I Will Teach You To Be Rich - 136. “We have $500k in debt. Can I retire early?” (Part 1)

Episode Date: December 26, 2023

David's 33 and Halima's 37. They’re been married for one year, a second union for both. The deep emotional (and financial) scars from those past relationships tint how they see the world today, limiting their ability to cooperate and leading to ill conceived get-rich-quick schemes and mounting debt. This episode is brought to you by: Superhuman | Get a free month of lighting fast email at https://try.sprh.mn/ramitsethi.  Rocket Money | Stop throwing your money away. Cancel unwanted subscriptions – and manage your expenses the easy way – by going to https://rocketmoney.com/ramit.  Long Angle | If you've made a lot of money and you're looking for a community of peers to turn to for advice, go to https://www.longangle.com/ to learn more.  Fabric by Gerber Life | Protect your family today with Fabric by Gerber Life. Apply today in just 10 minutes at https://meetfabric.com/ramit.  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://drinklmnt.com/RAMIT. Links mentioned in this episode “We 4x’d our salary as COVID nurses. The experience haunts us. So does the money” Why I Don’t Own A House as a Multi-Millionaire… Connect with Ramit Get the Podcast Newsletter and exclusive Q&A about the show Get Money Coaching with Ramit  Download the Conscious Spending Plan Get my New York Times best-selling book 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.

I'm seeing where I've come from, everything I've been through. I actually feel like I'm rich. I've hit rock bottom twice and I feel like I did a pretty good job at climbing myself out of it. One time I was basically on the point of, I was basically homeless. With my first marriage, I divorced my ex-husband because of financial infidelity. And it ended up the day after Halloween, we got a knock on the door. It was the owner of the house with the sheriff, another cop,

a victim, us. I lost everything except for my children. Both of us went through a lot and I want to show her that life is better now, but financially we're pretty much back in the hole. Meet David and Halima. David's 33, Halima's 37, they've been married for about a year. This is their second marriage for each of them. Now, they initially came to speak to me because David wanted to know if he could retire early. But when I started to peel the layers of their finances, I was truly shocked. And not just once, multiple times. In this conversation, you're going

to hear the ways that both of them treat money. We're going to delve into their past to try to understand their behavior. And you are going to hear a lot of puzzling explanations today. My goal for you is to help you try to understand why people act the way they do with money. Before we get to the episode, I was just reading this post on Reddit about lifestyle changes at various income levels. And damn, it was depressing. I don't need new shoes. I don't even need any shoes. Yeah, you can use the same shoes from when I was 11 years old.

What the hell is wrong with these people? What is with this mob mentality of proclaiming all the things you don't want? It's okay to spend money. That's the point of it to create a rich life, not to hoard it, then then brag about how you don't spend any of it. In fact, if you make more money,

you should spend more money on the things you love. This Saturday in my newsletter, I'm gonna dive into strange money psychology and how we build the skill of spending money meaningfully. Now, let's meet David and Halima. I was talking to my wife about investments and stuff and she hasn't invested in a Roth 401k, nothing like that. So when I asked her if her job matches, she didn't know.

And then I told her, well, look you know Remi says like 10% so just put 10% towards your investments. She said she didn't feel comfortable with that which was frustrating to me. She said all right let's do baby steps and she did 1%. He started mentioning word investment and I just felt like like the anxiety rushed me and then he started you know mentioning things Roth or IRA and etc etc and to me you know finances is not something that I have never I've never studied I don't really have much experience with it so to me it's like a different language let's just put it this way I don't like to much experience with it. So to me, it's like a different language. Let's just put it this way. I don't like to take money and put it into something

that I don't truly understand. Because? Because I'm afraid I'm gonna lose it. When I think of investment, I think of gambling. Okay. I think of stock markets, I think of gambling. You know, it's like a different language to me. I don't understand it. So I kind of stock markets, I think of gambling. It's like a different language to me. I don't understand it.

So I kind of just freeze. I do try to hear him out and try to take in the information that he's giving me. But to me, numbers, it's just a big mush and I shut down. Like when I start hearing things like that, I feel like not only the anxiety, but I start to get angry. Angry about what? Angry that I don't understand and that when I ask him to explain to me, I get angry because I feel like he's not really doing a great job explaining it.

Do you remember what you asked him to explain and then what he said? Like investments and percentages and yeah, all that with the numbers and the like the difference between 1% and 10% I'm just like, well, where is that money come from? Where is it going? How come I don't see it? Like I'm I need to see things. I'm very visual.

You know, you add more words in there that I don't understand and I just I shut down. Okay. And then do you get angry at him? I get angry at him. I get angry at myself. Yeah. Are you gonna get angry at me today? No. I would like to understand the process better before I commit.

I'm gonna do it regardless because I trust him and that's what you've been saying. But I don't want to go into it blindly. I feel like in the past, that's what I've done. It, you know, not really understanding things, but like trusting people. I do trust David. But again, I also want to trust myself. And right now, I don't trust myself with money. Let's take a second to deconstruct what Halima just said about investing and gambling because it is such a common belief. To Halima, investing feels scary. It feels like you're taking all this money you worked so hard for, throwing it into some black box with a confusing name like 401k or Sep IRA, and then just hoping that it spits money back to you.

Of course she wouldn't go to Vegas and spend all of her savings account on slots, so why should she invest it? And anyway, does it really matter? Because after all to Halima, she earns money, she sees the money in her checking account and it feels safe to her. Unfortunately the cost of this belief that investing is gambling can literally be hundreds of thousands or even millions of dollars.

The people who believe this are worried that they're going to lose money by investing, but they are actually losing hundreds of thousands of dollars that they could have had if they had sensibly invested. And predictably, as they get older, they get increasingly worried about money, never realizing that their own fear is directly responsible for their precarious financial situation. Now, I have a lot of compassion for people who feel like this. They often

have nobody around them who ever invested. In fact, a lot of them had family members who themselves said, just save your money. People like us don't invest. But I can acknowledge their upbringing and also highlight the importance of personal responsibility. You'll notice that 100% of people who say this, that investing feels like gambling, have never read a single book about money. They don't understand that by investing in an index fund, you're essentially buying a share of 500 of America's best companies. And they don't understand that by taking a long-term view, one in which stocks have typically returned over 7%

for the past 70 plus years, that they can totally change their socioeconomic future. This is why I completely understand when people tell me that investing feels like gambling, but it also makes me really sad. And it makes me really frustrated too. When you think about the money in your relationship today, what word comes to mind for you? David? Well, seeing where I've come from, everything I've been through, I actually feel like I'm rich.

from everything I've been through. I actually feel like I'm rich. Really? Tell me more. So when I was a teenager, I, you know, I didn't grow up very wealthy or anything with my family. So we basically, my parents wouldn't give me money. So then I went out and tried to get making money on my own. How'd you do that? We did boxing, my friends and I. Where did you grow up? We didn't do this in Sacramento.

To hear in New Jersey. Oh, say no more. New Jersey? Alright, fine. Alright, boxing like street boxing. Street boxing. Yeah. Did you use gloves? Uh, most of the time. What the fuck? Okay. Do you use gloves? Most of the time. Okay, all right boxing. This is crazy. What else? I tried getting a job at certain stores, but they were like yeah, we're not hiring a 14-year-old Okay, so the end yeah my friends and I would go into like convenient stores like 7-11 and stuff and we would steal candy and sell it at school

But this is crazy. Freakin' boxing. You know, stealing stuff, this is insane. I was a pretty bad kid. My mom said that she's very grateful that I joined the Army because it's trading me out. I've heard that from a number of people. I feel like I've hit rock bottom twice.

And I feel like I did a pretty good job at climbing myself out of it. One time I was basically on the point of, I was basically homeless at one point. But yeah, now I'm financially well off right now. I feel like except for when it comes to like retirement. Like right now I feel like I'm I'm probably gonna work till like I die which I love my job. I don't I probably I'm gonna keep doing something similar to that after I retire But I want to do it on my own time and I want to do it as a hobby Okay, so you feel rich especially in light of where you've come from, and you

mentioned you hit rock bottom twice. One was when you were nearly homeless, how old were you at the time? 22. Wow. It was for like a year and a half. I was basically squatting in the house that my family basically just left. There was no running water, no electricity. I had to buy myself several blankets to keep myself warm in the winter, because... How did you get out of that? That's a tough situation. So, I mean, to shower and stuff,

I got myself a gym membership. I thankfully I still had a car. I had one job and then I was trying to do a lot of overtime with that job, but it wasn't enough. So then I got myself another job and then a third job. I was basically just trying to save up money. I tried paying the water bill so that I could at least have running water, but it because it wasn't under my name, the company wasn't taking it. Yeah. Yeah, I mean, I tried using the army as well, because I'm in the army reserves.

So like I would ask to be put on orders from my leadership, and they would occasionally try to help me out with that. Yeah, and then eventually I found an opportunity with Rutgers, where they would put me through a program for veterans. I was so tired from working all those jobs. I got into like two car accidents, from fall andlessly driving. Jeez.

What was the second time you hit rock bottom? After my first divorce. Well, my only divorce, because that's not happening again. Do you mind sharing what happened? My ex-wife, she, she'd like to spend a lot, she was very materialistic. She grew up with her mom not working. So she didn't want to work. She had a job and then while we were on her honeymoon, she got laid off, like it was literally right in the middle of the honeymoon, she got a message from her supervisor saying that the company was bought off and she's not going to be with the company anymore when she comes back. Oh my God. After that, she didn't have a job. She was physically violent towards me

because I wouldn't listen to her. I would think she would tell me not to do overtime, but I'm like, how are we gonna pay bills? Yeah, that dragged on. I was for like three years. The point where I was just like, I can't do this anymore. I have to get divorced is when she literally threatened to kill me

I had to get to police involved in everything. You left that marriage. How long ago? It finalized December 2021. Okay. Wow. Well, I'm sorry you had to go through that. That is tough devastating. Nobody should have to go through that. And now I think I understand a little bit more about why you said you feel rich. All right. Thank you for walking me through it. I really appreciate it. David's story highlights how our past can affect how we feel about money in a profound way. Because he was previously homeless, anything feels better than that. In fact, having tens of thousands of dollars in credit card debt feels rich to him. Why? Because he can still go on vacations with his family. And this is one thing

that really fascinated me. If we're talking about buying something like a car or a nice vacation, I can take two people with the exact same financial situation and I can ask them a single question, can you afford it? One person will say, of course, the other will say, no way, not in a million years. Two people with exactly the same financial situation can have a dramatically different interpretation of if they can afford something.

They can have different risk tolerances. One might say, we can't buy a car without a six-month emergency fund. Another might say, yeah, let's get it. We need it for the kids, and we'll figure out the finances later. Our feelings, which are directly affected by our past, have a massive impact on how we see money today.

This example reminds me of episode 75 with the COVID nurses, one of whom thought that because they paid off their debt, he should buy a luxury car even though they had no investments. Principle is the same. His past shaped his view of money today. So when you hear someone acting in a way that surprises you with money, it is possible that their numbers are simply different than what you thought behind closed doors, but it's also very possible that their past is causing them to act in a way that you would never, ever act yourself. We'll be right back.

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Cancel your unwanted subscriptions by going to rocketmoney.com slash remeat. That's rocketmoney.com slash remeat. Rocketmoney.com slash remeat. That's rocketmoney.com slash remeat. Rocketmoney.com slash remeat. Now back to the show. David, I understand that you described some of your past finances as some get rich, quick stuff. Tell me about those.

I joined like two different MLMs. What? Two? Well, you know what? That doesn't surprise me because when someone joins one, they usually end up in another. It's very similar to why somebody who joins a cult is susceptible to joining another cult.

But I want to know which MLMs. Tell us. First one was started with an A. Amway. Amway? Yeah, Amway. And then the other one, I think it's called Girl Ventures.

What do they sell? Packaging deals for traveling. All right, so what drew you to those? Actually also, Primerica. They're the worst. Wait, you were a sales rep for Primeraqa? Yes. By the way, do you know how many people are watching

and listening to this podcast right now who are like, they're getting so f***** bad because they're involved in one of those and they're about to write me these messages. Primeraqa's done actually an MLM. If you're technically to find out, that's a f***** of an Netflix show! Where I talk about what an MLM is!

Don't send me messages! Just unsubscribe! Alright, so you got out. What was the thing that initially drew you there? Basically that I would be my own boss, and I determine how much money I make, like you determine, you are your own boss, you determine your destiny, you determine

if you're going to be financially successful or not. It's a powerful vision. Yes. It just happens to be a complete scam that over 99% of people fail at. And just to do a quick statistical check, David, did you make a lot of money with one, two, three MLMs? No. Shocking. Shocking. Check, David, did you make a lot of money with one, two, three MLMs? No. Shocking.

Shocking. All these MLM people brought to send me messages on social media, they're like, David just didn't work hard enough. If you put the time in, then you can get the result up. I love the statistics. All right, so you got that. So that was one get rich quick thing you joined.

What else? I tried doing the whole cryptocurrency thing. How'd that go? Terrible. Okay. I held on when I should have sold. That's about all we need to cover on that. That's pretty much most crypto guys. All right. Okay. Who else? What else did you do for get rich quick? What else did I do? You did try to get your real estate license. No, I tried getting my real estate license. Oh my God, the Realtors already hate me, so we can just sidestep this one. All right, so you tried to get that, that didn't work. What else? I tried getting jobs with, with certificates when in reality,

you need to get a job with a degree. Okay. Okay. So what's, what's the thread among all these decisions? Get Rich Creek doesn't really work. You knew that right? Like everyone says it's in the air. Don't try to get Rich Creek and yet you did all these things. Why? Because I would see that there are some people that succeed it, but it's such a minuscule amount that like it's nearly impossible to make it. Like why didn't you try to be in the NBA? I mean, you can pick up a basketball and you could throw it.

There are people who do that and make millions of dollars. Why didn't you try that? I didn't train hard enough. Yeah, yeah, yeah. What was the period of time from the first Get Rich Quick scheme until the last? Or is it still going on? No, no, it's not going on. All right, what was the time period? It's about five years ago. So it was basically from when I was, I would say maybe when I was a teenager, it kind of started. It's like 10 years. No more like, almost 20.

20 years? Okay. This is a great reminder that people can stay married to delusions for far longer than you think. In investing, there's a famous phrase, markets can stay irrational longer than you can stay solvent. Meaning, if you're making a bet against the market, you're saying, this just doesn't make sense. Maybe you're right, maybe not, but the market can keep acting irrationally far past the point where you run out of money, and many great investors have experienced exactly that. In this case, the psychology here is very simple. Get rich quick. David is what I call a believer.

He believes that success is right around the corner with the next MLM, the next crypto, the next real estate license. And you hear how he swallowed these messages whole. I can work for myself. I don't have to have a boss. I don't want to trade time for money. I can control my future. It turns out that most of us respond better to a big promise than a smaller, sensible one. And companies know this. This is why they offer one huge prize, not 10 smaller prizes with better odds. In other words, companies know exactly how humans act.

They know how you act often far better than you do. That's why the average person has very little chance of winning when they go up against realtors, MLMs, timeshare salesmen, AUM financial advisors, mutual funds that specialize in survivorship bias, and so much more. What I'm trying to do with all of my work is to equip you to understand how you can actually build serious wealth without having to spend a ton of time on it. But the one ingredient you need is patience. If you don't have that, I can't help you. And you are basically prey for the entire financial industry.

Now let's talk to Halima. I'm scared, nervous. Like try and make sure that I'm going in the right path and doing things the right way this time. Yeah, this time. What happened the first time? I lost everything except for my children. You mind telling me a little bit of what happened?

No, I don't mind. With my first marriage, I divorced my ex-husband because of financial infidelity. What happened? We were going under, and I didn't know. It was a high school teacher, and I had a great job. I got pregnant with my first born, decided that I wanted to be a housewife and have babies, raise children,

and that the man at the house was going to work, and my ex-husband was in the banking, he was in finance, and to me I feel like if you're dealing with money, you know everything about money. The house that we purchased, when I was working, we were going into foreclosure. The house was being sold because I thought that, you know, I was pregnant with my second now, they're only 16 months apart.

And we needed to upgrade. We were living in a really small 1200 square foot home. So we wanted to upgrade and buy something bigger and better for about six months. While we were, you know, we sold the house, but it was actually foreclosed the bank ticket. You didn't know this. I didn't know this. I didn't know this. He was responsible for all the bills. And I trusted him with that as any, you know, good wife, you know, I feel like I had a good in the beginning. I was married to my ex about 10 years, 12 years total being together with him.

So I trusted him and I loved him. We ended up renting a house and while we were renting this house and we you know sold our home with that money we were gonna buy something bigger so for about six months I became really really good friends with the real estate agent that we were working with because I was basically you know my Saturdays and Sundays would be going to look at homes with him. It was this, this grand plan for him to kind of drag things on because he knew that once I found out that I was going to lead him.

And it ended up the day after Halloween on November 1st, 2019. We got a knock on the door. It was the owner of the house with the sheriff, another cop, a victim. Us. My son at the time was about 18 months old. My daughter was a little bit older. They were both in diapers. I still have the the hamper that's downstairs that I was able to fill in with whatever I could. And that's how I left the house. And my whole foundation, my whole world, came crashing down. Long story short, he left the country because there was really nowhere else for him to go. Nobody trusted him anymore. He was borrowing money left and right. Nobody believed him anymore. And he left me with the two babies.

I'm sorry I had to go through that. And I assume you've never seen him again. I did. He came back and we tried to co-parent, but at the end of the day I couldn't trust him. You know, you said you're sorry that I went through that. In a way, I'm not sorry I went through that. Why? Because I learned from it. That period with, you know, with me divorcing him, I really was a period where I started getting help, therapy, reflecting on myself, working out, losing weight,

being surrounded by positive minded people, I wouldn't be here with David today. So I'm not sorry I went through that. Wow. Looking back now, I'm sure you've gone through a lot of reflection on what happened. What do you take away from everything that happened? Maybe it's kind of cheesy to say, but there's always a rainbow after a storm. And you know, just like David, he's

hit rock bottom. If you have the right mindset, and I truly believe if you really want something, you can go after it. You just got to do it. Wow. Do you find that your stories, David and Halima have brought you together, the fact that you've both gone through some really difficult things, okay, seeing nods from both of you. Yeah. Okay. So basically when I was going through divorce for a whole year and during that time, I was reflecting on, you know, what I wanted in a partner. I created this mental checklist of what I wanted.

And I met her. She literally checked off everything. I can't think of anything she didn't check off. I just wanna describe Halima Smile right now for everyone who's not watching on YouTube, but she's got this very radiant smile. Halima, what do you think? I'm just filled with joy. These stories help me understand David and Halima a lot better, and I love that they've

been able to overcome so much. But I also asked a subtle question at the end. Did you catch it? I asked, do you find that your stories have brought you together? And both of them said yes. What I want to know with that question is if they define themselves by their struggles. I believe in honoring our past and acknowledging whatever struggles that we have gone through or are going through. But I also think that we are more than simply our struggles.

And in many cases, when couples define themselves by their struggles alone, they can become a self-fulfilling prophecy. We struggled through that. It was us against the world. And now we're going to make more decisions to recreate that struggle because that's what brought us together. Struggling is love. I recreate that struggle because that's what brought us together. Struggling is love. I don't know if that's the case here, but my antenna are up. We'll be right back after this.

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It's like looking at how much we make annually. I've made this amount once before, and I feel like I'm finally much we make annually. I made this amount once before, and I feel like I'm finally back at it again. Okay. But if you make that much, if you're rich, where are we talking? David can be compulsive sometimes. And like we just, we bought this house too.

So that's another thing to add on the list. We just, you know, bought a house as well. And that is- Well, that can never be gambling because houses prices only go up. That's what I was told in America. Yeah. That's why because they always go up. Always without exception, therefore it doesn't even matter what the price is, right?

Because they're always going up. So it's actually doesn't matter what the price is. I mean, yeah, you agree? I agree. Because that's kind of why we bought this house. We got married. We wanted to live together. We were, you know, we were living separately in two different states. And we're like, all right, let's do this. Let's buy a house. Hold on.

Now you got me interested. Sure. I was planning to just roll right on by that. I've talked about houses enough, but you stopped. Now I'm interested. So you two were living in different states. Where do you live now? In New Jersey. All right. So you said, we got to get back to Jersey. I'm itching to box some little punk kids on the street back to Jersey. We go. All right. So, so then the next thing you said was, let's buy a house. Talk to me about that.

Buying a house has been instilled in me. You know, my childhood was very different than David's. I lived a very sheltered life. My parents immigrated here, you know, in the mid 80s. And, you know, they try to shelter us and, you know, keep us, I guess in the culture and, you know, following with all their friends and family that we're here. So, you know, this whole growing up, it's always like you have to grow up, you have to get married before you have kids by a house, you know, it's, what

society, it's the American dream, you know, that's why my parents came here for the American dream. So So even though like Wait, what else is in the American dream? I want to know Going to school having an education that was really big growing up What else having the house the cars the children the white picket fence and then and Then you tell me they never really tell you what happens after that do they they say get an education which is a nice thing for a lot of people get the house the pick white pick offense the 2.5 kids the car or cars and then it sort of just fades off I go well okay you're 30 or 35 or even 40. What else? You got a lot of time to live.

They don't tell you anything about that. How come? Maybe because they don't know either. Maybe they didn't know at all. And maybe they were just telling you what they did. And everybody thinks that the decisions they made are the same one kids should make. But do you think the same decisions your parents made

are gonna be the same right decisions for your kids? No. Life's different. I think what parents are saying when they talk about a house is security, safety. If everything goes bad at least have something If everything goes bad at least have something and that could take the form of a house Absolutely and especially if you have a family absolutely it can also take the form of what what are other ways to have safety and security Investments so many of us are following money stories that someone else wrote for us and they didn't even finish it. If your rich life is traveling around for two months a year or building a ranch or going child-free, whatever it is, I want you to define it and design it. And I'll show you how. But please don't just follow the idea that someone else created, that you've got to buy a house

in the suburbs with a white picket fence and that is the only way to measure a successful life. It's not. By the way, I'm trying something new with YouTube in 2024. I'm drilling down into topics like this so you can find a new video where I did a detailed deep dive covering renting versus buying on my YouTube channel right now. How much did the house cost? It was 440 and it's a fixer-upper. I mean, in terms of us moving in this summer into this fixer-upper,

and we went into a lot of arguments back and forth for months. About? About the house and the functionality of it and how quickly we moved into the house and you know with him his timeline I felt wasn't realistic. Okay, so you're renovating and things like that. Yes. How much have you spent? How much did you budget? I think we initially thought like 30 grand for renovating. That's exactly what I thought you would have said and how much has it been so far? I think we're at about 40 or maybe 50. for renovating. That's exactly what I thought you would have said. And how much has it been so far? I think we're at about 40 or maybe 50. So let's just say 60. Almost that is double. And how long is this going to continue going on for? Ballpark? Hopefully not past the winter. It's not even winter yet. Wait, is it? That's a long time. That's like four, five more months. I feel like that's unrealistic because right now we're working on the basement,

but there's so many other projects that also need to get done. Why do you need to do the basement right now? The house is small. Like it's a small house. And okay, so let's, have you heard of the Love Sack? The couches of the Love Sack? Yeah. Okay, so he, he's, he just of the Love Sack, the couches of the Love Sack? Yeah. Okay, so he just wants the Love Sack. And right now our living room doesn't fit the Love Sack. We actually have a sectional.

That section was too big for our living room. So the idea was to fix the basement, put the sectional downstairs in the basement, make the basement like an everyday room. And then by the Love S love sack that'll fit the dimensions of the living room and everybody's happy. Well, David's happy. How much of this couch cost? I bought that a while ago.

I wouldn't say maybe like two grand. All right, two grand. And this love sack that you want to put there, how much is that going to cost? Go ahead, Tom. Maybe, maybe about ten grand. All right, two grand and this love sack that you want to put there. How much is that going to cost? Go ahead, Tom. Maybe, maybe about 10 grand, $10,000. Maybe less. No, because he wants to get the, the speakers in it and the, the storage space underneath and I don't know what other accessories it is.

Well, hey, look, maybe when we look at your numbers, it will be obvious. Like if I wanted to buy a $10,000 Love Sack, whatever that is, then I could afford it. We'll see. They definitely cannot afford a $10,000 Love Sack. I see this theme of being unrealistic with money, coming up over and over again.

David Chase's ways to get rich quick, he confuses wants with needs, and he essentially buys things without understanding how they affect his overall picture. Halima ignores money altogether. We're about to open up their conscious spending plan to find out if they can actually afford it. If you want to follow along, you can download your own conscious spending plan for free at iwt.com slash csp. Let's take a look at the numbers. Assets 524,000. All right, what's next? Investments? 11,249. Okay, next. Savings? 62,752. savings $62,752. And debt? $517,000 and $45.

What's your total net worth? $80,956. How do you both feel about that number? More than I've ever had before. Okay. So, which means it feels like what? I'm rich. Okay. Halima? It's a good number. Would I like it to be more? Absolutely. Okay, so which means it feels like what I'm rich, okay?

Halima it's a good number what I'd like it to be more absolutely how much more Six digits at least Well, it's 81,000 so you want 19,000 more Look, you're holding your breath. Have you noticed that? You see that? If I'm completely honest, I'm not sure. Do you think you're going to magically change the way you feel about money when you have $19,000 more?

No, I don't think so. No, I don't. All right, let's look at the income. Halima, I'd like for you to read, what's your combined, gross monthly income? $16,44. All right. Do you know how much the two of you make? find gross monthly income. $16,44. All right. Do you know how much the two of you make? $192,528.

Did you know that you made that much as a household? I do now. Is that a little or a lot? That's a good number. Thank you for saying that. Nearly $200,000, the two of you're in your 30s. David, you agree? It's okay. Yes or no? Yes, it is. All right. It's okay, though. It's not accessible to you. Her and I have this thing going on back and forth as to who's going to make more money because you can see her and I make almost the same amount.

So, like, what do you got a little race going on, little competition? Yeah, like, we're saying this. David's like, yeah, and then Halima's like shaking her head like, no, I think it's more on him. I think he's got, you know, he calls me the sugar mom all the time because I'm making more of that. I have a question for you, David. I'm married as well.

Do you think that my wife and I compete over who makes more money? No. No, why? Not just because I've had a business for a long time. Let's say we were almost identical in income like the two of you are. I still wouldn't. Why? Because you're a team. Yeah. We might compete with our rich life goals. We might compete with the outside world. We might compete with the credit card companies. If we

have credit card debt, but why would I want to compete with my teammate? So you can push each other to improve. You can definitely push each other. You can set ambitious goals. You can be specific about, oh my gosh, let's set a milestone if we hit this number or when we achieve that number then let's do X. That is very motivating and you know you can congratulate your part. Oh my God you did such a

great job. I love you. I feel totally confident with you. Those are the ways that you can be a team. But when you think about competing especially in a zero-sum game. Somebody wins and what's the other side of that? Loser. Yeah. I don't really want to make my partner feel like a loser and I don't want to feel like a loser with my partner. Part of me does feel like I should make more money than her because it's a cultural thing for both of us. I grew up Hispanic. My wife is Turkish background. So both in both cultures, usually it's the man that makes more money. Okay. So what's the point of that? Do you need to make more money? Of course. Oh, of course.

make more money? Of course. Oh, of course. I'd like for it to be like more than seven figures, maybe eight figures. Come on. Yeah, that's unrealistic. I don't know if you caught me there saying, come on, come on, David, you earn about $100,000. You're in debt and you're talking about earning eight figures a year. That is $10 million per year.

What I want you to notice that each of these examples, MLMs, Love Sack, wanting to earn eight figures are all fruits of the same tree. And I could try to tackle one of them one by one, but it's really like playing Wacomol. The real issue is his unrealistic relationship with money as a believer. This is why I'm encouraging him and a lot of my guests to see a therapist. I want to remove the stigmatism. There's nothing that has to be wrong with you to see a therapist, but you can improve some part of you.

In David's case, he can understand why he has this unrealistic relationship with money that is manifesting in so many different ways. And they can start to actually become a team. Now a quick message from our sponsors. Here's a message I recently got from a listener, Kristen. Kristen said, element is a new staple for me. I recently had a health scare. I found out I'm prone to fainting.

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weather and when we naturally want less cold drinks, but still need to stay hydrated. Get yours at drinkelement.com slash remit. Try it totally risk-free. If you don't like it, they will give to your fixed costs. What's this number here, you see, David? 32%. Yeah, all right. What number technically should that be in my benchmark?

50 to 60. So 72 is good or bad? Bad. It's over the number. Your savings are 21%. Let's see where that's going. Oh, what the, what is this? Okay, hold on, sorry, I gotta, sorry, I'm still stuck on this, I forget,

some people are listening. We got vacations at 500 a month, long-term emergency fund at 500 a month, and then I've never seen a line item called outings and bulls**t, that's $1,462 per month. Can somebody explain this to me? She should explain it, because that was her. I mean, it's just the things that we don't really know

where to categorize or like it's- What's outings? What is that? Do you want me to take over? No, I want Halima. Okay. David, do you see what just happened there? You want a teammate, right?

Yes. So you gotta let her speak up, even if it means that sometimes she's not certain, et cetera. Halima's already said, look, I'm not sure about money. I don't feel as certain. So when she's actively in the middle of something, we gotta let her play it out. Honestly, I said the bulls**t part,

because to me, I didn't understand it. So I was like, all right, let's just the bulls**t part because to me I didn't understand it. So I was like, all right, let's just put bulls**t because I didn't know where else to put those things. This is more than just some text that Halima wrote in the CSP. This is not taking the process seriously. On this podcast, I try to be deeply respectful of different experiences that people have had along their money journeys. And my team and I spend literally hundreds of hours finding diverse couples from all around the world. I'm even sympathetic to people in tons of credit card debt.

But I have no sympathy for people treating my process as a joke. And deep down, that is what's happening here. Halima didn't understand it, so she reverted to her usual behavior. Head in the sand. Only this time, because she couldn't hide from the black and white numbers that she knew we would all be reviewing, she wrote a sarcastic label, she threw everything in one category, and she essentially said, Ramiq can figure this out for us.

Now, I can help people do amazing things, but only if they want to do the work. What's a weekend getaway? What's that? We can get away somewhere local. Stay overnight. Yeah, sometimes. Like a hotel motel. What are we talking about? Yeah, it's part of our time share. Oh, what? You have a time share. Yeah, which company is this part of Hilton? Hilton. So great. Wow.

Uh, who bought the time share? David. Wow. David, I, um, I know this had to have happened at least five years ago because that's when you ended your Get Rich Quick stuff. So what year did you buy this time, share? David. This year.

This year. Why did you do it? We were running, I was running through the numbers. I told the sales guy that he needs to give me a minute. I was literally sitting there by myself for like half an hour running through the numbers. How did you end up in this room? We went to Hawaii.

And you sit in the presentation. And what goes through your mind as you see the presentation? I'm not going to do this. Really? Yeah, the whole time is just like, I'm wasting my time here. And then he showed me the numbers. And then I was like, nope, nope, nope. And then finally, he showed me a number of that. I was just like, wait a minute. Which number was it? Tell

us. It was a 10 grand. But what, what's the number? Like what 10 grand gets you this thing? 10 grand. Why did that number convince you? They kept correcting me saying it's not a time share. It's a f***ing time share. Yep. That's what I kept saying. It's a time share anyway. It's a vacation club. Yep. Yep. Exactly. So then when he showed me that is 10 years for 10 grand and then I was like that's a thousand dollars a year. Okay. I was like, all right, well I need to see the terms and everything. And of course it said variable, but then I said I'm not signing this unless you change it to fixed. And they changed it to fixed, so it's not supposed to go up. All right, you really got them. Yeah. You feel good? Yeah.

OK, so what do you get for $10,000? Is that the total amount that you're going to pay over 10 years? 10,000? Plus it's going to be another $2,000 every, or yeah, basically 2,000 every two years. So basically, it's 20 grand. Oh. So what do you get for 20 grand?

Just that one trip alone was 5 grand. No, that's not my question. What do you get for 20 grand? The ability to go to a lot of these places and not have to spend money on where we're staying. How long can you stay every year? It depends on the points, but we can do multiple trips. We can do two to three trips a year from one week long each trip. Like, let's say you want to go to Bora Bora. Maybe you can make the points work or have some pelted property in Italy or whatever. And what would it cost to go there, fly there, eat there, all that stuff?

It'll probably cut it down by like, like, three grand, I would say. Okay. Do you think this was a good decision or a bad decision? I think it was a good decision just because we're not going to be paying for the stay. How come everyone who comes on this podcast of which you've listened to every episode I'm told? How come everyone who comes on here with a time share gets absolutely f**king reamed by me?

But in your situation, this was a good decision. Explain that to me. Doing the math, like I said, yeah, that one trip to Hawaii costs us like five grand. And then these that we take out the flights, it was like close to three grand. Basically, if we go to all these other places, we're going to cut the costs on the stays. So it's a no brainer.

Basically, yeah. I also wanna point out that when I told my wife that we were gonna be on this show, she was like, I can't wait to tell him about the time share. I know, Halima's had the biggest smile for the last five minutes. She's just sitting over and she's shaking her head. It's actually hilarious. Come watch this on YouTube. It's so good.

Halima, you want to add anything to David's quote, good decision? Yes. Tell us. So I remember I was sitting by the pool with the kids. He gave me a call. He's like, oh, you know, they're giving a really good deal, babe. What do you think? And I, you know, I just, I was getting frustrated. I was getting, you know, kind of angry, but at the same time, I was like, you know what? If he thinks it's a good idea, and it makes sense with the numbers, I was kind of like, all right, at the end of the day,

sure, let's do it. What the f***? Yeah. Hold on, hold on, I'm sorry, I have to cut in here. You're telling, first of all, you both agreed not to do it. You know that time shares are not a good idea. And then you go, let me, let me turn over and delegate. Notice that word keeps coming up today. Let me delegate the decision to my husband who has been involved in get rich quick schemes for in his own words 20 years. Honestly, I didn't understand it and I didn't ask too many questions because I didn't understand it.

I did know that time shares are bad and it's, you know, taking money out of it and it's not worth it. But I trusted him and I was just kind of like, all right, if you think it's a good idea, I guess let's go for it. You trusted him on the renovation. You trusted him on the time share. Didn't you yourself say that you want to trust but you also want to understand something? All right, and then David, you knew Holy Mide didn't understand this.

You knew that you had agreed to not purchase a time share. And so yet you called her and said, oh, the deal is actually pretty good. What did you expect her to say? I mean, I explained the numbers to her. I thought she was understanding when I was explaining the numbers to her. No, but you explained the numbers to me

and I think they're total bulls**t. I think you genuinely believe this is a good deal and it's totally not. Like 100% it's not a good deal. And you genuinely believe because of what those sales guys put in your head, just like what those AMway guys put in your head 10, 15, 20 years ago, you've bought into the next MLM style, get rich quick thing.

Do you not see the pattern here? Yeah. This decision will cost you how much over the course of the next 10 years. 20 per cent. Way more than that. How many times are you planning to take a trip? You told me you can go two to three times per year. You plan to scrape it all for what it's worth. Like make sure you take as many as possible.

Three a year. Should we just say three a year? Okay. Yes. All right, so three trips times 10 years. How many trips is that? 30. 30 trips.

How much is it going to cost on average for airfare, taxes, food, the occasional lost luggage, the new clothes you got to purchase, the souvenirs, how much is it going to cost on average per trip? Probably an additional 3 grand. 3 grand each trip. All right. So 30 trips times 3,000, 90,000, plus the initial 20,000. That's $110,000 on vacations. Okay, but we're not paying for the stays.

Here's the fact, you probably wouldn't spend $110,000 on vacations in the next 10 years if we had gone through your CSP and looked at it. Aren't you the one who called me and said, I want to retire early? Yeah. Every dollar you spend on this is one dollar not going towards your retirement, which right now you have 11,000 dollars in your investments. I don't understand how this seems like a good idea to you Companies are very good at finding the one single argument

That resonates with people who don't really understand the intricacies of a sophisticated financial purchase. Let me give you some examples. With time shares, the argument is, you're saving on the amount you would have spent on vacations. With whole life insurance, you get cash back with get rich quick scammers on TikTok. It's about passive income. You make money while you sleep

and you never have a boss. And with financial advisors who charge 1% AUM or more, just kidding, they don't actually have an argument because they never want to actually talk about their fees. You can see that nothing I'm saying is really reaching David. He still thinks this time share was a good idea. And this is why it is so difficult to reach people after they have been surrounded in

these worlds for so long, inculcated with these messages that they have absorbed. So I'm going to call this miscellaneous. Why I'm putting it in fixed costs is that people typically have just a certain amount of money they spend every single month. Okay? I'm going to move this here. So 1462 means now you're currently spending 85% on fixed costs. That's 85% of your net pay is going to fixed costs.

I'm going to go ahead and drop the number here, which means you're, I removed it from savings, which means you're now saving 8% of your net pay. And let's just finish up the CSP and then we could go back up. Let's look at your guilt free spending. I'm curious about that. Okay, well, I don't believe this. So it says that you have less than 100, you're basically spending more than you make every month, which of course you and I know that you're spending on outings and things like that. So probably part of this stuff like the getaways, let's even just say a thousand dollars, should, well, let's move it from your fixed costs down here. I mean, just the numbers just don't work. You're essentially, how do we do this? Let's say 6, 7, 30. Yeah, basically, the thing, you're spending more than you make every single month.

Did you know that? When that was my biggest concern, you know, when we would go back and forth, when we would sit down with these talks, I felt like, you know, the numbers, again, numbers to me, it's confusing for me to even like try to understand it. But like I just, I have this feeling inside that I feel like we're spending more than we're making. You are. I guarantee that. And like my got knew that like my like something inside me

was telling me that you know, something's not making sense. David, do you see that? of things that make sense. David, do you see that? I mean, every month that has been going by, since we've combined our income, our checking account has just been going up and up steadily. This is why it's confusing. People who are just beginning with money,

their barometer of success is how much money is in our checking account. That's it. And the fact is, you have a pretty high income. So it works for a while. And what that probably means is you're not actually actively and automatically contributing to your savings. You're not automatically contributing to your Roth IRA.

You're spending a bunch of money on credit cards, which I want to get to. And so, from all looks, the checking account looks great. You're getting paid like 15, 16 grand a month. Fantastic. But every month that goes by, you're compromising on your savings, you're compromising on your investments, you're adding to your debt.

If we were to actually look at it all, which we are right now, you would realize, oh my God, we're actually in the red every single month. And you want me to show you how I know that? Because let's look at your credit card debt. You were very helpful in breaking out all your credit card debt. Just to keep in mind, you have $517,000 of debt. Now, let's be fair.

$447,000 of that is your home loan. Okay? At about a 5% interest rate. Correct? Yes. All right. Let's take a look at your credit card bills. You got over $10,000 on your Amix. You have a synchrony ADT. What is that? Is that a credit card? It's a credit card for the home security system. Why do you have a credit card for it? Because a lot of the equipment was pricey and I think I could just pay it off. Why not?

Why not? Well, I paid off. Why haven't you paid it off? Yeah, three thousand bucks. Yeah. Um, I'm not sure. Then you have another kitchen credit card, $4,944. Then you have a Best Buy appliance for $4,424. And you also have two car loans, $13,000 and $13,800, $4.00. Do you realize you're spending more than you make every single month and that's where it's going? Yeah.

Tell me what's going through your mind right now. David, you're the one who's been managing the money and moving it around and sharing it with Halima. What's going through your mind right now? I'm failing. Like, we shouldn't be in this type of position. And I feel like I've gotten us into this. What is this type of position described before me?

Being in the red. Okay. Spending more than we make. And quantitatively, you are spending more than you make. I agree. You're spending more than you make. Tell me about qualitatively. How are you spending that money? Where's it going? Debt mostly.

Mm-hmm. And what is the debt for? Credit cards, other stuff that we purchased, cars, the house, the security system. What else? What's that kitchen thing? All renovations.

You can't even remember all this stuff. Then, where's the Hilton expenses on here? Where's that? On the MX. 10,000000 this month. So it's hidden. You've created your own nightmare. What's shocking to me is that when we started this call, you said, I feel rich.

You said, looking at the numbers, I feel rich. We have $70,000 in credit card debt and carloads, not to mention the mortgage. How do you reconcile that? I don't know. I need you to dig deep because you've been making decisions, renovations, time share, putting things on certain credit cards. There's nobody else here who has the answer except you. So tell me your thought process. How did you end up here?

Wanted to create a life where I can provide for my wife and kids. You know, not be able to say no. You know, I want to give them a better life than what I've had. How do you do that? Proving our finances. How are you currently doing that? Not saying no, just giving and giving and giving what I don't have. Mm-hmm. What else? What about your partner here, Halima? Both of us went through a lot and I understand she went through a lot and I want to show her that life is better now.

Because we have each other. But financially we're pretty much back in the hole. David and Halima are in $500,000 of debt. They're currently renovating their house with no end in sight. They're talking about buying a $10,000 couch and traveling three times a year using their timeshare. Until this very moment, I'm not sure David realized the severity of their situation. Unfortunately, they need a true wake-up call

to see what their future really looks like. And in part two of this conversation next week, I will tackle it with them. Thanks for listening to I Will Teach You To Be Rich. I'm Remete Saytee. 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.