282. "We spend 154% of what we make. Will we ever stop drowning?"

Ramit digs into how years of overspending, money avoidance, and relying on future income have left a couple with more than $428,000 in debt, no savings, and a financial life they can no longer sustain. Ramit Sethi of I Will Teach You to Be Rich talks with Addison, 39, and James, 43, who earn around $138,000 a year but have $0 in savings and fixed costs consuming a staggering 154% of their take-home pay. Addison feels responsible for keeping their finances afloat, while James admits he's spent years relying on optimism and money he expects to earn in the future. As Ramit digs deeper, it becomes clear they are both contributing to the problem through restaurants, concerts, Ubers, shopping, and pet spending that has reached thousands in a single month. He helps them uncover the childhood money patterns behind their behavior, confront what they can actually afford, and make some of the biggest lifestyle changes attempted on the show all in an effort to stop living on future money and build a financial life they can actually sustain. A special thanks to our new partners at Monarch for sponsoring this episode. Try Monarch for free today, and get 50% off your first year of Monarch’s core tier at https://monarch.com/ramit, promo code RAMIT. When you sign up with my link only, you’ll get your Monarch account customized with my exact CSP categories so you can see exactly how you’re stacking up to your plan each month. That’s https://monarch.com/ramit, promo code RAMIT. In this episode, we uncover: Why Addison says they may divorce if their relationship with money doesn’t change How more than $428K of debt, $0 savings, and 154% fixed costs have left them financially exposed Why James admits he has been “betting on money that’s not there yet” How Addison became the financial safety net while increasingly feeling like a caretaker Why restaurants, concerts, Ubers, shopping, and convenience spending became part of their everyday life How they planned to spend more than $3,300 a month on food and over $1,000 a month on their dogs Why Addison’s frustration with James is only part of the story and how her own spending contributes too How growing up around financial stress and poverty shaped the way they both think about money today Why 30% of their spending went toward shopping and why they couldn’t even remember some of what they bought How they radically restructure their spending, savings, investments, and rules around money Chapters: (00:00:00) Introduction (00:03:31) Why divorce is already on the table (00:08:54) The spending habits keeping them stuck (00:19:09) How Addison became the financial safety net (00:34:54) The true scale of their $428K debt (00:55:29) The childhood patterns behind their spending (01:17:08) Their shopping wake-up call (01:18:08) Making a radical lifestyle reset (01:30:26) Building a new financial plan (01:47:02) Follow-up 💡 RAMIT’S PODCAST NEWSLETTER • I share new ways to think about money every Saturday. Get the emails here: https://iwt.com/podcastnewsletter 🙌 GET HELP FROM RAMIT SETHI • Order my new book: Money for Couples: https://iwt.com/moneyforcouples • Take control of your money with the Conscious Spending Plan: https://iwt.com/csp • Optimize your credit cards with the 1st chapter of my book: https://iwt.com/chapter1-pod • Join my Rich Life: Road to $100K program: https://iwt.com/100k • Listen to my book — now on Audible: https://amzn.to/48zko28 🤳 CONNECT WITH RAMIT SETHI • Instagram: https://www.instagram.com/ramit/ • X: https://twitter.com/ramit ✅ SUBSCRIBE SO YOU DON’T MISS ANY EPISODES https://youtube.com/user/ramitsethi/featured/ This episode brought to you by: NetSuite | If your revenues are at least in the seven figures, get the free business guide “Aligning for the Agentic Era: How AI Is Changing Everyday Work” at https://netsuite.com/ramitGranola | Try Granola totally free at https://granola.ai/RAMIT. Ladder | Get a free 7-day trial and $10 off your first month at https://ladder.fit/RAMIT Fabric by Gerber Life | Go to meetfabric.com/RAMIT and apply today, risk-free Trust & Will | Protect what matters most in minutes at https://trustandwill.com/ramit and get 20% off Want to know exactly when you’ll hit your first $100K? Rich Life: Road to $100K gives you a step-by-step system to automate your money, accelerate your timeline, and build your Rich Life along the way. Join today: iwt.com/100K Connect with Ramit: Get my new book, Money For Couples Get Money Coaching with Ramit Download the Conscious Spending Plan Listen to my book—now on Audible Get my New York Times best-selling book Get my no-numbers journal Other episodes Instagram Twitter YouTube Apply to be coached for free on this podcast at https://iwt.com/apply

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

• 0:00Speaker 00

  The spending is out of control. We have no savings. We are living way beyond our means.

• 0:04Ramit Sethi?

  Fixed costs, 154%. That is one of the highest numbers I've ever seen.

• 0:09Speaker 00

  Shocking to see the numbers. And a little painful in that I was finding out the debt that James has is just way more than I could have ever anticipated.

• 0:19Speaker 02

  It was very foolish. You can't plan a life on vibes.

• 0:22Ramit Sethi?

  I never met a couple and $400,000 of debt that went to a beer garden once a week with tacos.

• 0:27Speaker 02

  We overvalue the almighty convenience.

• 0:29Ramit Sethi?

  You said, "We will likely divorce if things continue on as they have."

• 0:35Speaker 00

  I am supporting his career. I am the safety net and I am taking care of everything. Just done with the defensiveness and the excuses and the reasons why. I can't literally keep doing this anymore.

• 0:46Ramit Sethi?

  Guys, we can't get any further if you're not honest about what's going on. 154%, it's not about cutting your phone bill down by $20 a month. If you want to make radical change, you have to admit some deep things about yourself that might be quite uncomfortable.

• 1:01Ramit Sethi?

  You ever feel a little nosey? I do. And recently I started having couples on my podcast connect all of their accounts to Monarch so that I could see every transaction. Monarch is a platform that puts all of your accounts, your income, even those individual transactions in one place. Today I'm speaking to Addison and James. They're 39 and 43, newly married. And Addison says they will likely divorce if things continue as they have. Listen to this line from the application. "I've had to actually take on more work and student loan debt to subsidize his career growth and financial stability at the literal expense of my own. If we don't nip this in the bud now, we will retire homeless."

• 1:45Ramit Sethi?

  From their application, you can see that the stakes are as high as they come. Okay, let's take a look here. We have, whoa, $2,690 earned, but $7,889 spent. Where's the savings?

• 2:01Ramit Sethi?

  Where's the investments? What's going on here? All right, I'm starting to develop some suspicions. You know what? Let's go back a month and see what happened the month before. I'm back here in July. Fixed costs now at $14,659. Whoa, that's 154% of take-home pay. Well, that's the ballgame right there. You are spending more than you make every single month just in fixed costs and not even at 100%, 154%. I mean, take a look here. I can see pets that month at $2,667. Notice another thing, their groceries, the amount they planned to spend in one month?

• 2:45Ramit Sethi?

  $3,363 for two people. The fact that they are planning to have that much money spent on groceries in a month tells me that they're probably not looking at the big picture, nor are they particularly in touch with where their money should go. Also notice that the amount they have planned to spend on debt every month? $1,798. If you're spending almost $2,000 a month to pay off debt, you probably have a huge amount of debt. The question is, where does it show up here? I'm not seeing any particular debt. I'm seeing $4,882 on credit cards, which is a somewhat reasonable amount.

• 3:25Ramit Sethi?

  But there's gotta be a large amount, tens of thousands of dollars of debt somewhere that's not showing up here. I want to find out where it is. We have a lot of work to do. Let's talk to Addison and James. Addison, when you applied to speak to me, you wrote something in your application. I'd like to read it back to you. You said, "One of the first things James said to me when we first started seeing each other six years ago was, 'I'm not good with finances.' I now know what he meant, and I didn't know it was this bad. We will likely divorce if things continue on as they have." Where were you and what was happening when you wrote this application?

• 4:09Speaker 00

  It was probably 4:00 AM on my computer at a moment of desperation. We had been trying to have more conversations around money and just having transparency about our lives, what we want, how we're going to move forward, challenges with being able to pay rent on time. In the past, it was just plateau. I will talk about it until I feel confident, until I have money. So the burden's been on me to manage that and also to be the project manager of like the rest of our house and everything. And I just got to a point where I felt like I was putting myself on hold and feeling responsible for everything while not moving forward with my own career.

• 4:52Speaker 00

  And I was just really nervous about how things were going to look moving forward. Do I really have a partner or am I a caretaker? And I'm not caring for myself. So out of desperation, I sat down and typed up a very, very long application and sent it your way.

• 5:11Ramit Sethi?

  Okay. I'd like to ask just a couple of questions about your relationship. And then James, I'd love to hear your thoughts. How long have you been married?

• 5:22Speaker 00

  A little over a year.

• 5:23Ramit Sethi?

  Okay. And how long have you known each other before you got married?

• 5:27Speaker 00

  A long time.

• 5:28Speaker 02

  So we knew each other, at least we're running in the same circles and kind of in the adjacent or friend groups for 20 years before we got together.

• 5:40Ramit Sethi?

  Okay. Any children?

• 5:43Speaker 02

  No.

• 5:43Speaker 00

  No, just the two dogs.

• 5:45Ramit Sethi?

  What do you both do for a living?

• 5:46Speaker 02

  I work in garage door sales and the service.

• 5:51Speaker 00

  Academic, scholarship, researcher, consultant.

• 5:54Ramit Sethi?

  Great. Okay. Now, James, hearing Addison's application, some pretty strong words, how does that strike you?

• 6:04Speaker 02

  I mean, it made me feel guilty and kind of forced me to confront the realization that I had been getting by on a lot of wishful thinking financially and making promises based on that. And that it was gutting and deteriorating like some of the foundations of our relationship.

• 6:26Ramit Sethi?

  When did you first hear about the application? Was it just now or was it weeks ago?

• 6:31Speaker 02

  Weeks ago. She read it to me. We had both, you know, watched the podcasts and read the books and been aware of you and this program and everything for a couple of years, I think, for a good while.

• 6:46Ramit Sethi?

  How were you aware of it, but you were not making changes in your own financial life?

• 6:51Speaker 02

  I, at that time, had been working in, you know, commission-only, door-to-door solar sales and relying on feast or famine, windfalls, was kind of how my income came in. The big winds were always just around the corner, you know? And so as Addison mentioned, I was reluctant to, uh, to talk about it until, you know, I had closed enough deals to have enough in the coffer to be comfortable talking about how to use finances.

• 7:29Ramit Sethi?

  Looking back now, what do you think about that approach?

• 7:31Speaker 02

  It was very foolish.

• 7:33Ramit Sethi?

  Why?

• 7:34Speaker 02

  Because you can't plan a life on vibes, you know? I was just sort of relying on Addison's steady income.

• 7:45Ramit Sethi?

  Once Addison told you this application, what did you do?

• 7:49Speaker 02

  Took a deep breath. I thought it was very fair. I think I apologized.

• 7:57Ramit Sethi?

  And then what'd you do?

• 7:58Speaker 02

  I guess we talked about it and I agreed that change needs to happen.

• 8:03Ramit Sethi?

  What changes have you made since you had that conversation with Addison?

• 8:07Speaker 02

  At the time that it happened, I'd just started a new job and basically, you know, the changes that I think needed to be made that were led up to that letter was working a, working jobs for several years that were with no base, you know? So.

• 8:31Speaker 02

  I mean, one big change I did make was getting a job that has steady income.

• 8:36Ramit Sethi?

  Great.

• 8:37Speaker 02

  I guess that had occurred right around the same time and I jumped into these 60 hour weeks. And I felt like that was kind of my contribution is like I'm bringing something more steady and reliable to the, to the table.

• 8:54Ramit Sethi?

  Okay. Addison, has your combined relationship with money changed significantly since you wrote that application or not?

• 9:03Speaker 00

  I wouldn't say significantly. I think initially following the application and the discussion about it, I started putting together some spreadsheets and a CSP and calling for money meetings. And we were having those every week and that was new. Being able to talk about it and look at our spending on both of our parts and just be like, oh my gosh, really taken aback by what we're seeing here. Because neither of us up until that point had really been tracking things. We're just kind of getting through life and it's happening as it's happening and oh, we're out of money. So we're finally looking at things, being more conscious about spending at the grocery store or on other things.

• 9:44Ramit Sethi?

  Sorry, what does it mean when you say being more conscious about spending at the grocery store specifically?

• 9:50Speaker 00

  That we could put ourselves on a challenge to do under a hundred and $50. We just wanted to see if we can do it and we did it. But it also took hours of being by hours, about two to three hours. And I just, you know, I don't have that kind of time. So that wasn't something we were able to realistically keep up on a weekly basis.

• 10:09Ramit Sethi?

  What happened the next week with groceries? How much did you spend?

• 10:12Speaker 00

  Probably up to 500. We'll go to a Costco brand. We'll go to Target. We'll go to TJ's. We'll do all the things.

• 10:18Ramit Sethi?

  What do you notice about that? You know, going like, we're gonna do 150 in a week, which is quite lean. And then, hey, this is not sustainable. So we kind of really loosen it and go back to 600 a week. What do you notice about that?

• 10:33Speaker 00

  It's a trend. It's like we make a commitment to do something, but we've gone about it in a completely unsustainable way. And so kind of same thing with like, let's dial back our restaurants and going out to eat or going down to the beer garden with the dogs. Cause I'm not home all the time. I, I need to get out of my four walls here. He's working 60 hours. We're tired. So we'll make the excuse and justify to ourselves that we deserve this. We can do this because we're tired. We don't have time. This isn't sustainable. So we're going for the convenience, convenience that we simply can't afford.

• 11:04Ramit Sethi?

  You like it?

• 11:05Speaker 00

  I don't like where it's leading us. That's for sure. When we are putting our CSP together, there's all of those fixed costs. And we're like, well, what do we do with our beer garden and entertainment and going down to get wings? That should probably go with that last one at the very bottom, right? After we sent up for Monarch, it sent me a notification regarding my recurring costs and that being the beer garden. So like it's a fixed cost and I don't see my life being we go to the dog park and the beer garden and we go to get wings. I'd rather use my money for anything else besides that.

• 11:40Ramit Sethi?

  What do you say, James? What was your reaction when you got that alert?

• 11:43Speaker 02

  I mean, I like that aspect of our life. If it needs to be dialed back, I under, I accept that.

• 11:54Ramit Sethi?

  Guys, we can't get any further if you're not honest about what's going on. If you're getting alerts that you spend so much, so consistently that it is a fixed cost, that tells me you love it. Now, you might say, hey, this is out of alignment with what I want our life to be. Or looking at it, we can't afford this. So I like it, but like, we need to make a change. But I'm not hearing that. I'm hearing like, well, you know, we spend a lot of time apart, so we need to spend some time together. Do you love it or do you not?

• 12:21Speaker 00

  I enjoy it, but to your point, like the spending is out of control on those areas of our life. We have no savings. We are living way beyond our means and we can't just do all the things we love all the time. We don't have unlimited time or resources to do that. Like I don't want to take that part of our life away. It's important for our own socialization. So I wouldn't want to just stop doing it because I do enjoy those things. We just can't do it as much as we have been doing it to the point where Monarch say, hey, this is the recurring cost. I don't love that.

• 12:51Ramit Sethi?

  What do you want to get out of today? Like 10 out of 10, we have an awesome conversation. James, what would you walk out of here with?

• 12:57Speaker 02

  A newly established framework and understanding of money and personal finance that I, we can use together to build a future that we want.

• 13:10Ramit Sethi?

  Okay. Addison?

• 13:12Speaker 00

  I want to understand how we got here. And I'm really interested in our psychology around money because I feel like I've read books. We've watched the episodes. We have conversations and nothing is changing.

• 13:29Ramit Sethi?

  I love that Addison is asking this question because she already knows that just learning more about money is not enough. That tells me something important. Addison and James realized that they do not have an information problem. They have a behavior problem. They can recognize what they're doing. They can agree that it needs to change. They can even make a plan, but when real life happens, they keep falling right back into the same old habits. So before I give them yet another plan, I want to understand what happens between them when money gets hard.

• 14:02Ramit Sethi?

  When I started, I will teach you to be rich over 20 years ago. Business organization platforms were not really a thing, especially for small businesses. Massive companies had big bespoke CRM software, but I was just a college kid trying to get to Taco Tuesday. Now, if you already have a business, you don't need to cobble together random tools like I did way back then. Instead, make things easier on yourself and harness the power of AI using NetSuite, this episode's sponsor. NetSuite is the AI powered business management suite that securely connects all of your data. And now you get extra advantages with NetSuite Next, which lets you automatically surface custom insights,

• 14:43Ramit Sethi?

  use AI agents for routine tasks and get answers to complex questions in plain language, just like talking to a knowledgeable colleague. Whether your company earns millions or even hundreds of millions, it's time for NetSuite Next, where your business meets AI. If I'd had this system back when I was building IWT, it would have changed everything. If your revenues are at least in the seven figures, go to netsuite.com/ramit. Get your free guide at netsuite.com/ramit. netsuite.com/ramit. netsuite.com/ramit. All right. Here are some of my meeting red flags. Number one, the person who set it up is late. Number two, there's no agenda. Number three, while we are talking, this is what I hear.

• 15:30Ramit Sethi?

  Why do you have to type so loudly? And also what could you possibly be typing? I want my calls to be productive. I want us to both be listening to each other. And if you are like me, you want to use a tool like Granola, which will help automatically capture those meeting notes and turn them into action items. Granola is an AI powered notepad that makes your meeting notes useful. It captures what happens in your meetings and turns it into clean, structured notes with decisions and action items pulled out and made easy to find. What's great is that it seamlessly integrates into how you already work. No setup, no awkward bots or unneeded friction. Just jump on a call like usual and Granola will transform your fragmented call notes

• 16:12Ramit Sethi?

  into actionable insights you can reference and still understand weeks later. One of my colleagues uses it and told me, what I love about Granola is that I can stay focused on the conversation instead of scrambling to take notes and capture every detail. After the meeting, I have clear notes and action items ready to go. Once you try it on a first meeting, it's hard to go without. You can try it totally free. Head to granola.ai/ramit. That's granola.ai/ramit to get your time back, especially if you do lots of calls. Go to granola.ai/ramit and try it on your next call. Can you think of a time in the last few months where the two of you really disagreed about money?

• 16:54Speaker 02

  So when I started this new job, I had plans to work a bunch of extra shifts in the first couple of months. And there were some concert tickets that came up. And there was a week in the way that Addison had suggested we, we plan. And I said yes to those things. And once I got out of training and started a new job, it turned out it's a lot more, you know, than I expected. And we learned it didn't make sense for me to pick up the extra. And therefore I didn't have the money I said I would.

• 17:39Speaker 02

  And we got in a number of hidden.

• 17:44Speaker 02

  Arguments.

• 17:45Ramit Sethi?

  Okay, okay. Take me back there. In fact, just role play it with each other. I just want to watch you have that conversation again.

• 17:50Speaker 00

  Hi, James. Hey, how's, how's, how are things in Phoenix?

• 17:53Speaker 02

  Uh, you know, they're, they're busy, but, but good.

• 17:56Speaker 00

  So I'm really excited for you to come home. Do you want to go to Mount Princeton and go to the hot springs, maybe to celebrate when you get back? It's gonna be like $600 probably. Is that gonna be okay?

• 18:05Speaker 02

  Yo, yeah, absolutely. I'm, you know, I'm gonna be working like super hard when I get back. I'm picking up all these extra shifts, so I can definitely, you know, we can, we should definitely do that. Sounds great.

• 18:16Speaker 00

  Okay, well, I will go ahead and get all of that booked today. A couple of other things, some camping. Found a couple of really rad camping spots, so that's not gonna cost as much, probably like 50 bucks for the weekend, and then tickets to a concert. Uh, but with the concert, the transportation situation is really weird, so I would recommend that we stay at the lakeside camping, but it's gonna be like $800 for the lodging.

• 18:40Speaker 02

  Yeah, perfect. Let's do it. I'll be, I'll be good. Like, I'm crushing it.

• 18:44Speaker 00

  Okay, awesome. So I'm gonna go ahead and get all of that booked here today. Uh, just keep me like posted on how things are going. I'm so excited to see you and then let me know about your flight and I'll get, I'll pick you up and then we could just head to, head to the springs.

• 18:59Ramit Sethi?

  Okay. Great job. Great job. Thank you. That was very good, very enlightening for me. I was following along, noting some things. And then what's the tension part? What will happen on the next conversation? Go ahead.

• 19:09Speaker 00

  I really wanted us to start splitting those costs a little bit more instead of it all being on me. So called, got the permission, was told that he was going to be able to pay for this trip. We go on to the trip and I pay for it all.

• 19:24Speaker 00

  And it is back to the beginning of our relationship where I am supporting his career and I am the safety net and I'm taking care of everything and I'll get you back for that. And then it never happened. It's about $30,000 of trips and things and rent and bills over the years that I've just been covering. And it's why I work full time. I teach two classes every quarter. I'm a PhD student. Being in a relationship is really extensive, especially when you have to bear the burden of all the finances on your own. And so we fought a lot on that trip about my frustrations of taking on all the project management and the household, all the financial responsibility, uh, the detriment to my career.

• 20:05Ramit Sethi?

  And when you had this argument, was the dynamic, you sharing these things, all of the debt that you have put yourself into to support his career, all the work, all the labor, emotional labor, all of this stuff, and James agreeing and saying, I will do better?

• 20:24Speaker 00

  Yes. And with some defensive dis, understandably, I'm just done with the defensiveness and the excuses and the reasons why, like, we need to make changes. And I can't literally keep doing this anymore.

• 20:36Ramit Sethi?

  Okay. I want to ask another question as well. So you brought up to him, can we go to the concert and this place and that place and it's gonna cost this much and that much? And James was quite agreeable in this role play. Yeah, let's do it. I'm killing it at work. It's gonna be good. Did you believe him?

• 20:54Speaker 00

  Maybe that's by folly. Like, this is not the first, second, third, or fourth time this has happened, but it was a new job and things were going well. And he was even getting paid during training. So I really did believe in this time. I should have known better, because James does tend to be a little bit more optimistic than what reality presents itself. But I also want to be able to trust my partner, um, at the same time.

• 21:18Ramit Sethi?

  Yes, nobody wants to be in a relationship where you can't take your partner at their word. If they say something, by default, we want to believe it. I get that. Of course, that's where we want to go. James, when you answered that question, it kind of rolled off the tongue. Yeah, let's go.

• 21:34Speaker 02

  At the time, I had planned on just picking up any extra work necessary, so no.

• 21:43Ramit Sethi?

  Why'd you say yes?

• 21:44Speaker 02

  I was feeling confident that I, that I would have the money.

• 21:51Ramit Sethi?

  How often do you feel confident about money?

• 21:53Speaker 02

  Too often. I project that confidence, even if I don't feel that confidence. I don't know, I don't know why that is, but that's not healthy at all.

• 22:02Speaker 00

  I think part of it is, it's always worked out, because I've been there as a safety net. So there's been no actual consequences really for anything. And he's really confident until the shoe drops. And I'm picking things up and then getting upset about it. I think he dreads those conversations and the disappointment that comes along with the expectations weren't met.

• 22:25Ramit Sethi?

  Do you both like this dynamic?

• 22:27Speaker 02

  No.

• 22:28Ramit Sethi?

  Okay. Cause I hate it. I see it all the time. We have the dreamer here. James, you're the dreamer. Like, success is right around the corner. If I just close this deal, if I just get this job, I could pay off all the debt and actually build up our savings and we're gonna be good. Sound familiar, right?

• 22:44Speaker 02

  Yeah.

• 22:45Ramit Sethi?

  Yeah. And the dreamer is almost always only able to exist because they are subsidized by somebody else. James, if you did not have Addison picking up the pieces, what would happen to you?

• 23:02Speaker 02

  I would radically change my spending habits and, and what I'm able to do with the money that I make.

• 23:14Ramit Sethi?

  I agree. Addison, any thoughts on that?

• 23:16Speaker 00

  I, I feel like if I would stop, then if I stop helping, then we might get evicted. We're not gonna get our bills paid, so, or my credit's gonna take, because I'm not taking care of the things that we mutually should be taking care of.

• 23:29Ramit Sethi?

  What do both of you think needs to happen for you to change?

• 23:35Speaker 02

  I need to radically transform and establish, um, a understanding of money and how it works. In particular, the word afford.

• 23:52Ramit Sethi?

  Wow.

• 23:52Speaker 02

  I don't think I know what that means. I think I've been using that word wrong my whole life.

• 24:00Ramit Sethi?

  Wow. Okay. Wow. That may have been one of the best answers I've ever heard. Well, let me just ask you, when she said, can we go to this concert? It's gonna be 500 bucks. And you said, yeah, sounds great. What was the sentence you said after that?

• 24:14Speaker 02

  We can afford it.

• 24:15Ramit Sethi?

  Yeah. And then after that?

• 24:17Speaker 02

  We got this. He can, you know?

• 24:20Ramit Sethi?

  No, you said, I'm working hard.

• 24:22Speaker 02

  Oh, yeah.

• 24:23Ramit Sethi?

  So what does that mean?

• 24:25Speaker 02

  Uh, that I am betting on money that's not there yet.

• 24:32Ramit Sethi?

  Bingo. Did you know that?

• 24:35Speaker 02

  I think deep down, but it's hard to admit to myself. But yes.

• 24:40Ramit Sethi?

  If you want to make radical change, you have to admit some deep things about yourself that might be quite uncomfortable. This is just one of them. So I appreciate that. I think that was really, really insightful. Addison, what do you think needs to change here?

• 24:54Speaker 00

  I really need to get a grasp on what I want my life to look like and really come to terms with the consequences of not making better choices today that are in line with that. I just need to be thinking a little bit more about safety, security, and the long-term consequences if we don't change. Otherwise, I'm gonna see the monies in the account and probably be very tempted to spend it on the things I want now for instant gratification versus my long-term stability and quality of life. It's easy for me to just forget and want to live in the moment, because I've had a really stressful day, a really stressful week, and I feel like I deserve to treat myself.

• 25:33Ramit Sethi?

  I appreciate you admitting that you have a role in this dynamic, that you have co-created it, that you spend money too, that you both don't have. James is nodding. Addison, I can tell that you've been frustrated at the way James spends and manages money. James, have you ever been frustrated at Addison for the same thing?

• 25:53Speaker 02

  Yes.

• 25:54Ramit Sethi?

  Really? Tell me.

• 25:55Speaker 02

  Every quarter, there is student loan money or other loan money. Uh, most recently, $35,000 loan that came out a couple of months ago. And we adopted a, a dog and I was, I pushed back pretty hard on whether that was a smart move. And the boss promised it's not gonna be that much. And I found out after the dog was here, after the thing else was there, that, that she spent $6,000. Um, and that's money she took out, that's loan money. But I guess it frustrates me a little that Addison sort of feels like, uh, almost like a carte blanche to just go hard wild, because there's a bunch of loan money in the account,

• 26:40Speaker 02

  which isn't really, that's not an income, you know?

• 26:44Ramit Sethi?

  Did you say this to her?

• 26:46Speaker 02

  I did not. They expressed frustration, no.

• 26:50Ramit Sethi?

  And can I guess why? I'm gonna guess that because you feel so guilty about the way you spend, you feel you don't really have a leg to stand on. And anyway, if you bring up money, then she's gonna turn it back on you and say, well, what about this? What about that? What about this? So you say, better just not talk about it at all.

• 27:07Speaker 02

  Nailed it.

• 27:08Ramit Sethi?

  Yeah.

• 27:08Speaker 02

  Like, you know, those signs, uh, at workplaces, however many days since the accident?

• 27:14Ramit Sethi?

  Yeah.

• 27:14Speaker 02

  It's an accident. I feel like I have a met one of those for when my past transgressions gets brought up in an argument. And so anything I can do to avoid that sign going back to zero?

• 27:28Ramit Sethi?

  It's, um, very difficult to escape from the quicksand money dynamic that the two of you have willingly entered into. There have been legitimate, bad financial decisions made on both sides. And because of the particular way that you have enacted this relationship and this dynamic, it's really touchy.

• 27:53Speaker 02

  Yeah.

• 27:53Ramit Sethi?

  So everybody kind of tiptoes around it and the roles are set. Can we change this?

• 27:59Speaker 00

  We have to.

• 28:00Speaker 02

  Yes, we have to.

• 28:01Speaker 00

  I believe we can.

• 28:03Ramit Sethi?

  Good answer. I think couples often revert to the very American idea of, y'all just need to talk it out. You need to communicate. We love it. We love saying communicate. It never works. Just communicating alone is not an effective strategy. Right now, you are communicating about each other. You're not even communicating about money. You're just communicating about each other like two boxers. But what are you communicating towards? Is there a vision?

• 28:35Speaker 00

  We don't have a shared, sloped vision. We are just wantlessly spending on things that may or may not be aligned with the life that we want to have now. Well, like, you're right, talking about money when it's just like, here's a crisis, or I'm upset about this, or there's a problem we need to solve right now. It's not enjoyable. I'd like talking about money to be fun and exciting. And perhaps if we had this plan that brings us excitement about things that we're not going to go to the beer garden this week two times, and we're going to put that towards something else that we're really looking forward to and really want to spend our time on, would be, I think, way more enjoyable. But we're definitely not there. We're trying to figure out crises, how are we going to pay rent? How are we going to pay this bill? And it's not fun.

• 29:16Ramit Sethi?

  Let's take a look at your numbers. All right. What was it like doing the conscious spending plan together?

• 29:21Speaker 00

  Shocking to see the numbers. Like, oh, my God, this is out of control. And a little painful in that I was finding out new information. The debt that James has is just way, way more than I could have ever anticipated. I knew he took out a personal loan, didn't know he had three credit cards, didn't know he had $50,000 in federal back taxes, which is not even in the CSP, because I found that out the day after I submitted it. Like, I'm just finding out about all of these skeletons. So that was just frustrating.

• 29:53Ramit Sethi?

  You rightfully are upset about all these, what you put skeletons in the closet, but you kind of glossed right over the $6,000 on the dog. How do you think he feels about that? Is it, do you think he feels similarly?

• 30:07Speaker 00

  Yeah, he definitely has shared that. And I honestly was shocked that it was at that amount, too. I was not out there going, this is my budget for the dog. The dog was free. It was a very emotional purchase. He is the dad of our first dog. He died a couple of years ago from cancer, and nobody wanted to adopt him because he was old.

• 30:26Ramit Sethi?

  It's pretty interesting that Addison is sure the problem is James. She brings up multiple ways that James has been guilty of being irresponsible with money. And I agree, the way that he behaves with money is not great. However, she is also part of the mix here. And it's very tempting when she paints the picture of James being absent with money, not picking up on the labor, to suddenly say, oh, I recognize this pattern. We have the man here who doesn't talk about money. He's irresponsible with money. And we have the beleaguered wife who's here, please talk to me about money. Please connect with me. We've seen that pattern many, many times. But we can't just accept the caricature of a pattern. When I dig in, I find out that she's also spending a lot of money.

• 31:11Ramit Sethi?

  Both of them actually have a dynamic where they love to spend money today and not think about tomorrow. So that is what I'm starting to pick up on. The question I have is, where is this pattern coming from? That's my job. I want to keep digging so I can start to understand how they got here. One of the worst feelings in the world is wandering around the gym and not knowing what to do. I did this for years. I would end up doing the exact same things, dumbbell press, never moving the weights up. And then I would go behind the relative safety of a treadmill. You have no plan. You see no progress. You go, why me? It sucks. Now, I solved this with a trainer. But there's also an amazing app that anyone can use. It's called the Ladder app.

• 31:53Ramit Sethi?

  The Ladder app is an expert strength training plan, not a random collection of workouts. It's real, progressive programming designed by certified coaches with a new plan every week that builds on the last. It's like having a personal trainer in your headphones. Now, I actually tried it myself. And having done many different workouts in my life, I approached it a little skeptically. Is this thing going to be good? Or is it going to have a bunch of BS in it? And I have to say, I was impressed. I chose bodybuilding. I chose to use machines, dumbbells, et cetera. I focused on specific areas that I wanted to work on, that I'm currently working on. And then I evaluated the workouts and did it myself. I thought it was great. If I did not know how to program my own workouts, I would use this app.

• 32:39Ramit Sethi?

  It tells you exactly what to do. It shows you the form. It helps you enter your weight and your reps, and then you can track it all. And I like that it included bodybuilding, but also Pilates, at-home dumbbells, kettlebells, and a whole bunch more. The app costs less than a dollar a day. Compare that to over $100 for a single session with a trainer. Remove the guesswork with Ladder and get a real coach in your ear telling you exactly what to do for every workout. No thinking, everything planned for you. If you have an iPhone, head to ladder.fit/ramit and take a quick quiz to find your perfect ladder plan. Use my link and get a free seven-day trial with no credit card and $10 off your first month if you join.

• 33:24Ramit Sethi?

  That's ladder.fit/ramit. Attention all spreadsheet nerds. I don't like you, but I am going to talk to you. I know it's tempting to brag about the 74 sheets you have in your spreadsheet tracking the price of Fritos. But let me ask you this. What have you done to protect your family if you get hit by a bus tomorrow? Please zoom out and look at the big picture. Nobody cares how much you spent on chips in 2014. One way to do this is with term life insurance from our friends at Fabric by Gerber Life. Fabric by Gerber Life offers term life insurance you can get done today, all online, on your schedule, right from your couch. You could be covered in under 10 minutes, often with no health exam required.

• 34:05Ramit Sethi?

  Fabric has flexible policies built to fit your family and your spending plan, plus free digital wills and tools to help you invest in your kid's future right from your phone. Fabric has a 30-day money-back guarantee, and you can cancel at any time. Join the thousands of parents who trust Fabric to help protect their family. Apply today in just minutes at meetfabric.com/ramit. Meetfabric.com/ramit. Policies issued by Western Southern Life Assurance Company, Cincinnati, Ohio, which operates in DC and all states except New York, distributed by Gerber Life Agency LLC using Fabric technologies. See meetfabric.com for additional disclosures. This is a paid ad. Okay, I'm going to put up the CSP on screen.

• 34:46Ramit Sethi?

  Addison, can you read the word in bold and then the household number next to it, please?

• 34:53Speaker 00

  Assets, $20,780. Investments, $14,227. Savings, zero. Debt, $428,263. That should be about $22,000 more. Total net worth, negative $393,256.

• 35:12Ramit Sethi?

  What's the debt?

• 35:13Speaker 00

  Majority of that is student loans.

• 35:16Ramit Sethi?

  How much?

• 35:17Speaker 00

  About $350,000.

• 35:19Ramit Sethi?

  How much on the credit cards?

• 35:20Speaker 00

  Ballpark, let's say 20.

• 35:22Ramit Sethi?

  20, okay. Personal loans?

• 35:24Speaker 00

  Let's actually do 25 there and 15 on the credit cards.

• 35:28Ramit Sethi?

  Okay, and then there was back taxes?

• 35:31Speaker 00

  Yes, and that would be the repayment amount, plus 22.

• 35:34Ramit Sethi?

  James, do you know how much you owe in back taxes?

• 35:37Speaker 02

  $40,000.

• 35:38Ramit Sethi?

  All right. How much are you going to make when you graduate?

• 35:41Speaker 00

  Between 150 and 2, realistically.

• 35:44Ramit Sethi?

  How are you going to pay off $350,000 of loans?

• 35:48Speaker 00

  It's a long term. It's a 30-year repayment plan. And I've already calculated my payment will be about $1,000 a month.

• 35:54Ramit Sethi?

  Does it get forgiven at all?

• 35:56Speaker 00

  Yes.

• 35:57Ramit Sethi?

  What, in 30 years?

• 35:58Speaker 00

  Yep.

• 35:59Ramit Sethi?

  Okay. Let's look at income. James, can you read off your combined gross monthly income, please?

• 36:06Speaker 02

  Gross monthly income, $11,550.

• 36:10Ramit Sethi?

  Okay, so you all make $138,000 per year. Did you know that? Silence says, suggest no. Okay. What'd you think you made?

• 36:20Speaker 02

  I thought it was a little closer to 200. Between the two of us, when she's working full-time.

• 36:29Ramit Sethi?

  Okay, and Addison, how much did you think you made?

• 36:31Speaker 00

  Honestly, I had really no idea. I knew how much I was bringing in. I did not know what to expect from James when he started his new job, how much we realistically could be expecting, because it's still a commissions-based job. So I had no idea. I just knew my own stuff.

• 36:48Ramit Sethi?

  What do you think about making $138,600 a year? Is that a lot or no?

• 36:51Speaker 00

  No, not, it's not.

• 36:53Ramit Sethi?

  Okay, both say no. Okay. Let's just go down and look at the fixed costs here, because this number really caught my eye. Fixed costs, 154%. What does that mean?

• 37:04Speaker 00

  Ooh, things are out of control.

• 37:05Ramit Sethi?

  It means that you are spending far more than you make, and you have no savings. So you are going into debt every month. And it means that it's literally just a matter of time until you lose everything. There are moments where it becomes irrecoverable. And right now, that's obscured because you have a humongous student loan. So you go, ah, like, that's just a big thing. It doesn't really count. But you are actually incurring serious debt. The credit cards are very high interest. Personal loans, I'm willing to bet, are. Back taxes is a huge amount. There's a lot. And every month, you're going further and further into the red. Let's take a look at the rest of the fixed costs. We have utilities at $700, insurance at 500, car payment, $1,353. That's a lot. What do you think about that?

• 37:47Speaker 00

  It will go down soon. That includes my car payment, which is about $638. Ubers, we need to be taking less Ubers, and then also the train.

• 37:57Ramit Sethi?

  Why do you take Uber?

• 37:58Speaker 00

  To get around town and get to shows, not deal with parking, not deal with DUIs if we want to have drinks at a show. It's convenient, because we could also take the train, but Uber is a lot faster.

• 38:12Ramit Sethi?

  One time I was, I had a couple on this show, and they were in a lot of debt. And they, I asked them, you know, they had some car payment or something. It was pretty high. I was like, why you, why you pay so much for this car? And they go, it's not a car, it's a truck. I go, okay. Why do you buy this expensive truck? And he looked at me like I'm crazy. He goes, so I can pull my trailer. Do you see any similarities to what you just said? We take Ubers so that we can go out to shows and have drinks. And PS, we are spending 154% of net income on fixed costs.

• 38:44Speaker 02

  We overvalue the almighty convenience, I think, pretty clearly.

• 38:49Ramit Sethi?

  Okay. What do you see, Addison?

• 38:50Speaker 00

  We shouldn't be going to these shows in the first place.

• 38:52Ramit Sethi?

  That's right.

• 38:53Speaker 00

  Let alone the Ubers. We're spending money to spend money that we don't have.

• 38:57Ramit Sethi?

  That's correct. It's like people saying like, you know, I actually decided to go to a cheaper casino, even though I'm in $75,000 of credit card debt. I went to Circus Circus because it's actually cheaper slots there. It's like, you shouldn't be in that casino. You shouldn't even be in Nevada right now. So when you both talk about radical change, we're not even scratching the surface yet. But I want to share this with you. Because I need you to know the truth, the reality of what it will take. 154%, it's not about cutting your phone bill down by $20 a month. That's going to do nothing. It's a complete inside out lifestyle change, complete inside out way of looking at the world that has to change. Again, you don't have to. I'm just telling you, we're only on the fifth line of the fixed costs. But this is what I'm observing.

• 39:40Speaker 00

  We absolutely have to come to terms with these numbers. It's not even about alignment at this point with our rich life and how we want to be living. We're not going to be able to live if we keep living like this.

• 39:55Ramit Sethi?

  That's correct. James?

• 39:56Speaker 02

  We've known this is coming. Like, we know this is not sustainable.

• 40:04Ramit Sethi?

  If you've known this and changed nothing, then maybe knowing actually is not the key here. Y'all have had the spreadsheets and had access to all this information. You didn't do anything with it. Knowing is highly overrated for many parts of behavioral change. Everybody knows they should probably eat more vegetables. They don't do it. So we actually need to stop this endless search for knowing and take a much deeper look at what is the way that we are looking at the world? What are our deeply held beliefs that I call invisible scripts? And what kind of behavioral changes can I make? Maybe I don't actually need to know anything different. Maybe I need to literally create a rule that says, we're not ever going to the beer garden again. Or a more positive one would be every single week,

• 40:46Ramit Sethi?

  we are putting $200 into a savings account. That's what we're talking about. We're not talking about knowing, although I will show you some stuff. Let's go through the rest. Whoa. Clothes and personal care are $1,066 per month. What kind of clothes?

• 41:03Speaker 00

  I redid my entire wardrobe. When we moved from where we were living before to here across the country, we got rid of everything. So those numbers will definitely not be the norm.

• 41:14Ramit Sethi?

  What about the other self-care?

• 41:16Speaker 00

  All new hair products, getting all of those things. I get my nails done.

• 41:20Ramit Sethi?

  Okay, got it. Let's go to pet expenses. $1,029 a month. Food, treat, toys, vet, et cetera.

• 41:26Speaker 00

  Yep, that's what that is. Definitely a little bit overboard with Chewy.

• 41:32Ramit Sethi?

  This is a great opportunity for me because I've had a lot of parents here in severe debt. And they go, our kids deserve, you know, the best this or the best that. And I'm like, no, they don't. I point blank will be like, your kids don't deserve that? How can they? Your kids deserve to have a safe household, not to be homeless, to have parents that are not stressed out about money. But I've never gotten the chance to say that about a dog. So allow me to be the first. I'm sorry, but your dog does not deserve $1,029 of food, treat, and toys per month. America, hear my voice. Your dog does not deserve it. I'm sorry. If you are at 154% fixed costs, your dog doesn't deserve it. What's your reaction, Addison?

• 42:16Speaker 00

  They'll live.

• 42:17Ramit Sethi?

  Should we get that dog on camera? Where is that dog?

• 42:19Speaker 00

  There's both of them. They're out there taking their little notes.

• 42:22Ramit Sethi?

  Wait, are they close?

• 42:23Speaker 00

  Yeah, they're close.

• 42:25Ramit Sethi?

  Okay, bring that dog. I want to tell him or her?

• 42:27Speaker 00

  It's a him and a her.

• 42:29Ramit Sethi?

  Okay, bring them both. I'm going to tell them, this is the greatest day of my life. Oh, they're like literally right there. Oh, she's gesturing. They're well-trained. She's gesturing to them. Oh my God, this dog came right. Wait, are these Bernese mountain dogs?

• 42:45Speaker 00

  Yeah.

• 42:46Ramit Sethi?

  Huge. They're beautiful dogs. Okay, what are their names?

• 42:49Speaker 00

  Baca's and Chewbacca and Rainbow.

• 42:52Ramit Sethi?

  Baca, I assume that's Baca?

• 42:54Speaker 00

  Yep.

• 42:54Ramit Sethi?

  I need to tell you something. You and your sister are lovely dogs, but y'all are going on a very, very, very strict diet. And I'm talking about toys too. It's been a nice run, but that's it. It's time to batten down the hatches. And mom and dad are going to be extremely strict with you. All right, thank you for that. Let's continue on. Subscriptions and entertainment, $1,754. All right, we're going to dig into this in a minute. Miscellaneous, fine. Just scrolling down, looking at the CSP, I noticed that after we get to the fixed costs, which are $14,659 a month, then we have $0 on investments, $0 on savings,

• 43:38Ramit Sethi?

  and negative $5,000 on guilt-free spending, which of course we know cannot be true. Before I go on, I want to drill into some of these actual spending. Like, what does it tell you about you?

• 43:49Speaker 00

  We're living in the here and now and not taking a mode of time to think about tomorrow, let alone the secure and stable future we want for retirement. It comes in, it goes out. What we need today, we get.

• 44:02Ramit Sethi?

  Great. James?

• 44:03Speaker 02

  I don't know if the kids still say YOLO, but that's, I think, what we've adopted for our financial decisions. In fact, I don't even know if I would call them financial decisions because I don't think enough, I don't take enough thought when I'm doing to qualify them as decisions.

• 44:19Ramit Sethi?

  That's very good. That's a very good catch on your language. Most people say like, oh, I have goals or we're not living up to our goals or we're not making the right decisions. You're actually not making any decisions at all. It's literally whatever's in front of us. Toys, nails, clothes, beer garden, shows. It's just like swipe, swipe, swipe, swipe, swipe. There's no decision at all. I think that is honest. Okay, I would like to look at the actual spending. This is going into your Monarch account. And we're going to do a little drill down here. So I want to look at, for example, your debt payments. So we have Bureau of Tax. This is your back tax. Is that right, James?

• 44:58Speaker 02

  Yeah, that's a state, that's the state taxes for this last year.

• 45:02Ramit Sethi?

  Have you called them and tried to negotiate that?

• 45:04Speaker 02

  Uh, no. No, that's just what I just took that.

• 45:08Ramit Sethi?

  Call them. Okay. Negotiate. Sometimes they will be able to do that here. Let's go back a month ago. Let's look at transportation. Ah, on one day, July 20th, we have Ubers for $111, four trips. Couple of days before, we have $106. We have a gas station and parking, et cetera. Lots of Ubers here. You notice that?

• 45:34Speaker 02

  Mm-hmm.

• 45:34Ramit Sethi?

  Do you think that couples who have $400,000 of debt take Uber?

• 45:38Speaker 02

  No.

• 45:39Speaker 00

  We do.

• 45:40Speaker 02

  Well.

• 45:41Ramit Sethi?

  Yeah, both of you, both of you are correct. No, they typically don't, but we do. And that needs to change. Let's keep looking. Grocery is always very interesting. Let's look at the actual spending on groceries. So we have King Supers. Interestingly, that's $11.56. Who shops for $11.56 at a grocery store? Like, what'd you get?

• 46:02Speaker 00

  For James, that might, like, maybe he popped in and got a sandwich while you were out.

• 46:06Speaker 02

  Yeah, that's likely what that was. Because I, my job, I'm driving all day.

• 46:10Ramit Sethi?

  All right, let's look. Circle K, 7-Eleven, Circle K, Murphy USA, and Maverick. Lots of gas stations and convenience stores. Lots. Look at how many. What do you make of that?

• 46:24Speaker 02

  Just, you know, a quick break for me to go in and grab a snack or an electrolyte beverage or something cold to drink some out, working outside. I mean, there's no excuse for it, but that's what, that's what that is.

• 46:38Ramit Sethi?

  What do you get at the gas station?

• 46:39Speaker 02

  Gatorade, water, energy drinks, probably 90%. Occasionally, occasionally a slice of pizza or a snack.

• 46:48Ramit Sethi?

  You get a hot dog?

• 46:49Speaker 02

  Occasionally a hot dog. Usually it's beverages because I'm working outside, you know, a lot.

• 46:55Ramit Sethi?

  Out of curiosity, why not just buy the beverages from like Costco or something and take them in your car with you?

• 47:03Speaker 02

  We do, and we have. I bring it and then it's not enough. Like, I want another one.

• 47:07Ramit Sethi?

  Why not bring two or three or five?

• 47:09Speaker 02

  I just need to get that bigger cooler.

• 47:12Ramit Sethi?

  What do you think's behind your answer? Like, why do you think you really don't pack enough water or something for a long day out on the road?

• 47:21Speaker 02

  I think I enjoy the break and the AC.

• 47:23Ramit Sethi?

  Yes.

• 47:25Speaker 02

  I feel like I deserve it.

• 47:26Ramit Sethi?

  Yeah. Yeah. Why do you deserve it?

• 47:30Speaker 02

  Feel like I earned it. I earned this little treat, whatever it happens to me.

• 47:37Ramit Sethi?

  I've been driving out in the sun. I've been talking to a lot of people. Maybe I close a deal or I'm gonna close a deal tomorrow. Like, we're talking about a $4 Rice Krispie treat. Like, I deserve this. I've been working hard. That's the thing, right?

• 47:51Speaker 02

  Mm-hmm.

• 47:52Ramit Sethi?

  Okay. Addison, what else? What do you notice?

• 47:54Speaker 00

  I do hear and understand James's need to get out of the van. And I do similar things. I have a pound of green tea here, my favorite kind, but I still go down to the coffee shop to go get it from the coffee shop. Because I want to get out of the house. I like getting out of the house and socializing with other people.

• 48:14Ramit Sethi?

  Sorry, how do you think people who like to get out of the house, but they don't go into debt? How do they do it?

• 48:22Speaker 00

  I am not sure what they are doing. I am only sure what we are doing, and it's spending money on things we shouldn't be spending money on.

• 48:31Ramit Sethi?

  What's striking to me is the lack of curiosity about how other people do it. I don't think you've really thought about anybody except for what you two want.

• 48:43Speaker 00

  That's fair.

• 48:44Ramit Sethi?

  Because there are millions and millions of families who don't spend $3,000 a month on groceries and food and beverage. Y'all put in your CSP $3,363 a month for groceries, food, and beverage. That is one of the highest numbers I've ever seen. And this is two people. We're not talking about a family of six. Even still, I would tell them it's too much. All right, let's look at a couple of other things in Monarch. Pets. You planned for $1,029. I see $2,667. This is in one month. Somebody get sick this month?

• 49:21Speaker 00

  Uh, yes, we had a nearly vet bill.

• 49:24Ramit Sethi?

  Yeah, there's a lot, I can tell. I mean, one of them, one vet bill is $1,500. I then see Chewy for $114, $60, and a lot more. What do you think about spending thousands of dollars on dogs when you're in this much debt?

• 49:40Speaker 00

  Doesn't seem to make any sense. And we can't afford to continue spending all the dogs like we have been. And we probably couldn't afford this second dog, but we didn't crunch any numbers. I think I realistically said, oh, it's just going to be an extra bag of food and maybe a couple of vet bills here and there for wellness checks.

• 49:58Ramit Sethi?

  Why did you say that?

• 49:59Speaker 00

  I think I wanted this dog and I needed to reassure ourselves we could afford it, but we really couldn't.

• 50:04Ramit Sethi?

  How much of the decisions you make around money are, I want this? And I'm gonna come up with a reason that sounds logical to justify it.

• 50:14Speaker 00

  The majority and we'll justify to each other and support each other in our justifications.

• 50:20Ramit Sethi?

  How do other people make decisions like this?

• 50:22Speaker 02

  They look at the pre-planned budget and base decisions off of, up of that.

• 50:30Ramit Sethi?

  Yeah, you have that, though.

• 50:33Ramit Sethi?

  I mean, you have a CSP. All right. Let's look at a couple more expenses. I want to see what's going on with dining out, one of my favorites. Let's read off some of these, shall we? Wendy's, Mexican place, beer, some beer garden and tavern the same day. What's this one for $300?

• 51:00Speaker 00

  Birthday anniversary dinner.

• 51:02Ramit Sethi?

  What do you think about that? Was it good?

• 51:04Speaker 00

  Excellent.

• 51:05Speaker 02

  It was.

• 51:09Ramit Sethi?

  That's a good answer. Yeah, it was good for me. Okay, I like that. Can I ask you a question? Like, when a birthday or an anniversary or holidays coming up, how do you decide, like, what you're gonna do and how much you're gonna spend?

• 51:25Speaker 00

  The decision is based on the menu and never on the price.

• 51:30Ramit Sethi?

  Yeah.

• 51:31Speaker 02

  Yeah.

• 51:32Ramit Sethi?

  What does it feel like to even imagine a future where you have to make many, maybe most of the decisions based on price?

• 51:41Speaker 02

  It feels like, I mean, if you're responsible.

• 51:46Ramit Sethi?

  Who wants to be responsible? I'd rather have fun.

• 51:50Speaker 02

  Yeah.

• 51:52Speaker 02

  But look where fun got us.

• 51:53Ramit Sethi?

  To me, it sounds depressing.

• 51:55Speaker 02

  Yeah.

• 51:56Ramit Sethi?

  If I'm being honest.

• 51:57Speaker 02

  Yeah.

• 51:58Ramit Sethi?

  It sounds horrible. You're telling me that I got to do all this fun stuff and like, look, we got a pretty nice place we live in. And now you're suggesting that I have to look at price for everything. So that means what? We have to go to Wendy's for our anniversary? Sounds like it sucks.

• 52:10Speaker 02

  Yeah.

• 52:11Ramit Sethi?

  What do you think?

• 52:12Speaker 00

  Said that way, it sounds like it sucks, but having had the opportunity to review all of our finances and our spending, I think it kind of sucks to spend money on mid-tier restaurants or go to the beer garden as often as we were. I'd rather once a quarter, go to a really nice, awesome restaurant if we can afford it versus just spending hundreds and hundreds of dollars on mid.

• 52:33Ramit Sethi?

  Wow. That is a great response. I happen to agree. I would rather have one memorable experience than five forgettable experiences. So I love that reframe. Because if you go through life saying, oh, my God, we have to look at price as the first thing. And basically, we have to get the cheapest thing always, it's gonna suck. Your entire life is just gonna feel depressing. And you cannot win when you feel depressed about something. You have to find a way to find joy and purpose and meaning. And you can do that simultaneously while cutting expenses and saving and investing more. Okay, I'm getting on board. Shopping, yes. Amazon, Macy's, Costco, Rocket? Is that what I think it is?

• 53:16Speaker 02

  Another gas station.

• 53:18Ramit Sethi?

  Oh, okay, that's a gas station. All right, shop at a lot of gas stations. Home Depot, I hate that place. Okay, Costco, love that place. IKEA. So, looking at this spending is quite interesting. I mean, how would you describe the spending in a word or two?

• 53:31Speaker 02

  Unconscious.

• 53:33Speaker 00

  Reckless.

• 53:34Ramit Sethi?

  I agree with both of those. What strikes me is that there's a huge volume of spending. I mean, we are talking about $50 plus a day, essentially, on gas stations and random things, purchases, food for the dog, like random, random stuff. I don't see a lot of focus. Like, if you were to have one expensive sushi place or one expensive dinner place per year, or even every six months, I'd be like, oh, wow, they're foodies. Or they love this, or they love that with their dogs. I don't see that. I just see a lot of random stuff. I also am surprised that it's not all James's spending. Addison, you contribute a lot to this spending.

• 54:15Speaker 00

  I absolutely do. I do most of the spending in our household, but we don't need all the things that I bring.

• 54:21Ramit Sethi?

  Why did you just tell me that? What's the point?

• 54:24Speaker 00

  To justify it to myself and to everyone in this room.

• 54:28Ramit Sethi?

  The two of you talk a lot when it comes to your spending. And when you talk, you are justifying. You are explaining. And you do it to each other. I don't even think you might even hear the words sometimes. It's just spending and then blah, blah, blah, blah, blah, blah, blah. And whatever's being said in there is sort of irrelevant. It's just, here's why I need a way to justify it to me or to you or to us. We need this for the dog. We need this for us. We need to take a trip. I need to go outside. I've been inside all day. You've been inside. And so I need a thermos and on and on and on. I don't talk like this with money. If I buy it, I don't need to explain it and justify it because I made a good decision months or years ago.

• 55:12Ramit Sethi?

  I planned for it. There's money set aside. You're explaining because you realize you probably shouldn't be doing it.

• 55:21Ramit Sethi?

  So that's a good cue for yourself. If you find yourself already launching into this thing, you've probably taken a wrong turn. James, I want to understand about how you grew up with money.

• 55:33Ramit Sethi?

  What do you remember your family saying about money when you were a kid?

• 55:37Speaker 02

  Remember money being a source of stress, although my folks were pretty good with the money they made. My dad did really well. He was a top salesman for a Fortune 500 pharmaceutical company, same company for 42 years. But growing up, which for me was in the 90s, all these pharmaceutical mergers happened. You know, we had food on the table. We were able to take vacations and everything else. It wasn't like scarcity, but seeing my dad very frustrated occasionally, pounding his fist on the table or my parents going over their budgets.

• 56:20Speaker 02

  It was a really, I guess, tough time in that industry.

• 56:25Ramit Sethi?

  Did they teach you how money worked?

• 56:28Speaker 02

  My dad tried. Once I got out of the house and started making money mistakes almost immediately.

• 56:35Ramit Sethi?

  Yeah.

• 56:35Speaker 02

  My parents were like, they're very generous, very good with money. I remember my late teens, maybe early 20s, they got me this like little organizational thing where I'm supposed to put money in envelopes and this is how you budget. And like, I got it and I sort of paid attention to it for a bit. And then I just reverted right back to basically how I've always lived my life, you know?

• 56:57Ramit Sethi?

  Do you see any connection between that and then what Addison did recently, where she brought you all the files and we need to really buckle down? And you did it for about a week and then you stopped?

• 57:06Speaker 02

  Yeah. Yeah.

• 57:10Ramit Sethi?

  What does it tell you?

• 57:11Speaker 02

  Maybe

• 57:14Speaker 02

  determined for some reason to avoid digging into money organization. I think I just

• 57:22Speaker 02

  remember the stress, you know, seeing my parents stressed about it when I was a kid. And maybe just subconsciously or consciously connecting that, where if I just make enough to get by and make, you know, then I can breathe easy.

• 57:41Speaker 02

  Which, you know, sounds insane.

• 57:44Ramit Sethi?

  Are both your parents still alive?

• 57:45Speaker 00

  Yeah.

• 57:46Ramit Sethi?

  Are they still together?

• 57:48Speaker 00

  Yeah.

• 57:48Ramit Sethi?

  How are they doing financially?

• 57:50Speaker 02

  Fine. My dad retired. They're doing, they're doing great.

• 57:53Ramit Sethi?

  Do you talk to them about money?

• 57:55Speaker 02

  No.

• 57:57Ramit Sethi?

  How come?

• 57:58Speaker 02

  I think I make sure of pride and shame.

• 58:00Ramit Sethi?

  Tell me.

• 58:01Speaker 02

  I mean, I'm in my mid 40s now, like, I don't want to

• 58:06Speaker 02

  like, admit again that I, you know, messed it all up. And I don't want to ask for advice this late in the game because I feel like I've pretended like I knew what I was doing so long that I'd have to admit that I don't. And that just, you know, I only get so much time to spend with them. I don't want to spend time on that.

• 58:29Ramit Sethi?

  Finish the sentence. I don't want to spend time on that, meaning money, because?

• 58:34Speaker 02

  Afraid of their reaction.

• 58:36Ramit Sethi?

  Which will be?

• 58:38Speaker 02

  Disappointment.

• 58:39Ramit Sethi?

  Yeah. Another similarity to when you don't bring up topics with Addison. Do you notice that?

• 58:44Speaker 02

  Yeah. I don't want to disappoint her or hurt her far worse than if I would have just ripped the frigging Band-Aid off, you know?

• 58:53Ramit Sethi?

  Yes, interesting choice of words even. The idea that in order to communicate about uncomfortable things, you have to rip the Band-Aid off, implying pain, implying a wound.

• 59:07Ramit Sethi?

  Maybe there's a different way to describe it. Maybe there's different ways such as, gosh, I've been uncomfortable talking about money for pretty much my entire adult life. And I've realized it's caused me a lot, it's caused a lot of pain to my wife and my family. And I realized that I don't want, I'm not that person anymore. And it's going to take me a lot of retraining. I'm going to have to have uncomfortable conversations. I don't even know if I have the skills to do it. But I'll tell you what, I'm going to build the skills. I'm going to do it on my own through books, through watching videos. I'm also going to get help through a therapist, a coach.

• 59:49Ramit Sethi?

  And my commitment is that I'm going to talk to you at least every Saturday, 11 to 12 a.m. I'm making the agenda, I'm going to bring it up. And I think it's going to be hard. It's going to be uncomfortable right now, but my hope is that within six months, it's actually going to start to feel fun. It's going to start to feel pleasurable. That's a different way to look at it. What do you think about that, James?

• 1:00:12Speaker 02

  It sounds like what I've, I've said to myself in my head many times over the years.

• 1:00:17Ramit Sethi?

  Never out loud, though?

• 1:00:18Speaker 02

  No.

• 1:00:19Ramit Sethi?

  Yeah. Your, your response is very common. I mean, for, for a lot of people, and especially for men, the idea of like, I don't want to disappoint. A lot of men will basically say, I don't want to burden my wife with these kinds of things. Look at the nodding in your head. It's a very kind of toxic masculine idea that I can take it on. I can take on the pain, but my wife, I don't want to burden her with it. And in a way, it actually is quite insulting to your wife to treat her like a delicate little flower that can't take tough conversations. Women are smart, they can handle a lot. It's quite demeaning to assume that they can't. And actually, the people who then take on the burden themselves are often not even good at it. So we need to share, and we need to maybe reframe it as it's not a burden, it's just

• 1:01:02Ramit Sethi?

  something that I'm not particularly good at yet, but we've got to both get good at it. Addison, do you want to add anything to what James told me about his upbringing with money?

• 1:01:09Speaker 00

  He shared with me a number of times a situation where they were on a hunting trip. He was with his father and they stopped in at a gas station. I guess gas station stops are generational here. And he asked dad, hey, can I go in and get a soda, a bag of chips? And his dad said, no, we can't afford it. And James, what, what was your reaction?

• 1:01:32Speaker 02

  I remember saying like, what do you mean, we can't afford it? I saw one of my dad's paychecks sitting there. It was like, it was, you know, some couple thousand dollars or something like that. And to me, as a little kid, I was going, oh my gosh, it's like so much money. You know, I was like, I remember like not being able to wrap my head around how you couldn't afford something when you had that much money. And I don't know if I ever figured that out.

• 1:01:57Ramit Sethi?

  Did you tell your dad that?

• 1:02:00Speaker 02

  No.

• 1:02:01Ramit Sethi?

  Okay, that's interesting. What do you make of it now?

• 1:02:03Speaker 02

  The very tight and very like, to the dollar budget that they kept meant that there wasn't any room for buying stuff from gas stations that month, is my, my guess.

• 1:02:19Speaker 00

  I would agree because they had a shared plan and they stuck to it. They were able to retire and buy a home on a beautiful lake that we visit often and get to enjoy. And we are not taking a note out of their playbook at all. And we are not going to be able to enjoy those things because we're too caught up in enjoying the everyday moments.

• 1:02:40Ramit Sethi?

  You know, it's interesting. I see this a little differently. I think you might both be right. I don't necessarily think that you can say they were good with money because they may have done very well for themselves, but isn't one of the ultimate signs of being good with money that if you have children, you actually teach them, which they have failed to do. And another example of that is saying, we can't afford it, which leaves kids feeling very confused. What do you mean, we can't afford it? We just went hunting. We just went fishing. We just stayed in a lodge for two days and now I can't get a bag of chips? It doesn't make sense. Mixed messages. And so kids are left defenseless, not knowing what that means. And then they just go into the world.

• 1:03:23Ramit Sethi?

  And in your case, you just were like, affordability is just made up. I don't really care if I have money or I even think I'm going to have money. Sounds good. I think a different approach would have been for your parents and for both of you to say, that's not part of our plan. Had your parents said that, you might've been like, wait a minute, what's a plan? What do you mean by plan? Who made the plan? Can we change the plan? Cause I really want these Doritos. But instead it was just blanket, we can't afford it. Kid left to figure out what that means. Let this be a lesson for every parent, soon to be parent, maybe parent or kid of a parent on this show. Stop using the phrase, we can't afford it. Please.

• 1:04:05Ramit Sethi?

  That phrase causes often lifelong dysfunction with money. All because you want the kid to stop asking you some annoying question about money, which if you really trace it back is that you yourself are not good with money. So you want to shut the conversation down by saying, we can't afford it? It will cost you and your children dearly. Here's what happens. Kids hear you saying, we can't afford it. Not once, not 10 times, a thousand times over their childhood. And they start to associate feeling bad with money. Then they experience mixed messages. Wait a second, we can't afford it, but we're also eating out of Cheesecake Factory? Huh? And so they just start to believe money is just made up. Whatever somebody says, whatever, oh, we can't afford it, but then we actually can. So I'm just going to do the same thing with my money.

• 1:04:49Ramit Sethi?

  Throw my hands up, spend on whatever I see in front of me and boom, we'll figure it out later. You can see how the toxicity becomes layered and essentially intractable over time. We don't want that. I would rather a parent say, we're not going to buy that because in this family, we don't care about $300 shoes. Or we're not going to buy that because I love it too, but it's not on plan right now. However, we can start saving for it and three years from now, we'll be able to do it. Love that. But you've got to go beyond, we can't afford it. Also, if you grew up with your parents saying, we can't afford that, you can't change how your parents raised you. You can learn from it, you can adapt, you can start to zoom up and say, hey, they were probably trying their best.

• 1:05:30Ramit Sethi?

  They maybe didn't know about money, but today, what can I do to get better with money? I'm listening to this podcast. I can join Ramit's Rich Life Program. I can start to apply these principles differently, but I can't constantly live in the past because of something that my parents did to me. I'm now an adult. It's time for me to take responsibility for my rich life. And we're going to hear about the surprising way that Addison grew up with money right after this. Let's take a look at your to do list. How many things are on there that you've been putting off for nine months or more? I'm talking about important stuff like booking doctor's appointments and getting your estate plan in order. We can knock them out in about an hour.

• 1:06:11Ramit Sethi?

  You can get your estate plan handled today, for example, with help from Trust and Will. Trust and Will offers affordable attorney-designed estate plans online that you can create in minutes. Everything is state-specific, it's tailored to your needs, regardless of what stage of life you're in. And we actually had one of my coworkers create a will using Trust and Will. Here's what she said. Getting started was incredibly easy. In less than an hour, I had a will, power of attorney, last will and testament, and HIPAA authorizations, all of which I downloaded. And if I wanted, I could have them checked by another attorney. Their platform makes it easy to keep these things organized and updated so your loved ones don't have to manage tons of paperwork down the line. Now you can use an attorney for your estate plan, but that's not an option for everyone.

• 1:06:56Ramit Sethi?

  If you know that you have loved ones that you need to protect, Trust and Will is worth considering. Trust and Will, affordable estate plans, priceless peace of mind. Go to trustandwill.com/ramit to get 20% off. That's trustandwill.com/ramit to get 20% off. T-R-U-S-T-A-N-D-W-I-L-L.com/ramit. I want to thank our new partners at Monarch for setting up our couples on their platform to see their exact conscious spending plan categories. Monarch is a private personal finance app that brings all of a household's accounts,

• 1:07:37Ramit Sethi?

  checking credit cards, loans, and investments into one clean dashboard on your phone or computer. If you're trying to pay off debt, Monarch makes it easy to see your progress. You can see your whole payoff timeline for credit cards and car loans in a way that you can clearly visualize. No more juggling apps or manually updating spreadsheets. I've always said that a rich life is lived outside of the spreadsheet and Monarch lets you save time so you can do exactly that. Try Monarch for free today and get 50% off your first year of Monarch's Core Tier with code RAMIT at monarch.com/ramit. And when you sign up with my link only, you'll get your Monarch account customized with

• 1:08:18Ramit Sethi?

  my exact CSP categories so you can see how you are stacking up to your plan each month. That's monarch.com/ramit with code RAMIT. Addison, what do you remember about growing up with money? What did your family say about it?

• 1:08:34Speaker 00

  I grew up incredibly poor. Lots of hay me downs, lots of arguments between my parents about finances. Kind of this mentality, like we can't take it with us and we're going to die poor. So it was a very heavy topic and I knew I was poor. It was embarrassing. Yet my mom, you know, she would put things on credit card and lay away and got to kind of keep up with the Joneses. And we need to have very similar patterns I see in myself where I want this thing, so I'm going to buy it. We're going to finance Christmas if we have to because the kids really deserve to have a nice Christmas. I'm going to take on additional debt for vehicles.

• 1:09:18Speaker 00

  Eventually went back to school and changed our family situation, but the spending continues. They do not communicate really about finances anymore. My mom just handles everything. My dad is very secretive about things, has a lot of pride, and that's caused a lot of problems. And I talked to my mom about our own financial situation for guidance and she's like, I can't, I can't really help you when your dad's the same way. If you figure out how to work with, you know, James, you, you let me know. So not a lot of guidance, not having a plan, not really having anything to plan with. It was really hard.

• 1:09:56Ramit Sethi?

  That sounds like really tough. I have a couple of questions for you. You mentioned you knew you were poor. How did you know?

• 1:10:02Speaker 00

  Just kind of comparison to other people. Also, my parents literally saying we're poor and we don't have any money. And based off the food, we're not having food.

• 1:10:14Ramit Sethi?

  You went sometimes without food?

• 1:10:16Speaker 00

  Very little food at times.

• 1:10:19Ramit Sethi?

  That's tough. That's really difficult. How do you think that colors your view of money?

• 1:10:24Speaker 00

  I was resentful of growing up poor and need a commitment to myself. And very proudly and boldly shared with my parents, I'm going to college and I'm going to have all these things in a different life. I'm not going to live my life like this trapped on a farm in poverty. I'm going to break out of this. And while I've left home and gone to college, I'm really not doing anything different. It's the same stuff in a different place, maybe fancier stuff. And I have more things, but it's also a little bit intense.

• 1:10:55Ramit Sethi?

  It's quite profound. The idea that you said, I'm going to college. Were you the first to go to college?

• 1:11:01Speaker 00

  Yeah.

• 1:11:02Ramit Sethi?

  Very impressive. Not only did you go to college, you're now a PhD student, teaching as well. Extremely impressive for anyone, but especially considering your background. Made a huge amount of change in terms of education. And yet still find yourself repeating the same patterns as before. Just as you put it, just in a different place, maybe a little bit nicer stuff.

• 1:11:28Speaker 00

  Yep. It's the same patterns and trends. It's like my mother following right in her footsteps. I have very little in my 401K and have cashed out several 401Ks to, you know, finance moves across the country for school. Like, the future is there for me. There is no plan to get there whatsoever.

• 1:11:51Speaker 00

  I feel like I know better, but I'm definitely not doing better. But perhaps I don't even know better as well.

• 1:11:57Ramit Sethi?

  Do you find yourself confused by your own behavior?

• 1:12:00Speaker 00

  Not necessarily confused, disappointed, frustrated with myself for not making better decisions on a day to day basis.

• 1:12:08Ramit Sethi?

  That's interesting, but I don't get the sense that you feel frustrated when you buy something for the dogs or clothes, or you go out to the beer garden or a concert. When does the frustration come, if at all?

• 1:12:19Speaker 00

  Pulling our numbers and seeing like, how, why are our numbers like this?

• 1:12:23Ramit Sethi?

  How often does that happen when you pull the numbers?

• 1:12:25Speaker 00

  Maybe three times in a year.

• 1:12:27Ramit Sethi?

  So you feel frustrated, think about it, you feel frustrated for what? Three minutes times three, nine minutes a year? And the rest of the time, you get to eat out and do all this cool stuff? Sounds like a pretty good deal to me.

• 1:12:39Speaker 00

  And then when things are running low and they're tight and there's concerns about being able to actually cover costs like rent or healthcare. That's another point of frustration and disappointment. Like, we, we had those funds at one point and they got spent frivolously on things we didn't need because we weren't planning for a rainy day or things that we actually do need to live and thrive.

• 1:13:04Ramit Sethi?

  Yeah, neither of you plan?

• 1:13:06Speaker 00

  No.

• 1:13:06Ramit Sethi?

  You don't plan for retirement? You don't plan for going out and driving for eight hours enough to take enough drinks for the day? Like, there's a systemic lack of planning. Now, I'm going to tell you, most Americans do not plan. They don't plan for their retirement. They don't plan more than a month ahead with their money. So when you have all these financial people going on TV and talking about, look at this compound interest chart, and if you do 40 years from now, that might as well speak Martian to people. They're not thinking beyond a month later. And I'm not saying that to make you all feel like, oh, it's okay not to plan. I, I want you to know that it's quite normal that most people don't plan ahead with their money for the exact reasons that you are as well.

• 1:13:51Ramit Sethi?

  One of the things I love about this show is I get to speak to people from all over the socioeconomic spectrum. It is really hard to escape the social class and the structure that you grew up with. As the phrase goes, wherever you go, there you are. So here we have Addison getting her PhD, but still essentially spending the same way her mom did decades ago. Just because you make more money, just because you get a PhD, does not mean that you are going to change your psychology around money or relationship. And that's what this show is about. The numbers here are outrageous. I mean, 154% for fixed costs, one of the highest numbers I've ever seen on this show.

• 1:14:35Ramit Sethi?

  If they want to get out of this, it's possible, but they will have to make severe radical changes. And I wonder if they are willing to do that. James, you have a magic wand. What do you think our approach should be together right now?

• 1:14:49Speaker 02

  Wave it and be good with cutting back on everything.

• 1:14:55Ramit Sethi?

  Okay, cool. Addison, what's your magic wand? What would you do?

• 1:14:59Speaker 00

  Similar, I want to get our CSP dialed in and based in reality, what we have to work with. I want more going towards savings and investments. And we need to reallocate this whole thing. Like, we need to get a plan that we can commit to here together and then start implementing, knowing that if we don't commit to this and implement this, like, the future is looking pretty darn bleak.

• 1:15:22Ramit Sethi?

  Why? How bleak is it?

• 1:15:24Speaker 00

  I don't want to get a divorce. I don't want to be homeless. I don't want to have to move in back with either of our parents. And I definitely am not going to be able to work for the rest of my life and want to be able to retire.

• 1:15:35Ramit Sethi?

  Okay, James, what about you? Why is the, why make the changes of cutting back? That sounds like a lot of work.

• 1:15:40Speaker 02

  Because the pattern of feast or famine and uncertainty and embarrassment coming from not knowing which way is up with my finances has had, has, has, has had horrible outcomes many times repeatedly before Addison and I were ever together. And now it is to the detriment of my relationship and my marriage in addition to all of the other things. So I'm, I'm ready for a way out.

• 1:16:22Ramit Sethi?

  Okay, great. I love that. I love a couple that's ready to make changes. I can work with that. Addison, you want to add something?

• 1:16:30Speaker 00

  Yeah, like, in thinking of a magic wand, if it was waved and we did this, like, I, I want us to feel good and excited and proud.

• 1:16:38Ramit Sethi?

  Like that.

• 1:16:39Speaker 00

  Instead of like this, like, oh, gosh, that is scary and it's awful and we're going to fight about it and feel depressed about it. I, I want us to get excited talking about money.

• 1:16:48Ramit Sethi?

  Okay, I agree. We got to take a different approach. All right, so this is what we're going to do. We're going to redo the CSP.

• 1:16:55Ramit Sethi?

  First, I want to highlight something. I did a, using Monarch, did an analysis here of your last year of spending. What do you think your biggest category of spending is? Take a look. What does that say?

• 1:17:06Speaker 02

  Shopping.

• 1:17:07Ramit Sethi?

  30% of your spending was shopping. James, read off a few of the vendors on the left.

• 1:17:15Speaker 02

  Amazon, Amazon, Amazon, Target, Buc-E's, Google, Etsy, Costco, Amazon, Macy's, Costco.

• 1:17:21Ramit Sethi?

  What do you think of that?

• 1:17:22Speaker 00

  It's a lot of spending and as we're going through it, I'm like, what was that for?

• 1:17:26Ramit Sethi?

  What'd you get? Put your hand out like this. Put your hand out like this, palm up to the sky. What did we get?

• 1:17:33Speaker 00

  It feels empty because I don't recall what we got for some of those transactions. It leaves me feeling empty because it's not something I needed.

• 1:17:41Ramit Sethi?

  Thank you. This is so much of how we spend money unconsciously. I'm not opposed to spending money. I'm not even opposed to spending a lot of money. But I want it to be meaningful. And it could be a physical item. I love a beautiful thing. It could be an experience, it could be a food, but something where you look back, you go, wow, that was awesome. But right now, just looking at this, Amazon, Etsy, random stuff. What did we get? Nothing, we just bought what was in front of us. So here's what we're going to do. We're going to throw these CSP up on screen and we're going to make some changes here. You're at 154% fixed cost. The goal is to get down to 60%.

• 1:18:26Ramit Sethi?

  It's going to be really challenging, I'm going to be honest, but we are going to make some changes. Now, here are the rules, because I've done this many times with couples. They inevitably end up fixating on, should we cut $20 or $40 off of our cell phone? I'm just going to show you right now. If we go from 1,029 to 800, I'm just cutting off like 200 bucks. Look at this number up here, the 154%. It drops down 2%. So what does that tell you?

• 1:18:53Speaker 00

  Got to go big.

• 1:18:54Speaker 02

  More, more drastic.

• 1:18:56Ramit Sethi?

  Exactly. We're talking massive changes. So we're going to go one at a time. And I want you to remember, we're trying to actually change your entire lifestyle. So before we jump into all this, tell me your philosophy on money. In our relationship, we, what, James?

• 1:19:14Speaker 02

  Treat money with respect.

• 1:19:16Ramit Sethi?

  Yes. Damn. That is great. We treat money with respect. Okay, Addison?

• 1:19:23Speaker 00

  We recognize it's a finite resource, just like our time and other resources. So we have to treat it with respect.

• 1:19:30Ramit Sethi?

  We treat it with respect. We recognize it's a finite resource, which is exactly what the CSP allows you to do. It's finite, you have this much money to distribute. Okay, great. And do we have any rules here? Like, in, in, in our family, it might be, we are a debt-free family, or we save at least 10% or 20% or whatever. What kind of rules might you have?

• 1:19:50Speaker 02

  Delaying or putting a hard stop on any excess spending until we have a savings or an emergency fund of X amount.

• 1:19:58Ramit Sethi?

  Why don't you just pick one?

• 1:19:59Speaker 02

  $10,000.

• 1:20:00Ramit Sethi?

  Great, so what does excess spending mean?

• 1:20:03Speaker 02

  We cut off on, you know, cut out going out to eat and like a lot of gas station trips.

• 1:20:09Speaker 00

  Yep, unnecessary subscriptions, gas station, convenient Ubers, all of the things that basically we don't require to live, but also giving ourselves a small amount of like, we need to enjoy ourselves a little bit. It's, I don't think we can go completely down to zero. So maybe it's like we go to the beer garden one night and the music's there and the tacos, you know? We don't need to go 20 times.

• 1:20:33Ramit Sethi?

  I like the principle. I think that it will be important to get specific about what does unnecessary mean? Because what James thinks is unnecessary is different than what Addison, certainly different than what I think. I never met a couple in $400,000 of debt that went to a beer garden once a week with tacos.

• 1:20:49Ramit Sethi?

  It's quite interesting. We should talk about it, though. Let's see how the numbers play out. So the rule is, we are, at least the rule you're proposing is, we do not spend unnecessarily until we have $10,000 in a savings account. Is that right?

• 1:21:04Speaker 02

  Mm-hmm.

• 1:21:05Ramit Sethi?

  All right, let's, let's give it a shot. James, make a change first, then toss it to Addison. What do you want to do?

• 1:21:10Speaker 02

  I think groceries, food and beverage can be slashed to $800 a month.

• 1:21:17Ramit Sethi?

  $800 a month, okay. So you're going from 3,300 bucks to $800 a month. How are you going to do it specifically?

• 1:21:25Speaker 02

  Meal prep on Sundays.

• 1:21:27Ramit Sethi?

  Okay, what time Sunday?

• 1:21:28Speaker 02

  We do brunch a lot on Sundays, so maybe on Sunday for brunch time, we can do some meal prep together.

• 1:21:36Ramit Sethi?

  Very good. You know what's funny? Every minute that you are fulfilling one of the guidelines of your money rules, like prepping food on a Sunday, is a minute you are not out spending money. So that is a way to look at it like, oh, this, this meal prep is doing us double good. Number one, we're going to get prepped food for the whole week. It's going to be awesome. Number two, every minute I'm doing this is a minute I'm not outside spending money at the gas station, at Home Depot, at any of these places. Double whammy, awesome. Okay, let's keep going. I love that. You're going to meal prep and $800 a month. Addison, are you cool? Because you're the one who does grocery shopping.

• 1:22:19Speaker 00

  Yeah, I feel like that's a good amount because that whole category also includes food and beverage. So that's all the restaurants, that's the beer gardens, that's the brunch, that's everything. So cutting all of that as an unnecessary expense out, that's realistic for groceries.

• 1:22:32Ramit Sethi?

  Okay, and eating out, that sort of implies you're eating out like not much at all.

• 1:22:37Speaker 00

  Yeah, that would be not much at all. Like, can we go cold turkey on this? I know that we, we need to. And this is something we have to commit to and having a savings goal could help us with that. I don't know, James, like, can we never go out until we hit 10,000? Do you think that is realistic? I just think it's going to be hard. I think we should leave a little bit in the budget for like when we have friends that are visiting, our families are in town.

• 1:23:02Speaker 02

  Yeah, that's, so you're going to give us back to that crash diet saying, Mike, I guess it sounds really great. Can we do it, though?

• 1:23:09Ramit Sethi?

  You're not thinking about it the right way.

• 1:23:11Speaker 02

  Okay.

• 1:23:11Ramit Sethi?

  Both of you are expressing a fear of having to change your lifestyle. And the way that you are articulating this is by saying, what about when our family visits? Now, notice what is in that example. Number one, what about, it's this sporadic thing. We don't know when it's going to happen, so we can't even plan for it. It's just whenever. And second, it's family. And in your case, you use family, dogs, and your own need to be outside as political shields. Because nobody can argue against the importance of family and the importance of recuperation and the importance of your beautiful dogs. We have to change this entire way of operating. First of all, we're not going to plan

• 1:23:56Ramit Sethi?

  for a random sporadic might happen thing of other people visiting us. We are planning what we are going to do. We are the family that matters right now. And second, if they come, great, but we can't spend money with them. We don't have the ability to spend money. So if they want to go out to dinner, I'm sorry, that's just not in our plan. A phrase I wish your parents would have shared with you, James. We can't. Oh, what about this? Can't do it. Oh, we really want to do this. I'm sorry, we'd love to, but you know, we have a nice patch of grass outside. Let's take 10,000 steps in that patch of grass. Let's have some fun. That's how you do it.

• 1:24:30Speaker 00

  Yeah, that's feasible. And we have role models that are also modeling this behavior. We can easily do things like that with our apartment amenities.

• 1:24:37Ramit Sethi?

  Good, good. And I like that. I like you said modeling. We have to remodel who you have been modeling after. Of course, it's so easy these days to just, oh, let's go out to, let's order something in, whatever. That, that can't happen under this. So, all right, while I am sensitive to the fact of going cold turkey is very difficult, I am not trying to make allowances for random family to come over. It's, you simply do not have the money to be able to provide for that. So I'm going to keep it at 800 because right now you're at 127% fixed costs. Addison, you're next.

• 1:25:10Speaker 00

  Uh, let's go ahead and take a look at subscriptions. That's a fun category.

• 1:25:14Ramit Sethi?

  Subscriptions, it is. Here we are. Let's read them off. We have Monarch for $210. Every guest on this show gets a free subscription to Monarch. YouTube, OpenAI, Spotify, Amazon, Google One, Uber, Paramount Plus, New York Times, Apple, Doodle, Prime Video. What do you want to cut, Addison?

• 1:25:35Speaker 00

  Everything but ChatGPT, YouTube, Adobe, and the Doodle.

• 1:25:41Ramit Sethi?

  All right, so everything else is gone. Uh, what the [bleep]? It went from 1,754 to $55? No, we got to look at what else is for entertainment here. What's Surf House?

• 1:25:55Speaker 00

  Uh, Surf House is tickets to a show.

• 1:25:57Ramit Sethi?

  Okay, and the movies Meow Wolf? What's that?

• 1:26:02Speaker 00

  Uh, interactive art exhibit.

• 1:26:03Ramit Sethi?

  Okay, geocaching, AXS, what's that?

• 1:26:07Speaker 00

  Tickets.

• 1:26:08Ramit Sethi?

  All right, so it's a lot of like shows and concerts. What do you want to do about that?

• 1:26:12Speaker 00

  We got to stop. Uh, there is a lot of free entertainment options in our city. We do not need to spend hundreds and hundreds of dollars going to shows when we can see it for free.

• 1:26:24Ramit Sethi?

  All right, fine. So what we have decided is that there are no more shows.

• 1:26:28Speaker 00

  Yeah.

• 1:26:29Ramit Sethi?

  That's it. All right, I'm down. Let's keep moving. I like it. Uh, back to you, James.

• 1:26:33Speaker 02

  Let's do pet, pet expenses.

• 1:26:36Ramit Sethi?

  Okay, $1,029. We got PetSmart, Rover, Chewy, Vet, and on and on and on. What do you want to do?

• 1:26:43Speaker 02

  I think just, uh, just dog, dog food and, uh, treats for, for training purposes.

• 1:26:53Ramit Sethi?

  So how much?

• 1:26:54Speaker 00

  Each bag's 110, um, and we go through two of those for the two. So that's 220 for food. And then the jars of treats, we go through two of those. That's like 30 bucks, so 250.

• 1:27:04Ramit Sethi?

  Per month?

• 1:27:06Speaker 00

  Yep.

• 1:27:06Ramit Sethi?

  Okay, so I like the change. You're at 101%, but you know, a lot of those expenses came from your dog being sick. So what do you want to do about that?

• 1:27:14Speaker 00

  I think we also need to allocate a little bit of money every month into a pet emergency account to help cover those. Because it's, you know, the teeth got cleaned. Every three years, they have to get cleaned.

• 1:27:24Ramit Sethi?

  Would you rather allocate money towards your retirement or towards your dog's upcoming health expenses?

• 1:27:31Speaker 02

  Can we do both?

• 1:27:33Ramit Sethi?

  No, you told me that one of your money rules is that money is a finite resource.

• 1:27:38Speaker 02

  Yeah.

• 1:27:39Ramit Sethi?

  Notice your initial reaction is to try to find a way to wiggle out of the rules that you yourself set. What would you rather put money aside for? Your retirement or your dog's upcoming health expenses?

• 1:27:48Speaker 00

  It's a really difficult call. I want to make both work by cutting drastically in other areas where we can. Because those are two really important things. Like, I want to retire, but these dogs are like, they're like our children, so.

• 1:28:00Ramit Sethi?

  Okay, the one option is that you cut so drastically that you then have extra money to put towards both. We can see if that's possible, but it will reflect on your lifestyle. Let's take a look. What's next to cut?

• 1:28:16Speaker 00

  The car payment can come down a little bit because we will be paying things off. So I think we can get that to about $1,000, uh, because we're not going to be taking our Ubers.

• 1:28:27Ramit Sethi?

  Okay, done. 98%. What's, Addison, notice what you're doing. The over explaining. What I'm looking for from the two of you is concise answers so we can move on. If you were spending a ton of time explaining decisions, when we already made it, we're living in the past. We got to save that and focus on the future. Let's move on.

• 1:28:48Speaker 00

  Yep, uh, we could do clothes and personal care. That's mostly my category. We can bring that down to 300.

• 1:28:54Ramit Sethi?

  300?

• 1:28:55Speaker 00

  Haircuts are still possible and.

• 1:28:57Ramit Sethi?

  Okay, we're at 89%. What else? Let's move fast.

• 1:29:01Speaker 00

  Utilities, we can bring that down to five because we need to, we have four phones between the, the two of us. We could get that down to five.

• 1:29:07Ramit Sethi?

  500 it is, okay.

• 1:29:09Speaker 00

  Yep.

• 1:29:09Ramit Sethi?

  Fine. You're at 87%. Just want to point out at 87%, you're still spending more than you make every single month. What about this miscellaneous? Let's take a look here. Miscellaneous, we have Upstart, Ivy, and

• 1:29:26Speaker 02

  Those like interest payment for the loan.

• 1:29:29Ramit Sethi?

  There's quite a bit of uncategorized and sloppy spending that needs to be corrected. I will not cut this down to zero, but I'll keep it at 300, which means you all need to be looking transaction by transaction until you really smooth out your spending. You're down to 83%. All right, I'm going up to income. What do you got?

• 1:29:47Speaker 00

  I'm going to be resuming full time. And so my income is going to go from $4,000 a month to 7,100.

• 1:29:55Ramit Sethi?

  Great. What's the take home? Do you know?

• 1:29:56Speaker 00

  That's, that's going to be the net. That's the take home.

• 1:29:59Ramit Sethi?

  Wow. 7,100 net. That's great. All right. Watch what happens to the numbers here. Wow. 63% your fixed costs. That's not bad. That's really impressive. Great job so far. Very, very impressive. You cut your expenses down by over half. Great job. But we need to go one step further. Are you building savings if we end the call right now?

• 1:30:22Speaker 00

  We are not currently, but we need to.

• 1:30:24Ramit Sethi?

  Okay. So let's do that right now. One thing that people often do is they will over, they'll focus on expenses, which is great. But then they don't go the final step of saying like, what do we do with the extra money now? And they just let it sit there and then it gets spent because it's sitting there. And you two know, if the money is in your account, you will spend it.

• 1:30:41Speaker 02

  Yeah.

• 1:30:41Ramit Sethi?

  So look at this. You have $4,697 a month left. What do we want to do with that?

• 1:30:47Speaker 00

  We got to hit 10K for that savings account that we talked about as our first rule. No other spending until that's built up. So that's going to need to primarily go towards that. But I feel like we also need to be putting some towards retirement. And I, that's where I don't know. Do we build up our emergency account first and then start contributing?

• 1:31:08Ramit Sethi?

  You do both. First of all, right now you have $0 in savings. You're at extreme risk. If one of you gets in an accident or something happens, you're in real trouble. So there is no perfect answer here. This is really about making a decision based on risk, age, all kinds of stuff. But if it were me, I would put more of the money available towards savings because I need to build a moat in case something happens. Technically, if you all stuck to this at $8,000 a month, you know, you should have like $50,000 minimum in a savings account for like roughly six months of expenses. Okay? That would be 8,000 times six.

• 1:31:50Ramit Sethi?

  But we can start with less than that and we can build up over years. So let's take a look here. We can put, I don't know, maybe $3,000 a month towards savings. What's up with the debt? What's your debt payoff date?

• 1:32:05Speaker 00

  So other than my student loans, I will have everything paid off in 2031, but I have a lot of stuff falling off in 2026 and 2027 and 2029.

• 1:32:15Ramit Sethi?

  Nice. In 2026 and the other 2020s, how much is the payment that you're going to now have?

• 1:32:23Speaker 00

  About a thousand dollars will be off.

• 1:32:24Ramit Sethi?

  All right. So like, what would you do with that $1,000 once it gets paid? Do not say the brewery.

• 1:32:29Speaker 00

  No, no, buy one. No. I would say like, I really, I am worried about retirement. I feel incredibly behind. And so I need to figure, I need to calculate, what do we need or want for retirement? And how much do I need to start putting towards? I think a thousand dollars is going to be a really healthy amount to get caught up since we're starting. So wait.

• 1:32:49Ramit Sethi?

  It's a good start. You're, you're going to need to get even more aggressive with that, much more. First of all, I love that you know your numbers. I'm so impressed. That is less than 5% of people know their debt payoff plan. Extremely impressive. James, did you know that?

• 1:33:01Speaker 02

  No.

• 1:33:02Ramit Sethi?

  Okay. You got to know it from now on. The idea of letting Addison know this stuff and carry these and have these numbers, it's not okay for the two of you as partners. So we have to redo that relationship where the two of you know these key numbers and you know what they mean. Okay?

• 1:33:16Speaker 02

  Yeah.

• 1:33:16Ramit Sethi?

  If that is the case, then here's what I propose. We are putting, let's just say 500 bucks a month away for retirement. Not bad, not bad, not bad. Hair and clothes was 300 bucks a month. Cause I don't know too many people with this much debt who spend $300 a month on self-care.

• 1:33:35Speaker 00

  That's fair. I think that could probably go down to, how often do you need your haircut, James?

• 1:33:42Speaker 02

  Every five to six weeks.

• 1:33:45Ramit Sethi?

  How much you pay for a haircut, James?

• 1:33:46Speaker 02

  Uh, 60 bucks.

• 1:33:48Ramit Sethi?

  How much you tip?

• 1:33:48Speaker 02

  20%.

• 1:33:50Ramit Sethi?

  Okay. So 70 bucks for a haircut. Like, here's what I'm proposing. I don't care if you get, if you cut your hair at home or that, that's up to you. But I am proposing like, there are so many things that you both take for granted. Like, of course we gotta like go to a show. Of course we have to have this and go to Uber and get a haircut every four weeks. How does a couple that does not go into debt, what do they do? I'll tell you right now, they don't get their haircut for 80, $70 to $80 every four weeks. They stretch it out, they go to a cheaper place or they do it at home. Up to you what you want to do, but I'm trying to show you some of the things you just take for granted are actually just assumptions. And there are much cheaper ways to do them. What do you want to do for the amount of $300 a month for self-care?

• 1:34:32Speaker 00

  I'd be willing to not deem any else, any other stuff.

• 1:34:35Ramit Sethi?

  What's the number?

• 1:34:36Speaker 00

  So I'd leave it at $70 a month.

• 1:34:39Ramit Sethi?

  Can you stretch that, James?

• 1:34:40Speaker 02

  Yeah, I can do it elsewhere.

• 1:34:42Ramit Sethi?

  Love it. 40 bucks it is. That includes the tip, so make it 30.

• 1:34:45Speaker 02

  Mm-hmm.

• 1:34:45Ramit Sethi?

  Supercuts, here we come. All right. Next up, oh, call and negotiate your back taxes and even your credit cards. See if you can do it. You might not be able to, but at least try.

• 1:34:56Speaker 02

  Okay.

• 1:34:56Ramit Sethi?

  All right. We're at 4% on investments. That can come up over time. Right now it might be the best you can do. Savings at 24%, which is quite good. Uh, you know what? Y'all have 12% left or $1,457 for guilt free spending. That's too much. What are you going to do with $1,400? I know you'll spend it, but I think that money would rather be allocated somewhere else. Y'all want to take care of your dogs?

• 1:35:18Speaker 02

  Mm-hmm.

• 1:35:19Ramit Sethi?

  All right. Well, here's where it comes from. How much you need to put aside for your dogs?

• 1:35:22Speaker 00

  I'd say a hundred dollars a month.

• 1:35:24Ramit Sethi?

  What is happening right now? I saw the transactions where you spent $1,500 and then $200 and on and on and on. That happened last month. How much do you think on a yearly basis, you're going to spend on medical or unexpected expenses for these dogs?

• 1:35:38Speaker 00

  Probably two grand.

• 1:35:40Ramit Sethi?

  Two grand. Okay. I'll put it there if you want, but I'm going to try to show you a different way of thinking about it.

• 1:35:44Speaker 00

  Yeah.

• 1:35:45Ramit Sethi?

  When I plan for uncapped expenses, first of all, I'm very wary of anything where there's a potential limitless amount that I will have to spend. I'm talking about houses, cars. But if, sometimes we have to have things that are just going to potentially cost money and we don't know how much or how. That's okay. In those cases, I always am conservative. So for example, when people buy a house, the typical guideline is you assume one to 3% of the purchase price in maintenance every single year. I always assume 3%. Why? Because I don't want to be caught surprised with a $10,000 or $100,000 expense. Same thing here. Assume it's going to be bad and save for that. So how much you want to save?

• 1:36:29Speaker 00

  Let's say for the year, 5,000, considering when we have insurance, I think we get 90% coverage. So buying cash is going to go a long ways.

• 1:36:39Ramit Sethi?

  All right. So I'm going to save dog health. All right. We're going to call it 400 bucks a month. And that's going to sit in a sub savings account or a special savings account called dog health. And that's where you pull from. Okay? Damn, you still have $1,057 left. How much you want to have for like, quote, fun? Most times people, I recommend they have 20 to 35%. Okay? You all are at 8% right now, so you're well below. But you also have a high income. Okay? And you're in a lot of debt with pretty poor habits. And your habits have shown that when you give yourself an inch, you take a mile. So sometimes it's easier to just cut it off completely and not to think about it. Therefore, I would recommend you bring that number down, even though it seems crazy.

• 1:37:22Ramit Sethi?

  I rarely recommend somebody go this aggressive, but you actually need to be aggressive so you can send a signal to yourselves. Our lifestyle is totally different now. Therefore, what percent do you think you should have in guilt free spending?

• 1:37:33Speaker 00

  I almost want to say zero because I feel like we've lived like our fun life for so long.

• 1:37:39Ramit Sethi?

  Yeah.

• 1:37:40Speaker 00

  And I'm feeling pretty guilty about that. So I don't know if we deserve that right now. We've kind of spent that in advance of now.

• 1:37:46Ramit Sethi?

  I love the way you are, you are thinking. That's awesome. I, I don't want this to be punitive. We're not doing the whole like, you have sinned. That's not what this is. Okay? Instead, I would like you to look at it this way. We are taking our finite amount of money and we are redirecting it, allocating it with ruthless and relentless force towards the things that are important to us. You told me we respect money in this family. I see that because you are saving a huge amount of money every month, 27%. And you need it because you have zero savings. That shows me respect. Hey, we made a mistake in our past, but we are fixing it and we are fixing it with overwhelming focus and force now.

• 1:38:31Ramit Sethi?

  That's respect. I see investments. It's small, but it's a start. I like that. That's respect. Hey, we'll do more once the other car is paid off and once we have the credit card. That's money's going to go directly towards investments. Great. I think you should give yourself a little bit of grace. If it were me, I might take 800 bucks and put it towards investments. So that's a very healthy investment rate to start with. But I think, could you do $257 on fun for the entire month? Now think about it. Fun includes Gatorade. From now on, we're drinking water. Oh, I need hydration. Salt, goodbye. Next. No more shows. We already talked about that. No more brewery.

• 1:39:14Ramit Sethi?

  You could go once a month, but you all have to plan ahead and say, we are going to get one beer and no pretzels or whatever else. What do you all think?

• 1:39:24Speaker 00

  The great thing about our plan is like, we set the rule, we're not spending anything until, you know, we get our savings built up. It's like a huge goal and accomplishment. And then maybe at that point, we can reward ourselves with just a little bit more everything else.

• 1:39:38Ramit Sethi?

  Yeah. I love that. And can I add something else I love? You, you, you mentioned earlier, Addison, that, you know, you looked at your transactions and you're like, what do we even get for it? Like just a bunch of random stuff. But if you have $257 per month and that is it for fun stuff, then I bet you the two of you are going to plan and talk about it. It's actually going to be meaningful. So maybe you do decide to go to the brewery. It's on the calendar and then you can talk about it. Hey, I think you should do January, I'll do February. You do March, I'll do April. What are we going to do? Well, let's do this. Oh, well, let's do that. Well, this is how much we have, including tax, tip, all of it. Do we want to take an Uber there? I don't know. That would cut, that would cut into like 40% of our thing.

• 1:40:22Ramit Sethi?

  So you become actually hyper focused. And when you get there, whether it's a movie, restaurant, whatever, you, you looked at the menu, you're salivating, you're ready to go, and you actually appreciate it even more. That's how you do it. What surprised you about the changes that you have made today?

• 1:40:41Speaker 02

  Although there was a pushback and apprehension and explaining.

• 1:40:48Speaker 02

  Less of it than I thought that it would be.

• 1:40:51Ramit Sethi?

  Why do you think that is?

• 1:40:52Speaker 02

  The 20, 26 years of adulthood that have viscerally punished me for all the decisions I made. The potential relief from these decisions is looking, feeling pretty good right now.

• 1:41:08Ramit Sethi?

  Love that. Addison, what surprised you?

• 1:41:11Speaker 00

  We actually have a concrete plan to move forward with, and it's not as painful as I thought it was going to be. Am I going to be really excited for some safety and security financially, but we have an emergency account? Heck, yeah. Am I excited about having retirement? Yeah. So this was actually more fun and exciting than I thought it was going to be because I was very nervous and I had to dig through a lot of things and feel a lot of shame perhaps, but I'm leaving feeling excited and I'm surprised I feel that way.

• 1:41:36Ramit Sethi?

  I love that. I love both of your receptivity to these changes. These are really big changes. They're not to be taken lightly. Some of the biggest changes that we have made on this podcast. And it's actually really hard because what you are seeing is the lifestyle that you knew being systematically removed, one thing after another. And that, if that's the way you look at it, it's like I'm cutting off one finger after another. It's just increasingly depressing, sad, hopeless. But what I noticed is that the two of you actually started to move towards something.

• 1:42:19Ramit Sethi?

  And so it's like you have a philosophy, you have rules, you have a goal of having $10,000 in a savings account and feeling more secure. And I kind of love that you pushed back on me with the dogs. You go, hey, we're gonna, these dogs are part of our family. We are going to find a way to do it. Amazing. That means you can't do this or that. And you both said, fine, that's priorities. I love that. Addison, you came on asking to learn a little bit more about your psychology. A few things I want to observe. First, a lot of explaining and over explaining is kind of a tip off. As you, two of you go forward, if you find yourself over explaining, maybe just pause, make a joke of it. But it's actually something to notice in your relationship.

• 1:43:04Ramit Sethi?

  A lot of leaning on comfort and double talk, you know? Yeah, we love, we like comfort, but actually it's not that important. It's because there was a new job and then this happened and that happened. Important to be honest, hey, in our past chapter, we loved comfort. In fact, it was the overriding thing that guided us. And when we take a look at it from perspective, yeah, it was nice in the moment, but it didn't really leave us with anything of lasting meaning. And so we've decided to change to being a little bit more planful, a little bit more deliberate. And then when things come up, which they will, like your family visiting or dog needs something special. Then you go, okay, great. We already planned for it. Or hey, we're not able to do this because that's not part of our plan.

• 1:43:49Ramit Sethi?

  So that's a really savvy way to look at your money. And then the two of you coming together will be the most important thing. This plan can work or fail based on the two of you. Right now, there is still a disconnect between how both of you engage with money. It's a very common dynamic, you know? He kind of goes and goes to work and then comes home and is disconnected from the finances. She is managing the money, but managing to her means, you know, making a bunch of spreadsheets, but not really having a clear distribution of money. And then they fight and she asks what's happening and he retreats. We don't want that anymore. We need to be teammates.

• 1:44:31Ramit Sethi?

  When you do that as partners, it's going to be very, very connective, the way it has been today.

• 1:44:38Speaker 00

  This has been so helpful. Like we clearly, we wanted to make changes. We got started. We just couldn't do it on our own. So we, we needed this firm intervention. And it's been really great. So like, thank you is not enough to say.

• 1:44:53Ramit Sethi?

  It's absolutely my pleasure to see the way that you both came here, asked for help. With a little probing, you were honest, which I love. And as I said from the beginning, I'm not here to judge. I'm here to help you be honest with yourselves and with me and then make changes. And also it is especially meaningful to me to help you because of the lack of financial education that you got growing up. And I don't mind if people did not learn this stuff. I never mind that. As long as you're willing to change, which you are, I love to lavish my time and attention on you. So thank you both. Stay in touch.

• 1:45:31Speaker 02

  We will. Thank you.

• 1:45:33Ramit Sethi?

  I really like Addison and James. At the beginning of our conversation today, I think it was a little bit combative. I personally will take some responsibility for that. I was trying to pull out what's really going on here, feeling a little resistance. But I noticed this inflection point where they started to be more into it. They started to actually think about the future. James came along, Addison too, both taking responsibility. I like that. And you could see my energy shift too. When they are open to change, I lean in, I get excited. Will they follow through? I actually think they will make some serious changes. I think some of the examples that I shared with them today, they had simply never experienced them in their entire life. For example, the idea that if family comes around, you don't have to go out to eat with them.

• 1:46:19Ramit Sethi?

  If you've never heard that, that might seem radical. It might seem like, wait, I can just not go out to eat with them? And so I think they will make dramatic changes, cutting down their spending. I also think that they will find their childhood lessons coming up. And they will start to reason away their plan. They will start to say, you know, I think we deserve it. We worked hard. We saved 8,000. That's pretty close to 10,000. Let's go out and celebrate those kinds of things. And I hope that they acknowledge those voices in the back of their head and they say, hey, that was the voice from yesterday. But today we are a different couple. If they can do that, they have a good shot at sticking with this plan.

• 1:47:01Speaker 00

  What surprised me most is the amount of spending. We've had a couple of big spending periods like our wedding and moving across the country. But in looking at the details, there's also been a shocking amount of mindless, unnecessary spending with very little to show for it. Through all of this, my biggest takeaway is that we do not need to spend money to experience comfort and joy. And in fact, our out of control spending has resulted in less comfort and joy due to stress and arguments over money. Thankfully, through this process, we have learned a lot about our relationship with finances, more about our financial reality, and we've begun to take some steps to do better.

• 1:47:43Speaker 00

  It's not sexy or groundbreaking, but for the first time ever, we are taking it upon ourselves to actually manage our money. We've taken some measures to reduce our fixed costs and we are committed to not spending beyond our fixed costs. So we can focus on our savings goals as well as aggressively paying down our debt. Now, we've cut a lot, but we're still alive and kicking. It really has not felt like a sacrifice. Because for the first time ever, we are on the same page and we are actually investing in a future that we truly want.

• 1:48:16Speaker 02

  I'd say my biggest surprise was just how far apart my perception was from reality. When it came to all those little purchases, the convenience store and going out for beers and just seeing it all laid out and how much it'd add up. It was shocking how much we spent on convenience. And when Rameeth had asked Addison about that, it really made me think a lot about how much we spent on convenience.

• 1:48:48Speaker 02

  The biggest takeaway, well, frankly, is a pretty humbling realization that we've both lived with more of a sense of entitlement than I really care to admit. You know, we work hard. We feel like we deserve these little treats, beers after a long day, going out to eat, et cetera. But seeing the financial impact of that made me realize we need to dig deeper into the why of why we're doing those things instead of just trying to treat those choices and change things on a surface level. That said, we've made some big changes, you know, no more convenience store treats, we're not eating out. And we've started meal planning and planning a grocery budget.

• 1:49:29Speaker 02

  So, you know, we're also looking beyond immediate changes, allocating money towards an emergency fund, paying down our credit cards, getting out of debt and starting an IRA, setting aside money for things to help plan for the future instead of just hoping that we'll get there.

• 1:49:46Speaker 00

  Hey guys, it's Addison and James here checking in with our one month update. We have been busier than ever, but we have some exciting progress updates to share with y'all.

• 1:49:56Speaker 02

  Yeah. So we've been able to put a lot of the information and the tools that we received into practice. Our Monarch is more dialed in and categorized than it's ever been. And our CSP, we actually do that monthly now to account for our variable income. To track all of this, we've been consistent with our weekly money meetings and getting all that dialed in. And then for some of the gnarlier stuff like the back taxes and, and such, we actually retain the CPA. So we would be working with them to help us navigate these challenges moving forward.

• 1:50:32Speaker 00

  And reflecting on our session with Ramit and how we were approaching money and our relationship with money. We've really begun to both respect and manage all of our finite resources. So not just money, but also our time and our energy, realizing as was highlighted in our meeting, our reliance on convenience. So to counter that and to stay on track, we've been working intentionally to budget all of our resources.

• 1:51:04Speaker 02

  And yeah, we've been doing that, I mean, really working together as a team, more, more so than we ever have. We've, we have a shared vision, shared goals now. We've, we've really mapped all that out where before I feel like we're just kind of shooting from the hip, which was clearly not working. But now we have a much clearer understanding or shared understanding of what's necessary versus what's unnecessary. And what we deemed, you know, what we deem as such, with supportive accountability and, you know, discussing the consequences for purchases of, as a factor as well. To kind of help with that, we also opened up a couple of joint accounts. And so we have those, everything's on the table. It's a lot more, it's a lot easier to have that.

• 1:51:49Speaker 02

  It's all transparent and it helps us with our joint decision making.

• 1:51:54Speaker 00

  Yeah. So we're just really grateful for the opportunity and the experience. We've had the information and tools at our disposal, but I really think without this opportunity, we wouldn't be putting those into practice like we have been. And we wouldn't be on the path we are now, which gives us a lot of hope for the future. So we're just getting started, but we're really excited for the future and really grateful for Ramit and team. And for everyone else who's also been along on this journey. So thanks a ton.

• 1:52:22Speaker 02

  Thank you, guys.