Mm hmm.

• 53:24Speaker 01

  If we want to not be miserable all the time.

• 53:28Ramit Sethi?

  Mm hmm.

• 53:28Speaker 01

  And I don't think we want to be miserable all the time. And to be honest, that's a little scary to me to know that we're going to be going in reverse. Where I'd like, like, I'd like to be increasing our savings amounts. And I don't know if it's possible for us to increase our savings amount because the biggest place to cut from is a place we either have to sell our house or, or not. I just don't know where else to cut from, to be honest.

• 53:54Speaker 02

  So like, do we, yeah, for the next year, do we just not cut? And do we just, I didn't, never even thought about drawing from savings even more.

• 54:04Ramit Sethi?

  Well, you have to.

• 54:04Speaker 02

  That feels so scary.

• 54:05Ramit Sethi?

  That's what you've been doing.

• 54:06Speaker 01

  It's exactly what we've been doing.

• 54:08Ramit Sethi?

  You've already been doing, you just didn't acknowledge.

• 54:10Speaker 02

  I just wasn't paying attention to it.

• 54:12Speaker 01

  Yeah.

• 54:13Ramit Sethi?

  Let's explore what the options might be.

• 54:15Speaker 01

  Yeah.

• 54:16Ramit Sethi?

  But first I kind of want to understand what got you here. Nicole, what do you remember your family saying about money when you were young?

• 54:24Speaker 01

  Hmm. So we didn't really talk about it a lot out loud. Um, my upbringing was primarily by my dad's side of the family who's Chinese. And so we don't really talk a lot about the details of anything. In fact, being here is kind of terrifying.

• 54:44Ramit Sethi?

  You don't talk about, like, what? Numbers, feelings, what?

• 54:48Speaker 01

  Numbers or feelings or anything. And if you ask for help, it should only be like within family, like even then, like, why, why are you needing help?

• 54:59Ramit Sethi?

  Ah, that's interesting. Okay.

• 55:01Speaker 01

  Yeah, it's pretty daunting, um, being here. It's exciting as well.

• 55:07Ramit Sethi?

  I think you're doing great. And I think it's a, uh, very courageous to ask for help.

• 55:11Speaker 01

  Yeah, I agree. I mean, as a teacher, I want my students to ask for help.

• 55:15Ramit Sethi?

  Yes.

• 55:16Speaker 01

  So I get the philosophy and doing it yourself is always a little, a little scary.

• 55:22Ramit Sethi?

  For sure. Did he teach you about savings, investments?

• 55:29Speaker 01

  Saving to some extent. So when I was in high school, he actually, and this, I'm so thankful for this. He had me open up a credit card when I could, so I could establish credit. And he told me, you have to put something on it every month and then you just pay it off. And every month you can put something on it, but you have to not ever put more on it than you have to pay it off.

• 55:51Ramit Sethi?

  It's a good lesson.

• 55:52Speaker 01

  Yeah.

• 55:52Ramit Sethi?

  Okay. And have you ever gone into credit card debt?

• 55:55Speaker 01

  I have actually. So, um,

• 55:59Speaker 01

  when I was teaching adjunct and I was in grad school, I was teaching at like five different places. Basically, you have to, an adjunct professor makes a lot less money than a full time professor. And so I was all over the place and I knew that if I ever wanted to be able to teach full time, I was going to have to make some sacrifices so that my, um, resume is the best. Because there are so many people that are wanting full time academic jobs. And so I was going to have to do unpaid labor, basically, so that I could make myself be a good candidate. And that's what I did. So for a year, I cut the number of jobs that I worked.

• 56:41Speaker 01

  And I did unpaid labor at school, doing university service. I served on academic senate and things like that. Did work for my department, things that look really, really good on a resume and you can talk about, but they don't pay you.

• 56:59Ramit Sethi?

  Yeah.

• 56:59Speaker 01

  You know? And so I knew at that time, and it was such a privilege that I was gonna go into debt. And I didn't want to ask my dad for help. So I took on credit card debt and I said, I'm going to get a full time job this year.

• 57:13Ramit Sethi?

  Could your dad have afforded to help you?

• 57:16Speaker 01

  Probably.

• 57:17Ramit Sethi?

  Okay.

• 57:17Speaker 01

  Yeah.

• 57:18Ramit Sethi?

  Did you grow up middle class, wealthy?

• 57:20Speaker 01

  Middle class.

• 57:21Ramit Sethi?

  And what about your mom? What's her role with money?

• 57:25Speaker 01

  Well, not much. Um, my mom, she was diagnosed with cancer when I was four. And so for the next five years, she battled cancer and she didn't do much work.

• 57:41Ramit Sethi?

  Yeah.

• 57:41Speaker 01

  But we spent a lot of time making memories.

• 57:43Ramit Sethi?

  Yeah.

• 57:44Speaker 01

  And so, yeah, I think what I learned was like, memories are important, experiences are important.

• 57:49Ramit Sethi?

  Yeah.

• 57:50Speaker 01

  More than anything.

• 57:52Ramit Sethi?

  Nicole didn't mention this explicitly, but her mom passed away when she was nine years old. And you can imagine what kind of effect that has on a child, especially as it relates to money. It's no surprise that some people who lose a parent become even more concerned with safety and security. And I think that is part of what we see here with Nicole. She likes to plan. She wants to make sure that under all scenarios, she's okay. And I think that's fine. I think safety and security are a good thing with money. We have to take this need in light of her relationship with Drew. I don't think Drew particularly feels the need for safety and security with money. I think she likes it.

• 58:36Ramit Sethi?

  I think she wants to spend it on the things that are important to her. But how do we create a way for them to have a compatible view of money together? Drew, what about you? What do you remember your family saying about money when you were young?

• 58:50Speaker 02

  So I don't remember anything being said. Well, my parents both came out of poverty, were from the South, Alabama, Louisiana, and came out of a lot of poverty and a lot of trauma. And they really made a life for themselves. And it's really beautiful. They, I saw for them that money gave them experiences. And we went out to eat at restaurants like three days a week.

• 59:18Ramit Sethi?

  Wow.

• 59:18Speaker 02

  You know, like, they, they really wanted to live it up. And it was really, yeah, it's really beautiful to look back on that now. So I remember when I was a teenager, my parents bought my, both my grandmas, tickets to Hawaii to go on a trip with us. And we spent like a couple of weeks on all the different islands with my two grandmas. So there was this like giving, giving to family kind of idea and concept and like just fun, just embracing life and really living life.

• 59:54Ramit Sethi?

  How did your parents go from being in poverty to being able to eat out three times a week?

• 59:59Speaker 02

  They were both really smart. Not that it has to do with being smart necessarily. And they just, they worked hard. They really did just work hard.

• 1:00:08Ramit Sethi?

  And did you say you grew up in, was it Taiwan?

• 1:00:10Speaker 02

  I grew up in Texas for 10 years. And then I was in the Marshall Islands until I was 17. And then for college, I went to college in Alabama, where my mom lives.

• 1:00:25Ramit Sethi?

  Ah, got it.

• 1:00:25Speaker 02

  So kind of all over. And that was part of their, their life. They were like, yeah, we can go live in the Marshall Islands. Let's go, let's, let's live it up.

• 1:00:34Ramit Sethi?

  What messages about money do you think you took away from your upbringing?

• 1:00:40Speaker 02

  One that I really had to work through early on when I started working was that you have to work hard to make money. That one, I saw my dad go through that and work his whole life and to be able to retire. And now, to not be in like the best shape to do the things that he wants in retirement. And then the other one was that unfortunately, money can be used as a tool for manipulation. So there's a lot of like, money can cause a lot of pain, actually. And thirdly, to share money

• 1:01:21Speaker 02

  and just really like live it up as much as you can and enjoy life with the money that you do have.

• 1:01:28Ramit Sethi?

  The second point you made about money can be a tool of manipulation, was that something you experienced?

• 1:01:35Speaker 02

  I watched it in my family. Yeah.

• 1:01:40Ramit Sethi?

  What'd you learn from that?

• 1:01:41Speaker 02

  I learned a lot about what it means to be a woman and how women couldn't have, you know, bank accounts of their own until the seventies and how, you know, a lot of women have been stuck in situations that they shouldn't have had to have been in because there was no financial freedom. And how that still to this day kind of carries on with some boomers and, and other people.

• 1:02:13Ramit Sethi?

  Yes. You mentioned live it up, money, you know, we've got to use it. I didn't hear any money messages about saving or investing. Were those the messages you grew up with or no?

• 1:02:28Speaker 02

  I did actually, you know, I did have some messages growing up around. I remember when I started university, my dad told me, never take out a loan. Do whatever you can to not take out a student loan. He taught me, let's see, when I bought my first car, he, he said, never buy a car new.

• 1:02:49Ramit Sethi?

  Okay.

• 1:02:50Speaker 02

  Always buy a used car. They will depreciate heavily when you drive them off the lot.

• 1:02:56Ramit Sethi?

  You have a used car? Or you have a new car?

• 1:02:58Speaker 02

  No, I have a, I bought my car new.

• 1:03:00Ramit Sethi?

  You have a new car and you have a student loan. Okay, zero for two so far. What else?

• 1:03:05Speaker 02

  Sorry, Dad. Actually, I vaguely remember this. I think he offered myself and my siblings at some point a sum of money, like 150 bucks or something. If we would read, I think it was a Dave Ramsey book.

• 1:03:21Ramit Sethi?

  All right, and did you?

• 1:03:22Speaker 02

  Wait, Warren Buffett's the good one, right?

• 1:03:24Ramit Sethi?

  Yes.

• 1:03:25Speaker 02

  Maybe it was Warren Buffett.

• 1:03:27Ramit Sethi?

  That's actually pretty, that pretty much encompasses. He's the good one.

• 1:03:30Speaker 02

  He is the good one, right? He's like a family man. He lives like below his means or something. Goes to show you, I probably didn't read the book.

• 1:03:36Ramit Sethi?

  Yeah, I mean, okay. So the big takeaway is he offered us money and we still didn't do it. All right, got it.

• 1:03:43Speaker 01

  Which is funny because you love reading. You will read almost anything.

• 1:03:47Speaker 02

  And I'll listen to this financial podcast like constantly. Yes.

• 1:03:50Ramit Sethi?

  You have?

• 1:03:50Speaker 02

  I have.

• 1:03:51Speaker 01

  We read it together. That was like one of our.

• 1:03:54Ramit Sethi?

  The only guest on this podcast who have ever read my book. This is like, let me just soak it in for a second.

• 1:03:59Speaker 02

  It's really good. We should get a gold star.

• 1:04:00Ramit Sethi?

  Yeah. What money messages do you both find that you grew up with that you are now bringing to this relationship?

• 1:04:10Speaker 01

  I think the biggest one is that while money is useful, it's also really scary.

• 1:04:19Ramit Sethi?

  How does that show up here?

• 1:04:21Speaker 01

  I'm anxious. I'm so anxious about having enough savings in retirement and the economy and not knowing where to put things. And like, what happens if the AI bubble bursts? And all of a sudden, everything's gone, you know?

• 1:04:36Ramit Sethi?

  Are you normally anxious in other parts of life?

• 1:04:38Speaker 01

  Yeah, I'm a more anxious person.

• 1:04:40Ramit Sethi?

  Got it, okay. That's helpful to know. Drew, what about you?

• 1:04:44Speaker 02

  There's something about like flippancy in a way. Not that I would say I've, I see my family like that necessarily, but that seems to be what I've internalized. Like, I'm not taking it too seriously. Wasn't really focused on it. I kind of always was like, it'll work out.

• 1:05:04Ramit Sethi?

  Yeah, it'll work out. I can approximate it.

• 1:05:08Speaker 02

  I can approximate it, yeah. Doesn't, the actual number doesn't really matter.

• 1:05:11Ramit Sethi?

  Did you grow up religious?

• 1:05:13Speaker 02

  Sort of, but not really, but yes, for sure.

• 1:05:16Ramit Sethi?

  What? Hold on. That was a very interesting answer. What is that?

• 1:05:22Speaker 02

  Well, my dad was excommunicated from the church when I was five.

• 1:05:25Ramit Sethi?

  Okay.

• 1:05:25Speaker 02

  So it was all around me.

• 1:05:27Ramit Sethi?

  Even though he was excommunicated?

• 1:05:29Speaker 02

  Exactly. And then all my grandparents still went and they were highly religious. And so, yeah.

• 1:05:33Ramit Sethi?

  The reason I ask is when you say, you know, a bit flippant, one thing about people who grew up religious is they often say, God will provide.

• 1:05:43Speaker 02

  Oh, yeah.

• 1:05:44Ramit Sethi?

  Oh, familiar phrase.

• 1:05:46Speaker 02

  Oh, yeah.

• 1:05:47Ramit Sethi?

  Okay. Implication being, we don't need to pay particular attention. We're doing the right thing. We're good people. We're faithful. God will provide.

• 1:05:58Speaker 02

  Yeah. Definitely not relating to the God part, but, and I do, I do feel like I have a lot of privilege in the world. And that privilege also will provide sometimes, you know? It's like I, I feel that. I've seen it to be true. So not just God, but privilege.

• 1:06:20Ramit Sethi?

  Got it.

• 1:06:21Speaker 01

  Yeah, I've heard you say literally that you just trust that it'll work out. You trust that it will happen, that somehow the money will come.

• 1:06:30Ramit Sethi?

  It's the secular version of God will provide.

• 1:06:32Speaker 02

  It is, or it could be like the hippie, like granola. The woo woo version.

• 1:06:37Ramit Sethi?

  Life will provide.

• 1:06:38Speaker 02

  The universe will provide.

• 1:06:39Ramit Sethi?

  The universe will provide, perfect.

• 1:06:40Speaker 02

  Yes.

• 1:06:40Ramit Sethi?

  Okay. Wow, I think you both really nailed it with the messages you bring. And when you hear each other describe those messages, does it make sense? Some of the things we see on the CSP, some of the things that you disagree about and are worried about?

• 1:06:57Speaker 01

  Totally.

• 1:06:58Ramit Sethi?

  Yeah, it's perfect sense. I actually love it.

• 1:07:01Speaker 01

  Yeah.

• 1:07:02Ramit Sethi?

  It's interesting to hear Drew's upbringing. Living in multiple countries, very ambiguous relationship with money. And I think that can be really positive. It allows you to deal with ambiguity well, probably make friends really easily. But it can also make you chafe at the idea of structure. But if you want to live a life where you respect money, where you're not just subsisting, but you're actually thriving, giving yourself lots of opportunity, plans are actually a good thing. It can be fun. That's what I'm hoping to show them today. I recently got a comment on my podcast asking if I really use the products that I say I do.

• 1:07:42Ramit Sethi?

  And the answer is yes. If I tell you that I personally use and pay for a product or service, I do. That's why in so many Delete Me ads that I have hosted on this podcast, I tell you I pay for this myself. I do, and I have for years. I love this service. That's why I work with them, and that's why I want you to check them out too. Delete Me is a subscription service that removes your personal data from the internet. We're talking about things like your full name, email, phone number, address, even your parents' names, all found and removed. They've been the leading expert in personal information removal for the last 15 years. They were recently named Wirecutter's number one data removal service.

• 1:08:25Ramit Sethi?

  And I personally use and pay for Delete Me, and I love it. And I know you will too. You'll get 20% off all consumer plans when you go to joindelete.me/ramit and use promo code RAMIT at checkout. That's joindelete.me/ramit, code RAMIT for 20% off. In the application, you mentioned, you know, hey, we, we struggled to go out to eat, things like that. What happened?

• 1:08:55Speaker 01

  Drew went to school.

• 1:08:57Speaker 02

  Yeah.

• 1:08:58Speaker 01

  And then things happened.

• 1:08:59Speaker 02

  And then the flood happened. And it, yeah, it just all, there was a tipping point. Oh, and there were emergencies that happened, basically.

• 1:09:07Ramit Sethi?

  Like?

• 1:09:07Speaker 02

  There was a plumbing issue at the house that we had just bought in Southern California.

• 1:09:13Speaker 01

  Oh, yeah.

• 1:09:14Speaker 02

  Which was like 35?

• 1:09:16Speaker 01

  No, it was 29, but still.

• 1:09:17Speaker 02

  29,000?

• 1:09:18Speaker 01

  Yeah, I had to replace the sewer.

• 1:09:21Ramit Sethi?

  Wow.

• 1:09:21Speaker 01

  All the way into the street. It was

• 1:09:22Speaker 02

  Yeah.

• 1:09:23Speaker 01

  a disaster. If you are buying a house, make sure that you get a full inspection. And if they don't get the sewer scope through all the way, do not go forward with this house.

• 1:09:32Ramit Sethi?

  I don't even know what any of those words mean, but

• 1:09:34Speaker 01

  Yeah.

• 1:09:35Ramit Sethi?

  yes. Get your sewer scopes checked, America.

• 1:09:38Speaker 01

  Yes.

• 1:09:39Ramit Sethi?

  Okay, good. Good lesson. Okay, so, so several maintenance items came up

• 1:09:44Speaker 01

  Yeah.

• 1:09:45Ramit Sethi?

  that were unexpected.

• 1:09:45Speaker 02

  Yes.

• 1:09:46Ramit Sethi?

  You went back to school, which, which implies what? You, it's costing more money?

• 1:09:52Speaker 02

  Yeah, it's

• 1:09:54Ramit Sethi?

  But your finances are separate, correct?

• 1:09:55Speaker 01

  Our finances at this point are like, kind of separate, but we help each other whenever we need. Like, we share an emergency fund and things like that. In terms of legally, we're each other's, we have power of attorney. So our names may not be on each other's bank accounts, but we can do whatever we want with each other's bank accounts.

• 1:10:15Ramit Sethi?

  Got it. Okay.

• 1:10:16Speaker 01

  Yeah.

• 1:10:16Ramit Sethi?

  So you're legally

• 1:10:18Speaker 01

  Yes.

• 1:10:18Ramit Sethi?

  combined?

• 1:10:19Speaker 02

  Combined, yes.

• 1:10:20Ramit Sethi?

  Got it. Okay.

• 1:10:21Speaker 02

  But I think what's been happening is my expenses through school and then the Maui house. I went through my emergency fund because of the things that came up. And then, you know, Nicole was essentially covering that from her side.

• 1:10:40Ramit Sethi?

  What would you have done if you were not together?

• 1:10:43Speaker 02

  I would say I probably would have reached out to some contacts.

• 1:10:49Ramit Sethi?

  To do what?

• 1:10:50Speaker 02

  To ask for money.

• 1:10:52Ramit Sethi?

  Oh, why don't you just reach out to them right now? Like, who are these contacts?

• 1:10:58Speaker 01

  Yeah, I want to know.

• 1:11:00Speaker 02

  I'm thinking, well, I co-own the house with a friend. We bought the house together.

• 1:11:04Ramit Sethi?

  Okay, 50/50?

• 1:11:05Speaker 02

  50/50.

• 1:11:06Ramit Sethi?

  Do they cover 50% of the expenses?

• 1:11:09Speaker 02

  No, but all of the rental income comes to me.

• 1:11:13Ramit Sethi?

  What's the split? Like, how do they get money?

• 1:11:16Speaker 02

  If we sell the house.

• 1:11:17Ramit Sethi?

  How much do they get?

• 1:11:18Speaker 02

  50.

• 1:11:19Ramit Sethi?

  50?

• 1:11:19Speaker 02

  Well, we don't know yet.

• 1:11:21Ramit Sethi?

  Uh?

• 1:11:22Speaker 01

  50%?

• 1:11:22Speaker 02

  50%.

• 1:11:24Ramit Sethi?

  What is this? What's happening right now? What the [bleep]?

• 1:11:27Speaker 02

  It's like, it's, um, I guess if, if I invest a lot more time, and if I end up investing personal money that doesn't come from the rental incomes, then I would expect to be compensated for that.

• 1:11:42Ramit Sethi?

  What's the contract?

• 1:11:43Speaker 02

  If we sell the house. No, just vibes.

• 1:11:47Ramit Sethi?

  What the [bleep]? Like, I was like, how does a life coach sign a contract? And the answer is, they don't.

• 1:11:52Speaker 02

  No, you're just with God, with the universe. I'm like, I trust.

• 1:11:56Ramit Sethi?

  Like, there's a lot of, it would seem, perhaps, it would make sense if I get a higher percent. I'm like, what does the contract say?

• 1:12:06Speaker 02

  Look, this was five years ago, me. She was a different human.

• 1:12:10Ramit Sethi?

  Okay, okay, okay.

• 1:12:11Speaker 02

  I wouldn't do it the same again.

• 1:12:12Ramit Sethi?

  I'm about to have a heart attack right now.

• 1:12:13Speaker 02

  Everybody do your contracts.

• 1:12:14Ramit Sethi?

  Okay, so, and do you talk to this person? Like, are they active?

• 1:12:18Speaker 02

  We're so close.

• 1:12:19Ramit Sethi?

  Oh.

• 1:12:19Speaker 02

  Best friend.

• 1:12:20Ramit Sethi?

  Okay, got it.

• 1:12:23Ramit Sethi?

  I need to get my game face back on. All right, so what's the vision for where you live going forward?

• 1:12:31Speaker 02

  Yeah, I think our vision is to be bi-coastal. Because Nicole's job is amazing, so really, like, taking advantage of that while that's possible. When I actually met her, I encouraged her. I was like, do you want to just quit and move to Maui? Because I was living in a different world, and I'm so glad that she was like, no, we need retirement.

• 1:12:56Speaker 01

  It's really nice to have paid-for health benefits.

• 1:12:58Ramit Sethi?

  Yeah.

• 1:12:59Speaker 01

  I have a pension.

• 1:13:00Speaker 02

  Yeah.

• 1:13:01Ramit Sethi?

  So you're planning to keep, uh, at least live in both cities?

• 1:13:04Speaker 02

  Right, live in both places, keep our, keep working,

• 1:13:08Ramit Sethi?

  Okay.

• 1:13:08Speaker 02

  but keep our work stress levels at 40% or lower, you know, like, not expending too much energy for work. And then just enjoying, like, they're both beautiful places, and they offer so much, and just really like enjoying our life.

• 1:13:22Ramit Sethi?

  Okay, cool. Um, question, because baby's coming, at a certain point, there'll be school questions. Have you thought that far ahead?

• 1:13:32Speaker 01

  We've had conversations. It's gonna be a conversation probably for the next few years, still.

• 1:13:37Speaker 02

  Yeah, which, there could be like school expenses in the future, possibly, or we would do public school. These are just big conversations that need to be had.

• 1:13:48Ramit Sethi?

  Like, the bi-coastal thing, I think, is awesome for adults.

• 1:13:52Speaker 02

  Yeah.

• 1:13:52Ramit Sethi?

  I know my wife and I are bi-coastal, and even if you have like a two-year-old, three-year-old, okay.

• 1:14:00Speaker 02

  Yeah.

• 1:14:01Ramit Sethi?

  What about five, eight, certainly like 13?

• 1:14:04Speaker 02

  Yeah.

• 1:14:04Speaker 01

  Yeah.

• 1:14:04Speaker 02

  My

• 1:14:08Speaker 02

  feeling about it is see where the world's at.

• 1:14:11Ramit Sethi?

  Let's assume the world's at where it is today, meaning there's public school, private school options, et cetera, et cetera. What would you do if you had like a 13-year-old today?

• 1:14:19Speaker 02

  We'd have them here for school year.

• 1:14:23Ramit Sethi?

  Here in Southern California? For the school year, and then summer?

• 1:14:27Speaker 02

  Maui, summer, yeah.

• 1:14:29Ramit Sethi?

  Okay.

• 1:14:29Speaker 01

  I have to be here for the school year. I teach during the school year, so it kind of works out that I teach.

• 1:14:35Ramit Sethi?

  Yeah.

• 1:14:35Speaker 01

  Because for the most part, our schedules will fairly align.

• 1:14:39Ramit Sethi?

  Yeah.

• 1:14:39Speaker 01

  And then summers, we'll get to go to Maui.

• 1:14:41Ramit Sethi?

  I like that plan. Your visions of a rich life, are they compatible with each other?

• 1:14:48Speaker 01

  I think so, yeah.

• 1:14:49Ramit Sethi?

  Okay.

• 1:14:49Speaker 01

  Yeah.

• 1:14:50Ramit Sethi?

  The part about retiring at roughly 60 or so, have you put numbers behind that?

• 1:14:57Speaker 01

  I have, um, but it's gotten off track in the last couple of years.

• 1:15:02Ramit Sethi?

  Okay.

• 1:15:03Speaker 01

  Yeah, so I was looking to basically max out my 403B every year. And I would have easily actually been able to retire earlier than 60 because my pension would have covered part of it. And then my 403B would have matured to a decent place, so I could have pulled 4% and been fine.

• 1:15:26Ramit Sethi?

  But?

• 1:15:26Speaker 01

  But now I'm not putting nearly as much into my 403B as I used to be.

• 1:15:34Ramit Sethi?

  Because?

• 1:15:34Speaker 01

  Because of the, well, it's not the house as much as it's like, we're covering the renovation and the schooling costs.

• 1:15:44Ramit Sethi?

  Although we know that

• 1:15:45Speaker 01

  That will end.

• 1:15:46Ramit Sethi?

  That will end, and in fact, your income will go way up.

• 1:15:49Speaker 02

  Yeah.

• 1:15:49Speaker 01

  Yeah.

• 1:15:49Speaker 02

  Exactly.

• 1:15:50Speaker 01

  So I'm hoping it can change and shift.

• 1:15:52Ramit Sethi?

  Yeah.

• 1:15:52Speaker 01

  But I figure the like couple of years of pretty low investing, maybe moving my goal from 55 to 60

• 1:16:00Ramit Sethi?

  That's fine.

• 1:16:01Speaker 01

  is reasonable.

• 1:16:01Ramit Sethi?

  Two years in the grand scheme generally does not affect people as much as they think. I know that investing early makes a huge difference, yes, but just in general, if people take a year or two and they cut their contributions by 50, sometimes even 100%, and then they go back to where they were.

• 1:16:21Ramit Sethi?

  Truthfully, over the course of 30 years, it makes a little difference, but not that big. We're talking about small percentage amounts.

• 1:16:29Speaker 01

  Yeah.

• 1:16:29Ramit Sethi?

  So I like to put everybody at ease, especially like young parents. They tend to freak out because they're like, oh, my God, I have to cut my contribution rate, blah, blah, blah, blah, blah. It's okay for a year or two. Sometimes people have very high temporary expenses. Okay.

• 1:16:43Speaker 01

  Right.

• 1:16:43Ramit Sethi?

  Loosen up a little bit. Give yourself a little bit more, maybe save a few percentage points less, invest a little bit less, feel good, but make a plan. Within 18 to 36 months, we are going back to this percentage and honor it. And you will be effectively back on track.

• 1:17:00Speaker 01

  That feels really relieving.

• 1:17:02Ramit Sethi?

  Yeah.

• 1:17:02Speaker 01

  Honestly.

• 1:17:03Speaker 02

  Yeah.

• 1:17:03Speaker 01

  I've had so much anxiety being in the red, I guess is what the

• 1:17:08Ramit Sethi?

  Yeah.

• 1:17:09Speaker 01

  For the last bit of time. And it's like, how are we ever going to catch up again?

• 1:17:15Ramit Sethi?

  Yeah, I don't like catching up. That whole thing, catching up, puts you in a bad mental state.

• 1:17:21Speaker 01

  Yeah.

• 1:17:21Ramit Sethi?

  You're a new person today. Let's live in this chapter of life.

• 1:17:25Speaker 01

  Yeah.

• 1:17:25Speaker 02

  Okay.

• 1:17:26Ramit Sethi?

  Cool. I do want to look at the numbers. My concern is not that Nicole, you will have enough for retiring. That's not my concern at all. My concern is that the two of you do not talk about money

• 1:17:41Speaker 01

  Yeah.

• 1:17:41Ramit Sethi?

  At the same level. And that has to happen. It has to. So that is what I would like for the two of you. What do you think?

• 1:17:48Speaker 01

  I would love that.

• 1:17:48Speaker 02

  That feels so good.

• 1:17:49Ramit Sethi?

  Okay.

• 1:17:50Speaker 02

  Yeah.

• 1:17:50Ramit Sethi?

  Okay. So this is what we're gonna do. In a second, I'm gonna put your CSP backup on screen. I want you to build a plan where you don't need every single thing to go right.

• 1:18:02Speaker 02

  Yes.

• 1:18:03Ramit Sethi?

  In order to be okay.

• 1:18:05Speaker 02

  Yes.

• 1:18:05Ramit Sethi?

  There's a classic mistake people make. They're like, okay, in order for us to live our rich life and have our numbers where they need to be, we just need to triple our income, cut our expenses, never get sick, never have any maintenance, like, oh, no, no, no. I'm like, what?

• 1:18:19Speaker 01

  Yeah.

• 1:18:20Ramit Sethi?

  When we're in planning mode, we always plan as if life is gonna be perfect. But when we live life, it's never perfect. And you both know that.

• 1:18:28Speaker 01

  Yeah.

• 1:18:28Ramit Sethi?

  How many things have broken in your houses?

• 1:18:30Speaker 02

  So many things.

• 1:18:30Ramit Sethi?

  Yeah.

• 1:18:31Speaker 01

  It's been so stressful.

• 1:18:32Ramit Sethi?

  Yeah. Okay, so we're gonna be conservative in our planning, which might mean that we have to make some decisions that might feel like a little uncomfortable now, but they are a lifetime of comfort.

• 1:18:45Speaker 02

  Okay.

• 1:18:45Ramit Sethi?

  Okay, let's throw up the CSP on screen.

• 1:18:50Ramit Sethi?

  Our goal is to get your fixed costs to 60%.

• 1:18:56Speaker 01

  Okay.

• 1:18:57Speaker 02

  Okay.

• 1:18:57Ramit Sethi?

  All right. What would you like to do to get this number close to 60%?

• 1:19:03Speaker 01

  I have no idea.

• 1:19:04Speaker 02

  I mean, I'm honestly like, I'm just almost like, we just hold on for the ride. And then, starting in May of next year, I start making more money.

• 1:19:13Ramit Sethi?

  That is one possibility.

• 1:19:15Speaker 02

  Okay.

• 1:19:15Ramit Sethi?

  If you take that risk and everything goes well from now until then, let's just say about a year from now, then your fixed costs will come down to roughly 60% and you will have plenty of money. In fact, I'll show you what it looks like to be able to assign. Let's take a look. I'm just gonna, for easy math, I'm gonna double your net. You're now at 61% fixed costs. If we go all the way down, you have $8,000 per month to play with.

• 1:19:46Speaker 02

  Yay.

• 1:19:46Speaker 01

  Yeah.

• 1:19:47Ramit Sethi?

  I mean, that's huge. Why don't we say, what would you do with that $8,000 per month?

• 1:19:52Speaker 02

  Half and half.

• 1:19:53Ramit Sethi?

  Half, two?

• 1:19:53Speaker 02

  Savings and investments.

• 1:19:55Ramit Sethi?

  Okay. What about guilt-free spending?

• 1:19:57Speaker 02

  So, yeah, we would need like a couple thousand for guilt-free.

• 1:20:00Ramit Sethi?

  Okay.

• 1:20:01Speaker 01

  Yeah, I would say reasonably if we wanted to.

• 1:20:03Ramit Sethi?

  Hold on, notice what's happening here. You're about to give me your mathematical answer, correct? And isn't part of what we want to change is this dynamic?

• 1:20:10Speaker 01

  Yes.

• 1:20:10Ramit Sethi?

  Okay, go ahead, Drew.

• 1:20:11Speaker 02

  Yeah, I feel like, okay, let's say we're spending 22, we're investing 22, and then we're, savings are 22.

• 1:20:20Ramit Sethi?

  Okay, I like it. I like where you're going. So I put 2,200 for savings.

• 1:20:23Speaker 02

  Yeah.

• 1:20:24Ramit Sethi?

  Your investments are at 10%. Your savings are at 16%. And you still have $3,800 a month for guilt-free spending.

• 1:20:32Speaker 02

  I love that. Maybe we just, whatever's left over at the end of the month, we just put it toward a fund, like an investment fund or something.

• 1:20:41Ramit Sethi?

  Let's flip that. Remember how they, have you ever heard that phrase, pay yourself first?

• 1:20:44Speaker 02

  Yeah.

• 1:20:45Ramit Sethi?

  Pay yourself first means we put the money in investments first and whatever's left, we can spend it.

• 1:20:51Speaker 02

  So let's say we put the 38 in investments.

• 1:20:55Ramit Sethi?

  Mm-hmm. You wanna see what happens?

• 1:20:56Speaker 02

  Yeah.

• 1:20:57Ramit Sethi?

  All right, I'll add it here. 3873. Just so you know, you're investing now 24% of gross. That's really high for a high income. That's amazing. Look what happened to your guilt-free spending.

• 1:21:09Speaker 02

  Right.

• 1:21:09Ramit Sethi?

  It's at zero.

• 1:21:10Speaker 02

  Yeah, so we would have to know like what we're spending, what we wanna spend every month. And then, basically, yeah, invest and save the rest.

• 1:21:19Ramit Sethi?

  Yes, that's one way to look at it. But again, I wanna flip it. I, what I like to do is I like to say, how much do we want to save and invest every month? And whatever's left is what we get to spend. Because we pay ourselves first.

• 1:21:35Speaker 02

  So this is like a mind shift that it's almost like, it's having a hard time landing in me, what you're saying. You're saying, know the money that you have, like guilt-free spending.

• 1:21:48Ramit Sethi?

  So first off, know how much you take home every month.

• 1:21:52Speaker 02

  Okay.

• 1:21:52Ramit Sethi?

  $28,000 per month. So we've got this much to distribute.

• 1:21:57Speaker 02

  Okay.

• 1:21:58Ramit Sethi?

  Next, we know that we have some guideline numbers. Less than 60%, you're at 61. I'm fine with that.

• 1:22:04Speaker 02

  Okay.

• 1:22:05Ramit Sethi?

  These numbers, we like to see them roughly at 10% or so. Okay? In this case, you're at 24 and 16. What does that tell you?

• 1:22:14Speaker 02

  That we have a lot.

• 1:22:15Ramit Sethi?

  You have a lot.

• 1:22:15Speaker 02

  Yeah.

• 1:22:16Ramit Sethi?

  And if you wanna put an even finer point on it, you can actually calculate how much you will have at age 55, 60, 65. So you can tell if you need to tune that up. That becomes very precise.

• 1:22:27Speaker 02

  What if we know how much we need by 60? And we know we have 20 years to go hard on investments? Then we could just choose that number and put it aside every month.

• 1:22:36Ramit Sethi?

  I like that. I like, that's, that's how you do it.

• 1:22:38Speaker 02

  Yeah.

• 1:22:39Ramit Sethi?

  Exactly. That's exactly how you pay yourself first. So I will say that I'm just gonna intuitively suggest this investment number probably needs to be higher than 10%, but lower than 24%.

• 1:22:51Speaker 02

  Okay.

• 1:22:52Ramit Sethi?

  If I had to guess, we're talking about the range of like 14, 15% ballpark.

• 1:22:59Speaker 02

  Okay. So let's say 15.

• 1:23:00Ramit Sethi?

  15. So that means you have some money that you can play with and move elsewhere.

• 1:23:05Speaker 02

  Right.

• 1:23:05Ramit Sethi?

  Where would you like to move it?

• 1:23:07Speaker 02

  You mean in the investments?

• 1:23:08Ramit Sethi?

  Nope. In.

• 1:23:10Speaker 02

  Oh, like, okay.

• 1:23:10Ramit Sethi?

  It could go to savings.

• 1:23:11Speaker 02

  Oh, right, because we're going from 24 to 15.

• 1:23:14Ramit Sethi?

  Yeah.

• 1:23:14Speaker 02

  So, I mean, that could be our guilt-free spending.

• 1:23:17Ramit Sethi?

  I agree. So let's just, for the sake of math, let's take 2,200 bucks from investments and move it down here. And that gives you 8% and it gives you 16% in investments.

• 1:23:29Speaker 02

  That's great.

• 1:23:30Ramit Sethi?

  That's pretty good.

• 1:23:31Speaker 02

  And I feel like 22 is doable.

• 1:23:33Ramit Sethi?

  Could you do that? 2,200 bucks?

• 1:23:35Speaker 01

  We could do it. And I think we'd be really happy and super comfortable, given the cost of living, if it was three.

• 1:23:45Ramit Sethi?

  Oh, you would like it to be higher. I like that, okay.

• 1:23:47Speaker 01

  Yeah.

• 1:23:47Ramit Sethi?

  I like, I like advocating for yourself. That's great. The good news is your savings doesn't need to be saving forever.

• 1:23:57Speaker 01

  No.

• 1:23:57Ramit Sethi?

  So you're currently saving 4,400 a month. And just for easy math, 4,400. It's gonna take you a while because your fixed costs are high.

• 1:24:07Speaker 01

  Very high.

• 1:24:08Ramit Sethi?

  So you're gonna be doing that for a long time. Years. Fine.

• 1:24:11Speaker 02

  Because we need like 12 months of fixed cost.

• 1:24:13Ramit Sethi?

  Yeah. You need $200,000 for 12 months. It's a lot.

• 1:24:20Speaker 02

  Yeah.

• 1:24:20Ramit Sethi?

  It's a chunk of change. But I will say this, it, it sounds outrageous to a lot of people listening. They're like, $200,000 in a savings account? But when you have a family unit that is making $300,000 a year and your expenses are high, there's a lot of things moving, then you need liquidity. You need cash. Because if something goes wrong, like a $40,000 flood, what are you gonna, get it, put on a credit card? No way. You need to have liquidity. That's what this is. So it will take you years to get there, but there you go.

• 1:24:54Speaker 01

  I'd love to see.

• 1:24:56Ramit Sethi?

  You wanna see some projections?

• 1:24:57Speaker 01

  Yeah, what you were asking for, Drew.

• 1:24:58Ramit Sethi?

  Let me give you a couple of projections here about where you're gonna be. So your pension, I believe you told us, gets you what percentage?

• 1:25:08Speaker 01

  If I retire at 60, it will be 70%, I think.

• 1:25:14Ramit Sethi?

  Okay. So let's start with your old situation. If you change nothing, if the income does not double, what happens? You will have about $1.6 million at the age of 60. Okay? What do you think about that number right off the bat?

• 1:25:33Speaker 01

  It's great if we own our homes and that housing cost is not 40% anymore.

• 1:25:41Ramit Sethi?

  Okay, nicely put. I agree. Drew?

• 1:25:43Speaker 02

  Yeah, I, it sounds like a lot to me.

• 1:25:47Ramit Sethi?

  Okay.

• 1:25:47Speaker 02

  That I'm surprised by.

• 1:25:49Ramit Sethi?

  Let's go deeper.

• 1:25:50Speaker 02

  Yeah.

• 1:25:50Ramit Sethi?

  If you take 4% of that money every year, you can, and, and you retire at age 65, you can safely withdraw 4%.

• 1:26:00Speaker 02

  Oh, yeah, you were just talking about this.

• 1:26:02Ramit Sethi?

  Yeah.

• 1:26:03Speaker 02

  Oh, 4%, okay, yeah.

• 1:26:04Ramit Sethi?

  The 4% rule. So that will give you, per year of income, $67,000.

• 1:26:10Speaker 02

  So we'd have to live on $67,000 a year.

• 1:26:12Ramit Sethi?

  Yes.

• 1:26:13Speaker 02

  We would have to have no housing costs or.

• 1:26:15Ramit Sethi?

  Housing would have to be paid off.

• 1:26:16Speaker 02

  Yeah.

• 1:26:17Ramit Sethi?

  So that's one. And what else? Just consider that the two of you make $300,000 today.

• 1:26:23Speaker 02

  Yeah. I mean, our, all of our fixed costs would be probably just going to that, basically. And then we wouldn't have any guilt-free spending.

• 1:26:32Ramit Sethi?

  Yeah.

• 1:26:33Speaker 02

  Yeah. We would be struggling, I think.

• 1:26:35Speaker 01

  It would be tough.

• 1:26:36Speaker 02

  Yeah.

• 1:26:36Ramit Sethi?

  Now, there is something I wanna add. The pension. So the pension at 60% would give you $102,000 per year. So that's quite a bit.

• 1:26:47Speaker 02

  On top of the one investment.

• 1:26:49Ramit Sethi?

  On top of the 67.

• 1:26:51Speaker 02

  Okay.

• 1:26:51Ramit Sethi?

  So that means that per year, you would have about $170,000. That's.

• 1:26:58Speaker 01

  Not bad.

• 1:26:58Ramit Sethi?

  Not bad.

• 1:26:59Speaker 01

  Yeah.

• 1:27:00Speaker 02

  That's amazing.

• 1:27:01Ramit Sethi?

  170K.

• 1:27:05Ramit Sethi?

  And assume you keep both houses and pay those off.

• 1:27:11Ramit Sethi?

  I don't know if you'll pay them off in time.

• 1:27:12Speaker 01

  We won't, no.

• 1:27:13Ramit Sethi?

  That's a problem.

• 1:27:14Speaker 02

  Yeah, because we both got a 30 year.

• 1:27:18Ramit Sethi?

  Recently.

• 1:27:19Speaker 02

  Recently.

• 1:27:20Ramit Sethi?

  Okay, so that's a problem.

• 1:27:20Speaker 02

  Within five years.

• 1:27:21Speaker 01

  Yeah, I'm putting a little bit more than.

• 1:27:23Speaker 02

  I'm putting a little bit more, but.

• 1:27:25Speaker 01

  Yeah, so mine is 25 years.

• 1:27:28Ramit Sethi?

  Okay.

• 1:27:28Speaker 01

  Still.

• 1:27:29Ramit Sethi?

  How many years until you retire at 60?

• 1:27:31Speaker 01

  21.

• 1:27:33Ramit Sethi?

  Okay, so there's a few years. Well, you might work extra. You might save some extra, put some extra payments. You could do it. You could play with it.

• 1:27:39Speaker 02

  Yeah.

• 1:27:40Ramit Sethi?

  It's not perfect, but it's within the realm of possible.

• 1:27:44Speaker 02

  Yeah, it's doable. And especially if you retire, I could keep working easily, you know, from home.

• 1:27:49Ramit Sethi?

  Can I just, can I make a point? I don't like to plan for retirement where like.

• 1:27:56Speaker 02

  We're like.

• 1:27:57Ramit Sethi?

  It's pretty close.

• 1:27:58Speaker 01

  Yeah.

• 1:27:58Ramit Sethi?

  No way. That's not how I live my life. I live my life where if you tell me I need like a million, I want to have a plan where with my eyes closed, I come in at 1.8 million.

• 1:28:12Speaker 02

  Yeah.

• 1:28:13Ramit Sethi?

  Because I know that something's bad's gonna happen and I'm gonna have to stop working for a couple of years and blah, blah, blah, blah.

• 1:28:17Speaker 02

  Yeah.

• 1:28:18Ramit Sethi?

  So I don't like this.

• 1:28:19Speaker 02

  Mm hmm.

• 1:28:20Ramit Sethi?

  And I'm sharing it with you because I want you to develop an intuition and a taste for when the numbers don't smell right.

• 1:28:29Speaker 02

  Yeah.

• 1:28:31Ramit Sethi?

  Doesn't smell right to me, especially a couple making 300K. You don't want to live on less and be like, oh, can we afford grapes? Sucks. Okay? So let's go to the new situation, the one in which we assume that you double your income.

• 1:28:44Speaker 02

  Yep.

• 1:28:45Ramit Sethi?

  Here's what we got. If you retire at age 60, you will have 3.6 million dollars. That's a lot more than the other case.

• 1:28:59Speaker 02

  Yeah, it's more than double.

• 1:29:00Ramit Sethi?

  Yep.

• 1:29:01Speaker 01

  40, it's like 240.

• 1:29:03Ramit Sethi?

  4%. Wow, that's pretty. How'd you do that in your head so fast?

• 1:29:06Speaker 02

  She's so smart.

• 1:29:07Ramit Sethi?

  That's impressive.

• 1:29:09Speaker 01

  I just took 1% and multiplied it by four.

• 1:29:12Ramit Sethi?

  That's very good. Okay. Listen, like 50% of people on this show don't even know their own income.

• 1:29:17Speaker 01

  Yes.

• 1:29:18Ramit Sethi?

  Well, actually, including this show.

• 1:29:20Speaker 01

  Yeah.

• 1:29:20Ramit Sethi?

  All right.

• 1:29:21Speaker 02

  Case in point.

• 1:29:21Ramit Sethi?

  Your 4% withdrawal number would be $147,000. And then we add on pension at 60% would be $102,000 for a total amount $250,000 per year.

• 1:29:35Speaker 02

  Which is close to what we're making now.

• 1:29:38Speaker 01

  Yeah, I think that the one thing to consider is that the house in Maui, it generates income.

• 1:29:44Ramit Sethi?

  Yes.

• 1:29:45Speaker 01

  And so even if we were retired, maybe we wouldn't rent out all of the units. So there'd be a little less landlord-ing work, but there could still be income there.

• 1:29:57Speaker 02

  Yeah, and I could still be working a little bit if we wanted an extra like 50K or something.

• 1:30:03Ramit Sethi?

  Feels a lot more comfortable talking about this one, doesn't it?

• 1:30:05Speaker 02

  Yeah, it feels nice.

• 1:30:06Ramit Sethi?

  It's like, oh yeah, like we don't have to scrimp on everything.

• 1:30:09Speaker 01

  Yeah.

• 1:30:09Ramit Sethi?

  Okay, so what needs to happen in order for this to become a reality?

• 1:30:13Speaker 02

  I think what needs to happen is I just need to take all this information and live it, essentially.

• 1:30:21Ramit Sethi?

  Yes, I think to be more specific, at least to put in the language I would use would be you've got to start modeling these things and understanding them.

• 1:30:30Speaker 02

  Mm hmm.

• 1:30:30Ramit Sethi?

  And that happens through engaging. It's like learning how to cook. We can hear about it all day long. The next thing we want to read a cookbook. That's a good start, but then ultimately we need to get in there. And we need to start like trying stuff because some eggs are gonna break. We're gonna be like, oh, but it's not the end of the world. I have another egg. Let me practice.

• 1:30:47Speaker 02

  Right.

• 1:30:47Ramit Sethi?

  That's what happens with this. When you deeply get in there and start playing with the numbers and typing on the, you know, my compound interest calculator, and you go, wait a second, if we put an extra $100 towards this mortgage, we shave off three years? That's crazy.

• 1:31:02Speaker 02

  Mm hmm.

• 1:31:03Ramit Sethi?

  That's when you really get it.

• 1:31:05Speaker 02

  Yeah.

• 1:31:06Ramit Sethi?

  Now, for the next year, we want to talk about that.

• 1:31:08Speaker 02

  Yeah.

• 1:31:09Ramit Sethi?

  You have a baby coming, which even with all the amazing benefits you have, still introduces ambiguity.

• 1:31:18Speaker 01

  Yeah.

• 1:31:18Speaker 02

  Yeah.

• 1:31:19Ramit Sethi?

  Uncertainty. How do you think about that in terms of finances?

• 1:31:22Speaker 01

  It's really scary.

• 1:31:23Ramit Sethi?

  Mm hmm. Like what if the job, for whatever reason, doesn't materialize?

• 1:31:29Speaker 02

  I mean, I don't know. Then we get what we get from Nicole's.

• 1:31:36Speaker 01

  It's not sustainable.

• 1:31:38Speaker 02

  And my job.

• 1:31:39Ramit Sethi?

  Hold on. Play it out for me. So let's say that I'm gonna just make up a morbid situation. Let's say you get sick.

• 1:31:45Speaker 02

  Yeah.

• 1:31:45Ramit Sethi?

  And you can't work. What happens?

• 1:31:50Speaker 02

  Oh, gosh, it was just like, wouldn't, we would be unhappy.

• 1:31:54Ramit Sethi?

  Mm hmm. What about the numbers? What about the money?

• 1:31:56Speaker 02

  The money? We would be stressed.

• 1:31:58Ramit Sethi?

  Yeah. Would you be able to afford your expenses?

• 1:32:02Speaker 02

  Well, we're at 85%.

• 1:32:05Ramit Sethi?

  Correct.

• 1:32:05Speaker 02

  So.

• 1:32:06Ramit Sethi?

  You're basically spending more than you make right now.

• 1:32:09Speaker 02

  Yeah.

• 1:32:10Ramit Sethi?

  You would not be able to pay for the houses.

• 1:32:12Speaker 02

  Right.

• 1:32:12Ramit Sethi?

  One or both.

• 1:32:13Speaker 01

  For sure.

• 1:32:14Speaker 02

  Yes, that's also an answer.

• 1:32:15Ramit Sethi?

  Yeah.

• 1:32:16Speaker 02

  Yeah.

• 1:32:16Ramit Sethi?

  Like on a very practical level.

• 1:32:18Speaker 02

  Yes, run out of money.

• 1:32:19Ramit Sethi?

  You would run out of money. And when you run out of money, what happens?

• 1:32:21Speaker 02

  We live with Nicole's parents.

• 1:32:23Ramit Sethi?

  Right.

• 1:32:23Speaker 02

  If we run out of money.

• 1:32:24Ramit Sethi?

  Or you find yourself back in that roommate situation.

• 1:32:27Speaker 01

  And neither of which are tenable.

• 1:32:29Ramit Sethi?

  They're not tenable. I agree.

• 1:32:31Speaker 01

  Yeah.

• 1:32:31Ramit Sethi?

  So all of this presupposes that you not only graduate, which I'm sure will happen, but it presupposes that, but also you get a job, okay, that'll have, which doubles your income.

• 1:32:50Speaker 02

  Yeah.

• 1:32:50Ramit Sethi?

  All of it within a year.

• 1:32:52Speaker 02

  Yeah.

• 1:32:53Ramit Sethi?

  I don't know. To me, that's like, that's a lot, all focusing on one thing happening.

• 1:33:01Speaker 02

  Yeah.

• 1:33:02Ramit Sethi?

  It's like a single point of failure for me.

• 1:33:04Speaker 02

  Right.

• 1:33:04Ramit Sethi?

  I don't like that.

• 1:33:05Speaker 02

  Yes.

• 1:33:06Ramit Sethi?

  If you decided for whatever reason to slow down your education or stop for a while, go part-time because you're really enjoying time with baby or whatever, who knows? A parent got sick, who knows? So would you be open to considering a plan where if we don't have, everything has to depend on you achieving this major thing?

• 1:33:31Speaker 02

  Yes.

• 1:33:31Ramit Sethi?

  All right.

• 1:33:32Speaker 02

  Is there such a plan possible?

• 1:33:34Ramit Sethi?

  You tell me, what would you do? Yeah.

• 1:33:35Speaker 02

  I have no idea.

• 1:33:36Ramit Sethi?

  What would you do? Ask for help if you're not sure.

• 1:33:39Speaker 02

  How could we possibly? I mean, we could sell a house. That's like an obvious, big thing.

• 1:33:46Ramit Sethi?

  Is it obvious?

• 1:33:48Speaker 02

  I mean, they're the biggest expenses.

• 1:33:50Ramit Sethi?

  Should we explore what that looks like?

• 1:33:52Speaker 01

  We can.

• 1:33:53Ramit Sethi?

  Let's just explore.

• 1:33:54Speaker 01

  Huge.

• 1:33:55Ramit Sethi?

  Let's put the CSP back up on screen. I have no idea what it would look like.

• 1:33:59Speaker 02

  Mm hmm.

• 1:33:59Ramit Sethi?

  I don't even know if it's a good idea or not, but I would like to explore it because it's the biggest numbers.

• 1:34:03Speaker 02

  Yeah.

• 1:34:04Ramit Sethi?

  So which house would you sell?

• 1:34:07Speaker 01

  This is the hard part.

• 1:34:08Speaker 02

  Yeah, I mean, if we want to keep Nicole's great job with all the benefits, then it makes the most sense to sell the Maui house. And the Maui house has a lot of income that comes through it. So it's.

• 1:34:22Ramit Sethi?

  Well, let's play it out.

• 1:34:23Speaker 02

  Okay.

• 1:34:23Ramit Sethi?

  So let's model out selling the Maui house. We'll be a little loose with it, but if you sold it today, how much would you get?

• 1:34:31Speaker 02

  1.5. Oh, and then I would get half of that.

• 1:34:35Ramit Sethi?

  So you'd get 750.

• 1:34:37Speaker 01

  Yeah.

• 1:34:37Speaker 02

  750. Yeah.

• 1:34:39Ramit Sethi?

  You owe 500. You would get 750. So that's 250,000 you would get minus taxes, blah, blah, blah, transaction fees. Shall we say 150?

• 1:34:52Speaker 01

  Sure.

• 1:34:53Speaker 02

  Yeah, I feel like it would be more, but.

• 1:34:55Speaker 01

  Capital gains is massive.

• 1:34:57Ramit Sethi?

  That's what every homeowner says. Every homeowner's like, I thought I would get a lot more. Actually, they don't even know because they don't look at the numbers. They don't know anything. They go, I sold it for this much? I'm a gajillionaire. I go, you never factored in. All right, we're just gonna say 150. Maybe it's more, maybe it's less, but whatever.

• 1:35:12Speaker 01

  Yeah.

• 1:35:13Ramit Sethi?

  Okay, so you just got $150,000.

• 1:35:16Speaker 02

  Yeah.

• 1:35:17Ramit Sethi?

  What are you doing with the money?

• 1:35:18Speaker 01

  We have to adjust all of the income levels.

• 1:35:21Ramit Sethi?

  Yeah, we do. So the current income.

• 1:35:25Speaker 01

  Goes down by $7,000.

• 1:35:27Ramit Sethi?

  That's how much comes in every month?

• 1:35:28Speaker 01

  Yeah.

• 1:35:29Ramit Sethi?

  Wow, that's a lot.

• 1:35:30Speaker 01

  Yeah.

• 1:35:30Speaker 02

  Yeah.

• 1:35:31Ramit Sethi?

  That's a big, that's a tricky situation.

• 1:35:33Speaker 02

  That's why it's very tricky.

• 1:35:35Ramit Sethi?

  All right, let's take a look. So this number, which is currently 8,000 net, goes down to 1,000?

• 1:35:40Speaker 01

  Yep.

• 1:35:40Ramit Sethi?

  Is it 7,000 net?

• 1:35:42Speaker 01

  Net. Yep.

• 1:35:43Ramit Sethi?

  Okay, let's take a look. Oh, you're at 130.

• 1:35:46Speaker 01

  Yeah.

• 1:35:47Ramit Sethi?

  All right, all right, all right. But we don't have the cost of this anymore. Is it this one?

• 1:35:53Speaker 01

  Yeah, it's that one.

• 1:35:54Ramit Sethi?

  So let's zero that out. Oh my gosh, we're down to 84%, basically the same number. However, what's the difference?

• 1:36:03Speaker 01

  150.

• 1:36:04Ramit Sethi?

  $150,000.

• 1:36:06Speaker 02

  Oh, yeah, right.

• 1:36:07Speaker 01

  When we take out the utilities.

• 1:36:09Speaker 02

  That's zero. That 786 becomes zero.

• 1:36:11Speaker 01

  Oh, we'd take out the car payment and we'd take out the insurance.

• 1:36:17Ramit Sethi?

  Why does the car payment go away?

• 1:36:18Speaker 01

  Because we only have one car in each city.

• 1:36:20Ramit Sethi?

  Oh, I see. Got it. Okay.

• 1:36:21Speaker 02

  Yeah.

• 1:36:22Ramit Sethi?

  Got it. Zero. Okay, wow.

• 1:36:24Speaker 01

  And the insurance would above it.

• 1:36:26Ramit Sethi?

  Insurance would go out. Okay.

• 1:36:27Speaker 01

  Yeah.

• 1:36:28Ramit Sethi?

  73%. Wow. What about this repair?

• 1:36:33Speaker 02

  Zero.

• 1:36:33Speaker 01

  Be zero.

• 1:36:34Ramit Sethi?

  Zero on that. Okay. What percentage are we at for fixed cost right now?

• 1:36:38Speaker 02

  69.

• 1:36:39Ramit Sethi?

  69%. That's interesting.

• 1:36:40Speaker 01

  The housing reno.

• 1:36:42Ramit Sethi?

  Yeah.

• 1:36:43Speaker 01

  On my column, it wouldn't be 1,000. It'd be more like 500.

• 1:36:47Ramit Sethi?

  Really?

• 1:36:48Speaker 01

  Yeah, my house doesn't have as much. It's, the square footage is very small in comparison.

• 1:36:53Ramit Sethi?

  What's the fixed cost number?

• 1:36:55Speaker 02

  65.

• 1:36:57Speaker 01

  Wow.

• 1:36:57Ramit Sethi?

  What's happening right now?

• 1:36:58Speaker 02

  It went down like 20% plus we have 150,000.

• 1:37:03Ramit Sethi?

  Just liquid.

• 1:37:04Speaker 01

  Yeah.

• 1:37:05Ramit Sethi?

  150,000, which you could use for? Give me some options.

• 1:37:11Speaker 02

  Retirement.

• 1:37:12Ramit Sethi?

  You could invest all of it.

• 1:37:13Speaker 02

  Yeah.

• 1:37:14Ramit Sethi?

  You could. What else could you do?

• 1:37:15Speaker 02

  Emergency fund.

• 1:37:16Ramit Sethi?

  Emergency fund. You could knock out your emergency fund payment in one fell swoop.

• 1:37:21Speaker 02

  Yeah.

• 1:37:21Ramit Sethi?

  And then the money you used to put towards it, which is like 4,000 bucks a month, could be used for?

• 1:37:26Speaker 02

  Retirement.

• 1:37:27Ramit Sethi?

  Retirement. Take a little bit of it and enjoy it.

• 1:37:30Speaker 02

  Yeah.

• 1:37:31Ramit Sethi?

  Et cetera, et cetera. How about you both go, hey, we love Maui, so we're gonna put $1,000 a month aside and we're gonna go there and rent a place for a month, a year, but we don't need to maintain any of it.

• 1:37:46Speaker 01

  Yeah. Oh my God, the no landlord stress would be amazing.

• 1:37:53Ramit Sethi?

  No more phone calls.

• 1:37:53Speaker 01

  Yeah.

• 1:37:54Ramit Sethi?

  No more flooding.

• 1:37:55Speaker 02

  There's so many phone calls. Yeah.

• 1:37:58Ramit Sethi?

  So it's an option.

• 1:37:59Speaker 02

  Yeah.

• 1:38:00Ramit Sethi?

  Kind of pleasantly surprised to see that, like I see a lot of realizations happening for you.

• 1:38:06Speaker 02

  Mm hmm.

• 1:38:07Ramit Sethi?

  What's happening?

• 1:38:09Speaker 02

  Because the house has been a source of stress. Um, it just feels like, yeah, an exhale that we wouldn't have to have that stress anymore.

• 1:38:21Ramit Sethi?

  Yeah.

• 1:38:22Speaker 02

  So that feels nice.

• 1:38:25Ramit Sethi?

  Kind of echoes what you said about the kind of life you want to create, right?

• 1:38:28Speaker 02

  Yeah.

• 1:38:29Ramit Sethi?

  You don't want to spend a ton of time on work.

• 1:38:33Speaker 02

  Yeah.

• 1:38:34Ramit Sethi?

  Being a landlord is work.

• 1:38:36Speaker 02

  Yes, it really is work. We would, I would have to have that fund that you mentioned, like a thousand a month or more. That would be so essential because I would be so devastated if I had to stay in SoCal all the time.

• 1:38:56Ramit Sethi?

  And you could never go back.

• 1:38:57Speaker 02

  Yeah.

• 1:38:59Ramit Sethi?

  That's not the case.

• 1:38:59Speaker 02

  Right.

• 1:39:00Ramit Sethi?

  One thing that I love doing when I speak to people and help them create their rich life is they often think if I make this decision, I can never have that again. Like if I sell a house or if I get rid of my third car, whatever. And I go, wait a second, do you, you love driving this car? They go, I love it. I love a BMW. I have horrible taste in cars. I love my BMW. I go, why don't you rent it from Turo?

• 1:39:27Speaker 02

  Yeah.

• 1:39:28Ramit Sethi?

  Take it out two days, two times a month, get a nicer one. And, and because we have this idea that we have to own it. And if we don't own something, it feels like chopping off part of our arm. We necessarily limit ourselves.

• 1:39:43Speaker 01

  Yeah, I love that. It, it gives me a sense that there's not just one option.

• 1:39:47Ramit Sethi?

  Yes.

• 1:39:48Speaker 01

  It felt like, okay, we have to just really bear down and like grit our teeth and get through this year and pray that you get enough clients and pray that enough of them want to pay the fee that we need. And if all of that works out, then we'll be okay.

• 1:40:11Ramit Sethi?

  Yeah, it's really high stakes.

• 1:40:14Speaker 01

  Yeah. And we can still do that, actually. And then if it doesn't work, we have this backup plan. That feels really good.

• 1:40:25Ramit Sethi?

  Yeah, that's really beautiful.

• 1:40:28Speaker 01

  Yeah.

• 1:40:28Ramit Sethi?

  And, and you have now upside because you've really like cut down your fixed costs. So what that means is if you are able to, let's just say add 50% to your income. That's like amazing. Wow. I mean, you're already crushing it right now as is at $296,000 with 150K liquid. So if you're able to increase your income a bit, wow, that's like thousands and thousands. And if you're able to double your income, I mean, you have more money than you know what to do with.

• 1:41:02Speaker 02

  Yeah.

• 1:41:03Ramit Sethi?

  All because you made one decision now that cascades to the rest of your life. And maybe five years from now, you go, hey, I actually really want to go back to Maui and have a place of our own. Okay, cool. Well, we have $380,000 in savings. We have this, we have that. What does it look like now that we are both speaking this language at the same level? We can now start to plan ahead, but we're not playing not to lose. We actually get to play to win.

• 1:41:34Speaker 01

  That's cool. That's really cool.

• 1:41:37Ramit Sethi?

  Yeah, I love it. I love seeing it in your, both of your eyes.

• 1:41:40Speaker 02

  Yeah.

• 1:41:41Ramit Sethi?

  What are you feeling right now?

• 1:41:42Speaker 02

  I'm feeling excited. I'm feeling connected. I feel like we, this decision that I had for Maui was before I knew you and before this family. And yeah, there's something here about like having it be more intentional for us moving forward. And like how there are possibilities and it doesn't just have to rely on me doubling my income. You know, starting in May next year and then having it be sustainable. Because yeah, maybe it's not, maybe something happens and then we have alternatives.

• 1:42:16Ramit Sethi?

  Yeah.

• 1:42:17Speaker 01

  That's so much pressure that I hope you can feel can come off your shoulders. Like it doesn't have to be everything on you. We can still have a dream life. We can have our rich life and it doesn't all have to be completely on your shoulders.

• 1:42:38Speaker 02

  Yeah.

• 1:42:39Speaker 01

  And we can make it work so that no matter what, you can still have the ocean and the people in the community.

• 1:42:49Speaker 02

  Yeah. I think I would want to see the specific numbers for what like a three month stay on Maui would look like. If we're not just staying with friends and we want to have our own place and then factor that in.

• 1:43:02Speaker 01

  Yeah.

• 1:43:03Speaker 02

  And yeah, like.

• 1:43:05Ramit Sethi?

  I love that. I love that you're asking. I would need to see the numbers. Yes. I love that. That's so cool.

• 1:43:12Speaker 02

  Yeah.

• 1:43:13Ramit Sethi?

  You should be really thoughtful and you should factor in airfare and hotel and all that stuff. Airbnb, whatever it may be, but I suspect, I'm not sure, but I suspect that even going there for two months at a time or something like that will never equal the cost of ownership. It might feel different because you're actually paying out of your pocket. But when you look at the numbers and you have the full board in front of you, you go happy to do it.

• 1:43:41Speaker 02

  Yeah.

• 1:43:43Ramit Sethi?

  Again, it's up to you, your rich life, what you both want.

• 1:43:46Speaker 01

  Yeah. Yeah, I love that. I love the idea of like figuring out what is the thing that actually matters? And what are we doing to like get there?

• 1:43:58Ramit Sethi?

  Yeah.

• 1:43:58Speaker 01

  So if being in Maui is what matters, do we have to actually own a home?

• 1:44:02Ramit Sethi?

  Great.

• 1:44:02Speaker 01

  To get there? No.

• 1:44:04Ramit Sethi?

  Do we have to be there these specific months? Do we have to do XYZ? What's the important thing that we really need to make happen? We need to be there with our people. Cool. What are all the ways to get there? Just opening up the idea of potentially selling the Maui house has changed everything in this room right now. I think that Drew and Nicole feel really good at simply the option of being able to sell their house. It's kind of like a lot of New Yorkers who live in a building with a rooftop. They have a grassy area or a barbecue up there. Do they ever use that rooftop? No, never, but they love knowing it's there. And this is the same thing happening with Drew and Nicole.

• 1:44:45Ramit Sethi?

  Just the idea that they could possibly sell the house feels incredibly expansive. But I don't want to let them walk out of here just feeling good. I want to press them a little bit. Okay, so let's talk about next steps.

• 1:44:59Speaker 02

  Yeah. Yeah, I feel like before the baby gets here, if possible, we just run a bunch of scenarios. You know, like let's look at selling you quitting your job and us just living in Maui on my salary. Let's look at Maui and what it would be to go there for three months without the house. And let's look at my different salary possibilities. And yeah, I just, this idea of like the possibilities that are there for us is really fun and encouraging. And then we have that information and then we can, yeah, be on the same page.

• 1:45:39Ramit Sethi?

  I love that.

• 1:45:39Speaker 02

  You like that?

• 1:45:40Speaker 01

  It's so, it's great to hear you say that. It sounds fun.

• 1:45:44Speaker 02

  Yeah.

• 1:45:45Speaker 01

  You don't usually use that word.

• 1:45:47Ramit Sethi?

  Yeah, that's cool.

• 1:45:48Speaker 01

  When it comes to money. Yeah.

• 1:45:48Ramit Sethi?

  That's actually really cool. Your energy is super positive.

• 1:45:51Speaker 02

  Yeah.

• 1:45:51Ramit Sethi?

  I like that. And as, as I can see here, and I, and I'm grateful that you're letting everybody else see. It's the vision first and then the numbers second. So hey, let's, I love that you're like, let's play with what if you quit your job? That's cool.

• 1:46:07Speaker 02

  Yeah.

• 1:46:08Ramit Sethi?

  Kind of unlikely, but I like that you brought it up.

• 1:46:11Speaker 02

  Yeah.

• 1:46:11Ramit Sethi?

  And, and that's, we should play with that.

• 1:46:13Speaker 02

  Yeah.

• 1:46:13Ramit Sethi?

  What if we move here? What if we move there? What if XYZ? Everything's up for discussion and then we can decide what feels right. It's actually fun to do that.

• 1:46:23Speaker 02

  Yeah.

• 1:46:23Ramit Sethi?

  Then we plug the numbers in and say like, okay, what would it look like? Oop, that's obviously not going to work. Cross that one off.

• 1:46:29Speaker 02

  Right.

• 1:46:29Ramit Sethi?

  This could work.

• 1:46:31Speaker 02

  Yeah, we're in such a place of privilege and have so many advantages. And so it is play. It's like we get to play with this money and see what we want to do with it.

• 1:46:40Ramit Sethi?

  Beautiful. It's, I love this abundance. I can hear it in you. Like we have abundance and we get the gift of being able to choose how we spread it around.

• 1:46:50Speaker 02

  Yeah.

• 1:46:51Ramit Sethi?

  Would there be a date by which you would want to make a decision?

• 1:46:55Speaker 02

  Mm hmm, probably.

• 1:46:56Speaker 01

  This place is, is home. And to have time to really actually make the decision, I feel like Drew's going to need to be there. I could be wrong.

• 1:47:11Ramit Sethi?

  I see your point.

• 1:47:12Speaker 01

  She's so experiential.

• 1:47:14Ramit Sethi?

  Yeah.

• 1:47:15Speaker 01

  In her decision making that I feel like while I could make this decision logically and just in my head hypothetically and stuff like that, that's not the way that Drew makes decisions. And I feel like having him at least a few months, but maybe it could be less of time there would allow her to feel into like, how much time do I need here every year?

• 1:47:41Ramit Sethi?

  What do you say, Drew?

• 1:47:42Speaker 02

  Yeah, thank you. I feel so seen. Um, that's really sweet. And I actually feel excited by the three month proposal. Not that I say yes to it, but what I'm saying is I feel excited by the confines of a deadline. That's pretty soon, actually. Cause it is, this is a big deal. Like we are not in a good place, you know? And so I think it does require a little bit of urgency. And I could maybe do like a six month or something.

• 1:48:14Ramit Sethi?

  There's lots of ways to play it.

• 1:48:15Speaker 02

  Yeah.

• 1:48:16Ramit Sethi?

  Could be three, could be four, could be six. You all can decide. Part of that decision would be modeling out. How much are we going to have in savings? How much is it going to cost for us to fly to Hawaii? Now those things start to really need to be factored in.

• 1:48:30Speaker 02

  Yeah.

• 1:48:30Ramit Sethi?

  And, and then you have to decide, you know, like if, if I'm you and I'm down to 20K. In savings, we don't want that. Your fixed costs are too high. We also have to remember that just because you decide to sell, doesn't mean it sells.

• 1:48:44Speaker 01

  Oh, no.

• 1:48:45Speaker 02

  Right.

• 1:48:45Speaker 01

  Sellers fees and all this stuff.

• 1:48:47Ramit Sethi?

  There's like a lot of stuff to happen and do you need to paint it or rent it, whatever.

• 1:48:51Speaker 01

  Yeah.

• 1:48:52Ramit Sethi?

  But what I love hearing from you, Drew, is, hey, actually, tell me what's on your mind, because I like the confines. I don't mind the urgency.

• 1:49:01Speaker 02

  Yeah.

• 1:49:02Ramit Sethi?

  Another way to look at it would be to say, we can keep this place in Maui, but Drew, this is how much you have to make, starting a month from now.

• 1:49:14Speaker 02

  Right.

• 1:49:14Speaker 01

  Yeah.

• 1:49:15Speaker 02

  Yes.

• 1:49:16Ramit Sethi?

  And then maybe Drew's like, sounds great. Get out of my way.

• 1:49:19Speaker 02

  Yeah.

• 1:49:19Ramit Sethi?

  That's another option.

• 1:49:20Speaker 02

  Yeah.

• 1:49:21Ramit Sethi?

  But it has to be consistent. It can't be like one off client. It's got to be consistent.

• 1:49:25Speaker 02

  Right.

• 1:49:25Ramit Sethi?

  Put it all out on the table. My point is, use the numbers to guide you. Because if you're down to 20 or 30K, which is not far off from where you are, 67K in savings, you're in a danger zone.

• 1:49:36Speaker 01

  Yeah. Yeah, I like that.

• 1:49:38Ramit Sethi?

  Cool. I think that the two of you should jointly figure out your timeline. And like if it's me, you know, you have three months of expenses. I wouldn't let it get much less than that.

• 1:49:51Speaker 02

  I see why you said the three month number. Okay.

• 1:49:54Speaker 01

  Yeah.

• 1:49:55Ramit Sethi?

  Yeah. I don't like to ever have my back against the wall. So the urgency is actually like very functional and it will help you make the right decision.

• 1:50:05Speaker 02

  Yep.

• 1:50:05Speaker 01

  Yeah. I appreciate that.

• 1:50:08Ramit Sethi?

  Okay. You still have decisions to make, but what we've done, I think, is we've kind of, it's like we're in a garden. We've kind of opened up the possibility, like we've loosened up some of these plants that have these deep roots.

• 1:50:19Speaker 02

  Yes.

• 1:50:19Ramit Sethi?

  Maybe we're going to be in Maui with a home that we own, maybe in a different form. Maybe you're going to be making what you're making. Maybe you're going to double your income. Who knows? Maybe you're going to work at the place you work for 20 years, maybe 30. I don't know. Is your rich life vision still the same? Or has it changed as we've been talking?

• 1:50:41Speaker 02

  For me, I'm feeling the spaciousness, the call for spaciousness, you know, that really used to be such a like core value of mine, just to have spaciousness in life. And by that, I just mean like not super stressed, not feeling like squeezed on, not feeling like a back against a wall.

• 1:51:00Ramit Sethi?

  Yeah.

• 1:51:02Speaker 02

  And I'm, it has been very tight and money has created so much stress. And so I'm really feeling called to include spaciousness in our, in our life.

• 1:51:14Speaker 01

  I love that.

• 1:51:16Speaker 02

  Yeah.

• 1:51:16Speaker 01

  Yeah. I feel like community is still core and work-life balance is part of that, getting to spaciousness. But it is interesting. I feel like having a sense of what can we be doing to make our lives easier? As opposed to, I feel like we've been holding on so tightly to one specific way of doing it and it's not necessarily even serving us. Like it's not necessarily serving that vision.

• 1:51:49Speaker 02

  Yeah.

• 1:51:49Ramit Sethi?

  It's really powerful. Spaciousness is a word I have not heard associated with a rich life before, but it makes so much sense.

• 1:51:57Speaker 02

  Yeah.

• 1:51:58Ramit Sethi?

  It's, it's actually speaking to me as well, when you say that. Spaciousness on my calendar. Spaciousness even in a room where we have high ceilings and spaciousness in the way that I can think about all the different ways I want to do the things I want to do. There's so many different ways. That's really cool. I love that. And what you mentioned about, we've been holding on so tightly. But maybe we need to be relooking at the vision and zooming out and saying like, are we still doing it? Or are we just holding on to this thing that's been in our hands for a long time?

• 1:52:31Speaker 01

  Yeah. Definitely.

• 1:52:33Ramit Sethi?

  It's kind of cool.

• 1:52:33Speaker 02

  Yeah. It's very cool.

• 1:52:35Ramit Sethi?

  I find you're both very agile with the way that you think about these things. Agile, agility in a rich life, very important, because necessarily the world will throw things at you. And you know, like they have those stories about the monkey. Once you put something in their hand, they can't let go. That's a lot of people.

• 1:52:50Speaker 01

  Yeah.

• 1:52:51Ramit Sethi?

  Like we just have this idea, we have to buy an SUV or a house or this or that, and we just can't let go, even though we're drowning.

• 1:53:00Speaker 01

  Yeah.

• 1:53:01Ramit Sethi?

  But the fact that you can now play with these ideas.

• 1:53:04Speaker 01

  Yes.

• 1:53:05Ramit Sethi?

  Is really impressive.

• 1:53:06Speaker 02

  Yeah, thank you.

• 1:53:08Speaker 01

  It's really exciting.

• 1:53:09Speaker 02

  It is exciting.

• 1:53:10Speaker 01

  It's felt like drowning, honestly.

• 1:53:12Speaker 02

  It's felt like drowning.

• 1:53:13Speaker 01

  And this feels like, oh, I could just stand up.

• 1:53:18Speaker 01

  We were in the shallow end.

• 1:53:19Ramit Sethi?

  Beautiful, yes. Yes. That's it.

• 1:53:22Speaker 02

  I love it.

• 1:53:24Ramit Sethi?

  What's going to happen with Drew and Nicole? I actually have no idea. I would say 50/50 odds, which is quite rare, after I speak to a couple. 50%, they follow what we talked about today. They make a plan. They go back to Maui and they realize, hey, we can come back here in different forms, but maybe we don't need to own this house. 50% odds, they never get around to making a decision. Life gets in the way. And with a new baby just weeks away, I think it's going to be very difficult to follow a strict financial plan, especially for the next few months, because things are going to become a little bit tumultuous. All I hope is that they remember to zoom out and look at the big picture of their rich life.

• 1:54:08Ramit Sethi?

  At 85% fixed costs, they need to make a decision. In fact, not making a decision is the same as making a decision. So I really hope they get aggressive, they get direct with each other, and they decide to potentially sell that place, bank the money, and start over on their joint vision of a rich life together. And now, let's check out their follow-ups.

• 1:54:31Speaker 01

  Hi, everyone. We're back. I'm not pregnant anymore. And so we have our new baby, which is really exciting. We're definitely living day to day, because it's a lot having a newborn. But we have had some space to be able to make some big decisions and definitely some changes in kind of how our dynamic works in terms of talking about finances. I have really tried to take a step back in terms of leading financial conversations and letting Drew really take more of the lead. And like Drew handle touching the spreadsheets instead of me.

• 1:55:15Speaker 01

  That's a really big shift and it's made things a little bit more spacious in terms of those conversations and more playful. We ran numbers, looking at my job and basically all the different scenarios. In regards to my job, we're really deciding that it's just not feasible for me to potentially quit my job and us live solely in Hawaii, because the benefits are going to be very hard to match. So because of that, we'll still be a bi-coastal family, but we have made some other decisions and changes, so.

• 1:55:54Speaker 02

  Yeah. So as far as the Hawaii part of the scenario, I also, I have become basically a CSP expert and I ran a ton of numbers. I compared, I took Ramit's advice and I took, I looked at Airbnb costs. I looked at rental costs compared to buying costs and came up with the best financial scenario to keep our fixed costs at 60% or lower, which is that we're going to sell the property that we have and we're going to most likely end up buying a condo that we pay cash for. So that has been, bless you. So that has been what the numbers show is the best.

• 1:56:40Speaker 02

  And I have reconciled that. And I was feeling very emotional about selling the Maui place before. And after, you know, it's been about six weeks now, I've had to process it. And I'm feeling much better about it, because I'm letting the numbers really dictate what choices that we are making, which is a big difference. And also knowing that we want to lead with our rich life feeling spacious. And that means spacious, as in stress-free and financially spacious. So this is the best option for us. So we're, we're feeling really good about it and really excited to start this next journey with baby and keep our fixed costs to 60%.

• 1:57:23Speaker 02

  And then, once we sell the house and have our fixed costs at the number we want, we will be putting our savings and investments forward. Yeah.

• 1:57:33Speaker 01

  Really exciting.

• 1:57:34Speaker 02

  Yeah. Thank you, everybody.

• 1:57:36Ramit Sethi?

  If you want to know the exact month and year that you will have $100,000 in your investment portfolio, sign up for my new program, Road to 100K. I'll help you hit that number fast. Go to iwt.com/100k to sign up.