I Will Teach You To Be Rich - 172. “We saved for retirement but have no money to spend NOW” (Part 1)

Episode Date: September 3, 2024

Michelle is 42, Ryan is 43. They’ve been married for 9 years and share three young children. Michelle worries about money; she always has. Ryan knows they’re in trouble, but can’t say no to their kids. On one income, spending outpaces earning—slowly draining their savings and weighing them down with dread over the future.  This episode is brought to you by: Netsuite | Get visibility to everything in your business in one place. Sign up and defer payments, with no interest, for six months at https://iwt.com/netsuite. Superhuman | Get a free month of lightning fast email at https://try.sprh.mn/ramitsethi. DeleteMe | If you want to get your personal information removed from the web, go to https://joindeleteme.com/ramit for 20% off. 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://facet.com/ramit. 99 Designs | Get $50 off your first design contest at 99designs.com/ramit. Connect with Ramit • Pre-order my upcoming book: Money for Couples • Get the Podcast Newsletter and exclusive Q&A about the show • Sign up to attend a live event on my book tour • Get Money Coaching with Ramit  • Download the Conscious Spending Plan • Listen to my book—now on Audible • Get my New York Times best-selling book • Get my no-numbers journal • Other episodes • Instagram • Twitter • YouTube If you and your partner have a money issue and you want my help, I occasionally select a couple to work with, free of charge. Apply for my help here. Produced by Crate Media.

On today's episode. We are stuck with everything that we currently have. We stopped dreaming. You know, you can't dream at 113%. I definitely feel stuck. Most days I'm just trying to survive. Meet Michelle and Ryan. Michelle is 42 and she is a worrier.

He doesn't think twice. Like we missed the credit card payment by a couple of days. This is like horrifying to me. He's like, do better next month. I think I would like an equal worrier. Ryan is 43 and he refuses to worry about money. Ryan, you don't worry about money, right? I'm gonna say not anymore.

I made decisions based on money that in hindsight, I later regretted and I kind of just at some point said, I'm never doing that again. As we dig deeper, we learn that Michelle is resentful of how her relationship with money was different than Ryan's when she was growing up. So when I'm sitting there babysitting with my several side hustles at age 24 watching

Suzy Orman, this guy is out in Australia living it up, racking up the credit cards because he could. He had a place to fall back to. I did not. Can Michelle and Ryan see beyond the past and stop the bleeding so they can start living their rich life today? This is a crisis. Look at the spreadsheet.

It's not working. It really is death by a thousand paper cuts. I think big changes need to be made. I think I'm a little afraid to make them. Let's dig in with Michelle and Ryan. I was probably panicking because that's usually what I'm doing. We had fairly recently a credit card bill. I had to text him to be like, hey, can you pay this? And I got the, oh, hold on. I think I have to transfer over money for that. I never get that response from him. I was like, what do you mean? And it was because, and I realized because the balance of the

credit card bill, which we pay in full, basically matched the income for the month. So then I was like, yeah, we're in trouble. Yeah, yeah. So usually a couple of times a year, I just I got to take money from the savings account, shift it into the checking account. That way we can cover the credit card bill. You were just like casual about incurring a late fee from your credit card. Yeah, I probably would have been all right. Whatever. You know what?

That's that stinks. I don't want to pay it. It's you know, let's just say it's the cost of doing life. I should have been more responsible. I'll I'll make sure I'm better. I'm better next time. No, next time for it. I actually said this to him over time that I feel like I have a very physical connection and response to spending money. Um, like I can physically feel it when I'm, when I'm spending it in my entire body, mostly in my chest and my belly is mostly where I feel it.

But for him, I feel like it's so, you know, you're like, hey, you got 20 bucks. Yeah, sure. Here you go. It's never, he doesn't think twice. Like, you know, oh, we missed the credit card payment by a couple of days. It's, you know, a hundred bucks. It's a little over a hundred bucks of interest. And I'm, this is like horrifying to me.

He's like, do better next month. Whereas, you know, I have to call now and get one of my several one time courtesies and get these things waved, where if it were him, you know, he would just kind of let it ride. Is that how you would describe the basic dynamic of the relationship? You are worried, Michelle, and Ryan is along for the ride. In terms of the worry and concern, 100 percent. Yeah, I'd say I'd say I'm the warrior and he's he's the passenger of the worry.

I think I would like an equal warrior. Like, oh, I guess I want someone to be as concerned as I am. And you mentioned you feel it in your chest and stomach. Just so I'm making sure I get this right, this is a negative feeling about money, right? Do you ever feel positive about money? Yes, when I start to when I when I see that things are going well. Maybe maybe it's not. I don't know. Maybe it never maybe it never feels truly good. In your mind, Michelle, does worrying about money equal caring about money?

Yes. OK. It really is. An overload. It's it's overwhelmed. It's exhaustion. It's. The panic and then, oh, we're okay. And is there a world where you can care about money without worrying about it? I hope so. And Ryan, you don't worry about money, right? No, I'm going to say not anymore.

I try not to. I made decisions based on money that in hindsight, I later regretted and I kind of just at some point said, I'm never doing that again. What was an example? So when we got our house, so when I saved money to buy the house, I pretty much cut off frivolous spending, cut off a lot of socializing, everything safe, safe, safe, safe, safe, safe, safe, got to save, got to save, got to save, got to hit that number, that number, that number. There was no more Starbucks. There was no more coffee. There was no, there was

no nothing. And I got there. And by the time you got to the table with the closing costs and this, that, and the other thing, you know, the. Let's say 50 bucks I might have spent on a Friday night going out with some friends would not have. Made or broken that entire situation. I don't want to get back to that point where I'm so worried about every penny. So you, you bought this house. And you told yourself, I buckled down for this. Did you feel a sense of pride at being able to buy the house? Yes, there was a sense of pride in it. Almost followed by immediate sense of regret.

Well, that's every homeowner. Michelle, were you in the picture when Ryan bought the house? Were you two together? So no, we were not together at the time. I was part of the friend group though. So we, the friend group, I distinctly remember making fun of this valiant effort to scrape together all these, all these, like, nope, Ryan's not coming,

Ryan's not coming, he's got to save for the house. And another friend would be like, well, why doesn't he just open up the garage and take out half those toys in there and sell them and then he's got his down payment. So first of all, what toys were in the garage? Ryan, just tell me. In the beginning there was two motorcycles and Convertible. Great. All right. And then all right. I get it. Let's just are those gone or they still there? The one motorcycle is still there.

The convertible is still there, but the one motorcycle is up for sale. I just it's kind of funny, Michelle, that you mentioned you would make fun of him like, oh, this guy's not going to come anymore because he's got to save money. But now you are the one who is intensely worried about personal finances. How did that flip? I've always been I really haven't changed over time. The thing is, I would never just make a decision to buy a house and then suddenly have a few months to scrape together a down payment.

That's not how I roll. It's never how I rolled. Why not? I was even in my 20s. I was saving for this point in my life where I don't think Ryan's had the foresight. I'm currently living in what I planned for in my 20s. I planned for this, only I didn't go beyond this. I think I planned up to here. When he went to buy this house, there was like a scrambling to get together $4,000.

And like we were, we were in the same friend group at the time. And I remember making fun of that with like the other friends, like this guy has scrambled to get $4,000 together. That's the other thing that I, right from the beginning, I held that against you. I'm like, what do you mean? You've had a real job making like 60 grand a year and you've been living home for the first four years of this job and you are scrambling to save $4,000? That's like incomprehensible to me.

I like I would have had 200 grand in the bank by now. How come you have zero? Obviously not ready to buy a house. How come no one's telling him this? Right. And so he's still got it anyway. And then you know, you go down the line in the years, it's always like me tugging him along through every financial milestone that we're here because of you.

You know, you bought this house like this. I'm tripping over that cat and that kid and that toy because of you. So, and now we can't fix it because you lived it up back in the day and I never got the chance to and we're still here, dude. That's where all the resentment comes from. Did you notice how Michelle spent a lot of time talking about her feelings around money and how they were almost all negative? She talked about how she feels the negative sensations of money in her body. She mentioned feeling resentment that Ryan hadn't saved more, even though he did a crash savings plan and bought a house. And when I asked her if she ever felt good about money, she gave me an ambivalent answer.

These are clues, big clues that I want to dig into. Michelle, of course, is a worrier and Ryan is along for the ride. He's probably an avoider. I noticed that he's got what he calls toys in his garage. By the way, why is it that men always call their expensive impulse purchases toys? Can anyone tell me? I'm going to ask how they grew up with money. Before I get into it, what do you think they're going to say?

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It was always a source of contention. There was never enough than child of divorce. So then it was like, did dad pay the child support? Child support wasn't enough. Never had enough for this, that and the other thing. We ended up living with my my grandparents on my mom's side. I didn't come out of childhood with any money. There was no... I'm sure people gave me cash for gifts at some point. I saw none of it. I came out with nothing and I built it all myself.

So I knew that if I were going to survive going Going forward that I had me and me alone to rely on my parents The people who were supposed to take care of me Really didn't you know, they made me instead feel like a burden wherever I went That sucks, I'm sorry to hear that You take it and you move on. Were you the first to go to college in your family? Yes.

Wow. Congratulations. That's amazing. Thanks. Thanks. That's really cool. How did you pay for it? I went there for one year and I ran out of money. I was about, I think, 8,000 short to go back the second year. And I was like, this is my problem when I leave. So I'm going to leave here and go to a state school instead and not come out buried under debt.

So in your early 20s, it sounds like you started saving aggressively. Yes. OK. What was driving that? Like, what did you think about money at the time? And what did you feel as you started to save more? You know, I had zero for a while. You know, I was breaking even for a while. I remember very distinctly, I was like twenty dollars short. I think it was exactly twenty dollars short for my car insurance bill at the time. And the office that I was working in was right around Christmas.

And I went in at night. I had left something behind and I went in and there was a card on my desk. One of the employees had left a card, you know, to say happy holidays with the $20 bill in it. So like things like that, um, you know, I always managed to find it when I needed it, so to speak, um, when did I, to, to not totally lose faith. That, you know, even though I I grew up.

Being let down. That not everyone to let you down. You know, there's still hope around the corner. So thank you for walking me through that. That's super helpful. Ryan, can I just ask you the same question? What do you remember about your family growing up? So as a kid, I remember hearing a lot of.

We don't have money for that. As let's say that 17 year old who wanted a new car, you know, there's no money for that. But, you know, the little thousand dollar car that I bought when that broke down, they had no problem covering a repair when it needed it. If something came up, you know, it could always get handled and managed. So I think they just budgeted it well. But I wouldn't say there was a lot of ever talking about it. Ryan, did you ever talk to Michelle about her upbringing with money? And similarly,

did you share your upbringing with it? Um, we've definitely had talks here and there. I've told you little stories like they're very there because they're so different from his like I with the SATs, you know, like, oh man, this is $200 to pay for the SATs who, you know, ask your mom, ask your dad. Okay. I asked my guidance counselor who figured out how to get it paid for, or like there was a field trip that came up and I needed $100 above what we could afford. So my music teacher actually let me help her paint

in her house so that I could earn the money to go on this trip. Like that kind of stuff I think is so far beyond what Ryan can, he grew up not, not like that. Why not talk about that out of curiosity? Something that just comes up. It kind of just comes up here and there, you know, in little tidbits. I don't think you really go on that whole depressing journey.

Oh, wow. That's that's very interesting, Michelle, because I could tell you, I don't I mean, I hear some pain in your in your story, but I when I think about your story, Michelle, I do not think about depressing. That's not how I hear it. I hear somebody who grew up in a family where parents were divorced, money was lacking. It was an issue throughout childhood. And then I hear someone who said, I'm not going to let that define me. I'm going to find a way. Like, what's depressing about that? To me, that is incredible. Thanks. Ryan, you ever reflected on Michelle's journey like that? For her to jump not only one bad hurdle, but a hundred bad hurdles is very, very impressive.

I agree. What you both just revealed is so illuminating. I feel like I just shined a flashlight on your history and I can see something I couldn't see before. Now if I had three kids ages seven, five and three, you better believe I'd be wanting to tell these stories all the time because they connect your kids to where you came from. Right? Like Michelle, do you think your kids are going to struggle by not having $20 like you did?

No, because they'll have someone to call. Exactly. So therefore, don't you think it's even more important for them to know where mom came from? Yeah, probably. This is how we create legacies. This is what generational wealth really is. That right there. What a beautiful moment.

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So I put a post-it note in the envelope saying listen, this is a lot of money So, please waive the fee But if you really need it contact me and I will find a way to get the money and then I got into my first choice These are stories that define us and it's so important for us to look inside These are stories that define us. And it's so important for us to look inside to remember our own stories and then to share them. And don't be ashamed if these stories are not perfect. They are your stories.

Tell them to your spouse, tell them to your friends, and definitely tell them over and over to your children because they are a connection to where you came from. Let's get back to Michelle, who in her screening interview told us about her interest with personal finance. And it's quite revealing, especially the last part. I'm like the financial guru spiral out person.

So I've been watching Susie Orman since I was like 24 years old. Then I recently found the fire community. I was like, Ooh, now I learned a lot of technicalities like the 4% rule, the rule 72. Like I heard more about that through the fire community, but it's no longer working for us. I'm so far buried in my spreadsheet that I have no idea how to step back and, and fix it. I have no solutions. I spent so much time in my younger years setting up for retirement that I never really considered the right now. So what am I saving for? Like, what are we saving for? We don't know what we're saving for down the line. I kind of

started, it was a spiral. I was spiraling. I'm staring at an empty spot on the couch. I have nobody to vent it to. Like, I got to talk to talk to her. I can't. I need to see if I can get on this and have him talk me down. I'm a long time Suzy Orman fan. I followed a lot of her stuff. She never talked about spending, but I got the savings part down from her. Standing in your truth and all that good. Then I found your stuff. And that's kind of where the spending stuff came in, which I had never really considered before, then I read Die with Zero. And I think that one put me over the edge

because now I'm like, great, you know, I'm spending all this life energy. You know, I'm I'm the ant and and Ryan's the grasshopper is what is what kind of took me over the edge a little bit. You know, I married a grasshopper. Bill Perkins talks about in the beginning of the book where you have an ant and a grasshopper and the ant works really hard throughout the summer to make sure that there was enough food stored for winter.

With a grasshopper was out partying and hanging out and loving life. And then, you know, we all know what happened to the grasshopper who starved to death in winter. And the ant, while the ant survived, was she really happy? I was like, oh my God, I married a grasshopper. So when I'm sitting there babysitting with my several side hustles at age 24 watching Suzy Orman, this guy is out in Australia living it up, racking up the credit cards and, you know, student teaching internationally because he could. He had a place to fall back to. I did not. So I only had myself to fall back on. So like I made sure I maintained that my savings myself because who else is going to support me but me? But him, he's like, I can just go back home. I married a grasshopper. This is what happens when the grasshopper marries the ant. So the thing is though, and Bill Perkins thing is like,

when does the ant get to play? So that's my question. When does the ant get to play? So I lost decades. He did not. Watching someone use Microsoft Outlook is like watching a boomer give career advice. It's just so out of touch. No, I'm not going to walk around the mall and hand over my resume and I'm not going to drag email into different folders. Why would I waste my time doing that? This is why I don't use Outlook. This is why I use Superhuman because my fingers never leave the keyboard.

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Again, facet.com slash Ramit. Sponsored by FACET, FACET Wealth Inc. FACET is an SEC registered investment advisor, headquartered in Baltimore, Maryland. This is not an offer to sell securities or investment, financial, legal or tax advice. Past performance is not a guarantee of future performance, terms and conditions. Are you saying you worked so hard in your 20s and you saved up a bunch of money and Ryan did not. It sounds like, you know, he went out a lot and bought some bikes and stuff like that.

Yeah. Now you two are married and you're resentful of that. Is that what I'm hearing? 100 percent, because he got to live his happy grasshopper life where I had to constantly work and store and make sure. And I feel like we are set up. Not to say he didn't have a part in how we're set up now, because he was obviously a huge piece for that. But he got to end up here. Even existing as a grasshopper then, you know, I, I got here because I, I worked consistently to make sure I got here and I actually had my eyes here.

Whereas he was not looking ahead that far. You know, he was looking a couple of blocks ahead, whereas I was looking decades ahead and he still ended up in the same place as me. I a hundred percent feel resentment over that. Hmm. What do you think about that, Ryan? I can understand the resentment.

It's, and, And it's upsetting to me that she didn't get to experience a lot of the stuff that I did get to experience as I was living that grasshopper life. I planned to the porch in the rocking chair, you know, like older retirement, but I don't really have a handle or a vision for the right now. Like, it's almost like I feel like the goalpost needs to be moved a little bit more and I don't know where to put it for that. I think in order to speak on this, I need to look at your numbers with you. Okay assets are 584 thousand eight hundred thirty six dollars

investments are four hundred sixty seven thousand nine hundred eighty five dollars savings is one hundred thirty five thousand two hundred forty nine dollars and debt is two hundred eighteen thousand one hundred thirty five dollars $249 and debt is $218,135. Total net worth or total net worth of nine hundred sixty nine thousand nine hundred thirty five bucks. OK, great. How do you feel about that number?

Not going to lie, when I saw the net worth, I was a little giddy. It's interesting, right? Worrying about money almost every day. Probably had not added up a little giddy. It's interesting, right? Worrying about money almost every day. Probably had not added up a net worth before. What do you think about that? Not a net worth. I had never done that before. OK. All right. Ryan, let's go ahead and talk about gross monthly income.

Can you read that combined? Income right there. Eleven, eight, fifteen. It's six. Cool. Yeah. Eleven, eight, fifteen. It's six. Cool. Yeah. Eleven, six, fifteen. Sorry. All right. So that's one hundred and thirty nine thousand three hundred eighty dollars. Did you all know that that's what you made?

Yes. No. Well, we go 50 percent. I hate being part of the majority. What was it like doing the CSP together? Oh my God, I loved it. It was a lot of fun. I was like spreadsheets. Michelle, I know you loved it.

Ryan, did you like it? Yeah, yeah. It was really interesting. So how long did it take you to do this together? Multiple sessions because we, you know, I don't know if you can tell I'm a little on the thorough side. I just need to cut in here to point out that Michelle spent several minutes describing her emotional and even physical reactions to worrying about money, which she does constantly.

And she even said she loves spreadsheets and obviously spends a lot of time in them. But she has never actually calculated her net worth. This is so common. People play small with money all the time. They think that managing money means paying bills. They agonize over a $50 target bill. They log into their apps every day and they spend years, even decades doing this.

Basically moving meaningless puzzle pieces around the board. The truth is that most of this is pointless. Tracking the price of your family's spending on fruit rollups is pointless. And so is logging into your financial apps every single week or day to make sure that your bill got paid on time. What really matters is not these $3 questions, but the $30,000 questions. Like, what's our net worth? Are we hitting our four numbers in the conscious spending plan? When will our debt be paid off? When will we have a million dollars? When will

we have enough to retire? And on and on. Guys, I want you to play big with money, not small. That's why I do this podcast. And for those of you who want to do this together with your partner go and pre-order my upcoming Book money for couples you can get it from Amazon Barnes and Noble or the Indies via bookshop.org I'm currently Staying home with the kids. Oh, okay. How long have you been doing that since? 2016 all right, so Let's take a look here. So your net is 8,130 bucks.

Can Michelle, can you read this number to me? Fixed cost. What is this number here? The percentage? That is 113 percent. So I'm confused, guys. How is it possible that, you know that you have these conversations about money and transfer and you assured me that credit card gets paid every month and all this stuff is fine, but you are losing

money every single month. Okay. So we talked about this. I had just as much upset as you, but I saw that percentage. But it really didn't hit me until that one credit card bill where it kind of matched the income for the month. And it just so, it's not a frequent thing,

it's not an expected thing, but it has happened a handful of times over those seven years. And it just, it's just worked. It doesn't look like it should work. We mapped this out on paper before I resigned and we were in the red. And it just there's some stuff that just dropped off once I stopped working. And it kind of started just worked.

We were actually ahead each month for a while. And then and now we're not. You are losing money every single month. You're broke. You are broke. Both of you. It is clear as day. And you're saying, well, like, somehow it works out. It's not working. It just hasn't caught up to you yet. Simple as that. So.

To me, this entire this is why I wanted to look at the CSP early. Guys the way you talking about money, you know, I can see that you're discontent with money and with the way you both look at each other, but you have a fire burning in your house. You're losing money every single month. So do you see the severity of the situation? Yeah, it can't continue because it'll keep chipping away at, it'll keep chipping into that savings that's not going to be able to float us forever. It's not the way you want to go through life, especially with young children.

Michelle, what's your reaction? My reaction to it is I know that that number is why I feel the way I do day to day. I'm comfortable here. I've lived here my whole life in in this. In this stress, I know that it's possible to come out on the other end of it. In my mind, the way that I justified it, and I kind of still do, is that it's temporary. The goal that I had in mind was to keep afloat, was to stay even. I built up that savings for this so that if we got to this point, which we're now in, that I'd have a little bit of time.

I don't know exactly how much time, but I'd have a little bit of time where it could soften the blow and, you know, keep the fire burning lower. Or at least so that I could survive it until I get to the other side. Why are you talking like this? Because I. First of all, it sounds like we're on like Game of Thrones or something like what the hell is happening in my mind? It was a temporary. And this was like how I looked at it in my 20s, too. This is 20 years later.

You're in your 40s. I'm still here. Like this is a crisis. What is going through your head when you see one hundred and thirteen percent going towards fixed costs? That it's not sustainable. I don't have a timeline on that, but I know that it's not sustainable, that we cannot exist this way. What's going to happen?

We will actually be broke, as in savings will be eaten away to nothing. Correct. You'll run out of money. Yeah. OK, Ryan, what do you what do you think my perspective is? It's a sinking ship. It can't continue this way. Because we will run out of money or just it's it's the numbers. That's what the numbers are. We can't. They don't lie.

Is it working? No, look at the spreadsheet. It's not working. Let's take a look at the numbers line by line, shall we? All right. So your housing costs are 24 percent. It's pretty good for a family of five. All right. Moving along. Target, $763. What is this?

Okay. So I had to put separate line items because I don't sit and take all the Target and the Amazon stuff. You know, the groceries is easy because it's specific stores, but for Target and Amazon, I get some groceries from Target. I get some birthday gifts from Target. It's like a target kind of covers a whole bunch of line items in one. So I kind of gave it its own line item. Like, you know, Amazon is diapers, too. You know, so like there's all sorts of stuff. Some people count diapers and groceries, but like, Michelle. Yeah, you know that that's a very unsatisfying answer, right? Yes, I do And we haven't even gotten to Amazon yet. No, okay. Let's talk about Amazon. What's that one for there that upset me? 1185 bucks. What is that? So remember I was I was upset about that one. You remember Ryan? I have the household subscriptions like diapers and vitamins, whatever. So I have that all on my side. I was like, what is yours doing at?

What was yours like? Yours was like, I wanted that 500 a month. It averaged out like, what are you buying? Five hundred dollars a month on Amazon. I that one was a surprise. Pull up your Amazon account. Let's just look at the last few orders. It was a pair of sunglasses for my son that had gotten broken.

$13 for the sunglasses. We signed the kids up for soccer. Here's $25 for the shin guards and the soccer ball. These four pairs of shoes with the attention of returning three of them. One is 18, one is 38, one was 23, one was 18. I keep going. $21 for the bike tires. A replacement part for the refrigerator that broke. I think that was $17. Little paper cups for the bathroom. They were $16. This one is water shoes. Kids, 13irteen bucks. Baby wipes. Forty bucks. Vitamins for the kids.

That one's thirty two bucks. Shampoo for the kids. That one's like eleven bucks. I'm looking for guys. You don't get to a thousand dollars a month on thirteen dollars. Sunglass purchases. Yeah, it's it's a lot of just like nickel and diming. So is $49 for a gas detector $90 for a beach canopy for for the summer for going to the beach to create shade a pair of sneakers for me That was about a hundred bucks. I'm scrolling through nothing else is nothing else is higher than that on my end really So what do you think's going on here? We're impulsively buying things, let's say that we don't.

Really need. I didn't know the Amazon and I knew the Amazon on my end because it's a subscription for like housings. I was very surprised on his end, so we did find toothed comeness. We really did. And it really was a ton on his end. So we did find tooth comb this. We really did. And it really was a ton of little things. It really is death by a thousand paper cuts on the Amazon front. You can hear that they jumped right down into the weeds.

Of course, I did ask them to list out some of their purchases, but when I asked them to zoom up and to explain what they think is going on here, they play the innocent dough technique. Me? Little old me? I have no idea what's going on here. Now listen, I can understand not knowing where a few hundred bucks a month go, but $2,000 a month in unexplained charges from Target and Amazon? There's something else going on here. It's not just Target, which is seven hundred sixty three dollars a month. It's not just Amazon, which is one thousand one hundred eighty five dollars a month. It's not just groceries with one thousand two hundred and thirty dollars. OK, we also then have kids activities, which is nine hundred and fifty five additional dollars per month.

If I spoke to your kids and I asked them, you're young. What what do your parents say about money? What would they say? I don't say we don't have the money. We can't afford it. I don't say those things. I say I would rather spend my money on, you know, we have this frequently with the ice cream man. What else, Ryan? I want to think I tend to say, all right, we'll, we'll, we'll try and figure this out.

Um, type of thing. I, you know, in terms of, let's say the ice cream man, I'm a little bit more of the, um, the yes person for that. Um, but let's say we got some donuts and Dunkin donuts, um, and then, and afterwards they wanted the ice cream man is like, no, we just got that. We can't also get it. We can't also get the ice cream man is like, no, we just got that. We can't also get it. We can't also get the ice cream man. You're going into debt.

Yep. Oh, and we're sitting here talking about Dunkin Donuts. Are we being honest right now? Because I always say deliver rich life. You got to be honest, honest with yourselves and honest with the people around you. I think if I asked your kids, what do mom and dad say, they would say, uh, dad says we're going to try to figure it out. Mom worries about money. Things like how are we going to pay for this or all at the end of the month?

They hear me get upset with Ryan. I will say. Ah, what do they hear you say? Why you know, we, why are you buying two separate slices of pizza for whatever it was, $14 when we just bought a $24 pie or the we took them to a little kiddie show and I was sick that day so I ended up not being able to go and Ryan went alone which means the police officer wasn't there and of course was the first thing I did. Are you the police officer?

For a lot of I am the no officer. Wow. I am the limitation officer. Let's put it that way. So I, you know, my card pings my phone when there's a charge over $200. So I wouldn't say I was actively checking, but it pinged my phone for a charge over $200. I'm like, oh, that's weird. I look at it and it says it's the venue. He bought over $200 worth of merch after already spending $250 on the it's the venue. He bought over two hundred dollars worth of merch after already spending

two hundred and fifty dollars on the tickets for the show. He bought two hundred and fifty dollars worth of merch while there because they wanted it. And I I was not as you can imagine, I was not OK with that. Is the issue really just that, Ryan, you're just overspending on the kids and we should just stop is that it No, so I think we could go the next five years pointing finger to set each other and it wouldn't get us anywhere Ryan and Michelle are doing something that is so common for lots of couples They're living their lives day to day and once in a while they pay attention to money

But it's always when something goes wrong and And during that moment, they get so frustrated that they try to make a change. But the problem is they don't have a shared vision. They don't talk about money regularly or proactively. They see money completely differently, which leads them to adopt these very peculiar roles, like Michelle calling herself the family's police officer of spending.

But most of all, the changes they try to make are one-time episodic changes. There's no true lifestyle change, no systems, and therefore no sustainable change. It would be like you're in a lake, you're starting to drown, so you paddle for a few seconds, and then you go right back underwater. And eventually you drown,

because you never learned the really important part here, which is how to swim. I don't mind surprises on my birthday, but I do not like surprises in my business. I want to know how much we're going to make. I want to know if we have a problem and what we are doing to take care of it. Now we can't predict the future, not with our investments, not with our business, but I want to be able as much as possible to see what's coming. Now think about it, as entrepreneurs, when you run a business, you have tons of different

areas to focus on and you can get lost in the weeds, which means you're not looking ahead at growth. What if you could add all the important parts of your business into one place? That's what you get with this episode's sponsor, NetSuite. With one unified business management suite, there's one source of truth, giving you the visibility and control you need to make quick decisions. With real-time insights and forecasting,

you can start to go on offense with your data and look ahead. If I needed a platform that integrated accounting, financial management, inventory, and HR into one place, this is what I would use to be able to see the opportunities in front of me. Speaking of opportunity, download the CFO's guide to AI and machine learning at iwt.com slash netsuite.

The guide is free to you at iwt.com slash netsuite, N-E-T-S-U-I-T-E, iwt.com slash netsuite. N-E-T-S-U-I-T-E. IWT.com slash netsuite. Obviously this goes a lot deeper than $13 sunglasses. Have you ever said no to your kids? Like, we just can't do that. I mean, that's how I grew up. I never did the gymnastics.

I never did the swimming lessons. The money was just not there. We took the calculator to the grocery store. We heated up some Elio's pizza. We did all the extracurriculars that school had to offer because those were free. I wanted to be able to give them the chance to do that stuff. I took them to the trial gymnastics class.

I took them to the trial swim class and we just we never stopped it. It never stopped. Those are the ones like if we're like you had to pick one and drop everything else. Those are the two that they would want to keep. So those are the two that I want to try to keep for them. Problem is, though, I have played with that spreadsheet. No matter what I did, I didn't get it below, like, seventy five percent, even dropping stuff entirely.

What does that tell you? I mean, I would think it's an income problem. Well, every couple who overspends thinks it's an income problem. If you two started making two hundred fifty thousand dollars a year, you'd run through every last cent of it right now. There's no site beyond what we have now. What we have now. This is it. And this is where we exist.

This is where we are stuck. I use that word a lot with Ryan. Actually, we are stuck. This is where we are stuck. We bought or he bought a starter house. We will retire in the same house that we started in because we're stuck. We are stuck with everything that we currently have. We stopped dreaming. There's, you know, you can't dream at 113%. You can't. You just can't. So we don't. I definitely feel stuck. I'm going to say most days, I'm just trying to survive. I'm trying to juggle

the 9000 things that all have to be all have to be handled on a daily basis between everything. Vision, vision of the future, would love one. I'm trying to get through tonight, you know, so it gets tough to get out of that mindset. You know, often offer people the ability to make no changes, minor changes or big changes? I think big changes need to be made. I think I'm a little afraid to make them, but I think they need to be made. Okay. Michelle?

I think I'd have to see what they entail before I can choose what I'd be on board with. What what big changes could I suggest that you would be against? You know, you watch this from the other side and it's just so obvious. I'm flashing back to like being 24 years old and like throwing popcorn at the tv with suzy orman while I have The kids i'm babysitting for sleeping on the couch next to me because of course i'm earning money You know, of course you can't afford that you're not fully funding your raw thigh, right? And here I am on the other side Not wanting to let go

Of some vitamins Uh, I don't I think i'd have to see I'd have to see, I'd have to see what it is first. Because I don't want, I want my kids to remember. I don't want them to, you know, I feel like, man, I remember thinking like, I really wanted to try gymnastics and I couldn't do it. And I want them to be able to do. I want them to be able to do it. I know. I don't know. Hearing both of you answer my question is painful because I can see your future clearer

in some ways than you can see it. I know what it means when you have 113% fixed costs. It's like catastrophe. You just so far haven't yet experienced the earthquake that is coming your way. Most people don't know their fixed cost number, but even among those who do, when they discover that they're overspending, they usually get this vague feeling like they're doing something wrong. It goes something like, oh no, this is supposed to be 50 to 60 percent, but we're at 113 percent and that's bad. And that's as far as it goes.

This is where you really see that human nature is not quite as rational as you were brought up to believe. I guarantee that if Michelle and Ryan saw their son get a paper cut, they would react with more urgency than realizing they have 113% fixed costs. In other words, that they are spending more than they make every single month. Now, I'm not blaming them. In fact, we are all irrational like this in some part of our life, but this is a slow moving train wreck that will happen.

You see, money is complex. It's not as simple as, oh, I'm doing well because I have $10,000 in my checking account or I'm doing horribly because we're down to $27. It's not how it works. Money is complex. You can actually be losing money every single month and not realize it for months or in some cases years, but eventually it will catch up with you. And when that happens, it gets bad.

It gets very, very bad. You know, you don't hear many stories about couples in those situations, the ones who spent more than they made over and over for months and months. You know why? That's because the people who lose their house and sometimes lose their family don't want to talk about it. And sometimes they can't talk about it because they now have to work two jobs just to keep the lights on. I don't want this for you. That's why I created my conscious spending plan so you can see where your numbers are

today and it's free. And that's why I created my book. You can get it from the library or any bookstore so that you can set up your automatic money systems and save and invest and spend on the things you love. That is what I want for you to go on offense with your money. Next week we'll continue this conversation with Michelle and Ryan and I promise you, you're going to be surprised. I will see you then. Thanks for listening to I Will Teach You To Be Rich. I'm Ramit Sethi. 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.