I Will Teach You To Be Rich - 114. “Why did we spend $40K on trips we can't afford?”

Episode Date: July 25, 2023

Emily and John are in their mid 30s, living in Boston with their 2 year old son. Both coming from blue collar backgrounds, they’ve successfully broken many negative generational patterns thanks to a $200k combined income—but they struggle to break harmful spending habits.  This episode is brought to you by: LMNT | Right now, LMNT is offering 8 single serving packets FREE with any LMNT order. This is a great way to try all 8 flavors. Get yours at https://www.drinklmnt.com/RAMIT. Facet | Get affordable, accessible financial planning with a flat fee membership. For a limited time, the $250 enrollment fee will be waived when you sign up at https://www.facet.com/ramit. Mint Mobile | To get your new wireless plan for just $15 a month, go to https://www.mintmobile.com/ramit. Trade | Right now, Trade is offering our audience a free bag of coffee with any subscription at https://www.drinktrade.com/ramit. Links mentioned in this episode • Get Money Coaching with Ramit  • Download the Conscious Spending Plan • Get my New York Times best-selling book Connect with Ramit • Get the Podcast Newsletter and exclusive Q&A about the show • Get my no-numbers journal • Other episodes • Instagram • Twitter • YouTube • Submit a question for the newsletter iwt.com/askramit  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. Produced by Crate Media.

Before we get to the episode today, let's put aside all the long-term stuff that you and I know we should be doing more of calling our mom and dad going to the gym. Flossing, okay, yes, we should do all those things, but I want to talk about quick wins. The things we can do quickly to be able to be more productive, to be less anxious, to be in better shape, and even to be more generous. I'm talking about getting results in seven days. That is exactly what I'm going to be talking about this Saturday on the podcast newsletter. These are the actual tactics that I use myself and saw massive results in seven days. Yes, we should be doing the two year or five year, ten year things. Sometimes you just want quick results.

You can get this issue of the newsletter at iwt.com slash podcast newsletter. That is the only place you can get it. The email goes out this Saturday, September 2nd, iwt.com slash podcast newsletter. Where we're from, it was the sailing almost was you got a house, you got a good job and a car and maybe you take your kid to Disney and go to the Cape Park. There wasn't too much more than that. I never really thought bigger than that. Our parents are going to work until their death, her mom's retired, but she doesn't have

any money. And older faster than I expected. Yeah. It's definitely going quick. I just put it off for so long and now it's like, I got to do it now or I'll never do it. We are one life altering financial event from happening, from being ruined and like that, like again,

I think my motivation is like this panic. And you have a two-year-old son? That's why it's more real. I'm scared I'm not going to understand it well enough in time to get my act together and be there for our son. I don't want him to grow up being so naive and unaware of all of this. Will I be able to get there and, you know, well enough? We've put ourselves in a position where we now just got to focus on ourselves and we won't

be able to help him. And that's very, we're very, possibility. And that's really devastating to me. Do you think you're spending more every month than you actually make? The answer is yeah. That's scary. Yeah, that one does. Is it too late for me when it comes to money? This is a question I get a lot. And that's what we're going to talk about on today's episode. I'd like to introduce you to Emily and John. Emily 35, she works as a nurse practitioner. John is 36. He works in the entertainment industry. And one of the reasons that Emily and John have started to wonder if maybe it's too late is that they've been together for a long time and they've been spending a lot of money,

but they have a two year old son. And usually when couples have kids, they start to think about money in a totally different way. You know, I also want to point out that this is the only podcast where people come on. They share every number of their financials. They talk openly about their childhood and they let all of us listen in on the most intimate conversations that we've ever heard. I just want to give a huge thank you to every single guest who's ever appeared on this podcast, including today's couple Emily and John. Let's get into it. We have both come from a place of not knowing how to manage our money.

We don't know what we don't know. And I don't think that that was realized honestly and embarrassingly admittedly was till recently, until I kind of found you at terribly embarrassing to admit that. Why is that embarrassing? I don't know. I feel like seriously, I was like on Apple Podcast.

And your podcast popped up. I usually don't even listen to anything like this. I'm a true crime podcast person, I just, but I know. I was like, what is this? I will teach you, but I don't know, so I clicked on it. It blew me away. You really, you kind of acknowledging that listening to the couple, and I don't even remember which one at the time, but looking at their finances and then being

like, well, the reason you don't have anything in your account is basically because you're psychology and what you grew up with. And I, all of a sudden, it was like, boom, I was like, oh my god. Yeah, like, and I tried, I started like thinking in, be trying to be like insightful and like being like, self-aware of like, well, yeah, that makes sense. Like, maybe that's why and like really thinking about it and then honestly really taking a hard look at our finances and realizing wow yeah like we have we are not on path to retire at any rate ever if we continue

the way that we are like we are one life altering financial event from happening, from being ruined. And now, saying it out loud, you're an idiot. What are you talking about? You have to have a plan. That makes so much sense. I relate to so many of your couples. And it's almost like, gosh, why don't I know this by now I you know 35 I'm gonna be 36 I feel silly because I feel like I pride myself on a lot of

other accomplishments that I've had in my life and then all of a sudden I listen to all this and it's like I opening really I was like wait what like what it I didn't know that I didn't even ever think to think about and so we both have really lots to learn. When she started bringing this podcast up, I was kind of aggravated. I was like, oh, this is the last thing I want to deal with. I don't know. I feel like I'm going to principal's office.

I didn't even know about, I've had a pension. I didn't even know a thing about it. Even up to today, we're like trying to find out my username and password on there. And it's like, it is embarrassing. I should know more than that. Who is it embarrassing to? Donabar. I don't understand.

Yeah. Well, both of us. Just because we're so naive to it, it seems like a lot. But now, looking into it, it's something I do want to know. And I would like to have a young son now, and it's more important than ever. Just being a father and I guess getting older and wanting to grow our family maybe someday,

when I was younger, I didn't really see the importance to it,, I guess I'm so glad that I get the chance to talk to both of you because what you just said Is so advanced? Do you know how many people I talked to that make hundreds of thousands of dollars or even more on this podcast? Many of them Agonizing over the price of a pack of gum or blueberries and never realizing like there's actually ways to Make a plan and to stop worrying about little things and to elevate right and so I'm with you 95% of what you just said Emily except for the last part where you called yourself an idiot. I Didn't mean to ignore it. It was that I truly wasn't even aware of it and I feel so silly.

I feel so stupid. I'm truly embarrassed. All right, how old is your son? He's two. Ah, cool. Congratulations. Thank you. All right, so do you think that your perspective

on money is different? I would say it is. I don't worry. Like she definitely worries more. Oh, yeah. And what about you? I'm all laid back and I definitely procrastinate that does not help with finances I'm learning. So yes, I, in general, I'm the more warrior type A person from all aspects. I admit, like a control freak. I like things done the way that I like it, whatever, which is again, laughable to say, because if you look at our financial situation, it's like, well, really, that's not reflective of that personality.

So, yes, I worry more and I'm more like, okay, this needs to get done on top of it, and I'm the one kind of being on top of it all. At the control freak, I like strive for perfection, I guess. So what you're telling me is that your concept of your identity of being perfect might not actually be true. Yeah, I mean, I know I'm not perfect. Of course not.

Would you two ever call each other an idiot? No. So let's just not do it to ourselves. How about that? I like it. New rule. We're gonna say nice things. And sometimes, hey, we go, wow, I wish I had learned

that starting at age 18, but I didn't. And so the next best thing I can do is to get really good at money now. Same thing, just a different frame, much more in power. How's that feel Emily? Yeah. All right, so let's agree on that. That's one of the rules we've come up with today. Love it.

So you heard the podcast, Emily, and you were like, oh my God, I don't know any of this stuff. And what'd you do after that? I listened to a ton more. I bought your books. I told John all about you. I was like, listen to these things. Listen, we could have this. Or what were we doing? you. I was like, listen to these things. Like listen, like we could have this. They're like,

what were we doing? Like we're in no plan path. I kind of like divulged all my anxiety on him. Convinced him that we need to like change, try to have him see my perspective and then try to start setting things in motion. I guess. John, how did you receive that when she started telling you about this stuff? So honestly, I thought it was a scam. You thought a site called I Will To Be Rich? Was it scam? And then once I started looking into the book, and then I was listening to some of the podcasts,

I liked the way you just spoke about it very bluntly. And it didn't seem like you were selling anything. You were just trying to educate which I like that. Wait, the hilarious part is that I actually am selling things. Like I have many products. Did you guys know that? Yeah. It's actually really funny. So I don't even know if he knows that you have like, you know, the money coaching program, like all of those things. I know them because I listen to him. You didn't tell him that because you're like, he'd really think it's a scam. And now he's learning it right now.

Yeah. Am I being scared? No, no. I love hearing this stuff. I know the site sounds like a scam. I will teach you to be rich. It's like, come on. I kind of love hearing these dynamics. Emily stumbles across it because it's on Apple Podcast. She's like, ah!

And then she comes home, she tells John, oh my God, we gotta do all this. If he's like, what kind of bullshit is this? Yeah. But, John, to your credit, you were like, and then she comes home, she tells John, oh my God, we gotta do this. If he's like, what kind of bullshit is this? Yeah. But, John, to your credit, you were like, okay, I'll listen, I'll watch a little bit. And then you were like, wow, there's something here, and here you both are.

That's a pretty interesting path, I've brought them here. It's kind of humbling to think that more people may have heard about me in the last two months than maybe the last 20 years combined of my career. There are also so many things to note about the way that they make snap judgments. Emily says that she's a control freak in her own words, but her finances don't really reflect that. It's like, if you're going to be a control freak and your finances aren't even dialed in, what's the point? Then John is like, that sounds like a scam, but he also ignores his money.

Now, I'm not blaming them. All of us have these funny quirks of identity or even gaping blind spots. The important part is that Emily and John realize they need help and they are here now. Today's episode is sponsored by Element, a tasty electrolyte drink mix. I wanna read you a message that I recently got

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How'd you grow up with money? I'm guessing nobody was sitting there doing compound interest charts for you as kids No, seeing a lot of shaking heads right now. All right. Tell me, John, how'd you grow up with money? I was raised by my grandparents. My mother had me when she was 18 years old. She was not planned. So she didn't know anything about money. She was a kid.

And my grandparents pretty much, I think, just spoiled me because they felt bad. Even if I wasn't doing right, I would get not anything I wanted. We were pretty blue-collar family, but I didn't want for anything, and it didn't matter. Like, if I was getting bad grades, I still probably got what I wanted anyways.

Got it. So it kind of just felt like, I don't know, I never took money serious, I would say, because I guess I don't know, I never took money serious, I would say, because I guess I didn't know when around me took it serious. You grew up with your grandparents, both? Yes. All right.

And he was a mechanic. OK. OK. Emily, tell me about money going up for you. My mother and father divorced when I was really young and I was like four. It left my mother to care for me and my two older brothers alone, that included financially as well, that yeah, there was no financial support for my father's end. And you know, what I remember feeling like we didn't have money, she had to work, you know, incredibly

hard to support just the three of us, right? But it's have money, she had to work, you know, incredibly hard to support just the three of us, right? But it's really conflicting because she had to like, I remember her working like three jobs. I actually was just sharing this with John the other night is that I have like this memory of being little and her coming home from like her nine to five and I would want to play with her when she got home, but she would just be like, can I just need to like rest my eyes for like five minutes on the couch so she could get ready to play with her when she got home, but she would just be like, can I just need to like rest my eyes for like five minutes

on the couch so she could get ready to go to her other job to work till one in the morning. And I would be sad because I would want to like play with my mom and thinking about it now, it makes me really sad that she even had to kind of do those things like to work so incredibly hard. But I also realize now that she didn't also didn't know, even though she was working so hard, but I also realized now that she didn't also didn't know even though she was working so hard, she didn't manage her money well either.

I don't think she ever knew how to manage her money because this is a perfect example. Every Christmas, she, it actually, it's funny, John had this similar thing, so it's really weird, but I would get like that department bookstore like that JC Penny bookstore I don't know if that reads about right and it'd be like the catalog. Thank you. Circle the Toysie Wands and she would give that to me and my two brothers and start a shit like Christmas morning would come and our living room would be to the build to the brim with every tour we wanted, every tour we have worked, she would work so

hard and it made her so happy to give us that. But, you know, at the same time, I have very vivid memories of being like called into the principal's office being pulled out of class to be told that, Hey, we've been trying to get a hold of your mother, your tuition's not paid. So you, you know, you can't go back to class. Wow. She knew how to work hard for our money. She was generous with her money, right? Because she really wanted to make us happy. And I think in her eyes, it was, you know, giving us all that.

And that's how she tried to portray that by, you know, yeah, like she would take me to the mall like once a week and we'd go on a shopping street but like, once a week? Like sometimes we would, like, that's a lot. No, yes, she's in a situation where she's retired, but her retirement is surely, she's living off of social security and a disability check. And it speaks, we feel sad to think, well, she's already a lost cause. Now I'm going to get upset. Yeah. So like, for example, like we've been saying, oh,

we're going to meet with this financial advisor. Like I'm referring to you, but not going to tell her I'm going to be on a podcast. Tell her I'm not a financial advisor. Yeah, I know. I know. I just don't know how to explain you. That's OK.

I get it. But I can already I can. I just don't know how to explain you. That's OK. I get it. But I can already, I can tell that she's like, hmm, like that's weird because that's something that's a foreign to her, her. Right. It's out of her day to day, even year to year. I get it. Look, our parents grew up with different situations, different tools.

Certainly a different income than the two of you have. It's not necessarily fair for us to expect for them to have the same advantages that they gave us. I get that. I certainly can hear a lot with what you're saying and I understand what you're talking about. Both of our families and all of the relationships in our families and clearly the finances too, but the relationships and things that in mental health

problems and things like that are. Generational. Yeah. Like, I don't know. Issues and not treated. And we pride ourselves that we're breaking the cycle together and we laugh and say all the time, like who did we think we are,

like us two getting together because now we're just like meshing too bad. The things like, gene pools, that like what we were gonna have a kid or like is this the right decision? Like should we do that to a kid? Like a therapist that said to me, all it takes is one to break the cycle

and you're already doing it and it was really amazing and really nice to hear. I noticed that Emily's mom works really hard, probably feeling guilty about not being able to buy her kids lots of things. And then when the holidays came around, she gave them a JC Penny catalog and said, get whatever you want. I noticed that her mom had a lot of anxiety around money

and not necessarily the best financial skills. Now, when it comes to money behavior, do you see any similarities between Emily and her mom? I never flew anywhere until we were until we started dating. When was that? What age? Oh, 18. 18 years old. OK. You guys have been dating since you were 18 years old?

I was 17, yeah. Wow. And this, like, you're from the same town or something? Yes. Wow. This is a real small town love story here. I love it. Yes.

OK. Where'd you meet? Where, the YMCA? Where was it? Oh, I got a'd you meet the where the YMCA? Where was it? Oh, I got like a field. What the fuck? What the fuck? No, like we met in a field.

No, like he's getting around at like parks and stuff like that. Yeah. So like wait, that's a field. Yeah, I guess that sounds more terrible. But it's cool. We met in a field and it was love at first sight. No, it was a beautiful day. On the other side.

Hey, look, that's like neighborhood love. I kind of love it. That's beautiful. And have you two been together since then? Yes. So you've been together 17, 18 years. Yeah, go 19 this year, yeah. Congratulations.

Yeah, amazing. Thank you. That's amazing. I don't hear that story too much these days. So it's kind of cool. Also, to, sorry, it's different. Like, we didn't have a money conversation before we got together. We were little too, right? Like, we didn't surprise me. Yeah. Yeah. We're kids. We both got a career, I guess, pretty young. I remember we were going to like, trips to islands when we were probably 19 years old. What islands?

I think we went to Jamaica, we went to Jamaica I think. Oh yeah, hold on, I have to ask you guys this. So in the pre-screen, my colleague made a comment. She goes, you guys love Aruba, don't you? And you were like, yes, we do. And I was like, what is this? How does it, and it she goes everybody from boston goes to aruba and i'm like uh what the hell is this that i had no idea about

can you please explain it for all of us um i i know we can't actually i for some reason it's just what everyone goes for some reason everyone from boston goes to aruba yeah a lot they go there a lot i because it's a quick flight and it's great. The weather's always great. So it's just like the go-to, I think. So it's just easy. I love, I did not know this little micro trend of people from Boston always going to Aruba.

That is amazing. Thank you for opening my eyes to that. Let me tell you why I love this so much. There are micro trends in cultures that will never ever show up in a written book, but they are nonetheless real. Like if you go to any Indian person's house, like my mom's house, every single one of them

has this lay per sill serving pot with orange flowers on the side. I don't know how every Indian mom has the same pot, but they do. It will never show up in a book, but it's real. I don't know why I love collecting these tiny specific cultural examples, but now that I've got this podcast, Mike,

I wanna ask you, if you have one, send me a DM on Instagram and tell me what it is. It can be a little quirk of culture or religion or gender geography, whatever, but I just love collecting these and I want to hear from you. And you were taking trips. We would just take trips and we never thought of it. We just would get paid and we thought we were getting paid well and we'd just go on vacations or out to restaurants and what's like, oh, we can afford it. Surely you grew up hearing people around you say like save, save, save, everybody in America hears save, save, save. Doesn't mean you do it,

but surely you heard that. Is that fair to say? Yeah. Okay, did you save? No. Wow, no. We saved Tobiah. We saved the buy out house. Yes, okay. Did you buy it? Yeah. Yeah, not the right way. No, what does that mean? We didn't run the numbers. What's your mortgage?

So, I'm mortgage is 3,300. Okay. But we own a multi-family. Okay. We live in it. We rented out our. So we're renting one of the units. So we're getting, you know, I-family. We live in it. Great, so we rented out our family. We're renting one of the units, so we're getting, you know,

I got to put some included in there. And then what I did, because you're gonna be really excited what we did is we got a heal-off. Why'd you do that? But everyone told you to, it's free money. Yeah. Yeah.

I'm in a month. Yeah. Hold on, don't even tell me. Let me guess. Let's take out the home equity line of credit and let's renovate it because renovation is free money. It will add to the price of the property and we'll get the money back. Did I get that? Yeah, we did a little rent. Yep. We did spend some of it on renovations. Yeah, shocking. Okay. Wow. And what else did you do with the money? If you say Aruba, we're in real trouble here.

No, actually, it was a much better trip, it was a much better trip. We spent three weeks in Italy and Croatia. You took it, you locked it to the vacation! No, that's the thing, we didn't take it out for that, but then once it was there, we were like, hmmm. I mean, listen, I'm not with you. Like, you got the childhood, you got the blue collar family. I'm like, okay, I can roll with that. But this is crazy.

I know. Yeah. I know. Do you know why? Why is it crazy? Well, now I know the question. It's gonna cost us like 10 times what we paid for. Exactly.

And the long run. You're telling me that your loan officer didn't clarify all of these details. You're telling me your loan officer didn't have your best financial interest at heart? He did not know. I've shocked that anyone in the mortgage industry would possibly not put you and your interest first that they would only be trying to make a commission.

That's right. That's so shocking. Anyone in the mortgage industry, I'll see you in hell. All right, so I just wanna point out that you're spending like 17%, 17.5% of your gross income on your housing. Is that good or bad? I don't know. Okay, that's a fair answer. Emily.

I think it's good because you said it should be about 20. Less than 28%. Am I wrong? Less than 28. How much did you take on the home equity line of credit? We, I think it's approved up to 130,000. It's at 94. You have $94,000. It's at $94. You have $94,000 taken out?

OK. That's a lot. Oh. We also have this land that, oh, if it's opened, that could be. We could dip into that for a down payment on another house. And then next, you know, don't do all this. Yeah. Please stop.

I know. I'm not even going to get into how some of you actually trust your loan officer to look out for you. I want you to think of anyone in the mortgage industry as one of those little merry go-rounds you used to see outside of Kmart and Target. You know, you put the little two-year-old, they ride on the horse, it costs a quarter.

The mortgage industry is like that. They're coin-operated. That's what they do. They get you financing so you can buy a house. That is it. You wouldn't expect your mayor to go around and do your taxes, would you? That mayor go around, it's not going to kiss your boo boo. Ooh, it's not going to rotate your tires.

So why the hell would you expect your loan officer or your realtor to look out for your financial interests? They are not there for that. They are there to make a commission. Okay, let's look at their numbers. Their assets are $900,000. Their investments are $57,000 and they're currently investing 9% of gross. Their savings are $2,000 and their debt $557,000.

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remit R-A-M-I-T for a free bag of coffee with any subscription purchase. Again, drinktrade.com slash remit. Okay. Total net worth? 400 and 1,000 ish. Okay. What do you think about that? I hate it. Okay. John, what do you think about it? I hate it. How come both of you hate that number? It should be more for what we've made. Okay. We bore a lot of it.

Frivolously. Okay. I thought I was just having fun, but now I'm looking back. I mean, we did have fun, but it was. We did. It was at the expense of. Yeah. Our future.

It seems. Okay. What scares you about money the most? Emily, I know you're scared of it. That's the only way to get a good job. That's the only way to get a good job. That's the only way to get a good job. That's the only way to get a good job. That's the only way to get a good job. That's the only way to get a good job. That's the only way to get a good job. That's the only way to get a good job.

That's the only way to get a good job. That's the only way to get a good job. That's the only way to get a good job. That's the only way to get a good job. That's the only way to get a good job. That's the only way to get a long to recover from that it's going to now like again another drain of time before we're getting back on the right path. Okay. John, what scares you about money?

Before this, not too much to be honest, we always, from it when Framley was the sailing almost, was he got a house, he got a good job and a car and maybe you take your kid to Disney and go to the Cape Cork. There wasn't too much more than that. So I never really thought bigger than that. I don't want to sleep, but then I styled some of the podcast and we're talking and it's like, our parents are going to until their debt or her mom's retired but she doesn't have any money. So it's they didn't work they're not gonna retire with a pension. I don't even know and I know in my family had a pension, other than my grandparents. Getting

old a faster than I expected. Yeah. It's definitely going quick. Yeah. And I'm like, I just put it off for so long. And now it's like, I got to do it now, or I'll never do it. OK. I'm scared I'm not going to understand it well enough in time to get my act together and be there for our son or in future children, too. Now hearing this, I don't want him to grow up being so naive

and unaware of all of this. I want to start talking to him up money when it's age-appropriate and doing all the things that, you know, everyone clearly, no, or not everyone, but people do and recommend this whole life that I never even knew existed, these dynamics in someone's family I never even knew about. I want to be those parents and will I get there? Like will I be able to get there and well enough?

And then also I want to be able to financially get him on a right path too, like also provide for him. And now I'm afraid that I've put myself in it. We've put ourselves in a position where we now just got to focus on ourselves and we won't be able to help him. And that's very, we're a very real possibility. And that's really devastating to me. So it sounds like this is Emily, you coming to terms with this idea of breaking the cycle that you talked about specifically relating to money. Is that right? Yeah, I think you just said something that just made me.

Sorry. Yeah, like I just said, like we're really proud that we've like broken the cycle in other areas and now I'm realizing that because we didn't break this one, I won't, my son won't benefit from it. Like I didn't break it for him. Can we reframe that slightly using that rule that we all agreed on? What was the rule? Not an idiot. Yeah, basically we're not gonna beat ourselves up. What are we gonna do instead?

Good fella. Yeah. Get better, exactly. So try that same thing because you're giving me the honest truth, Emily, I could hear that. I'm gonna cue you up with the first part of the sentence you said you said we're gonna break it. We're gonna be the ones to break it. I know that, I guess will it be all that I thought? I could be, I could provide or could give him. I feel like, all right, I'm gonna stop being so negative on myself.

Yeah, we're gonna break the cycle, we're gonna be better, we're gonna be, we're already amazing parents. And, you know, I know that. I would like to chime in a little. We're both of us, me and Emily, like our parents were very worried about, like where did they go when they get older? They don't really have anything set up.

So that's a very real fear of her is that like she doesn't want us on to fail that way the way she fails. Yes. Yes. Which is like is that burden going to be put on her or us? Right now the way that my parents and even my sibling have been, you know, their financial situation is set up is that I'm like the stable one of the family, right? And so I'll be the one that will have to step forward. And so I do not want that for my son. I refuse to put that to have him feel the way that I'm feeling right now and to feel that burden. And I'm feeling like that situation with them, if it does burden me, it will just trickle down and burden him.

Yeah. Would you like to change it? Yes. That's really. Just want to reflect for a second on how many couples come on the show and acknowledge that they want to break the cycle of how they grew up with money. And I find that to be very, very powerful, especially when a couple decides they want to do it together. They have a very good chance of being able to do it. Now, they may not necessarily have the role models. They may not even have the skills,

but the desire alone is a very, very promising ingredient in wanting to change the way that you treat money. By the way, if you want to do this, you can download your own conscious spending plan at iwt.com slash csp. Talk to me about your combined gross monthly income per month. 16,200. Do, what do you think? We live in an expensive city. Weird, I didn't ask where you live. I just asked where your income is. I mean, I think it sounds a lot better than we're making out to be, I guess.

What's the number? 200,000. Yeah, correct. about 200,000. I mean, that's a lot of money. I know you all live in an expensive area, that's fine. But I just want to point out like, you two grew up blue collar, you grew up with, nobody teaching you about money

and you're making $200,000 a year in your 30s. What do you think? You say it like that, it sounds good, but I don't feel good about it. Of course you don't feel good about it. Let me ask you this, John. If you had to break down the percentage, how often did you feel bad about money and how often did you feel good about money? Growing up, I'm probably mostly bad. Yeah, like what percent? 80-20. Yeah, 80 percent bad, 20 percent good.

And the 20 percent you felt good. What was happening when you felt good about money? Someone was buying something for me or spending it. Wow, that's so shocking. Do you see any connection to your adult self right now? No, definitely. When do you feel good as your adult self right now? No, definitely. When do you feel good as an adult with money? Spend in it.

Yeah, specifically where? Vacation. Bingo. Do you ever make that connection before? Recently, but not before that, no. So it's no surprise to me that you don't feel good about money. It's no surprise to me that the two of you are sitting here

all depressed, sounding about, oh, boo, we only have $400,000 in net worth. I'm looking at the same exact spreadsheet you're looking at, the conscious spending plan and I'm seeing something totally different. I'm seeing a young couple in their mid-30s with a young son who grew up nobody teaching you about money. You met 18 years ago and you said, we're going to break the cycle and you now make $200,000 a year. That to me is incredibly impressive. What do you all think? I just think the same I said earlier, it does sound good. It's just we're not doing the right things

with the money. Yeah, it sounds great and theory and I'm like proud of what we made I'm just not proud of the way we've managed it and so it's hard for me to Feel proud about it. I guess All right, let's make some changes so you feel proud. How about that? Yeah, all right fine now Now can you just how much are you spending as a percentage Emily? What's this number up here under fixed costs? 71 what's it supposed to be? Ideally. 50 to 60. Yeah.

So what do you think about that? It wants to high. It's a little high. What's interesting is your rent and mortgage is actually quite good. Usually these numbers, especially in expensive cities, are like 28, 30, 32, even 34. You've kept this number really low. So there's some other stuff that's really high. We can talk about that, you know, and we're going to have to find a way ideally to bring this down. We're going to have to get rid of the pocket.

Yeah. We're going to have to have to have a private spot at work. There is like shuttles and free shuttle. Okay, done. Can you do that Emily? Are you committing to that? Yes. All right, how much is that? $400 a month. Whoa, all right.

If we put my ubers and packing down as well. Yeah. How much? I mean, really 200. You want to take 200 off this number? Okay. John, are you okay with that? Yeah, and I just have to only take them if it's nighttime and the ublas, I mean, the trains are closed closed. Okay fine. We're at 65% we're getting closer It's like we could definitely get rid of some of the subscriptions, but like you said is Listen to keep keep YouTube because my show is on there get rid of YouTube TV. I don't know pick one Let's let's just play with it. Let's at least get down to 60

I know. That this, I feel so silly like this, I listen to your people do this, and I'm always like, why can't they figure it out? And now here I am. Well, 8.54, I'm taking YouTube away. 64%, all right.

iPhones. Yeah. Anything on that I Don't know I feel like we're scraping the bottom here you to tell me Holy shit, what is all this stuff? So I yeah pretty litter you guys Yes, so wait you have a cat. So where's the cat food in here? So yeah, you're right. I So where's the cat food in here? So yeah, you're right.

I didn't like food down the grocery. Oh, OK, fine. Halaton, $44, blah, blah, blah. Well, look, you guys want to tell me how you want to get to 57%. Yeah, isn't this crazy? Like, it seems silly that I don't like it. I feel like it's impossible.

Before we go on, listen very carefully to this life lesson. Okay, it's really important. Be very cautious about what you add to your fixed expenses. Because once it's there, it is extremely difficult to get rid of. Once you get used to two car payments, it's almost impossible to think of only having one car. Once you get used to feeding your dog some organic stuff from Switzerland, it's almost impossible to imagine getting your dog food from the grocery store. And when it comes to housing, forget about it. Once

you get used to a certain lifestyle with housing, whether it's a four bedroom house or a certain neighborhood, it is almost impossible for people to contemplate downsizing. The lesson here is to be extremely cautious about what you allow into your fixed costs. You want to rent a beach house for a week? Be my guest. But if you want to rent a beach house for a week? Be my guest. But if you want to buy a beach house, keep in mind that it is going to be extremely difficult for you

to ever downsize because of financial reasons. In my own situation, I know that one day when I buy a new car, it's going to be a nice car. And I'm never going to want to downgrade. Same thing with a house. I'm going to buy one one day. And I know once I buy it, I'm never going to want to downgrade. Same thing with a house. I'm going to buy one one day and I know once I buy it, I'm never going to want to go down. I'm only going to want to stay or go up. So my philosophy is that I'm going to set myself up so I never, ever have to put myself at risk for what earns its way onto fixed costs. I recommend you do the same. All right, and then everything else your guilt-free spending is $1,600 a month. I don't really believe this number. I think the two of you spend a lot more than this. And this is including all your vacations spread out through the whole year. You didn't include that?

No. What are we talking about? Right, because we're not going to see the word. Can we just do it? Let's just, okay, take your number, put a pin in that. Your vacation's last year. How much did you spend on all of? I truly don't know. Well, I can help you figure it out right now. Emily's like looking down. Emily, the ground is not gonna open up

and someone's not gonna grab you and take you straight to hell. You gotta stay here with me. This is your hell from now on. How much? You know our trip last March was probably I don't even know this is what's so silly. It was probably like $56,000 Okay, usually when someone says 6,000. It's like about 10,000

Because they don't add in taxes, taxis to the airport, flights, tips, drinks, all that stuff. Yeah, because definitely we don't like think about those things on vacation. Yeah, spending money, definitely not. All right, 10,000 for the big trips, that's two a year, 20,000. And then the small trips? I mean, at least $500 if it even like 1 to 2 nights and where definitely more because yeah that's just the hotel and yeah 2000 more 3000 maybe 1000 2000 is the minimum we don't

say 1 to 2 we say 2 and how many did we say you do 8 per year 16,000 plus 20,000, that's $36,000 a year in travel. How weird. We don't see that represented on the conscious spending plan. Emily? I know that we do so. There's no way we spend that much money. I believe, I mean, yeah, I guess I will see. See? It's cold. It's cold. Everybody listen closely and look in my eyes right now. That's phantom costs. That's how it works. They're called phantom for a reason.

They're invisible. You forget about them. Your mind does not want to factor in 38% taxes at a hotel or the drink, much less the tip you left for the bartender. We don't want to think about that. We go, oh, the hotel cost 200 bucks. Ah, 250. It's like 2000.

That's how it works. So again, I don't know if these numbers are right or wrong. They're actually definitely wrong. We don't even know what direction they're wrong, but we know that it's a lot of money. Would we agree? If you actually knew that you were spending $40,000 a year on travel, would you be going to the same places you go to in the same style and the same stuff? No. No, when you say it like that, absolutely not.

That's the point of a rich life. I know. You got to get it on paper. You got to be honest and then you have to design your rich life. And I guarantee if you're going on, drop in 40k a year on travel, you're not traveling like this. Yeah, you're right. If we correctly calculated this, and I just added like three thousand bucks a month to this expense, your guilt-free spending, your number jumps from 15% to 43%. You're going broke every month.

That's exactly how people can make a lot of money and actually feel like we're doing okay, we could be doing better, we're doing okay. And they're actually losing money every single month until they skate so close to the edge that one minor problem can totally destroy them financially. I don't want you to get there. I want to flip it around so you can keep traveling. So you can build some really good habits. You can teach your son how this all works, all that. All right. How are you both feeling right now, Emily? All that. All right. How are you both feeling right now, Emily? No, I feel like I'm ready to I'm ready for your suggestions and your help. Not open. Cool. John? I'm feeling a little better than I was coming in. I was very nervous coming in and it doesn't look as bad.

That does not look good as well, but I feel like that's something I could be corrected. That's like a self-inflicted thing. Yeah, totally. But not over our heads, but that we could stop it. No, you could totally stop this. And just the fact that you even said that is amazing. Because you realize that's in your control. I think it's just all that stuff. Do you think you're spending more every month

than you actually make? I do, I think so. Very close. Oh, no, wait, the answer is yeah. I mean, we only have 2,000 and I save and so we must be. That's scary you? Yeah. Yeah, now it does.

It is so, so easy to spend more than you make. I think a lot of us have this belief that if you spend more than you make, suddenly your credit cards are gonna stop working and a big loud alarm is gonna start blaring somewhere. Nope. That's not how it works. In fact, so many people spend more than they make and don't even realize it. You can do it in a lot of ways. Most commonly, you do it slowly with a little bit of debt, thinking it's not so bad. The debt starts to cost you more each month, especially if it's high interest credit card debt, and then suddenly you are trapped. Or you can draw down your savings. You used to have $5,000 in savings.

Now you only have $500. What's going on? You're spending more than you make. It can happen with one-off expenses, like medical expenses, which is actually extremely common later in life. With things like vacations, you usually hear people saying,

it's not like I'm spending a ton, but oftentimes they're doing it eight times a year. The point is, it's much easier than you think to spend more than you make. And you can actually go years doing this, never even realizing it. How long can you go, keeping on spending more than you make?

I mean, where one injury or knock on wood like Like an accident away from something bad happening and you have a two-year-old son. Yes, I know That's why it's more real We just need to be honest with ourselves and realize like we just can't keep up the lifestyle that we got used to Another thing we didn't factor in. What? Like how much we spend just like taking them out and things like that. Where do you take your two-year-old?

Well, I feel like anytime it's raining or bad weather, we spend money, we take them to like an indoor park, get out of the house or take them to the museum or like we'll go to target just like by a matoi because the brain and then not this again whenever we have bored um notice whenever we're bored we go and spend money it'll just be like oh if this is boring let's go to the bar or the restaurant around the corner tell that to Emily tell that Emily, have a discussion about this. Oh, I know it. We know it.

Oh, we know. Well, it's good you know it. Did you do anything about it? No, that's. Well, now we're trying to. Now that's right. I'm realizing that it really is just about getting out and being together and it doesn't matter

about what the things that we do. And we just somehow always lean just lean to it and it's spending money. I don't mean it's like we'll drive into Boston and spend 50 to park and then go out to eat. It's like so we were all for two hours and spent 200. Yeah. Yeah. And we didn't even like you.

We didn't even like. Yeah. And listen, I totally get it by the way I've lived in these big cities I know how expensive it is to even just go into the city and just have a drink I totally get it Okay, but what I am also pointing out to you is that you know, it feels good You you get dressed up you go you have a nice dinner or whatever What you don't think about unless somebody shows you is that that hundred bucks that you

just spent directly took away from your own vision of a rich life. Now, if your vision of a rich life is to go into the city twice a month and have a nice drink, I'm all for it. I'll show you how to do it. But it seems to me that you're telling me you do a lot of these things just because you're bored. Yeah. Yeah. And if you go really deep and you think about your childhood, that 20% where you felt good, John, and for you, Emily, when you think about your mom, buying you those toys every single week, there's almost certainly that connection that's coming up for you may not even be aware of it.

And guess what? What's going to happen to your son in just a couple of years? He's going to be us. He's going to fall into this trap and think exactly like we do. He already is, I feel. Is he? Oh yeah. Why? Like he's get bored. I mean, it could just be a two-year-old thing, but I feel. Is he? Oh yeah. Why?

Like he's get bored. I mean, it could just be a two-year-old thing, but I feel like he's bored with his toys instantly and we're already like moving on to what else can we get him. Oh! What else can we get him at two? That's an us problem. Yes. But I'm saying I think he's getting used to it. Yes, I know what we're

oversteining and all that. And I think one of I had to have to say that one of the first episodes I listened to of your podcast, I remember it caught me my attention because it was the quote that one of the couple said and it said, how can we like not change and still live our life, but we don't want to change anything. But also, you know, have our retirement and be set for life. And I was like, yes, that's like the best question ever, right? Even though I know it's unrealistic. It's like, yeah, I relate to that. I enjoy going on those trips and doing all those things and it's that realization of like, yeah, those have to stop at least temporarily or need to be done the right way and having to acknowledge that's really going to happen. It's not fun.

Because there hasn't really been any restriction for the last 18 years. It's mostly been like, hey, in fact, we have more money than we know what to do with since we're 18. So there has not been much restriction. But you know what else there hasn't really been? There hasn't really been a vision of a rich life. Emily and John's situation is so common.

They're not really on top of their numbers. Things seem fine, but upon closer inspection, they're likely spending more than they make each month, and they have poor financial habits. What's most common of all here is that they ignored this until they had a child, and now suddenly they're in a big hurry to fix everything. The solution isn't for me to tell them all the things they're overspending on. It's to help them develop a rich life vision and let them come to that realization themselves. If they do that, it's going to be so much more powerful and they are going to lock in the changes that they need to make in order to live that rich life. What is your rich life, Emily?

So, yeah, I do, I do wanna travel, but obviously that would be really nice, you know, be able to budget for that and not have to worry about that, to feel like there's financial security in the sense of knowing that I can do all those things that I want to do, but know that I'm still set, have myself set up for the future as well. I want to remain part time because I want to enjoy my son at this age and maybe a possible

another child. And it's really important for me to prioritize spending time with them. And so I want to retire early so that we're young enough to enjoy retirement. I also want to be young enough to retire to enjoy my children's children. And my grandchildren be young enough to maybe be there like their daycare that would be a rich life to me. All right thank you John what about you what's your rich life? To be able to afford these trips that we want to go on and not be spending money we don't have I would like to like if my son was getting married be able to pay for it.

We didn't have that. Not everyone has that, but I would really like that. Well, like if you wanted to help with a down payment or something, we'd be able to help them out. And then just, I mean, I would love to have a vacation home. And then just I mean I would love it like a vacation home fun Like somewhere we could drive Okay, I got like helps with something All right, how do you both feel hearing each other's rich life visions any surprises? No, no surprises

Emily No, I don't think so. Have you talked about this before? Yes, that's, I think our problem is that we have talked about all these things that we've wanted and for a long time not realizing that we like aren't putting anything in motion for them to be realistic. Yeah, are you ready to make a change? Yes. So can we agree that the one thing we will not do on this call is to leave the situation as is? Can we all agree on that? Yes. I agree.

Yeah, we would, she would say all the time like where is our money going. Way before we found you and we both would just look at each other and pick, I don't know. John, you have a pension, is that right? Yes. Is that reflected here, Emily? No, neither of our pensions are on the conscious spending plan. Oh, how much are those four, ballpark per month? So we have no idea about Johns.

It's been so incredibly difficult to try to get information on it. And then I have the pension funded by my employer. How much pension? Right. There's like, it's like 7% based on what I make annually. They contribute like a 7.5%. That's a lot. Yeah.

It's really, I have it in them. That's really good. That's like a lot of money. I have six, so currently I have 69,000 in there. 69,000 you just found in the couch cushions? No, we didn't find. Is anybody have any other $60,000 finding somewhere? I don't know how to factor. That was a question that we were asking.

Why should you just type it in? Who cares? Okay. Watch, watch, watch me do it. Okay. Watch this. Okay. Emily, I'm putting it in caps.

Emily's pension. $812. Her month, what I'm gonna say here is this is all wrong, but at least directionally, it gets us pointed in the right direction. It's a pension. It's not post-tax, blah, blah, blah, whatever. At least we got it down on paper and we can tweak it later. You have $70,000 sitting in an account that's not reflected anywhere here.

That's not okay. We got to find a way, even if it's imperfect, to put it on our conscious spending plan. Do you see what I mean, Emily? Yes, I do. I wanna be able to factor that in and know how to factor that into my retirement as well in addition to my investments. I don't know how to use that as being like, okay.

Well, here's the thing. It's very complicated and I don't build that into the CSP because so few people have a pension. And the pension can depend on all manner of things. You can go to your HR person and ask them like, hey, help me understand this pension. What number do I call? And they will tell you if you work this many years, this is how much you're going to have every single month by the time you retire.

So that's another thing that we didn't even mention, which John used to make more, significantly more than what he made, and COVID, because he works in the entertainment industry, he was out of work during COVID. He lost his job during COVID, and then when they returned back to work, it was not where it was. Yeah, it's not the same. If it does go back up, what would it go up to? You're currently making $4,600 a month, John. I was probably making like $70 to $80 grand a year. Oh, that's a lot.

All right. So maybe like almost double. All right, what would you do with the extra $4,000 a month? I mean, now I would want to just put it right into investments because we've learned how to live without nice. Do you know how many people come to me? They go, repeat, it's impossible for me to save $50 a month, investing $100 a month must be nice. I go listen, everybody can invest with rare, there are tiny rare exceptions, but almost everybody can put aside 20 to $50 a month.

And here's trick. When you set it up automatically, you learn to live without it. I'm talking 20, 50, for some people, 500 a month, they just won't miss it. Look at this amount, you have $70,000 on the couch. You know, it's like there's money to be redirected here. So at

$4,000 extra a month or even 2000 if that happened. The fact is you've learned to live without it. That is an amazingly insightful thing. If I asked you like two, three years ago Could you live with $40,000 a year less? What would you have said? I would have said no chance. No chance. Here you are. So what does that tell you about your current situation? It's not as bad as we think or I could get better. This is kind of unbelievable. They literally just proved my point that if you automate your

investments and savings, you will learn to live without that money. In my experience, over 90% of people who automate their investments do not miss that money after three months. And you are not an exception. In Emily and John's case, they're investing hundreds every month. In fact, they used to have $4,000 a month more, and when that money went away, they didn't really miss it. Forget about the numbers themselves. Maybe you don't have $4,000 sitting around the couch cushions. It's the principle here that matters. If you

set up automatic savings and investments, and you don't even see the money coming into your account, You will not miss it. So automate your money. Get chapter five of my book and do it right now. John, where are you right now? How are you feeling about the changes we made? I'm feeling good. I was very discouraged when we were looking at the fixed costs. Yeah. And just like I feel like our mortgage isn't too bad. We only own one car. But we do move farther away. Now we need a second car. The parking comes back. So that was very discouraged. But I do feel a lot better. I think we could do a lot better with everything

else money. I know we can. I know we just wasted it. Okay, great. Emily. Yeah, no, I absolutely agree with what John just said. I also was staring at those six costs. Like, I don't know. Like, I admittedly was just like, Remy just tell us, like, I don't know. It's easy to do little impossible, but I feel like so little like rate. We're gonna like put this money in the investment account.

We're gonna do that. Like I still feel like there's so much to learn. Like we both have bad habits. Right, we've established that. I've not been salting myself. I'm just being honest. We both have bad habits of money. And so I want us both to support each other to break them.

I'm nervous because of our habits. We really need to be brave. We need to commit to it. I think we're saying and it sounds really great. And I really hope that both of us are like when the time comes down to it. It's not that like, oh, well, let's go. Like, let's. This is the time, right? Yeah, it is. If you're right, it is. And I'm, I'm ready to do that. Are we both ready to do that?

Like I am. Are you two? Ready is all of a big. I see thousands and thousands of couples. I see a lot. And the action that you've taken, even though you're in your mid-30s and you're kind of just starting to learn about money, you're moving at such a faster rate than many other people. Remember the rich life vision that you talked about? Yes. What is that? How does this get you that? I mean, if I cut down on those and start investing properly, I could have these things I would like. Yep. As your income and your net worth increases, you're probably going to add on travel places

that you want to go. And this time, you get to have a totally different conversation. It's not like, oh, we're just going here because we're bored or like, let's get a weekend away. It's like, what would make this trip magical? And I think that is a totally different conversation when it comes to travel that the two of you get to have. Emily, look at that smile. I'm excited for that already. There's one last thing. Your son's two years old.

By the time he's four or five, what do you want him to notice about his parents when it comes to money? I just want them to feel secure. Uh-huh. And not after worry about it. I mean, a five-year-old won't be worrying, but I don't want to lead a donate now, but I don't want it to be like fighting all the money or anything like that. Tell me about this secure comment. I really love it.

How would you know that your son felt secure about money at five? Make it seven. Just never worry about like he can't do things that kids in the school or doing like not saying you have to do everything but I know. I'm not sure that's secure. What would you say to him about money so that he felt secure? Maybe try to explain to him like the, like you need to put everything, start saving as young as you can. And so, I don't know.

Never had this conversation with your kid, right? No. Neither of you. kid, right? No. Neither of you. No, never. Yeah. I could see the struggle, but I love watching you think about it. Emily, is it tough to hear? No, it's just this realization that like, again, like I want to be that person for and I

want to do those things and I just don't even know how to start. Like I wouldn't even know how to. But you're here. You showed up. You got the book. You did your own version of the CSP. You're asking to learn things that weren't taught to you. I love that.

This, to me, is my favorite kind of conversation of everything I get to do. You're giving me a gift. Some of the things you could say would be, come sit down with mommy or daddy. I need your help. We're going to push this button. This pays the bills so that we can eat the delicious food that we eat in our house. That's a real simple example. Really simple.

Push a button. It's fun. Maybe a little older, saying something like, we're always going to have a roof over our heads. We're always going to be a family. We save our money so that we can always be safe together. That's all young kid needs to hear. How do you think your son would react if he heard that? I don't know why that made me emotional imagining that and feeling so happy to be able to say those things. Thank you for those examples.

That's exactly the type of parents we want to be. And it just we just don't know we didn't we don we don't know how, or we didn't know that. I would love to say those things to him. I feel 100% confident that you're gonna be able to say those to him in just a few years. We actually just heard from them right before this episode was released. Here's what they said,

Emily, what surprised me is how simple finances can be. Since finding RemiT's podcast and starting this new journey on financial literacy, I was overwhelmed with where to begin. I have a tendency to overthink and try to plan 10 steps ahead, which prevents me from taking initial steps. RemiT made me realize, I don't need to strive for perfection while I'm learning. There will be mistakes along the way, but as long as I continue this path forward, we will be okay. Number two, my biggest takeaway is knowing that we are on the right path to support our children with their own financial future.

I love what Remete shared about teaching our son about money even at a young age because not only is it possible for us to be those role models, but we already are simply because we plan to be. I'm happy and grateful that we will start this generational custom for our family. And John said, number one, I was nervous about Rameet's view on our financial situation and was pleasantly surprised to learn that we are not as worse off than I expected. I know we have a lot to learn and unlearn, but I felt encouraged by the end of our session feeling more motivated than ever.

Number two, my biggest takeaway is that financial stability can be achieved by anyone. I used to accept that being financially successful wasn't in the cards for me because this is the mindset I was taught growing up. Remete helping me realize that like anything else, you can always learn new things. Thank you for helping to open this door for us. I want to thank Emily and John for having this very candid conversation and for wanting to change the trajectory of the way that they treat money in their family. I wish them the best and I'd like to remind you, number

one, I have a podcast newsletter coming out this Saturday. You can only get it by being on the list and I do not send it out again. Go to iwt.com slash podcast newsletter to get this week's brand new email on money psychology. And second, I would love it if you could go over to Apple podcasts and leave a written review. It really helps. It helps other people discover this podcast. Thanks for listening. I'll see you next week. Thanks for listening to I Will Teach You To Be Rich. I'm Remete Sayte. Please follow the show on Apple, Spotify, or wherever you listen to podcasts.

If you haven't read, I will teach you to be rich. My book, pick up a copy. You can get it at any bookstore or any library, and it will show you the specific tactics for how to build the I Will teach you to be rich system into your personal finances.