242. "Our couples therapist couldn’t fix this. Please help."

Ramit Sethi of I Will Teach You To Be Rich talks to Natalie and Chris, married with two young kids and a net worth of $1.3 million. Despite their significant assets, money remains a constant source of conflict, especially when unexpected expenses arise. Chris tends to "freak out," emotionally withdrawing and becoming zombie-like, leaving Natalie feeling alone. This pattern, which Chris describes as "catastrophizing," has intensified since their kids' expenses piled up. Their therapist recommended they talk to Ramit, hoping to establish a financial game plan to prevent Chris's emotional collapses. Currently, 81% of their income goes to fixed costs, with 0% to savings, leading to a feeling of constant stress and no margin for error. Can Ramit help them create a financial system that provides peace of mind and allows Chris to process financial challenges with less distress? In this episode we uncover: • The unexpected source of Chris and Natalie’s referral to Ramit • How large, unexpected expenses trigger Chris’s emotional “shutdown” • Natalie’s experience of feeling isolated when Chris is financially stressed • Why having a $1.3 million net worth doesn’t alleviate their financial anxiety • The surprising reason for their elevated fixed costs and lack of savings • The emotional impact of feeling like there’s “nothing left over” at the end of the month • Chris’s pattern of “catastrophizing” and the fear of successive financial blows • The core question their therapist hopes Ramit can answer • How Chris’s upbringing influences his current financial anxieties • The challenges of discussing money when past traumas intertwine with current stresses Chapters: (00:00:00) “Your therapist...recommended that you speak to me” (00:10:55) “Natalie, what’s your role in money?” (00:25:43) The unexpected (and huge) financial blindspot (00:36:18) Ramit discovers a massive amount of hidden money (00:45:01) “You are financially set up for life” (00:54:02) How "Red Bull wingsuit" leads to a Rich Life (01:19:20) Finding an extra $1,360/month (01:44:23) Natalie and Chris’s follow-up: “He’s at ease now” This episode is brought to you by: ZocDoc | Download the ZocDoc app for FREE at https://zocdoc.com/ramit then find and book a top-rated doctor today #sponsored Notion | Try Notion, now with Notion Agent, at https://notion.com/ramit DeleteMe | If you want to get your personal information removed from the web, go to https://joindeleteme.com/ramit for 20% off Gusto | Try Gusto at http://gusto.com/ramit and get 3 months free when you run your first payroll Facet | Facet is waiving their $250 enrollment fee for new annual members, and for my audience, Facet is offering $300 into your brokerage account if you invest and maintain $5,000 within your first 90 days. Head to facet.com/ramit to learn more about which membership option is best for you. Offer expires March 31, 2026. #FacetAd Connect with Ramit • ⁠Get my new book, Money For Couples⁠ • ⁠Get Money Coaching with Ramit⁠ • ⁠Download the Conscious Spending Plan⁠ • ⁠Listen to my book—now on Audible⁠ • ⁠Get my New York Times best-selling book⁠ • ⁠Get my no-numbers journal⁠ • ⁠Other episodes⁠ • ⁠Instagram⁠ • ⁠Twitter⁠ • ⁠YouTube If you and your partner have a money issue and you want my help, I occasionally select a couple to work with, free of charge. Apply for my help here: https://iwt.com/apply

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

• 0:00Ramit Sethi?

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• 0:43Ramit Sethi?

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• 0:50Ramit Sethi?

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• 1:33Ramit Sethi?

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• 2:14Ramit Sethi?

  Your therapist is the one who recommended that you speak to me.

• 2:18Speaker 01

  I get really stressed out when unknown financial burdens come up. I start freaking out.

• 2:25Speaker 02

  I felt like I was living with a stranger. It was such a huge impact on your psyche that we couldn't live life as normal.

• 2:32Speaker 01

  All I spend my mental energy thinking about is how I'm gonna fix the problem. And that gets me spiraling. What if one of the kids takes a big fall and has to go to the hospital? Or I have to go to the hospital?

• 2:45Ramit Sethi?

  You are spending $3,000 more than you make. In approximately 10 months, you are out of money.

• 2:54Speaker 02

  That's scary. That doesn't sound good.

• 2:55Ramit Sethi?

  You two are in a position you have never realized before because you are operating on the valuable lessons that your parents taught you that happen to not match your current financial reality. Imagine my surprise today when I discovered that a therapist recommended today's guests come on my podcast. Their therapist told them, "You don't need another therapy session. You need this podcast." And I want to say I'm honored. I have a lot of respect for all of the mental health professionals in America: therapists, psychologists, psychiatrists, social workers, addiction counselors, professors, and everyone else in the field. And that is why I constantly try to de-stigmatize getting help for mental health. And I constantly recommend that my guests work with these specialists.

• 3:41Ramit Sethi?

  So for all the mental health professionals who listen to Money for Couples, thank you. And now, today, I want to introduce my guests. I'm speaking to Natalie and Chris. They are married with two young kids, and they have a net worth of $1.3 million. On paper, they're doing well. Behind the scenes, money keeps creating conflict in their relationship, especially when big, unexpected expenses come up. For example, when a big expense hits, Natalie tells me that Chris collapses emotionally.

• 4:10Ramit Sethi?

  So what's actually happening here? Why would someone with a million dollar net worth react this way? So let's take a look at their conscious spending plan, which covers a quick snapshot of their finances. Assets: $893,000. Investments: $634,000. Savings: $33,000. Debt: $211,000. Total net worth: $1.3 million. And their monthly spending breakdowns. Fixed costs: 81%, that's high. Investments: 10%. Savings: 0%, that's a red flag. Guilt-free spending: 9%. Okay, they're spending 81% of their income on fixed costs. They're saving nothing. And they've got less than 10% going to guilt-free spending. These are some red flags.

• 4:53Ramit Sethi?

  When money is that tight, even with a high income, it creates this constant feeling of stress. It means there's no room for mistakes, no margin for unexpected expenses. Why does someone with a million dollar net worth need to cut it that close? Why would you set your money up to flow like this? Shouldn't you feel good about money once you have seven figures? Well, here's my question for you. Maybe you've got a solid income. Maybe you've got good savings, solid investments, but there's still nothing left over at the end of the month. If this is you, tell me in the comments, how does it feel? I want to read what your feelings and experiences are feeling like there's nothing left at the end of the month. Now, let's meet Natalie and Chris

• 5:37Ramit Sethi?

  and figure out what's really going on. Can you tell me what was going on in therapy where my name came up?

• 5:44Speaker 01

  I get really stressed out when unknown future financial burdens come up. So if a car breaks down and I don't know how much it's going to cost to fix it, I start freaking out. And it affects me not just when I find out, but for a long while after. And that definitely impacts my mood around everyone in the family. So... We were talking about how it's detrimental and that maybe it's not even particularly rational.

• 6:17Speaker 02

  This is a cyclical thing that happens in our relationship three or four times a year. And previously, we've always tried to treat the symptoms, so to speak, instead of the the cause.

• 6:28Ramit Sethi?

  When you say this, you're talking about Chris, as he describes it, quote, freaking out about an unexpected cost?

• 6:35Speaker 02

  Yes.

• 6:36Ramit Sethi?

  Okay, and you you mentioned Natalie that when one of these expenses comes up, Chris shuts everyone out. Do you have any examples of that?

• 6:45Speaker 02

  My vehicle, my vehicle, the air conditioning went out. And one thing I admire so much about Chris is his not only willingness, but ability to fix things himself to save money. So he attempted to fix the issue. And because of circumstances that weren't entirely his fault, it didn't get fixed and actually made things worse with the vehicle. And there was a period of, what, Chris, two or three days that I felt like I was living with a stranger, like alone. It was such a huge impact on your psyche that we couldn't live life as normal.

• 7:19Ramit Sethi?

  Tell me what happened.

• 7:20Speaker 01

  I just kind of become really blank, kind of zombie-like. All I can really spend my mental energy thinking about is how I'm gonna fix the problem. And when it's a problem that I can't fix with my hands and my tools, then it's just a money issue. And that gets me, you know, just kind of spiraling.

• 7:43Speaker 02

  So when the kids ask for something, um, he can't respond effectively or can't provide that for them. Or when I ask about a completely unrelated issue, he's unable to think about that or address it. All he can do is like go to work and come home, very zombie-like and. No emotion and shutting us out.

• 8:04Ramit Sethi?

  How long does it last for?

• 8:05Speaker 02

  It depends on when he can get an answer as to how much the fix will be.

• 8:10Ramit Sethi?

  Okay.

• 8:11Speaker 01

  Yeah.

• 8:11Ramit Sethi?

  And what did your therapist suggest would be a great outcome for our conversation today?

• 8:18Speaker 02

  I brought up the question of how much money in our savings is an okay amount? So that Chris does not react this way to an unforeseen expense. And that's when she suggested that we listen to your podcast and start to think about financial fixes and being on the same page and getting a game plan together so that this doesn't happen in the future.

• 8:41Ramit Sethi?

  Okay, you mentioned kids, how many kids and how old?

• 8:44Speaker 02

  We have two, we have a six year old boy and a three year old girl.

• 8:47Ramit Sethi?

  Okay, great. How long has this dynamic around money existed?

• 8:54Speaker 01

  I've always kind of had that feeling around money. And I think it's exacerbated by the fact that now that we do have two kids and there's a lot of expenses associated with it. And so I would say that around the time that kid expenses really started piling up, like daycare is when it got to the point it is now.

• 9:15Ramit Sethi?

  Okay, got it. And when these feelings come up for you, like when a large expense comes up that with an uncertain amount, what's going on for you? Do you have a voice that's saying something? Do you have a feeling in your chest?

• 9:27Speaker 01

  It's a feeling of being really concerned and it's always the what if? It's generally not that issue that I'm concerned with. It's okay, this issue has come up and I know it's going to cost a few thousand dollars at least. I don't know exactly how much, but what if we get in a crash with another vehicle? And that's going to be a large expense. Or what if one of the kids takes a big fall and has to go to the hospital? Or I have to go to the hospital? And it's that concern about maintaining that cushion and being able to reestablish it fast enough before the next thing comes along.

• 10:04Ramit Sethi?

  You ever talk about catastrophizing in therapy?

• 10:07Speaker 02

  No, but we will now.

• 10:08Speaker 01

  Specifically, but yeah, I mean, that's kind of what it is, right? It's, it's the, I'm not particularly concerned about this one, but what happens if another one comes right behind it?

• 10:18Ramit Sethi?

  Okay, all right. And Natalie, in your application, you wrote, "We're doing just fine financially, better than most." And so if you are truly doing better than most, why do you think money is such an issue in your relationship?

• 10:36Speaker 02

  Chris and I have not yet established money flows to put money automatically in savings. Filling out the spreadsheet that you sent us was a real eye opener to the amount that we have in investments, which is factually better than most people our age, right? But having that cash on hand seems to be the issue with us. I don't know, there's just some kind of discrepancy between how you view things, Chris, and how I view things on how much money cash on hand is a good amount for us to feel okay.

• 11:11Speaker 01

  I don't particularly see it as the amount of money on hand in like the checking and savings account that we can pull from. That's the issue. It's what's the trend line look like? Is it generally going up or generally going down? Because when it's going down, I just see it as like a burn rate. And there's a set deadline where we gotta fix something. If it's going up, I feel a whole lot better about a large expense coming because I know that within a certain amount of time, we'll be able to get back to square one. If the trend line is, you know, we're, we're spending more than we're saving, I, I see that as like, there's a timeline

• 11:56Speaker 01

  on how long we're financially stable. And, you know, that gets me nervous. And then so when a, a large financial unknown jumps in, it cuts the fuse shorter, if you will.

• 12:09Ramit Sethi?

  What's the role that each of you plays in your relationship as it relates to money?

• 12:13Speaker 01

  I feel like I'm. Pretty financially savvy in terms of understanding different investment types and the market, but lately it's mostly just going to work and bringing home steady paychecks and and not as much active investment anymore.

• 12:33Ramit Sethi?

  So if you had to put a name to that, what's the role?

• 12:37Speaker 01

  I would say it's the primary money earner in the family.

• 12:43Ramit Sethi?

  Ah, okay. And Natalie, what's your role?

• 12:46Speaker 02

  I handle the groceries and the clothes and the shopping for the most part.

• 12:53Ramit Sethi?

  Wow.

• 12:53Speaker 02

  Chris's investments, I'm savings.

• 12:56Ramit Sethi?

  Yep.

• 12:56Speaker 02

  But because I'm not the primary breadwinner, I move over money from my business checking when I can. I move that over when I feel like it's an okay thing to do, when our checking has a good enough cushion.

• 13:09Ramit Sethi?

  Okay, that's good. So if you had to put your role in a word or two, what would it be?

• 13:14Speaker 02

  The doer.

• 13:15Ramit Sethi?

  All right. And you mentioned investing is Chris's thing. Are you privy to your family investments or not?

• 13:24Speaker 02

  No, I would like to be, not only involvement wise, but also I would love to increase my knowledge of investments in general, because as of right now, it's, it's pretty minimal. That wasn't something I was exposed to growing up. He has had a financial advisor, the same one for how long? Chris.

• 13:46Speaker 01

  He was my parents' financial advisor and that's been there, I don't know, since I was a teenager or something.

• 13:52Speaker 02

  His grandmother's financial advisor, his parents' financial advisor.

• 13:56Ramit Sethi?

  Really?

• 13:57Speaker 02

  And so when we got married, what, eight years ago? By marriage, he became my financial advisor as well.

• 14:05Ramit Sethi?

  He's your financial advisor in law. What's this guy's name? Please don't tell me it's Chet.

• 14:11Speaker 02

  Leonard.

• 14:12Speaker 01

  Leonard.

• 14:13Ramit Sethi?

  Leonard!

• 14:14Speaker 02

  Is that, is that just as bad as Chet?

• 14:16Ramit Sethi?

  I'm about to find out. Is he independent or does he work for a firm?

• 14:20Speaker 01

  No, he's Edward Jones.

• 14:23Speaker 02

  Right?

• 14:24Ramit Sethi?

  Leonard, you piece of

• 14:28Speaker 02

  So I've tried to insert myself with, you know, being included on the accounts, getting a login, being a part of annual review meetings. But any emails or questions or updates or summaries are still never sent to me. They're always sent to Chris. So I'm still-

• 14:46Ramit Sethi?

  Whoa, whoa, whoa, why is that?

• 14:47Speaker 02

  I don't know.

• 14:48Ramit Sethi?

  Chris?

• 14:50Speaker 01

  I haven't dug in to see who's on the like notifications, automatic notifications on the accounts, but-

• 14:57Speaker 02

  He lives on the East Coast and he recently came to our state to visit some clients, including Chris's parents. And Chris knew that he was coming in town. I didn't know that he was coming in town. I've never met Leonard. So I feel not included.

• 15:13Ramit Sethi?

  How else do you feel about this whole relationship?

• 15:15Speaker 02

  Not, not positively at all.

• 15:18Ramit Sethi?

  What do you feel?

• 15:21Speaker 02

  Marginalized, disrespected, pushed aside, not important.

• 15:27Ramit Sethi?

  Okay. I want to hear more about Leonard and the whole financial situation. I think it would help me to take a look at the numbers. Chris, you mentioned the net worth section. So I'm going to ask you to read off the word in bold and then the number in full next to it for this entire first box, please.

• 15:45Speaker 01

  Okay, so we have assets at $893,500. Investments, $634,624. Savings, $33,850. Debt at $211,856. Total net worth, $1,350,118.

• 16:13Ramit Sethi?

  Okay. $1.3 million in net worth. What do you think about all of those numbers, Chris?

• 16:20Speaker 01

  Don't think very much about the investments and the assets, because those aren't liquid that we can tap into. And so what I tend to be a whole lot more focused on is the savings. And the savings is, you know, just the checking and savings account combined.

• 16:42Ramit Sethi?

  Which is roughly thirty-three, thirty-four thousand bucks. What do you think of that?

• 16:46Speaker 01

  It's not the the number in it that makes me nervous. It's the the burn rate.

• 16:52Ramit Sethi?

  Okay, so do you feel good or bad?

• 16:54Speaker 01

  The the number I think is good. That's kind of like a goal. I would like it to be a stable number instead of a declining one.

• 17:02Ramit Sethi?

  All right. And what about you, Natalie? How do you feel about those numbers?

• 17:06Speaker 02

  I feel positively.

• 17:07Ramit Sethi?

  Okay.

• 17:08Speaker 02

  I know that after giving birth the first time, I um, my work was set back a little bit and even more so after the second child. And I've just kind of accepted that that is a temporary part of life um, that I cannot contribute financially. Kids cost money, especially when they're younger. And so I feel just fine about the numbers. I'm not stressed out at all.

• 17:31Ramit Sethi?

  All right, let's take a look at the income. This time I'm going to ask you, Natalie, to read off the combined gross monthly income, please.

• 17:40Speaker 02

  Thirteen thousand, six hundred and ninety-six.

• 17:43Ramit Sethi?

  Okay, so that means that combined, you make a household annual income of one hundred and sixty-four thousand dollars per year. By a show of hands, who knew that number?

• 17:55Speaker 02

  Ish.

• 17:56Ramit Sethi?

  Okay, hold on. Chris has his hand up immediately. Okay, Chris, you knew the number, one hundred and sixty-four K? Yep. And Natalie, what ish number did you think?

• 18:04Speaker 02

  I was not aware until we filled out the CSP together, um, how much Chris was making this this current year.

• 18:13Ramit Sethi?

  What did you think that you made as a household together?

• 18:16Speaker 02

  Closer to one eighty.

• 18:18Ramit Sethi?

  180 and you make 164. I'm gonna count that as not knowing your income.

• 18:23Speaker 02

  Okay, deal.

• 18:25Ramit Sethi?

  Off by like 50 bucks, alright. Even off by like 3,000, 5,000, okay, fine. 15,000 is a lot of money.

• 18:33Speaker 02

  I will take shared responsibility for that lack of knowledge.

• 18:36Ramit Sethi?

  That's okay. I mean, again, like 50% of the people I talk to don't even know their own household income. So you hit the statistic purely on the head. That's fine. Who's the one who makes 12,000 bucks a month? That's you, Chris? Okay, and then Natalie, it shows you as making 960 a month, is that correct?

• 18:55Speaker 02

  Yes, up until this month, that's correct.

• 18:57Ramit Sethi?

  Okay, so that's like partially from your business, which you are doing part-time. Is that accurate? Okay, alright, great. So let's look at the rest of the numbers in the CSP. We have fixed costs at 81%. What do you think about that number?

• 19:11Speaker 01

  Too high.

• 19:12Speaker 02

  Way too high.

• 19:13Ramit Sethi?

  Too high. Okay, I agree, it's pretty high. Let's take a look at the rest. Savings indeed are zero. And guilt-free spending indicates it's 9% at $818, but I'm not sure I believe that. Is it higher?

• 19:27Speaker 01

  Yeah, I wouldn't say the guilt-free part is higher, but it's, the spending's higher.

• 19:31Ramit Sethi?

  The spending part is higher. Okay, yeah, it's not guilt-free because you are feeling guilty about it.

• 19:35Speaker 02

  Correct.

• 19:36Ramit Sethi?

  So you are spending more than you make every single month?

• 19:38Speaker 01

  Yeah.

• 19:38Ramit Sethi?

  Did you know that?

• 19:40Speaker 01

  I knew that.

• 19:40Speaker 02

  I've had trouble believing it because in my occasional check-ins, once or twice a month in our accounts, they seem steady to me.

• 19:49Ramit Sethi?

  And when you say accounts, do you mean checking account?

• 19:51Speaker 02

  Checking and savings.

• 19:53Ramit Sethi?

  Ah, wait, savings?

• 19:55Speaker 02

  We have a checking account and a savings account.

• 19:57Ramit Sethi?

  I get it, but why are you looking at your savings account?

• 20:00Speaker 02

  Because I'm secretly hoping we, and trying to build up enough to have a comfortable cushion for Chris and/or in the next several months, get a different vehicle for myself.

• 20:12Ramit Sethi?

  But how would your savings account change? There's $0 a month going towards your savings.

• 20:17Speaker 02

  Occasionally, I'll put 100, $200 in there, like once a quarter.

• 20:23Ramit Sethi?

  Sloppy.

• 20:24Speaker 02

  It is sloppy.

• 20:25Ramit Sethi?

  Does the financial system feel sloppy?

• 20:28Speaker 02

  Yes, absolutely.

• 20:29Ramit Sethi?

  All right, like throwing a little bit here and a little bit there and like on a quarterly basis.

• 20:34Speaker 02

  Oh, I hate that. It should be an automatic

• 20:36Ramit Sethi?

  Oh.

• 20:36Speaker 02

  Withdraw from the checkings to the savings.

• 20:39Ramit Sethi?

  Okay, I agree. Why have you not automated money into your savings account?

• 20:43Speaker 01

  We had done that a while back when, you know, we were trying to save up for a large purchase. And then it got to the point where the checking account was getting down to like $5,000. And we could potentially, you know, not clear checks for daycare and mortgage. And said, whoa, whoa, we need to, you know, pull back on the rate. And I think we just ended up not putting any more in savings on a regular basis.

• 21:13Ramit Sethi?

  Okay, so you stopped it because it was getting too tight. Okay, I can understand that. And then what is this thing about, Chris, you didn't use to see the value of a savings account? Why?

• 21:22Speaker 01

  Uh, well, with interest rates, what they were, having it in checking versus savings is not a financial difference.

• 21:29Ramit Sethi?

  Hmm. The point of a savings account is not really to accumulate the interest. That's not what it's there for. The interest is nice, whatever. A lot of times you're losing money to inflation. It's just to have it symbolically and ideally physically separate. Because then it's just not tapped. It's like a junk drawer. You put stuff in a junk drawer, it's just junk. It's sloppy. But you have things in different drawers? Perfect. I know where all the knives are, et cetera. You know, it tells me a lot when I learned that Natalie and Chris are not contributing to their savings right now. They have about $34,000 saved, which is a good start, but they're not building on it. There's no system, there's no regular habit of putting money aside. That's how most people are. They literally say, oh, I'll try to save more. We should try to save more.

• 22:15Ramit Sethi?

  Try. What does that word mean? I never used that word in my life. Try. Either I'm gonna do it or I'm not. I'm not gonna try to brush my teeth. I'm not gonna try to breathe oxygen. Hey, Ramit Sethi, remember to breathe oxygen tonight. Why? Why don't you just do it? In fact, saving is actually easier than trying so many other things because you can set it up. To happen automatically. Now, when you are only spending and not saving, even a decent cushion can feel like it is disappearing. It's basically deaccumulating. And human beings hate seeing a number go down, especially men. And for someone like Chris, who already feels anxious about money, that can create this constant feeling of scarcity. So when a big expense comes up, something like a home repair or medical bill, it doesn't just feel bad, it feels like a threat.

• 23:01Ramit Sethi?

  It's like money is going away and there's no plan. So yes, Chris's reaction might seem extreme from the outside, but once you look at their financial system, it starts to make a little bit more sense. What I want to know is why aren't they saving anything? And that's what we're going to get into next. Stay with me. So you have 4.7 months of living expenses in your emergency fund. What do you think about that?

• 23:28Speaker 02

  I think having three to four months of emergency living expenses in a separate account is a wonderful idea. My assumption is that the number that you're seeing is also including your checking, which is, you know, what we use regularly for all of our bills, right? Chris's invisible comfortable number is $10,000 in the checking.

• 23:46Ramit Sethi?

  Okay, and do you, it seems like from your facial expression, you disagree with that?

• 23:51Speaker 02

  Um, I don't disagree or agree. I'm, I guess I'm more so just making a point that I don't know what makes $10,000 his comfort zone.

• 24:00Ramit Sethi?

  Why don't you ask him?

• 24:01Speaker 02

  How about you ask him?

• 24:04Speaker 02

  Chris, what makes $10,000 your comfort mark?

• 24:08Speaker 01

  Uh, well, with the combined fixed monthly expenses and what is coming in from my paycheck, I want to make sure that there's a sufficient cushion so that there's no risk of any overdraft. That cushion is about the size of a paycheck, right? So 7,000 plus a two-week paycheck after taxes is about that amount.

• 24:35Speaker 02

  Okay, well, next time, just explain that to me.

• 24:38Ramit Sethi?

  That was, that was a good explanation. I appreciate watching that. I'm curious, cause you know, I said, hey, why don't you ask him? And your response was, I've already asked him, but it seemed like you had not gotten that answer before. Why is that?

• 24:49Speaker 02

  I don't know. In fact, it's, it's something that we kind of joke about sometimes. Chris's invisible $10,000 mark.

• 24:57Ramit Sethi?

  I don't think it's invisible. It's quite obvious to me. Like, to me, I would probably do a similar thing.

• 25:02Speaker 02

  No, it, the rationale behind it makes complete sense.

• 25:05Ramit Sethi?

  You've never gotten that rationale before?

• 25:07Speaker 02

  Correct.

• 25:07Ramit Sethi?

  What was the response you got back?

• 25:09Speaker 02

  I don't know.

• 25:10Speaker 01

  I might not have had the ability to verbalize the specific reason. I've always kind of just felt like you gotta have enough to cover, plus a cushion. But without looking at the numbers, like, I guess it's been harder for me to verbalize and explain that.

• 25:27Ramit Sethi?

  Either of you use ChatGPT?

• 25:29Speaker 01

  Not really.

• 25:30Speaker 02

  Not really.

• 25:31Ramit Sethi?

  I've had experiences, whether it be using ChatGPT or hiring somebody to clean my house or, or work at my company. And in my head, I'm like, yeah, just like do this and do that. And like, yeah, it'll like, just make it look good. And then they don't do what I want, because I never actually told them exactly what I want. It was just up here and I get back a result and I'm dissatisfied. But in part, it's my fault, because I was not clear with what I was asking. And I was not clear with what output I wanted. It was like a lot of swirled up feelings.

• 26:14Ramit Sethi?

  One of the things that I want us to do is to be able to shine a light on these opaque feelings. And these opaque beliefs we have about money. It's actually okay if you want to have 10K in your checking. It's okay if you want to have 15K, I don't mind. But we have to be able to articulate why. Why? There's gotta be a logic. The answer might even be, look, rationally, it makes sense for us to have 10K. And I always want a buffer just in case, and my number is 25%. Fine, but we gotta be able to talk about it. How do you both feel about that principle?

• 26:51Speaker 02

  That's very logical.

• 26:53Ramit Sethi?

  Okay, great, great. That's part of what having these numbers in front of us helps us do. So let's continue on. I noticed that your debt is $211,000. Is that just a mortgage?

• 27:04Speaker 01

  That's it.

• 27:05Ramit Sethi?

  Fantastic. All right. And let's take a look at the fixed costs. Because I'm curious about this 81%. So you have a mortgage of 2,000 bucks, which is pretty low. Daycare is relative, I mean, that's a big cost as it goes in your fixed cost. That's $2,000. Looking at the rest, insurance, about a thousand. Okay, car payment is 200. So what is that? Just gas?

• 27:31Speaker 01

  Yeah, that's just gas.

• 27:32Ramit Sethi?

  All right, nice. Groceries at $1,118. Okay, clothes at 100. All right. Phone 127, subscriptions 161. Nothing jumps out to me. It's just that you have daycare. If we drop it to zero, your fixed cost dropped to 58%. So there you go.

• 27:51Speaker 02

  Yeah, it's the daycare. It's killing us.

• 27:54Ramit Sethi?

  Okay, you knew that. Natalie, Chris, did you know that?

• 27:56Speaker 01

  Yeah, I mean, when I see one daycare payment being equal to two weeks of my work after taxes, that just hurts.

• 28:06Ramit Sethi?

  It hurts in what way?

• 28:07Speaker 01

  I always think about it as, after you take into account fixed expenses, how many days of work does it take me to actually make $100 that I can spend guilt free? And when that number is, you know, many, many days, that's just like demoralizing.

• 28:23Ramit Sethi?

  Do you remember when you were younger, did you used to count things by the number of quarters it would cost you or the number of hours of work at like an entry level job that it would cost you to afford this sandwich? Did you used to do anything like that?

• 28:38Speaker 01

  Sure. Back when I was younger, I was mountain biking and climbing and that kind of stuff. And like, how many days do I have to work in order to, you know, buy this new whitewater kayak? You know, I need to get, because I broke my last one.

• 28:52Ramit Sethi?

  I also did the thing based on quarters, because, you know, when I was a little kid, it was like, how many arcade games would this be worth? And then I went to college and it was how many loads of laundry is this taco at Jack in the Box costing me? I stopped doing it because I found that it Really was scarcity based thinking. It was the kind of thing, a lot of people who work hourly jobs, they'll, they think like this all the time and it really impedes their ability to ever enjoy anything where they're not working because they're like, oh, I'm at a picnic in the park with my family. I could be earning $27. The other thing, um, when you tell me it hurts,

• 29:34Ramit Sethi?

  that's a very interesting word as it relates to money. I will say that I have tried to orient my finances in a way that very little hurts me. I would say it doesn't feel good if I ever incur a late fee that I can't get waived. I'm just like, God, Verme, that was really stupid. But especially when I think about kids and childcare, I almost think like, what a gift. What a gift to be able to pay for our kids to be safe and to learn from other kids and to be taken care of and to be entertained. And then they come back to us safely and we can take care of them as well. How's that strike you?

• 30:18Speaker 01

  I mean, totally agree with that because that's the exact rationale that we use to say, yeah, it's going to hurt financially, but it's in the best interests of our kids and so we're going to do it anyways.

• 30:32Speaker 02

  Not only in the best interests of our kids, but also for, you know, my sanity and mentality.

• 30:38Speaker 01

  We knew full well what we were getting into and we just dove in.

• 30:42Ramit Sethi?

  Okay. All right. Finally, I want to talk about the investments. $634,000 of investments. First of all, how'd you get that much? Cause you're not investing that much right now.

• 30:58Speaker 01

  My grandmother lived on a, a big farm and sold that farm when the nearby town was encroaching to a developer. And she set up, uh, accounts for the grandkids. Extremely fortunate to have that. It allowed, uh, me to get through college without debt. It allowed us to put 40% down on our house.

• 31:24Speaker 01

  And you know, there was still a lot of investments. And when I was a kid, if I got $20, 10 of it was gonna get put towards the investments. I invested and set aside money to an extreme degree when I was younger.

• 31:42Ramit Sethi?

  Uh, hold on, how extreme?

• 31:45Speaker 01

  Whenever I wanna buy something, it's I sit and think about it and wait like a month to see like, do I really want this or is that gonna go away? So that often means I don't buy a whole lot of stuff. And so I was just packing it away into savings.

• 32:02Ramit Sethi?

  Chris, I'm gonna put these numbers back up on screen. When you look at these numbers, do you feel safe? Do you feel anxious? What do you feel?

• 32:10Speaker 01

  Not so much anxious. I mean, I think they seem okay, but they also didn't really align with how I saw the the changes in the accounts over the months. And so that's why we went ahead and added a little bit of extra information off to the side there.

• 32:31Ramit Sethi?

  So here's what Chris added, some balances on the credit cards. 916 bucks for Chris, for Natalie, $5,555. There's some bank stuff, total spending 11,800. After-tax income is 8,800. And so you are spending $3,000 more than you make. That's a problem. What do you think about that, Natalie?

• 32:54Speaker 02

  I look at the numbers and I hear what Chris is telling me, but I just think if that were actually the case, we'd be broke. We wouldn't have any money in our checking or savings. Right?

• 33:03Ramit Sethi?

  It's a little trickier than that. It's a good question, though. Th- this is a very common thing. I'll speak to people who are less than two months away from running out of money. And they have no idea. And there are lots of reasons that this can happen. At the most.

• 33:22Ramit Sethi?

  Complicated level, if you think about like population decline, you know, you've heard of countries like even the US or certainly Korea, China, like they're having less babies. And so you can kind of project the future and you know, the exact year where population will be declining in a way that is almost irrecoverable. You can see it happening decades away, but you go to the store, you go to the restaurant, it's no different to you or me, but it's still happening. It's pure math. That's the same thing on the personal finance level. You can be spending more than you make, but you have a bit of a buffer. Other countries have time and some population. You have a savings account.

• 34:06Ramit Sethi?

  You have a checking account. You have money coming in and money going out. And sometimes those expenses are every six months or every 12 months, like your auto registration or whatever. So it kind, it's like water in a river. It's flowing. It's not like it stops here and then it starts and it stops. It's flowing, which makes it a little more difficult to see clear patterns.

• 34:29Speaker 02

  Okay.

• 34:30Ramit Sethi?

  But if we look at the math, you are spending $3,000 more than you make. So by pure math, in approximately 10 months, you are out of money in your checking and savings account. How do you both feel about that, Natalie?

• 34:47Speaker 02

  Yeah, that's scary. That doesn't sound good.

• 34:49Ramit Sethi?

  Okay. First time you understood that?

• 34:52Speaker 02

  Yes.

• 34:53Ramit Sethi?

  Okay. And Chris, did you know that before now?

• 34:56Speaker 01

  Oh, yeah. And so we, you know, pad that at the end of the year with the end of year bonuses and then tax return and those come in and they boost the numbers back up. And then around, you know, October, November, I start getting nervous about how low it is and get on the horn about like, we gotta spend less, we gotta spend less, kind of, you know, household austerity measures at that point.

• 35:22Ramit Sethi?

  And how does that go over?

• 35:24Speaker 01

  It doesn't. Go over that great, but you know Natalie can see it more easily because the number is low. And so I see the trend line and Natalie sees the number. And only when we get to the end of the year, do both of our red flags are up. And then that one, that's when it becomes a lot easier to say, we really need to spend less.

• 35:50Ramit Sethi?

  What do you both notice as you're saying this out loud?

• 35:52Speaker 02

  We're understanding each other more.

• 35:54Ramit Sethi?

  I agree. You're both starting to see each other's perspective. Chris, do you see why Natalie has been kind of surprised by your alarm around money?

• 36:04Speaker 01

  Yeah, and I've, I've said before that it's, you know, it's the burn rate, but I definitely understand her retorting with, but the number's pretty high and it was kind of like that last year. What do you mean?

• 36:18Ramit Sethi?

  Yep.

• 36:19Speaker 01

  How, how's it changing?

• 36:20Ramit Sethi?

  Chris, I would say Natalie intuitively understands burn rate, but probably not in the way that you do.

• 36:26Speaker 02

  Correct.

• 36:27Ramit Sethi?

  So like, Chris is like, the burn rate. And Natalie's like, yeah, like burning, but like, we also have a bunch of money in the checking account. Like, right? You're not really connecting in part because there's these technical terms and jargon that are being used. And it's not like, let's speak to each other in just plain English.

• 36:45Speaker 02

  Right.

• 36:46Ramit Sethi?

  Obviously, we want to connect and meet each other where we are. Yes. And I don't think that's been happening until now. That's what I can help with. And then obviously also, we want to be able to understand the basic language of personal finance. Because like anything, whether it be parenting or whether it be speaking Spanish, we have to learn the basic language in order to be conversant in it. Okay? So we're gonna try to do both. This investment number, I need to come back to it. So you have this money primarily from your grandmother. It's $634,000 and let's not forget that you are contributing 900 plus 900 post tax. So 1,800 a month you are investing.

• 37:25Speaker 01

  There's an additional there. The company that acquired my firm is an ESOP and I'm not vested in that yet. But they target and have been hitting about 12 to 15% of income a year into the ESOP account. And so that will come in later.

• 37:43Ramit Sethi?

  12 to 15%?

• 37:45Speaker 01

  Yeah.

• 37:46Ramit Sethi?

  That's a lot.

• 37:47Speaker 01

  It's. Been really good and we're hitting our targets this year, so.

• 37:51Ramit Sethi?

  Damn, 1,500 bucks a month?

• 37:54Speaker 01

  Yeah.

• 37:55Ramit Sethi?

  Yo, that's a lot of money.

• 37:59Speaker 01

  I know.

• 38:00Ramit Sethi?

  That's my man. Real quick, if you've never heard of an ESOP before, it stands for an Employee Stock Ownership Plan. It's essentially a program that allows employees to own shares in the company that they work for, often as part of their compensation package. And now with any investment, there are pros and cons. The pros here include being a tax advantaged retirement plan. The risks are concentration risk, meaning you have too much of your financial life tied up in one company, like your job and retirement, plus a lack of liquidity, which is typical of most retirement accounts. If this is you, if you are the rare person who has an ESOP, you can look up ESOP, E-S-O-P, online for more information. Let's get back to the conversation. So you're making like a lot more money than we originally saw here.

• 38:44Ramit Sethi?

  You're investing a lot more money. How come nobody's happy? Y'all want to fix it?

• 38:49Speaker 01

  That would be great.

• 38:50Ramit Sethi?

  Nothing worse than a unhappy, rich person. I'm gonna fix this shit and you're gonna be happier and that's the way it's gonna be, alright? Love that.

• 38:57Speaker 01

  Sounds good.

• 38:58Ramit Sethi?

  Alright, look at these freaking numbers. Leave aside the ESOP, leave aside all this other [bleep]. If we just take the 634,000, which you have invested currently, okay? And we take your current trajectory of how much you're investing today. By the time you're 65, how much are you gonna have, Chris? Do you know?

• 39:16Speaker 01

  I forget what the last numbers that I've seen were, but I know it was somewhere near 2.

• 39:24Ramit Sethi?

  2? Who did your math? Leonard. Leonard, you [bleep] suck at math. Oh, you know what? He might be right. After he accounts for all his fees that he's taking off the top. [bleep] Leonard. Well, um, let me put it this way. When I calculate investment returns, I never calculate a 1% expense for a financial advisor, because why the [bleep] would I pay 1% AUM? How much are you paying?

• 39:53Speaker 01

  I don't know the specific answer, because he's told me like $500 for a year, but I don't, I imagine he's, that's hiding, uh, the ball a bit.

• 40:03Ramit Sethi?

  I always find it amazing that people will feel anxious about money, that you will use words like "hurt", and like, it will be catastrophizing.

• 40:13Ramit Sethi?

  But they will literally spend hundreds of thousands of dollars in fees and not even know how much they are paying and be totally okay with it.

• 40:25Speaker 01

  Yep.

• 40:26Ramit Sethi?

  The way we calculate it, once Leonard loses his job, which as far as I'm concerned, I can make a call right now. I love firing financial advisors. But anyway, we calculate that when the time comes to for you to be 65, Chris, at your current trajectory, assuming no raises, you will have $6.3 million. What do you make of that?

• 40:50Speaker 01

  If we can get on that trajectory as opposed to the one I'm on now, that would alleviate all of my long-term concerns.

• 40:58Ramit Sethi?

  Great.

• 40:59Speaker 01

  That's great. And now we're just making sure that, you know, the burn rate isn't too high on the checking and savings. And that's a whole lot easier of a problem to deal with.

• 41:10Ramit Sethi?

  Agreed. Natalie, I want to loop you in here. What are you hearing right now?

• 41:14Speaker 02

  It's nice to see his face look a little more positive. That makes me happy.

• 41:18Ramit Sethi?

  Hmm. Do you feel connected to these numbers at all?

• 41:21Speaker 02

  The investment numbers? No.

• 41:22Ramit Sethi?

  Yeah. I could see you looked a bit withdrawn or maybe like, oh, this is like them talking about the investments.

• 41:31Speaker 02

  Yeah.

• 41:31Ramit Sethi?

  Not me. Am I reading that correctly?

• 41:34Speaker 02

  Correct.

• 41:34Ramit Sethi?

  Okay. And is that because this is from his grandma and he's got the relationship with the advisor and you're not particularly involved?

• 41:42Speaker 02

  Yes.

• 41:43Ramit Sethi?

  Hmm. Do you want to be involved?

• 41:45Speaker 02

  Absolutely.

• 41:46Ramit Sethi?

  Okay. Okay. How long have you two been married?

• 41:49Speaker 02

  Eight and a half years.

• 41:50Ramit Sethi?

  Okay. Is there a prenup in place?

• 41:52Speaker 02

  No.

• 41:53Ramit Sethi?

  So is there any objection to talking about the money, sharing the money, discussing all details of the money, the investments specifically?

• 42:03Speaker 01

  And no concern.

• 42:04Ramit Sethi?

  Okay. It just has not happened?

• 42:06Speaker 02

  Correct.

• 42:07Ramit Sethi?

  I can see why that would be a major problem.

• 42:10Speaker 02

  Chris is really busy, right? He puts a lot of time and energy into work for us.

• 42:17Ramit Sethi?

  Are you, are you now defending him?

• 42:21Speaker 02

  I guess I just want to acknowledge, take a minute to acknowledge how much I appreciate you.

• 42:26Ramit Sethi?

  I appreciate that. We are talking about millions and millions of dollars.

• 42:30Speaker 02

  I know. About a year ago, we had the conversation of switching how we do our investments, not having Leonard, right? And correct me if I'm wrong, Chris. Your response was it would take a lot of time and energy to change things over.

• 42:48Ramit Sethi?

  Hold on, I'm feeling hurt now. Now I'm feeling pain. The amount of lock-in that financial companies have over everyday people blows my mind. I'll talk to people. I'll talk to a black couple. They'll be like, oh, I have this Wells Fargo. Wells Fargo hates minorities. They actively discriminate. They have been cited. And they're like, I'm like, why the are you with this bank? And they go, huh, you know, I've had it since I was a kid. I go, what the? I don't mind if you have a teddy bear as a 45 year old, but your old Wells Fargo account? And then meanwhile, they're getting gouged for fees every single month. Then they have a financial advisor, Chet, or in this case, Leonard, comes around once every two

• 43:31Ramit Sethi?

  years, like one of those galloping salesmen, does nothing, doesn't talk to the wife, won't involve her, not even clear how much you're paying. And people go, well, it would be a lot of work. Damn, if I was a multimillionaire, I would pay somebody to come in and just do this for me. There's so many ways of doing it. Here's the point. I'm trying to get you to get aggressive. This time thing doesn't work on me. It just doesn't because this stuff is not that hard. You can knock it out in a couple of weeks. We're talking about millions of dollars. What could be more worth it? All right. And more importantly, we're talking about the two of you actually being unified for the next 40 years.

• 44:09Speaker 02

  So the sooner we start, the better.

• 44:11Ramit Sethi?

  Yes. Let's not rush. Let's try to figure out what's happened here. But I would like to understand how we got here and where do we want to go. Notice the communication issues. Chris is fluent in the language of finance. He can talk asset allocation, financial planners, year-end cash flow. To him, that feels like being responsible. But Natalie does not speak that language. She's smart and she cares. She wants to be involved, but she doesn't have the same financial background. So when Chris starts rattling off numbers, they don't connect with her. When he talks to their financial advisor without her, she feels excluded. In money and relationships, being excluded is a huge no-no. It is an instant red flag.

• 44:55Ramit Sethi?

  Stop everything, fix it. And you can actually see the effect of their communication style when you look at their checking account. Think about it. They spend it down all year. They refill it then, but they never actually talk about how it works and what it means. This is happening right in front of them, but because they don't have a shared language around money, they're experiencing the same situation in completely different ways. Now, I do want to say that this is one of the most common dynamics I see. One partner handles the finances and they assume if there's a problem, I'll bring it up. The other assumes if I don't hear anything, we're fine. But all of this is shrouded in darkness.

• 45:36Ramit Sethi?

  Neither of them has ever talked openly about what they want and what they need. You know, most of the time, people don't even know what they want with money because they don't know the basics of personal finance. If you want to get good with money, you need to know the basics. This is actually pretty easy. I can help you do it fast. I have a program called Money Coaching. It's going to help you understand the basics of your money. And if you're in a couple, get on the same page with your partner. You could stop just worrying about money and start actually using money to live your rich life. Sign up for Money Coaching at IWT.com/MoneyCoaching. As for Natalie and Chris, a lot of their fights about money are around the lack of shared expectations.

• 46:19Ramit Sethi?

  So I'm wondering, what would it take to get on the same page with how they talk about money and make decisions about money and even dream about their rich life? Next, we're going to dig into that. What are you going to do with $6 million bucks at 65?

• 46:32Speaker 01

  Part of that amount is, you know, the kids' college funds. Say probably about 80K of that is the kids' college funds. So that's definitely going to be a big expense. My knees aren't getting any better. And so the sooner I can retire and, you know, enjoy that, the better.

• 46:53Ramit Sethi?

  Natalie, what about you? What are you going to do with $6.3 million at age 65?

• 46:59Speaker 02

  At 65, our kids will be more than taken care of. That's not a, that's not a concern for me. I want to do things that are solely focused on... The two of us.

• 47:11Ramit Sethi?

  Most people do not simply lock their money up and let it sit there and spend nothing until 65. That's not the way human beings work. What I am trying to just understand is like, have either of you ever dealt with $6 million?

• 47:25Speaker 02

  No.

• 47:27Ramit Sethi?

  That's a tremendous amount of money. So, right now, day-to-day existence is focused on questions like, do we need to transfer $1,000 over from this, et cetera? Right? And I get that. It's, it's prime time, parenting, childcare is expensive. One primary earner, that's totally normal at this age. But you also have to realize, like, you got a turkey in the oven that is gonna turn into $6.3 million, approximately. So, we have to put things in perspective that if we are arguing over $1,000, like, what are we actually doing here? Doesn't it kinda sound absurd?

• 48:06Speaker 02

  I never think about that larger picture.

• 48:08Ramit Sethi?

  Yes. Very few people do, because we are so comfortable playing small. "Hey, I want $10,000 in the checking account." "No, I don't. I think $8,000." And you go 10, 15 years, arguing about 2 grand.

• 48:23Speaker 02

  I don't like playing small. At some, at most times, I feel like it's a necessity.

• 48:28Ramit Sethi?

  Is it a necessity to play small now?

• 48:30Speaker 02

  Until we put a game plan in place to boost our savings and have more cash on hand, so we're not losing $3,000 every month.

• 48:40Ramit Sethi?

  It's a good answer. I agree with that. And if you did that...

• 48:44Speaker 02

  When that's in place, I would love to think big.

• 48:48Ramit Sethi?

  Love it. That's a fair request. Chris, how do you feel?

• 48:51Speaker 01

  I mean, I kinda feel the same way. And a lot of that is because, you know, a lot of that net worth is, you know, locked up in our house that has doubled in value but was built in the 1970s. So, I have to pull out of the checking and savings to fix all the stuff that breaks constantly in this house that's now worth twice as much as we paid for it. It, it all feels like, that's cool. That's money over there that doesn't exist right now. I'm working with this, which is a whole lot less.

• 49:26Ramit Sethi?

  Yeah. You all are living the plight of many Americans. You happen to be in a much better position than many Americans, but many Americans have paper wealth. They're in a house that's worth like five times more than they bought it for in whatever year. Yeah, they may be wealthy on paper, but when it comes to buying groceries or taking a trip, they're like, where's the cash?

• 49:48Speaker 02

  Right.

• 49:49Ramit Sethi?

  And I can see that is the case for you, although you have options that many others do not. When you look at the CSP, did anything surprise you in going over these numbers on our first glance?

• 50:02Speaker 02

  Besides the $0 to savings? I mean, it's really just those, the high fixed costs at 81% that in general that jolts me.

• 50:11Ramit Sethi?

  Yeah. You know that many parents have unusually high costs when their kids are young?

• 50:16Speaker 02

  I mean, that makes sense.

• 50:17Ramit Sethi?

  What we need to do when we look at this, at least the way I interpret it is, hey, we're going to have high structural fixed costs for X number of years. That is life. We have to accept it. What, what is the trade offs? It means we're probably going to save less. We're probably going to have to adjust our investments for a while, probably going to have to cut back on guilt free spending, but we know that it is a temporary thing. Financially, we're putting more here, but we know it is a finite amount of time.

• 50:46Speaker 01

  And we're already working on that. Natalie has just started doing subsidy teaching and has, you know, just what? It's been like two weeks now. So, I mean, we're, we're putting in an action. We know that we have to do something.

• 50:58Ramit Sethi?

  Cool. All right. If we end our conversation right now and you go back right to the way you were, what do you think your kids would learn about money as the years go on from the two of you?

• 51:10Speaker 01

  From me, I think they would get the idea that it's something to be stashed away.

• 51:16Ramit Sethi?

  Okay.

• 51:16Speaker 02

  I suppose the example that I would be setting is be frugal as possible in all areas as possible and as many areas as possible because of the constant reiteration of.

• 51:29Speaker 02

  Spend less or make more that continually comes from Chris.

• 51:33Ramit Sethi?

  And maybe investing is something that dad does, not mom?

• 51:37Speaker 02

  Yes.

• 51:38Ramit Sethi?

  Chris, I'm very curious about what you remember your family saying about money when you were younger.

• 51:45Speaker 01

  I don't remember a whole lot specifically, but you know, we were there getting our wonderful advice from Leonard, right? And I really took to heart the concept of, I would say, I want to spend money on something. And my parents would say, do you really want that? And it's a fair question to ask. And I was just like, do I want that? I don't, I don't know. And so that's probably a lot of the reason why I will spend a long time researching things before I buy them and then maybe not buy them at all because that, that is a pretty core tenet of how I view spending money.

• 52:29Ramit Sethi?

  What age did they say, do you really need that?

• 52:32Speaker 01

  It was probably, you know, like when I wanted to buy something dumb in middle school. And it's a lot fair of a question then, but it just hasn't left me.

• 52:42Ramit Sethi?

  You ever get really into certain things, talking about like video games, musical instruments, skateboards?

• 52:48Speaker 01

  Oh yeah. I mean, I, my hobby is collecting hobbies. And so I would just get really into one thing and then I'd shift and get really into the next thing. And I just went through the whole gambit of extreme sports.

• 53:01Ramit Sethi?

  Yep. When you look back, like, do you still do all of those sports?

• 53:06Speaker 01

  No, I still have toes in them, you know, I still have a kayaks and you know, it's nice to go kayaking every once in a while. Less waterfalls, more relaxing stuff. Still do some climbing, mountain biking. It's just all to the, on the safer side of things. And I sold all my parachutes and wingsuits. That's out.

• 53:24Ramit Sethi?

  Wingsuits, like you would jump off the mountain like that?

• 53:27Speaker 01

  Yep. Mountains and middle of the night off of antenna towers.

• 53:32Ramit Sethi?

  Wow. That's crazy. The reason I'm asking about these hobbies and if you still keep a toe in them. I had a hunch, this idea that something just clicked for you when your parents said, do you really need it?

• 53:47Ramit Sethi?

  My antenna go up when I hear that because you know, a lot of parents say that to their kids. Some 14 year old kid wants some bike or something. Do you really need it? Yes, I need it, mom. But the fact that you like dove into it, double, triple, quadruple down, and that story is one that you still have here.

• 54:05Speaker 01

  Yeah.

• 54:05Ramit Sethi?

  Even though you make a very high income, that tells me that perhaps this is systemic across different parts of life, that you get really into something. And importantly, you don't actually stop doing it. You keep a toe there and you add something else on, which tells me you're probably keeping some of that 14 year old Chris views on money, even though your financial situation has drastically changed. How does that strike you?

• 54:35Speaker 01

  I don't disagree with that.

• 54:38Ramit Sethi?

  And Natalie, I always like to ask the partner because they always know best. What do you think Natalie?

• 54:42Speaker 02

  That makes total sense to me. He's always been a very methodical, planning, calculated person when it comes to large financial purchases.

• 54:53Ramit Sethi?

  How did your grandmother get so wealthy?

• 54:56Speaker 01

  My grandpa was, he was an accountant and had his own firm. And they did pretty well.

• 55:06Ramit Sethi?

  Was this in Colorado as well?

• 55:09Speaker 01

  No, this was back east.

• 55:12Speaker 01

  My grandfather passed away when I was like five years old. And grandma's still kicking.

• 55:18Ramit Sethi?

  Wow, still?

• 55:20Speaker 01

  Yeah, she's 95.

• 55:22Speaker 02

  Chris, she will be 98 in February.

• 55:27Ramit Sethi?

  Love you granny. Great job with the investments.

• 55:30Speaker 02

  She's the best.

• 55:31Ramit Sethi?

  All right.

• 55:34Ramit Sethi?

  Does she ever talk to you about money?

• 55:35Speaker 01

  Sure.

• 55:36Ramit Sethi?

  I want to know what somebody from that generation says about money.

• 55:39Speaker 01

  When she gave us the grandkids.

• 55:44Speaker 01

  Nice pool of money to have from the sale of the farm. It was, you can use this for three things. You can buy a house, start a business, or go to college with it. And or any combination of those three things. It was talked about as like, now, th- this is not just screwing around money. This is do something positive with it and turn it into something.

• 56:10Ramit Sethi?

  And as, as Grandma was saying that, Chris, like, is looking depressed at the floor, and he slowly starts unpeeling his Red Bull wingsuit. He's like, all right, Granny.

• 56:24Speaker 02

  You watched that YouTube video? Dang, he's on it.

• 56:29Ramit Sethi?

  Now, did your grandmother know that she was wealthy?

• 56:34Speaker 01

  Yeah.

• 56:35Ramit Sethi?

  She knew? Okay.

• 56:37Speaker 01

  Yeah.

• 56:37Ramit Sethi?

  And did your parents know? I assume they inherited a bunch of money too. Did they know they were wealthy?

• 56:45Speaker 01

  The inheritance hasn't come through yet, because luckily Grandma's still alive, right? But, uh.

• 56:50Ramit Sethi?

  Oh, so your grandma has not passed over that money to your parents?

• 56:55Speaker 01

  And no, um, so, I mean, there was a, an account that was established for the grandkids, but not for her kids, because they were in a solvent and stable financial situation. And.

• 57:10Ramit Sethi?

  Wait, your, isn't your parents like 70 years old now?

• 57:13Speaker 01

  Yeah.

• 57:14Ramit Sethi?

  Does your family talk about wealth as a wealthy family would?

• 57:18Speaker 01

  I would say that we do not. The conversations were a lot more focused on, you know, make sure you have a, a good job. And, you know, when you go to school, make sure you go to school for something that is, you know, a good career path. And it was all conversations that would indicate to an outside listener that we're not talking about people that have money. We're talking about people who, you know, are starting, trying to start from a lower level.

• 57:49Ramit Sethi?

  There you go. Bingo. I agree with that. Okay. So it's so interesting to to contextualize the messaging that you have received, which is great messaging, but also a bit off kilter with your actual financial position. Natalie, what do you remember about your family saying about money when you were younger?

• 58:10Speaker 02

  I grew up with a single mom, so she was incredibly frugal. She had a credit card only for emergencies and would save up, you know, to buy something. We never went out to eat. Before school started, we went to the outlet mall, you know, a few towns away to get, you know, cheap clothes. There was never fussing or a lot of conversation, you know, comparing to other people or families. I just picked up on the example that we live within our means and always try to do your best to to get whatever you can.

• 58:53Ramit Sethi?

  Would you describe your socioeconomic status growing up as middle class, lower middle class, poor?

• 58:59Speaker 02

  I would say lower middle class.

• 59:02Ramit Sethi?

  And how did you feel about that?

• 59:04Speaker 02

  I didn't feel embarrassed. I didn't feel uncomfortable. I didn't feel like I was wanting either. My mom made sure that we had everything we needed.

• 59:13Ramit Sethi?

  Okay, I appreciate that. Is your mom still alive?

• 59:16Speaker 02

  Yep.

• 59:17Ramit Sethi?

  How is she doing with money?

• 59:18Speaker 02

  Good.

• 59:19Ramit Sethi?

  Wow.

• 59:20Speaker 02

  Yeah, she was in the public school system her entire career. So she worked really hard to put money into savings

• 59:28Speaker 02

  for her retirement account so that she, quote, "does not have to be a burden on her children when she is older."

• 59:35Ramit Sethi?

  What verbal messages did your mom give you about money? Did she say save? Did she say we can't afford it? What kind of stuff did she say?

• 59:43Speaker 02

  Both. It's important to save money to purchase things that you know you're gonna need. Plan ahead. There were many times when she said, we can't afford X, Y, or Z.

• 59:53Ramit Sethi?

  Did you say anything about men and money? A man is not a financial plan. Always save for a rainy day. You never know what will happen in a marriage, that kind of thing?

• 1:00:02Speaker 02

  Yes, she has always wanted me to be financially stable and independent.

• 1:00:07Ramit Sethi?

  Are you independent financially?

• 1:00:09Speaker 02

  If Chris were to disappear, like there's no Chris and I have two children. No, I would not be able to financially take care of the kids.

• 1:00:16Ramit Sethi?

  You guys have a will?

• 1:00:17Speaker 02

  Yes.

• 1:00:18Ramit Sethi?

  Okay.

• 1:00:18Speaker 01

  And will and life insurance policies?

• 1:00:20Ramit Sethi?

  You have a li- oh, you have life insurance. Is that through Leonard?

• 1:00:23Speaker 01

  Sure is.

• 1:00:24Ramit Sethi?

  Okay, all right. But you're a dependent on those policies and in the will, Natalie?

• 1:00:29Speaker 02

  Yes.

• 1:00:30Speaker 01

  Everything goes to Natalie and contingent is, you know, to the kids.

• 1:00:36Ramit Sethi?

  Great. When was the first time the two of you substantively talked about money?

• 1:00:42Speaker 02

  Did we have that conversation at all before we got married?

• 1:00:46Speaker 01

  I think we did. And it like, I just wanted to make sure that it wasn't going to like surprise you. Because I think at that time, there was, it was still a pretty large sum.

• 1:01:01Ramit Sethi?

  What did you say, Chris? How'd you bring that up?

• 1:01:03Speaker 01

  I, I imagine I would have, you know, said something like, you know, hey, this is, this is not like money that we have to tap into, but just so you know, there's, you know, like 300 something thousand dollars in this account.

• 1:01:20Ramit Sethi?

  What would your reaction have been, Natalie?

• 1:01:22Speaker 02

  Surprised, slightly relieved in the sense of having a stable future.

• 1:01:28Ramit Sethi?

  Now, having known each other for 10 years and having grown up in different socioeconomic upbringings.

• 1:01:36Ramit Sethi?

  Have you discovered any surprising ways that the two of you treat money?

• 1:01:40Speaker 02

  From my perspective, surprisingly, no.

• 1:01:43Speaker 01

  We come at it from very different angles, but she comes at it as the, you know, be frugal because we, you know, really need to. And I come at it as the be frugal because that means you can save more.

• 1:01:56Ramit Sethi?

  Is that not the same thing?

• 1:01:57Speaker 01

  It is, but you know, for me, it wasn't like a necessity or requirement. It was a voluntary thing, you know?

• 1:02:10Ramit Sethi?

  This is very interesting. You both are frugal.

• 1:02:16Ramit Sethi?

  Kind of for similar reasons. And I guess my question is, is it working?

• 1:02:20Speaker 02

  Obviously not, because we're burning through. The burn rate is three grand a month.

• 1:02:27Ramit Sethi?

  If we fix that, is everything else fixed?

• 1:02:30Speaker 01

  Pretty much, yeah. I mean, we gotta deal with line art, right?

• 1:02:33Ramit Sethi?

  Yeah, we'll talk about letter two. Should we just fix those two things and then we're good?

• 1:02:37Speaker 02

  Yes, please.

• 1:02:38Ramit Sethi?

  Okay, the inheritance Chris got from his grandmother was life-changing. I love that for him, and I applaud her generosity. But I think there was a missed opportunity. No one ever taught him how to use that money. And this is where I have a bone to pick with old, rich people. Well, I have several bones, you [bleep] NIMBYs, preventing housing from being built in every city in America, but that's for another conversation. As for you giving a fat check to your grandkids, what the hell is wrong with you? Oh, wow, you wrote your grandkids a check. That's so not, I appreciate it, seriously. But how about teaching them how money actually works? Anyone can write a check, but actually teaching kids how money works is how true

• 1:03:22Ramit Sethi?

  generational wealth really functions. My parents gave me generational wealth. They didn't give me a check, but they modeled how money works. My mom showed me how creative you can be without a lot of money. My dad helped me open up an investment account as a 14-year-old, and he encouraged me to learn how investing works. That was far more valuable than my parents giving me a check for $5,000 or even $50,000. Oh, now I know what you're thinking, Ramit, must be nice. You made a bunch of money, and now you're just saying your parents could have given you a hug and it's all fine. If somebody gave you $50,000 right now, would you know exactly what to do with it? Would it cure your feelings of scarcity, of feeling like you're behind? No! If we've learned anything from over 200 episodes on this podcast,

• 1:04:06Ramit Sethi?

  the way you feel about money is highly uncorrelated with the amount in your bank account. Most people don't magically learn how to manage money just because they inherited some. They just stumble around like everybody else. They just have a little extra money in their checking account. I tried to model this in my own life. Like, some of my author friends will call me up. They'll ask me for a blurb. As a matter of personal policy, I don't do book blurbs, but I will offer them something way more valuable. I'll get on an unlimited number of calls with them, and I will help them with their marketing strategy. I'll help them promote their book. Or my nephews, they're 16 years old. I recently took them on a tour of Stanford, and I talked with them for days about why it makes sense to work really hard in high school. And I took them out to eat, and I took them on a flying lesson. And when they were late for one of our events,

• 1:04:51Ramit Sethi?

  I gave them some tough love. They don't just need a check. They need time. They need to see what's possible. And right now, I think Chris and Natalie are at that exact turning point. They're on track to have millions, but they are still treating money with a scarcity mindset. If you want to know how to change your mindset with money, that's coming up next. Before we do the numbers, what patterns do you notice that you have brought from your childhood into this relationship with money? Chris?

• 1:05:23Speaker 01

  I think I've brought a little too much reluctance and skepticism on spending money.

• 1:05:33Ramit Sethi?

  Okay, great. Natalie?

• 1:05:35Speaker 02

  Be conscious of the cash that you have and be frugal with what you have. Save up for what you need and be creative with what you do have to make it stretch further.

• 1:05:44Ramit Sethi?

  You know, it's interesting hearing your lessons. I agree with everything you just said. I think that those are definitely messages you've brought in. I think some of those are good. Some of those maybe not, not as good. Can you see the difference in your financial situation versus your childhood upbringing?

• 1:06:02Speaker 02

  Yes, absolutely.

• 1:06:03Ramit Sethi?

  Let's name them. Your expenses, are they higher or lower than your parents?

• 1:06:08Speaker 02

  Higher.

• 1:06:09Ramit Sethi?

  Way higher. Childcare costs were not the same. Your house is a nice price, but I'm sure it was more expensive than what they paid and on and on and on. Salaries also, probably way higher.

• 1:06:21Speaker 02

  Yes.

• 1:06:22Ramit Sethi?

  Okay. Saving matters, there's no doubt about that.

• 1:06:26Ramit Sethi?

  We live in a world where investing is much easier. You know, there's like low-cost index funds, there's robo-advisors, all kinds of stuff. But what I notice is, we could essentially lift the way that you both treat money, plop it back 35 years ago, and it might slot somewhat similarly into how you were raised. Save money, like let's not get anything we don't need. Chris, I see you nodding your head. What do you notice?

• 1:06:58Speaker 01

  Absolutely. It, it feels the same to me and I think it would take a lot to break that free from my brain.

• 1:07:09Ramit Sethi?

  Hmm. I mean, you're even using the same advisor.

• 1:07:13Speaker 01

  I know, yeah.

• 1:07:14Ramit Sethi?

  So like literally pick it, shift it, change a couple of things, and here we are.

• 1:07:21Speaker 01

  Yeah.

• 1:07:21Ramit Sethi?

  I don't mind a little bit of continuity. I love it. I love taking what the past generation had and keeping the best of it. I love that. And I like adapting to current scenario. So let's, let's try to do that. I want to understand how you

• 1:07:38Ramit Sethi?

  Deal with money as it stands. Chris feels tighter when there is an unexpected expense and it causes you, Chris, to stop and to not be able to respond in multiple ways and that causes conflict. Yeah. And Natalie, you said that when Chris shuts down, it feels like losing your partner.

• 1:07:59Speaker 02

  Oh, yeah. It takes our relationship down so many notches.

• 1:08:05Speaker 02

  We have to work to build it back up again and it's so draining and depleting from our relationship. We work back and get there because we love each other, but it's a lot of work.

• 1:08:14Ramit Sethi?

  The metaphor you just shared is really powerful. And you even used your hand. You said, "It takes our relationship down notches and then we have to work back up." It's almost like I can see water draining from a bucket and then you have to refill it over and over. And that reminds me of what happens by the end of the year with your finances. The money gets drained and then hopefully we get this bonus or something and then we can make it another year.

• 1:08:43Speaker 02

  Yep.

• 1:08:44Ramit Sethi?

  And along the way, when it's draining, it's causing conflict, it's causing a wedge, it's causing tension. I would rather have that bucket stay steady or even just increase a little bit every single month.

• 1:08:57Speaker 02

  Me too, Ramit.

• 1:08:58Ramit Sethi?

  Okay. Natalie's on board. Chris, how about you? Yeah, that's my goal. I always say it's not the number, it's the trend. Okay, I hear you on that. I'm gonna guess that phrase does not connect with Natalie. Natalie, am I right or wrong?

• 1:09:11Speaker 02

  Correct.

• 1:09:12Ramit Sethi?

  It doesn't connect with you?

• 1:09:13Speaker 02

  For me, it's the number and the trend, I suppose.

• 1:09:16Ramit Sethi?

  Is it any of those or is it like, "I want to feel connected to my partner"?

• 1:09:20Speaker 02

  It's more so, "I want to feel connected to my partner."

• 1:09:23Ramit Sethi?

  Yeah.

• 1:09:24Speaker 02

  When one of us feels emotionally...

• 1:09:29Speaker 02

  Unstable.

• 1:09:30Ramit Sethi?

  Mm hmm.

• 1:09:31Speaker 02

  The other feels unstable as well, and our kids.

• 1:09:34Ramit Sethi?

  Yeah, especially as they get older. After one of these things happens where there's an unexpected expense and then there's a conflict and a retreat, how do you both build, build it back up, the relationship?

• 1:09:47Speaker 02

  I've tried many different things, right? The thing that works currently is I don't engage because even words of support, you know, verbalizing, I'm here to talk. Would you like to talk? Tell me what you're thinking, what you're feeling. That currently does not even help. He's so fixated on what's wrong. So my current strategy is to

• 1:10:15Speaker 02

  be neutral and supportive from the background, making sure I'm helping with, quote, you know, his duties or his chores, or making sure that he feels supported in other ways without like talking or trying to get him to open up and talk. So waiting for him to come to that mental slowdown so that we can work towards a positive arch again.

• 1:10:43Ramit Sethi?

  Okay. Chris, do you see this as a problem?

• 1:10:48Speaker 01

  Yeah.

• 1:10:49Ramit Sethi?

  Okay. What kind of stuff have you done to try to improve your responses to these unexpected expenses?

• 1:10:56Speaker 01

  I've tried to bring myself back from the, you know, what's the worst case scenario that really the catastrophizing, right? Where if I don't know what's wrong, then I need to just, you know, try to get more information, but it's hard. I've always seen it as just a math problem, you know, in versus out. And when the big expenses come along, that's why we need to have more coming in than going out. And that just makes me think that these issues are going to come up no matter what. So you really need to fix the money issue. And so it becomes. About the large expense and what could come after that.

• 1:11:40Speaker 01

  But then it also just shines a light on the, uh, the burn rate. Right. And that gets me concerned.

• 1:11:47Ramit Sethi?

  It all leads back to catastrophe. This isn't like a minor problem, right? Oh, it's like, this is kind of annoying. Somebody's leaving candy wrappers somewhere. That's annoying, but whatever. This is a big problem. It, it's affecting your wife. It's affecting your kids and it's creating a wedge in your relationship. And each time that bucket goes down, it becomes a little harder to refill.

• 1:12:07Speaker 01

  Yeah.

• 1:12:08Ramit Sethi?

  So the kind of answer I might be looking for would be, uh, I'm seeing an individual therapist. Uh, I'm working on inoculating myself by trying to deal with this unexpected expense, which is only like 50 bucks. And then I'm working on that exposure therapy. And then I'm going to increase it to the next $200 expense, et cetera. All these things that a great therapist can help you with. A coach, a book, but it's a strategic approach. If you recognize this is an issue and I need to really improve it. Would you be open to trying some of those things?

• 1:12:44Speaker 01

  I, I think that engineering, science, spreadsheets part of me is just like, okay, that's cool, but it's not going to solve a math problem.

• 1:12:55Ramit Sethi?

  I, I hear you loud and clear. And because I have so many friends that are engineers, they're in CS. Like I grew up with these guys. I love these guys. I totally get that mindset. And we're going to look at the math, no doubt. But I can tell you that this is not just a math problem. It's actually here, psychology and mindset, and actually here, feelings about money, which started almost certainly back in childhood. And I am willing to bet back with your grandmother and grandfather.

• 1:13:32Ramit Sethi?

  So we'll tackle the math, but it goes way deeper than numbers.

• 1:13:36Speaker 02

  That was really encouraging. Thank you. I think especially in this day and age, it's important for adult males to know that not only is it acceptable, but it's so helpful, not just for themselves, but for their entire family to think that way, you know?

• 1:13:52Ramit Sethi?

  Yeah, I so appreciate you saying that. I was just thinking yesterday, I was thinking about masculinity in 2025 and 2026 and how different it is. When I think about masculinity, the way that I grew up, it was like big muscles and, you know, cursing and just this sort of bro type stuff that we all kind of imagine. And when I think of it now, it's like, yeah, like, if you want to work out, that's awesome. And mental health and relationships with friends, like all of it, all this stuff that would have been seen as like a little soft. I think we can all be very powerful, especially as a husband and a father, when you're like, yeah,

• 1:14:34Ramit Sethi?

  like, I'm going to crush this math. I'm going to dominate these numbers. And also, we go to therapy and maybe I even go to therapy and I can do all of these things. And so that's my approach with this as well. Have the two of you talked about what your rich life is?

• 1:14:52Speaker 02

  We've floated around ideas, but never set down and wrote a list together.

• 1:14:56Ramit Sethi?

  You want to do it right now?

• 1:14:58Speaker 02

  Heck, yeah. The first thing I have on my list is being able to hire a fix it person.

• 1:15:03Ramit Sethi?

  All right. I love that. Chris?

• 1:15:06Speaker 01

  I would much rather, you know, go camping and biking with the kids.

• 1:15:10Ramit Sethi?

  Beautiful. Love that. Okay, that's awesome. Let me hear one individual one from each of you now.

• 1:15:17Speaker 01

  I'd love to have an old project car to work on, you know, my buddies send me pictures of all their project cars that they're tearing apart and fixing. I'd love to do that, too.

• 1:15:28Ramit Sethi?

  Okay, I love that. That's cool. Thank you for sharing that. And Natalie, what about for you?

• 1:15:33Speaker 02

  I would love a kiln in our garage.

• 1:15:36Ramit Sethi?

  Guys, I'm loving this so far. So the reason I ask this is, one, I love to see people think of money as a source of possibility, because we have to be able to live a life that is bigger than simply paying our bills. Even if you have $100,000 in credit card debt, there has to be a future that is bigger than today. The other thing is I just like to see people smile. I like to see what gets you pumped, tells me a lot about you. And more often than people think, there's actually a way to get some version of that. I want to look at some numbers, okay? And I want to start off with the investments.

• 1:16:16Ramit Sethi?

  So first of all, it's important that these investments become shared. They become collaborative. Right now, the way that I see it, it's almost like Natalie moved into Chris's apartment, and there's no drawers for Natalie. It feels like we're living in Chris's apartment. But actually, that's not the intention. Both of you have said you're more than willing to share and combine space and do everything together. I see the love, it's very obvious. But the investments have not been properly communicated. And the way I see it is, this Leonard person is one symbolic representation of the old, the old approach to investments. Would you agree?

• 1:17:01Ramit Sethi?

  I'm seeing nods from both of you. It's not just Leonard, I'm sure he's a very nice person, but it's that Leonard has been involved with the family finances, and he hasn't properly communicated with both, and on and on. And also, he charges a crazy amount of money. So why? One of the best things that a couple can do is to do something tangible that is also symbolic, saying, "We are now doing this together. We are not going to keep things the way they were." Let's look at some numbers. How much do you think that Leonard is costing you in fees? Let's assume he charges 1%. We'll just assume, keep the math easy. Over the next 20 years, how much will you pay in fees? About half a million. Good guess. Natalie?

• 1:17:46Ramit Sethi?

  Natalie's eyes just went very bug-eyed. How much did you think, Natalie, before you heard that number? He just guessed.

• 1:17:52Speaker 02

  Maybe 200K.

• 1:17:53Ramit Sethi?

  So 200K to 500K, actually great range because the number as we calculate it is you'd pay about $397,000. Let's round to $400,000. Just to put that in perspective, that's $1,666 per month. Let's put it up on screen just so you can see how much you're all making every month. Now, I will admit, I'm playing a bit of mathematical magic here. Let me admit that before everybody comes after me. Most of that money is back-end loaded. You pay the higher fees as your investments grow. Okay, so if you're paying 1% on like millions, that is a tremendous amount.

• 1:18:35Ramit Sethi?

  And it's really focused on the end part of those 20 years, like the last five years, even the last two years. So when I just divide it out, that's actually not really true. True. I'm just showing you the point that if you literally do nothing, that is approximately how much you will pay in fees and opportunity costs. And that number goes up. If instead of 20 years, we do 30 years, how much you think you'll pay in fees by 30 years? Over a million?

• 1:19:07Speaker 02

  That's exactly what I were thinking.

• 1:19:09Ramit Sethi?

  1.1 million as we calculate it. Yeah. Now, we are really talking. And this is what financial advisors love to have, an older, wealthier person, because they've had decades for their capital to accumulate. I don't mind if people want to hire a financial advisor, if they have a large portfolio, a particularly complex situation. Okay, I just would never pay a percentage. I would never hire somebody from Edward Jones. I'd prefer you keep most of the money for yourself. Okay, that's my take. How do you both feel hearing those numbers, Chris?

• 1:19:47Speaker 01

  Not surprising, and I had looked into the, into moving things over, what was it, like a year or two ago? And I guess I just...

• 1:20:02Speaker 01

  Stalled out because there was some uncertainty about, you know, what, how do I do it?

• 1:20:11Ramit Sethi?

  How do you feel hearing it, Natalie? Those numbers?

• 1:20:14Speaker 02

  Oh, that pisses me off, especially considering the current seat that we're in and trying to figure out our short-term needs.

• 1:20:21Ramit Sethi?

  Good. I like couples getting angry sometimes. I like it, especially if it's focused, not at each other, but at like, hey, it's us as a team against the world.

• 1:20:30Speaker 02

  Right, exactly.

• 1:20:31Ramit Sethi?

  Let's get this. We have our rich life vision. We've got more work to do on that, but we know we want time with the kids. We probably want to spend less time fixing the house as long as we can comfortably afford it. And why are we paying all this money that's being invisibly siphoned away that we didn't even know?

• 1:20:47Speaker 02

  Right.

• 1:20:48Ramit Sethi?

  That kind of anger is very constructive when you make a change and then you, it reflects on your CSP. Okay, should we take a look at the CSP?

• 1:20:57Speaker 02

  Sounds good.

• 1:20:58Ramit Sethi?

  All right, so our goal is to make some changes that are going to allow you to feel more comfortable and to go from a receding bucket to something much more steady. With that lens in mind, what do each of you see on this CSP?

• 1:21:18Speaker 02

  My substitute teaching, I'm starting out at two days a week at 170 per day. So that's an extra 1360 a month.

• 1:21:29Ramit Sethi?

  Extra 1360 gross?

• 1:21:32Speaker 02

  Correct.

• 1:21:33Ramit Sethi?

  Okay, you want to just tell me the net amount?

• 1:21:35Speaker 02

  I don't know what that's going to be yet. I haven't gotten a paycheck yet.

• 1:21:39Ramit Sethi?

  Uh, let's just estimate it. If it's 1360, what do we think? 900?

• 1:21:43Speaker 02

  Just to be on the conservative side, sure.

• 1:21:46Ramit Sethi?

  Watch what happens to this number here, your fixed costs. Ready? What just happened?

• 1:21:50Speaker 02

  Hey, that's great. It went down several points.

• 1:21:53Ramit Sethi?

  It dropped from 81 to 73. That's a big drop. Do want to point out your gross income? Look at that number. $180,000 and actually more when you factor in the bonus at the end. That's a lot of money. How do you both feel about that?

• 1:22:12Speaker 02

  Wonderful. Do you feel better, honey?

• 1:22:13Speaker 01

  I feel positive about it. And I think it's the fact that, you know, it's not just, you know, raises that are keeping up with inflation. It's like a real difference because it's a different income source coming in.

• 1:22:32Ramit Sethi?

  We're not done, but it's a good step in the right direction. How about we turn to Chris? What do you notice with the new lenses that we've put on? What do you see in this conscious spending plan?

• 1:22:44Speaker 01

  And there's not much that can come out besides the daycare. And we kind of weigh that as like a cost now, but benefit long run. And when both kids are in school and we don't have that, it's going to be great. And we've kind of thought about it as get through this part. And when that comes along, it's going to be a huge relief.

• 1:23:11Ramit Sethi?

  Guys, can I suggest to you that I see a way for you to actually feel great right now, without even, without even Natalie's substitute teaching money? The first thing you have to believe is that it is possible. I'm not trying to be woo woo. I know I live in LA for part of the year. I don't buy those crystals. I'm not talking about, okay, wearing a wide brim hat going around in Venice. It's never going to be me. I'm talking about just simply saying, as a couple, making between 160 and 180,000 dollars a year, we are simply never going to feel bad about money again. Did you know that you can do that?

• 1:23:53Speaker 02

  Sounds great.

• 1:23:54Ramit Sethi?

  You can, but you have to set the intention. This is my personal rule. I think there's a certain amount of money where when you make it, I actually don't think you should be allowed to complain about the price of anything anymore. I'm not allowed to complain about the price of gummy bears. I'm just not. It is, and I would not because...

• 1:24:15Ramit Sethi?

  I am very grateful to be able to go and buy the things that I want to buy. And so I simply have made a choice. Even a rule, I am never going to complain about the price of something. I, I am too fortunate and I make too much money to do that. Is there some way you could adapt that intention? It's a very bold, aggressive intention, like I'm not allowed to complain. That's very bold. Is there a way you could do that? Cause you make 160 to 180,000 dollars a year. Maybe you could use some boldness. Go ahead.

• 1:24:53Speaker 02

  I'm not going to complain about the cost of childcare.

• 1:24:56Ramit Sethi?

  Thank you.

• 1:24:57Speaker 02

  That's huge.

• 1:24:58Ramit Sethi?

  I love that. What a gift to be able to do it. Every dollar I spend on our awesome childcare, we feel so lucky. We drop our kid off with a big smile and we feel grateful.

• 1:25:13Speaker 02

  I come at that from a different perspective because I started postpartum depression therapy after my first child. And I've worked really, really hard to be in a positive mental state for myself and my family. And daycare is one of those things that truly helps me as an individual.

• 1:25:32Ramit Sethi?

  I love that. I love that. Chris, this is what I mean. We are simultaneously working the numbers, but this is such an important lesson, especially for you. Yes, we are working the lessons, the numbers. But also we can get these numbers perfect. I guarantee you, you will still feel scarce around money. It is not purely a math equation here. There's something much deeper and in my opinion, much more meaningful here. Okay, let's, let's continue on. As it stands, we are 15,000 a month gross, which is 180K. Maybe a little extra, but we're not even going to count that right now. We're at 73% fixed costs. You can't change the daycare.

• 1:26:15Ramit Sethi?

  Fine. Keep it as is. 2,000 bucks a month. We're grateful. Probably a couple of things you could cut a bit if you want to. You know, you could probably cut your groceries a bit, whatever, but I'm not the grocery Grinch today. It's fine. What else do you notice on this CSP? Lack of putting money in savings. You're right. There is no money going into savings. So what would be a good solution to that? If we were.

• 1:26:41Speaker 01

  In a position where we had the amount that would keep our checking at that, you know, logical 10,000 number, let's say, and beyond that, it gets put into the savings. Then if that checking number can stay steady and we can pull from the savings for those larger expenses, that would make me feel a lot better that the fixed costs are going to be covered. And we're in good shape.

• 1:27:13Ramit Sethi?

  I love it. Natalie?

• 1:27:16Speaker 02

  I'm on board.

• 1:27:17Ramit Sethi?

  So let me give you some kind of like systems building. Checking 10,000 sounds fine. That's your number. That's in your checking. Keep it there. So that means right now in your savings account, you have $23,000. All right. Which is one, two, three months of savings. Okay. Savings should not be getting dipped into regularly. If it's getting dipped into regularly, you have like a larger problem. But in, I'm speaking just in a general average month, you should not be dipping into your savings. You need to actually be putting money one direction in, not pulling out. Okay. Where's the money coming from to put into savings? Cause right now, three months is not enough.

• 1:27:59Speaker 02

  Over the past couple of years, the only source for the savings has been my occasional transfer.

• 1:28:06Ramit Sethi?

  Which was like a hundred bucks a quarter.

• 1:28:08Speaker 02

  Yeah.

• 1:28:08Ramit Sethi?

  It's no surprise. It's no surprise that you're in the situation you're in, feeling scarce. There's very, very little money going in and money coming out because of housing and car and this and that. All the clues are here. Can I ask you guys a question?

• 1:28:22Speaker 02

  Yeah.

• 1:28:23Ramit Sethi?

  Why are you investing $1,800 a month?

• 1:28:29Speaker 02

  Don't ask me.

• 1:28:31Speaker 01

  Well.

• 1:28:31Ramit Sethi?

  Hold on. Whoa, wow, whoa. Who, who just saw that dynamic happen? Chris, what just happened right there?

• 1:28:39Speaker 01

  That's an on me thing?

• 1:28:40Ramit Sethi?

  It's an on you thing. And actually, the dynamic that you have created, that you have allowed to permeate your family is, is your wife is literally jumping back with her hands up saying, that's not me.

• 1:28:53Speaker 02

  I wish it were me. I wish I could talk about it.

• 1:28:57Ramit Sethi?

  But she's saying, that's not me. So we need to fix that because that's a culture problem. But for now, I'm going to come to you, Chris. Why are you investing 1,800 bucks a month?

• 1:29:08Speaker 01

  Part of that is the ESOP, right? And that's not something that I can reduce for a current financial benefit. And it is, it's just baked in. The other part is that the way my company does the 401k matching now is it used to be straight match up to 3%. Now it's half match up to their contribution of 3%. So I feel like I've got to put that 6% in to get the full match, or else I'm leaving money on the table and that doesn't make sense.

• 1:29:42Ramit Sethi?

  And when do you get that money?

• 1:29:44Speaker 01

  That would be a long time from now. And if, you know, the things work out with the investment account, then, you know, when is that money going to help me more now or later?

• 1:29:57Ramit Sethi?

  Can you answer the question?

• 1:29:58Speaker 01

  It would be now.

• 1:30:00Ramit Sethi?

  Yes. You two are in a position you have never realized before because you are operating on the valuable lessons that your parents taught you that happen to not match your current financial reality.

• 1:30:14Speaker 02

  Huh.

• 1:30:15Ramit Sethi?

  The fact of the matter is you are already on track to have millions and millions of dollars. What is the difference between the two of you having 6.3% or 5.8% or 6.7% or 5.5%? It makes no difference in the grand scheme of things.

• 1:30:33Speaker 02

  Right.

• 1:30:34Ramit Sethi?

  And wouldn't that money, a few hundred dollars extra per month, be much more valuable right now? Especially for the next three years?

• 1:30:45Speaker 02

  I think so.

• 1:30:46Speaker 01

  Right.

• 1:30:47Speaker 02

  Yeah, maybe in three years down the line, when our daughter is in public school and not daycare, then we can circle back around to that.

• 1:30:54Ramit Sethi?

  That's exactly right. Now, here's my question for you. So Natalie is praising the Lord. Now, here's my question for you.

• 1:31:02Speaker 02

  No, I'm praising Ramit.

• 1:31:06Ramit Sethi?

  The real question is, why did you not see it? We're all looking at the same numbers, literally the same numbers in front of all of our faces. What do you think stopped you from seeing that you have hundreds and hundreds of dollars per month that you could redirect? Chris?

• 1:31:29Speaker 01

  For me, it's kind of a silly thing to say, given what we've talked about with Leonard and his fees, but like the opportunity cost loss, right? Where, you know, if I don't contribute that 3%, then I, or that 6%, then I'm missing out on 3%. And, you know, if I put that in now and it's allowed to grow, then it'll be a whole lot more later down the road. But I'm, I'm just making myself suffer now so that there's a bigger pool and, and a timeline when it's not going to be significant. So I, I never really thought about it that way because it was never an option to leave,

• 1:32:15Speaker 01

  take that money off the table on my mind.

• 1:32:17Ramit Sethi?

  You just nailed it. I, I'm very proud of the way you described. That was picture perfect. You are suffering. And that vision that you have carried for your entire life of, I need to save, I need to invest. It's a very valuable lesson. 99.999% of us should follow that advice. We still save and invest, even though we could stop.

• 1:32:44Ramit Sethi?

  And also, as you become more advanced, which you both are, you have accumulated, thankfully because of your grandparents, a considerable amount of money at this young age. We have to adapt. And we have to start to ask these questions that, that are almost kind of counterculture to what we were taught. Am I going to leave free money from a 401k? Maybe.

• 1:33:11Ramit Sethi?

  Because maybe there's something better than free. And maybe that is connection.

• 1:33:17Ramit Sethi?

  That's the two of us actually feeling really good. And yeah, we're actually gonna lose out on $180,000 in gains. But we are gonna feel so good. Right now. And that's what's important. What do you think Natalie?

• 1:33:34Speaker 02

  That sounds wonderful. I was um. Thinking about your question. To both of us, which Chris answered first. Why did you not see it sooner? And I was thinking to myself. Why did I not see it when we went through the CSP together? It's because of my ignorance about. Investments and um geez, even like financial nomenclature, you know?

• 1:33:56Ramit Sethi?

  You're exactly right. I appreciate the candor. While Chris has. Created a culture. In the family where you know, it's him and Leonard. And you feel a bit left out. I think that Natalie, you have allowed yourself to remain on the outside. And is really important. That you also. Be allowed in. You need to and. You gotta advocate for yourself because you deserve a seat at the table. It is the two of you. You are partners in this. And so you've got to be able to talk about it together, understand it, use the same terminology. And if one of you doesn't understand what the other is saying. Simplify, simplify, simplify until you both are on the same page. Here's what I saw the minute we started talking about this. I said, let me get this straight.

• 1:34:42Ramit Sethi?

  The two of them are on track to have. Millions and millions of dollars. And actually more when they get rid of this financial advisor charging AUM. So this number is great and we haven't even talked about investing. You know, 50% of all the extra money that comes in at the end of the year bonus, like whatever. There's so much we can do here. Then why are they investing? 900 bucks a month up here. And 900 bucks a month down here. Why? That money would be really valuable. Right now in savings. And fill that savings account up. Then, once you fill up that emergency fund, get that six months, maybe ideally 12, then you put together a little house fund. Fill that freaking thing up. Put that in your fixed cost.

• 1:35:28Ramit Sethi?

  Keep that money there because you know that house is going to break down. It's old. So on average, every year, it's going to cost you 1% of the purchase price, maybe two, maybe even three because it's old, who knows? But you, that money is flowing. So you are now moving forward, not looking backwards. That's how you do it. Natalie, what surprised you about today's conversation?

• 1:35:49Speaker 02

  I think Chris and I were both feeling pretty stuck on like, well, I guess Natalie just has to start working more, you know?

• 1:35:56Ramit Sethi?

  Yeah.

• 1:35:57Speaker 02

  Which is true, but I didn't know that there was another way to affect that, that number.

• 1:36:03Ramit Sethi?

  Love it. Awesome insight. Chris, what about you? What surprised you in today's conversation?

• 1:36:08Speaker 01

  I did not expect financial advice to be save less. And in this particular situation, it makes a lot of sense. I wouldn't want that to be the, that's the, the fix for forever. I'd like to be able to return to that 401k contribution and everything when it's more comfortable and there's not the stress around the money. But it makes a lot of sense. There was no way I would have, I would have thought, oh, stop saving.

• 1:36:44Ramit Sethi?

  It's like someone telling you not to breathe. How can I not breathe? That's who I am. When you become more adept with money, then you start to see it less as a series of black and white rules and more as a fluid, beautiful art form. Yes, there is some science and of course, there's some math. It's very simple arithmetic, but there's also an art to it. If I'm you, I'm going, we make $175,000 a year. We cannot be stressed out about money. We just can't. I am not going to allow that to be a part of our household.

• 1:37:25Ramit Sethi?

  So if we know that, if we know that we are calm, cool, collected, a team, then what decisions would we make? Well, maybe one of us goes to work. Maybe we get a cheaper apartment. Or maybe we don't need $7.5 million 35 years from now. And like, we can just take some of that and put it in our savings account. Let's actually do it real quick, just to see what the math looks like. Let's just say 700 bucks a month going towards savings. How's that feel?

• 1:37:55Speaker 01

  That feels a lot better.

• 1:37:57Ramit Sethi?

  Well, I want to point out that because we dropped your amount, that leaves you both with $1,000 a month in guilt-free spending. You probably are going to have to cut a bit on your guilt-free spending for a while. The reason is you're, because of your job and your ESOP, you're like very heavily paper. You're getting paper wealthier.

• 1:38:21Speaker 01

  Sure.

• 1:38:21Ramit Sethi?

  It's fine. It's great. I mean, you're making a ton of money, but it's just illiquid. You have an illiquid house. You have an illiquid ESOP. You have all this stuff. Fine. So then your goal is just to scrape as much liquidity as possible. And you all know you can do it for three years. Like, it's not hard. You're accumulating a huge amount of money. You're also saving money on investor fees. And then after three years, you're gonna, I'm gonna show you. Look what's gonna happen. We just dropped this to zero just for simplicity's sake. Watch what happens to the fixed cost number. From 73 to 53%. It's massive. How do you feel seeing that?

• 1:39:04Speaker 01

  We, we know it's coming. It's just, I like the idea of being able to reduce the stress about money in the short term with a creative fix like the 401K.

• 1:39:19Speaker 01

  Because we know that that that big change is coming and that's gonna just it'll be huge. I feel positive and hopeful.

• 1:39:31Ramit Sethi?

  Cool. Natalie?

• 1:39:33Speaker 02

  I feel motivated.

• 1:39:34Ramit Sethi?

  I love hearing both of those. I love that. I suspect the two of you have a few hundred bucks a month easily that can be found, that can be optimized, whatever savings you institute. Like, just make sure that you set up the automatic transfer into savings.

• 1:39:52Speaker 02

  Hmm.

• 1:39:53Ramit Sethi?

  What you're gonna see is after a month, especially after three months, that savings account's gonna be growing and growing in a way that it has not grown in years. And you're gonna see it and you're gonna go, oh, my God, like, we didn't do it. We just set it up once and it's just automatically rolling. And that is very motivating. And you can start to see, oh, my God, we're gonna have this much after six months and on and on. And you're both gonna feel unified. That's a beautiful thing. I'm really glad Chris is seeing a therapist because so much of our relationship with money is mediated by our mental health. It's why I talk to so many people who have tons of money who still feel scarce about their finances. Natalie and Chris are looking at the same exact spreadsheet and they are seeing two completely different things,

• 1:40:37Ramit Sethi?

  which actually reminded me of one of my favorite examples from psychology. This famous study where Harvard and Yale students watched footage of a football game between their schools. Both sides saw the exact same plays, but each side insisted the other team was playing dirty. Same footage, completely different interpretations. Why? Because we don't see facts. We don't see an objective reality. What we see is mediated by our experience, by our psychology, by so many things from our history. It's almost like we're wearing a set of lenses and we are seeing the world like this and your lenses are different. So when people ask, what's the fix? Well, it's not just therapy. It's not just one book or podcast.

• 1:41:18Ramit Sethi?

  Real change is actually messy. It takes multiple attempts. You're not just gonna go linearly up and to the right. You're gonna do all kinds of things, go backwards. You're gonna try multiple approaches. You're gonna have to get a little bit lucky. But when it clicks, when people finally see each other and realize I have control over my money. It is beautiful. I also want to say something personally here. It means a lot to me when professionals like therapists, doctors, professors, recommend this show. Personally, in my culture, we are raised to revere teachers. In my culture, you never touch a book with your feet because it has knowledge. Teachers are almost treated like gods. So when a therapist says you should talk to Ramit, it is actually especially meaningful to me. And I take it very seriously.

• 1:42:00Ramit Sethi?

  I know my area of competence and when things stray outside, I always recommend people go and speak to a specialist. In fact, you don't know this, but I've ended calls, which you never heard when there were serious mental health issues at play. And I told them, I'm not equipped to help you. And I try to learn from them as well. Sometimes I ask therapists on social media, what do you think of the show? What would you do differently? And their feedback is incredibly helpful. I want to remind you, when it comes to these professionals, you should know that they do a lot of the quiet work behind the scenes. I speak to couples once. Therapists speak to them for months, even years. They are doing the hard work. So are the people who show up and seek out help. That's quiet work that's often unacknowledged,

• 1:42:43Ramit Sethi?

  but I see it here and I want to recognize everybody who takes part in that. Natalie and Chris, they have a long road ahead, but I think they have the love and the financial resources and the willingness to change. So let's see what's happened in their follow-ups.

• 1:42:58Speaker 01

  Hey, Ramit and team. This is Chris. Biggest surprise for me was that I don't always have to be saving everything all the time. And given our financial situation, it's okay to not be putting money into an IRA as long as that's meeting our long-term goals because it's helping us so much in the short term. I never would have come to that conclusion on my own. So thank you and I really appreciate it. Biggest takeaway is that we're really doing a whole lot financially better than I had thought, thinking about the investments.

• 1:43:40Speaker 01

  And that, yes, we don't have a whole lot of cash on hand, but that we can pull some away from.

• 1:43:50Speaker 01

  Stashing away into investments to help out with that situation of not having quite enough cash on hand because there was already enough in the investments. That really kind of opened my mind up to thinking about money a little bit differently. And so I've made the reduction to my IRA contribution. I was actually at 7%, not just 6%. So that's like $900 plus a month. That's huge. And we're also making the switch from Edward Jones and I am committed to making sure that gets done by the end of the year. So, thank you again, really appreciate it.

• 1:44:31Speaker 02

  Hey guys, Natalie here, checking in with my post-interview homework. The biggest surprise that I got out of our conversation with Ramit was definitely how much money our investments will accrue to by the age that we retire. I think when Ramit asked me, "What would you guys do with $6 million?", I can't even fathom that much money, so I didn't really have a response. But because of that information, Chris is incredibly motivated to not invest as much

• 1:45:09Speaker 02

  at the moment and he has already cut his 401K investment from his paycheck from 6% to zero, actually, which is even better than 3%. We've calculated how much money we can auto deposit into a savings account each month to hopefully purchase the vehicle that we want to purchase in June. We had our bi-weekly meeting with our therapist yesterday and she commented on how much lighter we seem, how much more easygoing.

• 1:45:49Speaker 02

  We seem, I even spoke about letting my in-laws babysit because it doesn't cost any money, which is huge for me. So I guess that says something. I wanted to thank you guys again so much for your help. I've never seen Chris this optimistic about finances and the fact that he's at ease now has just made a night and day difference in our relationship. So it works. Thank you so much. We appreciate it. Talk to you soon.

• 1:46:20Ramit Sethi?

  If you want to stop feeling like money is this thing that you don't have control over, and you want to get control, get it fast, and then start using your money to live your rich life together, don't miss the next episode of Money for Couples. Real conversations, real numbers, and what it actually takes to get on the same page.