Pod Insights Money For Couples with Ramit Sethi 206. “I quit my job to care for our son, but can we afford it?” About this episode Anna (33) and Will (37) are married with two kids, including a young son who was born with a serious heart condition. Between unexpected medical expenses, emotional stress, and inconsistent financial planning, their savings have steadily drained—and now, they're spending more than they earn just to keep up. Will brushes off concerns, saying “We’re fine,” while Anna feels like she’s the only one confronting reality. Now, they want to build a home and create long-term security for their family—but until they can get aligned, that dream may be out of reach.
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Transcript 14,634 words · 3 speakers
Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.
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2:00 Speaker 01 He could end up in heart failure on Friday and we would need to move into the hospital. That is our reality. It was too much. So we made the choice to have me stop working.
2:09 Speaker 02 I've doubled my income, but I feel like we have way less money.
2:13 Speaker 01 If I compare our net worth to other people with our similar backgrounds, we are behind.
2:20 Speaker 02 It felt like we were just taking our foot off the gas a little bit, but now it feels more like we shifted into neutral.
2:26 Speaker 01 I worry about everything. He worries about everything. We just don't align on what to do with that worry.
2:31 Speaker 02 You are weaponizing the tropes of this podcast against me.
2:36 Ramit Sethi? Can I pause things for a second? I don't think the point of this podcast is to like win Ramit over. All right, I'm looking at Anna and Will's CSP today. They are 33 and 37 years old. Assets $654,000, investments $366,000, savings $188,000, debt $495,000 for a total net worth of $714,000. All right, that looks amazing. Gross monthly income is 15.5K for 186K, also very impressive. At first I was like, why am I talking to this couple? But in their application, Anna writes, "Our family dynamics have changed drastically since 2022.
3:20 Ramit Sethi? We were earning $260,000 a year with one child. Then we bought a home and had our second child. He was born with a severe congenital heart defect and our lives were upended. After two open heart surgeries and with months in and out of the hospital, I left my job because I had too much on my plate. We are now spending more than we make every month, but we are not spending it on anything fun." This is a reminder of why the numbers alone do not tell the story. I'm very much looking forward to speaking to Anna and Will, figuring out what happened, where they are today, and where they can go in the future.
4:01 Ramit Sethi? Can you help me understand the dynamics of your family finances? What changed since 2022?
4:08 Speaker 01 So 2022, we had one kid. We were dual income, both earning over six figures. 2023, I was 20 weeks pregnant with our second baby. And we went in for our anatomy scan and they discovered that there's something wrong with his heart. And it was obviously an extremely earth shattering moment. There was before the anatomy scan in my life and then there's after. And I was trying to figure out what to do with having a baby that, quite honestly, we didn't know if he was going to survive. We were going in for checks every two weeks, meeting with cardiologists and surgeons and all of these things and building up our community.
4:52 Speaker 01 And during that time, I was trying to ramp up my career and I couldn't anymore. Like, there was a part of my brain that was in constant panic and fear and just trying to survive every moment. So he was born. Amazingly, he has survived two open heart surgeries and about three months in the hospital in total over the past year and a half, really defied the odds in a lot of ways, but will be a heart patient for the rest of his life. He's going to at least have one more surgery. But anyways, he's doing great. We've been through a kind of incredible turmoil. And in fact, to the income, when I did go back to work, it was after his second surgery. So I had been off for six months in and out of the hospital, all of those things.
5:36 Speaker 01 When I did go back, I was brought back part time, which was working really great. But ultimately, he was still having so many struggles. It was too much. And so we made the choice to have me stop working.
5:50 Ramit Sethi? Wow. Thank you so much for sharing. I'm sorry what you've had to go through. And also, I'm really happy that your son was born and that you've been able to see him grow. Are you comfortable talking a little bit more about your son and the medical issues? I want to get to the finances, but it helps me understand what's going on if I can ask a few more questions.
6:15 Speaker 01 Yeah.
6:15 Ramit Sethi? Okay. You seem very conversant about it. Like, you've obviously thought about it and talked about it a lot. How did you get that way?
6:24 Speaker 02 I'll toot your horn for you. She processes her feelings through writing a lot. And so Anna started a blog that was branded primarily for friends and family, just to like, get them up to date. And through that, she started getting connected with a lot of other families that were going through the same thing. And she also made a lot of great connections in the hospital with other families that had children with heart defects. And I think that both of us going through that experience really developed a lot of empathy and concern over how difficult it is for so many
7:02 Speaker 02 families when they have children with chronic conditions and they're spending a lot of time in the hospital. And I think Anna has really taken that as a passion of hers. And she's now involved with two charities and volunteers at the hospital.
7:15 Ramit Sethi? I love the mission that you, Anna, and both of you have taken on. Honestly, I'm so glad I asked.
7:23 Ramit Sethi? Like, forget the finances. This is way more interesting.
7:27 Speaker 01 Obviously, it's easy to get swallowed up by fear and the overwhelm of this life that we now lead. But what we've learned together, and me specifically by writing this Substack, is if you just tell people what's going on, it will help you process it. And what I've learned is that there is so many people out there who need so much help. And I have the skills and so does Will to connect with people, speak with doctors in a really productive way, connect with nonprofits, all of these things. We are extremely privileged and I think we have a duty to serve this community and it's been extremely rewarding.
8:06 Ramit Sethi? Honestly, thank you for bringing me into your world. Everybody goes through something, rarely as serious as this. But the overwhelming feeling I know, having gone through certain things in my own life and certainly talking to the people who speak to me, is how lonely it can feel. And I love that you've found a purpose, even in a way that's totally unexpected. You wouldn't have predicted it three years ago. So, thank you for sharing that. I wanna turn to what the effect of this was on your finances.
8:39 Speaker 01 We went from earning like two sixty-five a year to like one fifty. And we kind of thought it was gonna be a little more temporary than it's been. Things with our son are incredibly great right now. So in January, I've started taking on some contract work that I am absolutely loving. My hope is that I can ramp that up and then be able to ramp it down if and when needed for my son's care.
9:09 Ramit Sethi? Listening to Anna and Will share their story, we can all hear how fragile our lives can be when something unpredictable happens, especially with kids. What strikes me is not just how resilient they are, but the fact that they had actually planned for this. They're still in survival mode, though, understandably, but it's quite impressive, quite amazing. All the preparation that they had done before this moment. This is one of the reasons that I stress how important an emergency fund really is. Because when you need it, you will be so thankful you planned for it.
9:49 Ramit Sethi? But with Anna and Will, you can tell that they aren't sure how to pivot from survival to something a lot more intentional. And I can tell you that answer is going to surprise you. That is what we are here to uncover.
10:03 Speaker 01 I don't think we made the right adjustments of like, okay, you're not working anymore, like pull both kids out of school. We were like, we have the buffer, we're gonna use the buffer. And now we're like, ugh, a little nervous about where we're at.
10:15 Ramit Sethi? Okay. Well, I have to say that most couples, when they experience a layoff or one person stops working, most of them don't know their numbers at all, first of all. Most of them don't adjust, okay? And they certainly don't make as strategic of a decision like, hey, we have this buffer, we are going to use it. So yes, okay, you probably overused it. We'll talk about that, look at the numbers, but just the fact that you even knew it is quite a good sign. Will, I want to hear from you. What did it feel like to go from two incomes to one?
10:48 Speaker 02 It felt like we were just taking our foot off the gas a little bit, which is fine. But now it feels more like we shifted into neutral.
10:57 Ramit Sethi? Anna, what about you? What did it feel like to take that household pay cut?
11:02 Speaker 01 Horrible. It felt horrible. It felt bad because I'm a career-driven person and it was really hard to step back. I think there's an anxiety and stress that drives me forward, whether it's taking care of my son in the hospital and advocating for his needs or hitting a deadline at work. I thrive in that kind of crisis mode. Giving myself free time was scary and I'm still thinking about it a little bit. Like, did I completely derail my career? How am I ever going to recover from this? Oh, by the way, but also I want to be an amazing mom and present to both of my kids. It's like there's two versions of me that I want to be perfect at. So when I can't do that, it feels bad.
11:47 Ramit Sethi? Yeah, that makes a lot of sense. You alluded to you've thrived on accomplishing things and achievement and would tinge with a little bit of anxiety probably for a long time. Do you enjoy relaxing?
12:05 Ramit Sethi? I think that answer tells me all I need to know. All right. Thank you. And Will's over here shaking his head subtly. He's like, Will, tell the truth. The partner always knows best. Does she?
12:16 Speaker 02 Yeah. No. Relaxing for her is like, oh yeah, I went to the park with the kids. But that's not relaxing because she was like, I checked off the box that we went outside today, kind of thing.
12:27 Ramit Sethi? Okay, so when it comes to your finances today, I think, Anna, you described it as, quote, "survival mode." Do you both agree that you are in survival mode when it comes to your finances, Will?
12:39 Speaker 02 I don't think we're in survival mode. I think we're in like a planned negative cash flow.
12:47 Speaker 01 I think that he's saying it in order to downplay the severity, but I think that the math will still show that if we keep going on this trajectory, it's not great. I also think I wrote that we're in survival mode because of the hospital, right? There's still like that element of us. And, and it's like this weird moment of waking up like, okay, we actually might be able to count on things happening that we plan on happening in the next month, which is not how you can live when you have a child who's in the hospital. So I think, I think we're still in that mindset in terms of our finances because I'm not back to full-time work.
13:24 Ramit Sethi? How long did you go through complete uncertainty in your life?
13:28 Speaker 01 I mean, I would argue that from April 23 onward, we are in a state of uncertainty. There are different degrees of that uncertainty. Some of them are in the ICU, everyone rushing in and all the beeps beeping and saying, is this bad? How bad is this? What, you know, that uncertainty? And then there are much lesser levels of uncertainty of like, we're at the chillest point we could possibly be. He still needs to have another open heart surgery at some point. He could still develop heart failure in the next week. So I don't know how to answer the question about how long we're in uncertainty, because I think there's always a level of uncertainty that we as a family need to learn how to live with.
14:10 Speaker 01 And hopefully for the rest of our lives, because that means that he's still alive.
14:15 Ramit Sethi? Yeah, that's a fair answer. Your baseline for uncertainty will always be higher than another family's.
14:22 Speaker 01 Absolutely.
14:23 Ramit Sethi? And I think I'm hearing you say that we have to accept that. Now, the question is, where is that floor? Will, would you agree with the way that she's characterized where you are today?
14:35 Speaker 02 Uh, no. I think this is one of like our core issues when we talk, when we, when we approach, not just money, just like our lives in general, is she's still operating in that survival mode? And to me, I think, yes, our baseline level of uncertainty has risen. But when we are in super high uncertainty, to me, that, that ended when he was about a year old. And we've slowly been getting less and less uncertain. And when I look at our finances, we're not racking up debt. I still contribute to my 401K. We still have a lot of money in savings, although we are spending more than we take in every month.
15:14 Ramit Sethi? And I see you nodding while Will is speaking. Do you agree with him?
15:17 Speaker 01 I do agree. I'm saying my version of the truth and then you're saying your version of the truth, both of which are true, the way that you are saying it, Will, is by taking down the intensity and removing the emotion.
15:34 Ramit Sethi? Is the emotion the bad thing? Is that like the toxin we need to cleanse from this situation?
15:40 Speaker 02 The emotion that comes into it, we have this question, is always negative emotions. There's never a positive emotion of where we're going to go, what we're aiming for. A lot of times it will be like, I'll try to talk about longer term plans and for Anna, it's like, yeah, but we could be back in the hospital by that time. And so for me, I've taken emotions out of it because if I start bringing in those positive things, then I kind of feel like I just get shot down. And so if I'm getting shot down, then it must not really matter what I'm aiming for, what my vision is for the long term. And, and so I think I kind of just shut down. And so my, and my defense mechanism is to just look at the numbers as themselves and
16:24 Speaker 02 say, we're, we're gonna be fine and try to take the emotion out of it. I can support her.
16:30 Ramit Sethi? Do you say we're gonna be fine to Anna?
16:32 Speaker 02 Yeah.
16:33 Ramit Sethi? Okay. And then, uh, I was gonna ask, does that ever work? But I already know it never will. Anna, does it work?
16:40 Speaker 01 No.
16:42 Speaker 02 I think i- i- if we sit down and look at our conscious spending plan or look at like our account balances, I think in the moment Anna can see the numbers and agree. I don't think we have a disagreement on like the facts of the numbers, but how we interpret them and especially how we interpret them day to day and how, and how that emotion impacts us day to day, we're in different places.
17:05 Ramit Sethi? Okay. I'd like to get it to a specific example. Can you think of a time recently where the two of you were not on the same page about money?
17:12 Speaker 02 One of the areas that we have had a number of conversations about is with childcare. Our older son goes to preschool and our plan is to have our younger son go to that preschool starting in the fall and childcare is expensive. And our biggest question is, does it make sense to spend that money for them to go to childcare when Anna's not working full time? But asking that question is very easy to say, no, it doesn't make sense. So we should stop that. But if we look at the potential and where we're trying to get in the future, she doesn't just want to stay at home. She wants to do things with her time.
17:56 Speaker 02 She wants to grow the consulting business that she's brought in. She wants to be involved in the charities that she's involved in.
18:03 Ramit Sethi? Who's saying which position? Just so I understand.
18:07 Speaker 02 I think that I'm more committed to paid for childcare. And I think Anna is very much torn by her identity as a mother versus her identity as a professional and also stressed about the money.
18:21 Ramit Sethi? Anna, let's hear from you. What's your take on this?
18:24 Speaker 01 I get panicky when I look at the numbers and the easiest thing to do is to say, we gotta pull them from childcare and I need to just stay home with them. Even though I have other aspirations, but in order to make the numbers work out, it seems as if that's the answer. And whereas for Will, he's saying like, it's not a question. Like, we will continue to make our numbers look bad until we get our income up. Like, why are you still talking about this?
18:52 Ramit Sethi? And how do you respond when he says that?
18:54 Speaker 01 I guess I don't believe him. He can tell it to me and look at the numbers all you want. Like, it still doesn't feel right to me. I still feel like I am being pulled in so many different directions and I'm not making a decision and feeling uncertain about the way I should be spending my time feels uncomfortable to me. If I commit to sending them to childcare, then I'm missing out on time with them and potentially risking being in another stressful work environment that I might have to pull myself out of for medical reasons, all of that. And if I do the opposite and I keep them home for whatever reason, there's millions of reasons why we might do it, not just for money.
19:37 Ramit Sethi? So you all have had this conversation for how long about going back to work?
19:42 Speaker 01 It's been nine months.
19:44 Ramit Sethi? I like spending a lot of time on big decisions, but I don't like being stuck. I like to make a little progress, one way or another. Is this decision irreversible?
19:55 Speaker 01 No, there are ways to solve the problem in either direction.
19:59 Ramit Sethi? All right, so it's a reversible decision. Can I just ask a really dumb question? What if you just flipped a coin and picked one? And did it for a year? What would happen?
20:09 Speaker 01 I would need some emotional support in sticking with the decision, shutting down the thoughts of whether it's right or wrong.
20:19 Ramit Sethi? How much of this is the script like, I'm a good mom if I... dot, dot, dot?
20:24 Speaker 01 All of it is about tying it to my worth as a mom and a wife and all of that. And a career person.
20:30 Ramit Sethi? Yeah. And you're deeply embedded in this decision, but as guys, there are things that we just can never understand about that messaging. Like, it doesn't exist for us. So there's something you're seeing, almost like you have a different set of lenses, that we... Will can try as hard as he wants, and it seems like he's engaging, at least on the numbers. But ultimately, this will be something that you will have to grapple with. Sometimes when people listen to this podcast, they look at the numbers and they're shocked. Why do you feel like you don't have enough? Why are you so worried? I would love to have that much money. What Anna and Will are experiencing is an identity shift. This can happen when you make more money than you ever thought,
21:14 Ramit Sethi? when you lose a bunch of money, or, like in their case, when the world forces you to change your identity. They used to be purely these high-achieving professionals. That's how they identify. But now, they have to identify as something else, and changing your identity is incredibly difficult. Anna's trying to be the present, hands-on mom, and the ambitious professional. Will is adjusting to a totally different role than he ever expected. Until they accept these new identities, every financial decision is going to feel like it's pulling at them, and they're going to be confused, they're going to be second guessing, they're going to be trying to make it through the way they used to do it.
21:59 Ramit Sethi? Coming up, a raw, emotional, revealing conversation. Stay tuned.
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24:47 Ramit Sethi? Anna, how would you characterize your discussions about money with Will?
24:51 Speaker 01 Our discussions about money can get derailed, I would say. We try to have a meeting every week about the week ahead. It's hard to do big picture work because of the uncertainty of the numbers and getting used to the privilege of right now being able to think big picture.
25:11 Ramit Sethi? Because before you couldn't.
25:13 Speaker 01 Yeah, I mean, when you have a child who has so many needs, there is no big picture. There is the next hour.
25:20 Ramit Sethi? Totally.
25:20 Speaker 01 And it was like that for months.
25:22 Ramit Sethi? Can I tell you something? I can't imagine what it was like to be in the situation that you were in when you got the news. I can't imagine what it was like to be in the NICU and be in the hospital through one open heart surgery. I can't imagine what it's like to know that your son is doing better and he still has another surgery ahead of him. But I can tell you one thing. I can tell you that if I were in your situation, I would not be able to look at the big picture. I would have done probably exactly what you did, which is focus on my son, pay attention to my other kid as much as I can. Try to stay connected with the two of us and just hold on by the seat of my pants and try to live another day. I just have a lot of empathy for you, Anna, and for the two of you.
26:06 Ramit Sethi? And there's no shame around not being able to do what you would have done before you had your son.
26:13 Speaker 01 Thank you for saying that. I think that we both have really high expectations for ourselves as individuals and as a family. And we look at the privileges we have and think that in our own little ways that we can be, you know, doing better. And for me, I think there's a lot of pressure, but like, you know, we have a child who we didn't know if he was going to be born alive and he's here and he's amazing in every way. And I want to give him the best life possible. Like, I don't think his life is more worthwhile than other people's, but like the fact that he's had to go through so much and still has to go through so much like,
26:53 Speaker 01 we better do our job and be the best parents, have the best life, best schools, best house, be really, really smart about the things we let in our life and in his life to create this environment that will will help him grow and thrive.
27:12 Ramit Sethi? What would be the thing that could make your kids have the best parents they could?
27:18 Speaker 01 I think having parents who are confident in their decision-making and aligned in their decision-making and present as much as possible. That's all they need. And we know that. We don't do a great job of it because of stress and all of that.
27:36 Ramit Sethi? Yeah. Will, what do you think?
27:38 Speaker 02 I totally agree with Anna's vision. We want to provide them this amazing life. I often feel that because I'm not in survival mode right now and Anna is still in survival mode, that her desire to be perfect and provide this perfect life is sort of like strangling our ability to actually do it. And she's worried about every single minute being perfect.
28:07 Speaker 02 But that doesn't give us the chance to plan and work towards making sure that the next month is perfect, the next year, the next 10 years are perfect. And it also sets a really high expectation that if something's not perfect, that we failed.
28:24 Ramit Sethi? What do you think about that, Anna?
28:25 Speaker 01 I think that you nailed it. That's correct.
28:28 Ramit Sethi? Wow. I totally get the idea for wanting the best. I totally get it. Like, I want, where is this freaking thing? I have this notepad I got somewhere in Italy. I freaking searched for like six months to find this notepad. Okay, I went to Milan, I found it, it's like custom, it's the best for me. I like that. I like that kind of thing, finding this artisan, etc. But I also think sometimes it can become very destructive. It's like, yeah, it's good. I'm glad I can do this. Once in a while, I can get that thing I want. But also, life isn't about finding the perfect X all the time. Sometimes it's actually about enjoying the mess. Anna, you said, "I worry about everything. He worries about everything.
29:13 Ramit Sethi? We just don't align on what to do with that worry." Is that true? That's a little surprising. Well, it sounds like very all the cool on today's call. Is it true you worry about everything?
29:22 Speaker 02 I disagree that we both worry about everything. Our roles in the family are different, and so we worry about the things that are in our spheres. And it becomes difficult for us to communicate in a way where we can find alignment on what are the most important worries.
29:40 Ramit Sethi? What the [bleep], I'm getting lost. Too much talk about worrying. I gotta get you guys out of this worry sinkhole. Freaking philosophizing about my frameworks of worrying about worrying. No [bleep] way. Enough of this. That's why you guys came to me. And also, are you seeing a therapist?
29:56 Speaker 02 We're currently seeing a therapist, but in the context of our eldest son, who's having some emotional issues.
30:02 Ramit Sethi? Ah, okay. It's kind of an interesting manifestation of focusing on your son, which I totally get. But also, what about the two of you?
30:13 Speaker 02 Yeah.
30:14 Ramit Sethi? The two of you, who I would argue might be the most important in this entire dynamic, is that relationship between the two of you. Not taking the time and effort to nurture that shows up downstream in your kids experiencing their best life. What do you think about that?
30:31 Speaker 01 100% I agree with that. And I think we need help on making time for each other and ourselves.
30:40 Ramit Sethi? I need your help to keep creating these conversations with people all over the world where you can listen in. Do me a favor, hit subscribe. That helps us grow our channel and find more people whose conversations we can share with you. Something happened that really surprised me. It wasn't a huge argument. It wasn't some dramatic blow up. It was a trip to Walmart. Listen to how something as small as buying a laundry basket opened up a whole new view on their relationship dynamic.
31:13 Speaker 02 I primarily do most of the grocery shopping. I am constantly thinking about what you will think about what I'm buying, if it was too much or too little. I was at Walmart last week. We need an extra laundry basket. I was standing in the aisle and there's one that's $5 and there's ones that's $6. And I didn't think either of them was perfect. And I didn't want to come home with one that was not perfect and have her make a judgment over what I bought. So I didn't buy a $5 or $6 laundry basket because of her potential judgment.
31:49 Ramit Sethi? Perfect kids, perfect house, perfect time in the park, perfect laundry basket. Is there a pattern?
31:58 Speaker 01 I see the character that we are building right now. An anal type A mom who can't sit down and has to micromanage everything and doesn't trust anybody to do anything except her. And she's burnt out because she doesn't ask for help and doesn't let other people help her.
32:17 Ramit Sethi? Okay, okay. Wow, that was like rolled off the tongue. Okay, now is that accurate?
32:24 Speaker 01 I don't think it's accurate at all. I understand the fear that I might have an opinion about something. But he said, I'm gonna go to Walmart and I'm gonna get a laundry basket. I was like, cool. I don't care about the laundry basket. You also need to know, Ramit, that this laundry basket is tied to his Notion document about how to change our laundry setup.
32:49 Speaker 02 You are weaponizing the tropes of this podcast against me. You know that you will get Ramit on your side if you mention that we have a Notion document because that's the easiest way to collaborate on something.
33:01 Ramit Sethi? Can I pause things for a second? So I don't think the point of this podcast is to like win Ramit over.
33:08 Speaker 01 Mm.
33:08 Ramit Sethi? The point and the reason I do this is to try to talk to couples about money. And when we talk about money, of course, we end up talking about who we are and what our rich life really is. And always there is a disparity between what we say our rich life is and what we are actually doing. And guess what? There's nothing wrong with that. That's being human. We all say we should call our mom more and go to the gym more and eat healthier and we don't. And for me, the primary fascination is why? And can I help nudge you slightly in a little bit of the right direction? I have to say, I love how honest you both are. I love it.
33:49 Ramit Sethi? I don't care if you're talking about your laundry basket. The stakes seem so low. I agree. It's it's so absurd and yet it's real. It's not about the laundry basket. We all know that. But it's an argument that compounds for 30 years. And in your case, there is extra fuel behind it because you had something traumatic that happened to you. And I'm sure you know from other parents and families who have gone through something similar, there's also the potential for it to become a wedge that sets you apart. The reason that I want to talk about this laundry basket is it's a microcosm of your finances. Can we do something here? Let's flip it right now and let's come up with a new way of handling a purchase like the laundry basket.
34:33 Ramit Sethi? Here are the ground rules. Let's acknowledge that the laundry basket is so absurd that we're actually going to play because the stakes are low. And now I want you to come up with a solution. If you could wave a magic wand and figure out a better way of handling the quote laundry basket, what would you do?
34:48 Speaker 01 A way we would handle the laundry basket and similar purchases is for me to say, hey, you love going to the store and buying stuff for the house and groceries and all those things that I do not like to do at all. And it's awesome that you know how to do those things. So go for it. I don't need to be involved. And even if I don't like it, whatever my opinion is, is not a value judgment of you and your worth at all.
35:14 Speaker 02 But I don't want to hear an opinion because an opinion is a judgment to me. And so I either want you to engage with me in what I'm trying to do and work with me, or just not even talk about it because it makes me very like uncomfortable and makes me feel just not accepted.
35:36 Ramit Sethi? Okay. Do you all think that's a good solution? And do you think you could follow that solution?
35:40 Speaker 01 My only question is, if you don't want to hear an opinion, what if it's a positive? I'm like, this is awesome. Thanks for doing this.
35:46 Speaker 02 That would be great.
35:47 Speaker 01 Okay.
35:48 Speaker 02 And maybe sometimes you should just, you should just say that even if you don't think it.
35:52 Ramit Sethi? Do you all lie to your kids?
35:54 Speaker 02 No.
35:55 Ramit Sethi? No? What the?
35:56 Speaker 01 Yes, we do. Yeah.
35:59 Ramit Sethi? I love lying to kids.
36:00 Speaker 02 Depends on how you define lie.
36:01 Ramit Sethi? All right, hold on. We need to talk about this. Indians love to lie to kids. Like they love it.
36:06 Speaker 01 Really?
36:07 Ramit Sethi? They'll tell them like, if you don't stop crying, I'm gonna put you in the back of the car and take you to the police station. They'll put you in jail. They actually take them in the car sometimes. They literally will start driving and the kids are like,
36:18 Ramit Sethi? and then those kids dominate spelling bees later in life. How does it happen? You gotta lie to these kids. I know all these like white people are gonna be listening to this podcast. Ramit Sethi is so unethical, doesn't know anything about parenting. Just keep it to yourself. Sometimes it's cool to lie to each other. Why not? I love your hair. I love that pink laundry basket.
36:43 Ramit Sethi? Who gives a?
36:45 Ramit Sethi? What does it cost you? What do you guys think?
36:48 Speaker 02 Yeah.
36:49 Ramit Sethi? Oh, both agree.
36:50 Speaker 01 I'm totally.
36:50 Speaker 02 I agree.
36:50 Ramit Sethi? All right.
36:51 Speaker 01 I agree.
36:52 Ramit Sethi? You know, usually when people finish this podcast, I give them a challenge about do this, do that. Today's challenge is lie to each other in a positive way.
37:00 Speaker 01 Okay.
37:00 Ramit Sethi? That's it. And you go, wait a minute, that actually like really helped. And then guess what? Over time, by doing the action that you want, you might actually come to find that you actually feel good doing it. And best of all, it might actually come true. I do love that purchase you made, something I never would have even thought of. And it actually tastes so good or helps our family. Amazing. Okay. How fascinating is this moment of choosing a laundry basket? It really reveals something deeper. Will's hesitation isn't about $5 versus $6. It's a fear of judgment from Anna, whose approval matters deeply to him. It's not about household purchases. It's more about trust between the two.
37:44 Ramit Sethi? And until they trust each other's intentions, even these tiny little decisions feel almost existential. But you can tell they're starting to see it. They're showing up, they're laughing together. They're being honest with each other. They're willing to experiment. That is progress. And I want to say something to some of the commenters. "Oh, breakup, you should run." I see this all the time in my comments. Do you understand how difficult it is to come on a show like this and share some of these intimate moments? I am not looking for people to go from A to Z in one conversation with me. I'm looking for them to go from A to B. A to B is huge.
38:29 Ramit Sethi? Just going A to B means that you realize, "Oh, there's a problem here. Oh, I can do better. Oh, I want us to do better, and I'm willing to try just one little thing." So please understand the courage that my guests show when they come on here. Recognize issues and then start to make small steps. Small steps turn into big ones. Now, speaking of small steps, we are going to look at their conscious spending plan. And trust me, the advice I give them is not what you're expecting.
39:02 Ramit Sethi? 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... What stage of life you're in. And we actually had one of my coworkers create a will using Trust and Will. Here's what she said. Getting started was incredibly easy. In less than an hour, I had a will, power of attorney, last will and testament,
39:46 Ramit Sethi? and HIPAA authorizations, all of which I downloaded. And if I wanted, I could have them checked by another attorney. Their platform makes it easy to keep these things organized and updated. So your loved ones don't have to manage tons of paperwork down the line. Now, you can use an attorney for your estate plan, but that's not an option for everyone. If you know that you have loved ones that you need to protect, Trust and Will is worth considering. Go to trustandwill.com/ramit to get 20% off. That's trustandwill.com/ramit to get 20% off. T R U S T A N D W I L L dot com slash ramit.
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41:42 Ramit Sethi? Let's see, Will, can you read off the word in bold and the number in full next to it for this entire box?
41:49 Speaker 02 Assets, $654,400. Investments, $366,825. Savings, $188,884. Debt, $495,000.
42:04 Ramit Sethi? Total net worth?
42:05 Speaker 02 $714,713.
42:09 Ramit Sethi? What do y'all think of those numbers?
42:11 Speaker 02 Good, could be better.
42:13 Ramit Sethi? Okay.
42:14 Speaker 01 I agree. Not bad, could be better.
42:17 Ramit Sethi? Okay, all right, that's fair. Let's continue here. Anna, read your gross combined monthly income, please.
42:25 Speaker 01 Gross combined monthly income is $15,566.
42:30 Ramit Sethi? Okay, cool. So that's $186,000. Did you all know that?
42:36 Speaker 02 Kind of, but Anna's income is new.
42:39 Ramit Sethi? From this month, you made $2,983. Let's just round up to $3,000. That's an extra $36,000 a year gross. If you just continue, that's, that's quite amazing. What do you think about that?
42:51 Speaker 01 I think it's amazing, too. I am very focused on getting the next contract and making that 70,000.
42:58 Ramit Sethi? I know. You, you're looking at it from what you used to earn, and I'm looking at it from somebody who, as of recently, earned zero, and you've now added $36,000 while being a mom of two, one child having serious health condition. To me, amazing. But it's a great example of how we can all look at the same numbers and all see something completely different. Okay, let's continue going on here. Your fixed cost percentage, what is that number, Anna?
43:29 Speaker 01 Fixed costs are 84%.
43:31 Ramit Sethi? What do you think of that?
43:33 Speaker 01 Bad, too high.
43:35 Ramit Sethi? It is high, I agree. Let's keep going down. Your investments are at zero, although I know you're doing some pre-tax investment. How much are you investing, Will, in your 401K?
43:44 Speaker 02 It's a thousand dollars a month in a 401K. And then, so, and then another, I think, 750 in HSA.
43:53 Ramit Sethi? All right, all right, cool. So like 20,000 bucks or so per year, fine.
43:57 Speaker 02 Yeah.
43:58 Ramit Sethi? And then your savings are at zero, you're saving 0%. Although I want to point out, you have 188,000 dollars in savings.
44:06 Speaker 02 Yeah, yeah.
44:08 Ramit Sethi? What's that reaction?
44:09 Speaker 02 My parents were very savvy with their money. And they have a lot of extra money as they're approaching retirement. And they want to use it to help us make their grandkids have a great life. And so they had some kind of insurance product that was in my name that was just sitting in cash. And we finally just ended up transferring it to us so that we can use it for our kids.
44:33 Ramit Sethi? How much?
44:34 Speaker 02 This was 55,000.
44:35 Ramit Sethi? Like, do you feel like you have to apologize for your parents giving you this?
44:40 Speaker 02 Like, five years ago, when we, like, just before we had our first child, we were both working. Our careers were really, like, heading in a really awesome trajectory. And now I feel like it's the opposite. And like, I'm back being a child again, and they're providing money. And they want to give it because they love their grandchildren. And we're both only children. And so our kids have four grandparents who only care about them. And that's amazing. And so it's just taking a little bit for me to adjust to that.
45:13 Ramit Sethi? Yeah, your identity has to shift.
45:16 Speaker 02 Yeah.
45:16 Ramit Sethi? Just as Anna's identity, yours has had to shift, and it is [bleep] hard.
45:21 Speaker 02 Yeah.
45:22 Ramit Sethi? It's the hardest thing there is. Anna, in your case, from being high-achieving employee to still being high-achieving and being mom who stayed at home for a while, that identity incredibly difficult. Will, also high earner, who was planning to take care of his parents, and now his parents are, quote, "taking care of him," or giving a 55,000 dollar gift. Can I ask you guys a question? One day, do you want to hand some money to your kids? Every single person I talk to, I wanna create generational wealth. I want my kids to do better than I. And then when the minute they actually receive something from their parents, they're like, "Huh, this is so uncomfortable. I'm stricken with anxiety." Does anybody not see how ridiculous this is?
46:05 Ramit Sethi? It's a whole thing, and yet we turn around and wanna do the same thing to our kids.
46:09 Speaker 02 In the past few weeks, since they gave us this money, like, I've been thinking about that, and I was thinking about the same thing, like, oh, well, I would do that for our kids. But like you said, it's like my identity as like this independent person who's like making it for himself is like at odds with getting this gift. And I'm only now really willing to grapple with that and integrate that into my current identity and make that okay and not feel shame about all of this.
46:39 Ramit Sethi? Honestly, I love this journey that you're both going on. It is a journey of, yes, finances, but fundamentally is a journey of your identities individually and together. The fact is, you're both individually successful. Financially speaking, you have been successful together, but I know just from the stories you've told me about your life that you didn't do it alone. You had parents, you had a social infrastructure around you, probably went to pretty good schools. These are all things you cannot do yourself, right? We may be successful individually, but we live, we are embedded in a society. What's wrong with that? What's wrong with saying like, "Yeah, I [bleep] work hard and I feel proud of what I've accomplished and I get help."
47:24 Speaker 02 Yeah.
47:25 Ramit Sethi? All those can be integrated. I know it's easier said than done. There's a huge stigma in America about accepting money from your parents, although ironically, every parent wants to give it to their kids. I'm on a quest to get rid of that. Let's be open about it, shine a light on it. The only shame that should be felt here is why did your parents buy a [bleep]? Insurance product. That's the real problem. And truthfully, it's better you all have this money now when you actually need it than 40 years from now. What are you going to spend it on then?
47:55 Speaker 02 That's exactly what my mom says.
47:56 Ramit Sethi? Your parents are very wise. That's actually quite progressive, you know? These days wealthy people, they're smarter about distributing their money. They don't wait till they die. They know their kids need it in their 30s and 40s. It's much more valuable, especially in your situation. So if anything, Will, I hear you. I simply would work hard on rewriting that script and it sounds like you have.
48:16 Speaker 02 Yeah.
48:17 Ramit Sethi? Okay?
48:17 Speaker 02 Yeah.
48:17 Ramit Sethi? Right. Let's keep going down the list. Guilt-free spending says 16% or 1,500 bucks a month. Is this accurate?
48:26 Speaker 02 That only may be accurate going forward until this month when Anna got paid for this first like first tranche of her freelance.
48:36 Speaker 01 It was whatever's in Will's column.
48:38 Speaker 02 Yeah.
48:39 Speaker 01 So negative.
48:40 Speaker 02 That's and that's why all the expenses are in my column because up until this month, like I had, my paycheck was going into our joint account and covering everything.
48:48 Ramit Sethi? All right, fine. You guys are disciplined. I believe you. A lot of times I don't believe people when they show me their guilt-free spending. I'm like, this there's no way you're only spending this. But I love that you were responsive. Meaning when we had one income and we really had to buckle down, we cut from where we are supposed to cut from guilt-free spending and you spent effectively nothing. It's good to see it here. I'm going to go out on a limb and say, I don't think you've spent $1,500 this month on guilt-free spending. True?
49:16 Speaker 01 Absolutely true. We've not.
49:18 Speaker 02 Yeah.
49:18 Ramit Sethi? Exactly. Y'all very good at intellectually putting it on the CSP, but you haven't gone out to a nice dinner.
49:24 Speaker 02 No, no.
49:26 Ramit Sethi? Is there a world where the two of you would go out to dinner?
49:29 Speaker 02 We want there to be. Yes.
49:31 Ramit Sethi? In the next two weeks, what if I challenged you to go out to dinner, the two of you? Would you both want to?
49:38 Speaker 01 Yes.
49:39 Ramit Sethi? Childcare. Who's going to plan it?
49:41 Speaker 02 I want Anna to plan it because if I plan it, I'll get stressed about if it's the right restaurant or not.
49:46 Speaker 01 I'm so glad you said that because I was so hopeful that you would say that you would plan it because I plan everything else in our life. So it would be really meaningful to me if you planned it.
49:56 Speaker 02 Okay.
49:57 Ramit Sethi? Okay. First of all, that was awesome. I love that. Both of you advocating for yourself. Amazing. And do you all see the similarity between the laundry basket and the restaurant choice? It's the same thing. So Will, it sounds like you agreed to choose the restaurant. Anna, what is your commitment?
50:13 Speaker 01 I will be happy because he would get something that he likes and I would enjoy that.
50:19 Ramit Sethi? I love that. All right. So cool. What I'm really going for here, it is responding to the changes in your life. Anna, you are now earning $3,000 a month, which is awesome. And should you save and should we talk about your fixed costs? Of course, yes, we'll do that. But also can we step back from survival mode and adjust? We can adjust one degree at a time. That's okay. It's totally up to the two of you how you want to adjust, but let's adjust.
50:50 Speaker 02 Yeah.
50:51 Ramit Sethi? Okay, let's go back to the CSP. I want to talk about the fixed costs. We're at 84% here.
50:57 Speaker 02 Yeah.
50:57 Ramit Sethi? Take a look at what's going on. You have a mortgage for 3,700 bucks. The mortgage was more reasonable when you had two incomes and now that it's one income, it has become proportionally much higher. Is that right?
51:09 Speaker 02 Yeah.
51:10 Ramit Sethi? So honestly, it's not the house. It's childcare.
51:14 Speaker 02 Yeah.
51:14 Ramit Sethi? Childcare is incredibly expensive. It's 2,500 bucks. I'm going to assume that you've looked around and this is the best option for the two of you.
51:24 Speaker 01 Yes.
51:25 Ramit Sethi? Okay, fine. So we have to have this cost in here. Let's keep it. Work the rest around it.
51:31 Speaker 02 Yeah. And the gift from my parents, we'll just use that to pay for childcare for the next year.
51:37 Ramit Sethi? Great.
51:37 Speaker 02 And that eliminates that for this year.
51:40 Ramit Sethi? Roughly $30,000 a year and your parents gave you 55,000, right? All right. Anna, any comments on that? It looked like you wanted to say something.
51:49 Speaker 01 I'm not super convinced that's the best use of like a lump of cash. I actually wonder if it would be better if we invested a decent amount of it and just kind of kept being tight each month so that we could make up for some lost 401k investment time.
52:06 Ramit Sethi? Is there an optimizer in the room here? Someone who's going, hey, we have two kids, one of whom has a serious heart condition. We need to invest all this money in our 30s, even though we've already invested $366,000.
52:20 Speaker 01 Yes.
52:21 Ramit Sethi? Anna, how do you know you're behind? I mean, I know you are quote behind compared to what you used to make, but like, are you behind?
52:28 Speaker 01 If I compare our net worth to other people with our similar backgrounds, we are behind.
52:36 Ramit Sethi? Oh, who would those people be? Can you just tell me the name of their kid who has a congenital heart condition? Can you tell me that?
52:42 Speaker 01 No, that's not what I'm talking about. I'm talking about people that we went to school with and grew up in the same upper middle class.
52:51 Ramit Sethi? It's really funny because we all hear about comparing ourselves to the Joneses and we're like, "Oh, that's so stupid. I would never..." And then we all do exactly that. It's a saying for a reason. We can't help ourselves. We are social animals. We compare ourselves to others. I get that. I'm not going to tell you to stop comparing yourself because it's pointless. You're still going to, no matter what I say. But I will add a layer on, which is comparing where we are today to the rich life that we want to lead today and tomorrow. A rich life could be taking your kids to the park and playing with them. Whether it's checking the box off or not, you're outside, you're playing with the kids. Is that part of a rich life for you, Anna?
53:29 Speaker 01 Yes, it's a small part of the rich life for me.
53:31 Ramit Sethi? Great. Give me the bigger part. What is it for you today?
53:35 Speaker 01 My rich life today is feeling excited about living each day and feeling secure in our decisions. Feeling aligned as a couple and confident as parents. And it would also include more frequent like self-care stuff, like manicures and hair stuff and time with girlfriends. Time to invest in my nonprofit work and engaging in the heart community and sustaining connections there. I still think I'm getting off track. I don't know. I've been so focused on rich life of the future that I'm hard. It's hard for me to do it for now.
54:15 Ramit Sethi? Yeah.
54:15 Speaker 01 It's hard.
54:16 Ramit Sethi? Really good insight. Articulating what your rich life is doesn't happen perfectly the first time. It's like asking a kid to draw something. They suck. They don't have any skills. They don't know how to do it. But that's not the point. The point is they just put a pencil to paper and they're trying it. Like, truthfully, I don't know any parent who would be able to do all of the things you said. It's awesome. I don't mind getting it all out on paper. Let's do it one more time. And this time, I'm going to give you a little constraint. I think constraints help you. Three things, just three, that would be part of your rich life today. One of them has to include your kids. One of them has to include Will. And the third one is totally up to you.
54:58 Speaker 01 Okay, going on a walk with me and just the kids or playing outside with them. With Will, it would be that after bedtime is done, we have a few minutes sitting together and like talking without all of the noise of life and social media and the internet and the news and all that. And then time for myself would be extra time in the morning to get ready instead of just throwing clothes on. So like, I actually feel good about what I'm wearing and what my hair and face look like, no matter what is happening that day.
55:36 Ramit Sethi? How did it feel to say those three things?
55:39 Speaker 01 It felt good to say those three things. It also feels kind of vulnerable to be like, oh, like you don't get ready every day.
55:46 Ramit Sethi? I love that. I think a lot of people, parents, listening to this are like, that's me, like every day. And I do think it was incredibly courageous of you to say, I want to have some time in the morning for myself, regardless of what I'm doing that day. That's awesome. That doesn't seem outrageous to me. You're not asking to fly on some private jet all the time. It's like, yes, let's figure out a way to make that happen. Okay, great. Will, how did it feel to hear Anna say those things? Does that not like make you excited?
56:17 Speaker 02 Yeah, it does because she doesn't put herself first and I want to support her and do that.
56:22 Ramit Sethi? Love it. Some of this is wanting the best for yourself and your partner. Part of it is re-characterizing what best means. Best doesn't always mean the most expensive. Best doesn't always mean the highest achieving. Sometimes best is just a thing that fits you and your stage of life, the best. Anyway, these are things that a good therapist can help you work through and I would encourage you to do it.
56:46 Speaker 02 I agree.
56:47 Speaker 01 Yeah, I agree too. That feels correct and good.
56:50 Ramit Sethi? Love it. For the vast majority of couples who are spending more than they make every month, they're in a huge, huge red flag position. But once in a while, I will meet a couple who is spending more than they make on a given month, or even for months at a time, and I say, "Keep doing it." Why would I, Ramit Sethi, say that? Well, because sometimes they have saved enough that they can afford to do that for a while. Sometimes they're in an extraordinary situation where they absolutely have to do that, and they can fix things later. That's what's going on right now. They planned, and this advice works for them because they built up a sizable reserve fund.
57:34 Ramit Sethi? They actually didn't even realize how well they planned for it. My job is to help them see that and to act accordingly. I'm reminded of what happened during COVID when a number of people had major, major emergency funds, and they would write me saying, "Should I use my emergency fund? I'm really nervous about it." I'm like, "What the [bleep]? People are literally dying. This is the time to use your emergency fund. Stay home from work, or get your parents' medical care or safety." Emergency funds are meant to be used in an emergency. Now, the bigger question here is not just about numbers, it's about really defining what's enough. I can tell they're going to earn more money, and it is my job to help them zoom out and see the big picture.
58:18 Ramit Sethi? After the break, we're going to dive into the question of enough. We have more to talk about.
58:25 Ramit Sethi? 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. And we actually had one of my coworkers create a will using Trust and Will. And will, here's what she said, getting started was incredibly easy. In less than an hour, I had a will, power of attorney, last will and testament,
59:09 Ramit Sethi? and HIPAA authorizations, all of which I downloaded. And if I wanted, I could have them checked by another attorney. Their platform makes it easy to keep these things organized and updated. So your loved ones don't have to manage tons of paperwork down the line. Now you can use an attorney for your estate plan, but that's not an option for everyone. If you know that you have loved ones that you need to protect, Trust and Will is worth considering. Go to trustandwill.com/ramit to get 20% off. That's trustandwill.com/ramit to get 20% off. T R U S T A N D W I L L dot com slash ramit.
59:53 Ramit Sethi? Have you calculated how much money you're going to have at retirement, Anna?
59:58 Speaker 01 Yes.
59:58 Ramit Sethi? How much?
59:59 Speaker 01 I don't remember, but I think that the calculation is around 5.6 million.
1:00:06 Ramit Sethi? Will is furiously shaking his head no. Will, what number do you know?
1:00:10 Speaker 02 I think it's about 3.4. I think the number that Anna is quoting is before our income changed.
1:00:17 Ramit Sethi? I'm actually pleasantly surprised that you have run the numbers. A lot of times when I talk to people who are worrying constantly, they don't even run the numbers. Okay, great. Let's just look at the CSP again, because we got to nail these numbers. You have $188,000 in savings, which by the way is like well over a year. The rest of your fixed costs are quite nominal. I just want to point out your groceries are at less than 800 bucks. Your subscriptions are $31. There's nothing else you're spending on except your mortgage and your childcare. Those are the two primary things. Your investments, even though it says zero, you are investing about 18,000 or so ballpark. And your savings are at zero, which I understand.
1:01:00 Ramit Sethi? And then you do have 1,500 bucks a month left over for guilt free spending, which is 16%. Of course, that's new. You're not spending it yet, but we know that you're going to try to go and do a date night. We got to understand if you have enough or not. First off, so you currently have $366,000. We're going to plug it into the calculator. How many years?
1:01:21 Speaker 02 Like 30 something?
1:01:24 Speaker 01 Well, how old are you? You're 37.
1:01:27 Ramit Sethi? So 28 years.
1:01:28 Speaker 01 Yeah.
1:01:29 Speaker 02 At least, yeah.
1:01:30 Ramit Sethi? All right, let's just say that. And then you're adding $18,000 a year for now. What's that number right there?
1:01:36 Speaker 02 3.89 million.
1:01:38 Ramit Sethi? 3.8 million. What do y'all think about that?
1:01:40 Speaker 01 Way too low.
1:01:41 Speaker 02 It's a lot of money.
1:01:43 Ramit Sethi? Whoa. Will says that's a lot of money and it goes way too little.
1:01:48 Speaker 01 No.
1:01:49 Ramit Sethi? All right, well, how much is enough?
1:01:51 Speaker 01 We need in the five to six range to have a comfortable annual withdrawals.
1:01:56 Ramit Sethi? Okay, Will, you agree or no?
1:01:58 Speaker 02 It is a lot of money. But I agree that if we wanted to maintain our current spending levels, it's not enough.
1:02:05 Ramit Sethi? Well, you're not going to have childcare forever. Your house is going to theoretically be paid off. Isn't that like almost all of your fixed costs?
1:02:14 Speaker 02 Yeah.
1:02:14 Speaker 01 Yes.
1:02:15 Speaker 02 Yeah.
1:02:16 Ramit Sethi? Listen, high earners don't want to compromise. I wouldn't in your position either. I'm like, I'm not trying to live on $130,000 when I'm 65. That. I want options. However, high achievers can also only live for the future and not live for today. So I'm going to pose a hypothetical to you. What if you took that $18,000 a year that you're currently investing? And you actually just spent it for your family? Let's look. Right now, it's 3.8 million. That's with $18,000 a year. If we drop the $18,000 off, the number drops to 2.4 million. I agree, that's a big drop, not sustainable. So let's do this. Let's say that for one year in this hypothetical, you did not contribute the 18,000.
1:03:02 Ramit Sethi? You'd have 3.6 million instead of 3.8 million.
1:03:07 Ramit Sethi? What do you take away from that, Anna?
1:03:08 Speaker 01 I don't think it's significant.
1:03:10 Ramit Sethi? Yeah. The money compounds, of course, we all know that at the end, 18,000 in a year turns into relatively lot 25, 30 years from now. But also, sometimes, especially with young parents, that money is more valuable now. Like, way more valuable. And what if that 18,000 could be used to fix some deck issue that you've all been arguing about for two years? Like, what if? Wow, a lot of smiles around the room. Suddenly, everybody wants to dip into their 401K. Hey, [bleep] a 401K. Fix this deck. What about the idea of taking the money in your savings account and investing it? Because we're losing money right now. You all want to do that? Let's do, let's, oh, they're both nodding. Yes, yes, we want to do it. All right, fine.
1:03:55 Ramit Sethi? So what do we want to do here?
1:03:57 Speaker 01 We need about 50K for a six-month emergency fund. That's, we have to have that.
1:04:02 Ramit Sethi? Okay. So you have $155,000 in savings. You told me that 50K you need for an emergency fund. So let's just take 55 out, put that aside. You have 100K left. Your childcare costs are like $3,000 a month, or $36,000 a year. Out of 100K, how much do you want to invest?
1:04:22 Speaker 02 So let's say 50,000.
1:04:24 Ramit Sethi? Okay, so 50,000, meaning you would have a little bit over a year's worth of childcare costs in your savings. All right, fine. So instead of 366, we're gonna do
1:04:36 Ramit Sethi? 416,000 is what you're starting with. And what is that number you see at the bottom?
1:04:41 Speaker 01 4.2 million.
1:04:42 Ramit Sethi? 2, instead of 3.8, it's 4.2. What do you make of that?
1:04:47 Speaker 02 Not as big of a change as I would think.
1:04:49 Ramit Sethi? Yeah.
1:04:50 Speaker 02 Because it's like 50,000 turns into 400,000?
1:04:54 Ramit Sethi? Yeah.
1:04:55 Speaker 02 Over that many years. That's less than I would have imagined.
1:04:58 Ramit Sethi? There's two things I want to point out that I take away from this. First off, one-time investments, of course, they compound. But what really moves the needle is consistent investing over a long period of time. That's the first. The second is, honestly, to make an extra $400,000 when I'm 60-something years old, I'd rather have that money in my savings account at this high-intensity time as young parents with a lot of uncertainty in my family. What do you guys think of that? That's my approach, but I don't feel the need to optimize everything. Sometimes I want to have a little extra cash just to know that I can weather the storm.
1:05:36 Speaker 01 Yeah. I I agree with what you're saying. Having extra in savings now means it covers if I don't renew a contract, if he loses his job.
1:05:46 Ramit Sethi? That and and what happens next year with childcare? Yeah. Right now, at least you have the breathing space. Why put yourself in a position where in December, you both are scrambling? You're like, we have no money left, no cash flow because of a decision you made several months ago. Why not give yourself a little bit of runway? And the trade off is you're losing $50,000 compounded over 30 years? Yeah.
1:06:13 Speaker 01 But we're behind on retirement. I need to see that retirement number getting into the $6 million range.
1:06:19 Ramit Sethi? Okay.
1:06:19 Speaker 01 It's very hard for me to accept what you're saying without a way to get there.
1:06:24 Ramit Sethi? Okay, fine. I I'm with you. What I hear is, again, and I love I love the honesty. This is like so good. Anna's like, yeah, yeah, yeah. Okay, whatever. But like, get me to six. We can do it. What I'm saying is, the approach to a rich life is not always going all in. I don't want for the two of you to go all in on everything. I want you to be selective. So we know that you could take one year of 401k funds and use it for something if you want it. You don't have to, but it's in your toolbox now. Okay, we know that you could theoretically take $50,000 from savings and invest it. But at least from my perspective, I wouldn't do
1:07:08 Ramit Sethi? it because it's very risky. And I would rather have the money sitting in a savings account, knowing that I'm going to need it next year. Most people listening are not in Anna and Will's exact situation, but we have the ability to interpret and adapt it for our own lives. In fact, what's happening is actually extremely relevant to what's happening right now in America. This episode was recorded before Trump's new rounds of tariffs sent the market spinning again.
1:07:39 Ramit Sethi? But even with all that, major tumultuous moves in the market, my advice here does not change. Have money in your savings account. Keep investing, yes, but make sure you have a large emergency fund. I'm currently recommending 12 months of an emergency fund. The only other time I recommended that large of a reserve was during COVID, which I hope suggests to you how seriously I take the situation. Build that emergency fund up. If you can't get to 12 months right away, very few can, start aiming for three, then six, but build your emergency fund up. If you need it, you will be glad you have it. Now let's get back to Anna and Will. Listen as I show Anna how despite her reduced income, she can still help them hit their retirement goals.
1:08:24 Ramit Sethi? Okay, so what else can you do? Well, you could earn more money. Shall we talk about that?
1:08:28 Speaker 01 Yes.
1:08:29 Ramit Sethi? All right. You have this consulting business that you recently started. And how much did you earn from it last month?
1:08:36 Speaker 01 This is my first time ever doing anything as a non-full-time employee. So it's brand new. I'm signed on for a project with a client and I'm earning $35,600 or something like that over five, five months.
1:08:52 Ramit Sethi? Hold on, what the? Are we all getting lost in the details that you just earned a $35,000 project? Is that what I heard?
1:08:59 Speaker 01 Correct.
1:09:00 Ramit Sethi? Okay, what the? Round of applause. Does anyone else think like big pat on the back time? This is cool.
1:09:06 Speaker 01 Yes, I actually, I'm really glad you're saying that because yesterday I saw the marketing for my project on the client's website. And I sent a text to Will and I was like, I'm really proud of myself that I did this.
1:09:19 Ramit Sethi? I love that. Okay, great job. Amazing. We teach this in our Earn 1K program. It's like how to take the skills you already have and earn money on the side. And people often start off making an extra $1,000 a month. And then if they want, they can turn it up to two, five, 10,000 or more. You got a $35,000 project, which is incredible. Do you think you will continue doing this and maybe start earning more with this freelance business?
1:09:48 Speaker 01 That's a great question. I want to. I hope is that the client will sign on for a second project this year. The leap is how do I get another client? Ultimately, in these good times with our family, I'm scaling up. I'm exceeding the salary I was making as a full time. And then I can say no to things if I need to.
1:10:12 Ramit Sethi? You want some help?
1:10:13 Speaker 01 Yes.
1:10:14 Ramit Sethi? Okay, I'll send you my earn one K program. All right, I'll give you access to it. Take your idea that you've already seen the marketplace wants. We'll help you slice and dice it so you can understand why it worked. Where to find other people like this client? How to charge? How to scale it? And then how to turn it into something where you control how much money you make? Okay?
1:10:39 Speaker 01 Awesome.
1:10:40 Ramit Sethi? Let's plug in some numbers just to see how it might affect the finances. Let's say, Anna, that you're able to make, let's be conservative here. How much are you going to be able to make per month?
1:10:52 Speaker 01 What I currently have listed, which is what about three grand? You could double that, and I think that would be conservative.
1:10:59 Ramit Sethi? Okay, six grand per month. Love it. Okay, how much will we be able to invest of that money? Let's remember things like taxes, etc.
1:11:08 Speaker 01 At least a thousand of it, if not fifteen hundred.
1:11:12 Ramit Sethi? I think that's right. Let's say a thousand. So we got thirty thousand dollars a year. Right, eighteen of Will, plus twelve of yours. That's thirty thousand dollars a year. Shall we take a look at how it changes the numbers?
1:11:25 Speaker 02 Yeah.
1:11:25 Ramit Sethi? What's that number down there?
1:11:27 Speaker 02 Four point eight.
1:11:28 Ramit Sethi? You just went up a million dollars.
1:11:30 Speaker 02 Yeah.
1:11:30 Ramit Sethi? Just with a thousand dollars. That's pretty good. What do you all think?
1:11:35 Speaker 02 Yeah.
1:11:35 Ramit Sethi? Okay.
1:11:36 Speaker 01 It's really good.
1:11:36 Speaker 02 Awesome.
1:11:37 Ramit Sethi? I actually think, by the way, four point eight is pretty freaking good. Have you all calculated what the four percent on that is?
1:11:43 Speaker 02 No.
1:11:44 Speaker 01 No.
1:11:44 Ramit Sethi? No, of course not. It's one hundred ninety five thousand dollars a year.
1:11:48 Speaker 01 Oh, that's way higher than I thought.
1:11:52 Ramit Sethi? Oh, wow.
1:11:52 Speaker 02 That's way higher than I thought.
1:11:53 Ramit Sethi? All this worrying, never ran three calculations. Tell me, Anna, what's going through your head right now?
1:11:58 Speaker 01 I don't know. I still thought we were in like that one fifty range. Getting close to two hundred feels really good.
1:12:04 Ramit Sethi? It's pretty cool. Will, what about you?
1:12:06 Speaker 02 So I'm like really surprised, in a good way.
1:12:09 Ramit Sethi? Yeah. You know what I love about the two of you is you're thinking about these things and you have a lot of time. And what that means is that little perturbations, they don't knock you off course. They allow you to course correct gradually.
1:12:27 Ramit Sethi? And so we're not doing this. We're 58 years old. Oh my God, we didn't retire. It's like, okay, we are strong. Nothing is going to knock us off course. We might go a little left, we might go a little right, but as long as we are doing this together, we're going to get where we want to go. The other thing is you two experienced something that almost nobody else has experienced, and you're still financially speaking on a great track. Yes, you are spending 84% on fixed costs. Yes. But I looked at it. It's not like you're going out to dinner every night. No, it's like house and childcare. That's going to be for a while. You have the money in savings. You know, I always say strawberries are meant to be eaten.
1:13:11 Ramit Sethi? When I was a kid, we hardly ever got strawberries. And when we got them, I would try to keep them for as long as possible. Then they go rotten. It's like strawberries are meant to be eaten. Your savings are meant to be used. Money is meant to be spent on a rich life. Yes, have your emergency fund. You have that though. But what about things like childcare? The final thing that I observe here is part of accepting your rich life and thriving in it is accepting that you're not comparing yourselves to where you were as two high earners with no kids. That's a past chapter, and that's okay. You both had kids. If you compare yourself to where you were back then, you will forever be behind.
1:13:51 Speaker 01 Yeah.
1:13:53 Ramit Sethi? But gosh, when I hear your story, I don't hear two people who are behind. I hear two parents who have had something traumatic and incredible happen to them. And the two of you have had to develop an entire new language and skill set instead of experiences that nobody else can. And I'm like, you're not behind. You know things that none of us can ever know. So if anything, it makes me appreciate the two of you more and see the possibility in your numbers rather than being behind.
1:14:22 Speaker 01 Yeah, it's a big mindset shift for me. I didn't realize how often I am. Comparing my current self to my past self, even though I don't view our experiences with our son and heart disease and all of that, I don't view it as a setback. I think that in that constant calculating in my brain of comparing my old contributions to my current contributions, I am viewing it as a setback. So I need to stop counting the numbers.
1:14:49 Ramit Sethi? I love that. That's a great realization. Will, how about you?
1:14:53 Speaker 02 I worked really hard to not compare where we are now with where we could have been. But because I've been able to do that, I've sort of put up a wall. And because Anna's still doing that, I haven't been supportive enough. And we haven't been in the same place mentally together. And that has been pushing us apart. I'm really motivated bringing down that wall and we're here inside my wall with me, where we can work together instead of feeling like combatants or opponents on these decisions.
1:15:25 Ramit Sethi? Yes. Wow. Big realizations all around. Some final thoughts here for you, Anna. Definitely do the Earn One K program. Your income will go up. You've already accomplished something amazing, a $35,000 contract. That is validation that the market wants what you have to offer. If you do a couple more projects like that, you're going to build a lot of confidence. And secondly, you can always decide, do I want a full-time job? Am I enjoying this income on the side? What fits in with my vision of a rich life and our vision of our family? It's up to you. For the two of you, I would encourage you to find time for each other. That would be, whether it be date night, highly encouraged. Couples therapy, highly encouraged.
1:16:10 Ramit Sethi? But finding time where you have to carve it out and make it part of a family structure. Create that culture. And I think that the two of you, it's really important. You want your kids to have a great experience. They need to see their parents having a great experience. And the final thing is what you've gone through. No one else can tell you what it's like to go through. I certainly can't, but I can tell you what I see as a third party. I mean, I see a ton of love and I see that you two have handled it in ways that I don't think I could have. And sometimes like taking a second and appreciating how far you've come, looking at old memories, whether they be positive or hard to see, and just saying like, we did that. We went on that journey and that brought us here today.
1:16:52 Ramit Sethi? That, that will provide a whole new frame for looking at the numbers. Sometimes when you are deep in a chaotic situation, whether it be shifting roles, medical challenges, uncertainty, you have to narrow your field of view. You have to focus on what is directly in front of you. And that's why sometimes zooming out, stepping back can be so helpful. Whether it's speaking to me, speaking to a therapist, speaking to any third party can be so helpful. Anna and Will, they've been through a lot and they've done something that a lot of couples don't do. They really faced it head on. They were honest, they were vulnerable. They were willing to try something new. Anna doesn't have to go back to work.
1:17:36 Ramit Sethi? If she wanted to stay home and earn nothing, they would be okay. That's the level of financial stability they've built. But she wants to work. She wants to grow something that's hers, that's part of her rich life. And my job is to help her and Will live their rich lives. I want to acknowledge the topic of childcare because I made a really dumb mistake in a previous episode. 195, I told this couple that childcare was a luxury. It was part of guilt free spending. Why did I do that?
1:18:11 Ramit Sethi? My conversation around that point was trying to encourage this couple, a couple who admitted they were cheap, to see how they were already spending on things they value and that it's okay to spend more. Unfortunately, I picked a really dumb example. Thank you for the many comments correcting me, and I apologize. I will always be honest when I'm right and wrong. Thank you so much for those comments and for watching my material. That is so important here because Anna and Will have the money to be able to spend on childcare and it's clearly part of their rich life. Remember, a rich life is lived outside the spreadsheet. You gotta know your numbers, yes, but you also have to decide what is important to you
1:18:56 Ramit Sethi? and sometimes that doesn't show up on cell C16. I'm very proud of Anna and Will for having these conversations directly with each other. Now let's check in and see where they are now.
1:19:10 Speaker 02 The call with Ramit has totally unlocked my relationship to our finances, but now I realize that we have a lot of options, especially when it comes to using our savings to offset some of those fixed costs, especially the temporary ones like childcare costs. And that has allowed us to take that expense out of our CSP, which has just been like a weight totally lifted off our shoulders. And now when I look at those numbers, I don't feel like I'm wading through mud. I feel like we are back in control of our future and we're gonna use a lot of that new flexibility to really cement the connection we have within our family. I think that's something that has fallen by the wayside the past couple of years.
1:19:53 Speaker 02 We've already gone out, taken the kids out to get ice cream and dinner and it was just like amazing to do that. And Anna and I have a reservation to go on our first date night and we're really looking forward to that. I am definitely doing a lot of soul searching when it comes to my identity and relationship around asking for help with finances and also accepting help, especially with my parents. Anna and I have scheduled time to talk with them about their finances and how they want to help us and come up with a plan that helps all of us and not make it something that we have to do all on our own in asylum. I feel like I can breathe now. The call was very emotionally exhausting, but afterwards,
1:20:38 Speaker 02 I think brought the the sun flying back into our day to day lives. So, thank you.
1:20:43 Speaker 01 It was awesome to talk to you. I think we both feel really good about keeping the cash we have. It feels kind of like a relief and I don't think that our spending habits lead us to being at risk of blowing it all. So even though there's still a lot of unknown, that a lot of decisions that we have floating around, I think that for me, the intensity has decreased slightly. We're both working hard to be more united and empathetic before being right about things regarding money and decisions about our life and the way we spend our time and money. I want to say that I feel a hundred percent better about money than I did before our call,
1:21:24 Speaker 01 but that is not true. I think that what has gone away is like, oh, my gosh, we've ruined everything. All of that fear I realize is not realistic at all. So I'm glad to not be at that level. You were a lot more encouraging than I thought you were gonna be. And I realize now, after talking with you, that the context around our numbers really does matter a lot. You were more accepting of us in our very unique situation than I ever have been. I think that using Earn One K is really gonna help me get some of the pieces of my identity back that I've been missing, like just earning money and being invested in projects
1:22:05 Speaker 01 with clients and all that. I'm very, very excited about doing that. So thank you for giving me access. It's already going super well. Aside from that, I did just want to say congenital heart disease is the number one birth defect and there is no cure. If you're interested in helping out, there, an organization that I work with is called Lily Pads Housing that helps people who are bringing their kids from afar to our local children's hospital. Another one is called Miles of Love and they help families, like if they needed to quit their job to stay In the hospital, which happens all the time. Finally, on the research front, there's an organization called Heartworks,
1:22:50 Speaker 01 and they are very aggressively working toward finding actual cures for congenital heart disease, and they're a great organization. So thanks so much for listening. We have a lot to do and we feel pretty motivated to do it. Thanks.
1:23:07 Ramit Sethi? If you want my help with your specific money questions, you can apply to be on this podcast at iwt.com/apply. Or you can become a member of my money coaching program instantly at iwt.com/moneycoaching. In Money Coaching, you get access to monthly calls where I answer your questions directly on a private call, and I get the chance to go much deeper on the concepts of money that have made a huge change in my life. Plus, you'll get access to a community of other people like you who will inspire you and push you to live your rich life. Check out Money Coaching at iwt.com/moneycoaching.
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