274. "We have a newborn and 89% of our income is already spent...Now what?"

0:00Ramit Sethi: You have zero going towards savings, zero for investments, you have debt, and a baby. If you literally just continue on this path, you will hit a brick wall. How long have you been in debt? My whole life. I'll get a paycheck, just pay it off, continue the cycle. The two of you make$102 ,792. What do you think of that number? That's enough to not be in debt. So why are you where you are? Mismanagement, poor decisions. He didn't have as much money as I thought he had because he's trying to pay this loan off secretly without me knowing. Oh. Do you trust each other? No, not fully. We've had a lot of stuff.

0:42I haven't prioritized the safety and stability of my family.

0:47Ramit Sethi: Guys, it's going to take you a lot to build a healthy relationship with money. You will not walk out of this room without making dramatic changes. Is it too late to take control of your money? I get a lot of questions from people wondering that and wondering how they can catch up because they didn't start in their 20s. Now, this is challenging, especially if you don't make hundreds of thousands of dollars. And that is exactly the scenario that we are gonna talk about today. Meet Shelby and Calvin. Calvin is 43, Shelby is 31, and they feel trapped by their financial situation. Shelby applied to speak with me, and let's take a look at what she wrote.

1:28Ramit Sethi: We are unable to plan efficiently and realistically for the future because we have no savings, Calvin has no retirement, and now we have a baby to support. This sounds like a lot. It honestly sounds overwhelming, and having a baby with no savings is terrifying. Let's take a look at the numbers. Assets,$17 ,500. Investments,$9 ,000. Savings,$3 ,500. Remember, they have a baby. And debt,$20 ,326. Total debt worth,$9 ,674. Fixed costs are at 87%. Right there, that explains how they likely feel about their money. Feeling trapped, feeling overwhelmed. Investments at zero, savings at zero, and guilt-free spending at 13%.

2:19Ramit Sethi: There's something important that I need to flag for today's conversation. there's no magic wand that is going to make us be able to go back in time and change their financial situation 20 years ago. Here we are. These are the numbers. It's going to be a tough discussion. So I want you to prepare for that because there are no secret shortcuts to what's about to happen. So to answer the question that I first asked you, is it too late? Of course not. You can always make changes with your money and with your life. But sometimes when you are making jointly$100 ,000 with very little in savings and a new baby, it's pretty hard.

2:57Ramit Sethi: We just have tough decisions that we're going to have to make. Let's take a look at what happens. Let's meet Shelby and Calvin. Shelby, you applied to speak to me, right? Yeah. And I remember that you told one of my producers that you were trying to plan for the future, but you discovered some hidden debt. Can you tell me about that? Yeah. So, Calvin let me know. He had taken out a personal loan before, and I was informed that he paid back that money. But I found out six months after or so that that personal loan was not paid off. Oh. How much was the amount that he told you? It was about$5 ,000.

3:39Ramit Sethi: Yeah. Correct? Yeah. And what did you feel when you heard that? I felt a little frustrated. It always sucks to be lied to. But I took it with ease and just started planning how we're going to pay this off. How did you discover that the loan was not paid off? We both got off leave for our baby. And we were talking about how, like, I was confused. Where was the money? Like, I thought we were better off than we were in the moment. and I come to find out the reason he didn't have as much money as I thought he had at the moment was because he's trying to pay this loan off secretly without me knowing.

4:26So once he said that, your reaction was? To start planning on how to work through it.

4:34Ramit Sethi: You didn't say anything like, hey, how did you not tell me that? Well, yeah, of course. What'd you say? It's hard to remember exactly. She was upset. that she just let me know that, to not keep those kinds of things from her in the future. It's better that it's out in the open so we can take care of it. And looking back, why did you keep that debt a secret?

5:05Probably embarrassment, mostly. Um, I initially took out the loan to purchase a ring for her. Um, and then we kind of had some difficulties picking one out and finding, you know, uh, the right one. And I was supposed to just take all the money back, but I ended up paying off some other debts from my, uh, previous marriage. Okay. Got it.

5:35Ramit Sethi: So you have a baby you mentioned. How old is the baby? Eight and a half months. Eight and a half months. Congratulations. Thank you. And are you two married or no? No. No. Okay. And how long have you known each other? It'll be two years, November. Eight, yeah. So like a year and a half or so. Yeah. Okay. All right. Where are you with your finances today? Probably like a layoff or a firing away from needing welfare or help. Wow. We live very separately financially as often as like I tried to bring it together, which, you know, I've tried like Sunday finance meetings and things like that. I don't know how much money he has at any given time.

6:19He doesn't really know how much I have. We just understand that we're paying off, you know, we're paying our bills.

6:27Ramit Sethi: So how would you describe that? Like, how does that feel? I feel like I'm in the dark a lot of the time because he is the primary, you know, moneymaker in our relationship. I put my trust in him that he's paying the bills that he pays and I pay the ones that I pay. If you had to describe your relationship with money, with the two of you, in a word or two, what would you say? Uncomfortable. I agree. Okay. What is the role that each of you plays in this relationship with money? I'm the planner, the instigator of like financial conversations. I like to learn about money. That's, you know, that's something I've always been into.

7:14And I like to bring it up maybe too often.

7:17Ramit Sethi: Ah, how often? Multiple times a week, probably. Got it. Okay. How about you, Calvin? um i would rather just send her my paycheck and not have to deal with it not have to talk about it and just get it done and yeah do you do that not yet oh why'd you do it um i don't know i'm just trying to bend up and trying to kind of get caught up on personal like credit card stuff um trying to do it on your own yeah yeah in my own relationship, when we first met, I was an optimizer. Like I've freaking spreadsheets and like, okay, let's talk about our compound interest, which I still do. I love it. What I realized would have been more helpful for me would not be to create yet another spreadsheet or calculation, but actually to connect with my wife, to hear what she's saying and to be able to create a culture where we can speak in a way that we hear each other.

8:24Ramit Sethi: You know, that's what I needed to do in my next role. What would it be for you? What role would you have for the next chapter of your lives together? I would like it to be for her to just kind of take the reins on that and kind of be looped in. And what would your role be? Provider. Provider means you make money. Yeah. And then Hand it over to her Yeah Okay Shelby I want it to be a partnership So I don't want to be the only one Doing the work with the money afterwards Like I want him to also Educate himself on How to deal with it Rather than Me be like the leader What do you think? Are you two compatible?

9:10I'm okay with her Leading in the finance Because that's her Area of strength if I could just be there to come alongside her and like be looped in to make decisions I'm poor with money so like I feel like that would just be a better situation altogether just to not have my hand in it at all what did she just say though I heard what she said she would like it to be a partnership, but I feel like in that way it is. Like in a group, there's people with strengths and there's people with weaknesses. If, let's say we're writing a paper, if your strength is punctuation and, you know, sentence structure, then you would be the person writing, right?

9:57So…

9:57Ramit Sethi: What would the other person be doing? Maybe research. Maybe… I don't know. You know, gathering information for the person to write. I take your example. What's the chore that one of you does? You take out the trash mostly. Taking out the trash, I can understand. But it would be a little weird if it was one person solely doing baby stuff, right? It's just not really appropriate these days. We're both involved. We both want to be involved. Money is very similar to a baby. It cuts across everything. It's where you live. It's what you eat. It's what you're able to do. It's how much safety you have, your roof.

10:33Ramit Sethi: So I will gently challenge you that your vision of where you would like to be, right off the bat, that's going to be really tough. I don't see any couples who are good with money where one person goes, here you go, you deal with it. How does that strike you? Yeah, I understand it. Okay. Would you be open to participating with the money? Yes. That was tough. That was like a whoa, big breath. What was that? Like I said, I'm not good with money. like were you good with a baby before you had a baby yeah I'm the oldest of 12 so I've been raising kids since I was a kid so whoa were you good back then with a little sibling I don't know probably not I mean they didn't die so in that way you were great like the first time you meet a baby certainly the first time you have a baby you're not automatically good right it's a skill same thing with money I'm trying to demystify money because I know that for some people like they're really good at sports.

11:37For some people, they understand nutrition.

11:41Ramit Sethi: And we kind of get that. We're like, okay, like you're really good at sports. But what we don't realize is, oh, there was a lot that went into that. They've been running since they were a little kid. They played with their parents, all that stuff. Money's a skill just like anything else. And it might feel like, you used an interesting word earlier, you said, I'm poor with money. I want to hear more about that. But obviously, there's some things you have gone through with money, which we'll talk about. But it's a skill like anything else. And so the important thing is that we all agree you two want to be partners.

12:15Because if you want to be good with money, you've both got to be in it.

12:20Ramit Sethi: Okay, here are the clues that I'm noticing already. Shelby wants more transparency. She wants more access. She's trying to convince her partner, please participate in the finances. Calvin says he wants to be a provider. He also says he would like to not really have to think about money at all. In fact, he'd rather just give the money to her to manage. And yet he hasn't done that. So there's something going on here. Let's see if I can find out more. Do you trust each other? Yeah, I trust her. Okay. Shelby? No, not fully. Okay. Is that because of the secret debt? That didn't help. I mean, it's a little lie that builds into, you know, breaking trust.

13:05Okay.

13:05Ramit Sethi: I appreciate the honesty. It's like, we're here. We might as well just be honest with each other. And then we can try to figure out what we can do about the situation. What would it look like to be able to trust Calvin?

13:18Ramit Sethi: Take your time. Sorry. No need to apologize. Thanks. Take your time. I don't really know. What's going through your head right now? We've had a lot of stuff. I recently broke trust in our relationship. I was having, as you can say, emotional relationships with women and was not honest about things. So that has caused a lot of mistrust. Got it. Shelby? Yeah. Is that accurate? For the most part, yes. Okay. Have you all spoken to a therapist? We are in the works. Actively, good. We're in the works. Great. And where are you in your relationship? We're together working through it. that, you know, we don't know where we're going to end up, but we're trying to end up together.

14:22Ramit Sethi: Got it. Okay. Thank you for being honest. That really helps me understand the background of what's going on here. I'm not a couples therapist. I'm glad you are seeing one. That's awesome. The thing that I can help with is money. So although all of this is tied together, obviously, you're here to talk about money. So in light of what you have just shared, is it okay if we focus on the money part? Yeah. Okay. Look at Calvin's body language. A lot of deep breaths, a lot of low energy. It's telling me that he's not comfortable with money. And while he has shown up here, which I appreciate, I get the sense that he does not like talking about money at all.

15:08Ramit Sethi: That has implications for how they manage money together, as a couple. If you hate money or you hate talking about money, point blank, you're never going to get good at it. How can you get good at something that you hate? So part of what I try to do with couples is make them realize, hey, money isn't something that's just a bunch of confusing numbers. It's actually your ability to go out and order an amazing meal or put your kids in math tutoring class or be able to travel. Money is not just numbers. Money is your life, the one that you choose to create. I'm really curious to see what their numbers say.

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20:05Ramit Sethi: You can save your seat to join the call on August 20th at iwt.com slash events. What was it like putting this conscious spending plan together? It was a struggle for me. Yeah? Yeah. Because again, that uncomfortable feeling with money. What was it like for you, Shelby? I loved it. Oh, were you the one driving it? Of course. Okay. Who typed it in? Me. You typed it in, but you were asking him for his numbers. Mm-hmm. And what was the energy like that first time? I was excited. He was… Miserable. Miserable. He didn't know what to be there. Kind of like grumpy, hands crossed, that kind of thing? I just…

20:44Yeah, I was just like… I just didn't… I didn't want to do it. Okay.

20:49Ramit Sethi: Y 'all match energy on anything? No, not usually. Ah, so this is the dynamic. So you have Shelby who's kind of excited. And then Calvin, your energy is? It depends on what it is. If it's fishing, we're both excited. Okay. Nice. But if it's, you know, going over money, She's excited and I'm, you know, dragging my feet. Got it. Yeah. Okay. That's interesting. Let's take a look at the numbers. Shelby, will you read off the word in bold and then the number next to it for this entire box, please? Assets,$17 ,500. Investments,$9 ,000. Savings,$3 ,500. Debt,$20 ,326. logistics, total net worth$9 ,674.

21:41Okay.

21:42Ramit Sethi: What do you make of these numbers? It's rough. I mean, it's not great, but we're in the positive and I'm going to be positive about that. Okay. Are you always optimistic? I feel like I balance out whoever, you know, I'm working with, whether it be friends or a partner. So I'm going to be positive about it because I've seen his face when I tell him the number and it's not usually super happy, so. And do you ever feel it's okay for you to not be positive? Yeah, yeah. I have plenty of times, you know, I'm not super positive, but I try to keep it, you know, as light as I can. Okay. And Calvin, what do you make of these numbers?

22:32Ramit Sethi: They're scary. What part? Savings and the amount of debt. The$20 ,326, what type of debt is that? That's my car loan and some credit card debt. And the other. Oh, and the loans. Two loans. Two loans. $5 ,000 for the first loan. Yeah. And then? Yeah. Two, what was it? $1 ,500 left on the ring. Yeah, okay. The ring we ended up going. How much was the ring? Uh,$2 ,800. And how much credit card debt? I have like$200 and some odd dollars right now. Right now I'm up probably at about$600. $600. What's the debt for? Honestly, living. I took a new job and the earning potential is more at this new job, but it's not immediate.

23:29And my previous job, there was more money like upfront. So things were a little bit easier. So now it's like pay bills and then kind of living off of the credit cards until it's time to do it again.

23:45Ramit Sethi: How long has that been going on? About three months. Who's the one who charges the credit card? The 600 is his credit cards. We're separate. I usually pay off my credit cards by the end of the month. How long have you been in debt? my whole life. I can see the way you talk about it. Yeah. You talk about it like it's a mosquito bite. It's a minor nuisance. If I were in credit card debt, I would talk about it like I am drowning underwater. Is there a future where you change your behavior so that you're not in debt? I hope so. That's why I'm here. Good. Great answer. Okay. Let's go to the income.

24:30Ramit Sethi: Calvin, can you read off your combined gross monthly income? $85 ,66. Yeah,$8 ,566, which means that together, if we just combine for a second, the two of you make$102 ,792. Did you know that? We were in the ballpark. How much did you think? Well, it used to be like$105 ,000 to$110 ,000. Okay. But with the new job. It's less, but it could be more. Yes. Okay. What do you think of that number? It could be better. What do you think, Calvin? I think with that number, we shouldn't be where we are. Oh, tell me more. I feel like that's enough to not be in debt. So why are you where you are? Mismanagement, poor decisions.

25:21Okay, I like this. Which decisions? Mostly me. I don't have that sense of urgency when it comes to the debt. It's like, I don't know, I guess I feel like, you know, I'll get a paycheck, just pay it off, kind of continue the cycle. How many people that you know in your life are in debt?

25:47Ramit Sethi: Everybody. Yeah. So it's just part of life. It sucks, but it's just part of life. Yeah. Okay. For the breakdown on the income, I want to highlight a couple things here. So we have one person, I think this is Calvin, who makes$6 ,100 a month. Yeah. And then we have Shelby who makes$2 ,400 a month. Shelby, what do you do for a living? Right now I'm working part-time as like a bartender customer service at a bowling alley. Okay. And are you in school as well? I am. It's changed right now, but I'm going back in the fall. And how long will it take you to get your degree? Two to three years. Okay. Let's say three.

26:24Ramit Sethi: I don't like ranges. I always like to pick the conservative number. So three years, I saw somewhere in your CSP, you have some school costs. Is that for you? Yeah. Okay. So three years of that. And then will you be able to increase your earnings? Yes. How much? Drastically. Yeah? Probably, yeah. What do you think? Like how much would you make annually? I can make at least like 65 to 70K. No kidding. Yeah. That's a big deal. Okay. Good to know. Calvin, you're at 6 ,100 a month gross. Something about a bonus? Yeah. So right now I'm trending at my job towards a decent bonus. How much? I just started the job and right now I'm like five for six on sales.

27:11So it'll be probably around like$1 ,500 for that quarter. So probably like… $6 ,000 a year? Yeah. Ballpark? Yeah. Okay. What do you do for a living? I'm a project manager for a restoration company. Okay. Yeah.

27:24Ramit Sethi: Have you all talked about this number before? How much would this potential commission end up being at the end of the year? Yes, we talked about it. And you feel confident you can get 5K in bonus? Yes. Great. Now we're cooking. All right, let's go down to the rest of the numbers. Fixed costs, what's that number? 87%. What does that tell you? That we're not doing great. Yeah, you're drowning. Yeah. This number right here explains your anxiety with money because you're the one who manages the money, correct? No. For the most part. Wow. Interesting answer. One person says no, the other says for the most part.

28:01Ramit Sethi: This kind of explains part of the problem, right? Yeah. What do you all think? I don't manage the money. If I manage the money, I feel like it would be different. Oh, okay. And I know that's terrible to say, but that's how I feel. Why is it terrible? It's the truth. Because it's nothing. I don't want to down him. No, it's not downing me at all. It's the truth. if you were like, yeah, it would be different. Let me say it a different way. This is how I might say it. I might say, right now it feels really confusing because we both kind of do something with the money, but it's not really clear who owns what.

28:42Ramit Sethi: And if I were just in charge of it, I could probably at least have control over everything. I could make sure that the numbers fit. It feels a little frustrating that he won't go along with that. But what I really want is for both of us to be involved together. Did I capture that accurately? Yeah. Okay. Have you ever said something like that to him? I've told him I want us to be partners and by him just giving over a paycheck to me, it doesn't feel like it's a partnership. Agreed. What do you think about that? I don't necessarily agree. I don't want to not know about anything, but I just feel like in that area, like, she's better at it.

29:25Ramit Sethi: When you think about money right now, what do you feel about it? I don't know. It gives me anxiety. Yes. I didn't grow up with money. I didn't have, you know, much as a kid. I didn't have a, my own bed until I was an adult and out on my own. Like my relationship with money is like if i have it i want to enjoy it um now and that's just has that's what it's been since i like my whole working life so like i take care of my bills but like if i have money like i want to enjoy it yeah is it like easy come easy go yeah money's burning a hole in my pocket that kind of thing yeah and is that working for you no okay you still feel that way but you can also see that it's not working for you.

30:16No, I know there needs to be a change. I just don't know how to change it.

30:21Ramit Sethi: That's great. I don't mind that. I don't mind if somebody accepts that they need to make a change. They just don't know how. That part is relatively straightforward. I can help with that. It's when people don't really know they need to make a change or they're not willing to accept what it will take. I can't make somebody want that. Yeah. Let's take a look at the fixed costs real quick. So at 87%, you're drowning. You are effectively spending more than you make every month. And with a savings of$3 ,500 and a baby, if the income went away, do you know how long you would last? A month. Less. Like a couple weeks.

31:03Ramit Sethi: Yeah. Yeah. What would you do? I would have to figure it out. Let's just figure it out right now because it might happen what would you do well i've already been trying to get a second job so i would continue that okay she's really good at finding opportunities and and work and we can also ask family members for help if we needed how would they help probably with like a loan of some sort i don't like asking no family members i don't either for I don't either. So? I don't like waking up early, but I have to do it. What the hell? I understand. Not to joke about it. I understand there are family dynamics, but there are also things sometimes we have to do.

31:45Ramit Sethi: What I'm trying to get us to do is think ahead because it's quite possible. And I have learned that most people don't like to even plan ahead at all with things like career, family, certainly money. But you know what they hate even more? Is planning ahead for something to go wrong. they might plan ahead about a vacation they're taking or a car they're going to buy, but they almost never plan about, hey, let's get serious about what happens if one of us loses our job. You know what they say? We'll figure it out. And when that day comes, because it does come for all of us, they are so shocked and they have to go into panic mode.

32:25Ramit Sethi: I'd rather we just talk about it now and just get some plans out on the table. What do you say? Yeah, I mean, that's why. That's why you're here. Yeah. Okay. I can help. All right. Okay. So a couple other things here. On your fixed costs, I note like one person pays for one thing and another person pays for another thing. Groceries are more to you, Shelby, but he pays part of it. Yeah. How do you decide on this? I get cash tips. And so when we're shopping, like I shop during the day while he's out work, I generally like figure out what's for dinner. but we also sometimes he'll pay for the groceries when we're out.

33:05Ramit Sethi: It seems like a kind of a loose agreement. If we're together, I try to pay. Try means it's loose. Yeah, it is loose. Can I tell you all something? I f***ing hate loose. I hate sloppy. I don't like it. Not with like basic stuff like this because if we can't get dialed in on like who pays for groceries and how much, then how are we going to get dialed in on more advanced concepts like debt payoff, retirement, investment fees, stuff like that? Like we got to raise the bar. Are y 'all with me? Yeah. There needs to be a set of rules that are crystal clear. My wife and I have a rule about the dishwasher.

33:46Ramit Sethi: Not because we're punitive or we're like freaks. It's so that we know at 9am every day that dishwasher is empty. So you could be blind and you can reach in there and it's clean. We know that. I want you to have that kind of confidence about your money. The same way you know if the baby's been fed and bathed and all, you don't have to discuss it every day. You can decide. And if you need to change the rules, you can change the rules. It's your rules. But I want no slop. I want clarity. How does that strike you? something we've talked about. Yeah. Yeah. A lot. Oh, talked about it. A lot. So, Shelby wants clarity, I can tell.

34:31Yeah. We've tried different methods, especially with groceries. We tried to figure out. What'd you do? Like, let's keep all the receipts from when we shop so we can gauge how much we're fully spending on groceries. Let me guess.

34:45Ramit Sethi: No one ever looked at those receipts. Yeah, it didn't. It didn't. They sat on a jar. Yeah. Who wants to look in a jar? Who wants to look at receipts? Okay. Okay. It was a valiant effort. I appreciate it. So that didn't work. So then what did you do? Then I just moved to gauging how much of my tips, you know, I used. And then he did his thing. And I kind of just asked, what's the range? What are we working with? Okay. That's quite interesting, actually. So you first both said, let's figure out this grocery thing. And then who proposed the receipts? I did. You did. And then your response was? Yeah, let's do it.

35:24Ramit Sethi: Okay, great. So you went along, you put the receipts in a jar. When we had scheduled our finance meetings, we were supposed to pull them out and do that. Good. What happened? I did it. I did it separately from you. I kind of quietly sabotaged not doing this stuff. Why'd you do that? Because it's uncomfortable. Okay. Yeah. And so when things are uncomfortable, your response is? don't. Don't do them. Yeah. Yeah. So you sabotaged it. And then Shelby, your response was? I just kind of gave up. Yeah. I don't mind if things don't work. Like we're all trying stuff, right? We try lots of different stuff, but giving up, we can't do that.

36:06Ramit Sethi: We got to find a different way. And so if the receipts don't work, cool. We could laugh about it. Okay. This didn't work. Calvin, since you didn't enter it, you're in charge of coming up with our next strategy of how we're going to make sure we're on top of this. You didn't say that, right? No. You took it on yourself. Yeah. Of course. It's been made clear that that's kind of my role. Oh, is it? And you accept that role? I mean, yeah, sure. I find joy in trying to figure out problems. What if the very approach that you are taking with money in this relationship is actually co-creating this dynamic?

36:43Oh, it 100 % is.

36:45Ramit Sethi: Yeah? Oh, yeah. How so? I think I don't want to upset him. And I think if I pry or push too hard, I don't know what's going to happen. So you keep doing it, taking it on more. It's not really effectively working. You don't even know how much he makes, where he's spending, but you don't want to hurt his feelings. I don't want to deal with the frustration. What's the solution here? I don't know. For me to get uncomfortable or get comfortable with being uncomfortable. Okay. How? It's by doing. It's just words though. Because if you were just going to do it, you would have done it. Yeah. So what's the real solution?

37:28Ramit Sethi: It's not just like try harder. That's not a solution. I mean, this was the first step. Like I could have said no. Like I don't want to. That's true. It does take a lot to come here. I'm sitting here being comfortable with being uncomfortable. True. What's the next step? come up with a plan put it in action agree and then follow through okay i like this i like this do you agree you want to add anything shelby no that sounds yeah that sounds good we're going to take this um csp before we take it off screen i just want to point out we caught that the baby items were not being factored in so it increased your fixed cost by two percent you're now at 89 9%.

38:11Ramit Sethi: So you are effectively spending more than you make every single month, which is a huge problem. You have zero going towards savings, zero for investments, you have debt. I would say that your situation, I would call it dire. It's working in the sense that you can pay bills, but every month you are falling behind and you're hoping you get this bonus. But even if you get the bonus, it doesn't change anything. It's just money used for past expenses. If you literally just continue on this path, you will hit a brick wall. And with a baby, it's as serious as it gets. So can we all agree that you will not walk out of this room without making dramatic changes?

39:00Ramit Sethi: Is that why you're here? Yeah. I mentioned that over coffee. Tell me. This morning. Just like, things are gonna have to change after today. What were you envisioning? We like small joys daily. So like, you know, going to get coffee and, you know, things like that. Like we were really good for a while at cooking at home. It's kind of falling off, but just getting back on track with things that we were doing before and staying consistent. I'm with you. What do you think Shelby? Yeah. All of that. And? I think there needs to be like more transparency between the two of us because we both don't know each other's daily spending or whatever.

39:47Ramit Sethi: Yeah. Maybe. I think if you're living together, I think if you have a baby together, like these questions about transparency are like, it's happening. Like if you've seen a baby's ass, then what are we talking about? Like, come on. Transparency is the baseline. And I'm not trying to get you all to baseline. I'm trying to get you to a rich life. So it sounds like we all agree before anybody leaves this room, you're going to make some dramatic changes. Are we on the same page? Absolutely. Okay. Amazing. I don't think they understand how serious this situation is. This This is how so many people go through life until they hit a brick wall.

40:30Ramit Sethi: And if I take a look at the numbers, I am terrified. I see fixed costs over 85%. That's the ballgame right there. It means you're spending more than you make every single month. I see basically no investments and no savings, which means not only are they at risk today, but they are definitely at risk tomorrow. They will live in poverty if nothing changes. And then a new baby. A new baby introduces all kinds of uncertainty, not just financial, all kinds of other uncertainty. And so even if this couple had no baby and were operating at their absolute best, this would be a bad situation. But with a baby, no savings, no investments, debt, we are in a really bad position.

41:16Ramit Sethi: My gut take is that they are not really aware of why they do the things they do with money. So if I can hold up a mirror and help them really see their own relationship with money, that might help them change. What happens if you're away from home and you need to see a doctor? My coworker, for example, needed to see a doctor ASAP while she was in another state and she used our sponsor ZocDoc. Here's what she said. I searched by condition. I found someone local. It showed me people who had same-day appointments who also took my insurance. I found a great doctor who didn't make me wait and it was a total relief, especially when I was away from home.

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44:12Ramit Sethi: That's join G-E-L-T dot com slash Ramit. I want to learn how you got here. I can see a lot of fingerprints on your conscious spending plan. Calvin, what do you remember your family saying about money when you were a kid? I mean, nobody really talked about it because we didn't have much unless, you know, we were trying to get more. I was raised by a single mother and, you know, she was on like, you know, assistance. And then I lived with my great grandmother for a while. And then I lived with my grandmother who never talked about money. And you mentioned something, I didn't quite catch it, something about a bed as an adult.

45:00Ramit Sethi: What was that? Yeah. Like growing up, I'd never really had my own bed, like a bed that was mine that I slept in. Meaning you shared it with your siblings. Like I slept on the floor or shared a bed with my brother. Yeah. So would you say you were poor? Yeah, absolutely. And what were the other ways that you knew you were poor? Sleeping on the floor is one. Not having, you know, school supplies or clothes. Stuff like that. Just, you know, the lack. Did you work when you were a kid or a teenager? um once i hit like the age to start working yeah i've been working ever since then what'd you do with the money you got as a kid a young adult i didn't save it took care of myself so that my mom or her grandmother wouldn't have to do it bought my own clothes shoes fed myself what was your mom's relationship with money get it spend it i mean she kind of had to though with all the mouths to feed and clothes, shoes, things to buy for, you know, so many kids.

46:09Ramit Sethi: Yeah. But she didn't work. She didn't work? No. Because she was taking care of the kids? Yeah. Got it. And is everybody out of the house now, your siblings? Yes. Is your mom still alive? Yes. What's she like now in terms of money? She doesn't have any. Ah. No mouths to feed anymore? No. She's living with one of my sisters. What messages do you think you grew up with that you are bringing to this relationship with money? Probably that it's more of like a tool to use than something to be looked at as like, you know, putting it away, saving it. I didn't grow up with a respect for finances or money or, you know, it's like you get it.

46:56It buys things, buy things.

46:59Ramit Sethi: I like your acknowledgement that you did not grow up respecting money. In my experience, very few people actually respect money. Even people who make a ton of it don't respect it. Because if you respect something, you talk about it, you have a point of view on it, you plan for it. All these things that we do when we respect something, whether it's our body, whether it's our partner, mom or dad. We respect it. We treat it with respect. Mostly with money, I find that people grew up, their parents didn't really talk to them about it. If anything, they modeled like, we can't afford it. And then people grow up just being like, well, I guess money's bad, but I like having it.

47:43Ramit Sethi: So I'm just going to spend it. It's just a very unhealthy relationship. Shelby, what do you remember your family saying about money when you were young? I didn't hear much from my mom. She was in active addiction most of the time. She had us. I was in foster care twice between her having me for like three years. But I remember a game she would play with us was like, throw the smallest in the dumpster and see what you can find. Throw the, you, how old were you? I was like three to six. Wait, this is a game I have not heard before. Throw the youngest in the dumpster, that's you, and then you fish out food?

48:23Not food per se. Usually just like things we need or want. Like on a hot summer day, I remember, you know, I found a pool that was like brand new, but it just had a little gash. So we patched it up and put it in the backyard.

48:38Ramit Sethi: Wow. Like something like that. What do you think about that looking back? I mean, I think it was really fun in the moment, but looking back, that's really sad. And I don't think my mom, even though she was getting assistance for us, I don't think she was allocating that money to us. So it is sad in that respect. Yeah. Okay. Can you keep going? Yeah. So then we went, you know, back to foster care and my great aunt and uncle, who I had never met, found us by seeing a newspaper article about my mom being, you know, taken to prison. Wow. So they were like, we're going to take them in. And it was a whole different lifestyle change.

49:23I went from a foster care home that was a single wide trailer on a patch of dirt to being in Portland, Oregon, in a beautiful house with four acres of wooded property behind me. Wow. It was dramatic. What was that like? I think I was in awe for most of, you know, those first few months. You're just not accustomed to having, you know, all of that and more. My great uncle was very close to becoming CEO of a company. So he, yeah, he was really great with money. And my aunt, she was a stay-at-home mom and he did all of that, the money making.

50:08Ramit Sethi: What age were you when you went to this four acre house? Six. Oh, young. Yes. And is that where you grew up? Yes. Wow. What do you remember them saying about money? My uncle would generally say, you know, save. We would talk investments. He still does to this day. Really? Yeah. So he started giving us allowances. Okay. And my sisters generally spent, they were older, they would spend it immediately. I saved every allowance up until I was 18 to buy my first car. Really? Yeah. It was not chosen like that. It was more just like I had a situation come up and I could no longer live with my great aunt and uncle.

50:53I see. So I went to try to build a relationship with my mom in Spokane. So I got a car and—

51:00Ramit Sethi: I'm sorry to hear that. It's all good. Once you left, did you live with your mom? No, I hopped around friends of mine, like their couches, or I paid rent at one apartment for a little while while I was finishing up my high school degree. I wasn't getting the relationship from my mom that I thought I was going to maybe build. So I came back to Portland. Got it. And you've been working ever since? Mm-hmm. Okay. What made you decide to go to school, the school that you're in right now? I've been working on my education for so, so many years. Like I have an associate's, but it took 10 years to get that because I've had to stop, start, stop, start.

51:47I've always known I want a real career, but it's just taking a lot longer than I was hoping.

51:55Ramit Sethi: When you look back on the way that you grew up around money, everything from the game that your mom played in the dumpster to leaving the care of your mom and joining this other family with the huge house. When you look back on it, what do you take away from the lessons you learned? I think I've always had an anxiety around money where if I have it, I do want to save as much as possible. Because if you don't have it, there's a lot of bad things that come with not having money. And you have to figure it out and you have to go into survival mode if you don't have it. It's quite interesting that both of you grew up with a lot of scarcity, but your reactions to money is in many ways opposite.

52:45Ramit Sethi: Shelby, you save or you try to save. And Calvin, you spend it and say, worse comes to worse, I'll figure it out. Is there a vision together for what you want this relationship to be? Because right now, the way I see it, it seems pretty overwhelming. Like you may have gotten used to it, but when I look and I see you got a young baby with two weeks of savings, it's not normal. It's really, really risky. Yeah. I mean, I would like us to be in a position where, like, we had a very comfortable savings and didn't have to worry about things. Like, I worry about not having, you know, like something going wrong all the time.

53:36But, yeah, I would like a savings. and for us to be able to spend time together as a family, like vacation or whatever it may be, without having to go into debt more to do so.

53:55Ramit Sethi: So you want to have more savings and to be able to spend a little bit more travel without worrying. Okay. Shelby? I would like all that plus being together long-term. Retirement is important as well. Okay. And Calvin is a little bit older. So he needs retirement because I'm worried that if you don't have that, then it relies on savings or once I become of retirement age. What I'm hearing so far is a wish list. I want to have money in a savings account and I want to have money to travel and I want retirement. Great. Now, what are you willing to do to get it? I would like to minimize certain things like our phone bills.

54:42Yeah. Cut back on a lot of things and kind of not having those small comforts that we are so used to. The things that just kind of eat away at your money without you even realizing. Do you think that's going to do it? No. being aggressive with the debt that we do have i'm a believer so like in this season for me it's like the word uncomfortable is kind of like what i'm sitting in right now um and just being uncomfortable because comfort is good it feels good it's like yeah like i have all my little you know creature comforts that i enjoy and but that thing that will kind of drain everything that you have is just around the corner.

55:32When you say you're a believer, what does that mean? Oh, and God. Okay. Were you raised religious? I wouldn't say religious. Just I was raised by two grandmothers who took me to church a lot. Do you believe God will provide? Yes.

55:50Ramit Sethi: Got it. Common when I speak to folks who are religious, it's tricky when it comes to money. Yeah. because it's been that for me though like i've had situations where it's like okay like i'm looking at my account and i'm just like okay things are not going well and then randomly i'll get a call you know from somebody who needs some work done or something and like you know it happened when we first met and i kind of got this um job and made you know a decent amount of money What happens when God doesn't deliver? I don't know. It hasn't happened for me yet. We got chosen to be here. It's not happenstance that it happened.

56:34I don't believe in coincidences. We're here for a reason.

56:38Ramit Sethi: Yes, I agree. We are here for a reason. Shelby, what do you think about this? Are you religious? No. Okay. Hearing God will provide in this idea. It does get a little frustrating to me. Because? because I'm more of a like realist based in you know what's happening now not what could happen or what does happen maybe there's a way to honor both perspectives here like we can make room for something really good to happen to us and at the same time we can execute on a plan it's like my mom has a sign in her last house which says uh trust in god but lock your car we can do both yeah Hearing their story is really painful.

57:24Ramit Sethi: And if you truly put yourself in their shoes, it's kind of no surprise that they have ended up in an unhealthy relationship with money. Because if you are in perpetual survival mode, I'm talking about for decades, that's all you know. I'm not surprised that almost everyone in their life has an unhealthy relationship with money. And when that's what you know, that's what you do. So what a gift for me to be able to actually talk to them and share what a healthy relationship with money might look like. That's what I would like to do next. Recently, my producer told me she's been struggling with sleep.

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58:36Ramit Sethi: And Lisa mattresses were named the best hybrid and best memory foam mattresses by the New York Times Wirecutter. And they come with free shipping, easy returns, and a 120-night sleep trial. Go to Lisa.com for 25 % off mattresses, plus get an extra$50 off with promo code RAMIT, exclusive for my listeners. That's L-E-E-S-A.com, promo code RAMIT, for 25 % off mattresses, plus an extra$50 off. And support our show and let them know we sent you after checkout. Lisa.com, promo code RAMIT. Originally, I asked about trust. from a financial trust perspective, Shelby, do you think it's possible for there to be a future where you trust Calvin?

59:20Yeah, I think there's a possibility of it.

59:23Ramit Sethi: Okay, what would you need in order for that? I would need to know what money's going in and out accurately, not rounded. Good, that's one. What else? I can tell you're not used to saying what you would need, right? In these circumstances, when I know it's such a soft subject, you know, a sore subject for him. Can I make a suggestion? Because I encounter a lot of folks, especially women who tiptoe around their male partner's feelings. And I get that money can be sensitive for men and women. The people who tiptoe around their partner's feelings often feel that if I just say it the right way, if I'm just soft enough, then they will finally come out of this shell and engage with me.

1:00:06Ramit Sethi: Feel that, right? Oh, totally. Yeah. It never works. Yeah. That's not how it works. The actual way that change works is for one person in a relationship, ideally two, but sometimes it has to be one, to say, these are the standards that I expect. This is what I need. This is what I expect. I'm not going to try to change you. I will help. We can read a book together. We can do therapy together, but this is what I expect. And if not, that's up to you. But here's what I'm going to do. Any of this sound familiar at all? We've set boundaries and such. With money? Money? No. Money's hard. Okay. Yeah.

1:00:49Ramit Sethi: It's funny. I can talk to couples and they may be, they may have incredible boundaries. They may be really communicative in other parts of life, but with money is this real weird peculiar thing. And actually what I, the reason that I'm here, the reason that I wanted to speak to both of you is to show you that money is just another part of our life. It's not even something we have to sit down and discuss formally. It's as important as did you feed the baby? So in the same way that you're able to set boundaries in other parts of life and standards, that's what I'm asking you to do here. And I think Calvin, I would invite you to set standards and expectations and we can discuss what those are today.

1:01:30Ramit Sethi: This is a great place to do that. And also what happens if one or both of you do not live up to them? Because right now it just feels really sloppy. Hey, come on, let's try. Can you please send me some information? Let's put it in a jar. It's not getting anywhere. And you all do not have time to mess around. I feel like I'm running out of time. Let's fix it. Okay, this is what we're going to do. I in a minute i'm going to put your csp up on screen I want us to make some big changes. Typically. I like to see a fixed cost between 50 to 60 percent You all are at almost 90 percent. So we have some changes to make We need to start saving money every month Not one off not with a bonus.

1:02:13Ramit Sethi: It needs to happen every month automatically The only way to win with money Is the same way you win with health, with learning how to read, riding a bike. You do it all the time consistently. Okay. And then finally, we'll get down to guilt-free spending. Truth is you all don't have a lot of money for guilt-free spending right now. That's life. And what I'm going to try to do is be really honest with you. This is what you can afford to do. You all should be able to eat out once, but not once a day, probably not even once a week. And then you all tell me what you think. Okay. The key thing as I put the CSP up on screen now is that you are going to drive it, not me.

1:02:54Ramit Sethi: Who's the one who drives the finances more in the relationship right now? I drive it verbally, but I feel like in action, you drive it more. Yeah. Okay. Who wants to go first on this one? Oh, well. Okay. Let's take a look at your fixed costs. Your fixed costs are at 89%. You're drowning. So we need to reduce those. And we're going to start here. Calvin, take it away. Phone, like our phone bill. Phone is$150 right now. Yeah. I think we could probably get that. Well, I know we could get that lower. To what? Less than$100. Shall we say$100? Yeah. Okay. Watch what happens to this number up here. This 89%, okay?

1:03:41Ramit Sethi: We're going to take it from$150 to$100. What just happened to that number? It went down a percent. It went from 89 to 88%. What does that tell you? That's a start, but not enough. Yeah. We're trying to get to 60%. Shelby, you're next. I think we can get the phone down more. I used to have it for$37 a month. Guys, I think we're missing the message here. I'll zero out your cell phone just to show you what I'm talking about. Watch this. Y 'all don't have a cell phone anymore, okay? Watch. What happened to this number? Yeah. 86%. What are you noticing here? Focusing on the wrong stuff. Yes, you're focusing on the wrong stuff.

1:04:19Ramit Sethi: Do you realize how much of this you've done? You're here because I get to show you how to focus on the right stuff. So I'm going to put it back up to 100. And what are we going to do next? Shelby? We can take subscriptions down. Great. We could get rid of Netflix. Do you want to? It's one of the things we do at the end of the night sometimes. when the baby goes to sleep is watch an episode of our favorite show together. So do I want to? No. Do we need to? Yes. We could get rid of things like YouTube and those things, but like certain things, they're not mine. So like YouTube, I can't be like, oh, get rid of YouTube.

1:05:00Ramit Sethi: Why not? Because it's something that he enjoys. And if I'm just taking away everything that he enjoys, I feel terrible. I guess I would like you to re look at your role in this. I think your role as you see it right now is to be nice and to make sure that he's feeling comfortable. And I can't do that. I couldn't say that he should stop paying for YouTube. Who am I to say it's his money. You either both have a joint vision together or you don't. If it's separate, that's separate. We could work with that too. I want to jump in here quickly because Shelby told me earlier that they've been working through some trust issues and that she's not sure they're going to stay together.

1:05:47Ramit Sethi: And that's significant because if they separate, their financial picture is going to dramatically change and I need them to understand that. Listen in. I can tell you right now, if the two of you separate, your financial lives will be catastrophe. Can you imagine what would happen if you two were to separate? Have you thought about the numbers on this? We're talking about going back to government assistance. There is no secret way out of this. The rent right now, your rent is quite low,$16.90. If you split up and each of you got a smaller place, it would be more than$850 a month, right? Yeah. So right there, you're already behind.

1:06:26Ramit Sethi: All of this would be way more expensive if you separate. I'm not saying stay together because of the money. I would never say that. The way that I operate planning is I'm going to assume that the two of you stay together. We have to make some assumption here. And if you don't stay together, then you'll figure that out, but it's going to be even harder than this is. So what does that imply for the two of you? I want to work harder to get rid of credit card stuff. Good. Shelby? I want to cut costs where we can. Okay. What's the energy level right now? It's pretty low. Pretty low. It's low as f***.

1:07:08Ramit Sethi: What's happening here? I'm trying to raise it up. Yeah. Y 'all cannot get to a healthy level by being like, oh boo I gotta cut my cell phone ten dollars I think just like I don't know just kind of reality sync just like you know kind of set in what is it telling you what's reality telling you um that we're pretty screwed unless we unless yeah unless we yes unless we do something are the two of you used to taking big bold actions no fear is a big thing Fear of what? Failure. But you are failing. Yeah, but catastrophically failing. That's going to happen too. It's just a matter of time. It's like, this is very perceptive.

1:07:59Ramit Sethi: You're worried about failing, but you are actually failing a little bit every day. Yeah. And until we confront that, until we make big, bold action and raise the energy level, we light it up, then we're going to sit here fiddling around with freaking cell phone charges and YouTube. Correct. and being delicate. Oh, I don't know if I should tell him to cut YouTube. No, we're trying to take that energy to a different level. Who do you know that has high energy about money? Nobody, right? You all know anybody who has a healthy relationship with money? Healthy? That tells me the answer I need to know right there.

1:08:33Ramit Sethi: Healthy? It's okay to say you don't. That's okay. If you don't have anybody who has a healthy relationship with money and you don't know anybody personally, then it's no surprise that you have found yourself in an unhealthy relationship with money. So how do we get out of that? One, we have to envision somebody who has a healthy relationship. If you can't think of somebody, think of a movie. If you can't think of that, use me. Do you think I would go to my wife? Oh, honey. I don't call her honey, but in this situation, honey, do you think maybe you too? Oh, I couldn't make you stop YouTube. That would be mean.

1:09:10Ramit Sethi: You think I would talk like that? No. What would I say? We need to cut YouTube. Yes. And go one level up. YouTube, cell phone, Netflix. Okay. But what's one level up from that? What's the vision of all of this? Why are we doing it? Get aggressive with the debt. Yes. Get aggressive with the debt. And then once, what happens after the debt? Because debt is not a rich life vision. Savings. Savings. And then what does that get us? Security. Yeah. Yeah. Security means what? Peace of mind. Peace of mind. It means that if something happens to one of us, like? Losing a job. Losing a job. School gets delayed.

1:09:51Ramit Sethi: Can't find a job. Whatever. What does it mean for us? It means we're stable at least. We're stable. We can make it another day. Yeah. And what happens, by the way, after you're stable? We're stable. We have six months of emergency fund. We feel good. We have secure jobs. Is stable the end? Is that it? We're here on this planet to just be stable? That f***ing sucks. What's after that? Enjoyment. Yeah. What does it look like? Enjoyment means what? Going on more trips. Yes. And buying a boat. No, we're not buying a boat. Maybe one day. You could buy a boat. I'm just saying. Or you could rent one.

1:10:29Talking about, you know what comes before the boat though we like to fish and adventure so that would probably be like yeah great you want to fish more

1:10:40Ramit Sethi: cool what else take out of state trips or out of country trips yes what about with the baby baby's gonna be older yeah what do you want to do with this baby or kid I want to show them the world if I can yeah try different foods play different games learn different things this is a much more expansive vision than I need you to cut YouTube. Do you see? If you are constantly only down here talking about do this, cut this, blah, blah, blah. You might be right. You probably do need to cut YouTube, honestly. But like, what are we working towards? We need to have a vision, something that keeps us going.

1:11:21And I suspect that you may not have seen somebody talk like this and think like this. Is that accurate to say? Yeah. Okay.

1:11:30Ramit Sethi: First time for everything. That's why we're here. Yeah. Okay. So now we have a vision and it's like way up here. It might be the boat. It might be like a cool fishing thing. It might be saving for your son's education. Love it. A step down, some restaurants, some trips, et cetera. A step down, stability. And like today, right now is what? The first steps. getting our cost down, paying off debt. Yes. How do we get the cost down? What are the specific things you want to eliminate? Subscriptions, close. Yes. Great. Let's do it. Yeah. So we're working our way up there by starting with what's right in front of us.

1:12:10Ramit Sethi: Shall we do it? All right. We're trying to get to 60%. Go ahead. Energy's up. Speed is up. Go ahead. Calvin. Aggressively paying off the credit card debt. How? Yeah. So like the$360 that I'm paying for, you know using living off my credit card yeah i just need to get rid of it okay how though you got to cut expenses somewhere right yeah where i don't know that's the problem like it's you don't know because because it's a it's a cycle that is i don't know you don't know what steps to take that's okay i want to help you get there what i'm trying to do is we have your expenses up here. I'm trying to figure out what you want to stop spending money on so that that money can then go to your credit card debt.

1:13:01Ramit Sethi: What do you see? Read off every line. Car payment. That's at$195 for you, correct? That's gas, really. I don't have a car payment. Anything you can do about that? I recently have been able to use the company gas card to fill up my vehicle. Okay, so does this need to be$195? No. What should it be? Right now, maybe like$80? I think just like every two weeks,$65 is a conservative amount because we do take trips to go fish in multiple spots. And I did see$65, you know, go into the tank off of your card. So, you know, if you take that just conservatively, like every two weeks, that's$130 a month. Okay, so you say it's$130 on gas.

1:13:51Ramit Sethi: What do you say? I like hearing your point of view, Calvin. We'll call it, we'll call it$100. I'm going to put this number at$130, okay? I'd prefer to estimate high. It's still lower than what it is. $130. I think we need to have a larger discussion about can you all afford$130 a month on recreational gas? Maybe, maybe not. But let's put it at$130. We are down to 87%. Shelby, what do you want to change next? we should lower groceries to probably$600 a month realistically. Great. $600 a month. Okay. And I'm going to make these proportional. I just want to show you how much each of you is spending per month.

1:14:29Ramit Sethi: Okay. All right. So if we take a look at the proportionality of this, Shelby, you would pay$534 a month for rent. And Calvin, you would pay$1156, which will take you to$1 ,690. Okay? See how the proportionality works? Calvin makes more. Calvin pays more for that joint expense. Let's do the same for utilities. Shelby, you pay a little bit less. $1 ,78 and$1 ,69 for Calvin. Same amount you're paying in total, just broken up differently. Let's take a look here at groceries. Let's go ahead and take that number down. So you're saying instead of roughly$750 or so, you're going to take your groceries down to$600.

1:15:10Ramit Sethi: You can do that? Yeah. I think we can do that. Who's the one who shops for groceries? We do it together and separate. What? That doesn't sound… That sounds sloppy. It is sloppy. I don't allow sloppiness when you have this level of debt. And this little savings. We can't be sloppy anymore. It could be one person. It could be both of you together. But it can't be all three. Who wants to do groceries? Do you want to do it on the weekends together? We'll just stay doing it together. Together. One, like Saturdays? Is that it? Saturdays, Sundays, yeah. Great. Love it. All right, so we got 190 for Shelby, 410 for Calvin, and you all are shopping once a week.

1:15:56Ramit Sethi: So you better have your plans ready to go. Good? Yeah. And you all are going to hold each other to that number, which means 150 per shopping trip. Can you do it? Oh, yeah. Love it. Love that energy. Okay, great. Let's look at baby items. We got 47 for Shelby and 103 for Calvin. All right. Y 'all are still at 84%. So too high, but at least it's a little bit more equitable.

1:16:28Ramit Sethi: Subscriptions, we're not going to do this anymore. Cut this out for me, please. What's left? We're not going to like try to eliminate one by one. We're just going to say y 'all get one subscription. What's it going to be? Who? Hulu? That's your choice? Let's go with Hulu. How much is it? 20 bucks? I think it's 22. Alright. Child support… Who's that for? That's for me. Okay. That's for you. So… It goes away in November. Oh really? Possibly. Yeah. Okay. My son turns 18. Okay. Great. So that's money that can possibly be redirected to other stuff. That's really good financial news. Okay. School payments…

1:17:08Ramit Sethi: We could drop it to like 80 bucks. That'll account for summer ballpark. See what I'm doing? I'm spreading out the whole year. And then we have this miscellaneous number. You know what this is? So at the end of every fixed cost, we automatically add 15%. Most people, when they start earning a bunch of money, they have some unexpected stuff come up that they don't plan for, like registration for their car every year and stuff like that, right? Something breaks, whatever. If you all were making like a ton of money and you had a bunch of savings, I'll just be like, leave this miscellaneous, it's fine.

1:17:42Ramit Sethi: But when you have debt and when you are in dire straits, you can't afford this. You have to actually be dialed in on your money. So I will give you a tiny amount of miscellaneous because life does get in the way, but you simply do not have the room to be like, oops, like$611 per month. There's no way. So we're going to take this number down to like 100. I'll make it 150. Let's take a look at the numbers now. What is this fixed cost number? 75%. What do you think? Still too high. Still too high. Better though. Better. Yeah. Calvin? Yeah. What's going through your head right now? It's too high. I'm just thinking of how to make it even better.

1:18:27Ramit Sethi: Mm-hmm. Good. Well, if we take a look at this, I mean, y 'all have two or… Somebody have a car payment here? Yes. Yours? When is it over? I have four… Four and a half more years. Alright. Can't do anything about that. You have the car now. Can't do something about the gas. Don't drive as much. It's expensive right now. I feel like nobody in America is like, Oh, things are really expensive. I simply should not drive. We're just like, Yeah, it sucks. We talk about that. Yeah, it's just stuff. I hate this. Look at my hand. See this? I f***ing hate this. When someone is doing something where they just blah, blah, blah, blah, blah, I go like this.

1:19:12Ramit Sethi: It drives me insane. Just talking. Shut the f*** up. I hate talking. Take action or don't waste my time. Yeah. If y 'all had like two years of savings, I would still be annoyed. Oh, we talk about it. Oh, I don't want to hear that. I want to hear what you do. So tell me now, reflected in the gas, if you say we've been talking about it and we want to drive less, what number are you going to put there? Probably 65. You want to cut it in half? Yeah. Okay. And right now you go fishing every weekend? Yeah. Okay. So that means every other weekend you're not going. What are you going to do? Walk down to the park.

1:19:53Ramit Sethi: Love it. So you can fish there? Yeah. So what are you talking about? Get rid of that car. Actually, for that matter, do you even need two cars? Yes, we do need two cars. Oh my God. All right, fine. $65 down to 74%. Okay, fine. I think we've cut as far as we can reasonably cut. We could also cut the$50 for clothes. Great. 73%. Okay. I'm okay with this so far. All right. Let's just go down to the bottom. Holy s**t. Okay, look at, so now that we made all those changes, all that extra money flowed down to the bottom. And what this tells me is you now have 27 % available for guilt-free spending. So usually I like that number to be 20 to 35%.

1:20:36Ramit Sethi: For a couple that, as I described, was in dire financial straits, should your number be higher or lower than that? Lower. Lower. Way lower. So lower than 20%. Because that's like if you were in a healthy financial position. ballparking what do you think your percentage should be in your financial situation 10 yeah yeah i would say something like that eight to ten especially if you can walk to a park and whatever great all right so we got money to play with meaning this money can be reallocated somewhere pay off debts good your debt is twenty thousand dollars and you're currently paying three hundred $360 a month towards it.

1:21:22Ramit Sethi: Is that right? If you took out the car payments, roughly around$7 ,000. $7 ,000 left. Okay, that's fine. And so the$7 ,000 is what this$360 a month is going towards. Yeah, so those were just bare minimums. Yeah. We both put more than the minimum every month. Huh? Yeah. How much? According to this, you put$135 and$225 a month. Is that right or wrong? Wrong. Okay, what should it be? $450. Okay. Instead of$225. Yeah. Okay. And Shelby? Mine gets paid off by the end of the month usually. So… Why usually? Sometimes there's like 80 bucks that goes over. I know there shouldn't be. Yeah. There's not going to be.

1:22:03Ramit Sethi: So here's some words that I don't use in my household. Try. I don't try to do anything. I either do it or I don't. Simple. Maybe… I hate that word. Do it or don't. And if i'm not sure I put it on a list and i'll review that list once a month or during our money session But like I hate this uncertainty When I speak in an uncertain way then it makes it okay for me to be uncertain and it also affects my wife She knows when I say something i'm gonna do it and if i'm not gonna do it, i'll tell her that too Hey, i'm just not into this. I'm not gonna do it. At least she knows and she does the same for me.

1:22:40Yeah

1:22:40Ramit Sethi: Could you demand the same of yourselves? Yeah, and of each other could you shelby? I will work on that. I will do it, but it is going to take some time for me getting comfortable doing that. So you're saying you find it difficult to be that clear? When it comes to, yeah, because I try to keep the peace. Yeah. Yeah. But I am, I'm going to work on that because clearly that's needed. Yes. Good. I love that you're going to work on it. That's a good way to put it. I'm going to work on this. Love that. I want you to see that although Calvin has not been forthcoming with things like debt, et cetera, in almost every situation, almost every couple I talk to, they are co-creating the dynamic.

1:23:22Ramit Sethi: And part of the dynamic that you are co-creating is by tiptoeing around and even ending your sentences when you were right. You were right about the gas, but you didn't even end your sentence because you were so nervous about what's he going to say. No, you are a part of this relationship. you are mom you need money to be certain and clear so you need to speak up with a loud voice and y 'all might be wrong sometimes if you're wrong 20 % of the time I don't mind sort it out hash it out but I'd rather you speak up with both of your voices and then work it out cool? cool alright so you'll work on that great I appreciate that Calvin do you appreciate that as well?

1:24:05yeah I want the accountability I want the the difficult conversations. I want that from her. Great. This is also an awesome thing

1:24:15Ramit Sethi: to talk about in therapy. All right. How long is it going to take you to pay the debt off? If we stick to these numbers, it should take, what, like seven months? Okay. At most. What's the interest rate on this$7 ,000 loan? Average. Well, the$7 ,000 is not the loan. The loan is down to$4 ,600. $4 ,500. Okay,$4 ,500. What's the interest rate on that? I don't know. I don't know exactly. You guys don't know your numbers. I thought it was closer to 11%. No, you had a higher. It's higher. Higher than 11%. I don't know where. Let's just say 20%. I'm going to do a quick debt payoff calculation. So we have$4 ,500 at 20%.

1:24:58Ramit Sethi: And then what else? We have the$1 ,500 left on the ring, which is 11%. Let's just make it all the same. Just for easy math. Okay. It's going to work in your favor. So$4 ,500. So$6 ,000 total? Yes, roughly. $6 ,000 at 20%. And we are currently paying$585 a month towards it. Okay, we'll find out in a second. In retrospect, what do you think about this ring purchase? I think the ring purchase would have been a good idea if it wasn't for the other loan that I didn't pay back. In retrospect, financially speaking, we shouldn't have done that. Do you agree, Calvin, or no? Yeah. Okay. What I'm trying to get at, I'm not trying to like beat anybody up for decisions they made.

1:25:44Ramit Sethi: You made these decisions. Here you are. We're going to deal with it. Okay. What I'm trying to do is that you both grew up with a lot of financial trauma, like a lot. And when I asked you, who do you know that has a healthy relationship with money? Both of you were dumbfounded. You don't know anybody. Guys, it's going to take you a lot to build a healthy relationship with money, I am trying to show you with a few specific examples. Like if I had not been able to afford the wedding ring that I bought for my wife cash, then I would have told her. I would have said, look, I love you. I'm going to be in a position where I can buy a beautiful ring for you right now.

1:26:22Ramit Sethi: This is what I can do. It's not the ring that I want you to have, but this is the ring that I think is right for us and for the future that we are building together. That level of confidence to be able to be like, look, I'm not going to lie about it. I'm not where I want to be right now is a very different way of interacting with money than what happened. Would you agree? I initially bought a lesser. And then? And I just, I didn't feel right about it. That's what I'm trying to correct. Your feelings led you astray because that ring is going to end up costing like double what you paid for it. You don't need to be buying multi-thousand dollar rings.

1:26:59Ramit Sethi: it's actually okay if you do it together. If you make a decision jointly, be like, look, we're going to be able to get that. But right now, we have something more important. That's actually how wealthy people talk. And I would like for you to get to the point where you are comfortable with money. Okay. Y 'all are going to pay off your debt in guess how many months? Anybody want to guess? Go for it. Six. Okay. Shelby? Eight. Eleven. Eleven. Eleven months. What do you think about that? It's too long. I think it should be sooner than not. Okay. What does it feel like to realize you're paying this debt off for the next year?

1:27:38Ramit Sethi: Not good. Okay. It feels a little frustrating. What decisions did each of you make that brought you to this point? Piss poor decisions. Not paying the loan back. Getting the ring. Yep. Using my credit cards. Shelby? I think we've decided to allocate our money to different things rather than towards the debt. So with the APRs and all that, it accrues more and it costs us a lot more. And did you decide consciously to allocate or did you simply ignore the debt and pay a little bit and then spend the rest of it? I think we did consciously decide on certain things like a road trip or things like that, you know.

1:28:25So making those decisions, knowing that it's only going to put us in deeper rather than put us ahead. Okay. Calvin? Honestly, like just throughout this whole thing today talking, it's just become evident that like I haven't prioritized the safety and stability of my family. Yeah, I think that's really accurate. Good job. It's really perceptive.

1:28:58Ramit Sethi: I find that people rarely sit down, carefully map out their money, and make the wrong decision. It almost never happens. That's not the way it works. They simply ignore what's bad and they just do the thing that feels good. That's pretty much how humans behave. But we actually can do better. I notice it seems like you have a realization right now, getting a bit emotional. What's going on for you, Calvin?

1:29:31Ramit Sethi: Take your time. I want all these things for myself and my family. And, you know, I have dreams and stuff like that, but just haven't been making the right decisions. Keep going. this is big and it has to change it's powerful what i like is that you connected the dreams with the decisions the dreams happen if you make the right decisions if not they just remain dreams they're just fantasies it's all just i can't stand when people come and they talk about all these fantasies they have and then i look at what they're actually doing and it's just totally different i go why are you wasting my time it's not a fairy tale class tell me what you like you like to fish.

1:30:18Ramit Sethi: I'd like to be able to have you go on an amazing deep sea fishing trip. Okay. But it starts with YouTube. It starts with, are you two actually talking about money? Right now you're not. I know this is hard. Seeing a grown man cry is not easy. It actually takes a lot of courage for him to allow himself to do that. But this is important because Calvin is realizing that the identity he has cultivated for himself as a provider is not actually being matched by the decisions he's making. That is a moment of reckoning where he can start to say, am I not a provider? Am I making bad decisions? And to his credit, he's realizing the decisions he's making are not good ones.

1:31:10Ramit Sethi: That gives me hope that he is listening, that he's ready to potentially make a change. Now I want to see if I can drill it in. I think we made some pretty good progress. You want to keep going and make a few more big changes? Because we're on the cusp of something here. Yeah. Can you all feel it? Yeah. I could feel it. I could see it. Look, I'll show you. Look at these numbers. Used to be 89 % fixed costs. We're down to 76%. And we have more that we can do. Isn't there some bonus coming in conservatively at$5 ,000? Yeah. So we're going to get that in here. That is going to get taxed. So let's just say$3 ,000.

1:31:50Easy math.

1:31:51Ramit Sethi: So$3 ,000 divided by 12. We're going to add that here. Here we go. Look at that number. 73%. That's if you get the$5 ,000 bonus. What would you do with it? We would need to put it towards our debt. Interesting answer. So usually when people get a one-time thing, like a bonus or a tax refund, they actually use it to either pay off debt or save, which is not such a bad thing. It's fine. And if you were to use it to pay off your debt in full, I don't mind it. It's not so bad. But what I'm really trying to get you to do is to actually treat your money stably. So you're not taking these one-off things and doing random stuff.

1:32:34Ramit Sethi: Because I bet you, if you paid off your debt, the next time you got a bonus, you know what you would use it for, right? What? What? Your debt that you now accrued. Yep. Or vacation. Because you're like, it's free money. Yeah. You're not respecting it. Yeah. Respecting money means when it comes in, you have a plan for it. And right now, you all don't need to be doing one-off things. You need to be consistent. See what I mean? Yeah. That's why I put that money here. Right here. Just like the rest of your take-home pay. It just flows. That's why this number went down. All right. Now, let's go and look at the rest of this.

1:33:06Ramit Sethi: You still have 27 % in guilt-free spending. That's a lot. Way too much. We got to reallocate that. Where should the money go? Should go to savings, debt payoffs, investments. Great. Let's put some towards savings. How much? At least$200. Keep going. That's way too low. $500 gets you$6 ,000 per year, right? So we want more than that. Finish strong. I want you to really develop your voice, Shelby. Go ahead. If I was looking at the numbers, I'd probably say at least like$700. $700 a month. What do you say, Calvin? Yeah. Notice the dynamic. What is this dynamic that's emerging over and over again?

1:33:43Ramit Sethi: Shelby, your reaction is? Save. Save and be aggressive. Calvin, your reaction is? Conservative. Yeah, be conservative. Like, I don't know. But guess what happens when you leave money just sitting around in your system? You spend it. It just gets eaten up. So what's going on in your head is you have this invisible script. Money is meant to be spent. The minute I get it, it's burning a hole in my pocket. And I'm trying to get you to change that relationship. The way you change it is not by telling yourself like, oh, I need to be better. That's just words. The way you change it is literally by saying every single month, our savings account is automatically going to pull$700 a month.

1:34:20Ramit Sethi: You don't have to make the decision anymore. Let's take a look. 700 bucks. That's 10 % savings. That's pretty good. You still are at 16 % with guilt-free spending. That means you still got some money. So shall we take a little bit of that and maybe put it towards the debt? How about like 300 bucks extra per month towards the debt? What do you think? Yeah. I mean, could we do more? You could put more towards debt for sure. But I'm worried about your savings account. Because if something happens, you are in really bad trouble. So I actually don't mind if you have to spend 11 months or 12 months paying off your debt, even if you're incurring all this interest because I need you to have more savings.

1:35:05I need you to have like thousands.

1:35:10Ramit Sethi: It's$5 ,000 a month just for you to keep the lights on. So I would actually like to take the extra$300. Forget about the debt. You've got a debt payoff plan. Leave it. Put the$300 towards savings. So now we're at$1 ,000 a month. This is looking good. I hope you all are prepared to take your rotten and bread and use it to attract fish because no more buying fishing food. That's it. I know that game. We used to fish too. Duck bread. That's why we call it duck bread. Well, whatever. I don't like it. All right. You all have$835 a month for fun. Can you do it? Yeah. Who's packing the lunches? Me. Great.

1:35:50And coffee out?

1:35:52Ramit Sethi: Is it important to you? No. Okay. It's not. Great. So you're making coffee at home. What's important to you? We want to go to dinner at least a couple times a month somewhere. Two times a month. You know the place? Not yet. No. Here's how people who have to hit a strict number do. They go, we got$835 a month. We want to spend, I don't know, of that$835,$300 for eating out. Want to eat out twice? That's$150 each time. Divide by two, that's$75 per person. We're going to look at the menu before we go and we're going to be very clear with each other like Are we getting appetizers? Are we getting a drink and when you have like 75 bucks per person and you live where you live Maybe you are maybe not depends where you go.

1:36:35Ramit Sethi: Yeah, it's just that specific But if you want to eat out twice a month, you totally can I don't know that feels good to me. It's like we're paying off our debt We're building up savings at a thousand dollars a month and we can still eat out twice a month. That's pretty cool What are you gonna do with the rest of the money? We Should probably start putting some away for Our son. Don't worry about your son. He has plenty of time This is a classic thing that people do who are poor money managers They're in dire straits themselves and they start thinking about their son Your son needs you two to be Way more financially healthy And if your son ends up having to take out some debt So be it because you all need to get your financial act together first So I would say maybe five, 10 years from now, you will be like so dialed in.

1:37:26Ramit Sethi: You easily could get there, no doubt, that you're like, all right, we got extra money. We're retirement goals are on plan. We hit our six to 12 month emergency fund, XYZ. Let's start putting a little bit away for him. But doing it before then would be a massive mistake. What do we do about retirement? Good question. You right now have nothing going towards retirement. Yeah. Some of this changes once the debt gets paid off. as an example, you currently have$585 a month going towards debt. Once that's done, if it were me, I would immediately shift all of that over to investments. Immediately. I wouldn't miss a month.

1:38:05So when there's, you know, like two months left to go, I'm always making plans.

1:38:10Ramit Sethi: What's going to happen? Two months left to go on the car payment. What are we going to do with that money. That's how you get ahead. And that's how you avoid just like spending money. We got free money. No, we make a plan. You might increase your eating out amount a little bit, but you're going to redirect it. If you wanted to, and you want to take 300 bucks a month right now and cut and direct that to investing, it's not bad. It's not a huge amount, but it's not bad to get that started. I would really like that. And of course you could even make a rule. Anything we make above that$5 ,000 for commissions, we're going to take 50 % of that and invest it.

1:38:49Ramit Sethi: And you all can decide what you want to do with the rest. See what I'm saying? I like that. I'm going to leave this here as is. I want to just summarize what we have done so far. I want to point out a few things that I noticed. Okay. First of all, I want to just take a second and recognize both of you. That was not easy. Took a lot, right? Think about where we first began with this. We probably spent five, 10 minutes talking about a cell phone. And what do you realize now after all the changes we made? It was a drop in the bucket. It was a drop in the bucket. And we were stuck on this tiny expense just going da-da-da-da-da-da-da.

1:39:26Ramit Sethi: And actually, we were missing the entire situation. So I want to commend you for that because you picked up on that pretty quick. Second, there's actually a lot of stuff that changes that you could have made. And you did. The first part was like really hard. I think you were stuck in the old mindset. And then we created a vision. Hey, we need stability. We need to light a fire, increase the energy here and make changes together. And then you started doing it. What did we do? We reapportioned how the money is being spent. That means the two of you need to be talking about money a lot. Transparency is a default expectation.

1:40:04Ramit Sethi: So in order for this to work, Calvin, you've got to have the books open, how much you're making. She needs to know everything. and you all need to have the money going back and forth. Since you are not married, I think it's okay for you to have separate accounts, but I do think you should probably have a joint account where you each transfer money in every single month. Okay? We looked at your debt payments. You discovered how long it's going to take for you to actually pay it off. You were both unhappy with that. I like that. I love irritation with money because every day you wake up for the next 11 months, You're going to open the bathroom.

1:40:42Ramit Sethi: You're going to look in the mirror and you're going to say, good. After 11 months, you will be done and you will never go back. Okay? And finally, we made all these other changes. We cut down miscellaneous. We removed all these subscriptions, blah, blah, blah. Turns out you have a lot of money every single month. So we reallocated some of it. Now, I don't love where your fixed costs are at. I'm going to tell you the truth. 73 % makes me super uncomfortable. But I know that you are paying off your debt aggressively. and I know that in 11 months, you're going to be debt-free and have a lot more flexibility.

1:41:13Ramit Sethi: You want to see what it's going to look like when you're debt-free? Look at this. I'm going to take this debt and drop it to zero, okay? Watch what happens to the fixed cost number. 65%. Huge. It went from 73 % to 65%. That's massive. Yeah. Y 'all are in a pretty, pretty solid position at 65%. Keep in mind, your commissions can go up. And so if I'm you, I am like dialed in. What do I need to do to hit these commissions? That's what I'm thinking about while I'm at work. Shelby, if I'm you, I'm thinking, can I get another job right now? Is that feasible? Because even an extra thousand dollars a month would actually be huge.

1:41:54And also when I get my full-time role after graduating, that's going to

1:41:59Ramit Sethi: change the game completely. Y 'all could actually be in a very good financial position. Like your number could be less than 60%. No doubt. And that means more money to invest, more money to save, even a little bit more money to spend. How's that strike you? It's good. I'm not really worried about spending. Good. That's a good answer. What's the thing that is important to make this work that does not show up on the conscious spending plan? Accountability, communication. Mm-hmm. That's actually the most important thing is the togetherness. And I know that you have a lot of issues to work through.

1:42:40Ramit Sethi: If you have a unified vision of where we want to go, we want to attack this debt with unrelenting force. We want to make sure that we are saving a thousand dollars a month to our savings. And we want to make sure that we are like, I own the groceries, you own the lunch making, et cetera, et cetera. If you guys are unified on that, you're actually going to find that it's much easier to be a team. As for the rest of your relationship, that's for you to decide with the help of a therapist, I hope. But the money part, at least that can be one source of stability for you. In November, when that 700 child support comes off, should that all be allocated towards the debt?

1:43:21Great question. What do you think? I think it would be good. I think getting it paid off sooner rather than later is better. Okay. What do you think, Shelby? I think it should be like a 500-200 split. Like 500 to debt, 200 to just boost the retirement.

1:43:40Ramit Sethi: You want to talk about it and make a decision right now? I love a decisive couple. We can do it that way. That works. You're open to that. Yeah. You good? Yeah. That was easy. I like that. I like the proposal. I like saying like, hey, here's what I think. No, here's what I think. And then you both agree. Speaking up, articulating your vision, that's really cool. That's going to make a big difference. That's going to help you pay that debt off faster. What are you going to do once that debt is paid off and now you have more? Invest. Yeah. You can literally put hundreds, if not$1 ,000 a month towards investing.

1:44:17Ramit Sethi: You have the money. It's the 700 in child support and the money you were paying towards debt. all of that's going to be done by the end of the year, roughly. Let's say 12 months from now. Yeah. And we would aggressively put it into his retirement, correct? No, I don't think it should all go to his retirement because you're both making money and you both need retirement. Like what if it all goes to his retirement and then you'll end up not being together? Yeah. Not to raise a morbid question, but we need to be practical here. So no, you need to each have your own investment accounts. and if you decide to get married, you know, that's up to you.

1:44:55Ramit Sethi: I probably don't think you need a prenup or a postnup or anything like that, but I would like for both of you to have your own investments. And this is where you have to be willing to say, Calvin, you're older than me. You need to prioritize your investments, which means that, look, we can say like, of your salary, this percentage goes towards retirement, your retirement, but you can't be saving him from himself. Part of what has been missing here is a bit of shielding him from the consequences of his own financial decisions. So Calvin might spend money and not really pay attention to this. And then you come along with a smile when it's like, there's nothing to smile about here.

1:45:40Ramit Sethi: And you kind of say like, hey, let me like handle this. Let me try to handle it. Come on, please like share your finances so I can help. That's not the way it works. A better way is what? Being direct. Yes. And setting boundaries. Exactly. The same way you've done in other parts of life here. Calvin, how much are you going to need to be putting away every single month in order to have enough for retirement? If you ask Calvin that question today, I guarantee you would not know the answer. Correct. Okay. And that's okay. Most, the vast majority of people do not know, but how would you find out is there perhaps a book that was written about this exact topic called i will teach you to be rich exactly and so the two of you could read it you could have a little book club one chapter this person one chapter that person and you could figure out what it looks like to unify that's how you do it there's also um 211 have you heard of this service i want to make you aware of it because it may be something that you can avail yourselves of 211, a free confidential service that connects people across the U.S.

1:46:43Ramit Sethi: to local community resource specialists who find assistance for essential needs, including housing, food, utilities, healthcare, crisis support. I mention it because we talked for a second about what would happen if the two of you separate. Financially speaking, you would both be in a really difficult position. Here's my take. I would rather find out my options now before something bad happens. because if something bad happens, I don't want to have to be like, oh, what do I do? I want to just like open up the playbook and be like, okay, this is what I'm gonna do. With your income, it may turn out that you actually have opportunities for some help with food, stuff for the baby, et cetera.

1:47:25Why not take advantage of it? That's what we all pay taxes for.

1:47:29Ramit Sethi: So I'd like to encourage you to take a look at that and any other resources available. Okay? What surprised you most about our conversation today? the realization that it's a lot worse than i thought it's kind of easy to go and ignore the reality of your financial situation right what the csp does especially with a bit of a trained eye it's like a crystal ball it just lets you see a few months into the future, a few years. You could quickly see that if one of you lost any source of income, the game is over. And I don't want you to get to that point. Thanks for acknowledging that. That's a big one.

1:48:14Ramit Sethi: Shelby, what surprised you? I thought I was coming to you with, you know, wanting to talk about finances all the time in a way that was benefiting us, but I don't think I've been doing it in a way where it actually has been doing anything positive for our situation. What do you think you've been doing? I think I tiptoe. And instead of actually taking action, I allow it to just kind of whittle away at whatever, but it doesn't get us anywhere. Yeah. Nice. That's a powerful realization too. You know, my wish for you is for you to begin seeing yourselves as a power couple. I don't say that to every couple.

1:49:01Ramit Sethi: I don't know. There's some clue that I can sense from the two of you where, you know, there were times where you said like, we talk about stuff. And I was like, oh God. But there were also times where I saw that you could become decisive. And when I see that little hint, I go, oh, there's something there. A power couple can be a couple that is united, that understands each other, that makes it a point to communicate regularly, that disagrees sometimes. I don't mind that. Fine. They talk about it over and over. They don't give up. They try one way. It doesn't work. They try another way. That's a power couple.

1:49:39And also, they have their money dialed in.

1:49:42Ramit Sethi: They are not sloppy. power couples know exactly you ask them what's your savings rate they know who's the one who empties the dishwasher they know so that's my wish for you that's some work to do yeah the one other thing that i see for you is i see lots of positive things happening over the next one two and three years do you know what they are once we get out of debt we can create savings we can create stability security and retirement. So extra security. Yeah. Yeah. What else? We can do more things with our son and family and create, you know, memories and. Yeah. Calvin, what do you see coming up?

1:50:29Ramit Sethi: One, two, three years when it comes to your finances? Not having to worry about debt. Because it will be paid off. Yeah. Yes. And knowing that my family's good. Specifically, here's what I see. The debt's going to be paid off in 11 months, maybe sooner. Child support payments end in about a year, maybe sooner. We have a potential$5 ,000 or more bonus at the end of the year. Then we have, Shelby, your potential income increasing. That'll be a couple of years from now. we have savings of a thousand dollars starting this month that means a year from now you're going to have twelve thousand dollars in savings plus what you already have there's a lot of really positive steps i think maybe you haven't internalized it yet because it's just like we're living like oh we're paying these random bills and that's because you have so much chaos around when it comes to the money but when i look at just the simple numbers i'm like seven hundred a month about to open up soon.

1:51:39Ramit Sethi: The credit card debt and the other debt's about to be paid off. Then the income increase, then the bonus, then the this, then the that. It all really starts to change your financial trajectory. I think you're in a potentially better spot than you think. If what? What's the most important thing? Follow through. Yeah. And is it just one of you doing it? No. No. This fails if you don't both do it. That's the most important, is a healthy relationship. You have that and follow through. Y 'all are good. What do I think will happen with Shelby and Calvin? I think that financially speaking, if they were to execute the plan, as we outlined, they can actually be in very good shape in a few years.

1:52:30Ramit Sethi: They're going to have more income. Their expenses are going to go down. They can allocate that money accordingly. They actually have a bit of time. Realistically, I think it will be very hard for them to execute at a flawless level. I think that there's instability in their relationship. And when you grow up without healthy role models, it's almost like you're operating with one arm tied behind your back. So could they do it? Yeah, I believe in them. Will it be harder for them than other couples? Yes. There is no magic wand when you are operating starting late in life and without a very high income.

1:53:11Ramit Sethi: We ran some simple calculations. If they contribute about$785 a month until Calvin turns 65, the amount they will have for retirement is just over half a million dollars. That's not enough. That is definitely not enough. And at that stage, they would be living in poverty. Could they make changes? Of course, her earnings are gonna go up. I hope his earnings go up. They could get aggressive about how much they are investing and saving. There are things they could do. They have cards to play and they do have time, but they would need to be on it. And they can't be talking about things. They need to be taking decisive action right now.

1:53:52Ramit Sethi: My wish for Shelby and Calvin is that they create a bold, powerful vision of who they want to be as partners, as parents, as individuals. Something that is special, something that is aspirational, something that is not them worrying about bills for the rest of their lives. And then when they do that and they have that identity they want to get the help that's going to allow them to live it. And now let's check out their follow-ups. Hi, everyone. It's our first follow up since our conversation with Ramit. And we were just talking about our biggest surprise from the conversation. And that was just the manageability of getting our debt down and what it takes.

1:54:38He laid it out really simply for us. Yeah. With putting it in perspective of 11 months, that is something that is very obtainable. and it is not as bad as you know we initially thought it would have been yeah we're hoping we can crush it in less than 11 months if we really absolutely really get on our game yeah um one of our biggest uh takeaways was just um well for me it was that um I'm not trustworthy with finances. It really made me look at it in a different way and kind of see it from her perspective and understand that things need to change in order to, yeah, have that trust gained back. I think a big takeaway for me was the fact that I was partially communicating, but just stopping the sentence a lot of the times to kind of appease, you know, you.

1:55:42And I think, you know as Rameet pointed out I should just be confident in what I'm saying and I think if we plan to have more money meetings on a regular basis and continue like an open line of communication about what we're spending so focusing on transparency I think will meet our a lot quicker yeah absolutely and since then we've been really focusing on making sure that we are tight to the budget um groceries and um you know fun money and any extra spending we're really tracking and making sure that we're accounting for what's going out yeah we've definitely been crushing groceries we do weekly trips now um together and we stick to our 600 dollars a month yeah trying to get it a little bit lower than that yeah we would love to get like 500 if we could but we don't want to push it.

1:56:40And then, oh, our fun money, we write it down and we subtract every creature come for every day from it. And, you know, once it's out, that's it for the mumps. So that's been helping a lot. And really keep into the script and, yeah, just trying to plug away at it and make things happen. Yeah. We want to thank you so much for taking the time to help us. We really appreciate it. Yeah, it was an awesome opportunity. And yeah, like she said, we really appreciate it. And, you know, look forward to our growth. Definitely. I'm excited to see where it takes us.

1:57:24Ramit Sethi: If you want to know the exact month and year that you will have$100 ,000 in your investment portfolio, sign up for my new program, Road to 100K. I'll help you hit that number fast. Go to iwt.com slash 100k to sign up.