286. "We have $40,000 in credit card debt, but I can’t say no to my kid"

0:00Ramit Sethi: When I was in my 20s, I was a weird freak who started saving for my wedding before I even met my wife. I knew that one day I wanted to have a big, fat, huge, awesome wedding, and I did not want to have to think about cost as the first primary decision. I am so thankful that I did that. Now, I know most people don't start saving for their wedding in their 20s, but let me ask you this. Do you know if you can afford to buy your dream house? Do you know what it would take for one parent in your household to stay home with the kids? Do you know how much it would cost for you to take your dream trip across the world?

0:38Ramit Sethi: Most people have no idea. And so this thing just stays a dream. They don't even crunch a simple set of numbers to figure out what they can afford. And to me, it is a tragedy to live a smaller life than you have to. I want you to know how long it will take for you to be able to afford that dream house. I want you to know when you can get that beach house or that beautiful sweater. And in fact, I'm going to host a live event to show you exactly how to find the answer out for you. I'm going to show you real questions people have about big things they want. And then I'm going to show you how to crunch the numbers yourself so you know if you can do it or if not, when you can do it.

1:17Ramit Sethi: It's part of my free three night live event series. Sign up at iwt.com slash live. These numbers are a complete mess. Your mortgage is more than your entire take-home income. You each have$20 ,000 of credit card debt. I have probably 20 credit cards. You have 20 credit cards? Do you think this is normal? I don't know what's normal. It's not normal. Oh, God. Okay. It's kind of like a little monster in a closet that we're just not addressing. Is money the monster? Yes. If I say like, oh, let's go out to eat tonight. Well, I got to pay the mortgage. It's like a dig almost. I want to just go out. I don't care.

1:53Ramit Sethi: Couples who are in hundreds of thousands of dollars of debt in their 50s do not eat out. Ever. Pretty much ever. What happens if we change nothing on today's call? You never retire. You're always working. I have to face reality, I guess. I just don't know what the move is. Right now, you are on track for a very, very dangerous rest of your life. We can't end this call until you make serious, substantial changes because the trajectory you're on, it's over. Have you ever spent money just because you were tired and you wanted to make your day a little easier? You don't want to cook, so you order delivery.

2:30Ramit Sethi: Your kid wants something at the store. You don't want to hear them cry, so you say yes. But what happens when you keep making those decisions over and over, even when you can't afford it? Today, I'm speaking with Trevor and Lisa, 53 and 54 years old. Listen to this line from Trevor's application. Quote, she has maxed out credit cards, and I don't even know if they're getting paid. Sooner or later, this issue will need to be addressed, and I'm not sure if we're ready for that. It's like we're heading towards a cliff. What really caught my eye in that application was the phrase sooner or later. It's like they know there's a problem, but they're putting off the conversation.

3:11Ramit Sethi: And I want to understand what is going on that's stopping them. But before I speak to them, let's take a look at their Monarch accounts. All right, let's take a look here. We have, no way. Housing is$8 ,000, but they actually spent$40 ,000. There's no way. How are they spending so much on their mortgage? Whoa, but their fixed costs were way higher than planned. 230 % of budgeted income. How can you plan to spend 230 % of what you make just on fixed costs? That doesn't make any sense. I'm very confused here. Is this just all wrong data? They planned on$304 in subscriptions. They actually spent$1 ,100.

3:52Ramit Sethi: They planned on spending$1 ,469 on debt payments, but they actually spent$5 ,500. So basically, they're just spending more than they had planned, which suggests to me that maybe they just have out-of-control spending. All right, let's take a look at the months here. Whoa. Okay, so we have a highly variable income here. So we can see that a few months ago, we had an income of$16 ,000, but expenses of$14 ,000. But then the next month, income of$16 ,000, expenses of$30 ,000. Wow, that's massive. This is what happens when you have sporadic income. Most people just go, well, I hope it works out in the end.

4:33Ramit Sethi: Whoa, debt payments are 65 % of where their money is going. You're sunk. If that's the case, you are sunk. My takeaways from looking at this are there is just a lot of mess here. It's hard to even understand what's going on, which tells me if you have messy accounts, you almost certainly have messy spending. I can tell there's a business owner in this relationship. Okay, we can work with that. Sporadic or irregular income, we can work with that. But overall, I don't see a lot of focus and I see a lot of spending. Stick around until the end for Trevor and Lisa's follow-up to find out if they put my plan into action, and if they're on track to live their rich life.

5:13Ramit Sethi: Let's meet Trevor and Lisa. When I say the word money, what do both of you feel about it? Lisa? Stress. Trevor? Same. Anxiety. Got it. Okay. How long have the two of you been together? Eight years. Eight years. Married? Married for six years. Great. And any children in the picture? Yes. I have a 14-year-old son, and he has two adult children. Okay, so the two of you and one child in the house. Great. Let's think about the last, say, six months or so. Can you think about a time where the two of you really disagreed about money? Well, I feel like we argue about money almost every day. Really? Yeah.

5:55Ramit Sethi: Wow. Take me to one of the bigger arguments you had in the last few months. We don't really argue per se, but I'll just say like, oh, it would be cool if we did this. And he'll be like, well, the mortgage is due in two weeks. And I'm like, okay. And then I just kind of shut down because I feel like it's constantly, I'm being like scolded, even though it's not really a scold. He's not scolding me, but to me, it feels like I'm being scolded. Money is like an area we don't really talk to each other about because we know that it will cause an argument and kind of avoid it. And like, there's so many responsibilities.

6:36Money has always been a source of anxiety for me because of all the expectations. There's birthdays and holidays and things that you want. And, you know, you expect it to provide them.

6:48Ramit Sethi: So you don't talk about money a lot. Don't argue, but then Lisa says you argue about money almost every day. Argue is not the right word. It is comments like if I say like, oh, let's go out to eat tonight. Well, I got to pay the mortgage. Like that kind of thing. That to me, it's like a dig almost. Okay. A little jab. And then do you end up going out to eat? Yes. Because of the way we split up the money. I pay for all the food and groceries and going out stuff. And he pays for most of the bills and the mortgage. So I kind of make the decision like, well, I don't want to cook. I'm tired. I've been working all day.

7:32I want to just go out. It's 30 bucks, 40 bucks. I don't care.

7:37Ramit Sethi: Trevor, why'd you apply to speak to me today? Because I feel like that pattern is unsustainable. It's kind of like a little monster in a closet that we're just not addressing. And it's like, no one wants to go in that room where the monster is, but we have to one day. Yeah. Is money the monster? Yes. Okay. And what if you don't? What if we talk for a while today and nothing changes? What happens? At some point, something will break. Something will give. Maybe we'll move. We'll have to move, which will cause some headache. We're not going to reach whatever financial goals we set. Doesn't sound so bad.

8:12Ramit Sethi: Most people don't reach their financial goals. Most people don't even have financial goals. So what? What ends up happening is you never retire. You're always working. Yeah. Lisa, what about you? What happens if we change nothing on today's call? I think if we don't make some changes, I mean, I'm not happy, even though I feel like I am the cause of most of this because I have most of the debt. I'm not good with spending. I'm not good with a budget. I'm not happy with the way I do it either. I want to feel peace about how I'm handling things. And it's brought a lot of stress to our relationship as well.

8:52And we're not getting along as well as we used to. And we think about money very differently. And it stresses him out a lot and makes it so that he sort of shuts down a little bit. And I don't like talking about it. So we end up like at an impasse where nothing happens.

9:13Ramit Sethi: Respectfully, because I've read all of the material you sent over, I feel like the situation that you were in financially and the way you're talking about it don't match up. You're both being very polite. We're not going to reach our financial goals. It's a bit stressful. If you continue the way you are going and you've told me you want to retire in five years, you will be able to withdraw about$26 ,000 per year. Can you live on that? No. No. Okay. End of the story. If you don't change something, you're not getting younger, you're getting older. Time is working against you now when it comes to your money.

9:45Ramit Sethi: So when we're sitting here talking about like, oh, it's a bit stressful and we go out to dinner and this, we're not even in the same universe right now. No. I don't usually cut to the chase this early on, but I'm just struck by the way you're talking about it. It seems like, eh, it's like a minor inconvenience. This isn't minor. This is very serious. Right. I think we take it lightly because it's depressing. So no one really wants to be depressed all the time. We have to live. So we kind of, like I said, we leave that monster in the closet. And when he busts out, that's when it all comes to head.

10:22Ramit Sethi: That's right. That's very perceptive. So if you are having this conversation with me today, and the idea is like, okay, let's let this monster peek out its head. And that's it. And let's maybe talk a little bit around the edges about$5 here,$50. there, y 'all, that's going to do nothing. It's either bring this monster out and figure out a way to shoot it in the head. Sorry to be so visual. And it's going to make us uncomfortable. We're going to have a lot of uncomfortable conversations or we might as well not even talk. Right. That's why we're here. Great. Great. Okay. So do we all agree we are here to talk about money in the most honest way?

11:01Ramit Sethi: Yes or no? Yes. Great. Okay. And do we also agree that we can't end this call until you make serious, substantial changes because the trajectory you're on, it's over. By a show of hands. Okay, both people putting hands up. Great. That's the kind of conversation I'm willing to have. Perfect. I want to take a look at your numbers. What was it like to do the conscious spending plan together? Terrible. How come? I don't even like listing all the things that I owe. It becomes more real. And I also don't want Trevor to know every single thing that I have going on. Why? You're married. I don't want him to just be like, okay, I'm done.

11:52I can't do this anymore. I'm going to take the money that I make, and I'm going to deal with what I need to deal with, and you can fend for yourself.

12:00Ramit Sethi: Trevor, are you at that point? No. No, I'm not at that point. All right. What was it like for you, Trevor, doing the CSP together? We did it together, but we were uploading our own things. So she's uploading her stuff and I'm uploading my stuff. You know, I'm not an angel either. But like I said, we've always had this habit or poor habit of mismanagement, I guess. And so we're both dealing with our own monsters. And we're just trying to figure out a way to fight them together. Well, did you sit down physically together to do this? We did sit down physically, but we were sitting next to each other while entering our own separate stuff.

12:38Ramit Sethi: Lisa, am I noticing, is it nasal or are you tearing up? Yeah, I am tearing up because it's just hard to talk about this stuff. And it just feels shitty to be like this and be causing this much stress for both of us. So I don't mind if you cry. It's going to be some challenging conversations today. That's how it goes I know but that's why you're here. You came here. You went through a lot to get here So cry if you have to cry. Tell me if you need a break. I'll give you a break. No problem Okay, we're gonna do it Okay, all right When I think about the two of you sitting down for your csp and filling it out separately and then going Okay, ramit like do some magic I think that you fundamentally misunderstood The entire point of the csp What is the point?

13:28Ramit Sethi: What is the point that you thought of putting your numbers into CSP? I don't think Trevor even doesn't even know what the CSP is because I did it. I mean, he sat there and I said, okay, let's, I need this amount and this amount and this amount. And I typed it up. That's surprising. He applied, but you did it? Yeah. Why? When it comes to administrative stuff like that, I take the lead. I usually take the lead. Y 'all are proving my point. You thought the point of this was to type numbers into the conscious spending plan. That's not the point. What's the point of doing it together? Why did we specifically say do it together?

14:04Ramit Sethi: Why? So that we're more aware of what's actually happening and what's really going on. Yeah. Remember when you were dating? What if I said the point of going to a restaurant is to provide sustenance for each of you. Each of you is going to get a balanced meal. You're like, what the hell are you talking about? That's not the point of a date. What's the point of a date? Get to know each other. What's the point of a CSP is actually to connect over money. You thought it was to enter numbers and be right. I need you to fundamentally rethink the point of showing up today. If you come here thinking I need to be right, or I want to prevent myself from looking bad or being told I was wrong, this thing is already over.

14:45I don't want to prevent it. I'm just scared of it. Nobody likes to hear that they're the problem. They're the ones that are messing things up. They're making terrible decisions. Nobody wants to hear that. I'm anxious because I know that's what I need to hear in order to get things right.

15:03Ramit Sethi: No, wrong. How much of your life have you gone through by saying, I know that I was wrong. I know that somebody needs to tell me to do better. How much of your life have you gone through thinking that, believing that? My whole life, probably. Exactly. Did it work? No. You believe that somebody needs to come in here and tell you, Lisa, you've been bad. And you know that it's going to feel bad, but you think that's what's going to change you. As if I tell you you've been bad enough ways, enough times, it's finally going to sink through. Wrong. That's not how it works. Some very confusing things going on here.

15:39Ramit Sethi: Trevor applied to speak to me. He's obviously concerned about what's going on. He didn't even fill out the CSP. Lisa did. So already I'm like, what's the dynamic here? But then they really did not take this seriously. The way that they envisioned the point of this was, all right, we got some homework from this guy. Check, check, check. Let's just put some numbers in. I don't understand this, whatever. What you can see here is that Trevor and Lisa did not think about the point of the CSP. If they had taken even 60 seconds to say, what is the point of this? What do we want to get out of this? They might've said, gosh, we should probably connect.

16:20Ramit Sethi: That would have totally changed the dynamic. But because they walked in, having made the incorrect decision miles ago, they already lost. This is gonna be a difficult conversation. The numbers that you are about to see are hard. The ages, the situation they are in, even the communication, there's no easy answers today. and I want you to know that going in. This message is sponsored by Kindred. When people tell me their rich life is to travel more, I always push them to get more specific. Where are you going? Where are you waking up? What does the morning look like? Are you walking to a corner cafe?

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19:35Ramit Sethi: I'm going to look at the numbers. I'm going to pull them up on screen. And we're going to see what happens as we go through these numbers. Okay. All right, Trevor, can you read off the words in bold and the numbers in full for this entire box, please? Assets,$620 ,000. Investments,$382 ,627. Savings,$1 ,400. Debt,$43 ,923. total net worth 960 ,104. Great. What do you think about those numbers? I don't know what to think about the numbers because I don't fully understand them. That's honest. I appreciate that. Okay. Most people say, it looks okay. I wish it was more. Like that's kind of the level that most people are.

20:17Ramit Sethi: And I think that you're saying something really honest. Hey, I don't know, good, bad, whatever. Yeah. We'll get to that. But I'm just trying to get an understanding of your comfort with these numbers. Yeah. Lisa, let's go to the combined gross monthly income. What number is that? $20 ,226. Okay. The two of you make$242 ,000 per year. By a show of hands, who knew that? I see no hands going up. Okay. Interesting. What did you think you made per year? Lisa? I think Trevor makes$120 ,000. Uh-huh. And I don't know how to consider my pay. Like if I'm paid whatever my income is or if I'm taking away all my expenses, that's part of my big issue is that I don't really understand it fully.

21:09Okay.

21:09Ramit Sethi: That's fine. Trevor, what did you think you made per year? I know that I felt like I brought about 120 a year, but I could not have fathomed how much Lisa brought to the table. What do you guys think hearing that you make$242 ,000? The number sounds good, but the reality of it is we don't manage it well. So Trevor, you make$8 ,000 a month. Is that correct? It's around there. Yeah. Okay. So somebody makes$12 ,226 a month. Is that Lisa? No, that's Trevor. The$8 ,000 is me. What's happening right now? We don't know our numbers well enough. Not only do you not know your annual income, Trevor, you don't know what you're making per month.

21:49Yeah.

21:49Ramit Sethi: This is a problem. How are we going to manage money if we don't know how much you make? Yeah. So Trevor makes$12 ,226. Lisa makes$8 ,000. And that's in your business, is that correct? Yes. And then how much do you take home? Probably$1 ,500 or$2 ,000. Okay. Makes sense. It says$2 ,000 here. All right. Trevor, why is your take home$5 ,700? That seems pretty low. Medical pay and 12 % for 401k. and then there's like maybe 401k loan. Huh? You took a loan out? From 401k, yes. Okay. Why'd you do that? Pay bills, yeah. All right, so you have that going. That's deducted, all right. Okay, so your combined take-home is 7 ,700 a month.

22:39Ramit Sethi: Considerably different. From 20k to 7 ,000. That's a big difference. Normally, we would see this number at something like, I don't know, 12K, 13K maybe. So then let's go to the fixed cost number. Lisa, what's this number you see here for fixed costs? 230%. What does that mean? I believe it means that we are spending more than we're making. Correct. You are spending more than double what you are making every month just on fixed costs, just to keep the lights on. You have a mortgage or a rent? Mortgage. All right, your mortgage alone is more than you make every month. What does that tell you, Trevor?

23:17It tells me that I didn't put the numbers together well enough to get it when I got into here.

23:23Ramit Sethi: Yes. And what else? If these numbers are accurate and your mortgage is more than your entire take-home income, what does that tell you? I don't even know how we're sustaining it. We somehow get by and I don't know how we're doing it. What it really tells me is just, we bit off more than we can chew. And the arguments, you know, we had in the beginning where the conversation was like, oh, I'm not sure the monster in the closet. Like those days are over. I don't really care about that anymore. I care about this. I care about math. If you're spending more than you make just on your mortgage alone, that's the end of the story.

23:52Ramit Sethi: How we feel about it is less relevant now. We will talk about your feelings, but we need to solve this. Otherwise, y 'all will lose your house and all of it will be gone. That's it. We have talked about selling the house and renting. And I feel like we were kind of waiting for this to happen before making like a final decision because we don't know the steps to take. Or if that's the right choice for us. We'll go through it. Yeah. Let's continue on. I want to look at the rest of your fixed costs here. So we have 230%, which is the highest number I've ever seen of anyone's fixed costs. You have car payments,$2 ,170 per month.

24:35Ramit Sethi: What's that? I'm a mobile dog groomer. That's the vehicle payment for my van. And that's why I don't take home as much money as I could be because I have so many expenses with the business. Okay. Debt payments of$1 ,469. What's that debt? Credit card debt. How much do you have in credit card debt? Me, I probably have pretty close to$20 ,000. $20 ,000. What about you, Lisa? About the same. Okay. Groceries at$2 ,100 a month. What's that? I don't know if that included eating out. We eat out a lot. And yeah, I spend a lot on groceries, a lot on food with my son. Also, that's, you know, he constantly wants to eat out.

25:20Ramit Sethi: You have trouble saying no to your son? Yes. Almost every single person I've ever met who has credit card debt struggles to say no to their kids. What do you make of that? It makes sense. I mean, you want to do, you want to make your kids happy. And it's more about not adding to the stress that we already have. I don't want to have arguments with my kid every day. He'll, you know, I get home from work, I'm tired, I'll make dinner and he'll be like, I don't want that, I want McDonald's or I want this. And - You want me to handle this for you? No, because I already know what to do. And a lot of the time I do say no, but a lot of the time I just don't want to deal and I give in.

26:00Ramit Sethi: How come you didn't just accept my offer to help? I don't know. You do that a lot? Yes. I'm half joking, but if you FaceTime me and you go, hey, talk to my son. And he goes, hey, my mom made this meal and I don't want it. I want McDonald's. Do you know how much joy I would take in telling him no? Yeah. Yeah. Okay. Let's continue on. Miscellaneous at$2 ,319. I actually think that's probably true. I think you do spend money on uncategorized stuff. We're going to look at that. if we look at your investments, we have$1 ,430 going towards investments. Savings at 18%. I don't believe this. I don't believe you're putting$1 ,400 a month towards a savings account.

26:45Ramit Sethi: Is this true? No, that might be the balance. That's the balance. Right. All right. And then you have negative$12 ,000 left over. I'm going to be very honest with you. These numbers are a complete mess. We're screwed. No, don't use humor to try to escape the reality of the situation. you did not actually do these numbers properly. I don't mind if you get the numbers a little bit wrong. Most people get 20, 25 % of the numbers wrong. I don't mind. I don't think you actually took this seriously. I don't think you respect money. You certainly didn't respect me enough to do this and do it even semi-correctly.

27:22Ramit Sethi: I want to help, but I'm not sure where to go if your numbers are so wrong that you are negative$12 ,000 per month, which is obviously impossible. I don't know how we're wrong though, because I feel like we put in everything accurately. Yes, where I'm confused too. I'm going to walk you through it. Okay. So this is zero. Post-tax retirement savings, this suggests that you are investing$1 ,430 per month. That's incorrect. Okay, we'll look up what it is because we have your accounts connected through Monarch. But I'm going to put that at zero as well. Okay. I don't know about your income, but I want to go and I want to take a look.

27:57Ramit Sethi: So let's go through some of your numbers and let's see what we have here. All right. So here off, I'm going to go last month. You actually had a really good month. You planned to make$7 ,000, but you made$17 ,000. Did you know that? No. Even when things are good, you don't know it. No, we don't because we don't discuss it together. I told Trevor I used to get bills in the mail. I mean, even in my 20s. and if I didn't have enough money in my account, I would put the bills aside and just pretend like they didn't exist. That's kind of how I've always been and I continue to do it. Does it work? No, it doesn't work.

28:43Ramit Sethi: Why not? It works. You all have what appears to be a beautiful house, eat out a lot, have a van, have a business. Why not? It seems to work. No, it's because Trevor has good credit. That's why we have the van. That's the only reason. I wouldn't have been able to get it without him. And I fly by the seat of my pants when it comes to money. Like instead of paying my two credit cards that I have the biggest balances on, I haven't made payments in two months. And instead we go out to eat. And I don't tell Trevor that. It's less stressful for me to not think about it, not deal with it. Sounds like it's working great.

29:24Yeah, clearly it's not.

29:26Ramit Sethi: What do you mean? You're getting exactly what you want. You get to eat out. You get to have a business, even though you yourself could not afford to have it. You get the house. What's not working? It's working exactly the way you want it to. I mean, it's not the way I want it to. I want to be better at handling all this. And I don't want to have secrets. I don't want him to be so stressed about money and retiring and all this stuff. Are you telling me that you would rather downsize to a small apartment, give up the business, not eat out except once every two months in order to quote, be better and be less stressed about money?

30:06I'm not willing to do all of those things just to quote, be better. No.

30:11Ramit Sethi: Okay. That's an honest answer. I agree with that. Would you be willing to do those things for anything? I'd be willing to do those things in lieu of losing important things like my husband or so yeah great now we're getting somewhere trevor have you ever had a honest conversation with lisa about money and your concerns well i've tried yes i've tried to have these conversations but it's tough without maybe a mediator i guess you've ever seen one therapist mediator anything like that yes actually oh good You did it together? We have. Good. How'd it go? We didn't continue it. It's tough to find the fit, like the personality conflict, like the cultural differences or something.

30:55Ramit Sethi: All right, Trevor. So do you want to have the conversation with Lisa about money right now? Sure. If you could say anything to Lisa and she would listen, what would you say to her? Well, I don't know what to say to her. I really don't know. I'm like, I'm at a loss because I'm no, like I said, I'm no angel either. so it's kind of striking to me that you know I asked have you ever had a serious conversation about money you said no but it's because we couldn't find a counselor because of fit etc but now I'm giving you complete carte blanche the opportunity to say anything you want and your response is I'm not sure what to say is it possible that you haven't talked about money because you actually both don't know what to say about money maybe even you don't really want to talk about it maybe even I'm a very emotional person, Trevor's very unemotional.

31:44So whenever we talk about these things, I will start crying and he'll immediately shut down and say, I can't talk to you if you're crying. And then that's kind of the end of the conversation because I can't control it. I'm having an emotional response to it and he cannot deal with the emotion. Okay. So we end up not talking about it.

32:08Ramit Sethi: Let's say that my wife and I spent 230 % of our income on fixed costs. Let's say that we had close to no savings. We were in our 50s. It was a pretty dire financial situation. And she says, I can't talk about this because I start to cry. And then I say, yeah, and I shut down. What advice would you give us? I would say you both have to suck it up and just deal with it and talk about it. But she cries and I shut down. So what would we do? She'll have to cry and you'll have to not shut down. Great. That's pretty honest. Or we could write a letter to each other. Or we could record voice notes. Or we could see a therapist.

32:47Ramit Sethi: Or, or, or. There's a thousand different ways we could do it. But I'm not going to let crying stop me from one of the most important conversations. I'm not going to let my inability to stay present in the conversations. I'm not going to let those speed bumps get in the way of a rich life. Are you? I don't want to. Okay, then let's not. If you're going to cry today, cry. I don't mind. Crying is fine. It's normal. I don't mind. Trevor, you could cry too. Everybody could cry on this call. Let's do it together. Trevor doesn't cry. I know. I also have a difficulty crying. This is messy. I was right.

33:19Ramit Sethi: The numbers themselves are messy. But when I see messy numbers, messy account structure, it usually reflects something else messy in a relationship. You know, it's kind of like messy mind, messy office, or messy whatever. Whatever the phrase is, I don't know what it is, but it's messy here, it's messy everywhere. I want to tell you that when you are dialed in with some part of your life, it could be money, it could be fitness, it could be parenting, whatever. You know what it feels like. It feels like we all are on the same page. If you think about it with money, if I'm going out to eat, I don't have to check something to be like, oh, is it okay for us to buy celery?

34:05Ramit Sethi: I already know because I have a system that handles it. Fitness, am I going to work out today? It's already dialed in. I'm going at this time, these days, and I know exactly what I'm going to do and I'm going to track it. This is what I want you to be working towards. And it's okay if you're not there with money yet. Most people are not. That's okay. But there is something in your life that you are really good at. and it could be you individually, it could be you and your partner, I want you to start asking yourself, if I was that competent, that dialed in with money, what would it look like and feel like?

34:36Ramit Sethi: It would not look like this, I can tell you that. One of my challenges today is gonna be to take all this messy information, numbers, contradictory accounts and try to find out what matters and what we should do first. Common questions I hear from couples who are about to retire, are we gonna be okay? how do we know if we have enough, and what if the market takes a downturn? Now, these are good questions to ask. You definitely want to plan for the worst, but I noticed that very few people plan for the best. That's why it's helpful to explore all scenarios with the help from a flat fee planner like our friends at Facet.

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35:49Ramit Sethi: Plus their mobile app makes it easy to do everything in one spot, like tracking your goals, checking balances out, messaging your planner, seeing monthly action steps, and more. As of the date of this recording, Facet is waiving the enrollment fee for new annual members. And for my audience, Facet is offering$300 into your brokerage account if you invest and maintain$5 ,000 within your first 90 days. Head to facet.com slash Ramit to learn about which membership option is best for you. Facet is an SEC registered investment advisor. I'm not a member of Facet and I have an incentive to endorse Facet as I have an ongoing fee-based contract for cash compensation based on this endorsement.

36:28Ramit Sethi: All opinions are my own and not a guarantee of a similar outcome. Y 'all follow these people on TikTok? Somebody will post a picture of them behind a blade of grass and a white background and they go, find me. And then this person on TikTok will locate them, geo map, Google map, all this stuff. They go, this is where you live. This is the angle of the sun. This is who you are. I'm watching this stuff like, what? This is pretty scary. If someone can find you online from just a little bit of information, imagine the damage that a scammer with your actual personal data can do. That is why I pay for and use Delete Me personally.

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37:48Ramit Sethi: That's joindeliteme.com slash Ramit, code Ramit for 20 % off. I want to do a debt breakdown. You have$44 ,000 of debt. You each have$20 ,000 of credit card debt. What's the rest? The 20 was an estimate, so it may be a split between the two of us. That's it. Two different credit cards. That's your total debt? Not two different credit cards. I have probably 20 credit cards. You have 20 credit cards? Why? 20? I didn't know 20. I mean, I'm exaggerating. I'm exaggerating, but it's a lot. Okay, stop it. It's a lot. Yeah. Okay. Okay, at least 10. At least 10. Okay. So yeah, so I'm no different. I have maybe 10 credit cards.

38:32Ramit Sethi: You each have 10 credit cards. Yes. Do you think this is normal? I don't know what's normal. I'll tell you. I guess not the way you're saying it. It's not normal. Okay. What is normal? Two credit cards. Two? Wow. Yes. Oh, God. Okay. All right. Let's go ahead and take a look at some of your accounts in Monarch. So last month you made$10 ,000 more than you had planned. So you told me that between the two of you, after taxes and all that stuff, you take home$7 ,000 a month. That's this,$7 ,731. You actually made$6 ,000 more than you had planned. Okay. So what we're looking at here, I see a lot of payments from your pet business, payments of roughly$500,$600.

39:22Yeah.

39:23Ramit Sethi: And I also see a lot of money coming in. That's where Trevor works. Oh, great. Okay, so you have paychecks coming in from there. Great. Okay. How come you pay yourself like every few days, Lisa? I used to have an accountant. I'm not an accountant, a bookkeeper. And I don't anymore. So now I don't pay myself unless I need to pay bills. So that's another big issue. I need to get another bookkeeper again so that it's more under control. Okay. Let's look at transportation. $3 ,100 last month. Interestingly, a lot of Tesla charges. What's that? Charging? $145. That's probably insurance. All right. I'm looking at quite a bit of gas.

40:09Ramit Sethi: I'm assuming that's for the business truck. It's the van, yeah. All right. $2 ,169. That's the van? That's the van payment, yeah. Yeah, all right. Let's look at the rest of it. Debt payments,$3 ,063 in a month. We have two loan 90. We have freedom. That looks like a credit card. Freedom is mortgage also, isn't it, honey? Freedom is freedom mortgage, yes. How do you have two mortgages? I don't know what that top one is, but I know the other one is the mortgage. All right. Phone,$553. How's that possible? That's my business phone, my business line, and the iPad that I use for my business. And my son's phone is on it too.

40:57Okay.

40:58Ramit Sethi: Everybody feels like low energy right now. Am I the only one feeling that or are you two feeling it as well? I'm feeling it. Money does that. Yeah. You let it do that. How do you think I feel when I talk about money? You probably are excited about it because you know what to do with it. Yeah. True. What else? I'm assuming you like it. I'm assuming you like this. You love it. I mean, because… Why else would you be doing this for a living? Right. You're good at it. I appreciate the compliment. Let me ask the two of you. What is something that each of you is good at? Being creative, doing creative things.

41:37Ramit Sethi: Great. An example, what would it be like? I'm artistic. I do a lot of crafts. Perfect. I'm a dog groomer. That's a creative profession. Perfect. Trevor, what's one thing you're good at? I wouldn't say that there's an actual theme, but I'm consistent. Okay. All right. Think about how you talk about the thing you are good at and the way you feel about it. Okay. Now, if you apply that to money, How would it look and feel when you worked through money? Probably a lot better. Like if I went to a class on learning how to knit something, I'd be like super into it. If I go to a sci-fi movie with Trevor, I'm kind of like, okay, when's this going to be over?

42:19And that's how I feel about talking about money.

42:23Ramit Sethi: Okay, now tell me what it would feel like if you felt the same way about money. What would it look and feel like that you feel about being creative? I feel like I know what the hell I'm doing. And I'd be, it would make more sense to me. I wouldn't be making these mistakes that I'm making. You notice that whenever I ask you these questions, you're going into the negative. That's kind of what I do. Yeah, it's not working for me. It's not working for me either. Then let's change it. Stop doing that. And instead, try to stick with me and answer my question. What would it look and feel like if you had the same skill and approach with money as you do with creativity?

43:02I feel like I'd be a lot wealthier. I feel like I'd have more money coming in and I'd be using it for better things and not things that are just wasteful.

43:14Ramit Sethi: What else? When you saw all these numbers, like if I walk into a yarn store, as a guy like me, I'm like, what is this? This is overwhelming. I don't care about it. I don't understand it. That's how you're talking about money. Now, when you walk into a yarn store, what do you see? Potential. Yes. Yeah. You see possibility of things that don't even exist yet. Correct. That's what I see with money. I look at these things. It all makes sense to me. I see this. I see that. I go, yeah, okay, some mistakes here and there. We could fix this, da-da-da-da. And I can see the end result. You can see a blanket.

43:47Ramit Sethi: I can see the equivalent with money. That is how you might feel. I need you to get there. Okay. I need you to even visualize that the same way you walk into a yarn store, you could do that with money. That's what I'm talking about. Trevor, do you see what I'm talking about here? If somebody says to you, hey, can you do that for the next 45 days straight? You go, yeah, of course. Consistency, no problem. This is a given, done. That's the same way you can be about money. Hey, can you figure this stuff out? Yeah, of course. Yeah, it might take some work. I don't mind putting the work in. I can figure this out.

44:17Ramit Sethi: That's the same way you both can feel. But if you don't allow yourself to unlock, Locke, you'll just be sitting here living in the past. Oh, it sucks. I don't understand. We're not doing that. Okay. Lisa, I can see that you're getting this. Yeah. Just by the tone of your voice, you're like, oh, I could just see a slight upturn. Well, that makes sense to me. Great. Yeah. I'll tell you, honestly, I've always been fascinated by people who are creative and can see things. Like you have people who walk into an empty apartment or house and they can just see it. That's me. I want you to apply that same principle.

44:50Ramit Sethi: You might have to work a little harder with this, just like I have to work harder to do what you're naturally good at. Yeah, I want to. I want to see money like that because I feel like that would be life-changing. Yes, that is a breakthrough. Great. Now stick with me. Let's go through some of these other numbers. Some of them are going to be messy. Some of them are going to be depressing. Great. It's all helping you get better at the skill of money. Okay, Trevor, come along. Let's watch. All right, I'm putting some more up on screen. Subscriptions, you planned at 304. It was actually 1 ,118. Let me look into this.

45:27Oh my God. That's a good reaction.

45:31Ramit Sethi: You surprised Lisa? Yes. All right, let's look at it. Actually, you read it off, Lisa. Read off these subscriptions. Just go right down the list. Go ahead. Apple, Adobe, Amazon. That's a huge one. Ring, Duda website, Patreon, Google, Intuit. NetSol, that's my website stuff. Apple, again, Amazon, Relay, Tesla, Netflix. Oh my gosh, Hulu, Amazon, everything. It's everything in the world, basically. It's a lot, right? Yeah. Just looking at that, what do you think? We spend too much money on bulls**t. Okay. Would you be willing to make a change on that? Yes. Great. Love it. All right, let's look at some other stuff here.

46:13Ramit Sethi: And now we're starting to get a picture of what's going on here. Let's take a look at Miscellaneous. We have a lot of bank stuff. What is this? Those are my credit cards. Minimum payments? Yes. Yes. I'm going to fix that. Yeah. Discover$41. You're paying the minimum on all the credit cards. Yes. And Discover, I owe over$7 ,000 and I'm paying minimum. Do you know how much you're going to end up paying in the end? I do. I do know. You still do it. Why? Because I tell myself I can't afford to pay more because I'm not willing to give up other s***. Okay. Trevor, what about you? What are you spending money on here?

46:49Ramit Sethi: Bills, credit card payments. Okay, what else? Those memberships. Those are yours? Some of me are. All right. Let's look at dining out for just a second. Whoa. Yeah. All right. This year,$7 ,300 on dining out. Let's just take a look here. So acai,$36. That was yesterday. What'd you all get? Two acai bowls. We eat there way too often. I can see that. You ate there yesterday. You ate there two days ago. Before that, you went to Boba, Taco Bell, In-N-Out, Coffee Bean, McDonald's. A lot of that is my son and I need to change it. Okay. Do we want to get your son here? I'll lay down the law right now.

47:33He's at school. Please go.

47:35Ramit Sethi: Yeah? Yes. It's interesting. I actually think you would want me to talk to him. I totally would. Because it would mean you wouldn't have to talk to him. Correct. Yes. Bingo. 100%. So now that I have taken a look at this, I have one more thing I want to look at, and then I think I will have a full picture. Okay. We're going to look at your accounts. So we have in your checking and savings, I see maybe 15 accounts here. You have more accounts than I have. Let's take a look at credit cards, which, by the way, have$36 ,000 on them. The number of credit cards here, including B of A, Kohl's, Wayfair, TJ Maxx, Apple, Citi, Nordstrom, and on and on and on.

48:24Ramit Sethi: Why do you need 10 cards? I guess it just kind of worked out like that. Somebody will offer you balance transfer for 0 % interest, and you take the offer, and then you get another one, and there's 0 % interest. So you're just moving the debt around until— Why do you do that, though? To try and save money and try and slowly pay it off. You ever paid off doing that? In the past, I have had zero debt, but there's no defense against the debt coming back. The way you both talk about money is as if it happens to you. What you have is something called an external locus of control. It means that you believe control is external of you, that you react to whatever life throws at you.

49:10Ramit Sethi: Car is going to break. Son's going to ask for food. Dog grooming client is going to disappear, et cetera, et cetera, et cetera. Yeah. And I just got to figure out a way to react. And there's a lot of convenient phrases I would be willing to bet you grew up with. You know, money comes, money goes. These kinds of phrases that indicate, ah, you just got to put your nose down. You got to nose to the grindstone. You just got to work hard as if we just have to react versus. Neither of us are proactive. Correct. Yeah. The thing is, you can do it for a long time. Y 'all are in your 50s until it stops.

49:43Ramit Sethi: And when it stops, especially for people that spend hundreds of thousands of dollars like you do, it hits like a brick wall because you will be forced to go from where you are to a place you do not want to be. And you will not have the skills to know how to downshift. It'll be a very dark future. Just look at these numbers. They are catastrophic. What we like to believe is that if they truly understood what these numbers mean, they would be, here, we're ready to do anything. Tell us, we'll do it. We know this is a ticking time bomb. We know we're in trouble. Tell us, we're ready. But that is not how humans behave.

50:21Ramit Sethi: As you can see here, the situation is not just difficult, it's dangerous. And I'm gonna tell you right now, there's only so much that I can do. A lot of people in the last 30 or so episodes have been frustrated that people come on this show and their CSP is kind of messed up. and what people really want is for my team to help them fix their CSP before they come on here. That is the wrong approach and I intentionally do not do that. First of all, I wanna see how people fill in the numbers. I don't really care if it's a little bit wrong. But second, as you can see here, we actually went a step further.

50:55Ramit Sethi: We had them connect all of their accounts and it is still totally wrong. So getting more information is not going to solve a psychological or emotional problem. You've got to understand that. In America, we have this deeply held invisible script that we need more information that's gonna solve it. Not true. More information is not solving their problem. They have all their accounts connected together. They don't even know what to do with it. They can't talk about money because this is not just an information problem. It goes far deeper than that. I wanna thank our new partners at Monarch for setting up our couples on their platform to see their exact conscious spending plan categories.

51:39Ramit Sethi: Monarch is a private personal finance app that brings all of a household's accounts, checking credit cards, loans, and investments into one clean dashboard on your phone or computer. One of the biggest reasons I chose to partner with them is that Monarch is built for couples. You can add your partner or even your financial planner at no extra cost so everyone can see the same financial picture with shared goals. This turns your monthly money meeting into calmer check-ins where everyone is on the same page. One thing I love about Monarch is it allows you to save up for your rich life goals. If you want to save for a wedding or an amazing vacation, an emergency fund, a house, a baby, college, retirement, Monarch makes it really easy.

52:20Ramit Sethi: You set your goals up, you tell it how much you want to save towards that goal every month, Monarch lets you see your progress visually along the way. Try Monarch for free today and get 50 % off your first year of Monarch's core tier with code RAMEIT at monarch.com slash RAMEIT. And when you sign up with my link only, you'll get your Monarch account customized with my exact CSP categories so you can see how you are stacking up to your plan each month. That's monarch.com slash RAMEIT with code RAMEIT. Lisa, when you think about your childhood, what do you remember your family saying about money?

53:00It wasn't really talked about. My dad brought in the money. My mom didn't. She was like a secretary or didn't have a whole lot of money coming in. And then things would happen. She couldn't afford something. And I remember us living out of one of those igloo coolers because our fridge broke and she couldn't afford to go buy a new fridge. And then she would ask my dad to help us out, basically.

53:27Ramit Sethi: Ask your dad to help out his wife and kids? Ex-wife at that point. They got divorced. How old were you when they got divorced? 10. What was the effect that it had on you? I don't feel like he was a big part of my life anyway. So I don't feel like it affected me that much. What about financially? Yeah, it was very different. Because even though I grew up in upper middle class, and my dad was a doctor and made good money, it sort of was all gone because he wasn't part of our lives anymore. What did that feel like? It just felt like we were on our own. There's no one to help. What happened as you got into your teenage years and early 20s?

54:11I was reckless. I did reckless things because I didn't want to be without and I just wanted what I wanted because I was used to not getting what I wanted. So when I would want something, I would figure out a way to get it and I didn't care what the consequences were.

54:30Ramit Sethi: Were you the same way before the age of 10? I don't think so. So what happened? I think we were living in a way that was upsetting to me and I didn't like it. I didn't like being put in a position where if I needed something or I guess wanted something that I couldn't have it. Does that show up for your expenses? Because when I'm looking at your food, for example, I'm seeing acai, boba, taco bell. It's similar in my thinking where it's like, yes, I want to eat acai today, so I'm going to go get it. And I don't think like, oh, I shouldn't go get it because it's 40 freaking dollars. It feels like I'm giving something up that I want and I don't like that feeling.

55:15Ramit Sethi: Do you think your son has the same feeling? Yes. And what do you think about that? He has a lot of same qualities that I have that I don't perceive as good qualities. And I know that I've created it. I don't like it. I don't like seeing it in him. And I don't like seeing it in myself. So is your conclusion like, yes, I see some of those qualities that I don't love in myself in him and it sucks? Yeah, because I don't follow through and I don't fix it. Okay. I appreciate the honesty. I would rather hear the honesty than I need to do better. When people say that, I just disregard it because it's just words.

55:54Ramit Sethi: But I appreciate you just being like, yeah, I don't follow through. Okay. Yeah. Trevor, is there anything that Lisa did not mention about her upbringing as it relates to money that you think is important? She's being very open about her upbringing. I mean, if she needed, if she wanted the money, she like asked her mom, right? And I think like you also mentioned that it's a passed down behavior. You know, like she's like, oh, my son, you know, mom, I want. And he gets. How does he do it? Does he text you? I've seen teenage kids that just text their mom like a link. That's it. No context. Nike shoe link.

56:33That's it. No, no, no, no. I'm not like that. I disagree. I disagree because he does do exactly that. He's be honest. He send you an Amazon link saying, mom. I want this shirt. Ma, I want these. I need these. I want that. Can we just look at the texts? Open them up. Okay. Yeah. Why not? They'll send you a link. Like I want it. Okay. So like Sunday, he said he wanted Taco Bell. I said, fine. Text me what you want. A steak quesadilla with seasoned chicken, seasoned rice, blah, blah, blah. I want a large Baja Blast and a small Baja Blast. And I said, why do you need two drinks? Because the big one is not big enough.

57:18And I just said, okay.

57:20Ramit Sethi: Two f***ing drinks for a kid? I know. I never even got one drink. I know. This is insanity to me. And your answer, okay. I don't know. I'm not here to lecture a 50-year-old mom of a 14-year-old. That's not my job here. I know. So, Lisa, what's going on when he sends in his order to his mom and you go, okay, what's happening there? I'm just giving in because I don't want to fight, I guess. What else do you get out of saying okay? Him being happy. Which means what to you? It makes me feel good that I'm getting him something he wants. You feel loved when you are buying him something. Yes. And if you say no, it feels like what?

58:06Feels like how I felt. It feels like somebody's not giving you what you want and it sucks. Yeah.

58:14Ramit Sethi: Let's just fast forward 20 years from now. What does his future look like based on the current trajectory? I'm scared for his future. I am. I mean, there's a lot that you also don't know about, which is his father. And that's a big problem regarding money. His dad just gives him whatever he wants. Okay. What happens when your son is 34? He's not going to be able to fend for himself. He's not going to know how to survive. He's going to be begging me to help him with things. And I don't want that for him. And I don't want it for me. He's not going to know how to get an apartment. He doesn't want to work for money.

58:54He doesn't do any chores. That's a huge thing that we constantly are arguing about.

59:00Ramit Sethi: You're arguing as in you're trying to convince him and he's saying no? He's not saying no. But I don't follow through. And that's my pattern. I don't follow through and I don't make it happen. I should say you can't have these things because you're not doing this and this and this. And I don't do that. I still give him the things even though I shouldn't. I think you find comfort in beating yourself up. I notice you do it a lot. It's not comfort. It's just what I'm used to doing. But despite my many attempts to get us to focus on the positive, on the things you can do, you take me right back there.

59:41I know. I'm not very positive.

59:46Ramit Sethi: Do you want to be? Yes. Would you be willing to change things to do it? Yes. Okay. What's the first thing you should do? Make changes with how I deal with my son and tell him no. Okay. So next time he texts you, you're going to just say no? Yeah. All right. I'll pretend to be him. Mom, get me a quarter pounder with cheese plus three drinks plus McFlurry plus 32-piece chicken nuggets. Stacked. He doesn't talk like that to me, but okay. He nailed the McFlurry. God damn it. No, you're not getting any of that. I want it! 32 piece now. Well, now you're not getting anything. You don't talk to me that way.

1:00:39Please. No, we have food in the house. I don't want that.

1:00:45Ramit Sethi: I'm so hungry. I was running at school in PE, et cetera, et cetera, et cetera. Oh God, this is very realistic. Oh my God, are you him? There's food in the house. I'm not getting that for you. I'm tired of you asking me to spend money on junk food. You try to reason your way out of it. I think, Lisa, you're probably not going to be successful in doing this on your own. But I do think you could get help. There's a lot of things we're not successful at on our own. I need help with many things. Even money. And I'm good at it. So if you can't do this on your own, as we can see from this very quick simulation, then what could you do?

1:01:27My therapist helped me.

1:01:29Ramit Sethi: Beautiful. I have a therapy appointment on Monday. Really? Yeah. I think this would be a great topic to bring up because your ability to set boundaries with your son is table stakes for your ability to set boundaries with yourself and your ability to set boundaries with money. They all actually are very similar. So it'll be a great topic to bring up. Good for you. Okay, I love hearing that. Trevor, what do you remember of your family saying about money when you were a kid? My parents never married. I was a weekend kid with my dad. I lived mostly with my mother. We kind of struggled financially.

1:02:02We moved frequently. There are several times when we move and we don't have any lights, sometimes no heat, sometimes no phone. We didn't really talk about money other than the fact of it was always a shortage.

1:02:19Ramit Sethi: What did they say? What phrases? Like, we don't have it. We don't have the money. Or, rob Peter to pay Paul. And so we hear that. I heard that a lot. And I asked for money sometimes, but I didn't like to because I didn't want to be the contributing factor to the stress. Okay. So you were living with your mom, with your dad on the weekends. And did that go on for your whole childhood? Yeah, yeah. I mean, my dad seemed to have more money, but I didn't want to ask him for it. I didn't talk to him about money often. Is he still alive? Yeah, yeah. You talk to him about it now? Both parents are alive.

1:02:57No.

1:02:57Ramit Sethi: Okay. And mom? Yes and no. I talked to her about her money, but not much, no. How's she doing financially? It's not great, but it's okay. Do you think that you'll end up taking care of her as she gets older? As long as she's able to take care of herself, she will always try. We wanted her to move into an assisted living. But as we got closer to that, she backed away. And I wasn't going to push. All right. Lisa, anything you want to add on Trevor's behalf? Like I said, partner sometimes knows best. The only thing I would add is that they're not very open. They don't talk about a whole lot. And Trevor doesn't like to push anybody to divulge anything.

1:03:37like we went to Vegas and spent the entire day looking at all the assisted living places there. And then she decided like a week later, oh, I don't want to do it anymore. And he was just like, okay, and didn't ask any other questions. So there's hesitancy in getting deeper and asking more questions.

1:03:59Ramit Sethi: Trevor, you and I are very different. I love to ask the questions. Huh? You did what? What? Why? I live in another state. So the time we spend together, I don't want to spend it in conflict. Ah, notice that. The idea that if we're talking about money, it's conflict. It will lead to conflict. Okay, maybe. And my dad will get angry. But look at the worldview you have. It shows up in this relationship. If we talk about money, it results in conflict. It will result in conflict. If that is your worldview, then it will happen. Like if I walk into a yarn store, I'm going to feel stupid. And then I leave because I feel overwhelmed.

1:04:41Ramit Sethi: That's not how Lisa walks into a yarn store. She goes, I know I can build something here. I don't even see it yet, but I can make this stuff work. When I talk about money, I go, we're going to talk about money so that we can live our rich life. If that's the North Star, then how we get there, yeah, there's going to be some tough conversations. There's going to be some tears. There's going to be this and that. Okay, but we're going somewhere positive. We always want to go towards something positive. Even if you're in the middle of a conversation, it's really tough and somebody's fighting and yelling and whatever, it's okay to just be like, hey, wait a second.

1:05:15Ramit Sethi: I feel like I haven't done a great job in this conversation right now. I just want to call it. My goal here is so that we can get towards this rich life. I don't know how to do it alone, but I know that right here, I feel like we're fighting. I don't want to be a part of that. I want to just take a time out come back in 10 minutes and we go towards our rich life That's how you have those difficult conversations. Okay, these are the kind of things you're going to learn over time Okay, here's the deal now that I know a little bit more about how you were brought up with money I I have a better understanding but I think it's time to make some changes Right now you are on track for a very very very dangerous Rest of your 50s and rest of your life You simply can't sustain it and there are so many different ingredients that are coming together.

1:06:02We have just a lot of debt.

1:06:06Ramit Sethi: We have a lack of money management and a lack of basic understanding of numbers. All of these can be changed, but we also have the attitudes that are keeping you from even confronting these things. We don't like to talk about money. It causes conflict. I'm not good with money. Then on top of that, we have these very conflicted roles from childhood. We never talked about money. Money felt like deprivation. I give my son things so that he stops bugging me. And also, I know that I am loved when I do that. There's a lot here. We need to fix the money stuff right now. What changes are you both willing to make in order to fix the money situation?

1:06:46Ramit Sethi: And when I say fix, it means you will get control of your finances. It will be clean and simple. Yes, you will still have debt, but you will have a plan to pay it off. You will stop being stressed about money because even if you have debt, you can feel good about it knowing you have a plan to pay it off. What are you willing to do in order to get there? Whatever it takes. Wow. Two people saying the same words independently, whatever it takes. I love it. Okay. I'm going to throw your conscious spending plan up on screen and we're going to start there. We're going to try to simplify things and then we'll look at some transactions.

1:07:25Ramit Sethi: We are at your fixed costs and this number is 230%. It needs to come down to approximately 60%. So that's a vast drop. So we cannot be sitting here talking about one or$200 changes. We need thousands and thousands of dollars of changes. I would like for you each to just look at these fixed costs. And before we get started, I would like you to just think about what are we willing to change in this category you alone. Trevor, you want to go first? My first thought was the mortgage would be the biggest impact if we could somehow sell it and move it to an apartment. Yeah. How much would the apartment cost that you would move to?

1:08:03About$3 ,400.

1:08:05Ramit Sethi: $3 ,400. Great. Let's see what happens. $3 ,400. Watch the number. Drop to 160%. I think one of the biggest hurdles that we have with moving forward with that plan is that we're upside down. On your house? Yeah. How can you be upside down when your asset says$620 ,000 and your debt only says$43 ,000? Where's the mortgage debt? Oh, I guess we didn't put mortgage debt there. Oh yeah, that should be a lot higher. How much is your mortgage? How much is left on it? $696. $696. Okay. You have$739 ,000 of debt. you have$620 ,000 in assets that's the equity in your house. So yeah, you're upside down. Yeah.

1:08:52Ramit Sethi: You're in a bad position there because you can't afford the house, obviously. So yes, it's time for you to call the bank and ask them what your options are. You need to tell them, we cannot afford this house. Why'd you guys buy this house out of curiosity? Because our other house was sort of, it was in a bad neighborhood and sort of falling apart. and we wanted to be on the other side of town where it was newer and it was a brand new house. Why not rent? Didn't occur to us, I think. It just didn't. I mean, we thought we can make money off of our old house. Let's move in. And we moved into this new place.

1:09:29Ramit Sethi: All right. Not a good financial decision. No. And I think what is very clear now is the two of you need to get seriously educated about money. Coming on here is not enough. I need you to read the book. I will teach you to be rich. You need to read it and you need to understand it. And it might be hard and that's okay. You actually have to understand it because for the biggest financial decision of your life, a house, it didn't even occur to you that maybe we should rent. Even for the smallest financial decisions of your life, like McDonald's, it's not occurring to you that we need to actually radically change.

1:10:06Ramit Sethi: And part of it is you need to get educated, bottom line. Okay, moving along. In this case, I'm going to assume you can sell your house. Are you going to end up having to pay the remainder? Maybe, maybe not. But for the purposes of right now, let's just look at it and see. We're down to$3 ,400. What does a$3 ,400 apartment get you, by the way? A nice enough two, three-bedroom apartment. Three-bedroom? Why do you need three bedrooms? I don't know what the prices are for a two-bedroom. So let me tell you how I would think about this. If I'm in your financial situation, I'm getting the cheapest place I can get.

1:10:41Ramit Sethi: That's it. $3 ,000. Okay. You're at 154%. At least we're going in the right direction. Lisa, you're up next. What do you want to change? The eating out. Okay. How much? It's$2 ,100 a month right now. How much should you spend eating out per month? Zero dollars? I have no idea. I really don't. Should we not be eating out at all? Lisa, can I tell you something? Yeah. This sort of what I call the innocent dough. Innocent dough technique. Me? Little old me? I have no idea how much other people spend. I just, I couldn't even reason it out loud. It's not working for me. It's a technique that people use consciously or unconsciously to allow them to evade difficult questions.

1:11:24I literally don't know though. I can only base it on what I do. I don't know what everybody else does or what I should be doing. I just know that what we're doing is way too much. And it needs to be cut drastically.

1:11:36Ramit Sethi: So what's the number? $500 a month. Okay, so you're eating out five times a month,$500 total. So each time you eat out for fast food is going to be$100. Does that sound reasonable? No, it doesn't. That's not what I meant. I was thinking like if we went out to dinner, not just to like fast food. I'm saying if like the three of us went to dinner, we would probably spend at least$75 every time we went, depending on where we go, you know, so it'd be like$3.75. I would say that a couple who is in hundreds of thousands of dollars of debt doesn't eat out. Ever? Pretty much ever. Okay. I think this is especially painful for you to hear because it almost takes me back to when you told me how it felt at age 10, 11, 12, 13.

1:12:27There's other issues at hand, which is if we don't eat out, it's on me to then prepare food. and that's an issue because I don't, I feel like I'm, I am the only person that would prepare food. And so it just means more responsibility for me. And I know that that hasn't been working. So I'm willing to make changes, but it is hard to imagine never eating out again for the foreseeable future for any of us because it feels like a lot more work for me personally every single day. I know that I have to be willing to do more work to make this happen. I get that.

1:13:16Ramit Sethi: Yes. As you are talking about this, I think you make some really valid points. It probably will be more work. It will probably be more work for you. I would like to get Trevor involved in this so that he can take on some of the burden as well. But Lisa, it feels like when we are starting to talk about real changes, what you are doing is saying, these changes feel too big, so I can't do them. I'm not saying I won't do them, and I'm not saying I can't do them. Great, I love that. I love that pushback. Hey, that's not what I'm saying. I'm thinking about it. Okay, let me suggest something to you. I love what you said.

1:13:51Ramit Sethi: If you think about it as all changes we make are going to make my life worse, then they're not going to last more than seven days. It is very difficult for me to see positive in this other than like the big picture outcome. And I get that that's huge. And I should be thinking about that at all times when making these changes. But I think on a daily basis, realistically, when I've been working all day and I'm exhausted and I come home and now I have to think, oh, okay, we can't go anywhere. I'm going to make something and we're all going to eat it and enjoy it. right there because you're spinning yourself up right now.

1:14:30Ramit Sethi: What you are doing is you are taking your current way of life and just making it worse. You actually need to create an entirely new way of life. Do you think everybody's coming home from work after so many hours and then they're just like looking around saying like, what should I make for dinner? A lot of people are, but a lot of people are not. What are they doing instead? They've planned ahead. Exactly. That's a completely different way of life than you live right now. You don't do that. I don't. I need you to be open to the idea of changing your entire way of life. Otherwise, what are we doing here?

1:15:01Ramit Sethi: There is no tweaking. Let's cut down by 50 % on our eating out when you have 230 % fixed costs. It doesn't work. Okay. I'm not going to waste my time and I'm not going to lie to you. I'm going to tell you the truth of what you need to do. That's fine. I need to hear it. Couples who are in hundreds of thousands of dollars of debt in their 50s do not eat out. They do not take vacations. I hate to be the one to deliver this message, but you need somebody to tell you. Your groceries at 1 ,000 is going to be very difficult. We'll make it 1 ,400. And the two of you need to meal prep together. And you probably need to get your son involved but that's for another conversation.

1:15:39Ramit Sethi: So when are you going to meal prep where you both decide, you prep it, all that stuff? When's it going to happen? On the weekend. What day? Sunday. What time? Noon. Great. Are you going to have the food ready? Is it already going to be in the fridge or where's the food coming from? We'll have to go grocery shopping and get it. Great. The two of you going together or separately? I'm trying to get into the details here. Together. We're going to go together. All right. And then you're going to come back and you're going to what? We're going to come back and we're going to meal prep together and plan what we're going to eat for the week.

1:16:13Ramit Sethi: Love that. Trevor, get in on this. Notice that she's taking on all the burden herself. Get in. Okay. Yeah. Sounds good. I'm meal prepping. I'm all for it. Let me ask you a question. Have you ever done this in your entire relationship together? No. Okay. This is like the connective tissue that makes other things possible. It's like the equivalent of like when you go in the bathroom, you have toothpaste in there, right? Yes. Yeah. You just have toothpaste all the time. And if it's running low, somebody goes and gets some. It's the connective tissue that makes it possible to brush your teeth every day.

1:16:47Ramit Sethi: Now imagine doing that in other parts of life. the parts that happen to cost you$2 ,000 plus a month. You're always going to have the equivalent of toothpaste. You're always going to have food. Keep it simple. Make the same stuff. Start there. Make sure you get your son involved and tell him, hey, this is something new we're going to be doing. We actually do not have money to be able to eat out. We are making changes so that we are in a better financial situation. Notice, it's not just saying we can't afford it. We can't do that. We're in a horrible situation. No, here's a situation. then you talk about what you are doing.

1:17:21Okay.

1:17:21Ramit Sethi: We have made a plan. From now on, we're going to be meal prepping. This is how much we are going to be spending each week for grocery shopping, which is approximately like 350 bucks. This is our plan on what we are going to get. This is what the meals are going to look like. If you would like to change something, you're welcome to make a suggestion for up to, I don't know, two of the meals or whatever, but it's got to fit within this amount of money. And when he complains, what are you going to say? Sorry, this is how it's going to be from now on. Love it. Yes. He doesn't have a job, right? No.

1:17:57Ramit Sethi: Amazing. So you have the golden rule, which is he or she who has the gold makes the rules. He has no money. He's 14 years old. He's going to eat what mom and dad eat. That's it. Okay. That's it. Putting it back up on screen here. What's next? Trevor. I would point at the utilities, but if we're moving, the utilities are still unsure about. Let's drop them down a bit. They'll be less. $150. And moving also will knock the HOA fees away. If we moved, we'd drop$1 ,200 from that. $1 ,200. Great. All right, let's leave$300 on there. All right, nice work. We're at 126%. What's next? We do have a lot of subscriptions.

1:18:37Ramit Sethi: Yes. And I think this isn't accurate because you said that you came up with$2 ,100 or something. Some crazy amount. We will look at that. Yep, you did spend a ton. Just look at all these. So what do you want to do about all these subscriptions? We can definitely consolidate some of the subscriptions. The way to do this when you have this many subscriptions is to pick one and everything else goes bye-bye. Okay. What's the one you want to keep? Think Hulu or Netflix. Only one of those services has a hit show called How to Get Rich. Which one are you going to keep? Which one is it? I love that my own guests on my own show haven't even watched my Netflix.

1:19:14Ramit Sethi: I do. We just have so many channels. We don't know which one it's on. Yeah. All right. You're keeping Netflix and everything else is going bye-bye. Wonderful. I'm going to drop that number to, let's just say 30 bucks. We're down to 123%. I think we need to talk about something important here. You've made some big changes. The debt payments probably need to go up because you are paying the minimums on a bunch. It's not acceptable. And the fact is, you're still at 123%. So what do we need to do in addition to this? Increase income? Yes. Okay. So let's look at the income. This is the gross. These numbers here.

1:19:49Ramit Sethi: This is how much you make at the top line. And then once you have all your taxes and expenses and stuff taken out, this is how much you take home every month. What do you notice? It's not enough. Who's not enough? Mine. Yes. Lisa, you currently take home$24 ,000 per year. What does that tell you? It's not enough. It's not enough to live on. Correct. You could make more working any job. First of all, why do you think that is? And then what needs to happen? I know why it is. Because I've chosen to not work as much as I could. What do you mean? You work, how much do you work? I work four days a week.

1:20:28Why? Because I want to, I guess. And that's the only reason. Because I'm not busting my ass and I should be.

1:20:37Ramit Sethi: I just think you don't have a reason to. I do have a reason to. I just, it's like a thing that I do where it's like if I don't want to do something, I don't do it. I don't look at the way it should be. I look at what I want versus how it should be. And I give in to that. It's something I've always done and I continue to do it. And it's just a habit that I need to break. I do it when it comes to how I eat. I do it when it comes to how I spend. I do it when it comes to doing things that I should be doing every day. like I should, my habits should be very, very different. And they're not because I do what's easiest and what's lowest stress.

1:21:33It doesn't pay off anyway, because this is the situation that we're in. And this is very high stress.

1:21:40Ramit Sethi: Trevor, are you okay with this? Well, I'm not okay. I mean, like, I feel, I feel responsible for it. No, you don't. You don't feel responsible. Like, I, like, I got you the business, like thinking it was great. It's not about the business, Trevor. It's about the fact that Lisa herself just spent five minutes explaining she doesn't follow through. Her habits around food, her habits around business, her habits around finance. And instead of taking this opportunity to say, hey, I'm actually not okay with this. This is important to you. I'm in my 50s. I can't go on like this. You're starting to apologize for her and provide yet another example of saving her.

1:22:15I don't even think she wants you to save her. Why are you doing it? I don't know. I guess I got stuck on the, you said you could make more. And my mind started going, wait a minute. I thought this was a pretty good business to start.

1:22:30Ramit Sethi: Who told you it was a good business? Why did you think that? What calculations did you run? He didn't run any. I didn't run any calculations. What calculations, Lisa? I did a lot of research on how much money I could make. And it could be a very profitable business. Is it? but I'm not running it properly. Yeah. You're using your business expenses to pay personal. You don't have a bookkeeper, et cetera, et cetera, et cetera. Yes. Is the business inherently bad or is it just - It doesn't matter. It's not working. It doesn't matter. Why are you all so insistent on doing a history lesson of what happened 10 years ago?

1:23:08Ramit Sethi: You guys are heading towards, in your own words, a cliff. Yeah. Guys, this conversation is over in a little bit. I want the best for you, but you are heading back to your own lives You have Very not enough in retirement. You have an inability to talk about money I've tried multiple times to get you to talk about money I really want you to and we are stuck on wait. Is this a good business? What about the profit margin? It's not working. Why are we not being decisive and making decisions right now? So how do we get out of it? Do you want me to tell you what I would do? Yeah, yes, I would shut this business down.

1:23:43Ramit Sethi: I would sell the car Lisa would get a full-time job working five or six days a week. The net income, the amount you take home would go way up. It would double probably. And immediately that would make major changes. I would eliminate almost everything when it came to your expenses. The food, all that stuff we talked about. I would call up the credit cards and I would say, look, I can't pay this the way it is. We need to make an agreement on it and see what they would come back with. They may or may not agree. At the same time, I hardly ever suggest this, but I would look at a way to consolidate the debt, all of it, and start making aggressive payments.

1:24:23Ramit Sethi: You will never pay the minimum amounts on these credit cards anymore. You will be aggressive about them. And so you would take all the extra money you make, all the extra time would go towards paying off the debt. It will take years, but that's what you would do. And the two of you would have a mission. You would know the exact month and year. I can't calculate it here because it's so messy, but it would probably be several years. There wouldn't be a lot of fun, but you would have a mission. and you would be accomplished. You would be building savings and investments. That's what I would do. Now, let me tell you the reasons that might not work because that is not as fun as the life you have today.

1:24:54Ramit Sethi: The life you have today where you get to go out and eat and go on dates and live in this big house. So why would someone willingly choose the way where you have to move? You have to get rid of your business. You have to work more hours. You have to start communicating about, why would you choose that? Lisa, what's your reaction? I feel like it's almost been a waste, I guess. And I don't feel like I'm even capable of going and get a full-time job right now because I'm not qualified anymore to do what I would get a full-time job for. What did you do before you started the business? I was a graphic designer and I decided to change everything I was doing and become a groomer because I wanted to work with dogs and have my own business.

1:25:45And I did a ton of research and people were making hundreds of thousands of dollars. And in the beginning of the business, I was making a lot more money than I am right now. I, you know, a lot of things changed. I chose to take three days off instead of the two. I was working Saturdays in the beginning and I'm not anymore. Like I've just been lax about it. And I don't want to get rid of the business. I'm happy doing this, but if it's not working and it's putting us in this situation, then I have to face reality, I guess. I just don't, I don't know what the move is, what the right move is.

1:26:31Ramit Sethi: How could you find out? By making changes and seeing if it works better. What changes? Be specific. Work more days during the week. Work on the weekends. Or work more hours during the week. And increase my rates. So what's the plan? There are definite things I could change. So here's the deal, Lisa. I like that you are pushing back a little. And you're saying, hey, I like this business. I could probably make it run better. I love that. I love when somebody disagrees with me and says, this is what I want, this is what I do. I love that. And if that's the case, amazing. I want to point out to you that you would need to make every decision correctly and you would need to follow through on every single decision in order for that to work.

1:27:17Ramit Sethi: Or you would need to make one decision, sell the business, get a full-time job. I understand that. In my experience from talking to you, it would probably be more likely for you to succeed with a full-time job, but it's your life. It's not mine. If you go, I'm going to make this work, I'm going to get a level of conviction and follow through that maybe I haven't had before but there's a reason. I'm going to work six days, maybe seven days a week. I'm going to work more hours than I've worked. I'm going to control my costs. I'm going to learn how money in a business works and get control of all this.

1:27:51Ramit Sethi: Okay, but that requires you to be right about all of those things. If she got a full-time job, how much would she need to make for it to be better than what she's doing with the business? Excellent question. Now we're asking great money questions. So right now she's taking home$2 ,000 a month or$24 ,000 a year. Let's say she doubles that, okay? We can see that number drops to 98%. Still not enough on your fixed costs. You're still spending more than you make. So it would need to be more. Trevor, you might need to make more as well. Let's actually play it out. Let's make it, she takes home,$5 ,000.

1:28:28Ramit Sethi: Now we're at 89%, still not enough. Your fixed costs are just too high with your debt. The two of you would have to make$300 ,000 a year. And that's with selling our house? Yeah, and if you sold your house, you may have that debt as well. Yeah. Wow, so it feels a little, I mean, I guess because I helped invest in the business and she's been doing it for years. I guess it's hard to let go because it's like you've poured so much into it. Clientele. Look at Lisa's face. What's she saying right now? She's like throwing in the towel. No, I'm not throwing in the towel. I want you to stop talking about all that stuff.

1:29:07I don't want you to list all the reasons why I'm going to be sad. I want to figure out what I either need to do to make it work or have to face facts. or if it's not going to work, then I have to make some major changes.

1:29:23Ramit Sethi: Trevor, are you hearing this? Yeah. You are co-creating this dynamic. Something has changed just now. Lisa's like, I'm ready. Stop talking about all this shit. And you are still living in the past. I feel bad. I don't know. I contributed. What about? She's like, stop it. You see this? Trevor, the same way that Lisa said she's speaking to her therapist is something you actually need to do as well. Because your inability to actually have honest, candid conversations, even ones where you confront reality, is actually a huge part of this dynamic. Did you know that? No. It is. Again, I want to take you back to what you wrote to me.

1:30:02Ramit Sethi: You wrote, she has maxed out credit cards. I don't even know if they're getting paid. Sooner or later, this issue will need to be addressed. And I'm not sure if we are ready for it. You might as well have written, I'm not sure if I'm ready for it. Because Lisa seems to be ready. Are you? Yes. Okay. Get help, both of you, from a therapist, individual and couples. Is it expensive? Yeah. It's going to be pricey. Take this to them and tell them, we realize we are in hundreds of thousands of dollars of debt. I, Lisa, have been living in the clouds and unable to confront the fact that I'm paying minimums on tens of thousands of dollars of credit card debt.

1:30:42Ramit Sethi: I have an inability to say no to my son. Literally, he texts me and I go buy him whatever he wants. He's now taking on the same characteristics I've taken on. I hide things from my husband. Now, I, Trevor, won't bring things up with Lisa, even though I feel that it's not good. And when I went on this podcast with Ramit to talk about money, Lisa actually was ready to make changes. And then I started talking about the past instead of talking about what we should do going forward. What do you all think about that? I'm not usually this direct, but you need it. I guess this is what our previous counselors weren't doing.

1:31:18Ramit Sethi: Okay, but did you go in there asking them exactly, here's the problem? I feel like maybe I did with my counselor. Okay. But again, didn't follow through. I didn't keep going. I didn't, you know, it's like I give up when things get too hard. Exactly. Nothing changes if that doesn't change. Everything from the business to the food to all of it, it stays exactly the same if you don't change, Lisa. And Trevor, I'm discovering that that's the same for you. If I were in your position, Trevor, I would be saying things like, look, this isn't the way I want to spend the rest of my life. We don't have enough money.

1:31:53Ramit Sethi: I want to be able to retire. I feel anxious all the time about money. We don't talk about it. It's not the kind of relationship I want. I want us to get better. But in order for that to happen, Lisa, you have to get better at money individually. And so do I. That is my expectation for what we need to do as a family. That is going to be our number one priority for at least the next three years. We're going to talk about it every week. Each of us is going to have numbers that we own. One of us is going to be responsible for the grocery. The other is going to be responsible for XYZ. We're going to talk about this all the time and there will be no secrets.

1:32:27Ramit Sethi: It's going to be difficult. We're going to have to change everything we do. We're going to have to move to a smaller place. The business is going to have to go. All this stuff. This is what we need to do. You know, it's funny when you talk like that And when you said a big, bold vision, people actually often want to come along. What is your opinion on bankruptcy? That's a great question. People choose bankruptcy because people who get into consumer debt, they usually get into it because they make bad decisions over and over again. That's what's happened here, okay? So what they will do is they will then start grasping for straws.

1:33:01Ramit Sethi: They'll do 0 % balance transfers, which you have done. They will do everything except the only thing they need to do, which is to pay off the debt. And because they will do anything except that thing, they will then look at bankruptcy and often resort to it. And sometimes they get it granted. It's not often, but they get it. And then start over doing the same thing. Because they never changed the actual root cause. You cannot be successful if you can't eliminate your fast food spending to zero. It just won't happen. You cannot be successful if you cannot change your relationship with each other and with your son.

1:33:41Ramit Sethi: Bottom line. Oh, sure, you might be able to declare bankruptcy, but three years from now, you'll be back in$20 ,000 of debt. It was an excellent question. Should you consider it? Yeah, you should consider it. But... Only after making significant life changes. Yes. Lisa, I don't know what's going on, but I'm really enjoying this. You're asking awesome questions. You're even telling Trevor, stop it with that old shit. We're on to the new. Like you have come alive in a way that I did not anticipate. I'm so impressed. Can you tell me what changed for you just in the last few minutes? It's a reality check.

1:34:20I need to make significant, significant changes. And I knew it was going to be hard to hear it. And I kind of knew this was coming. I don't want to feel like this anymore. and I don't want our lives to continue like this.

1:34:34Ramit Sethi: Great. I love hearing that. Some people would look at, you know, somebody crying and saying, I don't want our lives, and they'd be like, oh, this is so sad. I think this is awesome. Sometimes you need to feel sick of this. Say, I'm done. I've been doing this. It's old. So I like it. Trevor, you look proud of Lisa. What's going through your head? Yeah, I am. I'm happy that we've made it through this, and it's been a long time in the work, but we're here. Yeah. And I'm happy for him. I like that. I'm happy for him. Lisa, I got a question for you. Do you think Trevor needs to change his relationship with money?

1:35:09I do.

1:35:10Ramit Sethi: Okay. What expectations might you have for Trevor? Because this is too big of a problem. Neither of you can do this alone. I feel like his changes need to be more than just with the financial. Well, first of all, let's start there. What changes does he need to make financially? What I want financially is also what I want in our relationship. I want more help. I feel like I do everything alone and I'm in all the situations by myself and I'm left to figure out everything. Let's start with food. What do you want? He does already go grocery shopping with me, but I think we need to figure out how to eat healthfully at a lower cost and meal plan and figure out what we're going to eat through the week.

1:35:56and not just me planning it. I want him to sit down and plan it too with me. Right now, that doesn't happen.

1:36:03Ramit Sethi: What else do you want? If I'm you and I'm being asked, God, I can ask for anything I want. I would like for, I want us to go grocery shopping together because that's actually kind of a fun thing we can connectively do, et cetera. I want us to share the meal prepping. But honestly, I would like him to cook on Thursday night. And I would like him to cook on Saturday, whatever the thing is. Point is like, why does everything have to be done together? You're doing stuff solo. Shouldn't he do something solo as well? Yeah. I mean, our biggest thing is that he doesn't really take a whole lot of initiative to do something on his own.

1:36:38He waits for me to tell him, I need you to do this.

1:36:42Ramit Sethi: Okay. Let's just fix this right now because this can't go on. You cannot be successful if someone is not replacing the garbage bags or something like that. Come on, Trevor. I don't even want to ask Lisa. Tell him what to do. You tell me what needs to be done. What are you going to do differently? I'm very willing to help. No, be specific. What I need from Lisa. No, what are you going to do for Lisa? What am I going to do for Lisa? I'm going to, I don't even know where to start. First things first, make calls. We got so much to dismantle right now. We got so much to take apart right now. I don't even know what to start taking apart first.

1:37:18We got to take apart a mortgage. We got to take apart our business. We got to take apart our food spending. We got to take apart our subscriptions.

1:37:26Ramit Sethi: Okay, so how are you going to do that? We got to make a call. Not we. I, I, I. I'm talking about you. Yeah. First things first, call the mortgage company. Look, they can't do this anymore. Nice. What's next? Next is I got to call the apartment complex. Hey, we need an apartment. When can we set a move-in date? Nice. First things first, calling the mortgage company, figuring that out. Then once you understand that, then you can go and figure out the apartment. But I like where you're thinking. Good. It's all about sequencing. How about all these subscriptions? That's easy. Yeah, subscriptions next.

1:38:00Ramit Sethi: Boom, cancel that today. How about Lisa? Okay, pause here. What do you need from Lisa? Because you're talking about, hey, all these action items from this call, I'm going to start taking the lead on some of this. And I will update you, Lisa, so you know what's going on. Of course, Adobe's canceled, et cetera. The mortgage is in process. I got to talk to the bank and blah, blah, blah. What do you need from Lisa? I would say support, but that's not specific enough, is it? Nope. I think we need to make a list of everything that needs to be canceled and changed. It's a big piece of cake. It's a huge...

1:38:33Yeah, it's a big list.

1:38:34Ramit Sethi: So maybe when you have a big thing to do, you can't do it on your own, right? So how do you do it? How do you break it up so that you can tackle this massive project? I could use Lisa's help in making this list. There you go. To do this. Because neither of you could... It's so big, you can't even make it. So you do it together. Each of you can come. Hey, here's what I think we need to do. Here's what I think Let's combine them. What did we duplicate? What are we missing? And once you got that list First of all, you just pause and give each other a high five damn we did this together. That's actually awesome We haven't even taken a step but this is a big accomplishment We're going to start giving each other a high five and a big hug because we're going to feel good doing this process We have to find a way to feel good because it's difficult to move out of a house.

1:39:16Ramit Sethi: It's difficult to X, Y, Z, but we're going to feel good every step of the way. We're doing it together. We're doing it intentionally. Okay, next, we got our whole list of 45 action items. Let's pick who's going to do what. I'm going to take these. These ones, we don't even know yet because first we got to do this one before we find out, but we put each other's initials next to them and at least we know, okay, what's next? We're going to update each other on Friday. Here's what I got done. This one's still in process. I didn't get to this one. What does this sound like? Plan. Teamwork. Yeah. Yeah, both of them.

1:39:50Ramit Sethi: That's how you do it. Teamwork and a plan. That's beautiful. Yeah. Here's what I want to propose to you. Do you notice that sometimes if you get up from a chair, you go like, ah, when you get up. Stretch. Yeah. Just like kind of like a grunt or a moan. You notice either you do that or people we know do that. Yeah. I notice both of you do it with money. Have you noticed that? a lot of I've been doing that for decades I know I want to propose that the two of you show up differently with money because I bet you Lisa you don't show up like that at the yarn store or at work because you love it I bet you don't go oh god another f***ing dog why would you?

1:40:37Ramit Sethi: you like it I never show up like that when I get the chance to meet couples like you I love it. I love this. So I want to encourage the two of you to notice that and to explicitly say, I'm not doing that anymore. This whole, ah, it's very somatic. It's, it actually tells your body, get ready to eat. Yeah. Not anymore. It already puts you in a negative space before you've even started. Yes. Yeah. So we can do anything. We can be theatrical. Yes. I get to talk about personal finance, whatever. You decide. I don't care how crazy it is. Yeah. But we are going to change from the outside in. Okay. This shows up everywhere.

1:41:20Ramit Sethi: The text messages with your son. Because when I text, no, I love you, but that's not part of our plan. Then inside you start to realize I'm the kind of person who follows a plan. Yeah. You're going to make the plan. You're going to have a to-do list. You're going to work your way down and you're going to adapt as time goes on. You're not going to have the perfect plan. That's okay. I'll tell you what to do next. All right. I want you to go back through the conscious spending plan and I want you to go back through Monarch and I want you to fix it. This time I want you to do it together and I want you to do it right.

1:41:53Okay.

1:41:53Ramit Sethi: Take your time. You don't have to do it all at once. It's going to take a while. Don't worry about it. Yeah. Get it right. Get a handle on your finances. Simplify it. Start to realize why do we have all these credit cards. It's not serving us. And you're going to have a lot of reasons. Well, this, this, this, da, da, da, da. We want a simple financial system. All of those things we have to do seem like a big, big jobs. Like I've never had just two credit cards, but it's possible. You can not, you could have no credit card. Yeah. Yeah. Taking it apart is, it's hard. Yeah. It's easy to add on random to a financial system.

1:42:31Ramit Sethi: It's really hard to have a simple financial system. That's why I say you have to fight for simplicity. Fight, because the world wants you to have all this stuff. Freaking Wayfair card, Kohl's card, all this. No, we are not the kind of couple who does that. We have a couple of credit cards, simple. Now, all the information you need is there. There's two books. I will teach you to be rich and money for couples. Get them, read them, do them together. We have money for couples. Perfect, start there. It's gonna make it really fun. You know, there's gonna be times you're gonna have uncomfortable conversations.

1:43:05Ramit Sethi: That book will show you exactly what to say. Okay. So use it. It's there for you. I'm not a magician. Nobody could have fixed this situation in one conversation. That's actually not my expectation when I see numbers like this. When you have consistently made decisions that have put you in a financial place as precarious as this, There are no good options. There's a lot of work. I do believe there's hope, but it's going to be incredibly difficult. Maybe the most difficult thing they have ever done together. In the past, I used to want to wrap it all up with a nice bow, but that's actually not realistic because in life there are problems that are so big they cannot be solved easily or sometimes they cannot be solved at all.

1:43:54Ramit Sethi: But what we can do is we can start to make progress. we can start to have them work together as a couple and that at least provides hope for doing this as a team. Now they have a lot of work to do but I was very pleasantly surprised by Lisa's awakening. If I could see that energy from her and from him that's two people rowing in the same direction wow you can make huge changes in a year if two people are aligned. So that is my hope for what they accomplish starting today. And now let's check out their follow-ups. I would say the biggest surprise from the interview was how much reduction we needed to make, how many fixed expenses we needed to cut, and how the percentage was way over.

1:44:44Biggest takeaway is how important it is. And I guess the thing we decided, the biggest changes we're going to be making soon are we're moving. We're going to have to cut our housing expense in half. So that's going to be one of our biggest changes and better at accounting, better accounting of the funds we're using. My biggest surprise from the conversation with Ramit really was how emotional it made me to talk about it. I didn't realize that just bringing up these topics was going to be so difficult. I'm glad I did. And I guess it needed to be done for a really long time. My biggest takeaway is along the same lines.

1:45:42It's more, you know, how much of an impact all of this is making on my life and my family's life. Every decision that I make regarding money is affecting us and it's basically, you know, destroying us. And we need to make a lot of changes. The ones that I have decided to make, the biggest ones, are to focus really on why I'm doing certain things, why I feel the need to do certain things regarding money, and to really do things with more intention and think about everything before I do it. It's been about three weeks since we had our interview with Ramit. It's been a wild rollercoaster ride, and we've had so much to do.

1:46:40We still have so much more to do. What stood out the most in our interview is we had so much to cover. We were both on opposite pages and not really working from the same plan on finances. We had a lot of spending that we weren't even aware of. So going forward, we have to, we've made a lot of changes in how we spend and we cut a lot of expenses. We have many more expenses to go. We make dozens of calls all the time, every weekend. And it's an ongoing process. And we really appreciate Ramit and his team with the help and advice he's giving us. Thank you so much.

1:47:26Ramit Sethi: I want to thank our partners at Monarch for setting my guests up with a free one-year account so they can easily stay on the same page with money. If you want your own Monarch account with my exact conscious spending plan categories built in, go to monarch.com slash Ramit to try it for free and get 50 % off your first year of Monarch's core tier with code Ramit.