280. "We have $11M in assets. Why are we still living month to month?"

Ramit unpacks what happens when a couple earns more than $1 million a year but still feels like they’re living month to month, and how a lifestyle built around family, community, and tradition can become almost impossible to afford. Ramit Sethi of I Will Teach You to Be Rich talks with Margo and Kevin, 42 and 52, who live in Brooklyn with their five children. They take home around $600,000 a year and have approximately $11 million in assets, yet only around $50,000 in savings. Once Ramit uncovers expenses missing from their original plan, including private school tuition and summer camps, their fixed costs climb above 100% of their take-home pay, revealing that they’re spending more than they make every month. Their biggest challenge isn’t simply earning more money. Kevin has taken on most of the finances while Margo has had limited visibility into their overall financial picture, and neither of them has a clear picture of where their money is actually going. Ramit helps them confront how community norms and family traditions shape what they see as non-negotiable, and the difficult choices they may need to make around private school, their homes, their children, and the lifestyle they’ve built. In this episode, we uncover: How a couple earning over $1 million a year can still live month to month Why they describe themselves as “rich poor people” How missing expenses push their fixed costs above 100% of their take-home pay Why $160K in tuition and camps completely changes their financial picture How a $400K–$500K mold crisis wiped out much of their financial cushion Why they have $11 million in assets but only around $50K in savings Why Kevin manages most of the money while Margo has limited visibility into their finances How childhood money lessons shaped their “earn more, spend more” cycle How community and tradition shape their spending Why they may need to make major changes to their homes, education costs, and spending to finally start saving and investing Chapters: (00:00:00) Introduction (00:02:00) Why they call themselves “rich poor people” (00:25:00) Ramit opens up their numbers (00:43:00) The hidden expenses pushing them over 100% (01:06:00) How their childhoods shaped their money habits (01:11:00) How community and tradition shape their spending (01:15:00) They finally confront what has to change (01:33:00) Why $11M in assets still leaves them cash poor (01:36:00) Private school, their homes, and the difficult decisions ahead (01:58:00) Follow-ups 💡 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: Ladder | Get a free 7-day trial and $10 off your first month at ⁠https://ladder.fit/RAMIT⁠ NordVPN | Get an exclusive NordVPN deal + 4 months extra at https://nordvpn.com/RAMIT Skylight | Get $30 off a 15-inch Calendar at ⁠https://myskylight.com/ramit Notion | Learn more about how Notion can support your business at https://notion.com/ramit Wildgrain | Get $30 off the first box — PLUS free Croissants for life — at https://wildgrain.com/ramit Want to know exactly when you’ll hit your first $100K? Rich Life: Road to $100K gives you a step-by-step system to automate your money, accelerate your timeline, and build your Rich Life along the way. Join today: iwt.com/100K Connect with Ramit: Get my new book, Money For Couples Get Money Coaching with Ramit Download the Conscious Spending Plan Listen to my book—now on Audible Get my New York Times best-selling book Get my no-numbers journal Other episodes Instagram Twitter YouTube Apply to be coached for free on this podcast at https://iwt.com/apply

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

• 0:00Speaker 00

  We're considered a top percent wealthy people. However, there's a struggle to pay the bills.

• 0:05Speaker 01

  We do spend. We go out for dinner a couple nights a week. We like to go away.

• 0:09Ramit Sethi?

  You spend 30K a year on vacation?

• 0:11Speaker 01

  At the least. Kids get allowances.

• 0:13Ramit Sethi?

  How much is their allowance?

• 0:15Speaker 01

  300 a week.

• 0:16Ramit Sethi?

  300 a week?

• 0:17Speaker 01

  Yeah.

• 0:17Speaker 00

  The food is going up. Tuition bill goes up and we have five kids to pay tuition for.

• 0:21Ramit Sethi?

  You have five kids in private school?

• 0:22Speaker 00

  We live in a community where everybody sends to one of three schools.

• 0:27Ramit Sethi?

  What's the phrase? Keeping up with the?

• 0:29Speaker 00

  Challenges.

• 0:30Ramit Sethi?

  These numbers are very wrong.

• 0:32Speaker 01

  I don't know what I'm spending.

• 0:33Speaker 00

  He doesn't include me in the finances. He just gives me the brunt of his upset about it and his stress. We're definitely not on the same page.

• 0:41Ramit Sethi?

  Not on the same page, not making progress. That's what I'm hearing.

• 0:43Speaker 00

  Yeah.

• 0:44Ramit Sethi?

  You are spending far more than you make every single month.

• 0:49Speaker 00

  Now it makes sense.

• 0:50Ramit Sethi?

  Your understanding of reality is so out of alignment with the numbers. You have five kids. You have very high expenses. You are in serious trouble.

• 1:02Ramit Sethi?

  Deep down, a lot of us truly believe that if we just earned more money, our financial problems would disappear. I've talked to so many people who think if I just made $10,000 more, $20,000 more, $100,000 more, everything would be fine and I would stop worrying about money. Are you starting to get it by listening to this podcast? We find out over and over that this is simply not true. And today I'm talking to Margot and Kevin, 42 and 52 years old. They live in Brooklyn with their five children. And on paper, they have an incredible financial life. But beneath the surface, they describe themselves as rich, poor people. They spend virtually everything they make. They have very little set aside for their future.

• 1:46Ramit Sethi?

  And despite years of earning more, they still feel like they're on a hamster wheel. The problem is, when we start looking at what they could actually change, they tell me that everything feels almost non-negotiable. Their kids' private school, their homes, plural, their vacations, even the community and lifestyle they've built their lives around. So today, we're going to find out whether they can finally get together on the same page and make some extremely difficult financial choices, or whether they don't want to change at all. And I want you to stay to the end because after our conversation, I asked Margot and Kevin to update me on what changes they actually made. Now, let's meet Margot and Kevin.

• 2:30Ramit Sethi?

  Who is the one who filled out the application to speak to me?

• 2:33Speaker 00

  Oh, me.

• 2:34Ramit Sethi?

  You did, okay. Let me read you something from your application that caught my attention. You wrote, "At the moment, we are rich, poor people, high income with no savings and living month to month." Tell me about that.

• 2:49Speaker 00

  It's exactly what I wrote. Thank God, we're very fortunate to have a beautiful life and my husband makes a very nice living. He works really, really hard and he built everything himself. So, you know, it's not anything that was given to us. It was something that was, you know, worked for. And in the grand scheme of things, looking, if you look at his income, you know, we're considered a top whatever percent wealthy people. However, it's, there's a struggle to pay the bills month to month.

• 3:21Ramit Sethi?

  So every month, he's trying to figure out how to pay the bills? Because he does the money?

• 3:26Speaker 00

  I don't know if it's month to month. It's more like, at the end of the year, when we're getting down to the bottom of things, like, how is it that we're short?

• 3:36Ramit Sethi?

  You're short at the end of the year?

• 3:37Speaker 01

  Well, there's not much left when there should be.

• 3:39Ramit Sethi?

  Well, which is it? Are you short or there's not much left?

• 3:43Speaker 01

  Wouldn't say losing, but spending every single penny.

• 3:47Ramit Sethi?

  Okay. And then what is a rich, poor person?

• 3:51Speaker 00

  Somebody that lives a wealthy life, a very comfortable lifestyle, you know, owns homes, is able to go on vacations and at the same time has such a high cost of living. So there's no savings, there's no cushion.

• 4:09Ramit Sethi?

  Hmm. Margot, when you wrote that application, what was going through your head?

• 4:14Speaker 00

  So for a long time, I've seen my husband just, you know, working really hard, making things work, keeping up a very, I would say, high lifestyle, paying the tuition bill, private school, and just trying to keep everything intact and keep everybody happy. And I think he consistently would say, "I don't understand. I don't understand. I don't understand." What, how is it possible? And so I started to listen to some podcasts on finance and just trying to, you know, figure out how I could help us as a couple, as a family financially,

• 4:54Speaker 00

  and try to, you know, shift the energy and shift it the way things are going so that we're...

• 5:00Ramit Sethi?

  This application though, sounds like there was some tough stuff going on. Like, "At the moment, we are rich, poor people." What was going on then?

• 5:09Speaker 00

  We have a very high tuition bill and we spoke about it, that that's a big, very big part of our income. And some, my dad helps with some of it. And we decided that we're going to, you know, take on the whole thing next year. So if that being the case, you know, that's going to be an even more difficult pill to swallow next year with everything going up. The food is consistently going up. The tuition bill goes up a little bit every year and we have, you know, five kids to pay tuition for next year.

• 5:41Ramit Sethi?

  You have five kids in private school?

• 5:42Speaker 00

  Yeah.

• 5:43Ramit Sethi?

  Oh, wow. Okay, so let me make sure I understand. Margot, your dad was helping with some of the tuition bill. You both decided, "We're going to do this on our own." And when faced with the costs of five kids in private school, knowing that even with the help from your dad, you were already not putting aside a lot of money and now it's going to be even a bigger expense, you're like, "What are we supposed to do?"

• 6:05Speaker 00

  Exactly.

• 6:06Ramit Sethi?

  Is that what brought you to applying to speak to me?

• 6:09Speaker 00

  Yes.

• 6:10Ramit Sethi?

  Good to know. Kevin, what's your take on this whole situation as Margot described it?

• 6:14Speaker 01

  You know, as the kids get older, they get, it's more expensive to take care of them. So just maybe that pressure she felt of kids starting to go to college, getting older, having more needs.

• 6:26Ramit Sethi?

  Who feels more pressure about money?

• 6:28Speaker 00

  Kevin.

• 6:29Ramit Sethi?

  Ah, is that because you manage the day to day or what?

• 6:33Speaker 01

  It's been a part of my history, worrying about money.

• 6:37Ramit Sethi?

  You worried for a long time?

• 6:38Speaker 01

  Yeah, it's always there somehow. But, you know, as I get older and I'm dependent on a business to keep performing, it becomes a question where, you know, when am I putting away savings and when is that going to benefit me?

• 6:55Ramit Sethi?

  Gotcha. When you think about the word money and money in your relationship right now, what's the first word that comes to mind?

• 7:01Speaker 01

  We have fun with it.

• 7:03Ramit Sethi?

  Money's fun, okay.

• 7:04Speaker 00

  Stress.

• 7:06Ramit Sethi?

  Fun, stress, okay. How long has money been a source of stress for you?

• 7:10Speaker 00

  I think it was maybe a few years, a few years into the marriage where it started to become stressful for Kevin because I don't really deal so much with the finances. He's the one that makes the money and pays the bills.

• 7:26Ramit Sethi?

  So is he the one who's stressed out about it?

• 7:28Speaker 00

  Yeah, but it causes stress in the relationship because when he's stressed about it, I'm the one who's running the home. So it's, it's, it becomes a questioning of what's, you know?

• 7:40Speaker 01

  Yeah, she gets the brunt of my worrying.

• 7:43Ramit Sethi?

  So you get stressed, Kevin, and then you start asking questions. Why are we doing this? Can't she save money on that? Is that how it works?

• 7:49Speaker 01

  Sort of.

• 7:50Ramit Sethi?

  So you get stressed about money and then how does it rub off on her?

• 7:53Speaker 01

  I could get upset about it, be in a bad mood about it, you know, things like that where she'll get the brunt of that and then...

• 8:01Ramit Sethi?

  Margot, you want to add anything?

• 8:03Speaker 00

  Yeah, it affects the dynamic of the relationship because once he's stressed about money, things just feel like they're constantly revolved around that. And it's, you know, you know, why is the bill this high? I don't know, hon, let's look at it together. I brought it home, why didn't you look at it? You know? And it's like, oh, supermarket, supermarket, supermarket, meat bill, kosher meat in New York. It's, it's, it's, we're feeding like an army in the house. And it's a lot. I don't know. I don't know what to say. Like, I never and ever was like a irrational spender.

• 8:38Ramit Sethi?

  Yeah.

• 8:38Speaker 00

  I was never one to like irresponsibly go shopping and buy myself things that I shouldn't. So it's kind of like we both don't know why we're in this position constantly.

• 8:48Ramit Sethi?

  You feel confused?

• 8:49Speaker 00

  He's confused. I, I'm trying to...

• 8:52Ramit Sethi?

  Wait, how come? Hold on, I have a question for you because this is twice now. So I ask, "How do you feel about money?" He goes, "Fun." You go, "Stress." But it's actually him feeling stressed. And then I go...

• 9:03Speaker 01

  It's fun to make it.

• 9:05Ramit Sethi?

  It's fun to make it, okay. And then I ask, you know, "Do you feel confused about money?" You go, "He feels confused." What do you feel?

• 9:16Speaker 00

  I feel that we, that we live a very high lifestyle and in order to be able to keep... Our kids in private school and keep this lifestyle. We have to find a way to make more income because it doesn't seem that there to me that there's anywhere very significant where we can cut.

• 9:33Ramit Sethi?

  Do you agree?

• 9:34Speaker 01

  Uh, yeah.

• 9:35Ramit Sethi?

  Okay.

• 9:36Speaker 00

  But maybe you can help us.

• 9:37Ramit Sethi?

  Are we about to have the shortest conversation in the history of this podcast? Y'all just need to make another, what, million bucks?

• 9:43Speaker 00

  A half of another half a million, right?

• 9:45Ramit Sethi?

  Call it a day.

• 9:46Speaker 01

  Very good until we're not.

• 9:48Speaker 00

  And there's another something that we didn't mention was that we have plans to build a summer home.

• 9:53Ramit Sethi?

  Okay.

• 9:53Speaker 00

  So, um, we, and it's been in the making for a couple of years now. We're living in like this, the house, the way it is. And, um, we would love to be able to fix it. That's a big, like, big thing for us, but it's like, how?

• 10:12Ramit Sethi?

  Okay. What's a time where the two of you recently did not see eye to eye on something about money?

• 10:19Speaker 00

  Kevin thought that maybe it would be a possibility to move to New Jersey. It would bring our expenses way down because the schools there are a lot less than what we're paying in New York. And I don't want to move there.

• 10:35Ramit Sethi?

  You don't want to move to Jersey?

• 10:36Speaker 00

  No.

• 10:36Ramit Sethi?

  Okay, why?

• 10:38Speaker 00

  It's just not for me. It's like really quiet and desolate in the winter.

• 10:42Speaker 01

  Slower pace, quiet life.

• 10:44Speaker 00

  It's just, I'm not ready to make that move. It's a big move. Yeah, the cost, the pressure would really decrease by a lot. I think that the cost of living would go down. But it's a very different lifestyle.

• 10:55Ramit Sethi?

  How long did you talk about this and disagree about this?

• 10:59Speaker 01

  I brought it up a few times, but I knew it was off the table. She wasn't doing it, so I just gave up after a little bit.

• 11:05Ramit Sethi?

  Is that a typical trend? You bring something up?

• 11:08Speaker 01

  No, this is a big move, you know, to do that. There's a lot of liquid sitting in the home. Figured if we sold it, invested some, and had a strategy of how to earn on that, it might bring the pressure down that we're under and just live a better lifestyle. A little lower key, a little less hectic.

• 11:28Ramit Sethi?

  And Margo, you said no because you don't want to move there.

• 11:31Speaker 00

  I'm not selling my home. That's, that's our like safety net and it's an asset that hopefully will keep going up. And we'll have it for, you know, our children, you know, down the road. If we decide to, to move or to change, you know, our lifestyle and, you know, go somewhere else. We have an asset. I don't feel like.

• 11:52Ramit Sethi?

  Isn't that what he was proposing? You have an asset?

• 11:55Speaker 00

  Yeah, but I'm not going to sell that now because we have a great home. We live in a really great block and a great neighborhood. The kids are happy. We're very comfortable. We have a lot of kids.

• 12:04Ramit Sethi?

  Okay, so you want to keep it the way it is for now?

• 12:06Speaker 01

  Yeah.

• 12:06Speaker 00

  For now.

• 12:07Ramit Sethi?

  And then I have a question. You mentioned we have this asset so that one day we may give it over to the kids. You have five kids in one house, the one we're talking about.

• 12:14Speaker 00

  Right.

• 12:14Ramit Sethi?

  I know you have other houses, but this one, how do you envision distributing a house to five kids?

• 12:21Speaker 00

  Well, they'll sell it and they'll distribute the funds.

• 12:25Ramit Sethi?

  Split the money.

• 12:25Speaker 00

  They'll split the money.

• 12:26Ramit Sethi?

  Okay, cool. Have you talked about this?

• 12:30Speaker 01

  That's the plan, but not really.

• 12:31Speaker 00

  That's like the norm for where we come from.

• 12:33Ramit Sethi?

  What does that mean, where we come from?

• 12:35Speaker 00

  Like, we live in a community in Brooklyn where, um, and we all live in kind of like, like the same area.

• 12:43Ramit Sethi?

  Yep.

• 12:44Speaker 00

  And, um, my grandparents left their homes to my parents and my parents will probably leave, you know, and their homes and, you know, generally speaking, everything has just consistently gone up in value, so.

• 12:58Ramit Sethi?

  So this is what you've seen happen for generations?

• 13:01Speaker 00

  Exactly.

• 13:02Ramit Sethi?

  That's the plan here. Okay, Margo, what feels most frustrating to you about your financial situation?

• 13:08Speaker 00

  The hamster wheel of constantly just trying to keep up, make, you know, pay the bills. And at the end of the day, there's no savings and it's the same thing year after year. And we need to like educate ourselves, figure this out on our own because obviously nobody's going to teach it to us. And we have to have a plan and it's enough is enough.

• 13:28Ramit Sethi?

  Enough is enough.

• 13:29Speaker 00

  Enough is enough.

• 13:29Ramit Sethi?

  Hey, I love that phrase. Enough is enough. Let's do it.

• 13:33Speaker 00

  You gotta do it.

• 13:34Ramit Sethi?

  Enough is enough. How long have you felt this way like, God, this sucks when it comes to money?

• 13:39Speaker 00

  You know, from where we come from, almost everybody sends to, to private school and everybody seems to be struggling to keep up, not just us. And if you think about it logically, it makes absolutely no sense. Like how we're just going and going and spending all this money every year. We don't have savings. Our kids are not set up. What is this doing for us? We want a certain future and if we're not going to make the changes now, we're not going to get there. I mean, it's just logical. If you see where we are now and where we want to go, we're, we're not kind of like on that path.

• 14:10Ramit Sethi?

  I'm not sure what the dynamic is between the two of them because there's so much information coming at me. But a few things are clear to me already. They both have a story about money and I can tell that they have repeated this story a lot. And it is entertaining. I'm kind of enjoying it, but I'm wondering, when are we going to get to the real stuff? I mean, after all, the application speaks for itself. I think the way they've set it up is this traditional sense of he makes it, she spends it. But I think there is something deeper beneath here. I just don't know what it is yet.

• 14:44Speaker 01

  We do spend. We go for dinner a couple of nights a week. The kids go, they come, they get allowances.

• 14:50Ramit Sethi?

  How much is their allowance?

• 14:51Speaker 01

  They, they get my, one in college, I'm probably giving 300 a week to.

• 14:56Ramit Sethi?

  300 a week?

• 14:57Speaker 01

  Yeah.

• 14:58Ramit Sethi?

  I was once 18 years old, weren't you both?

• 15:00Speaker 00

  Yeah.

• 15:01Ramit Sethi?

  Did you need $1,200 a month for food? It's not my place.

• 15:04Speaker 01

  I was working at 16 because I grew up without money. So I knew how hard it was to get 10 cents out of my, my dad. May he rest in peace. Because at 15, I was working for myself. I was all on my own.

• 15:18Ramit Sethi?

  What do you think is stopping you from changing this financial situation?

• 15:23Speaker 01

  I like the fun. I like, we like to go away. We go to Italy in the summers. Just got back from a fantastic ski trip in Europe. So those things are tempting to me. I spend on them. You know, I, there are certain things we could cut out, but then I feel like we're just not enjoying what we like to enjoy.

• 15:45Ramit Sethi?

  Is that the crux of it though? I mean, you mentioned.

• 15:46Speaker 00

  No, when we spend, we went to Europe because it was a quarter of the price as to go to Vail.

• 15:51Speaker 01

  Yeah, but I still had to take seven, nine children.

• 15:54Ramit Sethi?

  That doesn't work on me.

• 15:55Speaker 00

  It was a hundred percent.

• 15:57Ramit Sethi?

  Margo, listen, listen, I'm going to repeat what you just said out loud so that you can hear yourself.

• 16:00Speaker 00

  I'm telling you.

• 16:01Ramit Sethi?

  Hello, America. Instead of going to Vail, we decided to take our family of seven to Europe. Aren't we economically conservative? Care to respond?

• 16:15Speaker 00

  It was cheaper, significantly cheaper.

• 16:17Ramit Sethi?

  You're sticking with it.

• 16:18Speaker 00

  It was literally significant, was it not significantly cheaper?

• 16:22Ramit Sethi?

  All right, we all make our own decisions in life.

• 16:24Speaker 00

  Right.

• 16:24Ramit Sethi?

  God bless.

• 16:25Speaker 01

  You know?

• 16:25Ramit Sethi?

  All right. Shall we take a look at your numbers?

• 16:28Speaker 00

  If you'd like to.

• 16:29Ramit Sethi?

  Oh, the mood shifted. That's interesting. How was it to do the conscious spending plan together?

• 16:34Speaker 00

  We did not do it together.

• 16:36Ramit Sethi?

  Okay. Now, I just want to point out, this is quite an interesting scenario because, Margo, you're the one who applied. Part of the instructions are that you should do the CSP together. Did you see that?

• 16:46Speaker 00

  Yes. So I was like, let's do this together. I don't, what do we have to do?

• 16:50Ramit Sethi?

  Okay.

• 16:50Speaker 00

  And Kevin said, I'll do it. I'll take care of it.

• 16:53Ramit Sethi?

  Why'd you say, I'll take care of it?

• 16:54Speaker 01

  Because if I went to her with a question about something, she doesn't have the answer.

• 16:58Ramit Sethi?

  So?

• 16:59Speaker 01

  So, you know, on a, on what I'm spending a month on, whatever, the cars, the subscriptions. It's not really aware, so.

• 17:10Ramit Sethi?

  So it's like, don't ask her because she doesn't know.

• 17:12Speaker 00

  He wants to change, but I feel like he's not committed to like just figuring it out with me somehow.

• 17:20Ramit Sethi?

  How do other couples do this?

• 17:21Speaker 01

  I don't know. You know, a lot of couples that we know are dependent on, of course, themselves, what they earn. But there's a lot of extra help in our community.

• 17:32Ramit Sethi?

  Family.

• 17:33Speaker 01

  Family helps.

• 17:33Ramit Sethi?

  Parents.

• 17:34Speaker 01

  There's, you know, they.

• 17:35Ramit Sethi?

  Well, you guys, at least right now, for the moment, do have a limited amount of that. So you don't know how other couples do it. Margo?

• 17:43Speaker 00

  This is a conversation that we have consistently.

• 17:45Ramit Sethi?

  Yeah.

• 17:45Speaker 00

  How is everybody else doing it? Like you're making X amount. How is everybody else doing?

• 17:49Ramit Sethi?

  Is there possibly a podcast that shows in depth what other couples talk about behind closed doors?

• 17:54Speaker 01

  No, like we were home for Passover this year and I could have laid down in the middle of the street and.

• 18:00Speaker 00

  Yeah, there's no one, there's no one in Brooklyn. We were maybe one of like 10 families home. Everybody's away.

• 18:06Speaker 01

  Point is that everyone's on a.

• 18:07Speaker 00

  How is everybody paying their tuition bill? Paying their summer homes and vacation.

• 18:12Ramit Sethi?

  I'm sorry, is this like a, okay, I understand the curiosity. That is interesting, but is this like a woe is me? Like everyone else got to go on vacation?

• 18:18Speaker 01

  We do, we do.

• 18:19Speaker 00

  No, no, we're very, we live, we're very appreciative of the lifestyle.

• 18:22Speaker 01

  We do.

• 18:22Speaker 00

  Absolutely not.

• 18:23Ramit Sethi?

  Okay.

• 18:23Speaker 00

  We're, we're very, very fortunate.

• 18:24Ramit Sethi?

  You're wondering like, how do they do it?

• 18:26Speaker 00

  But how does, like, you're making a nice salary. Like what's going, how is this possible?

• 18:32Speaker 01

  We're spending it.

• 18:33Ramit Sethi?

  You're spending whatever you make.

• 18:34Speaker 01

  I'm not, there's a part of my brain that doesn't know how to. Put aside, and when I do, and it's there, it's just in the bank. So that, that doesn't do anything for us.

• 18:45Ramit Sethi?

  I will show you different ways of changing it, but problem number one is that you did not actually do this together. That is the problem. When I met my wife, not surprisingly, I knew a lot more about money. It would have been really easy for me to be the money guy. Hey, I'll do this. Give it to me. Blah, blah, blah. I have the thing that works already. And what do you think would have happened had I done that?

• 19:07Speaker 01

  I would just would have continued.

• 19:08Ramit Sethi?

  Yeah.

• 19:09Speaker 01

  Pattern.

• 19:09Ramit Sethi?

  It would have been me, being the money person for our entire relationship. We, she would have had no visibility. Once in a while, she would probably gotten anxious, maybe disagreed with me. Maybe I would have said, ah, it's fine, blah, blah, blah, because I know all the stuff in my head. Maybe one day I get hit by a bus. Maybe she doesn't know what to do anymore. Maybe Morgan Stanley or God forbid Wells Fargo calls her up, tries to charge her 1.5% AUM. She's defenseless, crying. Now we don't know what to do. Plus, she's paying [bleep] AUM to a worthless financial advisor. And what happens? I'm looking up from hell. I'm there because I didn't help my wife become equipped about money the way that I was.

• 19:45Speaker 01

  Right.

• 19:45Ramit Sethi?

  Not a good situation, especially if you yourself are not particularly equipped.

• 19:49Speaker 01

  Right.

• 19:49Ramit Sethi?

  Shall we change this?

• 19:50Speaker 00

  Yes, sir.

• 19:51Ramit Sethi?

  Thank you. I don't know about you, but I'm finding the communication style pretty difficult. I'm not used to having couples who talk over each other and talk at me at the same time. It's a little overwhelming. And I think what's going on here is this need to share their story. Everyone feels like, I just need to make sure you know what's going on. And I also think there's a bit of, this is what the people around us do, and so this is what we've learned, and this is just natural. This is how our parents probably talk. This is how we talk. But I'm an outside third party. I'm here to gather information. I'm here to help. And part of what I suspect is going to happen in today's conversation is the stories they tell themselves. Everything from the way they think about money to the way they communicate with me, with each other.

• 20:36Ramit Sethi?

  Those are probably need to come under question. They may need to change those things. At least that's my suspicion. We're going to take a look at the numbers right after this. One of the best things that my wife and I have spent money on is personal training. It has allowed us to stay on track, to be healthier, to build muscle. It's something that's just important. It's now part of our lives. Now, I know that not everyone is in the position to hire a personal trainer. It can get expensive. So when the Ladder app asked me to try it, I was curious about what it actually did. 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.

• 21:20Ramit Sethi?

  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. 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,

• 22:04Ramit Sethi?

  at-home dumbbells, kettlebells, and a whole bunch more. The app costs less than a dollar a day. Compare that to over a hundred dollars 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. That's ladder.fit/ramit. Are you still using the same passwords you had in high school?

• 22:46Ramit Sethi?

  The one that includes your dog and, uh, numbers in your address? Stop it. The easier your password is for hackers to figure out, the more vulnerable you are. Especially because I know all of you are using the same password across different sites. It's time to protect yourself online. If you are ready to take this more seriously, like I do, check out this episode's sponsor, NordVPN. NordVPN is an all-in-one digital security app combining the world's leading virtual private network with a next-generation antivirus to help protect you from scams and everyday digital threats. Their privacy-first, next-gen antivirus doesn't just wait around until a malicious file is on your device. Instead, it intercepts threats at the source, identifying fake shops, blocking scam websites and malware,

• 23:31Ramit Sethi?

  and neutralizing phishing links. Plus, one subscription can give you access to multiple security features and protect up to 10 devices. We're talking about your laptop, smartphone, tablet, smart TV, all covered. Get an exclusive NordVPN deal plus four months extra at nordvpn.com/ramit. It's risk-free to try with NordVPN's 30-day money-back guarantee. The best deal for NordVPN is through my link. That's an exclusive NordVPN deal plus four months extra at nordvpn.com/ramit. That's Nord, N-O-R-D-V-P-N.com/ramit. What's the exact date where you will be debt-free?

• 24:15Ramit Sethi?

  What's the exact date when you'll be rich? Most people don't think this is something you can plan for. It's just something one day in the future. Wrong! This is something you can plan for. In fact, I created Rich Life Road to 100K to show you step-by-step how to figure it out. In the program, we cover exactly what you need to focus on, how to accelerate your timeline so you can get there faster, and how to live your rich life along the way. Plus, we have tons of added bonuses in this program, like live weekly calls, access to a great community, and a library of vast content, all at your fingertips. You can join this program today at iwt.com/100k.

• 24:58Ramit Sethi?

  Let's take a look at the numbers. Kevin, I would like you to read off the word in bold and the number next to it for this entire box, please. Go ahead.

• 25:06Speaker 01

  Assets, 11 million. Investments, half a million. Savings, it's about accurate.

• 25:12Ramit Sethi?

  Um, debt? Wait, are you going to read the numbers?

• 25:14Speaker 01

  50,000, yeah. Uh, debt, 2.3 million.

• 25:18Ramit Sethi?

  Uh huh.

• 25:18Speaker 01

  Total net worth, 925.

• 25:22Ramit Sethi?

  9.25 million. Okay. What do you think about those numbers?

• 25:26Speaker 01

  I think they're beautiful, but they're on paper. They're in our homes.

• 25:30Ramit Sethi?

  Paper wealth in your homes?

• 25:32Speaker 01

  In my, in my investments.

• 25:34Ramit Sethi?

  Okay.

• 25:34Speaker 01

  My assets, we'll call them.

• 25:36Ramit Sethi?

  Margot, what do you think about those numbers?

• 25:38Speaker 00

  Uh, just the savings is ridiculous.

• 25:41Ramit Sethi?

  Okay.

• 25:42Speaker 00

  I guess in comparison to the assets.

• 25:44Ramit Sethi?

  Yeah.

• 25:45Speaker 00

  And, uh...

• 25:47Ramit Sethi?

  What about the good stuff?

• 25:48Speaker 01

  Yeah, there's good.

• 25:48Speaker 00

  Yeah, thank God.

• 25:49Speaker 01

  At the end of the day.

• 25:50Ramit Sethi?

  Thank God.

• 25:51Speaker 00

  I don't know. We're fortunate.

• 25:52Ramit Sethi?

  This is the most depressing, how many digits in this [bleep] number? One, two, a lot. A lot of digits. I never heard a more depressing answer. Thank God, ah, [bleep]. That's the response?

• 26:01Speaker 01

  No, it's good. We're very, very appreciative of what we have.

• 26:04Speaker 00

  We really are very fortunate.

• 26:05Speaker 01

  And we did pump a lot of money into those assets.

• 26:08Ramit Sethi?

  All right. What are the, what are the assets, by the way?

• 26:11Speaker 01

  Um, there's, uh, homes and, uh, my business. We have two.

• 26:15Speaker 00

  Just the two homes.

• 26:15Ramit Sethi?

  Two homes. How much are those worth total?

• 26:17Speaker 01

  Um, between, I'd say about nine, eight and nine.

• 26:23Ramit Sethi?

  Nine million for the two homes?

• 26:24Speaker 01

  Yeah.

• 26:25Ramit Sethi?

  Great. And then the business, you valued at 2 million?

• 26:27Speaker 01

  Yeah.

• 26:27Ramit Sethi?

  Okay. How did you value that just out of curiosity?

• 26:29Speaker 01

  I was offered a buyout at that number.

• 26:31Ramit Sethi?

  Oh.

• 26:32Speaker 01

  But I didn't take it.

• 26:32Ramit Sethi?

  We have a real business value on this show. Amazing.

• 26:36Speaker 01

  Yes.

• 26:37Ramit Sethi?

  Too many times people come on the show, they go, mm, I make 150K. That's probably worth $22 million. I go, what the [bleep]? Ah, whatever.

• 26:44Speaker 01

  No, I had an offer that I declined.

• 26:46Ramit Sethi?

  Amazing. All right. Well done. Uh, your investments at 500K, what are those investments in?

• 26:52Speaker 01

  Uh, stocks.

• 26:53Ramit Sethi?

  Okay, like a 401K type of thing?

• 26:55Speaker 01

  It's not 401Ks. It's in...

• 26:57Speaker 00

  That's my, it's my personal.

• 26:59Speaker 01

  Between both.

• 26:59Ramit Sethi?

  Individual stocks?

• 27:01Speaker 01

  Yeah, individual stocks.

• 27:01Ramit Sethi?

  Got it. Savings at 50K, low compared to assets. I think you recognize that, Margot. And then what's the debt? 2.3 million. What is that?

• 27:09Speaker 01

  That's just the, uh, mortgages.

• 27:11Ramit Sethi?

  Okay, two mortgages.

• 27:12Speaker 01

  Yeah.

• 27:13Ramit Sethi?

  Nine million value, 2.3 million left to pay.

• 27:17Speaker 01

  Yeah.

• 27:17Ramit Sethi?

  What's your interest rate on both of those?

• 27:19Speaker 01

  They're, they're fantastic. So that's why...

• 27:21Ramit Sethi?

  Tell me.

• 27:21Speaker 01

  You know, it was during COVID, so the rates were cheap.

• 27:24Ramit Sethi?

  2.75, yeah. Great. Well done. All right, let's take a look at... Margot, can you read off the combined gross monthly income, please?

• 27:34Speaker 00

  Zero.

• 27:35Ramit Sethi?

  Yeah, that's interesting. Y'all make $0 gross?

• 27:39Speaker 01

  Um, I put the net.

• 27:42Ramit Sethi?

  The net is 50K a month.

• 27:44Speaker 01

  Yeah.

• 27:45Ramit Sethi?

  Where's the gross?

• 27:46Speaker 01

  It's probably... Seventy? Sixties?

• 27:51Ramit Sethi?

  Hmm? You make sixty K gross and fifty K net? I don't think so. What's your gross income per year? Ballpark?

• 27:57Speaker 01

  Let's call it, uh, seven hundred.

• 28:01Ramit Sethi?

  Do you pay yourself a salary?

• 28:03Speaker 01

  Yeah, of course. That is the salary that I pay myself.

• 28:06Ramit Sethi?

  Fifty K net is the salary you pay yourself? And are you an escort?

• 28:11Speaker 01

  Yeah. Yes.

• 28:12Ramit Sethi?

  Okay, you take distributions as well?

• 28:14Speaker 01

  Yes.

• 28:14Ramit Sethi?

  How often?

• 28:16Speaker 01

  Um, like to get it in once a year.

• 28:18Ramit Sethi?

  How do you decide how much you can take?

• 28:20Speaker 01

  Depends what's there at the end of the day.

• 28:22Ramit Sethi?

  Ah.

• 28:23Speaker 01

  At the end of the.

• 28:24Ramit Sethi?

  That must be tough for planning.

• 28:25Speaker 01

  Yes, because the business fluctuates. There's years, I'll have an incredible year, be able to pull a lot more. And then there's challenging years with, uh, you know, all that's gone on in the business that I'm in. Tariffs plays a big role, shipping, the consumer.

• 28:43Ramit Sethi?

  What kind of business are you in?

• 28:44Speaker 01

  I do, uh, wholesale.

• 28:46Ramit Sethi?

  Wholesale, okay, so you have.

• 28:47Speaker 01

  Import. Import.

• 28:48Ramit Sethi?

  Importing certain type of goods, tariffs have affected those goods, making it more expensive.

• 28:53Speaker 01

  Yes.

• 28:53Ramit Sethi?

  Is your net income down over the last, say, year or two?

• 28:57Speaker 01

  Um, yeah.

• 28:59Ramit Sethi?

  Okay, got it. We're gonna find out the approximate gross monthly income that you would make in order for you to net fifty K, okay? And we're gonna put it in. We might be right or wrong, it depends. But considering, I don't see any pre-tax deductions like a 401K, it will be relatively straightforward, given that you live in New York, et cetera. So we'll be able to extrapolate that. That will clarify a lot of stuff. So y'all are making about ninety-six thousand, five hundred dollars per month. Gross. How does that number strike you?

• 29:29Speaker 01

  It's a nice number. Beautiful number.

• 29:32Ramit Sethi?

  Margo, ninety-six thousand?

• 29:33Speaker 00

  It's a very high number.

• 29:35Ramit Sethi?

  It's a lot of money, right?

• 29:36Speaker 00

  More confusion, more confusion.

• 29:38Ramit Sethi?

  Right, so did you know that approximately y'all make about one point one five million dollars per year?

• 29:44Speaker 00

  Do you, though?

• 29:45Speaker 01

  If you run the numbers like that.

• 29:47Ramit Sethi?

  I just took what you made and I added on taxes, et cetera, reverse engineered it. It might be off by a few tens of thousands here or there, but in the grand scheme. Now, by show of hands, who knew that you make approximately one point oh five to one point one five million dollars per year? Put your hand up if you knew it.

• 30:05Ramit Sethi?

  Okay, Margo says no. You put a half hand up. What is that?

• 30:07Speaker 01

  Yeah, I know what I make. I just, it's not always that number.

• 30:12Ramit Sethi?

  Yeah, it goes up and down.

• 30:13Speaker 01

  Like I said, it's, it's, you know.

• 30:15Ramit Sethi?

  Some years up, some years down, some months up, fine. But just in general, we have to average it, right? Pick something. Did you know that?

• 30:21Speaker 01

  Um, yeah.

• 30:22Ramit Sethi?

  All right. Can we go down the rest of these?

• 30:24Speaker 00

  Sure.

• 30:25Ramit Sethi?

  All right. Uh, Margo, what's this number here under fixed costs?

• 30:28Speaker 00

  Sixty-seven percent.

• 30:29Ramit Sethi?

  Sixty-seven percent. So typically, I like to see that number below sixty percent. And for very high earners, which I would call you, at netting, uh, six hundred thousand dollars a year, that number should probably be way under sixty percent in general. Now, y'all have five kids and you live in a very expensive area. So, all right, I don't mind if it's sixty, but too high, okay? Let's keep moving. What's the investment number? Kevin? What's this percentage right here?

• 31:04Speaker 01

  I was gonna say a thousand?

• 31:05Ramit Sethi?

  Yeah. Now, I don't know about you, but I don't really believe a thousand percent. And I don't believe you're putting five hundred thousand dollars a month into investments.

• 31:14Speaker 01

  I know, is that, was that a monthly?

• 31:16Ramit Sethi?

  Yes, this is monthly CSP.

• 31:17Speaker 01

  Sorry, no.

• 31:18Ramit Sethi?

  This should be zero, correct? That's more like it. So nothing is going to investments?

• 31:23Speaker 01

  Nothing.

• 31:24Ramit Sethi?

  I kinda liked it better at a thousand percent, but.

• 31:26Speaker 01

  Yeah, me too.

• 31:26Ramit Sethi?

  Reality is reality. Uh, savings are at eighty percent? That's wrong. I don't think you spend thirty thousand dollars a month on vacations, but.

• 31:33Speaker 01

  No, that's no.

• 31:34Speaker 00

  Absolutely not.

• 31:34Ramit Sethi?

  Okay.

• 31:35Speaker 01

  I thought this was yearly, sorry, my bad.

• 31:36Ramit Sethi?

  So you spend thirty K a year on vacation?

• 31:39Speaker 01

  At the least.

• 31:40Ramit Sethi?

  At the, what's the actual?

• 31:44Ramit Sethi?

  Don't be shy, just.

• 31:44Speaker 00

  I don't spend more than that.

• 31:47Speaker 01

  The trip alone was that.

• 31:49Speaker 00

  Twenty.

• 31:49Speaker 01

  The one trip, no, it was thirty.

• 31:52Speaker 00

  It's, I, I would say thirty. We don't spend more than.

• 31:54Ramit Sethi?

  Wait, who's the one who charges it?

• 31:57Speaker 01

  Yeah, me.

• 31:58Speaker 00

  I do the re- research, like.

• 32:00Ramit Sethi?

  Yeah, but, uh, he's the one who charges it, right? So let me ask him. Kevin?

• 32:05Speaker 01

  Yeah, I would put another ten on that.

• 32:06Ramit Sethi?

  That's it, forty? Forty for a?

• 32:09Speaker 01

  Let's call it that.

• 32:10Ramit Sethi?

  No, let's not. Let's call it the real number. I feel like it's way higher than forty. Y'all have five kids, you obviously like to travel nicely.

• 32:17Speaker 00

  I'm telling you, we do, we use points.

• 32:19Ramit Sethi?

  All right, fine.

• 32:20Speaker 00

  Is it more than forty?

• 32:23Speaker 01

  Let's call it forty.

• 32:24Ramit Sethi?

  Uh, gifts says ten thousand. That's wrong, cuz that's ten thousand a year you giving gifts, is that right? Or not, what's the gifts?

• 32:32Speaker 00

  Gifts, like, big family, so baby gifts, wedding gifts, I don't know.

• 32:38Ramit Sethi?

  How much you give for a wedding gift these days?

• 32:39Speaker 00

  We just gave a, his friend three sixty.

• 32:42Ramit Sethi?

  Okay, sounds reasonable to me.

• 32:44Speaker 01

  Yeah.

• 32:44Ramit Sethi?

  What about for birthdays?

• 32:46Speaker 01

  Birthdays, we buy our kids. We celebrate like four days of birthdays in your house per kid.

• 32:51Ramit Sethi?

  How much? I like care about.

• 32:52Speaker 01

  I don't know, like, uh, my daughter just got a ring for, it was five hundred.

• 32:57Ramit Sethi?

  Five hundred for a ring? What about the birthday parties and dinners and stuff like that?

• 33:00Speaker 01

  Dinners get costly.

• 33:02Speaker 00

  I, it's more like I'll do a Friday night dinner and invite my family over.

• 33:06Ramit Sethi?

  Does anybody know any numbers? Like, do you, do you kinda notice what's happening?

• 33:10Speaker 00

  I just, every Friday night.

• 33:11Ramit Sethi?

  Hold on, let me, let me tell you something. I am asking simple questions. Income, how much do you spend on vacation per year? I'm not asking complicated questions. I don't even mind if you're off by ten thousand dollars. What I'm looking for are straight answers from you, and neither of you can give it. In fact, what I notice is that you live in your story. So what you're doing, you don't realize it though, is you're giving me just the scratching of the surface. I don't care if it's one hundred or ten thousand. I truly do not care. It's your money and your life. I want you to both start dealing with reality. Give me a ballpark number and estimate high, but don't give me, we spend five hundred dollars on a ring. Cuz it's bull.

• 33:51Speaker 00

  Okay, it was a thousand dollars on Marie's birthday. We took her out for dinner, we had Friday night and then the ring. So figure a thousand.

• 34:00Ramit Sethi?

  Okay, could it be higher?

• 34:02Speaker 00

  Marie's birthday was the last one, we spent a thousand dollars.

• 34:04Ramit Sethi?

  Total, everything. Ring, cake, food, decorations, taxis, Ubers, et cetera, all of it.

• 34:10Speaker 00

  No, we don't do that stuff, yeah.

• 34:12Ramit Sethi?

  Great, a thousand bucks, good. You have five kids. I know the youngest is maybe not as costly, maybe. Uh, all right, so five thousand there, plus five thousand for friends and family, ten thousand a year. Sounds reasonable to me. I'm gonna change it to one thousand a month, which is twelve thousand. I don't mind, I'd rather have you have a little bit of extra.

• 34:32Speaker 01

  That's, it probably is a little.

• 34:33Ramit Sethi?

  Emergency fund? Nothing.

• 34:36Speaker 00

  Nothing.

• 34:36Ramit Sethi?

  Okay. And then guilt-free spending? Well, if the numbers we just put are true, y'all have twelve thousand extra dollars per month.

• 34:45Speaker 00

  But you, but what about groceries? You know how much, do you have any clue how much we spend on food? It, every Friday night is Shabbat, which means there is a large meal and the meat is kosher.

• 34:56Ramit Sethi?

  Well, let's look, let's look. So I wanna look at your fixed costs, cuz they're very interesting. Sixty-seven percent fixed costs, let's drill into it, okay? Um, your rent, or sorry, your mortgage is eleven thousand dollars. Frankly, incredible.

• 35:08Speaker 01

  Through the humps, yeah.

• 35:09Ramit Sethi?

  Eleven thousand dollars is very reasonable, especially for a couple making ninety-six thousand, five hundred a month. Gross. So, well done on that. Utilities, two thousand.

• 35:23Ramit Sethi?

  All right, insurance, five thousand, what's that?

• 35:25Speaker 01

  I mean, my health insurance for the family is forty-five hundred a month.

• 35:30Speaker 00

  I don't, I don't see how it's five thousand if just our health insurance is forty-five. And then we have auto, dental, and homeowners, how, how did you get to five thousand?

• 35:39Speaker 01

  Well, the, the, uh, medical insurance comes through the company, so, yeah, it is a little higher than.

• 35:45Ramit Sethi?

  How much?

• 35:47Speaker 01

  Let's call it seven.

• 35:49Ramit Sethi?

  Okay. Y'all seeing the pattern?

• 35:50Speaker 01

  Yeah.

• 35:51Ramit Sethi?

  What is it?

• 35:52Speaker 01

  That we don't really know our set expenses.

• 35:55Ramit Sethi?

  Exactly.

• 35:56Speaker 01

  Yeah.

• 35:56Ramit Sethi?

  Let's continue on. Car, twenty-five hundred a month? Does that include gas?

• 36:02Speaker 00

  No.

• 36:03Ramit Sethi?

  No?

• 36:03Speaker 00

  It's not twenty-five hundred a month. It is? It's gotta be thirty.

• 36:08Speaker 01

  It's three thousand.

• 36:09Ramit Sethi?

  Do you think it would be more efficient for me to just take every number, just double it? I mean, why are we doing this?

• 36:13Speaker 00

  I don't know, but like.

• 36:14Ramit Sethi?

  What the hell is going on?

• 36:15Speaker 00

  But also, that's like, what, put the number, what's the, calculate the number properly, I don't know.

• 36:20Ramit Sethi?

  I wanna just zoom out for a second and ignore the numbers. So, can we all take a second and, and like, almost as if there's a game of chess being played, I would like you to zoom up and look at what's happening on the chessboard. You asked, Margo, to come and meet, because obviously something does not feel right. There's a high income. Yes, you live a very nice life, but like, where's the money going? So you fill out all this stuff, you wanna be a little bit more harmonious, a little bit more united, a little bit less like annoyed and annoying about all this stuff. Like, why is money such a problem when we make presumably a lot of it? What are we doing wrong? So you get the CSP.

• 37:03Ramit Sethi?

  The instructions explicitly say do it together. You don't. And here we are now, right? Fast forward. Again, I'm not here to beat anybody up. I want to help you understand your own behavior.

• 37:12Speaker 01

  Yes.

• 37:12Ramit Sethi?

  What are we noticing from looking at these numbers? Kevin?

• 37:15Speaker 01

  That we don't really know our own.

• 37:17Ramit Sethi?

  Yes. The numbers are wrong. I don't mind that the numbers are wrong. Almost everybody I talk to, the first time they do their CSP, the numbers are wrong. Some of this stuff is a little complicated the first time around. But importantly, I noticed that Kevin, you said, I'll take care of the CSP. But looking at the numbers, they're all wrong. So what are we to make of this? Kevin?

• 37:39Speaker 01

  I don't know what I'm spending, probably.

• 37:41Ramit Sethi?

  Yes, I agree. Margo?

• 37:43Speaker 00

  He doesn't include me in the finances. He just gives me the brunt of his upset about it and his stress.

• 37:50Ramit Sethi?

  He doesn't include you in the financial conversations. I agree with that. Anything else?

• 37:55Speaker 00

  We're not making any segue. We're not, we're not getting anywhere.

• 37:57Speaker 01

  We're not on the same page with it.

• 37:58Speaker 00

  We're definitely not on the same page.

• 38:00Ramit Sethi?

  Not on the same page, not making progress. That's what I'm hearing.

• 38:02Speaker 00

  Yeah.

• 38:03Ramit Sethi?

  How does it feel to you? How would you put it?

• 38:05Speaker 00

  Um, I, I get it that this, like, he feels like this is his territory. And I am in charge of a lot in our lives. I'm in charge of the kids and the household, and I make a lot of decisions. However, I think that it would be a lot better for our family, our marriage, our finances and everything in our life, if we start to be a team and we start to work on this together. Because, you know, obviously it needs work. It's not gonna work itself out. This is important.

• 38:33Ramit Sethi?

  Love it. Great. Kevin, when you are thinking about money and like CSP or managing expenses, et cetera, what are you feeling when you think about sharing more information with her?

• 38:48Speaker 01

  Um, well, when I originally said it was, it became a, an argument or stress for her. So I just decided to, you know, not do that to her anymore.

• 38:59Ramit Sethi?

  Because?

• 39:01Speaker 01

  Because if we're gonna end up arguing about it or not being on, the, the understanding that I have and she has and not being met.

• 39:10Ramit Sethi?

  Yeah.

• 39:11Speaker 01

  Then it just becomes frustrating. So I guess I just took it to myself to manage.

• 39:18Ramit Sethi?

  Can I paraphrase? Tell me if I'm getting this right.

• 39:19Speaker 01

  Sure.

• 39:20Ramit Sethi?

  Whenever we talk about money, it doesn't really go anywhere. We get in a fight, it gets stressful. We don't see eye to eye. She doesn't understand money the way I do. So if we're gonna have those conversations and fight, I might as well just do it myself. And that way, she doesn't need to be bothered and I can deal with whatever problems there are.

• 39:41Speaker 01

  Well said.

• 39:42Ramit Sethi?

  Is that accurate?

• 39:43Speaker 01

  Yeah. Works.

• 39:45Ramit Sethi?

  And now that you're hearing Margo's reaction to some of this, what do you think about that idea?

• 39:52Speaker 01

  Yeah, I'm more open to sitting and coming up with a plan that we can both focus on, share thoughts, and, you know, be on the same page with everything that's going on.

• 40:04Ramit Sethi?

  Good. You're open to it. I appreciate that. Margo, you've been asking for that. So I appreciate that, coming together a little bit. I also think if I can be candid, these numbers are like very wrong. So I actually think not only might you be open to it, you might actually need Margo's help.

• 40:24Speaker 01

  Yeah.

• 40:24Ramit Sethi?

  When I brought my wife in, and it took us a long time. It was hard, man. I could have done it myself much easier. But I was like, nope, we need to both be partners in this, et cetera. But guess what I discovered after several years of working for us to come together? I was like, oh, she's actually better at some of this than I am. I was like, I'm the, I will teach you to be a rich guy. How's my wife better at this? But actually, I needed that. Not just that I'm open to it or I want her, but it's like, oh, she's actually good at this. I just didn't put her in the position and us in the position, which you now can. Okay? Let me just summarize what we know about these numbers. I see a very high income, almost a hundred thousand dollars a month. Gross.

• 41:09Ramit Sethi?

  That's a huge amount. That's what more than most people make in a year. Okay? I see a high net income, 50K a month, take home. That's $600,000, a huge amount of money. Now, I understand that you have high living costs. I understand where you live. Cool. Your mortgage is low. Like, wow. Unbelievable. And, um, I see some expenses that are really high. And as I dig in, I go, oh, oh, like, I don't think you really know your numbers enough for us to, like, go line by line. But I can essentially see what you are telling me, which is at the end of the year, you don't have much to show for it.

• 41:52Ramit Sethi?

  Oh, you have a beautiful house. Your kids go to private school and you take some nice vacations. Yes. Hey, listen, I need to cut in here because I know I'm about to get 5,000 comments from people saying, boo hoo, another high-earning couple. Let me let you in on a little secret that they don't even know yet. They are spending more than they make every single month.

• 42:15Speaker 01

  Camps, sleepaway camps, we left out.

• 42:17Speaker 00

  You didn't put, you didn't put tuition in there. Where's the tuition bill?

• 42:21Speaker 01

  That's.

• 42:22Speaker 00

  That's a huge, huge, huge bill.

• 42:24Ramit Sethi?

  Shall we put it? How much?

• 42:27Speaker 01

  Hundred fifty.

• 42:28Ramit Sethi?

  One fifty? And then what about the camp?

• 42:30Speaker 01

  Camps came down a little bit this year, called 10,000.

• 42:33Ramit Sethi?

  So 150 plus 10K, 160?

• 42:35Speaker 01

  Yes.

• 42:36Ramit Sethi?

  I like how, like, you know, once in a while, you have somebody like feeling between the couch cushions. And remember like when we were kids, we used to find a quarter? We're like, oh my God, like, I'm going to the arcade. But in your case, we just found $160,000 of hidden expenses in your couch cushion. So if I'm doing the math right, we're at around 13,000 a month. I like how that was just left off, by the way.

• 42:59Speaker 00

  Yeah.

• 42:59Ramit Sethi?

  Beautiful. Um, hey, what's that fixed cost number right now?

• 43:04Speaker 00

  101%?

• 43:05Ramit Sethi?

  Yeah, you're spending more than you make every single month.

• 43:07Speaker 00

  So now that's about exactly where we're at. We're, we're just right at the border of what we, yeah. We, we tinker.

• 43:16Speaker 01

  Groceries are a thousand.

• 43:17Speaker 00

  Under, over, under, over, under, like, we tinker.

• 43:19Ramit Sethi?

  Do you understand that when you spend 103% on fixed costs, you actually are way underwater? Because you also have travel, which is not included in fixed costs. You also have gifts. You have eating out. You have all the discretion. That's tens of thousands per year. So you are spending far more than you make every single month.

• 43:43Speaker 00

  Now it makes sense why he's so worried and stressed.

• 43:49Speaker 01

  Uh, agreed.

• 43:50Ramit Sethi?

  Did you know this before now?

• 43:51Speaker 01

  Uh, yeah, I knew it. I just, I left a few things off, I guess, for you to see.

• 43:57Ramit Sethi?

  You want me to, you want to put me through my paces?

• 44:00Speaker 01

  I want you to earn this.

• 44:01Ramit Sethi?

  Okay, right. Um, so what do y'all think about that?

• 44:06Speaker 00

  Um, what, I don't know. How we're gonna do, how we're gonna pay that tuition bill this year coming? It's a big, it's a big one.

• 44:15Ramit Sethi?

  Yes. It's a huge amount. What else are you realizing? Because you had problems before tuition was being covered. You still had problems.

• 44:23Speaker 00

  We, I mean, we have to allocate savings before spending somehow.

• 44:28Ramit Sethi?

  Yeah.

• 44:28Speaker 00

  And I don't know.

• 44:30Ramit Sethi?

  Are you realizing that this is a pretty bad situation?

• 44:33Speaker 00

  I, I guess so, yeah.

• 44:35Ramit Sethi?

  Kevin, what are you realizing?

• 44:36Speaker 01

  Yeah, I, I agree with what you're saying, but I have a tendency to look at it a little different where, okay, we're getting through the year, we're behind a little. A good distro could bring everything back.

• 44:47Ramit Sethi?

  And then what?

• 44:49Speaker 01

  And then we did have a decent cushion, which if it didn't get wiped out, I don't know if we'd be sitting here today.

• 44:55Ramit Sethi?

  What happened?

• 44:56Speaker 01

  Uh, the house needed, um.

• 44:58Speaker 00

  It was mold. There was mold, the kids were having health issues and we went to a doctor that was recommended that didn't take insurance. And the treatment was, at the time, not covered on insurance.

• 45:09Ramit Sethi?

  You had like really bad mold in your house?

• 45:11Speaker 00

  Yeah, really, like, black mold covered the entire, but under the vinyl floor of the basement.

• 45:16Ramit Sethi?

  With five kids.

• 45:17Speaker 01

  Yeah, and each kid had it. And the doctor visit was 11,000 per kid and we.

• 45:22Ramit Sethi?

  What? How much did it cost for mold remediation?

• 45:25Speaker 01

  That was, all this that we just mentioned was about 400,000.

• 45:29Speaker 00

  And we didn't, and that.

• 45:30Speaker 01

  Half a million dollars.

• 45:31Speaker 00

  For some reason, we didn't have the right home insurance. We didn't get back anything, barely anything.

• 45:36Ramit Sethi?

  Half a million dollars for mold. Horrible. Is it all fixed now?

• 45:42Speaker 00

  There's a little work to be done, probably 10 to 15,000 worth.

• 45:46Ramit Sethi?

  I mean, the money part, this sucks, but just the idea of like, this thing could be lurking.

• 45:51Speaker 00

  Yeah.

• 45:51Ramit Sethi?

  Anywhere, everywhere with kids is like.

• 45:54Speaker 00

  Yeah.

• 45:54Ramit Sethi?

  Is the plan to get the remediation again and then?

• 45:58Speaker 00

  I don't know. We didn't even talk about it. Louis said, let's, let's get here.

• 46:01Ramit Sethi?

  Okay.

• 46:02Speaker 00

  Let's, let's, I didn't even, we didn't talk about it yet.

• 46:05Ramit Sethi?

  Fair enough. You can fight one battle, two battles, even three battles at once, but 10 battles, just too much.

• 46:10Speaker 00

  Yeah.

• 46:10Ramit Sethi?

  Okay.

• 46:11Speaker 00

  Now I have two kids on herb, herbal remedies, which has been fantastic and they're doing great. And, but what is it? Every month, it's about 500 a month for that. Oh, and then the human growth hormone for my daughter. She stopped growing one with this, all this health stuff. And so that's another thousand a month.

• 46:27Ramit Sethi?

  I want to point out a couple of other things on your fixed costs. Groceries at 4,000 a month?

• 46:32Speaker 00

  At least.

• 46:32Speaker 01

  That's her.

• 46:33Speaker 00

  It's.

• 46:34Ramit Sethi?

  What's that?

• 46:35Speaker 00

  Just Friday night dinner costs 500 between the meat and the groceries and the.

• 46:39Ramit Sethi?

  Okay.

• 46:39Speaker 00

  Whatever it is.

• 46:40Ramit Sethi?

  4,000, what do you think about that number for a family of seven?

• 46:43Speaker 00

  I don't know. I have no idea. Is it high?

• 46:46Ramit Sethi?

  It's really high.

• 46:47Speaker 00

  I really, like, I go to Trader Joe's and then I'll fill in in the more high-end grocery store near us, like, just where, whatever my certain things, but most of this. And then the meat, the meat is really, really expensive.

• 46:58Ramit Sethi?

  And is that a necessity?

• 47:00Speaker 00

  To eat meat?

• 47:00Ramit Sethi?

  Yeah. I mean, that amount?

• 47:03Speaker 00

  I don't, I don't, nothing.

• 47:05Ramit Sethi?

  Okay, I can tell by your answer, the answer is no. The answer is no. And nothing goes in the gar-

• 47:09Speaker 00

  Like, we're eating. It's not like food waste. It's like-

• 47:11Ramit Sethi?

  That's not what I'm talking about.

• 47:12Speaker 01

  I'm saying, could you have pasta or do you need the meat?

• 47:15Ramit Sethi?

  Yeah.

• 47:15Speaker 01

  Cause pasta is a tenth of the price-

• 47:17Ramit Sethi?

  Could you eat what I ate when I was a kid? Then again, my family didn't make ninety-six thousand five hundred a month. So I can understand why you're like, hey-

• 47:24Speaker 00

  Not buy organic chickens, kosher organic chickens.

• 47:27Ramit Sethi?

  Yeah. How much does that cost?

• 47:28Speaker 00

  Like twenty-eight dollars, thirty dollars for a chicken.

• 47:31Ramit Sethi?

  Okay, thirty dollars for a whole chicken? And how many of those you buy?

• 47:35Speaker 00

  Um, well, on Friday night I buy one, but then I'll, you know, there's a roast, there's a chicken, there's a, um, a vegetable, there's another, like, meat dish. There, there's rice, there's, then there's like the salads and, you know, there, it's a big meal every Friday night.

• 47:55Ramit Sethi?

  You know, I love these stories. We didn't go to Vale. We went to Europe. It was cheaper. We love points. Shabbat dinner every Friday. Oh, and we have to have kosher meat. Think about what any of these stories individually represents and then all of them combined. These stories are basically ways to distance themselves from having to make tough decisions about money. I'm not sure the two of them have ever actually said no when it comes to money. Because of course, we have to do this dinner. We have to have this type of meat. We have to go on this vacation. Actually, we're saving money. We're actually really economical. These types of stories make it hard for me to actually deliver on what people come to me for.

• 48:38Ramit Sethi?

  It's fascinating. They will write these applications. They will go through a ton of screening. And when they come to me, they almost put a force field up by telling these stories. They don't realize what they are doing, but they are trying to insulate themselves from me getting to the heart of the matter. I gotta find a way to get through this. Check out this message I just got from my coworker. She started using Skylight, this episode's sponsor. She said, OMG, I'm obsessed with the Skylight. Now that our daughter is older and she has activities of her own, it's been so hard to coordinate with the whole family. Now I have this family command center right in the middle of the house. It shows me my schedule, my husband's schedule, and our kids all in the same place.

• 49:21Ramit Sethi?

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• 50:03Ramit Sethi?

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• 50:44Ramit Sethi?

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• 51:29Ramit Sethi?

  And when you use our link, you're supporting our show. I'm feeling, um, a bit stuck.

• 51:36Speaker 00

  Okay.

• 51:38Ramit Sethi?

  One, I feel on shaky ground because not only are the numbers incorrect, which I don't mind. Again, most people have incorrect numbers the first time. But we're off by maybe twenty-five thousand dollars a month. We're not off by two thousand dollars a month. We're off by tens of thousands a month. That's number one. Number two, when I ask, you know, some questions about things like food, like you actually have really good answers, like, well, we have this thing on Friday and then Tuesday, and there's a lot of people, et cetera. All that may be true. But that doesn't solve a problem here, which is like, if we can't even agree that, oh, maybe we're spending

• 52:20Ramit Sethi?

  kind of a lot on food, four thousand a month is an astronomical amount.

• 52:26Speaker 00

  Is it?

• 52:26Ramit Sethi?

  Yes. Most people who come in to speak to me, uh, as a couple, maybe they have a young kid, they spend roughly eight hundred to a thousand.

• 52:37Speaker 00

  With one kid?

• 52:38Ramit Sethi?

  Yes, but most of them don't shop to a number. As the family grows, of course, it's more expensive, especially as the kids get older. They're eating a lot of food, no doubt. But, um, there are economies of scale to be had. And at five kids, here's the fact, if you wanna feed your family like an amazing, uh, set of food, you could do that. Absolutely, you can do it. You have the income to do it. But you can't do that and do tuition and do summer camp and do vacations and do the insurance that you have and the mold remediation and, and, and.

• 53:14Ramit Sethi?

  When was the last time either of you said no to spending money?

• 53:21Speaker 01

  She brought up wanting to send one of the boys on a summer, it's like a three-week program for them to go. I said no to that.

• 53:31Ramit Sethi?

  That's fine. Margot, what about you?

• 53:33Speaker 00

  I don't know. It's more me consulting with Kevin. Should we purchase this or can we purchase, you know, this right now?

• 53:42Ramit Sethi?

  So you ask him, can we purchase this or can we do this thing? And then he says?

• 53:46Speaker 00

  Not right now, or?

• 53:48Ramit Sethi?

  Go ahead.

• 53:49Speaker 00

  Yes, we can.

• 53:49Ramit Sethi?

  Yeah. And, and what are you realizing from his mastery of these numbers?

• 53:55Speaker 00

  I don't think he's aware of the numbers.

• 53:58Ramit Sethi?

  Exactly. So when Kevin responds to you, yes, we can do this or no, we can't, where do you think it's coming from? Cause it's not the numbers.

• 54:05Speaker 00

  Um, based on, I guess, his bank account and credit card bills.

• 54:10Ramit Sethi?

  I think it's just a vibe. How do I feel today? Do I feel good? Do I feel bad? Did I get these orders in? What's the distribution maybe gonna be three months? It's just a vibe.

• 54:18Speaker 00

  Right.

• 54:19Speaker 01

  Like I said, I'm a giver. Like, why did my son need the car?

• 54:22Ramit Sethi?

  Yeah.

• 54:23Speaker 01

  And then I'll sit and in my own brain, I'll say, well, he's gonna spend

• 54:29Speaker 01

  three hundred on Ubers to get around. And then he's gonna be on us for our cars when we don't have it. And that's just another, uh, burden to deal with.

• 54:41Ramit Sethi?

  This is vibes. This is what I'm talking about.

• 54:43Speaker 01

  Right. So I said, get, the car makes sense for a few hundred dollars more for him to be independent, go to work.

• 54:49Ramit Sethi?

  What do you mean independent? You bought him the car. That's not independent.

• 54:52Speaker 01

  Well, he has to get to work. So if he can't get to work every day, I'm paying for him to get to work. So I, I, I think, and I still do, that I would spend more money on him

• 55:02Speaker 01

  if I didn't get him the car.

• 55:03Ramit Sethi?

  Are we here to make changes or are you here to explain?

• 55:06Speaker 01

  I'm telling you why.

• 55:07Ramit Sethi?

  But I don't care about that. I, I, I appreciate knowing and I wanna know some of the why, but I'm not interested in rehashing the stories. Because the more you tell me the stories of why you're doing what you're doing, whether it's the food or whether it's the car for your kid, the more you concretize your narrative about yourself. Well, Ramit, I told you, look, we had this and then we had that and I figured this, and if he didn't do that, then he would have done that. And now you just spent three minutes explaining to me and where are we?

• 55:35Speaker 00

  The cars is a big example because it's, it's hard for him to make the change, but, you know, I'm willing to downgrade my car. I called, you know, get a Kia. There's a Kia with a third row. How do we get rid of it? No, it's too much of a hassle because you can't give the, they'll charge us more to give the car back. But okay, we have to go further and try to find a solution on how to get rid of the car and get a cheaper car, even though BMW won't let us cut the lease early, but like still.

• 55:59Speaker 01

  No, that was a significant cost to get out of it.

• 56:02Ramit Sethi?

  You all are just doing it again. In fact, you're doing what I just told you you're doing. You're going right back into the story. I don't care. I'm not trying to be disrespectful. You came here because you want change, but what you are doing is you're just rehashing the old story and explaining why. Do you wanna walk out of here being like, ah, we told this guy all the reasons. We changed nothing, but we told him all the reasons we do what we do. Is that what you want?

• 56:23Speaker 00

  No.

• 56:23Ramit Sethi?

  No.

• 56:24Speaker 00

  We want the solution.

• 56:25Ramit Sethi?

  Okay, so why are we going back and telling me about your third wheel and this and that? It's irrelevant.

• 56:30Speaker 01

  No, because you're looking for ways for us to save.

• 56:32Ramit Sethi?

  No, I'm not. I haven't even gotten there, you know? I'm looking for you to understand what is going on here and you don't yet understand it. Why is it that your wife comes to you and says, can we do this? And you give her an answer? Why do you give her that answer?

• 56:43Speaker 01

  It's, it's, it's in that moment of what's going on.

• 56:46Ramit Sethi?

  Exactly.

• 56:47Speaker 01

  Yeah.

• 56:47Ramit Sethi?

  You just arbitrarily pick. Yes, no, the sun is in orbit. What?

• 56:56Speaker 01

  No, it's based on things that are going on in my life.

• 56:59Ramit Sethi?

  Right, but there's no use of actual numbers.

• 57:01Speaker 01

  Right.

• 57:01Ramit Sethi?

  And until you both realize that your understanding of reality is so out of alignment with the numbers, then you will keep making decisions based purely on vibes. Right now, you make very close to no decisions based on numbers. Why? Because there's such an abundance of money, at least seemingly. With a high income, it's like, do we really need to track the price of Pringles? No. Who gives a [bleep]? But the problem is, it's not just Pringles anymore. It's multiple cars, multiple properties, camps, multiple tuitions, and on and on and on. And it actually has gotten to the point where even at a million dollars a year, you actually can't keep up.

• 57:42Ramit Sethi?

  So you have choices. What are the choices you have?

• 57:45Speaker 00

  We need to cut, cut costs.

• 57:47Ramit Sethi?

  You could cut costs. What else?

• 57:49Speaker 00

  Make more money.

• 57:50Ramit Sethi?

  You could make more money. Anything else?

• 57:54Speaker 00

  I don't know. What would be else besides that?

• 57:56Speaker 01

  We already spoke about discussing it together and

• 57:59Ramit Sethi?

  That's good.

• 58:00Speaker 01

  You know, with plans.

• 58:01Ramit Sethi?

  Yeah, I think that's really good. Coming up, doing it together is a good part of the process. I totally agree that needs to happen. Out of cutting costs and earning more, which one are you more philosophically inclined towards? Do you want to earn more or do you want to cut costs?

• 58:14Speaker 01

  Earn more.

• 58:15Ramit Sethi?

  You want to earn more? What do you, what do you want?

• 58:16Speaker 00

  I think, I mean, I think we're both always trying to earn more. So the only thing we can change is how much we spend.

• 58:22Ramit Sethi?

  Okay, amazing. So you propose, Margo, focusing on cutting costs. And Kevin, you propose earning more. So do you see right here, right now, you're already out of alignment? Right there with that fundamental question, what approach should we take? If you don't actually talk about that and agree on it, then each of you is rowing in a different direction for the next 10 years. So how are you going to come to a resolution on that?

• 58:48Speaker 01

  Discuss it more.

• 58:49Speaker 00

  We have to really sit down and get all the numbers on paper.

• 58:53Ramit Sethi?

  Well, we just did it.

• 58:54Speaker 00

  To the T.

• 58:54Ramit Sethi?

  I mean, yeah, you can improve your accuracy, I agree. But you all are here. You might as well make a decision right now. Earn more or cut costs?

• 59:03Speaker 00

  If we can have earn more in our power that we would have had it already. So we have to cut costs. What, what choice do we have?

• 59:11Speaker 01

  I'm trying to think of areas where we could cut and, and how much it would save us at the end of the day. I don't know those numbers. So cutting costs for now is probably a good strategy until there is more earning. And then hopefully we'll know what to do with the extra earning as we leave here and get some advice from you. But until then, it looks like if I earn more, we're going to spend more and it's going to be a cycle.

• 59:44Ramit Sethi?

  What's the decision?

• 59:45Speaker 00

  Downgrade our spending. It's just, it's a nerve wracking thought.

• 59:49Ramit Sethi?

  Because?

• 59:50Speaker 00

  I don't feel like I'm overspending.

• 59:52Speaker 01

  And I think where? Where can I cut?

• 59:54Speaker 00

  We keep doing that. Okay, where could we cut? Okay, but you know, I'm not going to buy less food that, how could we buy less food? We're not going to not send their kids to, to a private school next year.

• 1:00:06Speaker 01

  Okay.

• 1:00:06Speaker 00

  They're not ready to change their schools.

• 1:00:07Speaker 01

  Or vacations. And that's what happens when we discuss cutting costs. We don't know where to cut them or how much value that cut would bring to the table.

• 1:00:16Speaker 00

  I don't think we know how to cut costs. I don't know. I think we know how to live differently. This is what we've been doing for 20 years. And, you know.

• 1:00:27Speaker 01

  It's what we've been doing forever.

• 1:00:28Speaker 00

  Yeah.

• 1:00:28Speaker 01

  Earning, spending, earning, spending, spending, spending.

• 1:00:32Speaker 00

  I think we have to allocate a certain amount of time a week where we sit down and we, we put our time and effort into this. And it's going to be a project, but it has to get done.

• 1:00:44Ramit Sethi?

  That was good, but that doesn't work for me.

• 1:00:46Speaker 00

  Okay.

• 1:00:46Ramit Sethi?

  I'll tell you why. You all just gave yourself homework.

• 1:00:49Speaker 00

  Okay.

• 1:00:50Ramit Sethi?

  But what better scenario will you have to make big, bold decisions than literally right here with me watching?

• 1:00:59Speaker 00

  But we need your guidance. We, we don't know what to do.

• 1:01:01Ramit Sethi?

  Okay, well, you can ask questions. But what you did, you didn't do that right now. You, what you did was there's a feeling of discomfort in the room because holy [BLEEP], we're actually having to talk about this substantively for the first time in a long time. And unconsciously is like, oh, this [BLEEP] feels bad. So let's do this. Let's agree that we need to sit down and talk about it. And we'll do it. And it's going to be hard, but we'll do it. It all sounds great. It's very PC, it's very nice. The problem is you didn't do the one thing that matters, which is make decisions right now.

• 1:01:34Speaker 00

  What decision? Like where are we going to cut the costs?

• 1:01:37Ramit Sethi?

  Are you going to cut costs? I did not hear both of you agree to that.

• 1:01:40Speaker 00

  Yes, we're going to cut costs. I agree to that. Do you agree to that?

• 1:01:44Ramit Sethi?

  That's the first time I heard a question asked. That's the next thing I want to point out. Do the two of you ask each other questions or do you just talk?

• 1:01:50Speaker 00

  We just talk.

• 1:01:51Ramit Sethi?

  Exactly. You cannot get where you need to go by just talking at each other. Because what's happening is although you are both quite polite, which I appreciate, um, you, if I had a, a sport right here on the table, it would be like boxing. Not that you are fighting each other. That's not what I'm saying. But you are each in your own corner. And you come to the middle to basically deal blows. They just happen to be like, this is what we need to do. Well, what about this? I can't do this. And there is no team. And you, how can you be a team if you don't ask questions of each other? Hey, what do you think? Oh, you say we can't cut groceries? Tell me more about that. How, I, I don't buy the groceries, so I don't know. But like, what is that like?

• 1:02:35Ramit Sethi?

  And then you say, hey, you mentioned like, it's not going to be a good year. What do you mean by that?

• 1:02:40Speaker 01

  I've definitely asked those questions. We've looked at it, but we didn't.

• 1:02:43Ramit Sethi?

  I don't think you've asked a single question substantively about money of Margo while we've been sitting here.

• 1:02:47Speaker 01

  Not while we've been sitting here, but when we do discuss it and I take out the, the credit card bills.

• 1:02:52Ramit Sethi?

  Oh, you go, what is this?

• 1:02:54Speaker 01

  No, I say, how do you, what, what could we do without? And it comes back as I'm, I'm getting what I need to run our home.

• 1:03:04Ramit Sethi?

  Okay.

• 1:03:05Speaker 01

  So how much pushback can I get? Should I tell, don't buy food? Or buy less of the food?

• 1:03:09Ramit Sethi?

  Yes. But also asking the question when you have a credit card bill in your hand and saying, what can we do without? Well, I think, Margo, you need to be more open to spending less, a lot less. I do think that waving around a credit card bill does not evoke cooperation. Especially if somebody's a mom of five and she's running the household and somebody's coming in saying like, what, what the, what can we do with this? Like now, even I would be like, I don't know. I'm running the [BLEEP]. If you want to do it, you do it. But like, what are you, what are you talking to me about?

• 1:03:39Speaker 00

  That's exactly it.

• 1:03:40Ramit Sethi?

  It's not setting up a healthy conversation.

• 1:03:43Speaker 01

  Right.

• 1:03:43Ramit Sethi?

  Here, we can have a healthy conversation. In therapy, do you two see a therapist?

• 1:03:48Speaker 00

  No, um, not really. Once in a blue if we need like.

• 1:03:51Ramit Sethi?

  Okay, would you be open to it?

• 1:03:53Speaker 00

  Yeah, we have someone that we talk to once every so often.

• 1:03:57Ramit Sethi?

  Okay, Kevin?

• 1:03:58Speaker 01

  Yeah, I don't mind.

• 1:03:59Ramit Sethi?

  Amazing, great. I highly recommend it. In part because having these conversations, having a facilitator who can help point out certain things you definitely do not notice on your own, invaluable. We've done it. A lot of my guests have done it. Highly recommend. Okay?

• 1:04:14Speaker 01

  It's funny, I could do it in my business, but not in my personal life. So.

• 1:04:18Ramit Sethi?

  Isn't that the way it is?

• 1:04:19Speaker 01

  Why?

• 1:04:20Ramit Sethi?

  Yeah.

• 1:04:20Speaker 01

  I can't figure it out.

• 1:04:21Ramit Sethi?

  It's funny. Actually, that's a great way to put it. I can't figure it out, so therefore I'm going to get help. If I'm the two of you making $96,000 a month, I'm like, we come first. We, the two of us, because without us, everything else falls apart. Kids are unhappy, houses go away, everything dies. So we will put ourselves first. What is it going to take? Well, we need to be communicating. And even though, yes, we're nice and we love each other, obviously, everybody needs a little help sometimes.

• 1:04:51Speaker 01

  Yep.

• 1:04:51Ramit Sethi?

  Boom.

• 1:04:52Speaker 01

  Not denying that.

• 1:04:52Ramit Sethi?

  Yeah. Okay. When you've looked at how your money is set up, the way that you talk about money, the way that you both see money, do you think your money setup is simple or complicated?

• 1:05:05Speaker 01

  It's definitely not simple.

• 1:05:07Speaker 00

  It's not organized, it's messy.

• 1:05:09Ramit Sethi?

  Okay, you want to fix it?

• 1:05:10Speaker 00

  Yes.

• 1:05:11Ramit Sethi?

  Good answer. Kevin?

• 1:05:12Speaker 01

  Of course.

• 1:05:13Ramit Sethi?

  Okay. I want to know, Margo, what you remember about money when you were a kid? What did your family say about money?

• 1:05:23Speaker 00

  My family didn't talk about money much. There was enough of it. And my dad was the breadwinner. My mom, I remember every Sunday night, my dad would leave a cash on my mom, on her bathroom, uh, sink on the side for her. And that was her money for the week. And, um, it was never really discussed. It was never a stress. It was never an issue.

• 1:05:44Ramit Sethi?

  They say any phrases you remember like, uh, money doesn't grow on trees or we can't afford it? Or, uh, spend money on education? Any of those things?

• 1:05:55Speaker 00

  No. Maybe once in a while, you know, it's too expensive.

• 1:06:00Ramit Sethi?

  Did you have a job when you were a teenager?

• 1:06:02Speaker 00

  Yeah, I was a tutor through high school and I was, um, a lifeguard in the summers and I worked at summer camp. And I saved all that money and I invested it from a young age. And that's my investments.

• 1:06:13Ramit Sethi?

  You serious?

• 1:06:14Speaker 00

  Yeah. And then anytime I made money, I would put more into it.

• 1:06:17Ramit Sethi?

  You have half a million dollars in investments? That came from you as a teenager?

• 1:06:21Speaker 00

  No, part of it, um, a portion of it is also stocks that my grandfather bought me that I never sold, I held on to.

• 1:06:29Ramit Sethi?

  Cool. This thing about your grandparents gave you investments and then you as a teenager invested your money? It's all quite interesting to me. Who talked to you about investing? Most teens don't know about it.

• 1:06:42Speaker 00

  Nobody. I would get a little bit of cash from my grandparents and my dad's like, "I'll put it in your bank account and I'll save it for you. Don't, you know, we're gonna save it." So I would always save. And then like when I worked at camp and lifeguarding, my friends would like spend their money at the end of the summer and I would put it in, give it to my dad to put in my bank account. So I never spent any of the money that I made. I always put it into the stock market.

• 1:07:03Ramit Sethi?

  Great. Kevin, what do you remember your family saying about money when you were younger?

• 1:07:08Speaker 01

  Money was a issue. There was not much of it. I'm the youngest child. I worked from a young age, 15, I was working. Same system, making, spending, doing well, spending, saving. I was never taught any kind of managing money skills in any way, shape or form.

• 1:07:30Ramit Sethi?

  What did your parents do for a living?

• 1:07:34Speaker 01

  My dad had retail stores. My mom did, she was, you know, stay at home mom.

• 1:07:40Ramit Sethi?

  Okay.

• 1:07:41Speaker 01

  And then he was in the ticket business, which was very successful. But then there were some state regulations that come into place. And when he lost that, I was a bit about, I was about 13. So from then on, I really never went to him for money. Never asked.

• 1:08:02Ramit Sethi?

  Did he struggle with it?

• 1:08:03Speaker 01

  Yeah, they both did.

• 1:08:04Ramit Sethi?

  Okay. Are they still alive?

• 1:08:06Speaker 01

  My mom is.

• 1:08:07Ramit Sethi?

  Your mom. How's she with money?

• 1:08:09Speaker 01

  You know, right now she's supported by the brothers and sisters.

• 1:08:12Ramit Sethi?

  Got it.

• 1:08:13Speaker 01

  We support her. They did have two homes. They sold them. They lived off them. They spent it, invested some that went bad. Not the smartest sequences.

• 1:08:24Ramit Sethi?

  Do you think your dad knew how to manage money? Seems like he knew how to make it.

• 1:08:27Speaker 01

  He, he could make it at times. He was unbelievably creative.

• 1:08:31Ramit Sethi?

  Yeah.

• 1:08:31Speaker 01

  But he had no clue how to manage it. It was in his suit pocket.

• 1:08:34Ramit Sethi?

  Ah, and did he spend a lot?

• 1:08:36Speaker 01

  No, my mom did.

• 1:08:39Ramit Sethi?

  Your mom spent a lot. What'd she spend it on?

• 1:08:41Speaker 01

  Whatever.

• 1:08:42Ramit Sethi?

  Like?

• 1:08:43Speaker 01

  Clothing, brand names, names, shoes, clothing.

• 1:08:48Ramit Sethi?

  Does this sound familiar? Not that it's an identical situation, not even that you spend on shoes, but like the dynamic. Dad is good at making money. Do we know anybody like that?

• 1:09:04Speaker 01

  Sort of, yeah.

• 1:09:06Ramit Sethi?

  You!

• 1:09:06Speaker 01

  Yeah, me. I know.

• 1:09:08Ramit Sethi?

  There's only three of us in this room.

• 1:09:09Speaker 00

  He doesn't think so though.

• 1:09:10Ramit Sethi?

  What the hell's going on here? I'm like, what?

• 1:09:14Speaker 00

  I don't know that he thinks he's good at making money though.

• 1:09:16Ramit Sethi?

  You, you said it 20 minutes ago. I'm good at making money. Nobody taught me how to save. What's the reluctance of admitting this?

• 1:09:22Speaker 01

  It's not a reluctance of admitting. He worked and worked and worked seven days a week.

• 1:09:27Ramit Sethi?

  Okay.

• 1:09:28Speaker 01

  I do, but I, he didn't enjoy anything. I, so maybe that's part of the problem. I, I saw that and I'm like, what kind of ways is this to live? Work, make money, not enjoy it?

• 1:09:39Ramit Sethi?

  Oh, okay. So got it. So we've got to enjoy the money that we make, hence the nice living standard of living. Okay, fine. Fair enough. Your mom, she spent a lot of money on things around the house.

• 1:09:52Speaker 01

  Materialistic.

• 1:09:53Ramit Sethi?

  Materialistic. Okay. Again, I'm not applying directly here.

• 1:09:56Speaker 01

  It's fine.

• 1:09:57Ramit Sethi?

  I haven't quite heard that, but think of the way that you wave the credit card bill around and bring it to your wife. What is the implication behind that?

• 1:10:09Speaker 01

  Well, first to get an understanding of why it's nine pages long. Second of all, to...

• 1:10:17Speaker 01

  I don't know, really. I don't have an answer for that.

• 1:10:19Ramit Sethi?

  Is it possible that you see, or at least in part, as spending a bunch of money that doesn't need to be spent?

• 1:10:25Speaker 01

  I think that, but then the few times we do do a review, I'm like, okay, makes sense. You know, food is food, education's education.

• 1:10:35Ramit Sethi?

  Not really.

• 1:10:36Speaker 01

  Camp's camp.

• 1:10:37Ramit Sethi?

  Not really.

• 1:10:37Speaker 01

  It is in our world and that's sort of the...

• 1:10:41Ramit Sethi?

  Do you think that might be the problem?

• 1:10:42Speaker 00

  We live in a community where everybody sends to one of three schools and everybody sends to one of three camps and everybody...

• 1:10:50Ramit Sethi?

  What's the phrase? Keeping up with the?

• 1:10:52Speaker 00

  Joneses.

• 1:10:53Ramit Sethi?

  Y'all.

• 1:10:54Speaker 01

  But they're looking at us at where the Joneses.

• 1:10:56Ramit Sethi?

  This is the problem. It's called pluralistic ignorance. Everyone is in on it, but no one wants to admit it.

• 1:11:02Speaker 01

  But I feel like there's no escape from it.

• 1:11:04Ramit Sethi?

  Of course there is.

• 1:11:05Speaker 01

  So.

• 1:11:05Speaker 00

  We looked at a public school for my son, but, you know, we, we told him that you're going, your grades are not, you know, we're not gonna bust our butts to send you to private school. You're not even working that hard. It's the first time in 16 years that his grades are up. But do we pull him out for the last two years of his high school and put him in public school?

• 1:11:25Speaker 01

  Him alone is 50,000 a year. So.

• 1:11:28Ramit Sethi?

  Sorry, I, I'm not interested in the stories. Again, I'm not interested in rehashing that and I actually don't think...

• 1:11:32Speaker 01

  No, not a story. How could I put him in an environment that he has never been in? That's filled with things that we don't believe in.

• 1:11:38Speaker 00

  It's just one part of the picture.

• 1:11:40Speaker 01

  I know. So that's, that's why the decisions are hard. So we keep doing it.

• 1:11:45Ramit Sethi?

  With the Joneses.

• 1:11:46Speaker 01

  No, keeping up with what community values. I wouldn't say Joneses so much, but there are community values. The value of learning our heritage, being in an environment that we feel is safe for our child.

• 1:12:00Ramit Sethi?

  Okay.

• 1:12:01Speaker 01

  Not in a public school environment.

• 1:12:02Ramit Sethi?

  Guys, I'm not pushing you. It's not my place to tell you to send your kids to public school, private school. It's up to you.

• 1:12:08Speaker 01

  No, I'm just throwing this out that these are part of the decisions we have to make. So I'm always gonna make the one that I feel is gonna benefit my child.

• 1:12:17Ramit Sethi?

  Keeping up with the Joneses. Boy, don't I love this. And it is a rare opportunity that we see today where we have a couple that is literally keeping up with the community around them. And I pointed this out to them and did you notice their response? Oh, well, I mean, we're not really keeping up with the Joneses. This is our tradition. These are our rituals. Think about what that represents. That answers almost an impenetrable story that I cannot argue against. What, who am I, Ramit Sethi to come here and say, "Well, um, those traditions are actually putting you in the poorhouse." I can't really say that. So they expect me to go, "Well, I guess that makes sense." Not gonna happen on my watch, not on this podcast, Money for Couples.

• 1:12:57Ramit Sethi?

  I will not allow couples, whether they are earning $75,000 a year or a million dollars a year, to thoughtlessly spend and then assign the blame to their heritage, to their rituals, to the community that they live in. No, you chose to make those decisions. And if you want to, that's okay. It's your money. But we cannot blindly say, "Well, I do that because everybody else did that and that's what I saw growing up." Okay, and you're an adult. It's time to take responsibility for your decisions and we're gonna start doing that right now. This episode of Money for Couples is brought to you by our friends at Wild Grain. Recently I saw someone online complaining about the price of a croissant.

• 1:13:41Ramit Sethi?

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• 1:14:21Ramit Sethi?

  they have a gluten-free, vegan box, and a protein box available in flexible subscriptions you can skip or cancel anytime. If you're looking for an easy way to enjoy bakery-quality food at home, I definitely recommend giving Wild Grain a try. The fan favorite apple cider donuts and other fall seasonal products are back for a limited time, so make sure you order before they sell out. Visit wildgrain.com/ramit to get $30 off your first box plus free croissants for life. Again, that's wildgrain.com/ramit for $30 off your first box and free croissants for life, or use promo code RAMIT at checkout. You do not have enough money to send your kids to private school, starting now.

• 1:15:06Ramit Sethi?

  You have no money set aside for college for your kids. You have no retirement for yourself, although you do have two expensive properties, which you could sell, but you both are extremely reluctant to discuss that.

• 1:15:17Speaker 00

  No.

• 1:15:17Ramit Sethi?

  Because fundamentally you don't trust... Trust yourselves. Any money we have, we as a couple, spend it. So having our money in real estate, at least it's locked up. So even we cannot spend it. At least that is safe.

• 1:15:30Speaker 00

  But it's also an asset. You know, it's not, it's not an unintelligent thing to say, let's have our savings in real estate.

• 1:15:39Ramit Sethi?

  On one hand, you're telling me having an asset is intelligent. It's smart. It's going to grow in value. It has grown in value. On the other hand, in your own application, you're telling me we live month to month, making over a million dollars a year, and we can't figure out how to spend less.

• 1:15:54Speaker 00

  So we need to cut costs.

• 1:15:57Ramit Sethi?

  Okay. If I put your numbers back up on screen right now, we would get nowhere.

• 1:16:02Speaker 00

  Why?

• 1:16:03Ramit Sethi?

  Because when I've asked you about groceries, you were not willing to concede even $1. When we talk about school, you're not willing to concede even, in fact, you doubled down. Vacations, having not heard either of you entertain even the concept of that. In fact, if anything, you're underestimating how much you spend and you have this idea, oh, we're actually saving money because we didn't go to Vail. It's actually quite good. We love points. Where are you going to cut? You two actually read the situation better than you think. Because you both said, where are we supposed to cut? Exactly. In the situation you have put yourself, where you live, the choices you have made, you have actually created a knot that is so tight, it is impossible to untie. Unless you decide to play an entirely different game.

• 1:16:47Speaker 01

  We're open to that.

• 1:16:48Ramit Sethi?

  You are?

• 1:16:49Speaker 01

  Yeah.

• 1:16:49Ramit Sethi?

  Okay. Margot?

• 1:16:51Speaker 00

  Yes. What's the entirely different game? Like move?

• 1:16:55Ramit Sethi?

  You tell me, let's play it out. What are some options? If your goal is to stop being stressed about money while making a million dollars a year,

• 1:17:08Ramit Sethi?

  to actually feel good about money, what else would be the vision here? What's the rich life vision?

• 1:17:13Speaker 00

  Well, I'd like to build my summer home.

• 1:17:15Ramit Sethi?

  Okay.

• 1:17:16Speaker 00

  I'd like to, I would love to have a ski home one day.

• 1:17:20Ramit Sethi?

  Ski home? Where's it gonna be?

• 1:17:21Speaker 00

  I don't know.

• 1:17:22Ramit Sethi?

  Okay. And then the summer home, where would that be?

• 1:17:24Speaker 00

  The summer home we have already, which we just want to build.

• 1:17:26Ramit Sethi?

  Okay.

• 1:17:28Speaker 00

  And yeah, not being stressed about money. Being able to spend in a way where we feel like we're living a comfortable life. And we're also saving at the same time.

• 1:17:39Ramit Sethi?

  Okay. Want to add anything?

• 1:17:41Speaker 01

  Rich life vision is, in my opinion,

• 1:17:47Speaker 01

  at the least, having saving something to show for it at the end of the year that you could move forward with. Because life's moving quickly in 20, 30 years. And I turn around, we're married off our kids, and we're looking at each other. We want to have, like we said in the beginning, our assets, of course, if we can hold on to them. But we want to have money where we can enjoy that time. I don't want to be working at 80, 77, 75. But I could have a few fantastic years and work and the knots untied and there are ways to save and put away that money. I just have to learn how to actually do that.

• 1:18:32Ramit Sethi?

  I'll tell you, especially with a business owner that's consistently making a million bucks. A million dollars can make up for a lot of financial mistakes, a lot. Like if you're making a million dollars, there's just so much cash sloshing around that you can kind of make things work. I'll tell you when it stops. Usually it stops when somebody stops making that kind of money, like their business goes down. And as a business owner-

• 1:18:58Speaker 01

  I've had years now that that happens.

• 1:19:00Ramit Sethi?

  Exactly. We all know business owners, it goes down, down, down, down, down, and it goes down forever. And that's over. So that's number one, when that ends. Number two, it ends when

• 1:19:11Ramit Sethi?

  the person is unable to sustain anymore. Maybe they get older, injured, whatever. And then third, this is the most rare, is when they simply have such high expenses that they just can't keep up with them and they just drown. In your case, it may be a combination here. The expenses are astronomical. You could untie the knot line by line, or you could simply say like, this isn't the way we want to do it. But I'll tell you why I think it's difficult for everybody right now is that this is what you've known. And Margot, you said we were born into the knot. What did you mean by that?

• 1:19:46Speaker 01

  I was just gonna say that.

• 1:19:47Speaker 00

  We live in a community that is, you know, very traditional. And it's the same schools that I went to is the school where my kids are going to. And the holidays cost a lot of money. The cost of living is so much higher, even when you account for inflation, that the percentage of my income of what I'm paying for tuition and food and just basic cost of living compared to my parents is such a larger, it's so much more astronomical. So they were able to do it and it made sense. But now I think there's a lot of couples my age that are having the same struggles to keep up and keep this lifestyle.

• 1:20:25Ramit Sethi?

  Fair, I totally agree. It's very insightful. And your conclusion thus far has been what?

• 1:20:31Speaker 00

  Something has to give. Something has to change. Something has to give.

• 1:20:34Ramit Sethi?

  What has been giving so far?

• 1:20:36Speaker 00

  What has been giving is every single penny of what we're making.

• 1:20:40Ramit Sethi?

  And more.

• 1:20:40Speaker 00

  And more.

• 1:20:41Ramit Sethi?

  You're spending more than you make. You're basically hoping it all works out. Maybe next year you take a nice 100K distribution. That might cover some debt you've accrued, but what happens the year after and the year after? Essentially, what you've done is you've taken on a massive amount of risk. Massive. It works until it doesn't. One question I have, Margot, is you mentioned your dad used to help with the tuition. How many kids was he paying for in private school?

• 1:21:08Speaker 00

  It was just that he would, he would offer to pay for just like a portion of one of the school's tuitions. This year, was it like 70?

• 1:21:18Ramit Sethi?

  70 out of how much?

• 1:21:19Speaker 00

  Our total was what, over $1.50?

• 1:21:22Speaker 01

  200.

• 1:21:23Ramit Sethi?

  And then you mentioned that he will not pay for the tuition. What happened in that conversation?

• 1:21:29Speaker 00

  We just felt like we wanted to be independent and not have to ask. This is our family and it's something that we should be doing on our own.

• 1:21:38Ramit Sethi?

  Okay, I appreciate that. Is this the first time you've looked at the numbers of how much it's going to cost for paying for private school for everybody?

• 1:21:46Speaker 00

  We know the numbers because that's one of the biggest expenses that we have. I think it's the first time that we looked at it in the context of what are we spending on other than that? And what is he making?

• 1:21:56Ramit Sethi?

  So what do you think? Where's the money going to come from?

• 1:21:59Speaker 00

  Hence, I put on the application. That's, that's when I put the application in.

• 1:22:05Speaker 01

  From cutting other costs.

• 1:22:06Speaker 00

  I'm like, you know, how do you think we're going to do this next year? Like,

• 1:22:10Speaker 01

  Cutting in other areas to support that. We feel very strong about that.

• 1:22:14Ramit Sethi?

  Okay.

• 1:22:15Speaker 00

  But where are we going to cut?

• 1:22:17Ramit Sethi?

  Shall we look?

• 1:22:18Speaker 01

  Shall we look?

• 1:22:18Ramit Sethi?

  Let's, okay, I'm going to put these up on screen, but let me just, let me suggest something. You mentioned private school is very important to you for the kids. Is paying for their college important too?

• 1:22:31Speaker 00

  Yes. I don't know that they have to go to American private university that costs $90,000 a year now. I'm okay with, you know, City University. I'm okay with international.

• 1:22:43Ramit Sethi?

  How much? How much would you put aside for them? Do they have a blank check? Somebody wants to go to NYU, can they go? Is there a number?

• 1:22:50Speaker 00

  We're living month to month. We're not planning.

• 1:22:53Ramit Sethi?

  Exactly, because the two of you are not willing to pick numbers. So that is what we're going to do now.

• 1:23:01Speaker 00

  Oh, my God.

• 1:23:03Ramit Sethi?

  I take a lot of joy in this. It might not be as joyful for you, but for me, it's quite fun.

• 1:23:07Speaker 00

  So happy that we've brought you joy from Brooklyn, New York.

• 1:23:10Ramit Sethi?

  So let's, let's recall a couple of things here. Assets. What's that number again? Can everybody say it all out? One, two, three?

• 1:23:17Speaker 00

  11 million.

• 1:23:19Ramit Sethi?

  11 million. Never heard a more morose group of people talking about 11 million dollars. Oh, 11 million. 11 million dollars.

• 1:23:29Speaker 01

  We're very thankful. We're extremely, extremely fortunate and thankful. There's no question about it.

• 1:23:35Ramit Sethi?

  Yeah, yeah, yeah. I heard you guys say that before. But I don't feel it.

• 1:23:39Speaker 00

  We're very nervous. We have a big, we're nervous.

• 1:23:42Ramit Sethi?

  I appreciate that. That is honest. We are nervous.

• 1:23:45Speaker 00

  It's like not a joke. This is not a joke. I have five kids to support. We have a crazy tuition bill coming up. We do not have a plan.

• 1:23:54Ramit Sethi?

  This is the first time I have heard a sense of urgency from you. This, you are finally saying, as the clock ticks down, we do not have a plan and we are nervous. And I appreciate that. Because finally you might be ready to change. This is not a joke. It's not. You have five kids, you have very high expenses. And as long as everything keeps going great, you could kind of make it work, sort of. But the day it doesn't, you are in serious trouble. And if it happens two bad years, it's over. Well, you got 11 million dollars, but you're going to have to make some really tough decisions you don't want to. So it's time.

• 1:24:36Ramit Sethi?

  Now, normally what I tell couples is they need to get these numbers to less than 60% on the fixed costs. What I would like to do is spend 60 seconds max, max, going through your fixed costs and each of you calling out what you can, what number you can reduce your fixed costs to. Who wants to go first?

• 1:24:55Speaker 01

  Let's say the car payment.

• 1:24:57Ramit Sethi?

  Okay. What do you want to take it down to?

• 1:24:58Speaker 01

  Half.

• 1:24:59Ramit Sethi?

  How are you going to do that?

• 1:25:00Speaker 01

  Get rid of my car. Use my son's.

• 1:25:02Ramit Sethi?

  Love it. Love it. Dad is repoing his own son's car. I love it. Good job. All right, 1,200. Very nice. That takes you down to 105%. Margot, you're up next.

• 1:25:15Speaker 00

  Groceries, we could take it down to three.

• 1:25:17Ramit Sethi?

  How are you going to do that?

• 1:25:18Speaker 00

  Figure it out through Trader Joe's.

• 1:25:19Ramit Sethi?

  Yes, good answer.

• 1:25:21Speaker 00

  Figure it out.

• 1:25:22Ramit Sethi?

  3,000. Okay, you're up. Kevin?

• 1:25:25Speaker 01

  What's all this miscellaneous things that we forgot?

• 1:25:27Ramit Sethi?

  My CSP automatically adds 15% because most couples do not carefully track their fixed costs and they have expenses that they do not account for, such as maintenance on their car, some pet accident, whatever, whatever stuff they don't account for. If you are in a financially difficult position, you cannot afford to have 15% just unaccounted for, especially when it's $6,680 a month.

• 1:25:52Speaker 01

  Right.

• 1:25:53Ramit Sethi?

  So what number should we have that is your overflow buffer? That's reasonable but under control.

• 1:25:59Speaker 00

  Two for miscellaneous a month?

• 1:26:00Ramit Sethi?

  You all have three teenage kids? Put them to work.

• 1:26:04Speaker 00

  Like what?

• 1:26:05Ramit Sethi?

  They are the ones who figure out what's miscellaneous. You ever gotten them involved in the money?

• 1:26:10Speaker 00

  They just ask for money and he says yes.

• 1:26:12Ramit Sethi?

  Yeah, they ask for money because they are not involved in it, just like they ask for food because they don't have to cook it. But maybe when it comes to miscellaneous, we can cut this number down to, I say, 1,000.

• 1:26:24Speaker 00

  Okay.

• 1:26:24Ramit Sethi?

  Because we are going to effectively enlist the help first of each other.

• 1:26:32Ramit Sethi?

  And second of our kids, because by the time they get older, by the time they're 18, 19, they need to know this stuff. They need to know how to plan a grocery list, how to plan a vacation. This is how kids learn. So you can change the trajectory of their lives. All right, we're at a thousand bucks here. Y'all are at 91%. Let's move on. $2,000 a month for clothes? I don't think so.

• 1:26:55Speaker 00

  Like you want to lower that number?

• 1:26:57Ramit Sethi?

  I love my job.

• 1:26:58Speaker 00

  There's seven people in the house.

• 1:27:00Ramit Sethi?

  Yeah. Where do they shop?

• 1:27:02Speaker 00

  Like really the kids, I try to really-

• 1:27:04Speaker 01

  Amazon Basics.

• 1:27:05Ramit Sethi?

  Don't tell me that bullshit. Where else do they shop?

• 1:27:08Speaker 01

  Where's Zara, H and M?

• 1:27:10Speaker 00

  Yeah, we're very Zara, H and M, J Crew. I don't buy a brand name, but-

• 1:27:14Speaker 01

  She just bought me this.

• 1:27:16Ramit Sethi?

  It's very nice.

• 1:27:16Speaker 00

  10 bucks, J Crew, when they're on sale, extra sale. That's where I buy him his stuff.

• 1:27:20Ramit Sethi?

  Oh, I'm impressed.

• 1:27:20Speaker 01

  I have had these for six-

• 1:27:21Ramit Sethi?

  Guys, I don't, I'm not-

• 1:27:23Speaker 00

  Those 63 bucks Bloomingdale's on more-

• 1:27:26Ramit Sethi?

  I mean, y'all can talk all you want. You can play the sitcom game with each other, but our time is running out and you're gonna go home saying, wow, we really had fun there, didn't we?

• 1:27:33Speaker 01

  Cut it to a thousand, cut it in half?

• 1:27:35Ramit Sethi?

  I'm not gonna just make up numbers.

• 1:27:36Speaker 00

  Impossible. What's a normal number for that?

• 1:27:39Ramit Sethi?

  A normal number for that? Well, let's break it down. Kids, how much do you want to give each kid per month for clothes?

• 1:27:48Speaker 00

  In other words, give each kid their own allowance?

• 1:27:50Ramit Sethi?

  Sure.

• 1:27:50Speaker 00

  And let them work with it?

• 1:27:52Ramit Sethi?

  Wouldn't that be a great way to teach them?

• 1:27:54Speaker 00

  Yes.

• 1:27:54Ramit Sethi?

  I bet you they wouldn't be buying J Crew anymore. I don't know. Who cares? It's up to them. Figure it out. And if they can come to you and if they go, this isn't enough, go, okay, make the case. Put a PowerPoint together and make a proposal. But right now, this is how much you get. Good luck. Y'all taking so much burden on yourself, especially with five kids.

• 1:28:10Speaker 00

  So much burden.

• 1:28:11Ramit Sethi?

  And yet, you're just like giving them what they want. $2,000 a month for five kids is a lot of money. Pick a number. It's way less than this.

• 1:28:21Speaker 00

  So a thousand?

• 1:28:22Ramit Sethi?

  Okay.

• 1:28:22Speaker 00

  All right, let's try.

• 1:28:23Ramit Sethi?

  A thousand, and that means you have to pick a number that each of them gets.

• 1:28:26Speaker 00

  That includes my clothes?

• 1:28:28Ramit Sethi?

  You're not getting any new clothes for a while.

• 1:28:29Speaker 00

  Got it.

• 1:28:30Ramit Sethi?

  I feel like this is preposterous because we have a couple that's worth $9 million, but with the expenses you have incurred every month, like $13,000 of private school per month, there are no new clothes. These are the trade offs you end up having to make if you want what you said you want. We want savings. We want to have upward trajectory, not downward. Well, then you have to make tough choices. If it were anything, it'd actually be probably less than that. It's probably more like 700 a month, if that. We didn't spend as a kid, $100 a month on clothes. We didn't. We got cheap clothes from Kmart and Target. We didn't know any better. Your kids live in Brooklyn, so they

• 1:29:10Ramit Sethi?

  do know better. That's part of the not. So it's gonna be very difficult for you to be like, here's $100 a month, good luck. They're gonna look different than their friends.

• 1:29:22Ramit Sethi?

  Lot of quiet over here. What's happening right now?

• 1:29:24Speaker 01

  Okay.

• 1:29:24Ramit Sethi?

  Are you realizing?

• 1:29:27Speaker 00

  Yeah.

• 1:29:27Ramit Sethi?

  What are you realizing?

• 1:29:28Speaker 01

  Realize we don't have to do some of the things we do.

• 1:29:31Ramit Sethi?

  Yes.

• 1:29:31Speaker 00

  That the kid, yeah, we're giving too much to the kids for sure.

• 1:29:34Ramit Sethi?

  Yes. And that the costs of the situation you have put yourself in are more than are immediately apparent. The where you live, the community you live in is, it costs more than just the mortgage and the schools. It's also the food and the type of clothing. None of these things would be normal in a different community or geographic area. So again, if you want to live there, it's fine. It's up to you. But these are the costs that you-

• 1:30:00Speaker 01

  Yeah, it comes with-

• 1:30:01Ramit Sethi?

  It comes with the price tag. Exactly. I'll put it at a thousand. I don't know if you'll hit it, but I think you could. Easily. Easily. Well, y'all are at 89%. It's still too high. You're spending more than you make every month. No money for college, no money for savings.

• 1:30:19Speaker 00

  That's, that's the price we pay with this tuition bill.

• 1:30:22Ramit Sethi?

  Yep. So what you are now seeing is that you have structurally put yourself in a position where you just don't have enough money every month. And it is crazy to say that, making $96,500 per month. But you are paying multiple kids' private education in New York. That's it. What do you want to do?

• 1:30:45Speaker 01

  I don't know. And if you start to cut out the tuition, you're talking about life changing events. So it's, it's off the table.

• 1:30:51Ramit Sethi?

  Can I make a proposal?

• 1:30:52Speaker 00

  Sure.

• 1:30:54Ramit Sethi?

  First of all, I really like what's happening right now. You two gave it a fair effort. You did. You did a nice job bringing some numbers down. That was good. I'm noticing that you are both realizing this is not as easy as you thought. I appreciate that. And so now we're gonna make some tougher decisions. All of this, based on what you told me you want. You want to be able to have a comfortable life. It is important to you that you send your kids to private school, et cetera, et cetera. Okay, so how are we gonna do it? Well, there's one number jumping out at me right here. What's that number?

• 1:31:27Speaker 00

  You want to sell my summer home?

• 1:31:29Ramit Sethi?

  The assets.

• 1:31:29Speaker 01

  Assets.

• 1:31:30Ramit Sethi?

  $11 million.

• 1:31:31Speaker 01

  Vacations.

• 1:31:32Ramit Sethi?

  So right now, you're at $11 million, and presumably those numbers grow over time because they are your houses. Well, first off, they cost money. That I didn't really even see.

• 1:31:44Speaker 01

  Upkeep is tremendous on homes.

• 1:31:46Ramit Sethi?

  Where is that? I don't see it here.

• 1:31:49Speaker 01

  Has, I mean-

• 1:31:50Ramit Sethi?

  Another $30,000, $40,000 missing per year at least.

• 1:31:53Speaker 00

  That much for what?

• 1:31:55Ramit Sethi?

  A proper way to do it is to take your house and take 1% to 3% of the purchase price every year for maintenance, every year. Now, I know, and you know, the prices in Brooklyn, Manhattan, et cetera. When I estimate how much it would cost me to own, my, it's like 3% plus because everything's expensive there. People don't understand how much it costs.

• 1:32:16Speaker 01

  Get the plumber to come to the house. It's 350.

• 1:32:19Ramit Sethi?

  I had somebody come. I gotta tell you something. I rent a place there and we have this fridge. And I told, I love posting on Twitter about how I rent, not own, because people think I'm stupid. And they don't understand costs in New York, Brooklyn, whatever. They, the handle on our fridge was loose. Do you know how much it costs for somebody to come and fix a fridge handle? This is a nice fridge. I estimated at least $1,000, probably double. Three guys wearing booties came into our apartment, came, looked at it, go, we don't have the right part. Come back. A few days later.

• 1:32:53Speaker 01

  We've been there.

• 1:32:54Ramit Sethi?

  Imagine how much that costs in New York. So the upkeep on your home's very expensive. You are cash poor. You're losing money every month, but you have $11 million in assets. What's occurring to you right now?

• 1:33:09Speaker 00

  Rent out our summer home for the winter?

• 1:33:11Ramit Sethi?

  That's one way to go. Why don't we put all the options out on the table?

• 1:33:15Speaker 01

  Well, the business is in there. Should we take that off?

• 1:33:18Ramit Sethi?

  No, I think it's fair to put it in there. 2 million bucks is fair. Keep it there.

• 1:33:22Speaker 01

  Okay.

• 1:33:23Ramit Sethi?

  What about with the houses?

• 1:33:24Speaker 01

  What other options are there than selling one, renting one?

• 1:33:28Ramit Sethi?

  Those are the options. You never put those out on the table. Sell them, rent them. What, how would that change your picture?

• 1:33:35Speaker 00

  What could we get for the summer house?

• 1:33:38Speaker 01

  I don't know. I never put it out there.

• 1:33:40Ramit Sethi?

  How much could you sell it for?

• 1:33:42Speaker 00

  Two.

• 1:33:43Ramit Sethi?

  2 million? It's not bad. And then the house you live in, that's the big one, right? What is that like? 656, whatever? 7?

• 1:33:53Speaker 01

  That's, yeah, between 6 and 7.

• 1:33:56Ramit Sethi?

  Damn. $7 million house and spending more than you make. This is house poor.

• 1:34:01Speaker 01

  But every year it goes up.

• 1:34:03Ramit Sethi?

  Yeah, but where's the money?

• 1:34:05Speaker 01

  I hear you.

• 1:34:06Ramit Sethi?

  And then is there another house?

• 1:34:08Speaker 00

  No.

• 1:34:09Ramit Sethi?

  No, like land or something, you're building or all that stuff?

• 1:34:12Speaker 00

  The summer home.

• 1:34:13Ramit Sethi?

  That's the one in Jersey?

• 1:34:14Speaker 00

  Supposed to go to the grounds.

• 1:34:15Ramit Sethi?

  Ah, hmm. What do you think, Margot?

• 1:34:18Speaker 00

  We have plans, but there's nothing gonna hap- we're not going forward with anything.

• 1:34:23Ramit Sethi?

  So are you open to renting it?

• 1:34:24Speaker 00

  Renting it out?

• 1:34:25Ramit Sethi?

  Yeah.

• 1:34:25Speaker 00

  The winter? Yeah.

• 1:34:26Ramit Sethi?

  Are you open to renting it out for the summer?

• 1:34:28Speaker 00

  No, because where would I go?

• 1:34:29Ramit Sethi?

  Right. Are you open to selling it?

• 1:34:32Speaker 00

  I don't want to be open to selling it. It's, that's my summer home. That's my future summer.

• 1:34:37Ramit Sethi?

  Are you open to not taking any more vacations for the next 10 years?

• 1:34:41Speaker 00

  10 years? Yes.

• 1:34:43Ramit Sethi?

  Really?

• 1:34:44Speaker 00

  I'm not, I don't, I'd rather not. I don't want to sell my homes.

• 1:34:47Ramit Sethi?

  I love that answer. You're willing to not take vacations for the next decade if you can keep your house?

• 1:34:53Speaker 00

  With the hope that I'll start making money and Kevin will start making more money. And in two years, we're is out. And so that's a big relief.

• 1:35:06Ramit Sethi?

  What, he's gotta go to college?

• 1:35:07Speaker 00

  I don't know. He's going to college. We'll see.

• 1:35:10Ramit Sethi?

  One way or another, though, like the next kid's gonna go to college, like it's-

• 1:35:13Speaker 01

  There's always gonna be expenditure.

• 1:35:15Ramit Sethi?

  There's a factory you've got with five kids that even if one doesn't go, whatever, there's gonna be something else. So I appreciate maybe one or two won't. Fine. But-

• 1:35:26Speaker 00

  I just feel like once we, in two more years, once we have that, you know, will be done with college and will be out of high school, that's another, like, that's a relief.

• 1:35:36Ramit Sethi?

  Can you tell the kids we're not gonna pay for college? Would you be open to that?

• 1:35:39Speaker 00

  No, I would not tell them I'm not gonna pay for college, but he can go to Hunter College or Baruch, which is a good business school, and you pay city tuition prices. It's not-

• 1:35:47Ramit Sethi?

  He's gonna pay or you're gonna pay?

• 1:35:49Speaker 00

  Good question.

• 1:35:50Ramit Sethi?

  What's the answer?

• 1:35:51Speaker 01

  I don't know. I'd probably tell you in two years when the time comes.

• 1:35:54Ramit Sethi?

  Y'all, y'all are the parents. You decide what's to-

• 1:35:59Speaker 00

  So maybe we don't have to pay full tuition next year. He's, he found himself a job there that he's gonna start working next year. Why do I have to pay my son's second year full college tuition and dorm? It's a big bill. Why do I have to always be struggling for the kids?

• 1:36:13Speaker 01

  Again, that's something where we came from. Where they're constantly building up their kids, bringing them into the businesses that they created.

• 1:36:20Ramit Sethi?

  I understand. My parents the same way. My, my community's the same way. They, they, they will spend an effective unlimited amount for education for their kids, even if it puts them into debt. I understand deeply. However, my group of Indian parents and my parents' friends, they, their spending was radically different than this. First of all, they didn't make this kind of money. But second of all, we didn't go to private schools, camps, vacations, none of it. We had no clothes. Like, go look at an Indian kid's picture. We don't look good. Indians have an Indian glow up. Why? Kids, Indian parents want us to not look that good, so we focus on school. Again, I'm not saying it's right or wrong. Different communities, fine.

• 1:37:01Speaker 01

  Right, it's just-

• 1:37:02Ramit Sethi?

  But like, the math is the math. And I want to say one thing. It would be difficult for me as a kid, whose parents live in a 6 or 7 million dollar house and take quite nice vacations and stuff like that, to, for them to put me into, let's say, $95,000 of student loans. That would be difficult. Again, it's up to you. If you were to be like, we're not paying it. I'm like, cool. I'll help you tell them. But is something a bit out of whack? What do you think, Margot?

• 1:37:33Speaker 00

  I agree.

• 1:37:35Speaker 00

  I agree. It's again, it's the system that we're tied into.

• 1:37:38Ramit Sethi?

  Yes.

• 1:37:39Speaker 00

  The elementary and high school tuition is so high. And now with the cost of living being so high and it's like almost impossible to pay. We're tinkering on just being able to get by, but we don't, we don't. This has happened to us for so many years now.

• 1:37:55Ramit Sethi?

  What do you think I would do?

• 1:37:56Speaker 00

  You would, well, you don't own a home, so I would assume you would sell one of the homes.

• 1:38:00Ramit Sethi?

  That's correct.

• 1:38:00Speaker 00

  You're a believer in renting.

• 1:38:02Ramit Sethi?

  I'm a believer in running the numbers. Yeah. What else would I do?

• 1:38:05Speaker 01

  But you would sell something that you know is going to appreciate. Like in 18 months, the home could be worth another million than it is now.

• 1:38:12Speaker 00

  The rental market in here is like slim to none.

• 1:38:15Ramit Sethi?

  I'm sorry. Are we asking me what I would do? Or are you trying to convince me you're right?

• 1:38:18Speaker 01

  No. What worries me is that I burned through that money.

• 1:38:21Ramit Sethi?

  That's because your dad did that and that's what you've seen and that's what you know. But there are people who do it differently.

• 1:38:26Speaker 01

  But I'm right. And I don't, with investing and putting away money and making that money work for you. It's not my specialty.

• 1:38:34Ramit Sethi?

  So what? You ever, you ever heard of a book called, I Will Teach You To Be Rich? See it right there?

• 1:38:38Speaker 01

  Yeah, I see it.

• 1:38:38Ramit Sethi?

  You ever read it?

• 1:38:39Speaker 01

  I have not.

• 1:38:41Ramit Sethi?

  It's not your specialty because you never did the elementary.

• 1:38:43Speaker 01

  I don't know. We look at assets as very important value, but I, I hear you and I did bring it up.

• 1:38:48Speaker 00

  He did bring it up.

• 1:38:49Ramit Sethi?

  Okay. So back to your original question, what would I do? What do you think I would do?

• 1:38:55Speaker 00

  What would you do? You would sell the home?

• 1:38:57Ramit Sethi?

  What I would do is I would talk to my partner. And I would say, what do we want? What do we really want? Because our whole life, we grew up here, we went to these schools. Now our kids go to these schools. Everybody we know is around us. Every Sunday, we do the same thing. Every Friday night, we do this thing. We know it's our ritual. It's our heritage, what we know. We make a ton of money. And we have not been able to get ahead in many years. And we take one step forward, it seems like two steps back. Even when we save four, five, $600,000, this thing comes out of left field and just kneecaps us. Do we want to go the next 30 plus years like this? More importantly, what are we teaching our kids?

• 1:39:42Ramit Sethi?

  Because it sure seems like the lessons our parents taught us about money, which were close to none, are the ones that we are teaching our kids. Keep up with the Joneses. Of course, we want continuity, live in the same neighborhood. It's going to be even more expensive for them. How are they going to compete? How are they going to even keep up?

• 1:40:02Ramit Sethi?

  So if we don't make changes, they are going to be in our position in 15, 20, 30 years. But it's going to be even worse for them and they're not going to know why. So we can't just delegate this and pass it on to them. We got to actually make changes now. It's going to be hard because this is what we know. So what do we want? I think we want as a family unit to understand the value of money. I think we want to enjoy our lives. I think we want to set our kids up for success. We want to teach them valuable lessons. How do we do that? Well, we, first of all, we make a lot of money. So earning more is not really on the table.

• 1:40:43Ramit Sethi?

  I hope we do, but we already make a million dollars. We can't make it work. Two million is going to be the same thing. We have assets. We probably need to tap into some of those assets. There might be one house. We sell that house. How many years of private school tuition would selling that house get you?

• 1:41:04Speaker 01

  It would get us through a five year period.

• 1:41:06Ramit Sethi?

  Five years. That's not enough.

• 1:41:08Speaker 00

  Why don't we send [BLEEP] to school for the next two years in Jersey?

• 1:41:13Ramit Sethi?

  What about the other kids?

• 1:41:15Speaker 00

  I cannot move them.

• 1:41:16Speaker 01

  You can't do that.

• 1:41:16Ramit Sethi?

  Okay.

• 1:41:16Speaker 00

  Absolutely not. It's not an option, but the high schooler, well, the, why can't we take a loan for the college one?

• 1:41:24Ramit Sethi?

  Where's the money coming from?

• 1:41:26Speaker 00

  We'll pay it monthly. Let him pay some of it. He's working.

• 1:41:30Ramit Sethi?

  That doesn't solve the problem.

• 1:41:31Speaker 00

  Why?

• 1:41:32Ramit Sethi?

  Because that's a drop in the bucket.

• 1:41:34Speaker 00

  Is it?

• 1:41:34Ramit Sethi?

  Yeah.

• 1:41:35Speaker 00

  It's 30 grand.

• 1:41:36Ramit Sethi?

  Y'all are spending 150 plus per year on kids' education.

• 1:41:43Speaker 00

  So if you take that down to 120, because you're minusing the, the older one, that's not a drop in the bucket. If you take a.

• 1:41:50Ramit Sethi?

  That's good. Keep going. I like that.

• 1:41:52Speaker 00

  Okay.

• 1:41:53Ramit Sethi?

  What else? I like that.

• 1:41:53Speaker 00

  So right. And he can pay it. And if he wants to go to my dad and ask him to help him, he can do that.

• 1:42:00Ramit Sethi?

  Great. That's good. One. What else?

• 1:42:02Speaker 00

  Okay. [BLEEP] goes to school in Jersey, which is half the tuition. That's 50, that's 50.

• 1:42:09Speaker 01

  Some hard decisions we have to discuss and make. It's not going to be made here.

• 1:42:12Speaker 00

  Okay, but he's selling my houses.

• 1:42:13Ramit Sethi?

  Wait, wait, wait, wait. Hold on, hold on. Let me correct something.

• 1:42:15Speaker 00

  So that we can pay this tuition where he's not even flourishing in this private school or paying, we're killing ourselves to get through this tuition. And he's not a studious kid.

• 1:42:23Ramit Sethi?

  Talking about these things does not mean you are making the decision.

• 1:42:25Speaker 01

  Of course.

• 1:42:26Ramit Sethi?

  I want, Margot's on a roll here.

• 1:42:28Speaker 01

  Yeah.

• 1:42:28Ramit Sethi?

  I actually want you to encourage her because the two of you have not been able to unlock this. She's on a roll. You can see it, right? If you're.

• 1:42:37Speaker 01

  Yes.

• 1:42:37Ramit Sethi?

  If you're getting help, meet her energy and exceed it. You go like, oh my God, that's a really good idea. Never thought of that. What else could we do, Margot?

• 1:42:45Speaker 00

  We gave [BLEEP] an option. So if he takes that alone, let him start to contribute. We'll give, we'll, we'll meet him where he's at and the rest will be, have to pay over time. In other words, we need your help. We, we, we're in a position where we're spending more than we're making and we need you to chip in for the tuition. And I also don't need to give him $300 a week. It's ridiculous. Let him work this summer, save it, do the best he can. Let him start to hustle a little bit. I don't know.

• 1:43:11Ramit Sethi?

  Okay. That's awesome. So that's 50.

• 1:43:14Speaker 00

  That's 30.

• 1:43:14Ramit Sethi?

  So he needs to find a way to do it.

• 1:43:16Speaker 00

  He needs to find a way to do it.

• 1:43:17Ramit Sethi?

  So you can cut that down to 50 bucks a week. Good luck. Looks like you're eating ramen. Fine. Figure it out. And.

• 1:43:24Speaker 00

  His tuition.

• 1:43:25Ramit Sethi?

  His tuition, who's paying that? He is?

• 1:43:27Speaker 00

  We'll pay a portion of it now. So maybe cut that in half. 15 will be a loan for when he finishes and he's working, he can pay it. And the other 15, he has to pay, I guess, half and we'll pay half.

• 1:43:39Ramit Sethi?

  You want to see what would happen if we took it down?

• 1:43:40Speaker 00

  Sure.

• 1:43:41Ramit Sethi?

  Watch this number at the top right, fixed costs. Drop down to 80%.

• 1:43:45Speaker 00

  That's it. We're still at 80.

• 1:43:47Speaker 01

  You're at 8, but it's.

• 1:43:48Speaker 00

  And we still have to get to 60.

• 1:43:49Ramit Sethi?

  Yep.

• 1:43:50Speaker 00

  That's, we have to get to 60?

• 1:43:52Ramit Sethi?

  No, you don't have to. You could keep it higher. You know, you are in a very expensive time in life, et cetera. But right now you have very little liquid cash. It's actually terrifying because you have

• 1:44:06Ramit Sethi?

  about a month's worth of savings. If something happened to you, y'all are in big trouble. One month's worth of savings and your expenses are astronomical. Even with these changes we made, it's $40,000 per month.

• 1:44:23Speaker 00

  Is there anywhere else we can cut without selling the houses? What, so what if we did rent out? Is it worth it to do that?

• 1:44:30Ramit Sethi?

  I mean, we'll just net out 2,500 a month. Okay. Watch what happens. Your fixed costs dropped 3%, 77%. It's interesting, but not that interesting. I once had a woman on this podcast who wanted a beach house. And she was saving every last penny. And it was causing her a lot of anxiety and stress. And I asked her, what is behind this beach house? And she told me that she grew up, they went to the beach. She wants the same thing for herself. And I said, it sounds like a lovely vision. Is it possible there are any creative ways to get to this beach house?

• 1:45:11Ramit Sethi?

  And I proposed to her, what if she just rented a nice one for a week or two or something like that? And it kind of struck her. She was dumbfounded. She had never considered it.

• 1:45:20Speaker 00

  It's the same not. It's, I grew up there. The kids go to camp there. I love my summers. Like, it's like, we say that the year is so hard, but we have like, all my friends are there. We have girls. It's like, it's really very important part of my life.

• 1:45:36Ramit Sethi?

  I get it.

• 1:45:36Speaker 01

  Everyone picks up from Brooklyn and goes to Jersey.

• 1:45:39Speaker 00

  They go to the same Jersey Shore area. It's like a migration.

• 1:45:42Ramit Sethi?

  Can I, can I tell you my perspective here?

• 1:45:45Speaker 01

  Yeah.

• 1:45:45Ramit Sethi?

  So I'll never tell a couple, a family, like pack up and move to Ohio so you can sell. I, I get that. Makes no sense, especially when you have your community embedded where you are. But where you are in this community is not serving you, at least financially speaking. And obviously it's not serving you relationally because you all flew all across the country to see me. So this is not working. And again, it's not working and you're having great years. A million bucks a year is [BLEEP] awesome as a business owner, but it's not working. So if it were me and I wanted to stay with my community, but I couldn't make this work, this is what I would do.

• 1:46:27Ramit Sethi?

  Big, bold changes. Okay. Easy for me to say, I know that, but that's why you came to me. I would get rid of one or both houses. I don't know which ones. I would find a place that's more inexpensive. I know it's difficult for five kids. I know that. I know this is not easy. But this is why sometimes we need to hear from someone else. I would not own a second place. We simply cannot afford it. Finally, with the school, the kids would have to not be in private school. It's just not feasible. Now, if I could do that for three or four or five years and bank a [BLEEP] load of money, and I would know the exact amount we need to have, which would allow us to pay for the kids' college, perhaps if that's a priority, have a retirement and know the exact number that we need. So we never have to go down, but rather go up.

• 1:47:12Ramit Sethi?

  And I could do that for five years at, at a million bucks a year. If you actually contained your costs dramatically, you could lock away hundreds of thousands of dollars.

• 1:47:20Speaker 01

  Also, if we have eight million earning interest and bringing in more money, it's more money.

• 1:47:25Ramit Sethi?

  Massive.

• 1:47:26Speaker 01

  We've had this conversation. Don't think we did.

• 1:47:28Ramit Sethi?

  Okay.

• 1:47:28Speaker 01

  Liquidate.

• 1:47:29Ramit Sethi?

  Yeah.

• 1:47:30Speaker 01

  Cash rich, invest it, rent.

• 1:47:33Ramit Sethi?

  Yeah.

• 1:47:33Speaker 01

  Step away from a lot of the problems. It's so hard to do when you're doing it for 40, 50 years of your life. You're living in that same.

• 1:47:40Ramit Sethi?

  Yeah.

• 1:47:41Speaker 01

  Situation. It's hard to just say, okay, liquidate. I'll have eight million in the bank. Great. It will earn X. I could still make this. We'll compound it. But we're living a completely different lifestyle than we're mentally and physically used to.

• 1:47:57Ramit Sethi?

  It's really hard.

• 1:47:57Speaker 01

  It's, it's, it's a tough one. I mean, I love it. And I love that option. But then the other part of me says, [BLEEP] how could I do that? Can I step away from the community I was born into?

• 1:48:09Ramit Sethi?

  Why step away? Maybe it's a little bit different neighborhood. Maybe it's a few blocks away.

• 1:48:15Speaker 01

  It's a little different.

• 1:48:16Ramit Sethi?

  I know it's not the same. I get it. Even a block away can be totally different. I get that. But again, this is not working.

• 1:48:24Speaker 00

  His parents sold their houses.

• 1:48:26Ramit Sethi?

  Yeah.

• 1:48:27Speaker 00

  Went through the money.

• 1:48:28Speaker 01

  Listen, the last of them 20 some years.

• 1:48:31Ramit Sethi?

  How about we make sure that doesn't happen?

• 1:48:32Speaker 00

  How?

• 1:48:33Ramit Sethi?

  Y'all could invest in simple funds, you'll be fine. I'm not promising some get rich quick bullshit. It's simple. What, the investment part is not the hard part. It's the two of you getting aligned on expenses.

• 1:48:47Ramit Sethi?

  But if you had, I don't know, $8 million, just interest.

• 1:48:52Speaker 01

  240.

• 1:48:53Ramit Sethi?

  Yeah, $240,000 a year in safe withdrawal income coming from that. So he would still be making, let's just say a million dollars a year. So you're still bringing in the current income. Plus, you would have an extra $240,000 a year of money, which you could use however you see fit, probably saving.

• 1:49:12Speaker 00

  But that money would go towards rental of the home and the summer home. It would equal $200,000.

• 1:49:19Ramit Sethi?

  Well, if you chose to spend that much, it would.

• 1:49:22Speaker 00

  I mean, I have a lot of people to house.

• 1:49:25Ramit Sethi?

  Yeah.

• 1:49:25Speaker 01

  Well, like you said, you can go to a different area where it's a little bit less, but you're still within the community.

• 1:49:30Speaker 00

  Well, you wouldn't be in Brooklyn, that's for sure, because there's nothing less than 10 grand.

• 1:49:34Speaker 01

  I, listen, I hear you.

• 1:49:37Ramit Sethi?

  Here's the facts. Having multiple kids in private school, plus college, plus cars, plus food, all that stuff, it just doesn't work. There's no magical answer that I can give.

• 1:49:47Speaker 01

  I know.

• 1:49:48Ramit Sethi?

  What do you want to do?

• 1:49:49Speaker 01

  So it's a lot to be discussed. We have to sit down and discuss things. But yet at the end of the year, if I make double the income with our habits, who knows if there'd be anything left anyway at the end of the day.

• 1:50:02Ramit Sethi?

  There would not.

• 1:50:03Speaker 01

  But, so we'd have to come up with a system, put it into effect, and make some hard decisions that we don't want to.

• 1:50:10Ramit Sethi?

  The one thing I want to say is time is not on your side. Y'all are getting older and a high income can help. If you start late in life, okay. Luckily, again, you have millions of dollars of property. That's an enviable asset to have. So my message to you is, from the surface, it seems okay. Kind of like the way you look at your neighbors and you're like, how are they doing it all? And maybe they are with parents' help, maybe they make even more money than you think. Or maybe they're in similar situations where they're just like, oh, my God.

• 1:50:44Ramit Sethi?

  But when you have a family of five, where you live, in those schools that you're in, with the lifestyle, which I understand, even a million dollars a year, it's really difficult. 20 years from now, I'm going to be hopefully doing this podcast. Say I have one of your kids come on and I ask them about how they grew up.

• 1:51:08Ramit Sethi?

  And I ask them what they learned from their parents about money.

• 1:51:12Ramit Sethi?

  What are they going to say?

• 1:51:12Speaker 01

  I mean, any of them would say, we had a great life. We have what we need. We're getting it all. Our parents gave us.

• 1:51:21Speaker 01

  Are we teaching them the value of money? I would say probably not so well.

• 1:51:27Ramit Sethi?

  Okay.

• 1:51:29Speaker 00

  I think that they witness us struggling and arguing about money.

• 1:51:36Speaker 00

  And I think that I don't know that they feel the actual value and, you know, of what things cost because they get a lot. What is the right way to have them being a part of this financial situation?

• 1:51:52Ramit Sethi?

  Outstanding question. At four or five, they should be watching you click a button to pay the credit card bill, even if it's a not real button. Help me push the button. Great job. This, this lets us have a roof over our head. Get them involved. Have fun.

• 1:52:11Ramit Sethi?

  At seven or eight, they're coming to the grocery store with you. And you're talking about, here's how much we have to spend. Can you help me do it? Age appropriate, small numbers.

• 1:52:21Ramit Sethi?

  Keep that going. 10, 12, they should be planning, uh, they should be the ones picking what's on the menu when you're eating out. Here's how much we have. What are we going to get? Where are we going to go? As they get older, we're talking about that same principle. The grocery store, the restaurant, now it's with bigger amounts of groceries. Birthday party, here's the amount. What do you want to do? It's up to you. You've got to make the trade offs. You've got to tip the vendor, all of that. Then it's buying a car. Then it's taking a family trip. By the time they graduate, they know taxes, tips, they know what it's like to get ripped off. They know maintenance costs. Right now, how much do your kids know of those things?

• 1:53:05Speaker 00

  We don't even know. We don't go into a vacation like calculating exactly how much we're planning on spending.

• 1:53:11Ramit Sethi?

  Right. That's not effective.

• 1:53:13Speaker 01

  No, but they see it. They just don't know how to.

• 1:53:17Speaker 00

  They have some sort of concept of, of money. Yeah. But they don't have a concept of it in relation to how much we have available to spend. And what, so what about a 16 year old?

• 1:53:28Ramit Sethi?

  They should be close to running part of the household when it comes to finances.

• 1:53:34Speaker 00

  Like, for example?

• 1:53:35Ramit Sethi?

  They should be investing. They should be having a certain amount of money. I would not be giving a 16 year old a bunch of money to go out and buy clothes compared to how much money they have to invest. Sure, they can have a little bit for fun. For sure, they're a 16 year old, enjoy. But they're talking about the difference between saving and investing, something that the two of you do not do. So all of this is a bit moot until the two of you get aligned. Because you cannot do the thing where you go, do as I say, not as I do. They'll read right through that. They're too smart. So I appreciate the questions. They're awesome questions. But until the two of you actually are dialed in with your money, until your fixed costs are at 60, even 65% and you're saving at least 10, 15% investing, 10, 15% guilt free spending is way down,

• 1:54:18Ramit Sethi?

  they're just going to see this as a show, as a charade. And I don't think they've ever seen you make tough decisions about money.

• 1:54:25Speaker 00

  And if we had money to invest, where would, where would it go? 401k or what?

• 1:54:31Ramit Sethi?

  401k is a great place to start, especially with the options you have. Or perhaps a SEP IRA, there's a few different types of accounts that business owners have access to. You could pick simple index funds. That's where I have the majority of my money. It's really simple. Can't predict the future, but we can see that typically it's returned about 7, 8% after inflation every year. That's a lot of money. So the investing part is not difficult. The suggestion I have is that the two of you do start a book club, each of you. If anything, I would actually involve your older kids and be like, we're all going to read this together.

• 1:55:01Speaker 00

  Okay.

• 1:55:02Ramit Sethi?

  If you want to change things, you need to really take it seriously. And your kids would actually need to see that. If I talk to them in six months, I should ask them what happened as of six months ago. They'll be like, holy, my parents really changed. And I, I would challenge you to think about what that change is and what you want them to see. Cause right now, they are equipped to leave the house, graduate college, not really knowing anything about money. And I don't want that for them. I don't want it for you.

• 1:55:31Ramit Sethi?

  The stories that we tell ourselves through the generations are incredibly sticky. And they can be things like, of course, we send our kids to college. They can be things like, of course, we buy a house. So when I am speaking to this couple and I am even proposing the idea that perhaps they can't afford to send multiple kids to private school. Perhaps they can't afford to pay for their college. Perhaps they might need to sell a beach house. You can see that it almost does not compute. Why? It's not that they're stupid. They're very intelligent. It's that we are talking about generations of beliefs that have been passed down. It's not easy to get rid of those things.

• 1:56:12Ramit Sethi?

  One of the key lessons of Money for Couples is that money is not just about numbers on a page. It's about beliefs. It's about social systems. It is about things that are passed down consciously or unconsciously, orally or not. And that is exactly what we are seeing here. A system, an interlocking system of beliefs that are showing up right there on their CSP, where they live, what schools the kids go to, what activities, even where they go on vacation. But sometimes those beliefs simply do not align with where you are financially. And that's when you have to make some very difficult decisions. My point is not that they should sell the house immediately.

• 1:56:55Ramit Sethi?

  My point is that I don't think they've ever even considered the alternative.

• 1:57:01Ramit Sethi?

  What if we took the money and invested it? What if we took $500,000 of that and put it aside for the kid's education or a million? What if we felt less stressed and actually had a vision together? But until they can rid themselves of this restrictive story, we must own houses, we can never sell until we die, they will be in this position forever. My wish for Margo and Kevin is that they systematically deconstruct the stories that they have surrounded themselves with. You do not have to spend $4,000 on groceries per month. You do not have to send five kids to private school, including college.

• 1:57:45Ramit Sethi?

  You do not have to live in two different houses until the day you die and struggle with money because that's what everybody else does. You choose. Right now, in a way, it almost seems like they are on autopilot with their stories. And you cannot live a rich life on autopilot. So Margo and Kevin, I wish you the best. Please keep in touch. I appreciate you coming on here. It's a difficult conversation. And I really hope you're able to make some huge, bold changes. Now, let's check out their follow ups.

• 1:58:18Speaker 00

  Hi. Our biggest takeaway from the conversation with Ramit was that it's not about cutting lattes, but our fixed costs are so high. And that's what's taking us over, over budget every single month. So the changes that we've decided to make was we getting rid of our most expensive car and downgrading our second most expensive car. We've also set lower grocery budget as well as miscellaneous, like clothing budget. What, not just intentions, but we're going to have concrete numbers that we're going to stick to.

• 1:59:00Speaker 00

  And we are going to start doing financial planning as a family. We've ordered, I Will Teach You to Be Rich. And we're going to sit down with each kid as well as the family as a whole and start discussing money and our finances and what's appropriate for each kid at every age and start to get them involved in the process

• 1:59:22Speaker 00

  from, from this age on. Thank you again, and we look forward to checking in again.

• 1:59:27Ramit Sethi?

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