Pod Insights Money For Couples with Ramit Sethi 259. "We’re worth $1.5M but I refuse to buy new pants" About this episode Ramit Sethi of I Will Teach You To Be Rich talks to Mikaela and Dave, both in their early thirties, parents of two young children, and earning an impressive $278,000 a year. Despite a net worth nearing $1.5 million, they struggle to spend money, even on necessities. Mikaela wears clothes with holes, and Dave sits in an uncomfortable chair, all rooted in a scarcity mindset developed from past challenges and recent life events. Ramit helps them explore their money beliefs, encouraging them to redefine their rich life beyond just accumulating wealth.
In this episode we uncover:
• Their surprising net worth of nearly $1.5 million in their early thirties
• Mikaela's struggle to replace workout leggings with holes, even when she can afford it
• Dave’s discomfort with his office chair despite working from home
• The recent health scares that have frozen their spending decisions
• Why Mikaela still views money through a lens of scarcity despite their wealth
• The shocking realization of their actual household income versus their perception
• The invisible labor dynamics in their financial management
• Mikaela's childhood experiences with financial stress and lack of fun
• How past trauma and family loss continue to influence their spending habits
• The challenge of transitioning from a "hoarder's mentality" to enjoying their money
• Their vision for a Rich Life that includes travel and personal well-being
• Ramit’s advice to ban the word "need" from their financial vocabulary
⏩ CHAPTERS
(00:00:00) Introduction
(00:03:08) Why they struggle to spend money
(00:06:08) The impact of past health scares
(00:14:00) What it means to be "frozen"
(00:16:32) The origins of their frugal mindset
(00:33:51) The shock of their true income
(00:40:00) Rebuilding financial foundations
(00:46:08) Mikaela's childhood and money lessons
(00:52:19) The profound impact of family loss
(01:06:00) Building an amazing relationship with money
(01:14:38) How to get help from Ramit
(01:16:40) Reimagining the concept of "need"
(01:19:15) The value of Mikaela's time
(01:27:00) The invisible labor in financial planning
(01:31:00) Ramit's challenge for Dave to initiate fun spending
(01:35:10) Setting boundaries for family finances
(01:37:00) Defining their rich life together
(01:44:30) Ramit's parting advice
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Transcript 18,433 words · 3 speakers
Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.
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2:36 Speaker 01 It gets to me sometimes. I feel like I need a break.
2:40 Speaker 02 I don't want you to feel that way. I really don't.
2:42 Ramit Sethi? Aren't you guys pretty rich?
2:44 Speaker 02 Yes.
2:45 Speaker 01 Yeah, we have money, but both of us have a hard time with just spending.
2:51 Speaker 02 It's probably a bit of like hoarders mentality. We don't spend it and we don't really have a plan to spend it.
2:57 Speaker 01 I'm scared that blink of an eye, we're 65, 70. We never did anything with some money. The kids are good, but did we enjoy life?
3:09 Ramit Sethi? Sometimes on this show, I like to show you what happens when people earn high incomes, but they struggle to spend their money. And I always see the comments, people sometimes complain about these couples. They say they're unrelatable. But I want you to know that this is an extremely important topic to cover. And it's important for you because if you follow my system, you will likely have more money than you ever thought possible. I want you to learn from these types of couples who are still stuck in scarcity mode so that you can make changes now. In my opinion, it is a tragedy to live a smaller life than you have to. And I am determined for that not to happen to you. Today I'm talking to Michaela and Dave.
3:54 Ramit Sethi? They're 33 and 32 years old. They have two young children and they earn $278,000 a year. That's a great income for any age, but especially impressive for someone's early 30s. So why do they struggle to spend money? So much so that Michaela wears clothing with holes in it because she can't bring herself to spend money. That's what I want to talk about today. And remember, I want you to. Apply the lessons to your own life. In fact, I think as you go through today's episode, you're going to be surprised at their reasons for being frugal. So make sure you stick around. Now, I'm looking at their conscious spending plan or their CSP. If you want my help with your conscious spending plan,
4:37 Ramit Sethi? join my money coaching program at iwt.com/moneycoaching. Assets $545,000. Investments $1,032,000. Savings $106,000. Debt $195,000, which is their mortgage. Total net worth $1.488 million. They have a net worth of nearly $1.5 million in their early 30s. Now, if this were you, what would you be doing with your money? Ask yourself that. And ask yourself why Michaela might be wearing clothes with holes still in them. Let's get into it, beginning with our conversation now. Help me understand a little bit about your day to day spending behaviors.
5:20 Ramit Sethi? Like, what is something that you wanted to spend on or started to talk about spending on, but you just couldn't bring yourself to do it? I'm not going to judge you, I promise. Go ahead.
5:30 Speaker 01 Just workout leggings. Like, my leggings have holes in them, in the knees, and from just years of use. And even trying to buy new leggings, I couldn't do it until there was a sale.
5:43 Ramit Sethi? This is an amazing example. First of all, are those leggings in the room that you're in right now?
5:48 Speaker 01 I'm wearing them right now.
5:49 Ramit Sethi? Can we see?
5:51 Speaker 01 Okay.
5:51 Ramit Sethi? Okay, she's standing up. I'm going to describe what I'm seeing.
5:55 Ramit Sethi? Okay, she's... Come closer to the camera. This is amazing. It's actually quite a modest hole. It's like the size of a hole puncher. And it's directly in the middle of her kneecap. It's like somebody punched a hole. Did your little four-year-old punch a hole with a hole puncher in that?
6:10 Speaker 01 Who knows at this point? It might have been a pinch from him.
6:13 Ramit Sethi? I have so many questions. How long have you had those leggings for?
6:17 Speaker 01 Probably four years.
6:18 Ramit Sethi? This is amazing. I couldn't script this. I love my life. So one day you said like, hmm, I'm going to get some leggings. Walk me through that. What happened?
6:28 Speaker 01 Yeah, it's just like a mental to-do list. Like, oh, add it to the list, I guess. And then I'm like, do I really want to spend that?
6:36 Ramit Sethi? Oh, and how much are we talking about?
6:38 Speaker 01 $55, $65.
6:41 Ramit Sethi? Why don't you just wait till the whole thing freaking tears apart? Why not?
6:45 Speaker 01 That or a deal.
6:46 Ramit Sethi? And how much did you get these beautiful leggings for this time?
6:49 Speaker 01 I think like half off.
6:51 Ramit Sethi? Wow.
6:52 Speaker 01 Twenty-five.
6:52 Ramit Sethi? Wow.
6:53 Speaker 01 So.
6:53 Ramit Sethi? Twenty-five bucks.
6:54 Speaker 01 Hopefully it'll last me another four years.
6:58 Ramit Sethi? This is amazing. Dave, care to comment? What are your thoughts?
7:01 Speaker 02 I'm probably worse with clothes.
7:05 Speaker 02 But if you were to say the item, it's actually this chair that I'm sitting in.
7:07 Ramit Sethi? What, that chair looks like Batman's chair. What are we talking about?
7:11 Speaker 02 It's a, I work from home, so a chair that I sit in all the time. It's grown very uncomfortable on my back, tight. My hips aren't sitting well into it. And just, I've had it for, I don't know, four years. And I don't know if it's a purchase for more, so I have to make it, make the value stretch, but I won't go buy another hundred dollar, hundred fifty dollar chair or splurge and get one that I'll sit in every day.
7:36 Ramit Sethi? All of this is a bit at odds with your own financial situation. Would that be fair to say?
7:41 Speaker 02 Very.
7:42 Speaker 01 Yeah.
7:42 Speaker 02 Yes.
7:43 Ramit Sethi? You want to spend more. My first question is, what's stopping you?
7:46 Speaker 01 I feel like just the unknown of the future and the expenses that could come with that.
7:52 Ramit Sethi? Dave, what about you?
7:53 Speaker 02 It's probably a bit of like hoarder's mentality. Just planning and overplanning for retirement, what could be in the future.
8:01 Ramit Sethi? You like that?
8:03 Speaker 02 Yes, I enjoy it. I enjoy it. Looking at like investment vehicles and those kind of pieces. But at the same time, I recognize the opportunity cost of what we could be doing. You know, what we could do to enjoy now versus what I'm older and can't move the same way.
8:17 Ramit Sethi? Probably a good sign that someone might be a hoarder is when they're talking about saving too much money, they use the word opportunity cost. Like, I think we're on to something here. I think I get it. Michaela, do you also enjoy planning for the future?
8:31 Speaker 01 Yes, but not even like the future a year from now. Like, I can't think of like the next two to five years. It's more so like jumping to our kids are in college, we're retired. And even that is still kind of fuzzy. It's the idea more so than like concrete details in place.
8:52 Ramit Sethi? Is it the idea or the feeling?
8:54 Speaker 01 The idea more so just because I don't know what the feeling would be not working so hard for what we have.
9:03 Ramit Sethi? Oh, right. Meaning it's supposed to be hard. We are supposed to work hard. If we didn't work, what would we be?
9:14 Speaker 01 What would we be?
9:16 Speaker 02 Purpose. Yeah. Purpose and drive.
9:19 Ramit Sethi? Aren't you guys pretty rich?
9:20 Speaker 02 I'd say so.
9:21 Speaker 01 Yeah.
9:22 Ramit Sethi? Wow. Talk about an uncomfortable reaction. Let's try that again. Maybe we can get in a slow mo. Aren't you guys pretty rich?
9:30 Speaker 02 Yes.
9:31 Speaker 01 Yes, we have money, but you don't. I feel like anything could happen at any point, and that's what scares me.
9:40 Ramit Sethi? Well, I understand that you've had some recent life events that have really shaped some of your pivotal views on money. Would you be comfortable sharing a little bit about that?
9:50 Speaker 02 Yeah, I'll share some. We kind of talked about a bit of a
9:55 Speaker 02 lack of purpose. I've always been very drawn to work and purpose driven work. And I think a lot of that along with surgery procedure, medications, put me into a bit of a mental spiral. It's an overwhelming place. Like time not driven to work, time not driven to purpose. So.
10:16 Ramit Sethi? Do you mean, can I read between the lines? Do you mean that you have always been driven? You've always been, your identity has been part of work. When you were sick, you couldn't do that and it made you question, like, what is my purpose?
10:31 Speaker 02 Yeah.
10:32 Ramit Sethi? Okay.
10:32 Speaker 02 I would almost say not working drove the sickness and lack of doing things. I'm always doing something. I'm always analyzing and optimizing. Did I make the right choice? Were these the right three variables to pull on those kind of pieces? That always happened since, since Michaela and I met and even long before. I've always been very active and I don't relax, read books, those things.
10:52 Ramit Sethi? All right. That's quite interesting.
10:54 Speaker 01 He was in the hospital for a week and had some heart issues and it was scary just for the age that. We are.
11:03 Ramit Sethi? Yeah, that is scary.
11:04 Speaker 01 And that was just very sudden. So it was just a lot of doctor appointments and trying to get him healthy again to like, just get back to our normal day to day. So it was just like a shock. I was five months postpartum, so the stress of new baby and yeah.
11:25 Ramit Sethi? That's scary. That's scary on so many fronts.
11:27 Speaker 01 Mm hmm.
11:28 Speaker 02 Heart rate dropped below, very below normal. Mental state not up to what it was. And was ultimately hospitalized for a week as we worked through this. And then even coming back for me, it was a bit of a confidence drain.
11:44 Ramit Sethi? Totally.
11:44 Speaker 01 Yeah.
11:45 Speaker 02 Uh, especially when we're working so hard financially, but also for the family and where we want to go. It's a bit of, it felt like a large step back. And for us to kind of reset them.
11:54 Ramit Sethi? A step back from where we, what do you mean by that?
11:57 Speaker 02 Just it felt like we had, we had direction where we wanted to go financially, where we were going kind of as a family, but being in that situation mentally and physically, it felt like, okay, there's this focus on, now I'm saying it out loud, it's, it's the focus on the here and now and the hey, we build from here rather than super focused into the future.
12:17 Ramit Sethi? Thank you for sharing that. Um, I really appreciate that, Dave. And Michaela, what about you? Um, I understand there was a, uh, illness in your family as well.
12:26 Speaker 01 When I found out that I was like three months pregnant, um, my mom was diagnosed with stage four cancer. So, yeah.
12:37 Ramit Sethi? I'm sorry to hear that.
12:39 Speaker 01 We don't have a timeline because it's just a rare cancer. So it's slow growing, which is good. Kind of bad because you're just living with the pain for so long.
12:50 Ramit Sethi? Yeah.
12:50 Speaker 01 Um, but also tying into Dave's, uh, hospitalization earlier this year and just like the unknown of that, it just like really freaked me out on top of everything because just like another person getting sick. She's the only person that is still alive in my immediate family. So it all falls on me to make sure that she gets taken care of.
13:15 Ramit Sethi? How is she feeling day to day now?
13:18 Speaker 01 Uh, good and bad days. Yeah, I'd say like sixty forty, like sixty percent of the month she can move, walk around and stuff, but forty percent she has really rough days. So.
13:31 Ramit Sethi? I'm sorry to hear that. I'm really sorry. How have the two of you reacted to Dave, your health scare and Michaela, your mom's illness, her cancer?
13:41 Speaker 02 We've kind of been frozen. At least for what I would say is we've kind of been frozen and we're not sure what happens next. We know something's going to happen, but we don't know. Like time is the most elusive and yet most valuable thing we have. It's, it's, we're stuck in where we are because we're not sure what tomorrow looks like. And I think for a lot of reasons, that's impacted a little bit of strain and stress on what we do, where we do, how we do, who we communicate with, but also what we do with our money. What do we spend it on knowing that there could be other bills that we're potentially going to have to look after her mom or for me with doctor's appointments or just with the family, more check-ins, etc. What about for you, Michaela?
14:23 Speaker 01 Yeah, a lot of stress on the foreseeable future. Like I know my mom lives three and a half hours away right now, but we talked about a month ago and her plan is to move closer to us within the next year, just because we will need her close to be able to take care of her when things decline more. So right now we aren't paying anything for her. However, she did not save or do anything really to set herself up to retire regardless of this whole mess. So we know in due time that we will definitely have to pitch in to
15:05 Speaker 01 support some sort of lifestyle, whether that's the higher rent around our area for her or doctor's appointments, transportation, etc. So it's just the stress of the unknown bills and budgeting that and how do you? Live your life and enjoy it versus staying strapped and making sure that you're financially still saving for the future, but paying for these things in the now, I think.
15:34 Ramit Sethi? Will your role in her care be her primary caretaker?
15:38 Speaker 01 Yes, probably while working full time. I mean, well, definitely when we get to that point, when the health declines, I assume we will need like a nurse that comes around to make sure that she is getting the care she needs.
15:55 Ramit Sethi? Dave, what about your health? How are you now?
15:59 Speaker 02 Progress. I wouldn't say, feel more confident, feeling better, but also still kind of recognizing that I have a long journey and respecting my own health and keeping up with it.
16:10 Ramit Sethi? Got it. Got it. Day to day basis, are you able to work? Are you able to, you're able to be mobile?
16:17 Speaker 02 Yeah, yeah.
16:19 Ramit Sethi? Okay.
16:19 Speaker 02 Yeah, day to day, day to day is really no change. It's more of a, yeah, just foresight, doctor's visits and continued checkups. Even, I'll even expand and say even last two weeks, went to the dermatologist because I have a cyst and they're saying maybe it's cancerous, maybe not. So it adds to a little bit of the stress and I'm trying not to worry about it until we find out versus worrying about what could be. So, but I think it just compounds to everything.
16:41 Speaker 01 And of course I'm stressing about that on top of, it's just like another health scare that it's like, you've got to be kidding me.
16:50 Ramit Sethi? I want to stop here for a second because Dave was hospitalized in his early 30s. Michaela's mom has a stage four cancer diagnosis delivered while Michaela was five months postpartum. And now on top of everything, there's another potential health scare for Dave. Any one of these things is difficult. All of them combined compounding, it is devastating. It's almost incomprehensible what they've been through. When I was at Stanford, I took a class on trauma and disasters. And I remember this example that I had also studied in my social psychology coursework. And that was how people take their cues from other people.
17:31 Ramit Sethi? People around them. There was a study where they have people eating in a restaurant and smoke starts filling the room and people are sitting there not moving and guess what other people do? They just keep eating. At a certain point, the smoke is so thick, you can't even see your own hands and people are still eating their food. It's almost unbelievable. But that is what happens. The lesson that I took away from that trauma class is don't freeze. If something bad is happening, don't worry what other people are doing. Move. Even if it feels silly, even if it feels like an overreaction, you gotta move. That's why when COVID hit, my wife and I were living in New York City and I looked around and saw what was happening with the compounding numbers and I said, we are out of here tomorrow. We left immediately before
18:15 Ramit Sethi? others left. And I remember our friends were on a WhatsApp group and we told them, we're leaving tomorrow morning. And they were like, really? Are you sure? It felt like an overreaction. By next Friday, it was a very serious thing. And I think about that class every time I meet a couple like Michaela and Dave. People who are not lazy. They're not irresponsible. People who are simply frozen. That doesn't make them bad people. It's actually deeply human. So right after this, I want to help them start moving again. When did money come up for the first time between the two of you in a really substantive way?
18:52 Speaker 01 The one thing that I can think of is when we first decided to move in together, we had another couple that was close friends. So the four of us moved into like a three bedroom, two bath apartment. The first thought that I can think of is, oh my God, how much money we are going to save because we're splitting it four ways.
19:11 Ramit Sethi? Holy shit. Who around you has called one or both of you penny pinchers or cheap?
19:18 Speaker 02 Not the word cheap, but definitely frugal and bargain hunters and friends, family.
19:24 Speaker 01 Friends. Yeah.
19:26 Ramit Sethi? When was the last time that you told somebody how good of a deal that you got on something? I'm gonna guess it's in the last month.
19:34 Speaker 02 Probably the last, probably the last week.
19:36 Speaker 01 Probably like Black Friday sales for our oldest son. He's getting a bike for Christmas. It was like sixty, sixty-five dollars. And then Cyber Monday rolls around and Dave goes, "Hey, uh, how much is it now? Like, can we get a better deal? Is it, is, and he was like, we could buy it again and return it."
19:56 Ramit Sethi? All right. Well, you guys want to be cheap?
19:59 Speaker 01 No, I mean, it got us to where we are, but no, I want to be able to spend our money and not feel guilty about it. I just feel like we can't get out of the mindset of when we first started dating and had like nothing. And we made that work so well, budgeting and getting to where we are that it's so hard to get out of that mindset of, "We have the money, why don't we use it?"
20:26 Ramit Sethi? Answer the question for me. Why don't we do this?
20:28 Speaker 01 Cause what if something happens? What if we get a random Dr. Bell or one of us gets sick? Or the kids can't go to daycare for a week for some odd reason? Or my mom needs it or something else?
20:39 Ramit Sethi? Pause, pause, pause, pause. Let's take it step by step. How much do you guys have in your savings account?
20:44 Speaker 01 Isn't it like twenty thousand or?
20:47 Speaker 02 Eighty, ninety thousand.
20:48 Speaker 01 Oh, oh, where I thought I was just talking about mine. Sorry.
20:52 Ramit Sethi? That's also not the number. It's higher than that.
20:54 Speaker 02 Hundred twenty thousand?
20:56 Ramit Sethi? It's a hundred and six thousand dollars. You get a six thousand dollar medical bill? You write a fat check. Here, take it. Get the [bleep] out of my life, medical industry. Or even better, you call them and negotiate it down. And then you write the check for four thousand dollars.
21:10 Speaker 01 Yeah.
21:11 Ramit Sethi? What's going on that in each of these examples? The answer is actually quite simple if you have the money. But the fear of it, the idea of it seems to be quite overwhelming. What do you think's going on there?
21:24 Speaker 01 Like I said, my mentality is still stuck in the like, we have just are in the grind of it. And we don't have the money. Like my mind has not come to terms with how much we have saved and invested and come to have at this point.
21:43 Speaker 02 I think it's a frugality, frugality mindset and living as if it's a scarce commodity. Like we don't have the number in our bank account. We couldn't cover that cost.
21:53 Ramit Sethi? Yeah. When was the last time you took a trip?
21:56 Speaker 02 It's been five years since we've done a vacation just for us. And even that was us going and then meeting up with one of my friends in Colorado, which was great. It was fun, but it's not just us.
22:08 Ramit Sethi? So like approximately five or six years ago, and how do you feel about that? Like some people are perfectly fine traveling once every five years, some are not. What's your take on that?
22:19 Speaker 01 I definitely wish we were traveling more. Life and timing is so unpredictable, like you don't know how long you have. So while we have our health and the money, I would love to start making those memories together for us and our family and enjoying it before it's too late.
22:40 Ramit Sethi? I appreciate that.
22:41 Speaker 01 Yeah, I get jealous of my friends that travel constantly, but they don't have kids. So it's a little easier for them.
22:48 Ramit Sethi? Is the reason that you don't travel kids?
22:50 Speaker 01 I'd say partial, just because childcare.
22:53 Ramit Sethi? Dave, what's going on in your head? I can see your thinking right now.
22:56 Speaker 02 That's what we used to do in the past. We were just billed not necessarily a big vacation, but just weekend and things to do.
23:04 Ramit Sethi? What changed?
23:04 Speaker 02 Lack of fun.
23:07 Ramit Sethi? Maybe, but what changed? Why?
23:09 Speaker 02 Now kids, different priorities, and we were putting our priorities into different places.
23:14 Speaker 01 Yeah, and I feel like we are so, we get so head down in the day to day that you look up and you're like, oh crap, six months have gone by. Like just this year, it's like, where the whole year ago, did we do anything for ourselves? And then even if it's is with the kids, once we start planning, it like hits a point where it's just like, I don't, not that is this even worth it, but it's like, is this actually what we want to do?
23:45 Ramit Sethi? Do you see why? If you approach something as a to do list, whether it's buying new leggings or taking a family trip, if you approach these things as an obligation, as an, oh God, we got this family trip, oh God, I gotta get new leggings, then of course you're not going to want to do it or do it well.
24:04 Speaker 01 Yeah.
24:05 Ramit Sethi? It just becomes one thing that's just like relegated to, oh God, add it to my to do list. I have things on my to do list that have been there for like three months. Deep down, I just don't want to do them. I think that was quite illuminating. When I asked you, why did you used to do that, but you don't do it now? The answer that you gave me was almost reflexive. It is what so many people in America say. What was the answer?
24:31 Speaker 02 Priorities and kids.
24:32 Ramit Sethi? Kids. Now, let's not minimize kids. It's a four-year-old and a one-year-old. That's a [bleep] load of work. And you love your kids. You want to be with them. I understand that. But it's quite interesting that people making $40,000 a year with two kids would say kids. And then we have a couple like you making way more money. And your answer is the same for why you couldn't take a trip in the last five or six years?
25:03 Speaker 01 I feel like I am... I get in the details of our family and all of the X, Y, Z of the kids. And then Dave gets on the details of like the price and like sorting all of that out.
25:20 Ramit Sethi? Who's getting on the details of the two of you having a rich life?
25:23 Speaker 02 Neither one of us have focused on it.
25:25 Speaker 01 Yeah. I feel like financially, Dave focuses on making sure that we invest right and we save and everything.
25:33 Ramit Sethi? That's not a rich life. That's just accumulating money.
25:37 Speaker 01 Yeah.
25:37 Ramit Sethi? A rich life is having a vision. So here you are today. You've made a certain series of decisions, interlocking, and you got money. I want to look at your numbers in a second. But I'm just wondering if, if none of us change on this call today, if the two of you don't change a thing, what happens?
25:57 Speaker 01 I'm scared that we, like blink of an eye, we're 65, 70. We never did anything with some money. Yeah, we have a great retirement. I hope the kids are good, but did we enjoy life? Or like, I hope to God we even make it to 65. Like with all of the health scares that we've encountered this year and last year, I'm terrified that we don't use it and something happens to one of us and then we don't get to share those memories together. And that's really scary to me.
26:31 Speaker 02 I'm almost more short-sighted and I could see the burnout, the friction, the frustration, the stress that happens if we don't.
26:40 Speaker 02 Really start thinking about this in the next five years. Going to have money in retirement, not be able to use it because we're old and it's just going to go to hospital bills or health bills or whatever, checking knee replacements, hip replacements.
26:51 Speaker 01 Yeah, and then we still don't know how to use it in retirement. So then we just have so much leftover money that that's amazing for our kids. But I would like to use it and create these memories while they're young, while we're young and healthy. And yeah, it's so that's where my fear lies.
27:10 Ramit Sethi? I think both of those are real. I would like to understand a little bit about your numbers. So a couple of questions. What was it like creating the conscious spending plan together?
27:23 Speaker 01 His stuff is a little more confusing for salary wise, so it took a little longer on that end. But yeah, for the most part, the investment accounts and all of the big number accounts, I feel like were on him. And then I came in with the subscriptions, what we pay for daycare, things like that. As yeah.
27:45 Ramit Sethi? Michaela, I was trying to get to the numbers and now you diverted me and now we have to talk about this.
27:51 Ramit Sethi? Michaela, have you heard me talk to men and women on this podcast? And then I'll ask the women, what is your role in this relationship? And what do they always say?
28:01 Speaker 01 Everything with the children.
28:02 Ramit Sethi? Exactly. On a given day, Michaela, when it comes to thinking about navigating your mom who's sick, your kids who need attention, work, Dave, all of it. How would you characterize how that feels?
28:16 Speaker 01 I feel like I'm on autopilot all the time for other people. I feel like my me time is when I'm sitting at my desk at work and that's a little pathetic. Cause it's like, I'm doing that for my family as well, so.
28:33 Ramit Sethi? Have you told Dave this?
28:34 Speaker 01 No.
28:34 Ramit Sethi? Do you want to tell him?
28:37 Speaker 01 Feel like I do a lot for everyone and.
28:44 Speaker 01 It gets to me sometimes. I feel like I need to break once in a while.
28:49 Speaker 02 I don't want you to feel that way. I really don't.
28:52 Speaker 01 I know you don't.
28:53 Speaker 02 That's me stepping up, but I also want you to feel comfortable in sharing and communicating this too. When you need a break, I'm gonna go sit down. I need you to do this.
29:05 Speaker 01 Yeah.
29:06 Ramit Sethi? I see this a lot. In most households I work with, the financial labor is divided the same way. A lot of visible labor goes to him, a lot of invisible labor goes to her. Nobody ever sat down and decided this. It just kind of happened. And it shows up in the small stuff. Who's handling the pediatrician appointments? Who's tracking what they need for groceries? That's Michaela. I suspect this hasn't been brought up at home. And there's a lot of discussion happening these days about invisible labor. I think it's an important topic to have. On the financial side, it reminds me of this famous quote that Jeff Bezos once told his senior executives.
29:49 Ramit Sethi? He said, "There's no reason for you to be stressed out. If you're stressed out, you should hire someone to help." And his point was, "The more successful you get, the more you can deploy money to solve problems." For somebody making $278,000 a year with $1.5 million in the bank, they can afford to solve some of these problems. And I think there's a question underneath all of this that she hasn't let herself ask yet. "I've worked this hard. I've held a lot of this together. What do I get?" That is what I want to show her today. We're gonna get into the numbers right after this. Here we go with the CSP. Holy [bleep]. There's a lot of zeros on this CSP. Okay, hold on.
30:34 Ramit Sethi? Dave, can you read off the word in bold and the number in full next to it for that entire box, please?
30:40 Speaker 02 Assets: $545,000. Investments: $1,032,000. Savings: $106,000. Debt: $195,000. Total net worth: $1,488,000.
30:56 Ramit Sethi? Okay, well done. What do you think about those numbers?
30:58 Speaker 01 They're amazing.
30:59 Speaker 02 They are amazing, and I also realized that we shorted assets a bit.
31:04 Ramit Sethi? 545,000 of assets, $1 million in investments. You all are in your early 30s, incredibly impressive. And I also love that both of you said, I said, how do you feel? You said, amazing. That, that is awesome. That is like appreciation for what you have clearly worked very hard for.
31:23 Speaker 02 Where we are is where we wanted to be. We're okay with this forever versus, hey, let's plan for the next thing. It's, that's where I think we're lacking.
31:31 Ramit Sethi? You made it to where you wanted to be in terms of your finances. Is that what you're saying?
31:37 Speaker 02 Yep, finances, family, house.
31:40 Ramit Sethi? Wow.
31:40 Speaker 01 For this age, yeah.
31:42 Ramit Sethi? Great. Congratulations. That's really cool. Did you stop and kind of recognize what you've achieved?
31:49 Speaker 02 I think for me quickly and just kind of went like, okay, we're there now. What's the next thing? Put the next marker out there.
31:55 Ramit Sethi? Okay, I get that. That's, I totally understand and connect with that. Michaela, what about you?
32:00 Speaker 01 We recognize the milestones that we've hit. Like even when we paid off our student loans, we paid them off a year before we wanted to. We were excited, like, wow, we actually did it. And then we came up with a new goal, hit that recently. So it's like, wow, we did that one now too. So like, what's next? I feel like how we have acted financially back right after college, it did help us get to where we want to be. But now I feel like I am living the rich life that I never thought was possible as a child. And I love that. But now it's like, well, do I want to stay content like this? Or wouldn't it be more fun?
32:45 Speaker 01 Or like have another vision laid in place for like the next level of that rich life?
32:51 Speaker 02 I think a lot of our goals have been so financially based that we haven't thought about the next step of rich life. We just hit financial goal, financial goal, financial.
32:59 Ramit Sethi? Well, why don't you guys just keep doing it for the rest of your life? Come on. That's what that's what they say, right?
33:04 Speaker 01 You see how fun we are talking about the planet?
33:06 Speaker 02 I think that's it. It's the we we question and analyze spend as we won't hit that financial goal as fast.
33:16 Ramit Sethi? Now, how much did you short your assets by?
33:19 Speaker 02 I would say probably 30 to 40,000. Didn't really account for the vehicles in it.
33:23 Ramit Sethi? All right, I'll add it. Wait, what kind of vehicles? Because if they're vehicles I don't like, I'm just gonna leave them out and what are they? What brand?
33:30 Speaker 02 Toyota and Hyundai.
33:32 Ramit Sethi? Oh, my God. I love it. Okay, I'll add them in. 545,000 turns into, what do we say? 570. How about that?
33:40 Speaker 02 Yeah, 570 is good.
33:41 Ramit Sethi? Let's do income. Michaela, can you read off the combined gross monthly income, please?
33:47 Speaker 01 23,186.
33:49 Ramit Sethi? Great. So combine the two of you make 278,228.
33:54 Speaker 01 Last we spoke earlier this year, I thought it was like 170, which I thought was amazing. And then I was like, oh, my God, we make that much.
34:03 Ramit Sethi? What is this? People coming on and not realizing by $100,000, how much they make per year? What world am I in?
34:12 Speaker 02 She actually got mad at me and thought that I overinflated our number so much that I had to email you all to change it. And then we looked back at our taxes last year and confirmed that we weren't that far off.
34:25 Ramit Sethi? Wow. Michaela, what did it feel like when you realized your household makes an extra 100K per year?
34:31 Speaker 01 I mean, I felt like my heart dropped. I was just like, holy, like, I was shocked.
34:37 Ramit Sethi? Finish the sentence. Holy what?
34:40 Speaker 01 I never thought that was possible.
34:42 Ramit Sethi? Okay, and then?
34:43 Speaker 01 It's amazing. Like, but what now?
34:48 Ramit Sethi? Well, tell me, what is the answer to that?
34:50 Speaker 01 I mean, that's kind of why we came on the show. And then not just that, but I've been the last few months trying to cycle through my head like I need to change my rich life. How do I do that without feeling guilty? Even seeing that big number, and I know how amazing it is, and I'm absolutely grateful because, like I said, I never thought that would be possible in my lifetime to be as fortunate as we are. But now I feel like I'm so stuck at a certain level that I can't elevate and not feel guilty about wanting to spend our money.
35:26 Ramit Sethi? Yeah. That's really common. It's really common. You're not alone, you're not weird, you're not broken. That is very common. What is rare and what I think is really impressive is that you are asking for help.
35:40 Speaker 01 Okay.
35:40 Ramit Sethi? It's not a topic that's talked about a lot. It's quite taboo. Hey, we make a lot of money, more than we ever thought possible. In fact, oops, I underestimated our household income by $100,000. What do we do now? The typical advice in America is like, just count your blessings and save it because you never know what's going to come around the corner.
36:01 Speaker 01 And I feel like we're there now because we have a lot of hardships that have happened and are still to come.
36:09 Ramit Sethi? But can I make a point to you that you would be doing the same thing if you had no illnesses in your family?
36:16 Speaker 01 Yeah. It just heightens it more, I think.
36:19 Ramit Sethi? Yeah. But you know that before you received the news about either of these things, this is what you were doing with your money. You're doing exactly this.
36:27 Speaker 01 Yeah. Because even last year, I mean, the numbers might not have been as high, but I could think of something like we were about to have a baby. So it's like, oh, well, we can't do anything because all of these expenses with a new baby. So I feel like there's always an excuse.
36:45 Ramit Sethi? Yes. Yes. This is a little challenging for some people to hear because for a lot of people, those are major expenses. Like, having a baby is expensive. Buying a house or buying a car or a medical expense is expensive. No doubt. But one of the reasons I wanted to talk to you and one of the reasons that I make it a point to find people from all different backgrounds, financial, income, socioeconomic, racial, all of it, is that there are different groups in different times in life where we actually do act differently, where sometimes we have to act and think differently. This is probably one of those times. Let's keep going. So on the application, you listed 270K,
37:28 Ramit Sethi? but you told my producer that you thought you made closer to 380K. What happened there?
37:35 Speaker 02 So when we look back on taxes, 340 for last year. And then that is, I think, because of some stock allocations.
37:44 Ramit Sethi? Hold on. I need to, I need to like mentally digest what's happening here. Michaela thinks that you made 170K. Then it turns out you made 270K, but actually you made 340K. Am I being punked right now?
37:56 Speaker 01 I feel like his job confuses me so much that I know he makes more than me and that's essentially where I stop it.
38:04 Ramit Sethi? Okay, so you get paid like what? You get a bonus and commissions and stuff like that?
38:08 Speaker 02 Yep.
38:09 Ramit Sethi? Okay, so it's irregular?
38:11 Speaker 02 Yeah, it's mostly, mostly predictable. There's also a stock purchase program that I take part in, as well as granted some stocks.
38:19 Ramit Sethi? Have you communicated how your income works to Michaela?
38:24 Speaker 02 Yes.
38:26 Ramit Sethi? Why do you say it like that?
38:28 Speaker 02 I say, yes, I've communicated how it works, but it's also at a point where our question just goes to, okay, well, are we covering our budget? Are we covering our expenses? And it's, okay, then we should be good.
38:43 Speaker 01 As long as the budget and the bills are getting paid, we can do our day to day, buy the things we can for the kids and stuff. Like, I'm not thinking a higher level than that.
38:55 Ramit Sethi? Look at my hands. Look at my hands. It's interlocking. Everything about the way that the two of you interact with money is interlocking on the frugality basis. Even knowing your household income, do we cover our budget? Can we keep the lights on? Like, that is how low of a bar that you are setting. You think I'm walking around like, ooh, do we have enough money in our checking account to cover our electricity bill? No way. That's not a concern. I've accepted that. I'm never going to be concerned about our electricity bill, ever. I'm trying to elevate myself. So the way that you two even talk about your income is interlocking to force you to not even dream. How could you dream if you don't even know within $200,000 how much you make per year?
39:41 Speaker 02 I think it goes back to just living well below the means and staying below the means in order to be able to do other things with money.
39:47 Ramit Sethi? Can I ask you a question? Like, why never did you probe him and say like, hey, I don't understand all these vesting and this and that? Like, give me a number. Why did you never say that to him?
39:56 Speaker 01 One, because I trust him, because we've been together for 10 years and...
40:02 Ramit Sethi? Have you heard these stories and videos where women...
40:07 Ramit Sethi? Notice that their husbands never ask about their medical conditions, like woman might be taking medication, or she might see an OB, and husbands are just kind of like, whatever, like, you take care of your medication. Whereas wives are often making sure their husbands are taking their medication and supplement system. Have you heard this before?
40:27 Speaker 01 Yeah.
40:27 Ramit Sethi? Okay. How about if that were happening here? And you were taking like 20 different kinds of medications because you were sick and stuff like that. And then I ask Dave, like, Dave, how come you're never curious about it? How come you never asked Michaela? And Dave goes, I trust her. I trust her as long as she's alive and I trust her. How do you think that would have been received?
40:47 Speaker 01 Not good at all.
40:48 Ramit Sethi? Yes.
40:49 Speaker 01 Why you love her? Why aren't you looking into the details more?
40:53 Ramit Sethi? Yeah. So what do you make of this? Why have you not asked those questions? Think hard.
40:58 Speaker 01 Because I'm just comfortable with him doing it and doing it for us.
41:02 Ramit Sethi? Yeah. He's the money guy. I focus on the kids.
41:06 Speaker 01 Mm hmm.
41:06 Ramit Sethi? And that's it.
41:07 Speaker 01 I feel like if I understood the numbers more and had like clear numbers put to them, I think I would be celebrating more or being like, wow, that's awesome.
41:19 Ramit Sethi? Yes. Great.
41:20 Speaker 01 Whereas when he says, I have stocks that are besting, I'm like, okay.
41:25 Ramit Sethi? What the fuck is that? It means nothing. Now, guys, I want to point something out to you. I respect you a lot. I'm not, I am not meaning for any of this to be condescending. I think both of you are very intelligent, obviously very successful. So the way that we are talking about this, it might seem like we're like bringing building blocks, you know, and we're playing with these very juvenile building blocks. It's actually not the case. It is not juvenile to connect with your partner. Even the simplest thing of like, this is how much I make. That's not juvenile. It's not pandering or condescending. We need to start at the basics and maybe the person gets it. Okay, cool. Then we move faster. Michaela, in part, you came on here because, you know, you're like, why do I feel this way about leggings and
42:09 Ramit Sethi? travel and we struggle to spend money and we want to live today and tomorrow? And a lot of people. Maybe including both of you thought that I would wave a magic wand and go like, "You should just buy the leggings. It's okay. You have a lot of money." Maybe, but that's so simplistic. Like, you already know that. What is really going on is we are trying to take this interwoven set of beliefs and attitudes and behaviors that you have put together, and we're trying to unwind them. And you can see that, how far you have to go back. You don't even talk about your income. And so this is the level of rebuilding that we are doing. And I hope you can see that when you start to build this solid foundation, things like, "Should we buy a watch?" or "Leggings?"
42:54 Ramit Sethi? Or "Take an extra few days in New York?" Become quite easy.
42:59 Ramit Sethi? How does that strike you?
43:00 Speaker 01 I would love to get to a level that, and if it means that we have to start from ground zero again and try to work our way back up there, I'm willing to do it. It means that we can feel freer with spending and not question every purchase that we're doing for ourselves.
43:18 Ramit Sethi? Fantastic. And Dave?
43:20 Speaker 02 Yeah, I can see how it unlocks the future of us actually planning and getting descriptive about what the rich life is.
43:28 Ramit Sethi? Yes!
43:28 Speaker 02 For both of us, and then getting invested in each other's rich life, not just like, "Here's our rich life individually, but also here's our rich life together," and how they can join.
43:36 Ramit Sethi? Yeah. Amazing. Can we go through some of the rest of your numbers? All right. Again, I want to reiterate, you have a net worth of about 1.5 million, early 30s. Of that 1 million is invested, which is really, really impressive. So we already know that this will turn into a lot of money. Very good. This is not just a high quantity of money, but it's a high quality of money. The way that you have apportioned or allocated it. Very well done. You also have an extremely high income. That's fantastic. And let's take a look at the rest here. So your fixed costs are at 60%. That's a little higher than I would have thought for a couple with a very high income. Let's dive in here. You got your rent. Is it rent or mortgage?
44:19 Speaker 02 Mortgage.
44:20 Speaker 01 It's mortgage, but I will say for that category, we included daycare on that because we didn't know where exactly to put daycare. So our mortgage is not that high.
44:30 Ramit Sethi? Oh. How much is your daycare?
44:32 Speaker 01 It's probably almost 50K a year.
44:34 Speaker 02 I think for me, I categorize it as a rent payment. It's almost like, "Hey, you're renting for four years. The space for your baby."
44:41 Ramit Sethi? All right, I think there's something there, but I don't know what it is, but whatever. All right, moving along here, your car payment is zero. What's the story with that?
44:50 Speaker 01 We've just paid mine off.
44:52 Ramit Sethi? Great.
44:52 Speaker 02 Yep.
44:52 Ramit Sethi? I'm sure your gas is quite nominal, we can add it, will make a zero difference. But you have $106,000 in savings, which is great. That's more than 12 months of emergency fund. But I noticed that you are still saving $1,500 a month towards an emergency fund. What's behind that?
45:13 Speaker 01 Just haven't thought of what to, like, not what to spend the money on, but like, because, yeah, we could go out and spend it on stupid stuff anytime we want. Like, we could splurge and get a whole new wardrobe or on our children and do some insane stuff. But it's like actually spending it on quality time and quality things that we want. We're stuck in that, so it's just going to savings.
45:41 Speaker 02 It's a lack of vision and leftovers.
45:43 Ramit Sethi? Do you appreciate that there is a point where you do not need to keep saving money?
45:50 Speaker 02 I do. I actually think it's far too much in savings.
45:53 Ramit Sethi? Okay.
45:53 Speaker 01 Yeah.
45:54 Ramit Sethi? Wait, is the next line that you're about to say, "I think we should move it to investments?"
45:58 Speaker 02 That's always what goes in my head, yes.
46:01 Speaker 01 Absolutely, for heaven's sake.
46:02 Ramit Sethi? Spending. I mean, the reason that you came to me, because there are a lot of other people who can tell you to invest more and be more frugal. There's a lot of people out there. You came to me. And so you know that I specialize in showing people how to use their money to live a rich life. So I note that neither of you have said, "Hey, spending it is something we've thought about.
46:29 Ramit Sethi? These are our three things, what do you think?" It just kind of feels like you're like, "I don't know. We have this extra money, we haven't really thought what to do with it. We have all these reasons we don't want to spend on, quote, 'stupid stuff.'" But what about actually spending it on cool stuff, meaningful stuff?
46:47 Speaker 01 Yeah, I feel like our rich life, the one vision that we have is it's not really things, it's experiences, but we're stuck on trying to create that experience. Because once we actually start planning, it's like, oh, well, do we really need that? I don't know, like, we just still get hung up on the money.
47:10 Ramit Sethi? Can I just answer the question? No, you don't need that. You don't need any experiences. So there's your answer. What do you think is behind you asking the question? Because the answer to that question is very obviously no. I don't need to take a pizza tour in New York. But I did. I don't need to go to the museum that I just went to over the weekend. But I did.
47:37 Speaker 01 Ultimately, like, and I, I still just look back, like, am I gonna feel fulfilled at the end of the day? At the end of my life, like, am I gonna be satisfied with just working my ass off? For not, like, not for nothing, we have a beautiful life, but like, my whole thing with our family and our children is doing as much as we can with them and making those experiences and memories because I didn't have that as a child.
48:06 Ramit Sethi? Can I understand a little bit more about how you grew up, Michaela? I think it would help me understand your views on money today. So if, if we go way back to when you were a kid.
48:18 Ramit Sethi? One sec, one sec. I noticed you're already tearing up. What's going on?
48:23 Speaker 01 Well, it's just stressful to, I mean, to look back. I mean, it just brings up a lot of emotions. Because, like I said, I'm very grateful for what I have now because I came from nothing, so.
48:42 Ramit Sethi? Do you mind if I ask you a few questions about it?
48:44 Speaker 01 Sure.
48:45 Ramit Sethi? If you need to pause it, or is anything?
48:47 Speaker 01 Yeah, let me get a tissue really fast.
48:49 Ramit Sethi? Sure.
48:49 Speaker 01 One moment.
48:50 Ramit Sethi? I'm pausing to give her a hug as well.
48:52 Speaker 02 Sure.
48:56 Ramit Sethi? A little peek behind the curtain here at Money for Couples. We ask our guests to sit in separate rooms so that we get clean audio and separate camera feeds. But it also means that when things get emotional, they can't just reach across the table and hold each other's hands. So sometimes they leave the room to hug each other, to hold each other. And it's actually one of the most touching moments between couples because it's almost like there's an irresistible magnet bringing them together. They're putting each other first, not this podcast conversation. So I especially appreciate it. Now, they're back. Listen in as Michaela shares her story.
49:40 Ramit Sethi? What do you remember about growing up when you were young? What did your family say about money?
49:45 Speaker 01 It was always stressful. It was always a stressful topic. My parents got divorced when I was fourth grade, so like eight or so. My mom had to file for bankruptcy during the divorce. My dad had his own company, like a construction company. So it was very up and down depending on like season and everything.
50:12 Ramit Sethi? What do you remember your mom saying about money as she was going through that financial hardship?
50:16 Speaker 01 I mean, she was always stressed. Like there was never a positive conversation about money because it was always paying something off, paying bills. Like after my parents got divorced, I can only think of one or two times in her life she ever actually took a vacation. So that's, I think, another reason why I look at our life. And I essentially, especially now that she's sick, like I don't want to look at myself at 65 and think I never traveled and then I'm too sick to actually do these things.
50:52 Ramit Sethi? When you say she never took a vacation, was that a sore point with her?
50:59 Speaker 01 Yeah, I mean, she, especially after getting sick, she has definitely said like she regrets wasting time and that she never did anything like fun for herself and financially, I don't even know if she budgeted to even allow herself to do those things.
51:18 Ramit Sethi? Do you think that if she had had a little bit more money that she would have traveled?
51:22 Speaker 01 No.
51:23 Ramit Sethi? Yeah, I agree. Why do you think that is? What would she have said?
51:26 Speaker 01 She would have spent it on something else. They also had addictions and stuff. So both my parents, so they spent frivolously on things that I don't think were needed.
51:39 Ramit Sethi? It's quite interesting. What kind of messages, looking back, did you take away from your upbringing with money?
51:48 Speaker 01 I mean, if I want something, I have to do it myself.
51:51 Ramit Sethi? Okay.
51:52 Speaker 01 Like I had to get a job at a young age. I was 14, my first job, working under the table. And then I had to, my, my ultimatum was I played softball growing up and it was, it's either choose softball or get a job. So I stopped softball and I got a job to pay for car insurance, gas, like going to the movies or something as, and then it trickled into, um, I lived with my dad mostly full time when they divorced, but it turned into my dad saying, well, can you pay for your cell phone bill? Can you pay for cable? And it's, so I moved out early because I'm like, well, if I'm going to pay for these things,
52:36 Speaker 01 I'll pay for my cell and be independent.
52:39 Ramit Sethi? Is your dad still with us?
52:41 Speaker 01 No, he passed away six years ago.
52:45 Ramit Sethi? How was he with money?
52:46 Speaker 01 I would say a little better than my mom, but it was essentially, yeah, like as long as he has money to budget to like pay his bills, the rest of it, he is spending on himself, essentially like with his friends at the bar. That was his like social, he didn't really care about vacations. It was more so the social aspect of like the neighborhood bar hangout. So, yeah.
53:11 Ramit Sethi? What part of the country did you grow up in?
53:13 Speaker 01 The South.
53:14 Ramit Sethi? Any siblings?
53:16 Speaker 01 I had an older brother, but he passed away when I was nineteen, so almost eleven years ago.
53:22 Ramit Sethi? I'm sorry to hear that.
53:24 Speaker 01 Yeah, thank you.
53:25 Ramit Sethi? Did your dad's passing and your brother's passing, did that affect the way that you look at life?
53:32 Speaker 01 Absolutely. There's no way it would have, not, so.
53:36 Ramit Sethi? Like, in what ways, if you can share?
53:38 Speaker 01 Um, my brother passed away when I was, or he was twenty-four, so I was nineteen, so you're already going through a huge transition anyway. You're like independent college, like trying to find yourself, so I think it just really shook me and made me realize that, like, life can be short and it can end instantly, so that kind of freaked me out. But I do remember my father saying, when my brother passed away, that maturity-wise, I, he said, like, "I grew up very fast that year." Like, he could tell how fast I grew up.
54:17 Ramit Sethi? When you think back, and when you were younger, when you were a little girl, do you remember having fun?
54:24 Speaker 01 Um, I think of more of the negative more than the positive. I feel like a lot of the positive I can't remember because you think of the negative, like, outweighs more. Yes, there's like bigger moments, like a Christmas or something here and there, but for the most part, it was very stressful.
54:44 Ramit Sethi? Right.
54:46 Speaker 01 And I felt like I had to be the parent to my parents more, so I was doing that from a young age and still continuing to this day. I feel like I am more of a parent than the parent, so.
55:02 Ramit Sethi? You've heard the phrase "parentification"?
55:05 Speaker 01 Mm-hmm.
55:05 Ramit Sethi? And I think about it, like, as a young girl. And then as somebody who watched their parents get divorced when you were young, mom struggles, get older, gotta get a job or play the sport you love. And then continuing on to your brother tragically passing away, your dad passing away, now your mom is sick and you are the primary caretaker.
55:28 Speaker 01 Okay.
55:29 Ramit Sethi? That's pretty serious. It's quite striking that when I asked, do you remember having fun? You essentially said, not really.
55:40 Speaker 01 Yeah, cuz I just was always, I always had a goal in mind to like, I had to get this done, like, I mean, it was on me and I'm fine with that. And I am the person I am today because of that, which is good. But yeah, it's like, oh, I want to go to college. I need to do it myself. I need to work full time the whole time. Like, there was no, I remember in college, like, people going, even Dave, like, went to a different country to study abroad for a semester. There was, that was never an option. It was like, I can't afford that. I can't, like, I have to do this and this to have the life that I want.
56:24 Speaker 01 And it was always just like, yeah, making sure that I'm good and in a place cuz if it's not me, who's gonna do it?
56:33 Ramit Sethi? And now that you have reached the life that you never even dreamed of.
56:38 Speaker 01 Yeah.
56:39 Ramit Sethi? Do you have fun now?
56:41 Speaker 01 It's sad cuz it's like, I'm having more fun than I imagined I would, I guess, at the time. But I know now that I'm in a steady place, we're at this income. We have been for a few years. It's increasing, if anything, which is fantastic. But now I, it's like, okay, well, what's next? Like, that's, yeah.
57:05 Ramit Sethi? Right.
57:06 Speaker 01 And then I even feel guilty a little bit that I'm not happy with being at this place. Cuz I am, I'm so happy that we aren't struggling. But it's like, there's gotta be more than just being happy that we're not struggling.
57:23 Ramit Sethi? Yeah. She's right. There is more. Michaela did what you're supposed to. She watched her family struggle. She took notes. She made sure it would never happen to her. But in the same way that a child grows up, their voice changes, their height, everything, it becomes immediately obvious when their clothes don't fit anymore. But with money, there is no such signal. You can go from struggling to having a lot of money. But there is no direct signal that you have made it. How many couples have come on this podcast and they have tons of money in an investment account or savings account and the couples
58:05 Ramit Sethi? that I speak to still cannot internalize the idea that they're doing okay. Here we see her money psychology still stuck in a scarcity mindset. Remember, those scarcity instincts worked for her in the beginning. They got her to where she is today. But those very instincts are now harming her. That is what we are here to change. Here now, we fast forward several years. Quite a few similarities here. What do you take away from those?
58:37 Speaker 01 I mean, yeah, it makes a lot of sense as to why I am the way I am. But then it's a little upsetting because it's like, well, I don't want to always be like that. Like, I don't want to just be serious and always thinking about like, keeping the family, like household running and all of the checklist, just the day to day or our children. Like, I want to experience life as well. One of the big trips that we want to take, that both of us have talked about and just never implemented is like a Euro trip. At least a week, two weeks, Europe, traveling, seeing things.
59:16 Ramit Sethi? What else?
59:17 Speaker 01 That's the hard part. I like, we, I feel like I'm still trying to envision what that could be. At one point, Dave and I were like, do we buy a second property? Like, do we buy a vacation home? And the more I thought about it, I was like, no, I don't think that's really what I want my rich life to be. It's great that like, we have brought it up a couple times now, but I don't think a second property would make me like, that's not.
59:46 Ramit Sethi? Why are we talking about what you don't want?
59:48 Speaker 01 I don't know. I feel like my whole life, that's. I've been more so negative mindset than the positive. There's things that I won't buy for myself, like let's say a massage. I like getting them as gifts because buying them for myself, I'm like, I don't need that. But knowing we have the income, why can't I get a massage? Once a month or once every two months instead of like once a year. I feel like it's almost uncomfortable for me to try to overarching, get into a new mindset of a rich life.
1:00:23 Ramit Sethi? I'm glad to hear you expressing, see what you did was quite typical, which is people who struggle to spend money, when I asked them what they want to do, they gave me very lofty answers. I want to travel to Europe for one to two weeks. I mean, if you haven't traveled for six years and you don't take any trips, that's that's almost like me saying, I haven't worked out in 20 years. I want to play in the NFL. It is so unlikely that it's just another way of deferring my dream.
1:00:54 Speaker 01 Yeah.
1:00:54 Ramit Sethi? What would be much more reasonable would say, you know, I'd like to be able to go to the gym like once a week.
1:01:00 Speaker 01 Yeah.
1:01:01 Ramit Sethi? Or one hour. So I can get you to Europe. If you want to go to Europe, I will help you do it, no problem.
1:01:07 Speaker 01 Okay.
1:01:07 Ramit Sethi? But sometimes it's as simple as I want to go to lunch and be able to order appetizers. And, and it seems so silly to say, I want to get a massage for myself. We make 278,000 to 340,000 dollars.
1:01:23 Speaker 01 Perfect.
1:01:24 Ramit Sethi? But it's that N word. Oh God, I'm going to get canceled again. It's the N word you said, need. Do I need it? If I can offer one piece of directive advice, it would be, in my opinion, that word should be banned from your household.
1:01:42 Speaker 01 Probably, yeah.
1:01:43 Ramit Sethi? It should be banned. And I would make it a whole theatrical thing. I would take a piece of paper, I would write need. Dave would videotape it. Well, Dave, you say it too. So both of you should take it, let your kids videotape you. And you both write need and you put it over the fire and you rip it apart and throw it in the fire and say like, that was our past chapter where we had to ask, do we need it? When you're making $35,000 a year or you have $250,000 of student loan debt, that is a question you need to ask. Do we need this? But when you make 10 times that, it's actually causing you to play small.
1:02:21 Speaker 01 Yeah, I want to get out of that mindset for sure.
1:02:24 Ramit Sethi? Okay. Thank you for sharing that. I am, I really appreciate it and I'm also sorry for a lot of the things that you have gone through. Dave, can we talk about your upbringing with money? What was your family socio-economically? How would you describe them?
1:02:40 Speaker 02 Middle class.
1:02:41 Ramit Sethi? Middle class, alright. And you grew up with mom and dad?
1:02:45 Speaker 02 Yep, mom and dad.
1:02:46 Ramit Sethi? And did one work or both work?
1:02:49 Speaker 02 Both worked.
1:02:49 Ramit Sethi? If you go back in time when you were young, what do you remember your family saying about money?
1:02:54 Speaker 02 Early days, there was a deep conversation about money. I don't think I paid attention to it much, but there also wasn't any hesitation around it. I think the earliest thing that I've kind of caught from them is, I think they were talking about money and I grabbed a bunch of stuffed animals and went around the neighborhood trying to sell them, you know, $5 to the neighbors. And I came home and they made me go back, give all the money back. And get my toys and stuffed animals, but there wasn't, there wasn't a deep scarcity.
1:03:22 Ramit Sethi? What age did you get your first job? I'm guessing young.
1:03:24 Speaker 02 Yeah, first job was, I think like 10 years old. Maybe, maybe earlier than that, doing newspaper out would just kind of hoard the cash, trying to milk it as long as I can, wouldn't really go out spending it, but started to get it early days.
1:03:37 Ramit Sethi? Well, what does a high school kid spend their money on anyway?
1:03:40 Speaker 02 Yeah, well, and I wasn't much like a soda drinker, candy, that kind of stuff. Like the normal, normal stuff, I'd get a new bike. Like that was the biggest splurge that I can remember putting the money to.
1:03:49 Ramit Sethi? So what'd you do with the money? Did you save it, invest it?
1:03:53 Speaker 02 Saved quite a bit of it, a lot of it. The cash sat in a shoebox. For quite a long time, the rest of it just went into a savings account.
1:04:02 Ramit Sethi? Whenever I hear about someone stashing cash in a shoebox, it tells me a lot about how they grew up. There's a scarcity mindset that makes people feel money needs to be held tightly, where you can see it or even physically touch it. Typically, people who grew up with these beliefs either grew up poor, or they grew up with parents from a different country. Dave and Michaela came in with that instinct. And what's interesting is that when they found each other, this scarcity instinct doubled. They're like a supercharged scarcity couple. One plus one equals 10 on the scarcity scale. And they've spent years actually building impressive wealth,
1:04:46 Ramit Sethi? but neither of them has let themselves enjoy the money. They're still operating with that same mental script. Most people never change their financial scripts. They just keep going and their account changes, but it has no correlation to how they think or feel about money. The question now is not just, hey, do you have enough? They have more than enough, it's obvious. The question is whether they can give themselves permission to truly believe it. Until now, what has your money identity as a couple been?
1:05:19 Speaker 01 I'd say save as much as possible, like for retirement.
1:05:23 Ramit Sethi? Okay, Dave?
1:05:25 Speaker 02 Yeah, long-term planning and save, save.
1:05:28 Ramit Sethi? Did you ever think about when you would stop?
1:05:30 Speaker 02 Yes, yes.
1:05:32 Ramit Sethi? What?
1:05:33 Speaker 01 Really?
1:05:35 Speaker 02 I've thought about it, but never executed on it.
1:05:37 Ramit Sethi? Aren't you the guy who has $102,000 in your savings account? And you're still contributing $1,500 a month to that emergency fund?
1:05:43 Speaker 02 Yeah.
1:05:43 Ramit Sethi? Y'all are rich, do you know that?
1:05:45 Speaker 02 Yeah.
1:05:46 Speaker 01 Yes.
1:05:47 Ramit Sethi? Wow, okay, cool. That's cool. Even though it's a little painful for you to say, I love that you both said it, that's great, yes. I'm just telling you that as you change, as you start to make more, as you change socioeconomically, your attitudes and behaviors often shift. And that's not a bad thing. In fact, it's quite counterculture because in America, we really regale those who are like, they stayed true to their roots. They didn't get too big for their britches. We've all heard these phrases. The idea that your identity would change? Of course, your identity will change. Your identity changes when you become a parent. Your identity changes with your health as you get older, if you get super fit or the opposite. Of course, your identity changes.
1:06:31 Ramit Sethi? And so, wouldn't naturally your identity change as well? You can still retain some of your core values and you can perhaps adapt. Maybe you don't want to spend three hours looking for a discount deal on a chair or a shirt. Maybe you want to travel a little bit easier. So what do you think about that? Both of you kind of smiling and nodding, I'm curious. Dave?
1:06:53 Speaker 02 It's strikingly accurate.
1:06:55 Speaker 01 Yeah, I feel like we are in the mindset of like, well, if we're gonna spend, we have to get the best deal. And it's like, why are we living, like you said, why are we living in that mentality still when we can afford like the things that we want? So why are we so hesitant to pull the trigger on that? Like you said, if if we want to start doing these trips or even smaller things like Dave always goes on a yearly golf trip. And that's something that he really enjoys. And so he's been doing it for like five years now with some of his buddies. They go for a weekend long golf trip. And I love that for him. I don't have a mindset of something that I do for myself like that.
1:07:40 Speaker 01 And why shouldn't I like find something that I want? And not have to second guess the budget or second guess the price on it before just saying, yeah, I'm gonna go for this.
1:07:54 Ramit Sethi? Is there a part of life where you're both really confident, like supremely confident, you don't second guess yourself? Michaela?
1:08:00 Speaker 01 I feel like being a parent, I feel like I am a good parent, so.
1:08:05 Ramit Sethi? Wow, that's power. I love that. Okay, and Dave?
1:08:09 Speaker 02 Yeah, I would say finances, but also parents.
1:08:14 Ramit Sethi? Wait, finances? What do you, what do you mean? You told me you second guess. You didn't tell your wife your income. You're planning based on logistics.
1:08:22 Speaker 01 I feel like saving for him is more.
1:08:27 Ramit Sethi? Well, that's actually quite intriguing because in order to get to the next level of personal finance, you're actually going to need to radically change your relationship with saving. You're actually probably going to become a failure at saving.
1:08:41 Ramit Sethi? That's really, really hard.
1:08:44 Speaker 01 Especially since we've been in this mindset for so many years.
1:08:47 Ramit Sethi? Yeah.
1:08:48 Speaker 02 Yeah, even just you saying that, the stress kind of mounts of like, oh, that's gonna be just different, not seeing it kind of get socked away.
1:08:55 Ramit Sethi? But you're actually going to build something amazing. What would it be for you, Dave? If you're gonna build something amazing in terms of your relationship with money, what would it be?
1:09:04 Speaker 02 If I'm building something amazing in terms of my relationship with money, it's being a better husband and parent in the freedom of finances.
1:09:11 Ramit Sethi? Okay, keep going.
1:09:12 Speaker 02 So not worrying, not, not limiting the experiences, not limiting date nights, not limiting vacations, not limiting things that, you know, I was blessed enough to experience myself as a kid, not limiting.
1:09:26 Ramit Sethi? Give me the opposite. I don't want to hear what it's not gonna be. I want to hear what it is gonna be.
1:09:31 Speaker 02 It's going to be being proactive in finding things to do with our family. Being proactive in scheduling weekly date nights, just go to a fun cooking class or go bowling, do something that we used to do as like teens and fun and.
1:09:44 Ramit Sethi? Great. Here's how I would describe it. I want you to start using in, uh, language that is intentional. So instead of saying, I am not going to, you know, want to be stressed out by my, I don't care what you do not want to do. We're taking that out of our vocabulary. We're gonna talk about what we do want to do. What we do want to do, perhaps, is I want to be consistent. We are going to have a date night every week, every two weeks. And each date night is going to be magical. Now magical could be, we're gonna get a piece of cheesecake because we both love cheesecake. It could be, we're gonna go bowling because we used to do it as kids. It doesn't have to be expensive. Once in a while, it can be like,
1:10:27 Ramit Sethi? you know, really cool, perhaps a little over the top or extravagant, but each is going to be magical and meaningful. What do you think?
1:10:35 Speaker 02 I'd want you to do things that show.
1:10:41 Speaker 02 Yeah, the people around us that we can have fun. Like, go to sporting events.
1:10:46 Ramit Sethi? Like what? Can we get specific?
1:10:48 Speaker 02 Yeah, go to the World Cup would be awesome. I think would be awesome.
1:10:54 Ramit Sethi? Okay, what else?
1:10:55 Speaker 02 Love to do a trip just the two of us. At least once a year.
1:11:00 Ramit Sethi? Great, and how about something more mundane, something more day to day?
1:11:03 Speaker 02 I'd love to change out some of our rooms.
1:11:06 Ramit Sethi? Okay.
1:11:06 Speaker 02 Some of the layouts, some of the furnitures. Actually get to decorating one of our rooms that we can enjoy living in it versus just be in a room that's got stuff in it.
1:11:15 Ramit Sethi? Good, I like it. People who have money are decisive. What's the worst that happens? You get a headboard you don't like? Donate it, get another one. I'm not encouraging you to waste, but I'm saying at any system of any sufficient complexity, there's a little bit of waste. It's okay. Michaela, what do you take away from Dave's responses?
1:11:33 Speaker 01 I feel like he wants to do these things, but I feel like he's still a little hesitant. Just because there, I see where he's trying to come from.
1:11:44 Ramit Sethi? In your back of your head, both of you are gonna have a voice, I suggest, or I suspect, telling you that's too expensive. We gotta start smaller, like, we don't need to do all this crazy stuff. Nobody, especially me, is telling you you have to go and drop $150,000 on some crazy trip. I'm not saying that.
1:12:01 Speaker 01 Yeah.
1:12:01 Ramit Sethi? Bowling sounds amazing. I love bowling. Take money out of the first part of your thought process.
1:12:10 Speaker 01 No, that makes perfect sense. Number one should be, we want to do this.
1:12:15 Ramit Sethi? Ooh.
1:12:15 Speaker 01 This is fun. And that's, and number two, it's like childcare? Where are they coming? And then number three is money. Like, it's not, we need to swap out these.
1:12:26 Ramit Sethi? Number five, number eight is money.
1:12:28 Speaker 01 Yeah.
1:12:29 Ramit Sethi? Okay, I would like to talk about your rich life over the next three years.
1:12:37 Ramit Sethi? I like to do small and I like to do big. So I'd love to start off with your home. Day to day life. What would a rich life look like?
1:12:49 Speaker 01 One thing I can think about is cleaning. Like, uh, last year, right before we had the baby, I did a deep clean, like hired someone outside. And it was amazing. We realized that with my bonus for the year that I could essentially pay once a month for a cleaner. So we've been doing that the last year, which has been really nice. Maybe upping that to not just once a month, but biweekly.
1:13:18 Ramit Sethi? I love that. Can, can I give you a little suggestion on this? When we're talking about our vision and our rich life. Let's start off by saying something like, imagine. I love that phrase. Imagine I wake up every Monday morning and our house is clean. And what that does is allow us to feel it, see it, smell it. Notice that it keeps us out of the weeds. What else?
1:13:45 Speaker 02 I would love to have a proper office. This room slash bedroom slash stockpile of stuff room that I'm in every day is aggravating frustrating.
1:13:58 Ramit Sethi? What do you want in this office?
1:14:00 Speaker 02 I'd love to have a better background. I'd love to have better lighting setup. Uh, I'd love to have a different chair that's better for me. I'd just love to have it feel like an actual office and utilize in a way that we are going to utilize it day to day versus the once or twice a year that somebody comes to visit and stay with us.
1:14:16 Ramit Sethi? Great. Back to you, Michaela.
1:14:18 Speaker 01 The closet has been on our to do list for a couple of years now. We just haven't gotten to it yet. But just like organization, get it to a place. Cause it's very outdated and we have not touched it since. It's just chaos in there. So.
1:14:34 Ramit Sethi? I'm sorry, I'm getting lost in all the negative stuff. Can you get me lost in the positive?
1:14:39 Speaker 01 Imagine.
1:14:41 Speaker 01 A very organized closet with shelving and just clean, stress-free. Everything has a spot for it.
1:14:51 Ramit Sethi? How would you feel every morning when you opened up the closet?
1:14:55 Speaker 01 I can find things easily and I'm in and out.
1:14:59 Ramit Sethi? Yes, great example. So, one of the ways that you have, in an interlocking way, created a strategy to not spend any money is that you focus on the negative. And I don't know if you noticed, but people don't like to hear about the negative or talk about the negative. It just sucks. So you just go, ah, let's not even talk about this [BLEEP]. Closet, it's been two years, you haven't done a thing. You could have that thing knocked out in seven days. But part of it is you actually have to start talking about the things you want, unapologetically. I want a closet. I want a clean house. We both work really hard and we make a lot of money. I want a clean house. I'm not going to apologize for it. And you need to talk about what it would feel like. What would it mean to you?
1:15:43 Ramit Sethi? It would allow me to wake up on Monday and actually be ready to go to work. That means I'm not kicking freaking Legos out of the way. Having a closet would mean I could finally see what I have to wear. That would feel so good. It would be the first thing that I do in the morning and it would set me up for the rest of the day. Isn't there a difference between those two examples, negative and positive?
1:16:06 Speaker 01 Yeah, definitely.
1:16:07 Ramit Sethi? Good strategy for you to implement, both of you. Give me another one.
1:16:10 Speaker 01 I'm big on my coffee. I want to get a new coffee maker that works properly.
1:16:16 Ramit Sethi? Like what kind of coffee maker?
1:16:18 Speaker 01 Uh, right now we have a Ninja, which is nice, but maybe not. I don't need an espresso machine or anything, but just like another elevated Ninja or something along those lines.
1:16:28 Ramit Sethi? And like, what kind of coffee beans do you get?
1:16:31 Speaker 01 We just started buying a nicer brand of coffee lately and have noticed the difference. So I think now we're stuck in our ways of buying nicer, which is a good thing.
1:16:42 Ramit Sethi? Yeah, great. Can we shift to bigger ideas of a rich life? You mentioned travel.
1:16:49 Speaker 01 Yeah.
1:16:49 Ramit Sethi? So first, I'd like to understand this Euro trip.
1:16:52 Speaker 01 We talked about Spain, definitely, Portugal, Italy.
1:16:57 Ramit Sethi? I love that. Sounds amazing. Dave, you want to add anything?
1:17:00 Speaker 02 We both enjoy food. I mean, a good breakfast and sitting and relaxing to enjoy the breakfast. Good coffee, Spanish coffee. I'd love to go to like a vineyard, do a lunch and then a vineyard somewhere to explore.
1:17:13 Ramit Sethi? Is this the two of you or your kids as well?
1:17:15 Speaker 01 I am open for either. If it's two weeks, there's realistically no way we can go without them. But we have talked about bringing them on bigger vacations like Europe.
1:17:26 Ramit Sethi? Well, could you bring anyone else with you to help with the kids?
1:17:28 Speaker 01 We could, but then I almost, I'm like, well, like I want it to be focused on our centralized family, but we could potentially invite my father-in-law since he's retired and then his girlfriend.
1:17:42 Ramit Sethi? I see. You want to have time for, for you four. But there's also something to be said for, hey, we also want some time as adults, like the two of us. Okay. So how do you reconcile all that? How do you make that work?
1:17:58 Speaker 02 Right now, everything's focused around the kids, but for a vacation, it would be planning
1:18:04 Speaker 02 two days where we don't have the kids. We get to do some exploration of historical sites.
1:18:09 Ramit Sethi? Who has them? Your dad?
1:18:11 Speaker 02 Yeah.
1:18:12 Speaker 01 We could invite his dad and his dad's girlfriend maybe for a portion of the trip.
1:18:17 Ramit Sethi? Nice.
1:18:17 Speaker 01 Like the last four days and see if they could take them for a full day.
1:18:23 Ramit Sethi? Great. Love it. We're getting creative now. So here's how I would think about a trip at your income and net worth level and with the constraints you have over young children. You want one-on-one time, but if you're going for like 10 days. They have to come one way or another. One, you can just go for a short amount of time, the two of you. So literally you go for four days. Find somebody to take care of the kids. Make it so easy for them. And you all are on your own and at least you just have that time for the two of you. And if you go, hey, we'd love to do that, but I think Europe for four days would be a little tight. Maybe you take a two day trip for just the two of you somewhere close by in the US. Just do that.
1:19:06 Ramit Sethi? Get your feet wet and then you can decide about Europe later. Okay, that's option one. Another option, I love what you said about bringing your dad. Bring him and he can overlap. So maybe you take the kids for a couple of days first. He then comes, has them for a couple of days. And then all of you are together for the last day or so, right? You really craft that emotional experience. What do we want to feel? Yeah, we want to experience Spain with our kids. They're our kids, we love them. And then we want to hand them over for a couple of days so we can go do something cool. Beautiful. And then finally, there are, at your income level, there are travel nannies. There are actually people who can come with you either from here or you can hire them there. And you can find them. Now, that involves a lot of trust and things like that, but I'm just opening up the possibilities for you.
1:19:51 Ramit Sethi? How does that strike you? I'm not asking for you to make a decision. I'm just saying, how does hearing those options hit you?
1:19:57 Speaker 01 I think it's more options than I ever thought were possible. Especially the travel nanny. I never would have even, I know I've heard of it. I've seen it done before, but I've never thought of it for ourselves. I like the option, like, because I love spending time with my in-laws. It's not, it's not me not wanting to spend time with them, but I do like the option of, hey, we would love to experience this place with you that you guys also haven't been to. And we're open to like all expenses paid for your end. We just want your time.
1:20:35 Ramit Sethi? Very generous. I hope that as we're talking about this, you're actually getting more excited. Because you go, oh my God, all these things that seem like insurmountable. There are a lot of solutions we can have. It's just up to us to decide if we want to do this. Then the question is just the details. How long, who do we want to take, all that stuff.
1:20:54 Speaker 01 Yeah.
1:20:55 Ramit Sethi? How much you think a trip like this would cost? Ballpark. I'm not asking you to even be completely accurate, but just ballpark.
1:21:02 Speaker 01 10 to 12 K. I don't know.
1:21:05 Ramit Sethi? This is two weeks?
1:21:06 Speaker 01 Yeah, 14, 15.
1:21:08 Speaker 02 I would have said 12 plus 15 is fine with me.
1:21:10 Ramit Sethi? Okay, cool. Look, I don't know the answer because it depends on what you want to do, where you want to stay, how you want to fly, all those things. But what if it was 25K?
1:21:18 Speaker 01 I feel like as long as we get the experiences and do things that we want to do and make it fun, I'm fine spending that money.
1:21:27 Speaker 02 It's, it's high in my head, but I'm also looking at it as not a, not scrutinizing the budget and saying, we have to do this. I actually see this as we have to do this. We're on here for a reason. We talk to each other for a reason. We already made a plan, even without coming on here, that we were going to do an international trip. Now it's a stop shutting of the doors. There's so many more options. We hadn't thought about going into it. 25 is the number. 25 is the number. Put the money to it.
1:21:50 Ramit Sethi? Damn. I think you guys are ready to, to start using your money for a rich life. I'm very impressed with both of your answers. That's really impressive, especially for the two of you. I want to recognize that because that has been how you have been living for a long time. And so for you to be able to do that with this example, which is a big one, is really, really impressive. Can we go to your numbers, your CSP, and can we make some changes to make these things inevitable? Are you down for that?
1:22:26 Speaker 02 Yeah.
1:22:27 Speaker 01 Yeah.
1:22:27 Ramit Sethi? Okay, cool. So here we have your fixed costs at 60%. We have your investments at 17%. You're investing quite a bit plus pre-tax, so almost 6,000 bucks a month approximately, which is extremely impressive. Your savings are at 13%. If you were to stop saving right now, I'm not saying you have to. It's your money, not mine. But if you were to just turn off the savings that go every month. How would you feel about it, Dave?
1:23:02 Speaker 02 I'd wonder where it's going. But as long as there's a plan for it, I'd be okay with it.
1:23:06 Ramit Sethi? What if there's not a plan?
1:23:08 Speaker 02 I'm uncomfortable with the amount of money we have in savings.
1:23:10 Ramit Sethi? You're uncomfortable with it because you don't think you're getting maximum return on that money.
1:23:15 Speaker 02 Yes.
1:23:15 Ramit Sethi? This is the wrong way to think about it. Again, I'm trying to systematically deconstruct the way that you think about money. I have a lot of money in savings. Okay, I like it because it allows me to sleep well at night. If something happens, I'm good. Okay, am I losing potential return or yield? Yeah, that's the point. It's supposed to be liquid. It's supposed to be there in case of emergency. You know, when people were going through COVID, early on, they had elderly parents, things like that. They were themselves immunocompromised and they would message me all the time. I have this emergency fund, but I don't know if I should use it to stay home from work. I'm like, it is literally the defining emergency of our life. And you are so concerned that you won't even use it to save your own life or your mom or dad's life.
1:23:58 Ramit Sethi? That's when you know personal finance has gone very, very wrong. And although we are not talking about life or death, we are talking about serious health concerns and we are talking about building a healthy relationship with money. So the fact that you are concerned you have too much in savings, but only because of yield, really shows how trapped you are by this view that I need to be optimizing all the time. What would you like to do about your CSP to make these things you talked about inevitable?
1:24:32 Speaker 01 I feel like the only place to really take out is stop allocating so much to investing every month.
1:24:39 Ramit Sethi? Okay.
1:24:39 Speaker 01 And start putting it into a specified vacation fund.
1:24:43 Ramit Sethi? All right, let's do it. So vacations right now is at zero. No surprise, you have not taken a vacation in a long time. It all makes perfect sense. Let's change it. How much you want to put in vacations, Michaela?
1:24:52 Speaker 01 Honestly, this might be a big jump, but since we're putting 1,500 into savings every month, can we do at least 1,000 a month?
1:25:02 Ramit Sethi? Sure.
1:25:03 Speaker 02 1,500, I would say let's do 1,500.
1:25:05 Ramit Sethi? Wow, nice. God, this is so cool.
1:25:08 Speaker 01 Next year. I would love to not pull from our actual savings and like we do it, we do it now.
1:25:18 Ramit Sethi? Okay, guys, so I just took the 1500, I zeroed it out for your emergency fund and I switched it over to your vacation. Okay, you have 1500 bucks a month going towards your vacation. Well done. That's awesome. So your vacation is gonna happen when? Do you know?
1:25:32 Speaker 01 Let's say like end of summer next year before our oldest goes to kindergarten.
1:25:36 Speaker 02 Within the next two years.
1:25:38 Ramit Sethi? Here, let me just tell you straight. When I'm rich and I don't wait, no way. I don't say like two years, five years, no way. When? And you're in a big rush. Both of you have
1:25:49 Speaker 01 Yeah.
1:25:50 Ramit Sethi? health issues and all these things in your family. Why are you waiting?
1:25:53 Speaker 01 Say early summer next year before, because our oldest goes to kindergarten and then we don't have to worry about school.
1:26:00 Ramit Sethi? Beautiful. Six months.
1:26:01 Speaker 01 Mm-hmm.
1:26:02 Ramit Sethi? I think you need to put a little bit more than 1500 in, or you will just draw some out of your savings, which is totally fine. You have way more than you need in savings. You're investing 2000 bucks a month. Why don't we drop that to 1500? How about that? And then raise this to 2000. We're still good. Same thing.
1:26:18 Speaker 01 Yeah.
1:26:19 Ramit Sethi? I honestly think you could go way down. Personally, I'm just gonna, just as an example, I'm gonna, hell, I'll go to 500 over here. I would love for you to make those plans together and it's not a question of are we going? We're going. We are a decisive couple. We have millions. We are gonna create these memories. So you got the trip, you got things in your home that you talked about. Fantastic. What else?
1:26:48 Speaker 02 Uh, date night, like?
1:26:49 Ramit Sethi? Yeah.
1:26:50 Speaker 01 Yeah.
1:26:51 Speaker 02 Date night every other week and allocate 300 bucks for that.
1:26:56 Ramit Sethi? Are you guys actually spending this guilt-free spending money right now?
1:26:59 Speaker 02 It just kinda goes to like Target and Amazon and
1:27:01 Ramit Sethi? That's not guilt-free. That just
1:27:03 Speaker 02 There's not really a guilt-free spending category.
1:27:05 Ramit Sethi? Yeah, no kidding. That's why we're talking. I actually think you should just commit to using the 1400 dollars a month first.
1:27:12 Speaker 01 On ourselves and not
1:27:14 Ramit Sethi? Exactly. Exactly.
1:27:15 Speaker 01 Store stuff that we need, not diapers.
1:27:19 Ramit Sethi? Cleaning, yeah, diapers don't count either. Cleaning person, that would be date night every other week. How much is your date night?
1:27:26 Speaker 01 250 just cuz that's sitter included.
1:27:29 Ramit Sethi? Yeah, great. You gotta include the sitter. How much does a babysitter cost?
1:27:32 Speaker 01 20 an hour.
1:27:33 Ramit Sethi? So that's like 60 bucks or something like that?
1:27:36 Speaker 01 Yeah, like 80.
1:27:37 Ramit Sethi? 80 bucks. Okay, great. Perfect. So yeah, that sounds very reasonable. There you go. So you got that. Is there something about a little self-care?
1:27:46 Speaker 01 I'll say a massage. Doesn't have to be.
1:27:49 Ramit Sethi? Don't tell me what it doesn't have to be. Hey, everybody, in my dream, it doesn't even have to be good. It doesn't even have to be a human being. A raccoon can push on my back. I'm great. I'm so happy. I just want something to touch my back. We're not doing that.
1:28:02 Speaker 01 No. Okay. Massage monthly.
1:28:05 Ramit Sethi? Thank you.
1:28:05 Speaker 01 As long as I get a cleaner every other week.
1:28:09 Ramit Sethi? Great. You could do it all.
1:28:11 Speaker 01 Yeah.
1:28:12 Ramit Sethi? All of this, this is not hard. You actually can do all of these things. And then Dave, what about for you? Is there something around self-care or something you enjoy doing?
1:28:23 Ramit Sethi? Oh, God, not this man thing again. Oh, no, I just like to sit at home with my new office.
1:28:28 Speaker 02 I enjoy golfing. Can't go every time. So hobbies of like playing a sport, which I do weekly, or golfing.
1:28:36 Ramit Sethi? Okay, I love it. Already with like minor, just shifting money from here to there. We've already funded the vacation. It is now an inevitability. So you will have many, many thousands of dollars for that vacation. And honestly, if you need to pull out an extra 5K from your savings, go for it. You have so much in there. It's fine. You're still continuing to invest aggressively, which is very, very impressive. Do you all know how much you're gonna have at retirement?
1:29:04 Speaker 02 Four million.
1:29:05 Ramit Sethi? Oh, my God. This is gonna be the best moment of my life.
1:29:10 Ramit Sethi? Michaela, how much do you think you're gonna have at retirement?
1:29:12 Speaker 01 I didn't even think as much as what Dave was saying. 2.5, maybe two.
1:29:17 Ramit Sethi? So you all have been saving aggressively for years and years without calculating how much you're gonna have.
1:29:23 Speaker 02 Not in a simplified manner, no.
1:29:25 Speaker 01 It was more so hitting the milestones of like paying the student loans off. Oh, we did that. And then trying to hit X number.
1:29:33 Ramit Sethi? Can I interrupt you? As it currently stands, you will have 18.2 million dollars when you retire.
1:29:41 Speaker 01 Yeah, I honestly don't, I don't want that. I want to use it throughout my life and not just hoard it at the end. What am I gonna do with 18 million?
1:29:52 Ramit Sethi? I want you to process it for a second.
1:29:56 Speaker 01 I can't. That's.
1:29:57 Ramit Sethi? I want you to just listen. Dave is processing it.
1:30:03 Ramit Sethi? Dave, what's going through your head right now? I saw you really thinking about what I just said and taking it in.
1:30:09 Speaker 02 Honestly, it's gonna come off the wrong way, but embarrassment.
1:30:15 Speaker 02 And it's embarrassment of how little we've given to ourselves and those around us
1:30:23 Speaker 02 in the time that we've had in 18 million in retirement. What are we going to do? Pay for a cyber body? Like, what could we possibly do? I don't think we have a plan to leave a wild legacy for our kids. And like, sure, some, some wealth, some generation wealth, sure. But it's, it's almost like sad and embarrassing to say, why, why haven't we done this? Why haven't we committed to each other in this way?
1:30:49 Ramit Sethi? I think that's a really powerful reaction, Dave. I really appreciate it. That's not easy to say. It's not easy for anyone, especially for men, to admit that something they have done, something that you have been in charge a lot of is embarrassing. So I think that takes a lot of courage. I really appreciate that. And Mikhail, I noticed that you're tearing up. I'm curious why.
1:31:15 Speaker 01 It just kind of goes back to,
1:31:19 Speaker 01 I'm grateful for what we have, but like,
1:31:25 Speaker 01 I feel like I'm taking it in and realizing like, why am I so stressed about like the day to day? Cause I shouldn't be, I shouldn't even like, it makes, it gives me relief too. Just knowing like next year, when I have to take care of my mom, like it's not gonna be stressful. Like, why am I giving myself future stresses?
1:31:49 Ramit Sethi? Yes.
1:31:49 Speaker 01 When the place that we're at right now, like it will all work out.
1:31:55 Ramit Sethi? You have more than you will ever, ever need, ever.
1:32:00 Speaker 01 And like, I thought I had a rich life now in the like current present without knowing those numbers.
1:32:08 Ramit Sethi? Yes.
1:32:08 Speaker 01 Like the things that we could do long-term
1:32:15 Speaker 01 for ourselves, for our children, for family, it's like, it's.
1:32:21 Speaker 01 Yeah, it's way more than I thought possible at all, so.
1:32:26 Ramit Sethi? I want to just make a couple of suggestions now because as you get to see, you get to have these conversations in a totally elevated way. Number one, you don't have to wait until your mom gets even sicker to move her there. You have the money. Throw it towards her.
1:32:40 Speaker 01 Yeah.
1:32:40 Ramit Sethi? There is nothing like being able to take care of your family, especially when you have the money to do it. Don't wait. Be overly generous. You will, as my wife says, she always reminds me, how do you want to have a relationship with your family and your loved ones? So if money is not a concern, which it's not, get the place right now. When you're talking about a vacation, go. Don't wait. Start with a staycation. Have somebody come and take care of your kids. Next time, take them with you. Bring somebody with you or not. It's up to you. Go to a nice theme park or restaurant. Don't think twice. The cleaning, every week. The closet, have it done. The office, set a deadline. It should be done within X months. Get it done. The Europe trip, start to dream together.
1:33:24 Ramit Sethi? And if you can't plan all this yourself because it's the first time taking a trip in a long time, get some help. There's travel agents who do it for free. And/or you could pay somebody. There's lots of options. The point is, lean forward in your rich life, not back.
1:33:37 Speaker 01 Yeah.
1:33:38 Ramit Sethi? I also want to point out one last thing, a number that should be incredibly startling to you. If you stopped adding money to your retirement right now, you just went to zero, you took all that money, what is it, around $6,000 a month, and just spent it on freaking dinners and cleaning supplies, whatever. You know how much you would have by the time, Michaela, you turn 65? You want to guess?
1:34:02 Speaker 01 I'll go with my original number again, like 2.5.
1:34:06 Ramit Sethi? No, you'd have $9 million.
1:34:10 Speaker 01 That's wild. That still also seems like more than what we will ever need.
1:34:16 Ramit Sethi? Yes, it is. I can tell you from speaking to you, that is more than you will ever need. So the point is, it is now part of your job. To learn how to responsibly spend this money, responsibly, meaningfully, but simply hoarding it? What do you want? Nine million, 12 million, 18 million, 36 million? None of it matter. It's irrelevant. I would rather you all set up a charity or start to give to your community. There's so many things you can do. But seeing the surprise on your faces when I told you the number, a number which, by the way, you have been able to find out your entire lives.
1:34:57 Ramit Sethi? But because you were looking at the world through lenses of scarcity, it just never occurred to you to look for. And now just taking that off allows you to see the world is crystal clear and you can shape it the way you want it to be.
1:35:10 Speaker 02 Yeah, absolutely. It's, we did all this work to set us up for this point to have optionality.
1:35:16 Ramit Sethi? And you crushed it. You both crushed it. Like, can we just take a second and a round of applause? Please give yourselves a round of applause for what you accomplished. It's very, very impressive. I do not see this that often.
1:35:30 Speaker 01 We are lucky. We are grateful, but we worked our butts off for this. So why don't we appreciate what we have and use it and create these memories?
1:35:38 Ramit Sethi? Now, can I ask another question? Considering the fact that you two are wealthy and are going to be incredibly wealthy, how does that affect hearing that your wife feels like she's on autopilot and she's doing everything for everybody else?
1:35:54 Speaker 02 It's demoralizing a bit. It's almost like I've failed in ways of being a great husband, a better husband than I could be. One, I think it's, I think it's a recognition, appreciation, and also understanding to allow me to step into it. Some of the small things she does in the morning, she's up earlier than I am, getting us prepped for the day.
1:36:17 Ramit Sethi? Yeah.
1:36:18 Speaker 02 And then at night, she's, sometimes I'm working late because of the job and she's also settling the kids, getting them down. What can I do to step into some of that? Even if it is not the true action, but meal prep, or if that's, hey, I already have DoorDash, I already have this taken care of for the night. I'll do dishes. You sit down, enjoy a movie, enjoy a show.
1:36:38 Ramit Sethi? Nice, nice, nice. I like this teamwork. Like, do you see how fun and empowering it can be to use money? And I'm not saying waste it. I'm not saying that you gotta start spending a million dollars a day. That's not gonna happen. It's never gonna happen for the two of you. Never. But you could increase your spend by $5,000 per month. And you would still have more money than you ever know what to do with ever in your entire lives and for your kids' lives.
1:37:06 Speaker 01 Yeah.
1:37:08 Speaker 02 I find that as we've talked about the experience and the experience with the kids, like this is an experience of daily life that we've sacrificed ourselves in for so long.
1:37:17 Ramit Sethi? It's like you all don't have to go to Disneyland to have a magical experience. You can have a magical experience at home every single day. A clean house, parents who are relaxed.
1:37:28 Speaker 01 Yeah.
1:37:28 Ramit Sethi? I know you love your kids. I can tell by the way you talk about them, but parents who are relaxed.
1:37:33 Speaker 01 That's a big one, but yeah, this was even better than I imagined. I feel like we hit on things that we have unconsciously been struggling with for years and now bringing them to the surface. I feel like there's no other way to go back. It's more so how do we communicate better and work as a team to actually have fun in our life. Like we've worked so hard for this. Now is our time to have fun, have fun for our children, do things for my mom before things get worse. So it's just like so rewarding to realize that.
1:38:14 Ramit Sethi? When I told Dave he was on track to retire with $18.2 million, did you catch the word he used? He said embarrassed. Embarrassed. Let's talk about that. Embarrassed at how little they had given themselves despite having so much. I thought that was quite self-aware. Embarrassment is a very powerful feeling, particularly for a man. Very powerful. Here's what I want you to take away from Michaela and Dave. Scarcity is so powerful that it will talk you out of leggings without holes. It will talk you out of getting a cleaner or a vacation or an espresso machine. It will convince you that the number in your account is never quite enough. And it will do all this so quietly, you never think to
1:38:59 Ramit Sethi? question it. In fact, it will convince you that you're being responsible. But what got you here won't get you there. What they needed was not a better spreadsheet. To put it very simply, they needed someone to tell them it was okay. They were okay and they were going to be safe. As for Michaela and Dave, I don't expect them to transform overnight. This is an incredibly difficult transformational journey to go through. From scarcity to abundance, it's really hard to do. But hopefully from going from level 10 scarcity to maybe level nine scarcity, level eight scarcity to maybe level six scarcity.
1:39:41 Ramit Sethi? I do think they're going to wake up one Monday morning to a clean house, dinner taken care of, kids are settled and the two of them finally with a little space to breathe. In that moment, my wish is that they look at each other and they think, why did we wait so long? That is when their rich life truly begins.
1:40:04 Speaker 02 Here, me following up with the biggest surprise from the conversation. I think it's just how freeing emotionally leading with the vision really becomes and how much more fun it is to talk about things rather than starting with the cost and fitting within the confines, whether it's planning our rich life together or even vacations. Just the conversation is a little bit lighter of a mood overall. My biggest takeaway is really just leaning into Michaela's ideas a bit more as well. I encourage it to be a little bit more fun and playful, keeping costs as really like a fifth consideration in things. And really, I think the biggest takeaway and probably the biggest area of work for me is also being very intentional with guilt free spending.
1:40:46 Speaker 01 Something that surprised me was definitely just how much we will end up having in retirement. I just never knew that number, never thought it would be close to that. I knew that we were aggressively saving in order to retire. So that was just a huge, exciting surprise, but just.
1:41:09 Speaker 01 Shocking the number because I don't feel like we need that much for retirement. And then the biggest takeaway is realizing that we have definitely been kind of working together against ourselves in spending any money. We're so good at budgeting and being conscious of the numbers that we're buying and the numbers on the shelf that it's kind of hindered us spending any money and enjoying the money on anything we want, especially trips.
1:41:46 Speaker 02 It's been three weeks since we last spoke with you and I just want to share some insights. Michaela and I, the conversations around anything around money, we're quick to point out when we're talking about the negatives and really trying to make it a positive of, hey, what do you want? And that vision and creative aspect rather than exclusion or cost focus, albeit very hard to change. A lot of things are still very cost conscious for us, but it is definitely led with a bit more of that future vision of what we want things to be like in our life. Literally, we'll point at each other as we're talking about things and say, hey, you can't say need or can't say certain words. And I think that's really helped kind of refine what we want in our rich life and also planning for vacation too. So look forward to giving you a future follow up.
1:42:31 Speaker 01 It's been three weeks since we spoke to our meet and I feel like we've definitely tried to make some changes in our household, including myself. I'm trying not to make the price of something the first thing I look into on a purchase and the priority. It's definitely taking some getting used to, but I feel like I am trying to purchase things that I want, not based off of, am I getting a good deal or not? I also have a deep clean scheduled with the cleaners and then after that we'll have them be coming more regularly to our house to help me and take that lift off of me. But thank you again for the conversation.
1:43:13 Speaker 01 I feel like it was definitely a huge help for us to realize, to just enjoy life and we have the money to be able to do the things that we want and we don't have to just focus on saving, saving, saving. So thanks again.
1:43:30 Ramit Sethi? And I have a very exciting update because six months later, here's what they have to say.
1:43:36 Speaker 01 Hey, Remy. We just wanted to let you know that we actually did book the trip that we talked about on your podcast. We ended up going to Spain and we are currently in Valencia. We did 10 days and when, yeah, 10, 12 days. Did Madrid, Barcelona, Valencia, and then we'll end back up in Madrid. We did bring our kids, but like you recommended, we did invite some family to help us just coordinate travel and then help let us get some days and dates and dinners. And so that was very nice. But yeah, we've been having a great time.
1:44:19 Speaker 02 Almost no museums, but looking at a lot of the architecture, eating food, not wearing a bill or prices or anything. The kids have been spoiled with ice cream and churros every day, pretty much, and coffee. Coffee for us. It's been, it's been an exciting one.
1:44:38 Speaker 01 We have you to thank because before this was always a what if, like wanting type travel. But now after the podcast, you definitely made us realize like, what are we waiting for? We have the budget and we were able to have the stream vacation. And you've definitely changed our lives and how we think about our budget and just our rich lives and not stressing so much over the money. So thank you again for that.
1:45:07 Speaker 02 Extra nugget for you. We're averaging 19,000 steps a day. So exploring a lot. And it's been awesome.
1:45:14 Ramit Sethi? Listen up. If you want my help with your specific money questions, there are only two ways to get it. First, you can apply to be on this podcast at iwt.com/apply. Or second, you can join my money coaching program instantly at iwt.com/moneycoaching. In that program, you get access to live virtual events, monthly group coaching calls, live Q and A's, and an amazing, huge community of other people like you. Check it out at iwt.com/moneycoaching.
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