Pod Insights Money For Couples with Ramit Sethi 192. “We spend 98% of what we make—Where is it all going?” About this episode Justin (40) and Deepika (32) are stuck in a frustrating financial loop: despite their high income, they feel like they’re living paycheck to paycheck. Deepika dreams of buying a house someday, but the couple can’t seem to identify where their money is going—or how to escape the cycle of credit card debt. Justin has a side hustle that he’s eager to grow, but he’s struggling to get the same level of commitment from his business partners. For years, they’ve been focused on survival, not dreaming about the future. Now, they’re realizing that their lack of a shared vision for their finances is keeping them from the life they want. Can Justin and Deepika kick their old habits, create a better strategy for managing their money, and finally start living their Rich Life?
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Transcript 18,232 words · 3 speakers
Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.
0:00 Ramit Sethi? Are you feeling stuck with your money? Have you told yourself, "I need to figure it out." But you haven't really done it? I understand that not everyone is going to sit down and read multiple books about money. I get that. That is why I created Rich Life: The Road to 100K. This is a step-by-step program that shows you how to build a money system that works. Like figuring out the date that you're going to have $100,000 invested, how to automate your money, and how to cut through the noise. Plus, you will get access to weekly live events and a community of like-minded people, plus a library of my best materials. This is the program that will finally help you get on track with your money,
0:43 Ramit Sethi? and you can join today at iwt.com/100k. When I was thinking about quitting my last job to do "I Will Teach You To Be Rich" full-time, I created a rule for myself. I couldn't go full-time with IWT until it earned at least as much as my monthly salary for three months in a row. And this really helped me take my business seriously. Now, for new business owners, I recommend something similar. And as you are getting set up, I also recommend keeping things simple by using Shopify. Shopify is the commerce platform behind millions of businesses around the world and 10% of all e-commerce in the US, including brands like Mattel and Jimm Shark.
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2:10 Ramit Sethi? On today's episode, meet Justin and Deepika.
2:13 Speaker 01 I'm thinking more about the future and I think Justin is very much thinking about now.
2:17 Ramit Sethi? Justin is 40, Deepika is 32, and they're caught in a cycle of credit card debt, even though they have a high income.
2:25 Speaker 01 It feels like we are living paycheck to paycheck and it stresses me because we just have the money we have and then we wait for payday and we do it all over again.
2:35 Ramit Sethi? Justin has a side hustle that he wants to take to the next level, but his business partners are not as invested as he is.
2:42 Speaker 02 Me, my brother and my family bought this building. And then finally, when we finally did pay it off, all of us kind of like went our separate ways.
2:49 Ramit Sethi? Deepika wants to eventually buy a house, but she can't figure out where they're overspending.
2:54 Speaker 01 We've looked at our credit card statements time and time again. We cannot figure out what is causing the revolving cycle of debt.
3:03 Ramit Sethi? They both struggle with their money psychology.
3:05 Speaker 01 It's like the second you get a dollar, it's, oh my God, it's a dollar. Oh, what can we do with this dollar?
3:10 Speaker 02 Yeah.
3:10 Speaker 01 And it's that one dollar brought us joy, but then it was this fleeting joy.
3:15 Speaker 02 Money is for rich people and you have to work super hard to get it.
3:19 Ramit Sethi? And they don't have a shared vision for their money, which is preventing them from living their rich life.
3:24 Speaker 01 I have to understand that for the first few years of our marriage, we weren't allowed to have dreams.
3:29 Ramit Sethi? Can they kick their old money habits to the curb and adopt a different strategy for managing their money?
3:35 Speaker 01 It seems like the folks around us have been able to figure this out and we just haven't. And maybe the answer is so obvious, it's right in front of me, but we have not been able to figure out what the change is that we need to make.
3:46 Ramit Sethi? Now, let's meet Justin and Deepika.
3:56 Ramit Sethi? All right, I've got Justin and Deepika's CSP in front of me, getting ready for our conversation. Let's take a look at what I find.
4:04 Ramit Sethi? Let's take a look. Assets, 5,000 bucks.
4:08 Ramit Sethi? Investments $111,000. They mentioned that Justin's income goes towards savings. Maybe that counts investments too. Savings at $38,000 and debt at 43K. Okay, it's all about the income here. What the hell? $21,000 per month. Okay. So they make $260,000 a year. All right, what's the problem? First off, okay, they're taking home 13,000. So they're at least presumably maxing out 401K. How they have 98% fixed costs at that income? Oh, especially when their mortgage or rent is $1,650 a month.
4:53 Ramit Sethi? Whoa, all right. Where's the money going? Utilities at 700 bucks a month. That's high, but okay. Insurance at $3,800? Why? How can insurance beat $4,000 a month? Okay, well, we'll find out. Car payment, 1,800 bucks a month? No, hell no. Debt payments at 4,000. Groceries at 800. I told you, it's always 800 to 1,200 bucks. Clothes, 200 bucks a month. You can't spend 200 bucks a month on clothes when you have 98% fixed costs. Investments are at zero, okay? Savings are at zero. That's a problem. We got a spending problem here.
5:36 Ramit Sethi? That's it. I mean, it's all in the fixed costs. And we can already narrow it down to a few different areas. All right, I'm gonna find out what's going on here. Especially with a salary this high, there's something going on here.
5:52 Speaker 01 When I saw the different prompts on your Instagram, the one that stuck up to me was the one about having the business idea and not having it pick up off the ground. I saw this and I thought of Justin. Justin and his business really is this incredibly untapped financial resource that we could be benefiting from. It's something that he's been wanting to do for a few years now. He had the LLC created after our son was born. So he has done a lot of the groundwork. So typically, when it comes to all things finances and larger decisions, because I take on the weight of the world on my shoulders at all times for all the people in my
6:33 Speaker 01 life, I'm stressed about the untapped financial stream that could be coming from his business. If we want to do something like buy a home or try to do something for our son's future, we don't have the resources to do things like that. And I think like that's what my concern is. So I'm thinking more about the future and I think Justin is very much thinking about now.
6:55 Ramit Sethi? Justin?
6:56 Speaker 02 I never focused on future stuff. I've always focused on what happens now. So she's absolutely correct. There is money to be made in what I'm trying to do, but I always feel like there's always some sort of blot. My biggest problem right now is I'm trying to renovate the space and I either don't have time or I'm trying to do other projects and so many other things jump on top of it that when I try to focus on the business, it never really goes anywhere.
7:24 Ramit Sethi? Is your full-time business?
7:26 Speaker 02 No. So I have a full-time job and this business is more of like a side hustle.
7:32 Ramit Sethi? Okay. How long has it been a side hustle for?
7:34 Speaker 02 Fifteen years.
7:35 Ramit Sethi? What? You serious?
7:37 Speaker 02 So me, my brother and my family bought this building and me and my brother were in the mindset of we can turn this place into a recording studio slash venue because it has multiple levels. We all pooled our money together and we never had enough money to actually put into the building. It was just a matter of paying it, paying it, paying it, making the bills or meeting the bills. And then finally, when we finally did pay it off, all of us kind of like went our separate ways. So it's just me thinking like, hey, this is a great opportunity to do what we originally wanted to do.
8:13 Ramit Sethi? What about the family members who put money into it?
8:17 Speaker 02 My brother is now in Miami. My older brother is here, but he's not very much interested in doing this anymore.
8:23 Ramit Sethi? Did you buy him out?
8:25 Speaker 02 No. When I got the building, he didn't have a place to stay, so I renovated the top into an apartment. Uh, the main floor is a venue and the, the, the lower level is the studio. So he still lives up here?
8:39 Ramit Sethi? This doesn't sound like a, like a structured business, right? They don't really care about the money, but legally they would be entitled to it. There's like somebody living upstairs, not paying rent. Does it sound unusual to you as I say it?
8:53 Speaker 02 Yeah. So that, that's, I, I went through this in therapy as well.
8:57 Ramit Sethi? And what happened?
8:58 Speaker 02 It was basically like, you do realize like this is toxic, things should be.
9:02 Ramit Sethi? Oh, okay. She said it, not me.
9:04 Speaker 02 Yeah.
9:04 Ramit Sethi? Thank you therapist.
9:06 Speaker 02 Don't worry.
9:06 Ramit Sethi? Okay. And then what did you do?
9:09 Speaker 02 I tried to talk to him, but he doesn't want to pay. So he just wants to like, you know, stay for free.
9:14 Ramit Sethi? Okay. So you told all the details to your therapist, presumably over multiple sessions. Your therapist was like, this is super toxic. And then you went to your brother, you're like, hey, not sure if you should stay here for free. And then he was like, oh, I'm not trying to pay rent. And you were like, okay.
9:32 Speaker 02 Yeah, basically. It's like a family thing. Like, yeah, you get involved in family and then, you know, this kind of stuff happens.
9:38 Ramit Sethi? Are you Indian?
9:39 Speaker 02 Of course.
9:39 Ramit Sethi? Okay. All right. So this explains a lot. You want me to, you want me to set up the call right now and get all the family members on Zoom? I'm not part of the family. I'll, I'll wrap this up in 15 minutes. All right. Maybe not. So, all right. Now that I understand a little bit more about the family business, Deepika, what's your take?
9:59 Speaker 01 I think it's a fantastic opportunity for Justin because he's actually been doing a majority of the manual labor. He's the only one that has the vision and wants to execute on it. So I'm in full support of him actually moving forward with his business. I think it's just a matter of prioritizing and finding the resources to actually execute.
10:19 Ramit Sethi? All right. So we have this side business, has a lot of family embroiled in it. And Deepika, you're managing your family finances on a day-to-day basis. Things like tracking things, planning where the money's coming from for vacation, those kinds of things, right?
10:37 Speaker 01 Yep.
10:37 Ramit Sethi? And, uh, Justin, do you ever feel stressed about money?
10:40 Speaker 02 It's not something that I stress over only because I feel like we have a safety net. When we have it, it's great. It makes me happy because you can get what you want in terms of like, you know, gifts, vacations. You don't have the stress of, oh no, I can't do this or I can't afford that. So yeah, when money is there, the levels of stress are down, which to me makes me happy.
11:03 Ramit Sethi? It doesn't really surprise me that you are stressed out, Deepika, and Justin is happy. Cause he's like, yeah, whatever. The roof is here and we're eating well and it's good to go, right? You've seen this pattern on the show before many times, right?
11:16 Speaker 01 Yeah. Yeah.
11:18 Ramit Sethi? We have the worrier, we have the avoider, the avoider's like very happy. And the worrier is like, one, sometimes they try to get them. They get into this chaser avoider dynamic, but in general, it's just like, it is what it is. And in fact, you said, Deepika, that you tend to take on the world in lots of parts of your life. Well, I think we should start with looking at your numbers. Cause I understand the general dynamics, but I don't really understand what's going on with your finances. Let's take a look at the numbers, shall we?
11:48 Speaker 01 Yes.
11:48 Ramit Sethi? Justin, can you read off the words in bold and then the number in full next to it?
11:55 Speaker 02 Assets, five thousand, three hundred and twenty-eight. Investments, a hundred and eleven thousand, seven hundred and ninety-three dollars. Savings, thirty-eight thousand. And then debt, forty-three thousand, two hundred and fifty-one.
12:10 Ramit Sethi? Total net worth?
12:11 Speaker 02 A hundred and eleven thousand, eight hundred and seventy dollars.
12:15 Ramit Sethi? Great. What do you think about those numbers?
12:18 Speaker 02 It's scary. There's really not much there.
12:20 Ramit Sethi? Deepika, you want to add anything on those net worth numbers?
12:23 Speaker 01 Yeah. Now that I'm looking at the numbers, I don't know if we did the assets part right because we have four cars.
12:30 Ramit Sethi? You have four cars with two people?
12:33 Speaker 01 Yeah, it's a long story.
12:34 Ramit Sethi? So you have these cars, but your assets read only five thousand bucks.
12:39 Speaker 02 We were confused of like, how do you value it?
12:41 Ramit Sethi? Just plug it into, uh, Kelly Blue Book or whatever. Yeah, let's just approximate it right now. Who cares? It doesn't matter, you know, get it right within 10,000, it's fine.
12:49 Speaker 02 It's probably worth forty thousand?
12:52 Ramit Sethi? Okay, we'll put 40,000. All right, so your net worth is 151,000. Okay, that's cool. Again, you can tidy up the numbers later. This is just, at this point, it doesn't really matter. It's just directional. Moving on, let's talk about income. Deepika, can you read off this combined gross monthly income, please?
13:12 Speaker 01 Sure, $21,684.
13:17 Ramit Sethi? Per month? That's a lot. What do you think about that?
13:20 Speaker 01 Doesn't feel like a lot.
13:22 Ramit Sethi? I just feel like we're middle class. You guys want to say it? Go ahead, get it out.
13:27 Speaker 01 It really feels like we are the epitome of middle class.
13:32 Ramit Sethi? By the end of the month, we just don't know where it all went, right? Okay.
13:36 Speaker 01 You got it.
13:37 Ramit Sethi? All right, all right, all right. Your net income, I found this interesting, is 13,577. Why is the difference so big?
13:47 Speaker 01 Justin pays, I think it was 1,900 a month for health benefits. It's mind blowing. He's part of a union, and I think maybe the health benefits are included in the union dues, and maybe that's why the number looks so inflated. But that was a very eye-opening moment for us, because I don't think either of us realized how much was going towards health benefits and union dues until we completed this.
14:14 Ramit Sethi? Is there a pension involved as well, Justin?
14:17 Speaker 02 Um, yes, yep.
14:18 Ramit Sethi? And is it a pretty good pension?
14:20 Speaker 02 Yeah, so once you finish the years, I think we get around 27, $2,800 a month.
14:26 Ramit Sethi? $2,800 a month, okay. Are either of you contributing any pre-tax money to a thing like a 401K?
14:32 Speaker 02 Yeah.
14:33 Speaker 01 Yep.
14:33 Ramit Sethi? How much?
14:34 Speaker 02 I think mine was 2% or 4%.
14:37 Speaker 01 Mine was about the same.
14:39 Ramit Sethi? So like about 650 bucks a month towards a 401K total. So about 7,800 bucks a year. All right. But what really concerns me is the next number. What's this number, Deepika? The fixed cost number?
14:55 Speaker 01 98%.
14:57 Ramit Sethi? Okay. Justin, you see that number?
14:59 Speaker 02 Yeah.
15:00 Ramit Sethi? What do you make of this number? What number should it be theoretically?
15:03 Speaker 02 50% at least.
15:05 Ramit Sethi? 50 to 60. Yeah, that's and and for a couple with an income like yours, probably towards the low end, if not even lower, because your fixed costs don't tend to often scale as much with high incomes. So we got to figure out what's going on here. I'm going to dive into those fixed cost numbers in just a second, but let's keep going down the list, just so we see the rest of the CSP. Your investments are at zero. So you're basically not contributing anything more beyond your 401k, which explains how the investments, which theoretically should be higher with an income like yours, are not higher. Your savings are at zero. You have about three months of savings,
15:48 Ramit Sethi? and that's it. And then finally, your guilt free spending, you put childcare for 1,200, and then you put everything else 500 bucks a month. Do we all agree that fixed cost is a problem area?
16:01 Speaker 01 Huge problem area. Yeah.
16:03 Ramit Sethi? Okay. And Justin, do you agree as well?
16:05 Speaker 02 Yeah, absolutely.
16:06 Ramit Sethi? All right, we're narrowing it down already. Let's try to figure out what's going on. Do you rent or own?
16:11 Speaker 01 We rent.
16:11 Ramit Sethi? Okay, your rent is $1,650. That's good. That's 10.83% for housing. Whoa, whoa. And that includes your utilities, which are 700 bucks a month. What's up with that, by the way?
16:25 Speaker 01 We have done a lot of investigating over the last couple of years. For some reason, our gas and electric combination bill is sometimes north of 800, 900 dollars, which is unheard of. We've asked the gas company what's going on. We've had them check for gas leaks. We've had them come and look to see what's going on.
16:45 Ramit Sethi? How could it take a couple of years to figure this out?
16:49 Speaker 01 We can't get anyone on the phone. We've just been in this cycle for the last two or three years, and we can't figure it out.
16:56 Ramit Sethi? There's something going on there. Maybe it's right, maybe not, but let's keep going because we got a lot more. Insurance, you're paying $3,835 per month for insurance. What is up with that?
17:10 Speaker 02 It's the union. That's how much they take out of the paycheck. It's almost like half per paycheck.
17:16 Ramit Sethi? Well, have you asked your your friends at work, like, hey, do you pay this much?
17:20 Speaker 02 So when I talked to them, they said it's it's a pretty high amount. I just left it at that because I'm not very good at this stuff.
17:26 Ramit Sethi? I don't mind not being good at money. None of us is born being good at money. But it's a skill we learn, right? Like, what do you do for your union job?
17:36 Speaker 02 I work in event services.
17:39 Ramit Sethi? If you ask me how to do that, I'd be like, "I don't know. I'm not good at this stuff." Which is true. But if I wanted to get good, or it was something important to my life, I would get good, right? It's just like, it has to happen. So, already, we're going down this list, and we're three things in, and I've heard, I don't know why we're paying that much, but we just can't figure it out. And I'm a little confused. I don't hear this from almost any other couple. I can understand one month, three months, six months, but like, two, three, four years? Doesn't make sense to me. I'm gonna be honest, Deepika and Justin have me a little bit confused. Their fixed costs are at 98%, which is very high. It means that they are essentially spending every single dollar they make.
18:24 Ramit Sethi? But that's especially confusing at their income level. They're high earners, and their rent is extremely low. And when I ask them specific questions like, "Hey, why are you paying so much for insurance?" Or "Why is your electric bill so high?" They give me a very casual "I don't know." "I don't know." It's like when I'm seven years old, I come home, a big old stain on my shirt. My mom goes, "How did you get that stain?" "I don't know." Which, by the way, does not work. The world has a way of making you tell the truth, whether you want to or not, so you might as well do it early on. Now, he uses the excuse, "I'm not good at this stuff." And then happily continues avoiding money. Meanwhile, Deepika is on a different end of the spectrum,
19:08 Ramit Sethi? worrying, stressing about their future. It's not a healthy way to approach money. We'll continue going through their conscious spending plan after this quick break. Let's take a look at your to-do list. How many things are on there that you've been putting off for nine months or more? I'm talking about important stuff, like booking doctor's appointments and getting your estate plan in order. We can knock them out in about an hour. You can get your estate plan handled today, for example, with help from Trust and Will. Trust and Will offers affordable, attorney-designed estate plans Online that you can create in as little as 30 minutes. Everything is state specific. It's tailored to your needs regardless of what stage of life you're in.
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22:13 Ramit Sethi? Welcome back. Let's keep going. All right, let's keep moving. There's two people paying $1,900 a month for insurance totaling $3,800. Deepika, why are you paying $1,900 a month?
22:25 Speaker 01 So the two columns are broken down by what's coming out of my paycheck and what's coming out of Justin's. 100% of Justin's paycheck goes into our savings account.
22:36 Ramit Sethi? Why does 100% of his paycheck go to savings?
22:39 Speaker 01 We thought it might be a good way to boost our savings.
22:42 Ramit Sethi? You guys didn't read my book, right?
22:44 Speaker 01 Oh, I have the book. It's actually sitting right there. I read.
22:47 Ramit Sethi? Pull it out. Pull it. Show us. Okay, hold that book up close to the camera. Everybody look at this book. It's so pristine. There's not one mark. It's never been open. There's never been oxygen between those pages. That thing is still from the factory. Look at that. It's open for the first time. She just flipped through the pages. Wow, wow, wow. That thing is perfect. That thing probably came right off my desk. I finished writing it. It shipped directly to you. Wow. All right, so I'm, I have to say, all jokes aside, you know, Deepika, you mentioned you worry, you take a lot of things on yourself. You have a book within arm's reach, but you haven't read it. I'm curious why.
23:22 Speaker 01 I don't think we realized the scope of our money troubles till we had our son. And we can't seem to find the time.
23:30 Ramit Sethi? Okay, that's an honest answer. All right, let's keep moving along the CSP here. Still don't understand why you're paying almost $4,000 a month in insurance.
23:41 Speaker 01 So the, the insurance coming out of my paycheck is my health insurance. We have auto insurance, renters insurance.
23:51 Speaker 01 Life insurance, that's the big one. We have two custom whole life policies and term insurance. Oh, man.
23:58 Ramit Sethi? Finish the sentence. I'm just kidding. I'm trying to control my rage. I'm trying. I'm not a very good poker player. I'm trying, like, in my head, I'm like, oh, Ramit's so calm, Rico Suave over here. But apparently on camera, I'm like, God, there's no reason to buy whole life insurance. I have not found a single reason to. It's not an investment, it's insurance. And in fact, the best way to buy insurance, especially if you have a little one, is term life insurance. It's way cheaper. You're not paying all these stupid fees. And so, like, the amount of money you're paying is, like, insane for me. Insane. All right, we're gonna fix that, too. Let's keep going. Your car payment is $1,863 per month. What is that?
24:40 Speaker 01 It's $888 for the AMG.
24:44 Ramit Sethi? What the hell? For all of you non-car people like me, wondering what an AMG is, an AMG is a Mercedes, and Justin bought it for $65,000. And as Deepika just said, their monthly payment is $888.
25:00 Speaker 01 All other cars have no payments attached to them.
25:03 Ramit Sethi? What's the $1,000, then?
25:05 Speaker 01 The EZ Pass, the parking the car in Times Square every day.
25:09 Ramit Sethi? Who goes to Times Square every day?
25:11 Speaker 02 I do. I work there.
25:12 Ramit Sethi? Just tell everyone how much it costs to park in Times Square every day.
25:15 Speaker 02 It costs $30 a day to park there with toll and gas that you can add on. $10 on top of that, and then, I don't know, $10 per day on gas.
25:25 Ramit Sethi? So 50 bucks a day to drive?
25:27 Speaker 02 Yeah.
25:27 Ramit Sethi? You guys live where?
25:28 Speaker 02 We live in Queens.
25:30 Ramit Sethi? Come on! Is this a... Am I being punked right now? You drive from Queens to Times Square? Come on. That's a straight train.
25:37 Speaker 02 I start so early, so my day starts at, like, 4:30. So the problem is getting a train from there at that time will either make me too early at work or too late. So I decided driving gets me there quicker.
25:53 Ramit Sethi? Do you think it's a good financial decision?
25:55 Speaker 02 No, but combined, it's like $500 or $600 a month towards transportation. And I just felt like, hey, on top of everything else, I didn't think that that was the most expensive.
26:07 Ramit Sethi? Do you understand the severity of the situation you are in with your finances?
26:12 Speaker 02 Yes and no.
26:14 Ramit Sethi? If you were an ER doc looking at somebody who came in the door and this is their... You know, their numbers. What do you see here?
26:21 Speaker 02 Oh, yeah, this is like a trauma patient. Like, you're just bleeding and denying the fact that you're bleeding. Eventually, you will, you know, die. But at the same time, I think my brain is like, yeah, but life is still fairly good.
26:36 Ramit Sethi? Okay, Deepika, what about you?
26:38 Speaker 01 The parking situation is a perfect example of Justin living his rich life. I see this, and this is what stresses me. It feels like we are living paycheck to paycheck. And it stresses me because we just have the money we have, and then we wait for payday, and we do it all over again.
26:56 Ramit Sethi? The way that you approach money is not commensurate with the income you are making. You're not talking like a couple that makes $260,000 a year. And it's not commensurate with a couple that wants to grow their money for a specific purpose. The way that I hear it is like, oh, the lights are on, and we still can eat out every so often. And like, that's great. That makes me happy. And Deepika's like, it's occasionally stressful, but we get through it. And I really just want him to get his business off the ground. Can we finish going through the fixed costs, and then I'm going to tell you what I see here?
27:35 Speaker 01 Sure.
27:36 Ramit Sethi? Okay, your debt payments every month are $4,000. How can that be?
27:43 Speaker 01 So we added our student loan payments of $250 and $250 a month to whatever we pay for credit cards, which on average is about $3,500 a month.
27:55 Ramit Sethi? Let's clarify something. When we talk about credit card debt, that would be debt that is revolving, that you didn't pay off the first month. So maybe that changes things here.
28:03 Speaker 01 Yeah, so then it would only be 500 because the only debt that we have is the student loan debt.
28:09 Ramit Sethi? Okay, great. Okay, that considerably changes things.
28:12 Speaker 01 Oh.
28:13 Ramit Sethi? Guys, this is like a big difference. It went from 98% to 72%. All right, well, that's positive. I'm never gonna be mad at that. Ninety-eight to seventy-two is good.
28:26 Speaker 02 Yeah.
28:27 Ramit Sethi? All right, so you're paying five hundred bucks a month in debt. But now we gotta talk about some other stuff. So your groceries are eight hundred bucks a month. That's fine. Clothes are two hundred bucks a month. Whatever, that's fine. So all the money that you just mentioned, the four thousand dollars a month on credit cards. Where did that go in this CSP?
28:46 Speaker 01 It's a combination of that last line item with the everything else. And
28:53 Ramit Sethi? Five hundred bucks for everything else and go free and?
28:56 Speaker 01 And then that's what we were trying to figure out is we don't know what the what the bleed is. We've looked at our credit card statements time and time again. We cannot figure out what is causing the revolving cycle of debt.
29:11 Speaker 02 It's just hard for us, once we go line by line, to figure out, am I doing too much Amazon spending? Or am I doing too much gas or a toll? And that's what we get lost. Where exactly are we spending too much?
29:23 Ramit Sethi? So what I'm hearing from the two of you is, first off, I hear no vision for what to do with your money. It's like when we talk about money, we talk about, should I park in Times Square? It's like you're already jumping down into the weeds. And then that's where you both stay. Right? And I bet you've been talking about that kind of stuff for a long time. It's almost like each person goes to their corner. Look, they're both nodding and smiling.
29:48 Speaker 01 Sounds about right. For the first couple of years of our marriage, his entire paycheck went to his family. So there was no finances. Justin actually didn't have credit until we got married. So his entire financial history comes after being married with me. And I'm not the most brilliant person when it comes to finances. I'm a business major. I've taken a few finance classes. I know Justin enough to make sure that the bills are paid every month. But we've reached this point in life where we're now thinking about it a lot. Like, what happens now that we have a son? If we want to have another baby, we don't have the space in this home. We want to buy a house. So I'm trying to look at how do we maximize our income?
30:29 Speaker 01 And I think that's where our divide is happening is I'm thinking about what's next now. And Justin is thinking about what's next, but from a very different lens.
30:39 Ramit Sethi? You mentioned that he used to give his money to his family. Which I understand culturally. And what about you, Deepika?
30:46 Speaker 01 A lot of my money was also in the possession of his family. For a while there, we didn't really have any money to ourselves. It was only after a year and a half that we finally moved out of living with his family. And I had my own income then, but a lot of his income was still going to his family despite being moved out. His family is church. His father is a pastor and they don't have many members. So a lot of the foundation expenses and all of those things come from within the family.
31:20 Ramit Sethi? Whoa, holy [bleep]. Wow, okay. All right, so along with that, I'm gonna go out on a limb. There's a lot of religious things in the household, control issues, those kinds of things as well. Okay.
31:35 Speaker 01 Yeah.
31:35 Ramit Sethi? Are you still in touch with your family, Justin?
31:38 Speaker 02 Not really. I mean, I'm in touch with my, my brothers, both my younger brother and my older brother.
31:44 Ramit Sethi? And how about you, Deepika?
31:45 Speaker 01 My parents aren't really around, distant family, also not really an active part of our lives either.
31:53 Ramit Sethi? It's gotta be tough just for the two of you and your son to be kind of alone, trying to make this happen on your own.
32:00 Speaker 01 That's what we struggle with a lot, is trying to create a better future for our son, but not really understanding how to do that. We live in Queens, New York, right on the border of Nassau County and Queens County. And Justin and I have always agreed that if we wanted to take our money and do something with it, we'd really wanna buy a home, have space for our son. I want to be able to, you know, have pride in saying that my husband owns his own business and is successful with it. And I can support him with like my own physical contribution of helping him lay the groundwork for that.
32:35 Ramit Sethi? What about for you, Justin? What's the vision with money?
32:37 Speaker 02 Kind of the same. Me and Deepika kind of agree on in terms of future goals and stuff. In terms of buying a home, having things saved up for our son, whether it's for college funds or whether it's for him to have the things we didn't have um education wise. And then, like she said, being able to have this business grow where we're bringing in a decent amount of income where we're not constantly, I work a lot of hours to make my income. I don't want to have to do that where I'm just a slave to the punch clock.
33:11 Ramit Sethi? So you make $260,000 a year. It's a lot of money. Your housing costs are very low. And for a couple that has this income, it doesn't seem like you're really getting ahead. I can see that because you don't have any dedicated savings per month. You don't have any dedicated investments per month. And you have told me that you are constantly in a cycle of getting into credit card debt and then paying it off. But I can also hear it just from the way you talk about money. There's several clues. The clue about how Deepika is the one who manages the money, but even she admits she's not particularly good at it.
33:54 Ramit Sethi? Justin is happy. He talks about money, but he's not in the day to day. And when you do talk about money, from what you've told me, it sounds like you go down into the weeds, both of you quite frequently and stay there. When I ask about what the vision is, the vision is quite typical, but there's no plans on how to get there. Okay. And what is, I think, kind of a big red flag for me is the certain expenses, which you haven't been able to find out for like three years. The insurance, the car payment, these are red flags that if you can't get the basic blocking and tackling of your money done, then it'll be very difficult, especially in today's time, to buy a house.
34:38 Ramit Sethi? So I'm glad that it's not 98% fixed costs, but there's a lot of layers here. Can we just kind of like reset the whole thing? We'll be right back after this short break.
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37:43 Ramit Sethi? Let's get back to the conversation. If you had a blank slate, where would your money be going? What is your rich life?
37:50 Speaker 01 Going on vacation twice a year and not having to worry about credit card debt when we come back.
37:58 Ramit Sethi? Okay, what else?
37:59 Speaker 01 I would love to have a large home where my son can bring all his friends. I can have another child and not have to worry about where I'm going to put this child. And be able to entertain all of our friends and family and not have to worry about space.
38:16 Ramit Sethi? How about with Justin?
38:18 Speaker 01 I would love for him to continue driving to Times Square every day if that's what makes him happy. But aside from that, I think if he had the resources to be able to invest into his own business and have his vision come true with what he wants to do, nothing would make me happier.
38:36 Ramit Sethi? All right. I like it. Justin, what about you? What's your rich life?
38:39 Speaker 02 Being able to provide for my son without worrying about where that money is going to come from. Owning a nice home, entertaining, and then being able to put money into the business where it brings more money back.
38:53 Speaker 01 For me, you also have to understand that. For the first few years of our marriage, we weren't allowed to have dreams. We were brought up in a culture where it was all about the church and the family, and that was it. You weren't allowed to have dreams outside. You weren't allowed to go anywhere. You weren't allowed to travel. You weren't allowed to think of leaving. So what sounds like basic, small dreams, it's everything we've dreamed of for our entire life. And we're content with that. But the fact that we are in a place of our own right now, and you know, our son isn't subject to that kind of life, that's, that's a miracle in itself.
39:35 Ramit Sethi? Listen, I love it. And I totally appreciate you giving me the context of where you both came from. So one of the things that I love is hearing what people's rich life is. And it's a good reminder because sometimes I hear their rich life, and I'll tell them, I'm like, that's too small. In your case, I saw it on your face, both of you nodding and smiling and like, this is what we want. Okay, love it. We can totally work with this. And I think that as we start to take the dream, the vision of a rich life, and then look at how your numbers are or are not serving that vision, it's going to become a lot easier to decide what to do and what not to do. Okay.
40:19 Ramit Sethi? So hearing your rich life vision, do you think that you are currently spending your money to live it?
40:28 Speaker 02 Absolutely not.
40:29 Speaker 01 What we end up doing is tapping into the savings to pay the credit card bill, which it, it essentially, we're just taking Justin's paycheck and using it to pay the expenses that we have. So we just let it accrue and then use what we could have been using the entire time to pay the credit card.
40:46 Ramit Sethi? How many years has that been going on?
40:47 Speaker 02 It's been about two, two and a half years.
40:51 Ramit Sethi? To me, this is what is indicative of one of the challenges here, which is like, you tried an approach and it didn't work. Now, that's normal. Like, we're all going to try stuff at life and it's not going to work. That's totally normal. But it went on for two years. That's a long time to basically have one of the major pillars of your strategy for your rich life not work. One month, fine. Even six months, fine. Two years, too long. Three years to figure out this utility thing, too long.
41:30 Ramit Sethi? There's no real incentive to change, right?
41:32 Speaker 01 True, yeah.
41:33 Ramit Sethi? And in fact, what was the real singular moment in the last five years of your relationship when you actually changed around money?
41:41 Speaker 02 I think it was once we had our son.
41:43 Ramit Sethi? Exactly. This is how most people are with money. They pretty much ignore it. As long as it's running and they can swipe their card, they're fine, until two things happen. They have kids and they turn 40. And that's the only time most people wake up until roughly around the age of 60 or so. Imagine that. We work our entire lives and we pay attention in real urgent terms, maybe three to five times in our entire life. If it's me, I go, okay, I accept human nature, but I better make those times count. If I'm paying attention when my son is born, then I better set up my system so that it works for the next 25 years because odds are I'm not going to pay attention much at
42:25 Ramit Sethi? all. You've told me that your money is not being spent towards your Rich Life vision.
42:33 Ramit Sethi? What do you think's the solution here?
42:35 Speaker 01 It seems like the folks around us have been able to figure this out and we just haven't. And maybe the answer is so obvious, it's right in front of me, but we have not been able to figure out what the change is that we need to make.
42:48 Ramit Sethi? Take your right hand.
42:50 Ramit Sethi? Hold it up. Now, reach over and grab that book that you put on your desk for a second. Maybe the answer is right in front of me. I couldn't have scripted it better myself.
43:00 Ramit Sethi? It's not about me, all jokes aside, it's not about me forcing you to read my book or anything like that. It's not about that. What it is about is your very astute observation that everybody around you seems to have figured it out. And candidly, at $260,000, you could actually be doing all of those things. And yet, you designed a Byzantine process which doesn't work and hasn't worked for years, instead of reading a book that you have literally at your desk. What you told me is achievable.
43:33 Ramit Sethi? But it would require a lot of changes.
43:34 Speaker 01 We're willing to make them. Right now, the only solutions that I can see in front of me and the ones that we just keep discussing are, you know, how do we get Justin to stop driving? Or how do we decrease this particular cost? We know what the bigger picture is, we just don't know how to get there.
43:51 Ramit Sethi? I think we need to appreciate that Deepika and Justin are really just starting their journey around money. And when we hear the details about their past, like how they didn't have control of their own money because of their ties to their former church, we can start to develop a little bit of compassion for where they are today. Neither of them had positive role models when it comes to money. So the first step is to help them making some foundational habits and then to build some accountability around their spending. One helpful strategy is to focus on the biggest red flags first. For me, when I look at their CSP, I'm really curious about their housing situation. They live in a high cost area, but they have low housing costs. So I want to know what's going on here.
44:35 Ramit Sethi? Is there anything about your house, the rent, that you were concerned about?
44:40 Speaker 01 My mother moved into this house in 1996 and the rent was less than a thousand dollars and has gone up with inflation over the last 26 years. The rent is so low that we can't justify leaving, but we're in a position where the landlord has also gotten 26, 28 years older. He's no spring chicken. We're in this very worried situation that if God forbid anything were to happen to him, either we don't know if whoever will take it after that is going to up our rent. Are they going to kick us out? Are they going to sell the house? What do we do at that point? And I feel like that's what's also putting us in this hot water to say, what are we going to do next?
45:22 Ramit Sethi? What would you do? If it happened tomorrow.
45:24 Speaker 01 I would probably start looking on Zillow for other places to rent because we just don't have the down payment to buy a home, especially not in Nassau County, New York.
45:33 Speaker 02 Renting to us makes sense only because the high cost of down payment plus taxes plus the mortgage, it's just way too much.
45:42 Ramit Sethi? Yeah.
45:42 Speaker 02 So the next step would be like, how can we allocate money towards a new rent payment?
45:48 Ramit Sethi? Yeah, but where's the money coming from?
45:50 Speaker 02 Whatever I was putting into savings now would go directly to pay for.
45:54 Ramit Sethi? The money's not really going into savings. It's getting spent anyway.
45:57 Speaker 02 Yeah.
45:57 Ramit Sethi? So where would it come from?
45:59 Speaker 02 More hours at work.
46:00 Ramit Sethi? You grew up poor?
46:03 Speaker 02 Actually, yes.
46:04 Ramit Sethi? It's a common thing for people who grew up poor. Their answer is if something doesn't work with my money, just grind it out, especially for men.
46:14 Speaker 02 Before we had, that's all I used to do. I used to be the breadwinner in the family and but I would never be home. When we got married, I'd saw my wife for like four hours per day. And that was because she was sleeping and I'd come home, take a shower and go right back to work.
46:30 Ramit Sethi? I understand that sometimes we have to. I don't understand keeping that same mindset when you have a household income of $260,000 and housing costs of 10%. It just doesn't make any sense. You don't have to keep grinding when there are so many other ways to put your money to work for you. And one of the reasons I started this podcast and started my entire body of work is that money isn't this mystical thing that only wealthy people have knowledge about. I want people to know this stuff because when you finally understand it, you're like, oh, wait a minute. It's totally achievable and it's actually not that hard. Right now, that's not what I'm hearing from you.
47:15 Ramit Sethi? Like you could make a million dollars tomorrow and you would not invest that money. It would get sucked up into your finances and you still wouldn't be living the rich life until you change this and until you change your numbers. Okay?
47:30 Ramit Sethi? Let me tell you what I would do. If it were me, I would first off, crystallize the vision of what we both want. I think the house is a nice thing to put down on paper, but it's probably not going to happen today or tomorrow. It's a very long-term aspiration. But you want to have a rich life vision that includes what you're doing to live a rich life today and what you're doing to live a rich life tomorrow. So it might be, you know, we want to, we want to have date night twice a month. Great, fantastic. I would next up, talk about how we want to get there. And I would recalibrate the workload. Right now, you have a very unhealthy dynamic where Deepika does all the work and Justin,
48:13 Ramit Sethi? you're not involved in the day-to-day finances. So that actually puts the two of you at odds. You've got to get together and start going through, from your vision to the numbers. That means that you've got to both have skin in the game. How would I do that? I would next decide, we're going to get educated about money. Right now, the two of you are not educated about money, right? You have the book there. I would say, once a week, we're going to spend an hour talking about this book and start to change your financial system to be more aligned or together. Finally, on the more directive side, immediately I would fix the utilities thing. If you are stuck and at the end of your rope,
48:57 Ramit Sethi? I would either go into your employer and ask if they have somebody who can help. If necessary, hire a lawyer.
49:06 Ramit Sethi? That's it. Have them deal with it. Pay them a little bit of money, but get that fixed right away. Okay, next, insurance. I would cancel the whole life immediately. I would take that money and redirect it. Where would that money go?
49:18 Speaker 01 It would probably go to where it's one of the investments that we should be making.
49:22 Ramit Sethi? Correct, I agree. I think that's right on. And I certainly, if I knew that my housing is at the whim of elderly landlord, I would be putting aside money because I know that I'm going to be either evicted or my rent is going to go up spectacularly. Couple of other things, I would sell every vehicle except maybe one. Furthermore, I don't understand driving to Times Square. That just doesn't make any sense to me at all. How long, how long have you two been debating this Times Square thing?
49:54 Speaker 01 Eleven years.
49:55 Ramit Sethi? Eleven years. Yeah. The reason you're debating it for so long is it's become part of your identity. It's become part of your identity because you have no vision to look towards and make the decision. A vision helps you make these decisions so easily. You don't even almost have to think about it after a while. Your vision makes the decision for you. So if your vision is, we want to buy a house one day, then spending fifteen hundred bucks a month on parking does not contribute to that vision. Okay. One last thing, this event space.
50:27 Ramit Sethi? It just seems like such a mess to me. Like, there's no good that can come out of it because even if you win with all the work you've put in, even if you start to generate a ton of money, it's tied in with other people who are not contributing as much. But if I'm looking for a fresh start where we are hyper focused on the rich life, I would not be doing that. It's a distraction. Sometimes there's no shame in saying, hey, this isn't the right thing for me. I'm gonna scrap it and start something else later. But first things first, I want to get financially stable. I want to start building and living our rich life. Lot to take in there. What's your initial reaction?
51:03 Speaker 02 You are absolutely correct, but making those steps, I feel like is gonna be the hardest.
51:08 Ramit Sethi? How old is your son?
51:09 Speaker 02 Two and a half.
51:10 Ramit Sethi? What do you think he's gonna learn about money as he gets a little bit older?
51:14 Speaker 01 I don't know. But I would want him to learn that it's not something that he should be stressed about.
51:21 Ramit Sethi? Really? His mom, the one who's stressed, wants him to learn that?
51:24 Speaker 01 Yeah, I want him to not be stressed like I am.
51:28 Ramit Sethi? If nothing changes for the two of you when it comes to your money, business, et cetera. And let's just fast forward three years. What would he learn about money from his parents?
51:38 Speaker 02 He would just think like money is such a hot topic, meaning in terms of it creates problems. He would not want to talk about it. He tried to shy away from it. I think he would grow up the same way we grew up thinking about money, which was money is for rich people and you have to work super hard to get it.
51:57 Speaker 01 A lot of the arguments that we have, if it's not money, it's time. It's either Justin's working too much or I'm working too much. And there's very little time, it feels, that we can spend together as a family just doing family things. When it comes to money, I just feel like it's one last thing on his plate. And I'm realizing maybe it does need to be on his plate. It needs to be on our plate. And all of those things that we've been tabling in terms of the investments and all the high yield savings accounts that we've talked about, like maybe we should just pull the trigger and do it.
52:33 Ramit Sethi? Both of you have created this kind of vortex where you're both totally indecisive about making decisions, which to me are so minor in the grand scheme of what you're trying to accomplish. And you've totally missed the big picture, the stuff that's important, like what's your son going to pick up on with money? He's going to pick up that moms are the ones who are supposed to be stressed about money and dads are carefree and it passes down generation to generation. What a tragedy, especially coming from a family that makes $260,000 a year. To be stressed out about money with 10% housing costs, all because you have this narrative that you tell about, we don't have time. That's not true. So, I mean, you can make a change.
53:15 Ramit Sethi? I'm not sure how serious you are about it because you'd have to change a lot.
53:20 Speaker 01 This is the first time I think we've gotten guidance that is giving us a roadmap.
53:25 Ramit Sethi? Here's what I want to do. I will speak to you again, but not before you finish the book. And I would like to see what specific changes you have made. And if you'd like to speak again, we can actually get into so much more. You have everything you need in front of you with the book, et cetera. I'd like for you to solve the question of the insurance, the utilities, the car payment, all that stuff needs to go way down. And from looking at your numbers, you actually probably would be able to bring your fixed costs down to, I don't know, 48 to 55%. That's like really good. That's a lot of money.
54:06 Ramit Sethi? That's thousands of dollars every month that you could be using for investments and savings. And finally, I'd like for you to make a definitive decision about this business. To me, I'd rather have you just literally close the whole thing up. And even if a year or two later, you're like, oh, my God, I want to buy that place again because now I'm in a better place. I took some business classes, et cetera. It's going to cost me more. Fine, at least you started to get decisive. But you can't go through the rest of your life, just like waiting for somebody to come and tell you what to do. It's not going to happen. It's the two of you. Would you both like to talk again?
54:41 Speaker 02 Oh, yeah, absolutely.
54:43 Ramit Sethi? All right, I love it when my guests accept a big challenge. We made some good progress today, but Justin and Deepika have a lot of work ahead of them. And they don't really have a concept of spending money in a meaningful way, which is why I challenged them to work through my entire book, one chapter at a time. We only really scratched the surface in today's conversation. And I think we can go a lot deeper once they understand the basics so that they can actually develop a rich life vision. And I have very good news. I'm delighted to share that Justin and Deepika were up to the challenge. They sent several updates along the way, keeping us updated with their progress. And let me tell you, they accomplished a lot.
55:26 Ramit Sethi? Listen as they share what they learned and the big changes they made.
55:30 Speaker 01 So we're on week three, and I actually feel like we've been making some pretty good progress. The financial conversations have been almost daily now. We've made some major decisions that we are acting on right now. The first one is we've decided to cancel our custom whole life policy that is currently accounting for close to 1,400 a month in our budget. We do have other term life and whole life policies that are currently in effect. So it's not like we're foregoing life insurance completely. We also spoke to a lawyer about our Conadisson case. Unfortunately, it doesn't seem like there is anything that we can do unless there's a
56:11 Speaker 01 class action, but we did flag down an actual Conadis and guy yesterday to take a look at our bill, look at our meters. This month's bill wasn't too bad. It was still pretty egregious at 365, but he told us that when the bill gets crazy, have someone come in to do the audit then, and they'll be able to tell us in comparison to our neighbors, where we stand and all that. We are chugging along. I've also opened a high-yield savings account based on the book. We went with Marcus by Goldman Sachs. Justin is also transitioning his paycheck back to our checking account, and we have put together a spreadsheet that helps us figure out what the monthly costs are, what account they're coming from, the
56:53 Speaker 01 date that they're coming out, just to help us budget a little bit better. I think we're making some pretty good progress. This is the end of week three.
57:02 Speaker 02 Hey guys, just an update on this week and what we've done so far. So we've sold one of two cars. We also put my paycheck into the checking account so that we can manage it, and we created envelopes so that we can put money towards our savings goals. We also created a to-do list. We did it individually. So online, created some to-do lists, one of which is change car payment to the first of the month, so that this way, when the paycheck comes, it can slowly start taking it out in the first of the month, as well as some other payments. Also, need to inquire about health insurance and why it's
57:46 Speaker 02 so much money coming out of my paycheck. Cancelled one of my credit cards. It's not really doing much in terms of points and benefits, so gonna get rid of that one. And that's about it so far of what we've done.
58:01 Ramit Sethi? As promised, I agreed to meet up with Deepika and Justin after they finished my book. About six weeks have passed since the time we filmed our initial session and the follow-up interview, which we'll dig into right after this short break from our sponsors.
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59:27 Ramit Sethi? All right, back to Justin and Deepika.
59:31 Ramit Sethi? Welcome back. It's so good to see you in person. From what I understand, you read the book, you sent in videos documenting your progress, and I'm told you've made some changes to your finances, which we're going to go through today. What happened right after our conversation?
59:48 Speaker 01 We set aside weekend time and we said, okay, after our son goes to bed, like we have our assignments for the week. So I created like a little shared note on our phones and it was here are our financial to-dos for the week. So I think we came to the conclusion that I still need to lead the charge just because I have a little bit more flexibility. But as long as we know what we need to do and we're keeping on track, we'll be okay.
1:00:12 Ramit Sethi? Amazing. How long did it take before you felt like you were making specific, concrete progress with your numbers?
1:00:21 Speaker 01 Like literally one week.
1:00:23 Ramit Sethi? Yeah, one week. What happened?
1:00:25 Speaker 01 The first thing we did was the life insurance policies.
1:00:28 Ramit Sethi? How much were you spending again?
1:00:29 Speaker 01 Combined, almost 1,400 a month. So that right there saved us 1,400 a month.
1:00:33 Ramit Sethi? That's a lot of money. And then what'd you do when you had that extra 1,400 per month?
1:00:41 Speaker 02 We made sure it's not extra money. It's just money that we need to reallocate.
1:00:45 Ramit Sethi? Whoa, okay.
1:00:46 Speaker 02 Yeah.
1:00:47 Ramit Sethi? I think I feel something for the first time in my life. It's my heart.
1:00:51 Speaker 02 Yeah.
1:00:51 Ramit Sethi? Oh, my God. Okay, that's amazing. And you did that together?
1:00:55 Speaker 02 Yeah, yeah.
1:00:55 Ramit Sethi? What did it feel like to go through this process and decide what to do with this extra money?
1:01:00 Speaker 02 We felt like adults. Once you start being like, hey, no, you need to reallocate money. You need to put stuff away. You just feel like I'm doing things properly in life and it kind of scares you. Cause you're like, this is what order feels like.
1:01:13 Ramit Sethi? That's scary?
1:01:14 Speaker 02 Good scary in the sense of like, you're getting your life together.
1:01:17 Speaker 01 Some people, at least in our circle, their parents have set a very good financial example for them on like, this is what your money should do for you. This is how you should be allocating your expenses. This is how you should be wisely spending. And I don't really think either of us had that. So for us, it's like the second you get a dollar, it's, oh, my God, it's a dollar. Oh, what can we do with this dollar? And it's that one dollar brought us joy, but then it was this fleeting joy. So now it's like, now the dollar can work for us and we know where to put our dollars.
1:01:48 Ramit Sethi? That's kind of an amazing transformation. Just that part alone of going from the minute we make money, we're gonna spend it. That's a very childlike approach, right? But the magical part is that you switched it. Allocation, it sounds like such a boring word, but it's, for me, it's going from passively going through life to leaning forward and saying like, we have this pot of money. How do we want to use it in our rich life? Could be vacations, could be eating out, could be cutting back on X, Y, Z. But you get to decide. Okay, what surprised you about going through the book?
1:02:29 Speaker 01 There's so much bad financial advice out there that I think it's sometimes easy to get swept up in that. But to have everything in an easy to understand format just made our life a whole lot easier.
1:02:39 Ramit Sethi? Well, thank you. I'm happy to hear that because my hope is that when you, when you start to internalize that, you go, oh, my God, it's supposed to be simple. It's supposed to be boring and pretty straightforward. And then you start to see your savings account build up and all this debt get paid off. You go, wait a second, maybe that's how a lot of things in life are supposed to be.
1:02:58 Speaker 02 Right, yeah.
1:02:59 Ramit Sethi? Awesome, okay. You go through the book, you reallocate your money, what happened next?
1:03:06 Speaker 01 Flag down the Con Edson guy on the street.
1:03:08 Ramit Sethi? Freaking AC thing or whatever, tell me, I've been waiting.
1:03:12 Speaker 02 Unfortunately, uh, he went through, he looked at our bills, he came into the house and he was like, what do you have, what's going on here? He saw that all of our stuff is, you know, up to date. He's like, unfortunately, you're spending the same amount of money that a lot of people are spending. You're paying the normal amount, which happens to be exuberant.
1:03:30 Speaker 01 He gave us actionable steps, but what to do if the bill gets exuberantly high? So we know what we have to do if we see that bill go beyond like six, 700.
1:03:39 Ramit Sethi? Now, what's striking to me is that when we talked, this bill had been around for years and nobody got around to talking about it. And I was like, what is going on? Like, how can you not find an answer to this? Now you went out and grabbed that Con Ed guy with like a freaking, one of those staged things. You're like, get in here. Like, that is another amazing change. Where did that come from?
1:04:02 Speaker 01 Well, I just saw him on the street and I was just like, hey, can you come here? And he was like, I got nothing better to do, okay?
1:04:09 Ramit Sethi? Yeah, but that never happened like for the last four years.
1:04:12 Speaker 02 After talking with you and then we started making actionable steps, something in your brain's like, I'm on the verge of saving money. I want to talk to this guy to save more money.
1:04:21 Ramit Sethi? Bingo.
1:04:21 Speaker 01 I might have never noticed him.
1:04:23 Ramit Sethi? This is what people mean when they say, you know, you create your own luck. When I hear that phrase, what it says to me is, it's almost like I put on a new set of lenses and I'm looking at the same world, but I'm seeing opportunities now that I would have missed before. I think that's exactly what's happening. Okay, amazing. Uh, my next question is about, uh, driving. Did you drive here today?
1:04:45 Speaker 02 Yes.
1:04:45 Ramit Sethi? Love this reaction already. Who drove?
1:04:47 Speaker 02 I drove.
1:04:48 Ramit Sethi? Where'd you park?
1:04:49 Speaker 02 Times Square.
1:04:50 Ramit Sethi? Oh, God, what the? How much was it today again? Just remind us all.
1:04:54 Speaker 02 $30.
1:04:57 Ramit Sethi? And you were paying like 30 times 24 or whatever when we last talked, right?
1:05:04 Speaker 02 Yes.
1:05:04 Ramit Sethi? What are you paying now?
1:05:06 Speaker 02 I'm paying the same thing.
1:05:06 Ramit Sethi? Okay. Well, not everything's gonna be solved. All right. I guess it all comes down to can you afford it? Like, it is obviously a pure luxury. If you can afford it.
1:05:16 Speaker 01 There were, there was a day or two between when we spoke and now that he did try to take the bus and the train. It was a time versus money situation. It took him two hours in the morning to get to work and then two hours to come back.
1:05:32 Ramit Sethi? Well, we're gonna look at the numbers and we'll see how it plays out. But what I will say is I like that the two of you have talked about it. I like that you are making decisions by thinking about the trade offs. Not sure I agree with this decision, but it's not my money, it's not my rich life. So as long as the numbers work out, it's not my place to pass judgment. What else happened with your conversation since we last talked?
1:05:55 Speaker 01 He did sell one of the cars, I think, two weeks after we had a conversation, which was amazing.
1:06:01 Ramit Sethi? Whoa.
1:06:02 Speaker 01 Don't clap yet. Two weeks ago, a new car showed up in the driveway. It was an ice cream van from London.
1:06:09 Ramit Sethi? What?
1:06:10 Speaker 01 It was supposed to be his work hauling vehicle, which he purchased before we even spoke to you the first time.
1:06:16 Ramit Sethi? Did you ever consider renting?
1:06:18 Speaker 02 Yeah.
1:06:19 Ramit Sethi? You did?
1:06:20 Speaker 02 Yeah.
1:06:20 Ramit Sethi? But you bought an ice cream vehicle instead.
1:06:22 Speaker 02 If you rent the same size vehicle from a U-Haul, because they charge you by mile, it adds up to a lease payment.
1:06:30 Speaker 01 The good part that I wanted to share despite all this was when this ice cream van shows up. I was like, you've got to be kidding me. We just spoke to Ramit about this. We said we weren't gonna be doing any more of these crazy car purchases. And he was like, well, I got the car before the conversation and it just took over a month to ship. It took only one argument, but then he agreed. He was like, no, you're right. I think we need to sell this car.
1:06:52 Ramit Sethi? Wow. So you basically are one car down and one truck up.
1:06:56 Speaker 02 Yeah, yeah, right.
1:06:57 Ramit Sethi? Some of the logic doesn't make any sense to me, but I appreciate that you recognize, hey, you gotta sell one of these vehicles. That's cool. And again, people make decisions, certainly before you talked to me and before you got, you know, really educated about money. The goal with a rich life is not to avoid any bad decisions. The goal is to make educated decisions as much as possible and to know that, hey, we're gonna make mistakes once in a while. That's okay, as long as they are recoverable and as long as we catch them, we can almost always correct them.
1:07:31 Speaker 02 Right.
1:07:32 Ramit Sethi? Honestly, speaking with Deepika and Justin this time around almost feels like I'm talking to an entirely different couple. Remember, just a short time ago, they could not answer simple questions about where their money was going. They had no idea why they were in the red every month, and they weren't taking any accountability for their choices. Now, they are proactive instead of reactive. They are living proof of how much you can change when you make it a priority. This is why I do what I do, to be able to help a couple or an individual get out of a rut and change the entire way they look at money is magic. In our first conversation, we spent a lot of time talking about Justin's side hustle
1:08:16 Ramit Sethi? with this building. Now, considering the messy family dynamic, I suggested that Justin cut his losses. I'm pretty interested to hear what he decided to do. What happened to the family dynamics around the space?
1:08:29 Speaker 02 Put it all to the side. I don't get involved. I don't do anything anymore.
1:08:33 Ramit Sethi? What'd they say?
1:08:34 Speaker 02 If the money's not making sense, I don't want to be a part of this. The LLC is there, but no money's going into Venue Family or anything like that.
1:08:41 Ramit Sethi? Well, I have to say, I commend you. That's quite amazing. You were doing that for a long time.
1:08:47 Speaker 02 After understanding the system, you're just like, "Stop. Why?"
1:08:50 Ramit Sethi? Yeah.
1:08:51 Speaker 02 It's like, kind of need to like pull that mandate and be like, "Stop."
1:08:54 Ramit Sethi? Cool. What do you say we look at your CSP? How did it feel to do the next CSP, the second one that we're about to look at?
1:09:01 Speaker 01 That was really exciting, actually, because the end number was within 100 bucks, I think, of our total income every month.
1:09:10 Ramit Sethi? Meaning, you made a bunch of changes, and then the number that you ended up seeing was almost identical to how much you're making?
1:09:17 Speaker 01 Yeah.
1:09:18 Ramit Sethi? So you knew that you basically got it, like the puzzle pieces fit?
1:09:22 Speaker 02 It made sense.
1:09:23 Speaker 01 Yeah.
1:09:23 Ramit Sethi? Right. Is that the first time that your money made sense to you?
1:09:27 Speaker 02 Yeah. Yeah.
1:09:29 Speaker 01 Yeah.
1:09:30 Ramit Sethi? That's amazing.
1:09:30 Speaker 02 Half the time we were like, where's my money?
1:09:32 Speaker 01 We were like, here's the money and this is where it's going.
1:09:35 Ramit Sethi? Yes.
1:09:36 Speaker 01 It was a phenomenal feeling.
1:09:37 Ramit Sethi? Yes.
1:09:38 Speaker 01 Yeah.
1:09:39 Ramit Sethi? That's what I describe as a simple, beautiful system that you deeply understand. We're going to take a look at the numbers now. So here we have your net worth before the book, $111,000. And your net worth afterwards. How the hell did you get $70,000 more in a few months?
1:10:01 Speaker 01 In the original CSP, we did not properly calculate our assets.
1:10:06 Ramit Sethi? What does that tell you? Meaning the fact that you before counted $5,000 in assets, now you have $72,000 in assets.
1:10:14 Speaker 01 I don't think we realized just how much we are worth.
1:10:17 Ramit Sethi? Right? And if you needed to, what could you do with those assets?
1:10:21 Speaker 02 You could liquidate.
1:10:22 Ramit Sethi? Yes. Their actual value.
1:10:24 Speaker 02 Right, right.
1:10:25 Ramit Sethi? Maybe you would take a haircut, fine, but that's real value. Meaning if you need more money, they're there.
1:10:32 Speaker 01 Yeah.
1:10:32 Ramit Sethi? Good to know, really important. All right, cool. Uh, I noticed that your savings went up 2,000. Great, okay, very good. How come your investments are at exactly the same amount?
1:10:44 Speaker 01 Oh, admittedly, we actually didn't go in to take a look at our updated 401K numbers.
1:10:48 Ramit Sethi? What? That's like the first thing, that's for me, that's like, uh, that's what I do on my birthday.
1:10:52 Speaker 01 Okay, it's probably actually a little bit higher now.
1:10:55 Ramit Sethi? I don't mind, at least it's going in the correct direction.
1:10:59 Speaker 02 Yeah.
1:10:59 Ramit Sethi? Fine. Uh, let's look at the income. So the income has not changed. I don't expect it to, fine. But you know what has changed? Is your fixed cost number. Whoa. Okay, so before it was 98%, which means you're broke. You're spending more than you make every month. Here, today, your fixed costs are 63%. Now that is amazing. What happened?
1:11:25 Speaker 02 The main thing that probably accounted for that was the insurance. Once we killed the the whole life.
1:11:33 Ramit Sethi? So take a look at this. You went from paying three thousand eight hundred dollars a month in insurance to two thousand five hundred dollars a month? Why is it still twenty five hundred bucks for insurance?
1:11:45 Speaker 01 It's the nineteen hundred, which is still coming from his paycheck. His health insurance and union dues and all lumped into one category.
1:11:54 Ramit Sethi? Okay, okay, okay. All right, that seems really high to me. How much are your union dues?
1:11:59 Speaker 02 Six hundred.
1:12:01 Ramit Sethi? Six hundred a month, okay.
1:12:02 Speaker 02 And then on top of that, the company takes out like twelve, sixteen hundred or something like that.
1:12:06 Ramit Sethi? For health insurance?
1:12:07 Speaker 02 For health insurance.
1:12:09 Speaker 01 No, it's like thirteen hundred.
1:12:11 Speaker 02 Yeah, thirteen. But altogether, it was like a ridiculous amount of money. And it feels like it's something that we can't get rid of. It's like one of those fixed costs that you have to pay unless you quit your job.
1:12:22 Ramit Sethi? Something's not right here because really, if you really look at it, look at these numbers here. Justin, you're making seventy six hundred. You're taking home forty six hundred. But if we subtract out another roughly two thousand, you're basically making no money.
1:12:35 Speaker 02 Right, twenty five.
1:12:36 Ramit Sethi? Like, why would you work here? Okay, yes, withholding can be a confusing part of your conscious spending plan. But it is worth your time to really examine what is happening, what is being deducted? And just considering, does it all make sense? According to their conscious spending plan, over sixty five percent of Justin's gross income is being withheld for taxes, union dues, and health insurance, which is insanely high. That doesn't make any sense. Why would anyone want to work somewhere that was withholding sixty five percent of their income? So I pressed them to think a little bit harder about this. And I'm glad they did because listen to the realization that Deepika had.
1:13:15 Speaker 01 So, yeah, the nineteen hundred is coming out from the seventy six hundred. So I double counted it.
1:13:21 Ramit Sethi? Okay, let's fix it right now.
1:13:22 Speaker 01 Okay.
1:13:22 Ramit Sethi? How much should this be? This should be zeroed out, right?
1:13:25 Speaker 01 So just literally just remove that and then it's accurate.
1:13:27 Ramit Sethi? Yeah, okay, watch this. Okay, look at this. Watch what happens. Your number is sixty three percent right now, right? Okay, I'm gonna zero it out. What'd that number drop down to right there?
1:13:36 Speaker 01 Wow.
1:13:37 Speaker 02 Forty nine.
1:13:38 Ramit Sethi? Forty nine percent. This is one of the lowest numbers I've seen.
1:13:45 Ramit Sethi? On this podcast, what does it tell you?
1:13:47 Speaker 01 Our fixed costs are very low, which means there's a lot of room for opportunity.
1:13:51 Ramit Sethi? Yes, and really important to get your numbers right.
1:13:55 Speaker 01 Yeah.
1:13:56 Speaker 02 Right, right, right.
1:13:57 Ramit Sethi? I just want to take a second and just really compliment you. Look at this.
1:14:00 Speaker 02 That's insane.
1:14:00 Ramit Sethi? You went from 98% and you are now at 49%. What's going through your head right now?
1:14:06 Speaker 02 There's a lot more to reallocate.
1:14:08 Speaker 01 Wow, I don't even have words right now.
1:14:11 Ramit Sethi? What I notice is that, first off, when you take gross, net, all these exemptions and insurance and all that stuff, it's complicated, especially if you never learned about this stuff. What was happening is you were double counting insurance. But when we took out the double count, the extra 16 or 1900, you're now at fixed costs of 49%. What this means to me is your fixed costs are well under control, meaning your rent mortgage is well under control. Your additional expenses are fairly minor. There are a few things that jump out of the page for me, but candidly, at 49%, it's up to you. You can do whatever you want. You want to buy the ice cream truck?
1:14:53 Ramit Sethi? If you can afford it, which you can here at least, fantastic. At 49%, it gives you room to allocate for your future. Okay, it should make you feel a little bit more at ease.
1:15:08 Speaker 02 Yeah.
1:15:09 Ramit Sethi? It's kind of interesting, right? The minute we start leaning forward with our finances, we start to see more and more opportunities. How long would you have gone on worrying about money?
1:15:21 Speaker 02 If we didn't talk to you, probably till the end of eternity.
1:15:25 Ramit Sethi? I agree, but more importantly, we got the chance to talk right now only because you followed up and you did your homework. So I'm thankful that you did that. Okay, let's keep going.
1:15:38 Ramit Sethi? Car payment is eighteen hundred bucks. That includes all transportation. Now, this is where we realize like you can afford it from a day to day perspective. You're at forty nine percent. If it were me, I might re-categorize it slightly just to see. I might put parking in guilt free spending and I might have parking come out of your individual guilt free spending. Cause it is a personal luxury for you, not for the two of you. It's you. Again, if you can afford it, fine. I like to categorize things properly because it sets the right incentives. Okay, cool. Debt payment's at five hundred. What's that for?
1:16:18 Speaker 01 Student loans, two fifty for each of us.
1:16:21 Ramit Sethi? Uh huh. And but your debt is forty three thousand dollars. Okay.
1:16:24 Speaker 01 Which is the total combined student loan debt.
1:16:27 Ramit Sethi? It's not enough. Not in my mind.
1:16:29 Speaker 01 Can up it.
1:16:30 Ramit Sethi? Look at this. When we talked the first time, it was a lot of, I don't know what's happening. Like, I don't know that. And now we can up it. Just simple.
1:16:39 Speaker 01 Give me my phone, I'll do it right now.
1:16:42 Ramit Sethi? Oh, my God. Hang on to that thought. So if you were to add an extra hundred bucks a month, two hundred bucks a month, you would quickly see how fast that debt would be paid off. It would come down by years. You should run the debt payoff calculation and decide. The fact is, you have extra money. That's one place that you probably should redirect it. Okay, let's look at the rest. Investments are at eight percent. Okay. So you have pre-tax investments as well?
1:17:12 Speaker 01 Yeah, that's my 401K.
1:17:14 Ramit Sethi? Okay.
1:17:14 Speaker 01 We both have accounts that we've opened up post-meeting with you to do additional investments. So we thought two fifty was a good starting point.
1:17:23 Ramit Sethi? Great.
1:17:23 Speaker 01 And apparently we have more money, so maybe that number will change.
1:17:26 Ramit Sethi? Love what you did. You said, look, let's just get started. That's the hardest part is just getting from that first dollar going in every month. You did that. And now I love your reaction. Oh, my God, looks like we can invest more. That's the way. Now, what's interesting is your savings goals are at eighteen percent of net. That's really high. That's higher than most I see. It's also considerably higher than your investments, which is kind of interesting to me. Let's look at what you have. Vacations at 250 a month, okay. Gifts at 250 a month. Emergency fund at 250 a month, which is interesting because you already have $40,000 in savings.
1:18:03 Speaker 01 We took 30,000 and we put it in a high-yield savings account. And we left 10,000 in our normal
1:18:11 Ramit Sethi? Savings.
1:18:11 Speaker 01 Savings account. The high-yield savings account is the safety blanket. The emergency fund is if we actually have an emergency where we need cash. I think we often run into times where we're like, we need money quick. Let's say the brakes on the car cost $1,500 a pop. We need money for this. I'm not taking it out of the high-yield savings account.
1:18:33 Ramit Sethi? I just want to cut in here because we're now talking about multiple savings accounts and it's getting confusing. The important thing to remember is that they are currently saving 18% of their net income and investing only 8%. Now, with the goals of saving for a home, it makes sense that they have increased their savings goal. But their system is still overly complicated. And they are prioritizing short-term savings over long-term investments. Everybody, please remember, saving money is not enough. The only way to truly grow your money is through investing. So listen as I challenge them to rethink their approach. All right. First of all, I like that you are planning ahead. That's super sophisticated.
1:19:15 Ramit Sethi? That's what differentiates people living a rich life and many other people, is people living a rich life plan for things before they need to. Okay, so amazing. You have $250 a month going to an emergency fund and $500 a month going to what you call a high-yield savings account. Okay? You also have $30,000 in your emergency fund.
1:19:38 Speaker 01 Yeah.
1:19:39 Ramit Sethi? So there's like a lot of cash flowing around here. If it were me, first I would never call something a high-yield savings account. You want to name it vividly. Don't even call something vacation. Call it Santorini Dream Trip. Interesting. Okay, because every time you look at it, you know exactly what it's for. And even emergency fund, it might be, you know, break in case of emergency. And you just look at it, you feel safe.
1:20:03 Speaker 01 Yeah.
1:20:03 Ramit Sethi? Okay?
1:20:04 Speaker 02 For so long, we would pay off credit cards from our savings account.
1:20:08 Speaker 01 Yeah, because his paycheck was going into savings.
1:20:11 Ramit Sethi? I get it. It's like evolution. So like, you ever see like the ugliest fish in the ocean? It's like a blobfish. Have you ever seen what this thing looks like?
1:20:18 Speaker 02 No.
1:20:18 Ramit Sethi? It looks horrific. Okay. I don't know what freaking animal that evolved from, but whatever animal was probably even uglier, and then it evolved into what it is today at blobfish. I'm kind of like, if I were gonna create an animal, I would just create a brand new animal. I wouldn't have it evolve from something ugly. I know you're wondering, what the is this guy talking about? Stick with me. You went from this system that you used to have, which was very confusing, and you evolved it to this. But maybe we can just erase all that legacy and come up with a better system altogether.
1:20:50 Speaker 01 Yeah.
1:20:50 Speaker 02 Okay.
1:20:50 Ramit Sethi? Okay. How much do you keep in your checking account?
1:20:53 Speaker 01 After all the money comes out, I like to leave a little safety net of 2,000.
1:20:58 Ramit Sethi? I find this with people who make a lot of money.
1:21:01 Ramit Sethi? And they had like a past where they didn't make a lot of money. They, in many ways, still have these feelings of scarcity. So like, when you didn't make a lot of money, they didn't have extra money to sit around and keep it in their checking. But now, you make 260K, and you know, you have these different expenses and money outflowing. And sometimes, I go, you know, one of the reasons you feel scarce about money is you just don't have a lot in your checking. And a lot of people derive their feelings about money purely from their checking account. So I go, why don't you just increase your checking account by 5,000 bucks? And often, you'll find one person in the relationship who's in... Look at that. That's you, the optimizer, who says, say it.
1:21:43 Speaker 01 Oh my god, that's so scary.
1:21:45 Ramit Sethi? Why?
1:21:46 Speaker 01 It just feels like that's too much.
1:21:48 Ramit Sethi? Okay, why?
1:21:50 Speaker 01 I see the money in the checking account. That is spendable money.
1:21:54 Ramit Sethi? That was in the past, right? What about today?
1:21:56 Speaker 01 I do feel less stressed now that his money is going into checking. Yeah.
1:21:59 Ramit Sethi? Funny how that works. In your monthly money meeting, I would write down the definition. What is an emergency? Here's specifically what is an emergency and what is not. And then secondly, okay, we want to have a blanket. How much do we need in this blanket account? Let's pick a number.
1:22:16 Speaker 01 Yeah.
1:22:16 Ramit Sethi? And what counts as being used for the blanket? Such as brakes need to get repaired, et cetera, et cetera. What does not count? And when you look at the two of them, they should make sense. The blanket should be kind of like petty cash, specific things. And your emergency fund should be true emergencies. Okay. The best part about that is you're going to know how much you need. That's also going to free up some money because I don't think you need to be continuing to fund your emergency fund. And what's this expense that did not exist last time? Tithing?
1:22:48 Speaker 01 Oh, yes, that was one that I realized I had left off.
1:22:51 Ramit Sethi? Oh.
1:22:52 Speaker 01 We do a hundred fifty dollars every week to church in tithes.
1:22:57 Ramit Sethi? So you were doing this last time we talked, but it didn't show up on the CSP.
1:23:00 Speaker 01 I didn't think about the tithing, yeah.
1:23:02 Ramit Sethi? Because it's just like, it's like breathing air.
1:23:05 Speaker 01 Yeah.
1:23:06 Ramit Sethi? Okay. And you're doing six hundred bucks a month. And how important is this to you on a scale of one to 10?
1:23:12 Speaker 01 A 10.
1:23:12 Speaker 02 I'd say a 10.
1:23:13 Ramit Sethi? Wow. If it's a 10, most of the time, we can find a way to make it work. You just have to make other choices. Fine. All right, Amazon, et cetera, is 500 bucks. Okay, you're in pretty good shape in terms of just cash flow on a monthly basis. And the primary reason for that is your fixed costs are so low. That allows you to tithe. It allows you to pay daycare, even though you cut that in half, which is great. And it allows you to save and invest money. Fantastic. Can we talk about what the future looks like?
1:23:49 Speaker 01 Yeah.
1:23:49 Speaker 02 Yeah.
1:23:50 Ramit Sethi? So I looked at some of your investments and, Justin, you're about 40, right?
1:23:54 Speaker 02 Mm hmm.
1:23:54 Ramit Sethi? Okay. So right now, let's say that you invest a thousand dollars a month. If you invest a thousand dollars a month, you will have fifty six thousand dollars a year in income. What do you think about that?
1:24:06 Speaker 02 Marginal living.
1:24:07 Ramit Sethi? How do you go from 260 to 56K? That [bleep] sucks.
1:24:10 Speaker 01 It's higher than I was expecting.
1:24:12 Ramit Sethi? Really?
1:24:12 Speaker 01 Yeah.
1:24:13 Ramit Sethi? Why?
1:24:13 Speaker 01 Because I just feel like the last two months is the first time we've ever put any thought to any kind of retirement plans. The fact that we're at 56,000 is like mind blowing to me.
1:24:23 Ramit Sethi? Okay, I kind of like this. I have to say, I did not expect your reaction. It's like genuine gratefulness. For me, I'm like, 56,000? Oh, my God! And you're like, 56,000? That's way more than we thought. The fact that that's more than you thought, it's very likeable. Like, I appreciate that. And you're right, it's been only recently that you've started to focus on this. However. What this tells me is two things. Number one, 56K is not enough. Especially considering the lifestyle that you live now. It will be very, very difficult for a couple to go from 260 and your income will probably go up because you're still young to making 56K forever.
1:25:08 Ramit Sethi? That's difficult. But second, a lot of the amazing changes you've seen in the last couple of months are possible because of one thing. What is it?
1:25:17 Speaker 02 Our paychecks.
1:25:18 Ramit Sethi? Yes. You both make a lot of money. So that to me says, look, if you're getting $56,000 in safe withdrawal income, you could get a lot more if you were to focus your efforts. Just to give you another example, if you invested $1,500 a month, your safe income would be 72,000. What does that tell you?
1:25:41 Speaker 02 Start investing more.
1:25:43 Ramit Sethi? Start investing a lot more. So all this money that's kind of just floating around and the minute it comes in like a kid buying candy, you go, wait a minute, I want to buy my future self an amazing life. And that's just 1,500.
1:25:57 Speaker 01 Right.
1:25:58 Ramit Sethi? You have a lot of money that you could redirect. Can we just look at it for a second?
1:26:02 Speaker 01 I mean, we have 1,900 that just came off of this.
1:26:05 Ramit Sethi? That's right. You have 1,900 right there.
1:26:07 Speaker 01 Yeah.
1:26:07 Ramit Sethi? Well, let's start with the easy stuff. Let's start at your savings goals.
1:26:12 Speaker 01 I guess the high-yield savings account and the emergency fund are two that we should probably look at what the cap is for each of these, right? Because it's not a long-term savings goal.
1:26:23 Ramit Sethi? Correct. Always have a cap. How much until it's filled? It's like you would never just fill a glass with water forever. You go, how much is enough? Eight ounces, okay. Do the same with an emergency fund and et cetera. 500 bucks a month? That's a lot of extra money towards investments. That's huge. What else?
1:26:44 Speaker 02 Definitely HYSA.
1:26:45 Speaker 01 We could probably repurpose that money or at least decrease it since we're already at thirty thousand.
1:26:51 Speaker 02 I would take that whole thing and put it into funds, investments.
1:26:54 Ramit Sethi? Okay, what else?
1:26:55 Speaker 02 If we already have thirty thousand dollars in the bank, that would be our emergency fund. Technically, could put that towards another investment, other investments.
1:27:06 Speaker 01 So maybe we just get rid of the emergency fund, slice the high-yield savings account in half.
1:27:13 Ramit Sethi? That's nice. That's five hundred bucks a month towards investments.
1:27:15 Speaker 01 Yeah.
1:27:15 Ramit Sethi? Great. That's six thousand bucks a year right there. Keep going. What else?
1:27:18 Speaker 01 I don't know if I want to compromise on anything else. Vacations, gifts, and buy a house fund.
1:27:24 Ramit Sethi? Okay.
1:27:24 Speaker 01 Are three that.
1:27:25 Speaker 02 Yeah, those are three main important things.
1:27:27 Ramit Sethi? As we started to discuss how they might go about funding some of these accounts, Deepika remembered that she has additional sources of income that she forgot to include in their CSP. And I've noticed that a lot of people do this exact same thing. They leave out additional sources of income, things that don't neatly fit into buckets. It's almost as if they've convinced themselves that if it's not included, then it won't be spent. But this is not a good strategy because you need to plan for the income you know about. You also need to plan for the income you don't know about because if you don't plan for it, it's just going to get spent. Listening.
1:28:06 Speaker 01 I get a bonus once a year. I also do consulting on the side.
1:28:11 Ramit Sethi? What? Does that show up here?
1:28:12 Speaker 01 No.
1:28:13 Ramit Sethi? What's the problem?
1:28:15 Speaker 01 I forgot that I'm consulting on the side.
1:28:19 Ramit Sethi? Okay, can we talk about unexpected income for a second? Because that makes a profound difference on where you end up. How much money, ballpark it for me, do you make extra per year that's not reflected in here?
1:28:31 Speaker 01 Including bonuses and consulting?
1:28:34 Ramit Sethi? All of it.
1:28:34 Speaker 01 An extra fifty thousand?
1:28:37 Ramit Sethi? First of all, you're gonna get roasted in the comments, and I'm not defending you on this one. I tried so many times to get you to put your numbers. 50K? Get them. Just get them.
1:28:48 Speaker 02 I have a feeling like-
1:28:49 Ramit Sethi? 50K extra!
1:28:51 Speaker 02 You ever watched those HGTV things like, "Oh, I'm a teacher"?
1:28:55 Ramit Sethi? Yeah, that's you!
1:28:56 Speaker 02 And I make a million dollars.
1:28:58 Ramit Sethi? Well, I'm literally talking to them!
1:29:01 Ramit Sethi? I'm sweating.
1:29:01 Speaker 01 I feel like it's certain things that like, you know when you're tasked with something and you just don't remember everything?
1:29:07 Ramit Sethi? Yeah, that's why it's a spreadsheet.
1:29:09 Speaker 01 I know, but it-
1:29:11 Speaker 02 I think there's also the fear of like, it's like random. It's not like guaranteed.
1:29:16 Ramit Sethi? A lot of us, we are very fearful of writing down a number, especially when it's variable. Your current stable income more than covers your day-to-day. So we're now talking about icing on the cake. And whether you make 30K extra or 50K extra, it actually does not affect your day-to-day at all. So I'm not gonna say, "Hey, I need you to build a model based around $50,000 in extra income." But we need to be honest that, hey, we're actually gonna make between 30 to 50K. Let's just conservatively assume 35, and let's build in a life around that. And any extra will even make a plan for that. I really want you to do is to put everything down accurately on paper,
1:30:01 Ramit Sethi? because I don't want you to play games with yourselves anymore. You've played games for too long.
1:30:05 Speaker 01 Yeah.
1:30:06 Ramit Sethi? Okay, so let's just make a rule. Let's say of any additional extra income you make, it could be $10 more than what you put here. It could be $50,000 more.
1:30:19 Ramit Sethi? How do you wanna allocate that money? Have the two of you talked about it?
1:30:22 Speaker 02 Yeah, I think most of, any extra that we are, after all this, literally goes into investments, which would be long-term.
1:30:31 Ramit Sethi? And is that the same place you would then draw from for a house?
1:30:35 Speaker 01 That was the plan, is see how much the money can grow and use that towards our house.
1:30:40 Ramit Sethi? Wow, I like this. I really like this. I will say, if you're putting money in the market, it sort of assumes you're not gonna buy a house for at least five years and probably 10-plus years. Are you okay with that?
1:30:52 Speaker 02 Yeah, we've gotten used to the fact that, hey, we'll never save enough to have a home. If this works out in 10 years, it works out in 10 years.
1:30:59 Ramit Sethi? Okay, I'm with you. I will tell you that in my own case- My wife and I talked about it. We're like, are we gonna buy a house in the next 10 years? It's like, no, we have no interest in it. So took the money that was saved, was just sitting in a savings account, invested it in the market. And over time, it's grown a lot and it will continue to grow. And if and when one day we decide to, we will pull it out. It's already earmarked and use it for the house. That's exactly what you two are saying.
1:31:26 Speaker 02 Yeah.
1:31:27 Ramit Sethi? Fantastic. Wow. This changes things and I think in a good way. So you told me that first of all, you got 500 bucks a month. You're gonna put that instead of towards a savings account, you're gonna put it towards invest. I mean, we're now talking about you potentially investing 4,000 something per month. That's powerful. That's amazing. You can calculate it on your own. You'll realize how much you're gonna have at retirement, which is awesome. You're also gonna be like, wait a second, if we decide to buy a house in X years, this is how much we'll have. Great. And at that point, you can decide if it makes sense to buy a house or not. I'm all for it. Give yourself options. Furthermore, we decided that any additional income, you're gonna put 100% of it towards the investment account, which would be earmarked for a house.
1:32:12 Ramit Sethi? Okay, can I make one suggestion?
1:32:14 Speaker 01 Yeah.
1:32:14 Ramit Sethi? I like to give myself a reason to keep earning extra income. So for me, I will do something like 70% of unexpected income goes towards investments. 20% goes towards something I've been saving for and 10% is just guilt free money. It has to be used. Is there anything that you might want in your own life? Like if you're making $50,000 extra per year, might you take X dollars and go to a special restaurant? Maybe something that keeps you looking forward to the work that you're doing on the side?
1:32:48 Speaker 01 I think for us, that's the vacation piece. We work a lot and the only time we really get to spend together as a family is when we're not here.
1:32:57 Ramit Sethi? Right. Okay. As long as the two of you agree, that's important. And as long as you each December, do your annual rich life review and you sit down and you say, hey, do we still agree about this? Do one of us wanna make a change? Very sophisticated.
1:33:13 Speaker 02 I think our mindset also was, does give us the opportunity to buy that home quicker.
1:33:19 Speaker 01 We can only afford the life we have now because our fixed costs are so low and we know that. And we wanna get to a position where when we buy a house, we can continue having the lifestyle that we have. Yeah.
1:33:31 Ramit Sethi? The first time we talked, there was just basic confusion about basic concepts. Right? And yes, today, sure, we've had a couple of corrections and mistakes, but I'm also hearing you bring up extremely sophisticated concepts. We're talking about giving yourselves optionality, creating multiple layers of safety. I hope you see how far you've come. It's quite amazing.
1:33:55 Speaker 01 We've literally spent the last two months since we last spoke just really, like that session really was couples there, but it really was. And I think it kind of opened our eyes to how simple it is.
1:34:08 Ramit Sethi? I appreciate that you two received it. One last thing to tighten up your CSP. I would really like to see is his guilt free spending, her guilt free spending, and then your guilt free spending collectively. Just to give you a simple example, out of a hundred dollars, just easy math, you might say 20 goes to him, 20 goes to her, and 60 goes to us, which would include vacations, dining out, et cetera.
1:34:39 Speaker 01 The guilt free spending part, I think, is what hasn't clicked for me because I feel guilty about spending anything. I don't know what I would do with a guilt free spending budget, if I'm being honest. I love Russian manicures, but a Russian manicure and a Russian pedicure will often run you about 200, and that's without tip. So I do not do Russian manicures and pedicures.
1:35:02 Ramit Sethi? How often does one get a manicure?
1:35:04 Speaker 01 Every three to four weeks.
1:35:06 Ramit Sethi? So let's just say once a month for easy math, 200 bucks plus tip, 250. Is that possible?
1:35:12 Speaker 01 It just feels like that's a savings goal right there. 250 a month, I could be putting towards vacations.
1:35:19 Ramit Sethi? Okay, you could. I'm not telling you not to. And in fact, you don't have to get the full manicure/pedicure. It's up to you, maybe even get it once a quarter. But my point is, it's actually healthy for each of you to exercise your spending muscle individually. How old is your son?
1:35:37 Speaker 02 He's gonna be three in December.
1:35:39 Ramit Sethi? If you changed nothing, what would he observe his mom spending money on?
1:35:44 Speaker 01 Him.
1:35:45 Ramit Sethi? And what's the message that a young boy takes as he gets older? Women and money.
1:35:50 Speaker 01 They're meant to spend on everybody else, but never themselves.
1:35:54 Ramit Sethi? Where do you think he gets that message?
1:35:56 Speaker 01 He's probably getting it right now from me.
1:35:57 Ramit Sethi? One of the reasons I started this podcast was you see these generational patterns of money. I mean, you two concede in yourself, right? You didn't learn about money and I'm so impressed and grateful at how far you've come, even in two months. It's truly incredible. You have earned the right to now think about your son and what messages he's going to pick up. And you've also got to show him other parts of money, including mom spending money on herself and dad spending money on his self. So I'll ask again, what would be your guilt free spending?
1:36:34 Speaker 01 A Russian manicure and pedicure once a month.
1:36:36 Ramit Sethi? Great.
1:36:38 Speaker 01 A nice handbag once a year.
1:36:41 Ramit Sethi? Might that handbag money come from any unexpected income you earn?
1:36:47 Speaker 01 It would probably be from my bonus or consulting.
1:36:51 Ramit Sethi? You might make a decision together that each of you takes 10% of the unexpected income and you spend it on guilt free, whatever individually. And you might make 50K one year unexpected. You might make 100K one year. You still take that money and you still use it. You're building the skill of spending money. Final point, if you look at your savings goals, things like vacations, dining out, those should likely be coming from your joint guilt free spending. Okay. Okay. So work all that stuff in and your number should technically be between 20 to 35%.
1:37:33 Ramit Sethi? In your case, it might be right around there because your fixed costs are so low.
1:37:38 Speaker 01 That makes sense.
1:37:39 Ramit Sethi? I'm actually really thankful that you followed up because it shows me that you two are 10 out of 10 serious about living a rich life.
1:37:49 Speaker 01 We're grateful for your help. We've been looking for someone to help us for a really long time. And the fact that it was sitting on our bookshelf for the last two years. Made a lot of difference.
1:38:00 Ramit Sethi? Looking back on your finances before we talked, what stories did you use to tell yourself?
1:38:06 Speaker 02 We're poor.
1:38:06 Ramit Sethi? What was the answer to that?
1:38:08 Speaker 02 Make more money.
1:38:09 Ramit Sethi? Right, okay. And what other stories did you tell yourself?
1:38:11 Speaker 01 We can't afford to do it.
1:38:13 Ramit Sethi? Could you?
1:38:14 Speaker 01 No.
1:38:14 Ramit Sethi? But you haven't changed your income. So what changed?
1:38:18 Speaker 02 You had said something like, if you want money, why aren't you educating yourself on it? Once you start educating yourself on how money works, you start making drastic changes to better yourself.
1:38:32 Speaker 01 And you don't need the crazy spreadsheet of 200 line items. It's just keep the budget, stick to it, and it's as simple as that.
1:38:41 Ramit Sethi? Yes, I love that last closing thought from Deepika. With a little bit of effort, your money system can be simple and highly effective. That is exactly how it should be. Thank you, Justin and Deepika, for sharing your story and for really digging in and doing the work. I can't say it enough, they made huge changes in their finances in a very short amount of time. I was so impressed with their progress after reading I Will Teach You To Be Rich, that I gave them another challenge. This time, I gifted them my new book, Money For Couples, and I asked them to report back after reading it. Check out their follow-ups and what they have to say about their progress.
1:39:21 Speaker 01 Hi, guys. We just finished the Money For Couples book. And overall, I think the biggest thing that we were surprised to learn that we've been overspending on this whole time is custom whole life policies. When we looked at our fixed costs, we were surprised that we were paying at a crazy amount, like almost $2,500 a month in all of our insurances combined. And when we tried to get to the root of what the problem was, we found that a whole life policy is not the best investment. We get so in the weeds about the small details of what we're spending on that I think we forgot to look at the larger fixed costs. So this conscious spending plan was a great opportunity for us to figure out
1:40:04 Speaker 01 what the actual root of the problem is.
1:40:07 Speaker 02 And I think one thing we realize that we can actually afford to do is invest. This entire time, we were like genuinely thinking that we were living paycheck to paycheck. We couldn't afford anything. But once we did the conscious spending plan and we were able to like figure out the numbers, it's just a weird thing that now we actually have money to invest and that we can actually put money towards the future. That's pretty cool.
1:40:34 Speaker 01 My favorite thing about our monthly money meeting is first of all, we have a monthly money meeting and it's not something that I'm scared of anymore. We have a plan, we're both on the same page and none of what we're discussing is coming as a surprise to either of us.
1:40:49 Speaker 02 After reading this book, I think what we're most excited about is the actual future. Like now we have plans to make our dreams actual goals. Before we were just like dreaming about like, oh, we can do this or we could save up for that. There were just dreams, but now we're actually making our dreams goals like they're actually about to happen, which is pretty cool.
1:41:12 Speaker 01 Yeah, and we're being transparent about where the money is going. We're talking about it. It's not like it's a surprise, like a few months down the road to say, oh my goodness, like we're not meeting these goals. So it's been a literally life-changing experience to go through this book together.
1:41:28 Ramit Sethi? So if you want to get on the same page with your partner about money, get your copy of Money for Couples, my new book, at I W T dot com slash Money for Couples. And thank you, Justin and Deepika, for going on this journey. It has been a thrill to watch.
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