I Will Teach You To Be Rich - 80. “If I add any more to our $50,000 credit card debt, he will ask for a divorce” (Part 1)

Episode Date: January 31, 2023

Sarah and Kevin are 38 and 42. They sold their home to pay off $130k in debt, only to dig themselves another $55k hole, six months later. Sarah is worried that if she doesn’t stop her credit card spending, Kevin will ask for a divorce. We need two episodes to untangle their complicated situation. Connect with Ramit 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 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 speechless. Yeah. You paid off $130,000 of credit card debt. Six months ago, and now you have $50,000 of credit card debt just six months later. Yeah. Whoa. You need something that works because nothing's working. Like, working through how not to repeat past mistakes

because we throw out a plan, but we always seem to get back to where we were. Because we both have the goal, like we're committed to wanting to build a house and wanting to travel and it's all rich life, but we don't have a common plan to get there. This is a generational issue, I think on both sides. And now, as a mom and as a wife, I'm breaking that.

Meet Kevin and Sarah. He's 42, she's 38. They have accumulated $200,000 of debt. Then they sold their house to pay it off, and now they're finding that those old habits are coming right back. I went back to their application when they initially wrote into me, and I found a line that I'd like to share with you. Sarah wrote, Kevin recently told me that if I kept adding debt to my credit card, he would ask for a divorce. My parents got divorced over money, so I'm desperate to figure this out.

We're going to talk to Kevin and Sarah today. But one of the biggest lessons of this podcast is that our money decisions are rarely only our own. A lot of us like to imagine that we're rational, logical people. We're pushing our shopping cart down the aisle, and we're making a careful cost-benefit analysis before we buy those Ritz crackers. In reality, our parents bought those crackers,

and they subconsciously taught us that love means buying this exact brand. We learn how to talk about money from the people around us. We learn how to invest it, or if investing is even for people like us. And of course, we learn how to spend from the people around us. And it is very, very hard to shake those generational lessons away. I would encourage you to listen to this episode. And I would invite you to watch it on YouTube. The body language and the facial expressions you'll see at a whole layer of understanding. You can find this episode on YouTube by searching for RemiTzSaty and be sure to follow my channel

there. Now let's begin. I'm RemiTzSaty and this is I will teach you to be rich. We did Dave Ramsey's thing. We tried that. Fred Sheets, our own made up, during forget against the wall. I don't know what am I missing. I mean, we probably, thought there we probably tried it. And so coming on this show,

talk to me, for you, what is it represent? I'm a emotional person, so there might be tears. Hope is what I hear in all of your podcasts. And so. Hope to do what? Figure it out. And so, hope to do what? Figure it out. We have very different backgrounds when it comes to money.

And we want, I want, I want, I want, I want, I want, I want, I want, I want, I want, I want, I want, I want, I want, I want, I want, I want, I want, I want, I want, I want, I want, I want, I want, I want, I want, I want, I want, I want, I want, I want, I want, I want, I want, I want, I want, I want, I want, I want, I want, I want, I want, I want, I want, I want, I want, I want, I want, I want, I want, I want, I want, I want, I want, I want, I want, I want, I want, I want, I want, I want, I want, I want, I want, I want, I want, I want, I want, I want, I want, I want, I want, I want, I want, I want, I want, I want, I want, I want, I want, I want, I want, I want, I want, I want, I want, I want, I want, I want, I want, I want, I want, I want, I want, I want, I want, I want, I want, I want, I want, I want, I want, I want, I want, I want, I want, I want, I want, I want, I want, I want, I want, I want, I want, I want, I want, I want, I want, I want, I want, I want, I want, I want, I want, I want, I want, I want, I want, I want, I want, I want, I want, I want, I want, I want, I want, I want, I a way to speak to each other where we can actually hear each other when it comes to money. We tried to talk about money. And I was like researching your site and you're listening to your podcast that I'm an all-in kind of person. And we started having conversation about money just trying to communicate because you'll find that that's where we struggle deeply. And we just lost it on each other. So talk me through that conversation. Do you remember where you both were? Gosh, there've been so many. I think we were actually probably like I was sitting here and

was sitting here and he was in the living room. And it was something, I don't remember exactly what it was, because like I said, there have been so many, but it was basically screw this. Like, I'm done, some things got to change. Probably what it was was him getting mad at me about what was spent on credit cards. What you spend on credit cards are what was spent? What I spent because of my card.

I'd like to hear from you, Kevin. I'd like to hear about that same conversation that the two of you had where you both became really frustrated. What do you remember about that conversation? I think I know what she's referring to, and this comes with the commulations of things that it's a built-up of, you know, through auto marriage. I get short-fused, and so in that particular moment, there were the expectation in my head, hey, we should be at this ceiling. And when we spoke,

the ceiling was higher. And therefore, it's like, oh, that means that there's more debt that we have to. Sorry, what does ceiling mean? What are you referring to? Just in a sense of, I thought that the debt, that level, and it turns out to be at the higher level right now we're probably at $50,000 in debt of credit card that... 5-0? 5-0. Okay. I want the clean slate every month.

So like you've talked about in your book, like utilizing credit cards as an account versus because you can use them for certain things that are very beneficial. And so I think you do it that way, but if you don't have a plan in place of what you're putting on the cards, then it can get out of control. And so- Is it out of control for you now? Yeah, I mean the amount, yes it is. Okay. Anything else that Issa is not out of control? Yeah, I mean the amount. Yes, it is. Okay, anything else that is or is not out of control? Well, thanks. I feel like right now, but. Tell me. Yes. I mean, just we sold our house.

Actually, sold our house, but in May, and moved into a rental house with the goal of building. It's been a lifelong dream of building our own house. We had to switch cash. Sorry, we had to, we've had a really tough year. And so we had to switch our school because they went through a lot of stuff. They're in private school and they went through a lot of stuff at their old private schools. So we had to switch schools for them. So I think that out of control is just level stress and not being very outside of our comfort zones right now. And my business is maintaining

and so, but I lost a pretty big account in October. And that dropped my income in half. Yeah, almost a half. And then my income for my business has kind of steadily gotten down, not much, but a little bit. So, it's just, there's just but a little bit. So it's just there's just been a lot of stress. And so and I don't I really struggle when I can't control things. So.

How do you react when you have more and more stress like this? What do you do? It depends on the level, but I end to get depressed and I start withdrawing or I blow up. It's usually blowing up at Kevin. And this has bluntly caused an issue in our marriage is where professionally, I has been so head-down that there are moments, more than moments, that in our mental life where, I didn't see her going through these times until she blew up or until it was verbally cool to me.

And in the meantime, I'm thinking, oh my gosh, this is happening. And that means I need to double down and buckle in into my work so that we can come out of the better end together, but she's suffering because of that because she's not getting the support emotionally. So, this is full transparency here. I really appreciate it. It really helps me understand the dynamic here. A few things to note. There's a lot of emotion in their description of money, a lot of history.

And I'm going to spend time trying to unravel it. Along the way, I suspect that Kevin and Sarah will get a better understanding of what's really going on. Because when something like money is covered in emotion, it's easy to lose sight of the real issues. It's like a bad relationship. Everything feels existential. You'll also notice that there are some clues. Something about their girls, something about Sarah's dream of building a house, something about Kevin having the best year of his career last year. We're going to get into all that and we'll get into all the numbers. But I think it's important for you to know that Kevin and Sarah are high earners.

Keep that in mind as we continue on this conversation. I think that money is a foundational struggle for us because we can't sit down and have a non-emotional conversation. Or it's very rarely that we can do that. Is that the dream to have a non-emotional conversation about money? Yeah. Okay. And if you were to have a non-emotional conversation about money, what would that look

like? Just sitting down together over wine or dinner or out to eat or, um, just in the living room and talking about the spending and the things that we've done without, um, criticism or feeling put down. Um, who feels put down? I do. Okay. Okay. So you'd have conversations without you feeling put down. What else? Feeling as an equal in the conversation. And having a common goal. And we do, maybe it's more like a common plan. Maybe that's a better way of putting it. Because we have, we both have the goal, like we're, we're committed to when to build a house and when I travel and it's all rich light, but we don't have a common plan

to get there. What has stopped you from making a common plan towards an already common goal? We don't speak the same language. Ah, well language, do you speak? Well, we don't. Actually, those completely speak a different language, but I, he speaks numbers and like, it's just very, this is how it is. I mean, a perfect example is he was like, can't you just transfer

the money over to the credit card? And it, I don't know why that is very hard for me to do. He's like, it's just a button, click a button. And I'm like, it's not that easy. There's a lot of emotion behind it. So he speaks the language of numbers and what language do you speak? Emotions. My childhood was very much all emotions when it came to finances. My parents divorced over finances.

Like, there's a lot of baggage. I want to talk about how you were raised. I find it very interesting that you speak the language of emotions. You were raised with emotions, but you told me that your number one goal is to have a non-emotional conversation about money. Because, yeah, because I don't want to cry through every conversation or avoid or yell at each other. I want a, maybe it's not emotional, it's positive emotion. Ah, that's different, right? I did, yeah. Because can I just say, I don't think there's anything wrong with having emotions about money.

Everybody does. Even Kevin, who's Mr. Numbers, I bet you he has emotions. Give me five minutes. I'll find him. Everybody has him. And I think sometimes we're raised with this idea that deep down emotions are weakness. But they're not. They're just human.

So can we reshape your goal? You said first that you want to have a non-, look what our money's doing, and we're going and look what we'll be able to do. It's so exciting. All right, I can get behind that. Kevin, are you down for that? I'm learning it down. Oh, yeah, I love it. Okay, good.

Okay, and when you two got married, how long ago was that? 14 years ago. Yeah, I was just celebrating 14 years. Oh, congratulations. Thank you. Appreciate it, that's awesome? 14 years. Yeah, I was just celebrating 14 years. Oh, congratulations. Thank you. Appreciate it. That's awesome. 14 years, amazing.

Okay. 14 years, three kids, fantastic. All right. A lot of you listening right now, beat yourselves up for things that are deeply held parts of your personality. Sarah basically started crying in the first two minutes of her conversation. Before minutes later, she tells me she wants to have a non-emotional conversation about money.

That's not gonna happen. That would be like me going to a French restaurant and saying, ooh, I'd really love to spend $89 on some poulets that seasoned with three particles of salt. It's not gonna happen. I want some fucking spice on my chicken. I'm not going to a French restaurant and Sarah is not going to have a non-emotional conversation. A better approach is what she finally said. She wants to have a conversation with positive emotions. Maybe she will later say that she wants to become comfortable talking about numbers. I can help with that.

But I'm glad we caught this now, because if you truly detest something about yourself, if you believe you need to fully extinguish it, it's gonna be very hard to actually change. The End Recently on the show, you heard me speak to Jennifer and Andrew. They were struggling to pay off their credit card debt,

and they had a bunch of subscriptions that they didn't even know about. Look, if you love having all these subscriptions and you can afford it, I'm all for it. But a lot of times when people actually see all the subscriptions they've signed up for months or years ago, they realize they need to make a change because they can redirect where that money is going much more towards their rich life. If you are wondering where all that money is going much more towards their rich life. If you are wondering where all your money is going, I want you to check out this episode sponsor RocketMoney. RocketMoney, formerly known as TrueBill, is a personal finance app that finds and cancels your unwanted subscriptions, monitors your spending, and helps you lower your bills all in one place.

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friends or investments, or you could use it to pay off debt even faster. Stop throwing your money away, cancel your unwanted subscriptions, and manage your expenses the easy way by going to rocket money.com slash remit. That's rocket money.com slash R-A-M-I-T. One of my favorite things to talk about is this concept of money dials. The areas where you love to spend money. The most common one is food, the next most common one is travel, and the third most common one.

A top money dial is health and wellness. Now I get it. I spend a lot on certain areas of my life. For me, I love hotels that falls under luxury, I love convenience that falls under having my food delivered, etc. And I also love the ability to spend on health and wellness, like a personal trainer or selecting where I stay by how close the gym is. Health and wellness is a top money dial for most of my audience. That's why I'm excited to partner with Ness,

who I want to tell you about today. With the Ness card, you can earn 5 x points on health and wellness spending at grocery stores, gyms, salons, pharmacies, restaurants, and 2 x points on everything else. Then, just like you use travel card points for travel rewards, you can redeem the points from your Nest card for health and wellness experiences. This could be things like a Chipotle burrito, to recovery gear, to an all-inclusive retreat. Now, in my own personal life, I love spending money on health and wellness.

I have a personal trainer. I get a weekly beard trim. I buy protein powder, and when I travel, I make sure to prioritize where I'm staying by how close it is to a good gym. Right now, Ness is offering a 50,000 point bonus to members who spend $6,000 in the first 90 days plus a $200 statement credit for health and wellness

spending. They have a special offer for our I will teach you to be rich listeners and extra 5,000 point bonus when you apply for the Nest card and get approved using the link nesswell.com slash remit that's N E S S W E L L dot com slash R A M I T offer and benefit terms apply. Sarah, will you tell me about how you were raised with money? What do you remember about growing up with your parents? What I do remember is there was a lot of turmoil

between my parents and my, especially with finances. My parents were raised very differently. And when it came to money and in general, and I read one of the biggest things, I was thinking about it earlier today was And I read one of the biggest things I was thinking about it earlier today was my sitting at dinner when it had gone out to eat my dad ordered a steak. And so there's four of us, I'm one of four. And my siblings and I were like, oh, well, we want steaks too. Do that. And my mom would either order nothing or soup. And we would find out, as I got older, the reason we did that was we couldn't afford it. And instead of arguing with my dad there in the restaurant, she would just let it happen.

And there were lots of times my dad bought a car without consulting her. And there were six of us, and it was a five-seater and it was like and then he'd go and buy TVs and just different things and It was always we can't afford it. We can't afford it and who said that my mom, okay and My dad my dad worked hard But we grew up on the poor side. He grew up very poor. If my mom grew up wealthy.

And so, it was very two different sides of the track. Can you think of any examples where that difference really manifested itself? I can, I know that some, that my mom told me about and that it like we would be they would not be able to pay the light bill. And my dad would say just go ask your parents for it. Oh wow. And your mom told you that story, not your dad. My mom told me that story, yes. And did they separate your parents?

Mm-hmm. When I was 16. Why then? Money and other things. I see. And who was the one who initiated this separation? I think my mom. OK.

OK. Looking back now as an adult, as a mother, looking back on how you were raised as it relates to money, what are the things that you take away? That my mom was just trying to survive. That was a big one. That

was a big one. That, um, there, that, I know my dad had a lot of struggles as a child as well, that he was never able to work through and it really was a problem. This is a generational issue, I think on both sides. And now as a mom and as a wife, and I'm not, I'm breaking that. And I don't want my children, only have three girls. And so I don't want them to grow up in their life and not know what I didn't know. I don't want them to be in these same positions to risk their marriages because they can't budget well or whatever. I don't want to end up like that. And I don't want us to end up like that. Do you think you're destined to end up like that? If we keep going the way we're going, yes. That helps me understand a lot. Thank you.

Kevin, what about you? How were you raised with money? My dad worked a lot. My last band that I've seen, he managed the money. My mom almost stayed at home. Once my dad's career really took off. She didn't need to be a teacher anymore and so she stayed at home. So that's what I remember for most of my life.

What did you learn about money? Now that you look back as an adult, what do you take away? Well, this is where it is. Through my life, I've never been educated about money. I saw it. I was around it. I wasn't educated about it. So I didn't grow up in this country, I grew up abroad and with that there's some culture differences, differences, right? But I didn't have an education about money, I just knew my dad took care of it. I just knew that to Karen. Sarah, you reached out because of a series of conversations. Describe it for me. What is the situation?

It sounds like you have together $50,000 worth of debt. What would you say in a sentence or two seems to be the problem that keeps coming up for both of you. Lack of communication and connection. I think that we have to find even more commonality than what we want for a money. We've got to come together on that roadmap. And let me ask you a question about yourself. Use specifically. What behaviors do you think you need to change in order to break that generational?

I think, well, what are the good ones in impulse? I impulse purchase. And usually out of emotion, or feeling like I deserve it. out of emotion or feeling like I deserve it. I think some of the things that I told myself about money. And I think probably just... Probably just... Yeah, I would say a lot of it's the impulses the and the The way I speak about it the way I talk about it and the way I think about it Be sure to watch her facial expressions on that last exchange. They are very revealing

This $50,000 of credit card debt whose credit card is that on? mostly mine All right, so you have a joint checking. Joint investment. Is that joint? It is. And then we each have, here's a 401k and I have a Roth. Great. All right, you have separate credit cards. So I'm just curious about like the bills, the day-to-day bills getting paid. For example, you're rent, eating out.

Like, how does that decision get made about who pays for what? Um, the rent that like to live our life under our roof, rent, utilities, all that kind of stuff. I set it up. I put it on my card. Except for the rent it went. It has come out of the checking count. So it's on the joint checking count. Okay. But anything that was going on could go a card. I just put it on the credit card. Your credit card. Okay. And then when it's eating out, it is, I mean, a lot of us for eating out is convenience, because we're pretty busy. And so it's, if we're all together, typically it's on his card.

If it's me with the kids, it's fine. If I'm ordering it's fine. It's there an app is probably so it's just like whoever's basically doing the thing is pulling out their credit card. Okay. Is this cause any problems for you? Quite a bit. Oh, it's I was like this is kind of a weird setup, but you both seem very calm about it. I'm like, is there any issue here? And then I go, is this a problem in both of you are nodding furious? Yeah. Okay, so what's the problem?

Break it down. What happened the last time you all argued about this? So if I think one way to add to the context is when we sold our house, we're able to be debt free. We sold the house, we're like X, that credit card, no more, that's a blah, blah, blah. And then we reintroduced it and there goes again

by behaviors where there's no plan set where we actually could get back to zero. And for a minute, we did it, but then there are some things that occur. Pull the trigger here, pull the trigger there, and they say, you know, it's the snowball. And in here, you are reaccumulating debt. Okay, let me ask a few questions about the pattern that you seem to be in. How much did you sell your house for?

A million 50. Okay, and how much did you take home after the sale? Just like three, three 69 or, nine or three, 96. Yeah, so somewhere on there. All right, at three, 75 in my hand. Let's say three, 75. And did that include all fees that you had to pay transaction fees, all that?

What about taxes? Yeah, that's what we walked away with. Okay, walked away with including paying taxes, et cetera, on anything that you owed. Yeah, minus 500 bucks that we had to pay for A to A. Okay, great. So 375, and how much credit card debt did you have at that time? 130,000.

Credit card debt? Yeah, because it was, yep. 130. And was there any other type of debt at that time? Student loans, cars. Cars multiple. Yes. Okay. And student loans, whose student loans? Mine. Okay. All right. So you had how much was it 130? All right, so you were able to pay all that off and you still had a couple hundred thousand bucks. Yes. Awesome. All right, great.

So, did you, was it kind of like a big thing in your household like, all right, we're paying off this debt? Huge. Yeah. Okay, what did that feel like? Amazing. Yeah, it did.

That's cool. Was it the first time that you were deffrey in your marriage? Credit card debt. Mostly yes, yes. I think it was completely. I don't know if we've been completely. We haven't been completely deffrey. Did you take the money from the house and pay off all the student loans as well? No, because we were the goal was to take the additional. We sat down and we decided we were going to pay off the credit card debt. And then the additional amount that we had left over, we were going to invest some of it, save some of it to have cash available for whatever reason. And then utilize that for down payment on land.

Okay. We didn't pay everything off. No. Okay. That student loan that you had, which you did not pay off, how much was it at the time? Right around 30,000? Okay. What was it? Interest rate, do you remember?

It's nothing. Right. I mean, it's low. It's zero, zero right now. I mean, okay, but back then this was six months ago. Oh What yeah, hold on let me get this straight. What the hell I didn't know about these timelines. Yeah, hold on I'm speechless Yeah, you paid off $130,000 of credit card debt six months ago. And now you have $50,000 of credit card debt just six months later. Yeah. Whoa.

So what happened? Um, life. Wait, okay, this isn't, this is like, if this was five years, I would be like, all right, yeah, life happens. But six months, we can figure this out in like 25 seconds. Let's just do it right now. Okay, life happens. All right, life, not that much life happens in six months. So let's break it down. What vacations did you take in the last six months? Well, we pay for crews that we have coming up How much is that ballpark?

7000 I think what do you think what number do you think I would pick to write down here? How much is your cruise gonna cost cost? You said $7000. What do I think the real number is? Eight? No. $8500? Higher. Kevin?

11, 11, 15. Okay. Love out palm on it. Okay. So let's say 11,000. What else do you spend money on the last six months? Business stuff. This is, that credit card debt is including the business cards.

OK. How much do you spend on the business? I think it's 15. OK, 15 on business. You spent that on a credit card. OK. What else? Eating out, you mentioned? Eating out. That's a credit card. Mm-hmm. Okay. What else? Eating out, you mentioned?

Eating out. That's a big one. How much? Three to four thousand a month. Four, let's say four thousand a month. What else did you spend money on the last six months? Yeah, I'd surgery in July. Okay.

And so a big cost was post-care. Okay. How much was that? I was spending, I think, almost $1,000 a month. For six months. To survive, for five. Wow, okay. And are you doing all right? Okay, good to hear.

Okay, anything else? Christmas. How much? I don't know. 110,000. What are we talking about? Work out for them. Anything else clothes you mentioned, Sarah? Clothes. This is actually the first time we've had to buy a large amount of clothes because our girls were in uniform before and the school had like a hand-made-down thing. So in August we spent I don't know maybe two thousand on clothes for all three of the girls. Okay. I'm trying to think what other I've had some trips with my business. The one in September was about 2000.

Okay. Uh, Cabo was my light, which I spent quite a bit on my flight. How much? 3500. Okay. What else? Um, and what else? August, September, October, just little coaching.

Oh, yeah, business coaching. How much was that? It was 1700 a month for six months. And then now it's 900 a month for six months. Let's just say a thousand a month just for easy math. So that would be 6,000, would that be fair to say? Yeah. All right. All right.

So if we add up all those numbers, what do you think we get? A lot. Any idea? Just take a guess. 30. Okay. 35. 30. Well, which one is it?

30. Okay. 35 since it's a lot of the larger numbers. Let me finish calculating these. $72,500 in the last six months. What do you think about that number? Wow, that's unexpected. All right, I need to lay down the fucking law here for a few different items. unexpected.

All right, I need to lay down the fucking law here for a few different items. Can you see that affirmations board behind Sarah? They just spent $72,000 in six months putting them back into credit card debt, but she has these etsy affirmations behind her. These posters. Here's what they say. this year will be different. I have genius inside of me. I have something the world needs. It's like affirmations are nice, but sometimes you need to look at the fucking numbers. Notice the details. Remember how I always say, the best predictor of your future behavior is your current behavior and people get mad at me over me that's not true I can change everybody can change well maybe but it's hard you'll also notice that Sarah is using the innocent dough technique to evade actually acknowledging what they're spending on you don't know what the innocent dough technique

is let me explain imagine a wide eyed bamb? Little old me? I have no idea what's going on with our money. I don't know. That's the innocent doe technique. And I can tell you because if it was five years of spending, okay, we could figure it out. It would take a while. They ran up 50K of credit card debt in six months. It took us three minutes to figure this out. Some of you have been procrastinating on some money question for 13 years that would take us 15 seconds to find the answer to. You could join my money coaching program. Let's solve it right now. You'll also notice another clue. She has a verbal tick of giving ranges, three to four thousand dollars. That means four thousand, more likely seven. You know why? Because she doesn't want to count phantom costs in.

A cruise isn't just what you paid for the room. It's the drinks, the extra food, the excursions, the flight, the hotels, all of it. Add 50% to the sticker price to be conservative. That's exactly what I add whenever I stay at a hotel or whenever I look at buying a house. So there are a lot of clues in that short exercise that really reveal a lifetime of attitudes and behaviors that Sarah has bought into. You mentioned that there are two issues that you have with money. One is impulsive spending and two is the stories you tell yourself. Yeah. What are the stories you tell yourself about this spending? That is all my fault. Yeah. What is that story?

Well, it's just, oh, if I hadn't done this, we we do. It is, put a lot of, I guess, guilt and stuff on myself for seeing the credit card building and saying, like, oh, we shouldn't have done X or we shouldn't go on trips or we shouldn't do these things. And then I think about the way I grew up and I was like, well, screw that because I want my kids to have a different life. We didn't do trips. we didn't do fun things.

I want, I don't want my kids to feel like that they, we can't go by close, because we don't have any money. And so I just ignore it. and ignore it. And... Because I just want something different. Something different about what? And what I had growing up. How long ago was it that you felt that way

when you talk about growing up? What year was this? up. What year was this? Um, I mean, really between like, caution, what I can remember like, it was pretty much my whole life. And that feeling is what that we don't have enough. I can't have X. What are the feelings that you're trying to escape from? I think they are embarrassment. Confusion. embarrassment, confusion, frustration, and sadness. There's a lot of sadness about money.

There's a lot of sadness about money. And have you also spoken to therapists? Some. Some actually have started therapy back again. How do you believe that you stack up to other people in terms of your income and your expenses. I think income wise we're pretty comparatively comparative. Yeah. What would you call yourselves? I don't understand the question.

Are you waiting? You're middle class. Your middle class. In terms of income. Okay, now we're upper, upper, upper middle class in terms of revenue. Just strictly revenue and other people manage. There's another piece to this we haven't talked about is that Kevin has an inheritance coming in.

Really? This year. What? How much? It depends on the exchange rate. Yeah, it depends on the exchange rate. But not that much. Three to four hundred thousand?

Yeah, we'll keep it like that. All right. Good. Something like that. So it's a sizable amount. Mm-hmm. Okay. That's interesting. I did not know that. And what's the plan with that money?

Well, that's what we want to talk to you about. That's the thing. No, not there. We're not asking you to solve our lives problems. We need to hit a two hour span of conversation or however long we'll discuss, but at least is addressing these behaviors that we have so that we don't swallow to your point using the word bizarre velocity.

What's beautiful is we don't continue this velocity in which is going to eat away. What would come in? Yeah, that's a great concern because you actually know exactly what will happen right now because just six months ago you had the exact same amount and it's essentially gone. So we don't want to make that mistake again. All right, let's go through the full conscious spending plan and evaluate it. through the full conscious spending plan and evaluate it. Who put this conscious spending plan together? We did it together.

Good. How was that process? I think because we both were like, we sat down and we were looking at the numbers. It was overwhelming, but it was a civil conversation. That's good. Let me recap their numbers here for you, okay, because something is missing. Their total net worth is $150,000. They have 100K in assets. They've got two cars, a Ford Expedition and a Tesla, they've got $137,000 in investments, $93,000 in savings, $179,000 of debt, 30K of which is student loans, over 50K of which is credit cards, and about 100K left on the car loans.

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people in debt do not really apply to you anymore. And it can also be embarrassing to ask. You can't really post about certain topics when you have money because your friends don't know how much you make. And nobody really wants to hear about, how do I take cooler vacations? Or what do you all do for tax optimization? Because the first response is, oh, rich people problems. I don't like that phrase because rich people problems are problems nonetheless.

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will hold a brief Zoom call with every potential member to make sure it's a fit. Go to longangle.com to learn more. That's longangleangle.com. Today's episode is sponsored by Element, a very tasty electrolyte drink mix, and I want to read you a response that I got from one of our readers who started using Element recently. His name D, he wrote, You convinced me to try element, and I'm pleasantly surprised by how much I enjoy it. The magnesium is really helpful for managing headaches and getting quality sleep, but it tastes so much better than I was expecting given the salt factor. This will be my new go-to for workout recovery and the blistering Florida summer heat.

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Right now, element is offering eight single serving packets free with any element order. This is a great way to try it all eight flavors. Get yours at drink element dot com slash remit. Try it totally risk free. And if you don't like it, they'll give you your money back. No questions asked. You have nothing to lose. This deal is only available through my link. Let me give it to you again. Drink L-M-N-T dot com slash R-A-M-I-T. That's drink L-M-N-T dot com slash remit. All right. Let's talk about the income. I found this one very interesting. All right. So Sarah, what's your gross annual income? Annual income. And then last year, I will bring in just under 100,000.

I will bring in just under 100,000. Just under means what? Just tell me an number. Sorry. That's great. 70. Also, 95. 95,000. OK.

And Kevin, what about you? This past year, 214. What? Well, mine was, I'm contracted. Okay. A contractor too. So it's like where my income is coming in. So that monthly number is current.

Three months ago, it was at, I don't know, 11,000? What? Because I lost a contract. Okay, so you, but collectively, the two of you are making about $309,000 a year. That's what I'm trying to say. Yeah, this last year. Okay, and this year, what will you make? I don't really know.

Ballpark. If I hit on my goals. No, because you're probably not going to. Most people don't. Um. Probably the same. I'd like to be I'd like for it to be higher, but probably the same. I'd like for it to be higher, but probably the same.

That would be 95,000. There must be something else going on here. There's just so much squirming in Sarah's answers. I ask how much she spent on the cruise, she gives me a range. I ask how much Kevin's going to inherit, she gives me a range. By ask how much Kevin's gonna inherit, she gives me a range. By the way, 300 to $400,000 is her range. I ask how much she's gonna make this year, she gives me a hypothetical.

This is a great example of what I mean when I say, to live a rich life, you have to be honest with yourself and honest with the people around you. You have to learn how to pick numbers that make planning easy. You can get them wrong. That's okay. You can correct them later, but you have to have a logic for picking some numbers instead of letting them simply hang out in the air and never making a decision at all. So this year, last year you made 309. This year you're both going to make 309.

Fair? Is it make it difficult to plan when you don't know what the numbers are gonna be? Yes. Yes. Is that an issue for the two of you? Yes. All right. Do you want me to give you a little solution for that?

Yes, please. Yes. Okay, because I hear couples, they agonize over this shit and it drives me insane listening to you. Like right now, just listening to the two of you, my fists are curling up. I go, look, I don't need the exact number. I just need some fucking number that you both feel confident about. And that's not your fault. I'm not blaming you. It's actually psychologically very difficult when you're a contractor or you have different clients. I get it.

Okay. What we want to do is we want to pick a number that we are absolutely certain that we can get. Okay, that's the number we're going to work off. That's our baseline. So if you get a bonus at the end of the year, don't include it. Just the number that you know you're going to get. If you have 10 clients and you think three might churn, hell, give yourself a little room to,

you have five clients now instead of 10. That's your number. But it's a number that you know for a fact, you're 99% confident you can get, 95% confident. And then you work off that number and anything that comes on top, any annual bonus, et cetera, that's icing on the cake and we will create a separate thing on what to do with that money. Okay. All right, because otherwise you're just gonna drive yourself insane. Yeah.

That's what I think, so. And honestly, it's like, we just got to pick a number that we know we can get. And let's work with that. The rest of it's icing. So what's the number? Right now, you told me 309,000 this year. That seems a bit optimistic. I think 95 is right for me.

Okay. Kevin? I'll be conservative and say 190. 190. Okay, I just want to point something out. This is really funny. So how long has this been driving you crazy? We're not sure about how much we're going to make. Probably the last three years for me. What the fuck?

Do you know that the difference between the two numbers we picked three years from now. What the fuck? Do you know that the difference between the two numbers we picked is literally $24,000? That's nothing in the grand scheme of how much you make. $24,000, that number, that's the difference between 309, 285. That is the number that has been stopping you from just saying, this is our certain number. 285, that is the number that has been stopping you from just saying, this is our certain number. The lesson here is to stop letting tiny barriers get in the way of your rich life. It's like two parents saying, gosh, we really should get a car seat for our baby. But first we need to make sure we have the right baby food.

And also, what if we get the wrong fabric on the baby seat? And also we need to talk to grandpa about baby sitting. But first we really need a baby proof the bathroom. It's like, just go buy the baby seat. Go get the wrong fabric on the baby seat. And also we need to talk to grandpa about baby sitting. But first we really need to baby proof the bathroom. It's like just go buy the baby seat. Go get the best one. Go get the fifth best one. Get all of them. It does not matter. So many people waste their lives letting these three dollar questions get in the way of the actual point of money. And even if you get it wrong, so what? You can fix it next year. You can fix it tomorrow, but at least make a decision. One of the worst things that I hear when I speak to couples is indecisiveness.

And it's indecisive from everything like a $5 purchase, you know, or all the way up to what should we do with $5 million that's sitting in our checking account. Building the skill and the habit of being decisive is one of these single best things that you can possibly do for your rich life. Okay, so can I just say you two make a lot of money? You guys make $300,000 a year? So what's really going on here?

It's not an income problem. You ever see those people on TikTok? They're always like wearing these horrible ties. I'm like, first of all, get a new fucking tie. Second of all, who taught you how to tie that tie? And I'm not even the best tie tire, but I'm like, that looks like shit. And these guys are always saying the same thing.

There's a hedonic treadmill in the United States. And if you make more money, people always spend more money. I go, shut the fuck up. But the problem is you're actually doing that. You're the example they're talking about on TikTok. You made more money, and then you started spending more money You're violating my own rules Okay, so look can we fix this please because it makes me look bad if somebody goes out in the public They go remeat satis readers. They are on the hedonic treadmill. I go ah

So tell me this what do you need to do? I pay off the debt. Okay. Bet. Yeah, I mean, the double digits credit cards are going to kill us, so there's no, the double digits credit cards is gonna kill us, so there's no ways around it. So the first one is to eliminate the credit card debt. What's the savings?

Yeah. Okay, that's a possibility. Let's just stay at the high level. So one thing you both know that you want to do is pay off the credit card debt. Fantastic. Okay. Let's not even get into the how, but yes, I totally agree. That's a really important thing to do.

Are there any other things that are really important for the two of you to start doing? Saving for the girl school next year. What? What? Where'd that come from? We haven't talked about that at all. No, so they're in private school. And so we have to switch their school. It's for all three, it's about without financial aid.

It's about 55,000 a year. What the fuck? How are these secret expenses coming up right now? 55,000, what else? This next year, I think that's it. That's all. The two. Don't you have to make a donation to these private schools too?

No, okay, she's like struggling. Yeah, all right. Okay, so 55, where's that money coming from, by the way? So this was our first year and we used some of the house, the money that we, when we sold the house, we used it to pay it for the first year. And where's it going to come from next year and the year after and after that? Great question. That's we're asking ourselves the same question. This is absolutely blowing my mind right now. They signed up for a $55,000 a year private school without being able to pay for it. I don't even buy lunch without knowing how to pay for it.

They committed to 10 plus years of $55,000 a year and they can only afford one year of it. You know, there's this idea floating around the financial world that people who make a lot of money always spend it. Like there are so many Americans making multiple six figures and just living paycheck to paycheck. I don't really love that concept because I know a lot of people making 100K, 250K, 500K who are extremely disciplined about money. But, Kevin and Sarah are doing exactly what all those people talk about They have a high income and they are spending every last cent and more and worst of all their attitudes towards money will likely keep them broke for the rest of their lives

The problem school is difficult because it's something that both Sarah and I agreed on very early on the something that both Sarah and I agreed on very early on. The school system that we're in currently isn't bad, but we have recognized that our children do better in smaller settings than larger settings. So the before this prior year, we were able to manage it through auto budget and it was manageable. We only had two children go in there, it was duple. This year, it was an increase,

significant increase plus an additional child. And so hence the big jump. So how do you think you can handle it? Yeah. Uh, uh, make more money. Make more money is the only answer. What do you think of that answer? I want it to not be the only answer. Okay.

But it's the only one that I can come up with. Okay. Or. Do you believe yourself when you say that? I. I think, yes, but I think it's because we've been so in the weeds, like you were saying, that we can't be thoughtful and creative about options if it really was that important to us and making changes, making significant changes, if that is what that important to us and making changes, making significant changes, if that is what is important to us. But now we're switching our mindsets,

about some of this stuff. Well, that's good. I don't like this line of thinking for several reasons. First of all, how much do you need to make to pay for the kids school? Fifty-five thousand? Nope. What about taxes? Oh yeah. Oh yeah. So 75, 80, 85,000, whatever the number is, you're already making a lot. So you're at a high marginal tax rate. And we, you know, we don't need to calculate that right now but it's more than 55,000. Like a considerable amount more than 55,000. That's number one, lack of thought into this.

Number two, I don't like buying something and then saying we'll figure out how to pay for it later. That is a terrible decision to make. You know, haven't we all heard people say like, don't go into debt for a wedding? We've all heard people say that, right? Did you guys go into debt for a wedding? Not really. Okay. Isn't this basically the same thing? We're going to commit to $55,000 a year, but we don't actually know how we're gonna pay for it. And it's not just for one year, is it? No. How many more years is it for?

Well, probably at least. Yeah, it's over half a million dollars. If it is truly critical to you, then maybe we can find a way to make it work. It's possible. If you tell me that, we can look through your numbers and maybe we can find a way to make it work,

but I can tell you that it would involve you radically changing the way you live. Have you both entertained the idea of potentially not doing this private school? Um, the only other option that I would entertain is homeschooling. That's it. Yep, I'm not putting a hit them about that school. That's a conversation that we really have to get into and make that decision. I mean, make the decision and make

it together. And I mean, but I think we need to kind of live in the scenario of what that feels like, of cutting back the things. I mean, I think we need to do that anyways, regardless of the school piece, but if we take that out, what does that look like? And if we keep that in, how does that feel? And I think we need to live in that. And have that, because we've never really done that.

We've never really had the conversations and sat down together and said, okay, are we going out to eat this week? We haven't ever really felt that pain. And I think we need to decide if it, I think we need to feel it to the side of its worth. Let me summarize, Kevin and Sarah make over $300,000 per year. They sold their house, they paid off $130,000 of credit card debt. Yet six months later, they were back in $50,000 of credit card debt. They recently committed to 12 years of private school at $55,000 a year, but they have no idea how they're going to pay for it.

I truly hope you're getting a chance to watch their facial expressions on the YouTube version of this podcast. Because the rest of our conversation is surprising and eye opening. And you can hear the rest of our conversation is surprising and eye-opening. And you can hear the rest of it next week on the I Will Teach You to Be Rich podcast. I will see you then. Thanks for listening to I Will Teach You to Be Rich. I'm Ramit Saiti. 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. to your personal finances.