A Blended Family, a College-Savings "Ghost," and a Budget That Didn't Add Up: Ramit Sethi Talks With Mia and Jake

Overview

Ramit Sethi of I Will Teach You To Be Rich frames this episode around a habit he sees often among American parents: spending in the name of the kids, especially on fully funding college, without ever running the numbers. Sethi says he has no objection to extracurriculars, big birthday parties, or paying for college, as long as the choices are deliberate and the math has been done. His complaint is that most parents follow a script instead, and that the script can cost them their own financial future.

31 min read

His guests are Mia, 40, and Jake, 38. They have been married for four years and have a blended family: two children from Mia's previous marriage, aged 14 and 11, and a three-year-old daughter together. Mia applied because she worried that paying for the older children's college was building resentment. Over the conversation, the question moves away from whether Jake resents the spending. It becomes why the couple is spending the most money in their budget on something they have never examined.

The numbers that didn't make sense

Before meeting them, Sethi reads the couple's Conscious Spending Plan (CSP) aloud and calls it "perplexing." It showed assets of $443,000, investments of zero, savings of $13,900, and debt of $176,410, for a net worth of $280,490. The percentages also looked odd to him. Fixed costs were 50%, which he liked. Investments were listed at 22% even though the balance was zero. Savings were a high 25%. Guilt-free spending was 3%, and he said outright that he didn't believe it. Savings of $13,900 also struck him as low for a family with three children.

Resentment or frustration?

Mia's application said the couple's values were mostly aligned, but that she felt "resentment from my husband that a big chunk of our money goes to support my two kids who are not his biological kids." In person she softened this. She thinks they agree on values, but the implementation creates an "underlying tension." A lot of their money is going toward making up for the fact that she didn't plan and save earlier when her older children were young. Moments like "we can't even go out to dinner this week" leave her feeling guilty.

Jake rejected the word "resentment" and offered "frustration" instead. He is earning more than ever after landing a job he had worked toward. His idea of a rich life is being able to eat out or buy a few things without stress. He gave an example from the day before the recording. While walking around, he had remarked that if they redirected the money going to college, they could buy a hot tub and start landscaping within about eight months. Mia said her reaction to comments like that is usually to go quiet or laugh it off. Jake said he doesn't resent Mia or the kids: "That's where they were at their time."

Both described the same imbalance. As much money as possible goes to the children, through 529 college savings for the older two and a costly preschool for the youngest. That leaves very little for day-to-day or guilt-free spending, which doesn't feel sustainable to them. Mia also said that giving themselves more at the kids' expense "feels selfish," and Jake agreed.

Asked whether they make money decisions together, Mia said yes on the big picture, but that money isn't something they think about much. Jake summed up his philosophy with a joke about his Midwest upbringing: "you just save money, then you die, and you give it to your kids." Money conversations usually start with Mia saying "we have to do the budget." Jake said that phrase triggers anxiety and anger in him. Mia said it raises her anxiety too, because budgets have always been hard for her. She tries to explain her thinking without fully understanding it herself. Jake then asks a reasonable question, she doesn't know the answer, and they both get stressed. Her default is to treat the kids' money as if it doesn't exist, which makes it non-negotiable. She said she was open to changing that.

Sethi noted that things would be far harder if Jake had refused to contribute anything to the older children. Since their values seem to line up, the real question is how much help to give in a blended family. He also began to suspect they had only thought of help as the size of a check.

The "house-broke" years and a hard reversal

Asked why he's confused when Mia says they can't afford to eat out, Jake told the backstory. When they got together, both on their second marriage, they bought a house of almost 4,000 square feet with a three-car garage. Jake called it a "10 out of 10" on their wish list. He also bought a Toyota Tundra for around $50,000 and spent $3,000 on rims. They bought new furniture, and Jake built an expensive home gym during COVID. Mia said they were "so happy to have happiness" that they wanted everything.

Once they started talking seriously about finances, they realized they were house-poor. They sold the house and bought one about $200,000 cheaper in the same neighborhood, which they say feels much more like them. They sold the truck and the gym equipment and kept one paid-off car. They later bought a larger car because the older kids had grown. Both credited their parents with teaching them to avoid any debt except a mortgage, so the house was the obvious lever. Mia described those years as "being strangled." She tracked every line, down to "$12.37" spent on donuts for the kids. Selling everything felt good, Jake said. Mia's summary: "it was almost like we had an entire relationship in like 3 years."

Sethi praised the reversal more than he criticized the original mistake. In his view, everyone makes money mistakes, and the valuable skill is taking a dispassionate look at the numbers and correcting course. People who can do that can move fast because they trust themselves to fix errors. He said he was "willing to bet" they would never be house-poor again. Later, when they reviewed their new mortgage of $1,776 a month (about 9% of gross income, on a 15-year loan at 6%, compared with more than $2,000 before), the couple called it one of their proudest money decisions. They said they still look at each other and say how glad they are they did it. Sethi pointed to this as proof that they can make and celebrate a hard decision, and said he wanted to "transfer" that ability to the rest of their finances.

Overcorrecting, and the wish for someone to take charge

Sethi asked whether things feel better now. Mia described the current setup as "yanking the steering wheel" the other way. After selling the house, they put all the extra money toward college, possibly as an overcorrection. That raised the question of whether saving for college is "the right thing." Sethi replied, "Well, isn't a house the right thing to be buying?"

Jake said he keeps wishing someone would "put their arm around me and say, 'Son, this is what you're supposed to do.'" Sethi told him that person doesn't exist: not his father, not anyone except himself. Jake accepted this and said what he really wants is to be confident in their decisions. He also admitted he doesn't know what "making your money work for you" means. His best guess was "putting it into the stock market." Mia wondered whether their pension explains this, since it meant they never had to think about a 401(k). Jake knows only that the pension is based on the top three years of salary. That is part of why he keeps adding income: he has two master's degrees and is becoming a principal the following year.

Asked what he would do with more money, Jake listed saving, house projects like landscaping and replacing a hot tub they inherited that had broken, and possibly a healthy meal service to reduce stress after work. Mia agreed on the house and the food idea but said meal services cost so much more than groceries. The one likely point of disagreement is travel, which Mia wants and Jake sees as a "not a need of mine."

Sethi told the audience that the couple was very likable, but that their politeness made it hard to get straight answers or tell whether they agreed. He made it his "personal mission" to show them they could be direct and still kind. He asked whether they liked feeling anxious about money. Both said no, firmly. He pointed out that the dynamic they had built kept them anxious all the time anyway.

The spreadsheet as "paper pushing"

Mia said filling out the CSP was the first time she had a concrete way to see the big picture. Before, she didn't know how to calculate their net worth, even though she had kept a budget for years. She described her old method in detail. They put everything on credit cards for the points and always pay them off. Each month she copied the statement line by line into a spreadsheet, checked for suspicious charges, sorted items into categories she had invented, and tracked them over several months against targets for clothes, eating out, and so on. She knew she was duplicating information that already existed. Asked what it got her, she said: "I think I felt like I was controlling our money."

Sethi called this a classic example of "playing money," or paper pushing: moving things around for a feeling of control and treating motion as productivity. He said nobody forced her to do it, and it was probably an echo of her parents. He credited her with recognizing it and stopping.

Looking at the numbers, Jake felt their net worth was low relative to their income, said he didn't understand the investments line, and felt "amazing" about the debt because it is only the mortgage. Mia said she was proud there was something there but felt guilty it wasn't more. She wished she had made different decisions earlier in life. Jake said guilt would be his only feeling, and only if the debt were higher. Sethi joked that he could show Mia a glass of water and she'd feel guilt, and she agreed.

Their gross monthly income was $18,862, or about $226,000 a year. Jake had only known their net figure and would have guessed around $200,000. That high income is exactly what stresses them, they said: why are they counting pennies? Asked whether earning $500,000 would end the stress, Jake first said yes, then conceded he would probably always be stressed.

Where the money was really going

Fixed costs at 50% looked good at first. Sethi said that is the low end of the 50–60% range he expects for a high-income couple. The 22% investments figure was the pension, about $3,000 a month. The 25% savings was mostly the kids' 529s plus the emergency fund. Sethi said he would have filed the 529s under investments, but that the placement showed their priorities.

Guilt-free spending was listed at $364 a month. Mia admitted that was just what was left over. They estimated real discretionary spending at $1,500 to $2,000 a month. Sethi used $2,000, explaining that he always wants to be conservative so there are no surprises. That exposed a gap. The plan put $700 a month into a long-term emergency fund, yet savings were only $13,900. They had been drawing from savings, which they wanted to stop. Their savings covered about two months of expenses, and Mia said that felt "scary."

Jake explained his avoidance with an analogy: money scares him the way girls did when he was going through puberty. He didn't understand it, so he avoided it. He talked about a deep-seated fear of seeming dumb by asking questions, called it a "knowing gap" he wants to close, and compared it to learning a new sport. Mia said her fear outweighs her anger. Sethi told listeners that at some point people have to face such fears, and that nobody else is coming to save them. He added that he had always understood money intuitively but felt like the odd one out in areas like fitness, so he has compassion for people who find money confusing.

Mia's fear is that a catastrophe would leave them without money. Sethi compared this to fearing a fall in the shower and buying a mat, and asked why their savings hadn't grown if the fear was real. Mia answered that in the moment she wants a trip or a purchase, she thinks "I'll deal with it later," and that this happens "probably all the time." She estimated their money conversations as 95% about problems and 5% about solutions. Sethi asked her to picture the reverse. She said it would feel like the pride they feel about the house decision, with more celebrating, less worry, and more time with Jake and the kids instead of being "trapped to the spreadsheet."

Recalculating the fixed costs

Going line by line, Sethi found costs missing from the totals. Preschool at $1,266 a month (with one school year left before public school) wasn't counted. Adding it pushed fixed costs up 10 points, to 60%. A joint account that Mia and her ex-husband each pay into for the older kids' larger expenses, such as clothes, was also missing. With it included, fixed costs reached 64%. Mia said she could feel her hands get hot. Sethi said he wasn't feeling that pressure at all. To him it was a puzzle to solve, and they "certainly do not have a lack of money." At 64%, though, he said he would be more directive.

Several changes followed. Utilities of $409 were unusually high, partly because they were still paying to run a broken hot tub they hadn't figured out how to disconnect. Sethi told them to fix that. The $459 treadmill payment, at 0% interest, ends in three months, so he zeroed it out, bringing fixed costs to 60%. Groceries and gas were grouped together only because both go on the credit card. Sethi said gas belongs with the car, since car costs should include everything. He mentioned that his own $350 car payment once turned out to cost over $1,000 a month once parking and other costs were added. The couple estimated groceries at about $1,200 and thought $800 was realistic. Sethi initially set the combined line to $1,100, which brought fixed costs to 57%. Subscriptions for TV services went from $315 to $200. Both said they didn't care much about them and that the cut was "easy."

Jake asked how to actually stick to a grocery number. Sethi said most Americans don't shop to a number. People can withdraw $200 a week in cash or simply track against a weekly figure on their phone. From what he has observed, people who hit grocery targets tend to eat the same things repeatedly and follow a meal plan, and usually one person does most of the shopping because that person knows the numbers.

Sethi then pointed out that they cut costs with almost no resistance, which he said is unusual. Jake said he does it for the greater good of the family and financial stability. Mia said it's easy because it's hypothetical: when she actually wants a pair of shoes, it's different. Sethi suggested cutting also feels comfortable because it's all they were ever taught. He told the audience that for Mia and Jake, "being good with money" seems to mean not spending. Cuts alone would send them back to that comfort zone, so they also needed to think critically about big decisions such as their pension, their 529s, and their guilt-free spending.

The pension as a safety net

The couple explained their pension. Under a "rule of 88," once years of service plus age reaches 88, they receive 80% of the average monthly income from their top three earning years for life. Having contributed since age 21, they expect to be eligible somewhere between 54 and 60. Mia asked whether 80% would be enough in 20 years given inflation. Sethi said he didn't know the details but was "willing to bet" their pension adjusts for inflation, as many do, and suggested they check. They estimated their final salaries at about $140,000 each. Sethi called this remarkable and noted that few people have pensions like this anymore. He described how pensions were more common in their parents' era, and how companies later shifted the burden to workers through 401(k)s and IRAs. By the time the couple retires, he said, the house will be paid off, college saving will be finished, and their costs will be much lower.

As for the $700 monthly savings, they had started with a round $1,000 and lowered it without much reasoning. Sethi then showed them that with the adjustments, they were spending more than they earned each month. That explained why their savings were shrinking and why money felt scarce.

Interrogating the 529 "universal truth"

The biggest remaining line, apart from the pension, was $2,700 a month into the kids' 529s. Mia explained her reasoning. Her parents taught her to avoid debt above all, and they helped her graduate without any. College costs now seem outrageous to her: where students might once have borrowed around $60,000, she now pictures $100,000 to $150,000. She also acknowledged a pay-it-forward element. Asked whether they would still save for 529s on $75,000 a year, Jake said they would try. His own view is that it was done for him and he wants his kids to have the same advantage, and that the "safe" path he was taught is to go to school and get a job that pays. As they talked, he said, the position got harder to defend. It was "an agreed upon truth" they had never looked into. Mia later called it "this ghost telling us that we have to do that."

They estimated the 529s would grow to about $98,000 to $100,000 for the oldest, who starts college in four years, around $130,000 for the middle child, and possibly about $170,000 for the youngest. Mia asked whether that was the right amount and admitted she had never thought about it. Sethi said it was shocking that the largest line on the sheet besides the pension had never been questioned, and that it was no wonder they felt guilty without knowing the basic numbers. He suggested they might even like guilt because it is familiar. He also observed that right after the momentous decision to sell the house, they moved the money elsewhere without stopping to ask what was right.

In a segment addressed to viewers, Sethi described "I need to pay for my kids' college" as a nice but simplistic idea. Parents promise to sacrifice everything without knowing how much, where the kids will go, or having talked with them. He argued this isn't about loving your kids but about thinking critically about one of the biggest financial decisions in your life. He urged parents to calculate different scenarios, from giving nothing to giving a great deal, and to fit the decision into their rich life.

Family money scripts

Mia remembers her parents' message as "do not spend." As a child she wanted to spend her babysitting money right away and always felt she was doing something wrong. Her parents are "true minimalists" who can eat the same meal forever. They also took the family traveling and paid for her college, both things Mia wants to do for her own children. The contradiction she felt was that saving seemed effortless for them and impossible for her. Her parents are still married, still just as disciplined, spending more on travel in retirement, and enjoying it "a thousand percent." What she wishes they had done is explain their trade-offs. She saw spreadsheets and tracking, but never heard reasoning like "we could buy this, but we're not because we want to travel." Jake described her parents as a methodical unit. He always knows exactly what meal they'll serve when he visits, which Sethi called "a huge reveal" that they have a system, even if it isn't visible.

Jake's parents were supportive and upper-middle class, "probably towards wealthy" for their small Midwest town, but they never discussed money. They paid for all of his college, and he says he didn't really apply himself until about 25. His father has mentioned an inheritance, but the amount is "a mythical number" that has never been discussed in 38 years. Jake said he has taken on the pattern of avoidance: "shut the door, pretend it doesn't exist." Mia said she copied her mother, who spent weekends doing a spreadsheet, without knowing what the spreadsheet was for. Sethi found it ironic that Jake may inherit a large sum while being afraid of money, and that he risks passing the same avoidance on to his own children. He argued that generational messages don't fade on their own. Most parents did their best but didn't know what they were doing with money, and today's parents have far more free resources available.

Feelings versus decisions

Mia said that even though she knows college doesn't have to be 100% funded, the thought of lowering it makes her anxious and guilty, because they both value taking care of family. Trading anxiety for guilt, she said, doesn't sound better. Sethi's response was "so what?" Feeling guilty doesn't mean you have to follow that feeling. You can acknowledge it, identify the invisible script behind it, set it aside, and instead follow a decision "informed by numbers, by connection, by conversation, and by a rich life vision."

Mia stopped him there. She said it was a major shift in her thinking: she hadn't realized how much she was letting feelings rather than decisions control their money. Sethi said that in his experience, more than 95% of the time people make life-changing financial decisions on feelings alone. His recommended order is the rich life vision first, then the numbers, and then the feelings.

A rich life vision, and "playing not to lose"

Asked for their rich life vision, both said they want not to track every penny, and to feel about their overall finances the way they feel about the house decision. Jake said that during this conversation his vision had shifted toward being confident in their decisions and using data. He pointed out that at work they insist on data rather than opinions, yet at home they rely on feelings. Sethi told them they had been "playing not to lose." Pressed for specifics, Jake named the landscaping and the hot tub. Mia agreed. Jake said reading Sethi's book was the first time he had ever thought about what he was saving for. Before that, he just wanted to save and not spend.

Sethi said that if you don't create a vision for your money, one gets created for you, typically a big house and a big car, which is what happened to them at first. They unwound that but never replaced it with a new vision. Mia's defaults became following her parents' rules and putting everything toward the kids. Asked to name the problem in one sentence, Mia said they don't have the money to do it the way they're spending, and it's forcing them to take from savings. Jake said they must stop drawing from savings and would like to add more, likely by reducing the 529s. Mia said they need to decide on a college amount and then fit the rest of the budget around it. Jake again wished for someone to give him a plan to execute, "a Midwest work ethic." Sethi said he never accepts that role, because people follow through more when they have done the thinking themselves.

Reframing the college conversation with the kids

Mia said they had told their 14-year-old that they could help with a public university, and that anything else would require scholarships or loans, adding that he should avoid debt. Sethi called this the typical lecture parents of their generation gave. He offered an alternative framing: tell the kids how hard the parents worked to save, what it took, and how much education has meant to them as teachers. Then present the money, using $75,000 as his example figure, as a gift. The child, as an adult, can decide how to use it, whether for the first year or spread over four, and the parents trust them to decide well. The couple said this version makes the child the decision-maker, shows confidence, and treats the child as a collaborator. Mia noticed it includes exactly what she wished her own parents had done: explain how they did it.

Sethi argued that many parents believe they must shield their kids from money and that this is wrong. Every trip to the grocery store or department store, and the college decision itself, is a chance to talk about money. That requires the parents to get good at money first. He added that kids love it when parents admit mistakes and say they had to go learn this themselves.

Mia said she had a much bigger emotional response to the idea of empowering her kids with money than she ever had to saving for college, which had no feeling attached. She joked that in 20 years she doesn't want her kids flying to California to have Sethi's kid teach them about money. Sethi said that because both of them are teachers, the idea connects deeply, and that based on what Mia had said, giving $30,000 and teaching the kids might be more empowering than giving $120,000. Jake said his mind was "blown." At his school he talks about "high expectation with high support," yet with money he had operated on feelings with low expectations. He described strong cognitive dissonance and said it might be the first time he had felt hopeful about money. Mia agreed: "We just weren't making decisions."

During a break, with Sethi out of the room, the cameras kept rolling. The couple planned to disconnect the hot tub. They talked about telling the kids the family will eat mostly the same healthy meals each week, with a set budget any child can use to plan a different meal. They agreed they need to talk to the kids about money. Mia reflected that her old approach of looking at the budget and concluding "we're spending too much" was itself a feeling, with no "how, where, what." She also liked the idea of telling the kids the money is a gift and showing them the account whenever they want to see it.

Rebuilding the plan

Back at the numbers, Mia proposed deciding on a firm amount for each child and then building everything else around it. Her gut said $75,000, and she was open to less. Jake had been thinking $50,000. He suggested $60,000, and they settled on $65,000. When Jake worried it was arbitrary, Mia said it didn't matter, "because at least we decided." Her ex-husband will contribute $15,000 for each of the two older children toward that total. Asked to guess the required monthly savings, Mia said $2,300 and Jake said $1,900. Sethi's team's rough calculation was about $1,600 a month, roughly half the previous amount, largely because the youngest has many more years to go. He noted the figure depends on several variables and should be calculated carefully at home.

They then finished the adjustments. Gas was split out at about $200 and moved to the car line, bringing it to $609. Groceries went to $800. Miscellaneous was cut in half to $600. Fixed costs fell to 52%, leaving 9%, or $1,216, for guilt-free spending. Sethi then used what he called the CSP's greatest strength, projecting ahead, and zeroed out preschool as it will be in a year. Fixed costs fell to 43%, and guilt-free spending rose to 18%, about $2,400 a month. Mia said that felt like the rich life.

Their first choice was more savings. Mia wanted six months of liquid cash, which Sethi put at roughly $30,000 to $35,000, so they doubled the monthly contribution from $700 to $1,400. Of the remaining $1,700, they chose house projects over travel for now, putting $750 a month into a "house" category in place of vacations. A hot tub, estimated at about $6,000, would take about a year. Both said they were fine with that, which Sethi called an amazing answer. He noted that many people balk at waiting, but they'll be that much older anyway and might as well have the money, with no debt.

That left about $1,000 a month for eating out and other guilt-free spending. Sethi asked them to stay comfortably under it. For eating out, one of the few variable costs he recommends tracking, he suggested the same approach as groceries. Set a monthly figure, work out what each outing can cost, even down to entrées and drinks, and plan in advance where they'll go. Many people find that boring, he said, but knowing Friday is pizza lets you enjoy it twice: once looking forward to it and once being there. It trades some serendipity for the lack of worry they both said they wanted.

Is this their rich life?

Asked whether the plan reflects their rich life, Jake said yes. Not pulling from savings is part of it, and he was already mentally designing how he'd track it. Mia said she had been "confusing saving for college with preparing my kids for the future," and those aren't the same. Sethi agreed that simply giving kids a lot of money helps them avoid some debt but doesn't teach them much, and noted that both of them are examples of that.

On what surprised them, Jake said it was how much he was perpetuating his own childhood patterns and how, because he was scared, he had gone against everything he believes about using data, building capacity, and trusting kids. He said he had been "the worst version of myself around money" and felt more comfortable digging in now that there was a goal. Mia said it was the distinction between giving kids money and preparing them for it, and that she felt "so much lighter." Neither expects resentment going forward. Jake said the hard work now has a purpose beyond a big lump of money they had never thought about. Mia said decisions they make together leave no room for resentment. Jake added that his resistance had come from a lack of clarity and understanding.

The follow-ups

In a first follow-up video, Mia said her biggest surprise was how many unwritten rules had been guiding her. Jake said he felt much better even while saving less for college, because they now agree they want to teach their kids about money, not just give it to them. His takeaway was that he will always have to think about money no matter how much they earn. He used to believe earning more would make the worries go away, and he's now fine with that because they have a purpose and a process. They reported auditing subscriptions and regular expenses and deciding confidently what to keep and what to stop.

In a second update, they had just returned from a vacation Jake said he actually enjoyed because for the first time he knew where the money was coming from and how much they could spend. They had held two money meetings, which Mia described as the first money conversations of their relationship that didn't feel contentious. She said they weren't necessarily spending less, but they were questioning why they spent and choosing more intentionally. Jake said the lesson for him is that they have to be consistent and can't skip things, and joked that he's still grumpy, but at least he now knows where the money is coming from.

Holy, you're spending the most amount of money. We pay for our kids' college.

If you say, "Well, give yourselves more money and don't give money to the kids," that feels selfish.

Growing up in the Midwest, you just save money, then you die, and you give it to your kids.

My anxiety increases because a budget has always been really hard for me. There's always this tension of, we can't even go out to dinner this week.

I feel this pressure. I'm like, gosh, here we go.

You are now spending more than you make every month.

That explains the savings.

How's that feel to you? Scary.

That's why we're here. I just want someone to put their arm around me and say, "Son, this is what you're supposed to do."

That person doesn't exist. What if instead of following that feeling, I followed the numbers by connection, by conversation, and by a rich life vision?

In 20 years, I don't want them flying to California to have your kid tell them about money.

In America, we do some pretty funny things with our money in the name of the kids. Extracurriculars, huge birthday parties, SUV when they are 2 months old, and college, of course, has to be fully funded. Now, I don't have a problem with any of those things as long as they are intentional and as long as you ran the numbers. The problem, of course, is almost nobody does that. Most parents simply follow a script, and that script often costs them their own financial future.

Today I'm talking to Mia and Jake. She's 40, he's 38. They've been married for 4 years. They have a blended family with three children, two from Mia's previous relationship and one child that they share together. And this idea of paying for their kids' college is causing resentment between them. Mia applied, and here's what she wrote: "I don't think either of us realized how difficult it was going to be to create a stepfamily. Money is a real sticking point because my ex-husband does not contribute very much, and I want to provide my kids with what I can because we're able to."

Okay, pretty complex situation. How would you reconcile this if you were sitting in my chair? Let me show you the numbers so you have a little bit more information. Assets, $443,000. Investments, zero. That's interesting. Savings, $13,900. Low with three kids. Debt, $176,410. Total net worth, $280,490.

Okay. Fixed costs at 50%. Very nice. Investments at 22%. I'm confused because their investments above are at zero. Not sure what to make of that. Savings at 25%, which is quite high. Guilt-free spending at 3%. I don't believe that. Honestly, I'm kind of confused by their numbers. They're very perplexing. So I need to talk to them to figure out what's going on, and I have a lot of questions. Let's get started with Mia and Jake.

Mia, you wrote the application, and in the application you wrote something I wanted to ask you about. You said, "Our values are mostly aligned and we have a plan with our money, but when it comes to implementing it, I feel resentment from my husband that a big chunk of our money goes to support my two kids who are not his biological kids."

Yeah. Is that an accurate reason for why you're here today?

I think that Jake and I really do agree on our values, like this is what we want to do. But in the implementation of it, the reality is that a big chunk of our money is going to make up for the fact that I didn't plan and save earlier when my two biological kids, our oldest kids, were younger.

There's always this tension of, well, we can't even go out to dinner this week, right? And I'm like, ooh, that's true. No, we can't. And then there's some guilt that I feel. And I don't think that there's any resentment about me or our values because we've agreed to it, but there's this underlying tension that I'm afraid will get worse if we don't come to a place where that underlying resentment is gone.

Yeah. I think that it's not resentment. I think frustration would probably be the better term for it. I'm making more money than I ever have. I've gotten my job that I've really been trying to get that's given us a lot more money. My ideal life would be being able to go out to eat without thinking about it. That's kind of my rich life, being able to buy a few things here and there without being very stressed about things and not thinking about money, which I know is not a realistic thing.

But just even walking around here yesterday, I was like, "Wow, these are the things we could buy with all the money that we're putting into school." But I don't resent Mia or anything, and the kids or what they were doing. That's where they were at their time.

When you say walking around here yesterday, these are the things we could buy, what's an example of that?

I'm noticing a lot of my rich life revolves around our house and our idea of making it a really great spot for us and the kids, and it's our forever home, hopefully. And that's ideas of maybe getting a hot tub or getting landscaping done. And we put a fire pit in, and I was like, "Oh, if we just put one of the kids' tuitions, we'll be able to do it in a couple months." So it's that kind of thinking.

Got it. Did you have this conversation today or yesterday?

Yesterday. Yeah. Yeah. Just walking around.

I think the exact comment was, "Man, if we just took the money that we were spending on college, in 8 months, we could do a hot tub and probably start on the landscaping." And I literally don't know what we were walking by.

Probably a landscaping hot tub store.

Yeah. Yeah, there's one right outside.

Yeah. And what was your reaction to that when you heard that?

I think my general reaction is just to be quiet. I think internally, I don't even think I said anything. I think I maybe laughed and was like, "Yeah."

Yeah. How long have the two of you been married?

Just over four years.

Four years. Yeah.

Okay. Four years. And how many children total?

Three.

Three kids.

Two from my previous marriage, and then we have a daughter together.

How old is your daughter?

Three.

Three. Okay, great. And we're spending a fortune on her preschool right now, too.

Really?

Yeah. Yes.

Oh, okay. And how about the two other children? How old are they?

14 and 11.

Okay. That's good to know.

And can I just clarify one thing, too? It's one of these weird things. I know what's best for the kids in our family and in investing in their school. And I think it's the right thing to do, but I'm not sure. And that's kind of why we're here. We want to figure out the balance. It feels off.

Yeah.

The balance of what?

The money we're putting towards the kids versus the money we're putting towards the things that—

And our savings is probably not where we want it either. We want more money in our savings, too.

Okay, hold on. What's off with the balance?

We're really emphasizing as much money as possible towards the kids, between saving for college and our youngest's preschool. And so our daily spending, or our guilt-free spending, is really minimal, and that doesn't feel sustainable. But also, if you say, "Well, give yourselves more money and don't give money to the kids," that feels selfish.

Yeah. I would agree with that. Yeah.

Okay. That's interesting. Do the two of you make decisions about money?

You mean together?

Well, that kind of answers my question, right? No. Yeah, let's start with together. Do you make decisions together about money?

I would say big picture, yes. Although I'm not sure that we've always been doing that. It's not something we think about a lot.

Okay. You agree, Jake, or disagree?

Yeah, I would agree that it's been something that we haven't talked a bunch about. I've always enjoyed just, we save a bunch of money, you die with a bunch of money. That's all. That's what happens.

Oh. Did you grow up in the Midwest?

Yes. Yes. Yes. Like I said, growing up in the Midwest, you just save money, then you die, and you give it to your kids.

Yeah. How do the conversations about money and kids typically go?

I usually say something like, "We have to do the budget."

Okay. And what is your reaction to that, Jake?

Just anxiety and anger. Anger, probably.

I feel anger, too, when I hear that word. Yes. Yes.

Probably my anxiety increases because, to be completely honest, a budget has always been really hard for me. It's hard for me to wrap my head around what are the right buckets to think about. And so I'm trying to explain, thinking, here's my thinking, Jake, here's what I think we should do. But it's probably not making a lot of sense because I barely understand it. I just know money is going out, and it's probably more than we should have going out.

And then Jake's like, "Well, but what about this?" Which is usually a super reasonable question, and I'm like, "I don't know." And so then I get stressed, and then he gets stressed, and then—

Where do the kids come into this?

As in?

The primary question today is, are we sending too much towards our kids? And this is a source of potential conflict. Where do the kids come in?

I would say my default is to treat that money as if it doesn't exist. Maybe where the kids come in is, "Well, what if we spent a little more money here?" And then my response to that is, "We don't have that."

Got it. So the kids' money is sacred, like it does not exist. It's a non-negotiable. Got it.

Yes.

Are you open to changing that?

I'm open to it.

Just imagine if Jake had said, "I don't want to send a single cent to your kids." That would be incredibly complicated to unravel. But fortunately, they do seem to have similar values. So now the question becomes, with a blended family, how do we decide the right amount of help to give? And I'm starting to suspect they have only thought about help in terms of how big of a check they can write, but there are a lot of other ways you can help kids, too.

And Jake, what about you? You mentioned, "Hey, can we spend a little bit more eating out or doing XYZ?" And she says, "Well, we can't." What's your reaction?

It's confusion because I'm making more money than I've ever made in my life. A little backstory. When we first got together, we bought a huge house that was great. It hit everything on our 10 out of 10 wish list. Perfect. I had a big truck trying to act really tough. That tough guy, that's what I need at 35.

I didn't know this.

Yeah.

This is when you got married?

Yes. This is both of our second marriage, and I think we were both so happy to have happiness. We were just like, let's just spend. Let's have everything that we've ever—

I don't know how we survived.

So you bought a—how big is the house? Was the house?

Almost 4,000 square feet.

Holy.

Yeah. Three-car garage.

That's for two of you and a little baby.

Yes. Well, half the time.

Babies need space.

Yes.

4,000 square foot. Okay. So then you bought the truck. What kind of truck?

Toyota Tundra. And I didn't stop there. I spent $3,000 on rims because that's what you need at 35.

Totally. How much is a Tundra?

Like $50,000, something like that. It was great.

Okay. So then what else did you get?

New furniture.

New furniture. So you had the house, the truck, etc.

Yeah.

It sounds like this is—

And then we kind of started talking about finances. That's what kind of got us into it, and then through conversations we decided that the house is a money pit. Not a money pit, it was just, we're probably house-broke at that point.

Wow. So we sold the house. A house $200,000 cheaper. Same neighborhood. It feels so much more like us. It's fantastic. We sold my truck. We have one car that—we had two cars paid off. We had to get a bigger car just recently because the 14-year-old kids are huge now.

But how long to make the decision to sell the house? That's a huge decision.

It was a big decision, but I feel like we just looked at each other and we were like, we were so house-broke, and it just seemed like, why are we doing this? Because neither of us were attached to it. We were like, if there is something that we can change, what can we change? And to our parents' credit, both of us were taught from a young age, do not go into debt other than for a house. So we didn't have other debt. So it was sort of like, okay, if we have money to play with, this is it. It's the house.

What was a sign that you were house-poor?

This was probably—we were thinking about every penny.

Yeah. That's when I was doing the spreadsheet, and it wasn't big idea numbers. It was like, we spent $12.37 getting donuts for the kids. We cannot spend that.

It was, yeah.

How would you describe how money felt at that time?

It was horrible. It just felt like being strangled.

Right? Wow.

And we had a big house gym that we worked out in. It was lots of expensive things that I've been collecting during COVID. Sold all that. Planet Fitness is a bunch of weirdos, but it's still pretty good.

How did it feel to just sell all that stuff?

It felt good.

Again, we got married, we were so happy to have happiness, spent all the money, and then it was feeling like, okay, now we're making smart decisions.

Yeah, it was almost like we had an entire relationship in 3 years.

Well, what I appreciate about this is I don't mind people making decisions about money, even mistakes about money. We all make mistakes. I make them. We all make them. What I really appreciate is that you caught it and you took a dispassionate look at the numbers, and you were like, "This does not work. We got to make a change."

If you actually build that skill of course correcting, you can actually go through life making a lot of mistakes because you're like, "Let me move fast knowing that if something goes wrong, I will correct it, learn from it, and I won't make that mistake again." So I'm willing to bet the two of you will never be house-poor again.

Yeah. Yeah.

And that's what I love about Mia, is how reflective and honest. And I think those conversations are what brought us together. Both very reflective and honest. When we make a mistake, we need to fix it.

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You mentioned that when you had the house and you were house poor, it felt like you were being strangled. It felt horrible. Is it different now? Because you mentioned you can't really go out to eat.

I think we took all the extra money and put it towards college.

Yeah, it's like yanking the steering wheel this way, and now I'm like, we weren't saving any, we're not saving enough for the kid. It's, to some extent, maybe an overcorrection. But again, there's that whole tension about, well, isn't that the right thing to be saving for?

Well, isn't a house the right thing to be buying?

Yeah, we don't. Fair point.

Yeah, we don't know what the right answer is. I think that I keep having someone, I just want them to put their arm around me and say, "Son, this is what you're supposed to do." It's like, "Feel free to put your arm around me and tell me."

That's actually quite interesting. What if I told you that person doesn't exist?

That's what I expected. Yeah. Otherwise, otherwise, yeah.

It's not your dad. Nobody is going to be that person for you except you, right? How would that strike you?

I know I say I want somebody to come and put their arm over me and tell me what to do, but I want to be confident in the decisions that we're making.

Okay.

It'll make it easier to not spend that money or do this or make that decision knowing it's in the right spots and our money's working. You know that term, money working for us? I hear people say that all the time too. I don't know what that means, though.

Really?

Yeah. I'm serious. I don't know.

What do you think it means?

Putting it into stock market. I don't know. My Midwest is probably showing right now. You save money and you put it away and hand it off to the next group.

I wonder if part of it is that we get a pension, and so we've never had to think about a 401(k) or where does the 401(k) money go? There was never any conversation about that.

I want to understand the idea of a pension. I get it conceptually, but on a day-to-day basis, should I be investing more? I don't know.

Who have you asked about this?

The person, no one.

Okay.

I'm asking you.

Okay, that's a fair answer.

And with the pension, what we do, or little that we know about it, is that you get retirement as the top three years, so an average.

An average. So I've got two master's degrees. I'm going to be a principal next year, and I just keep wanting to add income so that that top three years is as high as possible.

Okay. When it comes to the money in your relationship, the tension is around how much, Mia, that you are sending towards your kids. Jake, what would you do with the money if you had more of it? No judgment.

I don't know. My mind's going a lot of different ways. I'd probably save it. I'd put it into savings somehow, try to collect interest, that kind of thing. Put some money into our house, the landscaping idea that we wanted to do. Our family really liked—we inherited a hot tub and that broke. That would be something I'd probably put it into. Those are kind of my ideas.

Okay.

And maybe a food service. We talked about possibly something that, health is really important to both of us. We both exercise regularly, and I think to have healthy food options consistently and not add it as a stress, because when we come home from work, everybody's dumping their problems on us.

Have you all talked about these three things? Saving, house, food?

We've talked about it.

Any conclusions?

We do want to save for the house stuff. That's probably the most conclusion. I agree that having some sort of a food pro—I think we probably agree on that. If we could have healthy food prepped and delivered to us, that would be amazing. But any food service is just so much more than what we spend on groceries. It just doesn't seem to make sense.

Are you two aligned about money?

Probably.

I would say most of the things. The only thing I think that would cause any conflict on us would be vacation. I think it's something that Mia wants to travel, and I'm not. I feel like if we're putting all that money into school, I'd love to, I'd like to go sometimes, but it's not a need of mine.

This couple is very likable. I like talking to them, but I am noticing that because they are so compassionate with each other, it's difficult to get a straight answer out of them. I'm not even sure if they agree or disagree. And so much of what's happening here is being polite to each other. Polite's good, but sometimes I need somebody to say, "I don't like that. No, this is what I want." That is what I'm pushing for here. It is now my personal mission to show Mia and Jake that they can be direct with each other and be polite.

Do you all like feeling anxious about money?

No.

No. Let's try that question again. Do you like feeling anxious about money?

No.

Both are saying no.

Yes.

Very affirmatively no.

No.

And yet the dynamic you've built allows you to both constantly feel anxious. Okay. Let's find out what the numbers say and then we'll talk about them. All right. What was it like putting the CSP together?

It was actually really nice because it gave me a concrete way to think about our big picture, which is nothing that I've ever been able to do before. I had no idea. If somebody asked, "What's your net worth?" I don't even know how to calculate that.

And consider how many years you kept a budget.

Yeah.

We're tracking this, and like you mentioned, should we be tracking the price of groceries or the price of soda? It's unclear. Why do you think, looking back for the many years that you kept a budget, why do you think you were keeping that budget?

Because that was the number one thing I was taught about money, is you balance your checkbook.

Right. And so since nobody balances their checkbook anymore or basically uses one, you adapted that for today, and we're using Excel or some tool. Using Excel?

Google Sheets.

Yeah.

Do you want to know what I was doing? Because it's pretty crazy.

I would love to. Okay, tell me.

So, again, we spend on the credit cards because I get points for that, but we never don't pay them off.

Great. Okay.

So, I would copy everything that was spent in the credit card statement, put it into an Excel spreadsheet. I'm just copying and pasting it. And then line by line, one, make sure everything looked like there wasn't anything there that shouldn't be there. And then I would try to sort them into categories.

Mhm.

Categories. I don't know why I came up with those categories. I just did. And then I would try over multiple months to track to see, are we spending on clothes what we said we should spend? Are we spending on going out to eat what we should spend? But I knew I was duplicating work. It's already there. But that's what—so I...

Keep going. Why do you think you were doing all this? What did it get you?

I think I felt like I was controlling our money.

Exactly. Exactly. This is a classic example. I'm actually really thankful that you're sharing this with everybody because there's so many people who go through the motions of playing money. They are playing money. They are moving things from here to there. Why? Like the concept of a paper pusher. Let me pick this piece of paper up, push it over there. We all know that's useless, but we do it. And nobody forced you to, right? No one sat you down and said you got to do this.

No.

If anything, it was echoes from your parents, maybe grandparents. It doesn't work. If we actually took an honest look at it, we'd be like, "What the am I getting out of this?" But we get a sense of control. And we like to feel like motion is productivity. Another great example of you correcting that and being like, "Hey, made a mistake. Went down the wrong rabbit hole of a budget. We're going to stop that." And you did. Amazing.

Okay, let's take a look at the numbers. Mia, can you read the word in bold and the number next to it for this entire box, please?

Assets, 443,000. Investments, zero. Savings, 13,900. Debt, 176,410. Total net worth, $280,490.

Cool. What do you think of these numbers?

I feel like our net worth is low considering how much we both make.

I don't understand the investments line.

Okay.

Again, we've got the pension, so I don't know if that should be higher.

Okay. I feel amazing about the debt. I think that that's something—it's our house. That's all we have.

That's all mortgage debt.

Yep.

What's the interest rate?

6%.

Yeah. Okay.

It's also a 15-year mortgage. So, we're proud of that.

Yeah. So, we sold from a 30-year to a 15-year. That was something else that were actually paid off.

Nice.

Yeah. Net worth, I don't know. I just don't know enough about net worth.

Yeah.

Obviously, I want it to be higher, but I don't know why.

Yeah.

That's a good answer. That's honest. That's actually common. I would say most people feel that way. Do looking at these numbers make you feel anything?

I think the only thing I would feel would be guilt, and I think it'd be debt.

Wait. I think I could show you this glass of water and you'd feel guilt.

Yeah, I think so too.

That's a default baseline. Okay, so you feel guilt because...

I don't feel guilt. I said if debt was way higher, I would feel guilt. That's the only feeling that I would have.

That's quite an interesting response, though.

Yes.

Mia, how do you feel, if at all, looking at these numbers?

I'm proud that our net worth is something, right? I'm proud that there's something there.

Yeah.

I'm proud of the decisions that we've made that have gotten us to have that. And I also feel—I do think guilt is a default—but guilty that it's not more. I wish I would have made some different decisions earlier in my life.

Cool. I appreciate that. Let's look at the income. Jake, what's the gross combined monthly income, please?

18,862.

Cool. That means that your household income is $226,000 a year. Did you know that number?

Yes, we knew that.

You knew that.

I had never made that calculation of our gross. I knew our net.

Uh-huh. So, you didn't know your—what do you think that you made as a household, ballpark?

I probably would have said 200,000.

Okay. What do you think about that income?

I think it's great.

Yeah. No, it's great. And that's why it stresses me out. I don't know why we're...

Why are we counting pennies?

Jammed up.

This is funny. People don't make enough money, they go, "I'm stressed out." Then people make a ton of money, they go, "I'm stressed out because why don't I feel better about money?"

Yeah.

How much do you need to make to not be stressed out, Jake?

Well, I know that it'd just be better problems. I've read The Subtle Art, where it's just you want to have good problems. So, these are pretty good problems to have, but...

But you're still stressed out, right?

Yes.

Maybe if you make 500K, will you still be stressed?

If we kept our current assets, no, I wouldn't be stressed, but...

Oh, really? 500 is all you need to make.

Just double.

I feel like you're leading the witness. I'm sure I'd be stressed always.

Yes.

Yeah.

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Okay, let's look at the fixed costs. What's that number?

50%.

Okay, quite good. That's on the lower end of the 50 to 60%. That's exactly what I would expect to see for a high-income couple. When your income goes up, disproportionately up, this number should come down because you can only spend so much on toothpaste, right? So, I think you're all doing a very nice job. Look at that mortgage. $1,776. That's crazy. 9% of gross. Well done.

Thank you.

Especially considering you had a McMansion before. This is amazing.

I'm very proud of that.

The other mortgage was like 2,000 more. Yeah.

I think that's probably one of our proudest money decisions, is that we made that.

I love that. That's so cool. You all ever celebrate that, that you made that tough decision?

I think we do, actually. We look at each other, I would say pretty regularly. I'm like, "Oh my God, I'm so happy we did this."

And it feels better. It feels like home, too. It's that added bonus. It feels more like us, too.

Yes.

This is great energy. Now that I see that you can do this and that you do celebrate, I'm in my head going, cool, they can do that. So now I just need to transfer that—

I would love that.

Over to other parts of your money.

I'm in.

This is very good. Okay, let's keep going. We have investments. What's that number?

22%.

Okay, so that is your pension, which is about $3,000 a month going to your pension.

Yeah.

Okay. And I can see there's a little bit of confusion on your part of, what's happening with this pension? What does it mean? But overall, great. Savings, what's that number?

25%.

Okay. The bulk of this is kids' 529s. And then you have an emergency fund. Okay. Personally, I would have put the 529s under investments.

Okay.

But it's fine either way. It shows me where your priorities are. And then finally, let's go down to guilt-free spending. What's that number?

3%.

Do you only spend $364 a month?

No, that's not right.

Okay. How much do you spend? You don't know.

I bet that's just what was left, probably.

That is right.

So, do you think that you are spending more than 364? That would be extremely lean.

Yes, of course we are.

How much do you think that you are spending every month on discretionary items, including eating out, coffee, vacations spread out over 12 months, etc.?

I bet it's closer to 1,500. And even that probably is us being really strapped.

Let's not do that. How much are you realistically?

No, no. I think we're realistically spending probably $1,500 to $2,000 a month. But I'm saying—

Let's say 2,000. When I do these numbers, I always want to be conservative because I never want to be surprised owing more money. If anything, I want extra money at the end of the year. Right. Cool. So, at 2,000, then the question is, where's that money coming from?

Yeah.

I have a question. Your long-term emergency fund says 700 bucks a month, but you have only $14,000 in savings.

Yeah.

You pulling money out of your savings occasionally?

Yes, we have been, which we want to stop doing.

Well, this all makes sense.

Yes.

So, you're spending more than the CSP is reporting.

Yeah.

It's not planned for, and then you pull out of savings.

Yes.

Okay. Your savings is about two months of expenses. Were you aware of that?

Yes.

Okay. How's that feel to you?

Scary.

That's why we're here.

That is why we're here.

All right.

I think us being here gives us hope, right? I think if we had—

That all kind of answers that.

Because I would be more mad if I didn't feel like I'm gonna talk with Ramit. He's gonna help me figure this out.

Wow.

I think that with me, it kind of reminds me of how I treated girls before, when I was going through puberty. It scared me. I didn't understand it, so I just avoid it.

Okay.

I can't be mad. I don't understand it well enough. I think that that's kind of where I'm at.

This is a great analogy.

Yeah. Yes.

But wait, wait, what's the conclusion? Because now you're married. Actually, you've been married twice.

Yeah. So, I'm not afraid of girls anymore. Sort of.

Are you afraid of money?

Yeah. I think I'm confused by it. And I think there's a deep-seated fear of seeming dumb and asking questions. I joke about not knowing what people say, making their money work for them. I think that there's just a knowing gap, and I want to get it fixed. So that's kind of where I'm at. I can't be mad that I don't—it's like learning a new sport. You're not mad the first day. I'm just trying to drink it in as much as I can right now.

And I think I'm just more scared than mad. The fear is bigger than the anger for me.

I love Jake's analogy about being afraid to talk to women when he was growing up. I think a lot of men can really connect with that memory. But I also think that at a certain point, you have to face your fears. There is no way but straight through those fears to go and talk to somebody or apply for a job if you've been nervous about your career. You've got to face your fears with money and realize nobody else is coming to save me. And I was put on this earth not simply to save money in a savings account, but to live a rich life. Therefore, I'm going to start facing my fears. I'm going to learn how money works, and I'm going to start feeling good about it.

For me, I always naturally understood money, but things like fitness, I felt like I was the odd man out. Everybody else learned it, and I just don't get it. And so, when I talk to people and they don't understand money, I have a lot of compassion. It's kind of complicated. You get a million different people telling you a million different things. And as long as you got a roof over your head, it kind of seems like it's fine. So, I appreciate you being so honest about it.

Mia, you said you feel fear. What's the fear of?

The fear is that if something happened, if there was a catastrophic event, we don't have money to deal with it.

If you had a fear of that, let's say I had a fear of slipping in the shower. Okay, I might get one of those plastic mats. You have a fear of if something happened, you won't have enough money, but your savings account is still $13,900. What's the difference?

I think in the moment that I want to go on a trip or I want to buy something, I'm just like, I'll deal with it later.

Yeah. How often does that happen?

Probably all the time, right? Because if I was really afraid, I wouldn't be doing that.

Yeah. How much do you think your relationship with money is problem-oriented, where you talk about the problems, you agonize over the problems, you discuss the problems, versus solution-oriented, where you say, "Okay, that's the problem. Here's what we are doing about it"?

95% to 5%.

Yeah. 95% problem.

Problem.

Common. Really common. Just imagine with me for a second if we flipped it. Just flipped it. 95% solution-oriented, 5% problem-oriented. What would that look and feel like to you?

That would feel like when you said that you liked that we celebrated the decision that we made about the house. To me, it would feel like having that 95% of the time, which sounds amazing.

So, you'd celebrate more. What else would you do?

I would worry less. And I could spend that energy doing something I enjoy.

Like what?

Hanging out with Jake, spending time with the kids. I wouldn't be trapped to the spreadsheet.

Are you trapped now?

Yeah. I watch it all the time. It still doesn't make sense to me. And again, I'm just paper pushing.

Yeah.

Okay. I have a couple more questions about this. So, you have preschool at $1,266 a month. How long will that last for?

Another school year.

Yeah. One more school year.

One more school year. Yeah. Okay. And then after that?

Then public school.

Got it. Cool. We have a deposit into an account. What's that for?

That is a joint account that my ex-husband and I each put that much money in, and it's savings for when the kids need clothes, for the sort of bigger expenses.

Got it. Got it. So, that's kind of day-to-day versus the 529s that you are saving for. Okay, great. I love seeing this car payment at $398 a month. Amazing. Debt at $459. That's what?

Treadmill.

That is a treadmill that is done in three months.

Yes.

What is the interest rate on a treadmill?

It was 0%.

Oh, okay. All right. By the way, I noticed something interesting. Your preschool amount is not being accounted for in the total. So, let's go ahead and adjust that right now. Wow. What just happened to your fixed cost number?

It's a big jump. 10% jump.

Yeah. Jumped 10%. So, let's recognize a couple things. Number one, child care and preschool, very expensive.

Yeah.

Number two, suddenly having that really high income and the low fixed cost, which was something I was like, great job.

It's not so low anymore.

Right. Now, preschool is temporary and, as you mentioned, public school after. So this number will go down.

Yeah.

But things are not so loose all of a sudden. What does it tell you?

It reinforces that we don't really know what's going on.

Agree. That is true. And what does it imply for the rest of your money? If you just jumped from 50 to 60%, what does it imply for the rest of how you're spending your money?

That's shrinking.

Yeah, that shrinks.

I'm feeling my hands get hot right now.

Yeah.

I feel this pressure. I'm like, "Oh, here we go."

Okay. Here's how I think about it. I appreciate that. That's real. For me, I'm still like, we got a puzzle here. And we're going to figure it out. Certainly, you do not have a lack of money. You all make a lot of money. So, we got a puzzle. We just need to figure out which way the pieces all fit. So, I'm not feeling hot hands at all right now. Okay. I am—

Because you have that confidence and you understand. That's where I want that feeling, where most of life, there's a problem, we'll fix it.

Exactly. All right. We got to make some other adjustments. We have this deposit for your kids that was also not reflected. Look at the number now on your fixed costs. We're at 64%.

Yeah.

So the financial picture has actually dramatically changed. Now I'm going to be a little more directive on my questions, because at 50%, I really don't care what you're doing. You do whatever you want. But at 64%, I have questions. Utilities are 409. Why? That's a lot.

I would assume that our electric and gas are high because I basically run the washing machine 100% of the time, and then the hot tub also.

How much does a hot tub cost? I truly do not know.

Well, just the electricity to run it, to heat the water.

How often do you get in the hot tub?

Well, it's—

Well, now it's broken.

So, great.

It was so old, it had a CD player on it.

But can I ask you, when it broke, did you notice your utility bills going down?

I have not figured out how to—

We have not figured out—

Connect it, to stop.

Yeah. Basically, we're still paying for a broken hot tub to run.

Fix that.

Yes.

All right. This number is unusually high, and at 64%, we don't have room for that. Debt payments at 459 and three months. Oh, okay. Let's zero it out then, just to see. Okay, so watch. We zeroed it out, and it brings us down to 60%.

Okay, nice.

Okay, I'm going to leave it at zero. Groceries and gas are—first of all, why'd you combine those two? It's a little odd combination.

Because it's what we put on the credit card. It all goes on the credit card.

You should change that.

Okay.

Gas should go with your car. Car is everything related to the car. Okay, so gas, parking tickets, parking, all of it should go there. That way you just have a good sense. A lot of times people don't realize, oh, my car payment is $350, which mine used to be. And then when I netted out everything else, I added it all together, it was over $1,000 a month, including parking and gas and everything. So, we got to know these numbers. Know your numbers.

So, move the gas up to the car payment.

Exactly.

Okay.

How much are you spending on groceries per month?

I do think we probably spend about $1,200 on groceries per month.

Okay. What are you buying for 1,200? I'm not the grocery. I'm just curious.

I think that's an area where we could really cut back. And I think that it's so cyclical, too, because when you add two grown children, the meals change. We're trying to be proactive, and when the older kids are not with us, then we try and do leftovers or things like that. It's just trying to save money. But I definitely think that that's a spot.

What do you think?

Yeah, that we could save. I agree that we probably could cut back on that a little.

If you could bring this number down, your groceries instead of 1,200, what would you bring it to?

I think we could realistically do 800. I think we do 200 a week.

You'd cut 400 off?

Yeah, I think we could.

I agree. That's pretty good. Okay.

How do we do that, though? What's the action steps? Do you just pull out $800, and every time you go, then that's it?

Excellent question. When you start, most people in America do not shop to a number. They go to the grocery store, and they're just like, "That looks good." And when you are building the skill of sticking to a number, you can do that. You can literally pull out $200 a week in cash. Or a simpler way is to simply know your number. Every week we're going to spend $200. Now, lifestyle is lifestyle. If you go in twice a week, fine. It's a hundred bucks each time. But you got to keep a note on your phone somewhere where you are tracking it.

Over time, what I have found is that people who are effective at hitting their grocery number, they basically eat the same thing a lot. People who are hitting a number, especially when they need to hit a strict number, they basically come up with a meal plan, and that's it. So that's number one. The second thing I've learned about patterns of successful people hitting a grocery number is one person is doing the shopping, because they just know the numbers. They're connected. If another person goes and buys it, sometimes they have to, but they may not have that tacit knowledge that the primary person does. Right? So that's what I would do.

Okay, that's really helpful. Thanks.

Cool. I'm going to take this down to 1,100, still leaving your gas in here, which you can move later. Okay. And that brings you down to 57%. Honestly, you're in great territory. Great territory. It's a little higher than I would like considering your income, but 57% is within parameters. Subscriptions at 315. What's this for?

So, that would be all of the different TV services. Every single one, which I think we could totally—

Yeah, we could.

I don't care about that very much.

Yeah, same.

How much can you take it down to?

200 at least.

Easy. Yeah.

Yeah. Okay, great. I love that you say easy. Let's keep it easy.

Okay.

All right. 200. We don't need to cut to the bone on everything, right?

You know what I'm noticing? The two of you are very good at cutting costs. I have not seen any resistance from you. It's uncommon. Most people fight consciously and unconsciously. The two of you, no. You're like, "Yeah, we can cut that."

Yeah.

What is that? Why is it so easy for you to cut costs?

For me, it's the greater good of our family. I think that financial stability would create such a safe environment in a household where we're comfortable moving forward.

What about you, Mia?

I agree with Jake. And I think I'm comfortable with it because it's just hypothetical. When push comes to shove and there's a pair of shoes I want, I'm like...

That's quite interesting. Wow. Very insightful, both. We're going to tackle that as well. I think that you also might both be really comfortable with this because it's what you know. How long have you been told, "Got to cut costs. That's bad. Don't spend money"?

Forever. That's my education on money, is don't spend money you don't have.

Exactly. So to me, it's like me saying, "Drink a glass of water." Yeah. You've been drinking water for a long time, right?

It's quite striking how easy it is for Mia and Jake to cut costs. Most couples do not find it this easy. They resist at every turn, even if they're in severe debt. But I also suspect that there is something much deeper going on here, which is that for Mia and Jake, being good with money means not spending a lot at all.

And so, while I want to cut some of their costs because I think they are a bit out of their parameters, I also know that that alone is going to take them back to their comfort zone. Cut costs, shrink, I don't want to spend any money. That's not the path to a rich life for them. The path to a rich life: manage your costs, but also think critically about these major decisions like your investing, your 529s, and yes, even their guilt-free spending.

Your pension. Can we just talk about this for a minute?

I'd appreciate that.

All right. So, your pension, I looked into it, and I understand that you looked into it a bit as well before you came here. What have you learned about your pension?

When we retire, if we max out our pension, so if we wait till we're whatever the rule is, right? There's a formula, I think.

Rule of 88, where it's the years taught plus how old you are needs to hit 88.

So if we wait to that, then we get, for the rest of our lives, every month, 80% of the average monthly income of our top three years.

Great. And when will you be able to retire based on that?

Between 55 and 60.

Yeah, I think it was 54 even, because we both have been going into that pension since 21.

Great. How do you feel about that?

Good.

Good. It feels good. It feels good. Yeah. It's just like this in-the-distance thing. I've never...

I guess one question I have is, I don't know if 20 years from now, 80% of what I make, if that's enough to live on. I don't understand how to make the estimation of how much will inflation go. I don't...

Well, I don't know the details of that, but I'm willing to bet a little bit that your pension indexes for inflation. So usually a lot of different types of pensions and the like will account for inflation. They're not just going to pay you in today's dollars 20 years from now because it would be worth far less.

You could look into that, and literally you could just type in "IP inflation."

Yeah.

And I would not be surprised if it's like, "Yeah, we account for inflation," etc.

Got it.

Do you have a sense of how much you might make in the last three years' average? A ballpark is helpful.

Each year, you mean? What our yearly income would be?

Yeah. What can we use to project?

Sure. I think it'd be safe to say 140 each.

Okay. We can make some rough estimations, but in general that's quite amazing. Very few people have pensions like this anymore. You know that.

That's what we've heard. Yeah. Everybody we talk to says that.

And the benefit of this is, back in the day, in our parents' time, a lot of people had pensions. So basically, like the two of you, they're kind of like, "I don't really think about investing. It's taken care of. All I know is I need to put the X money in the pension," and then they retire, and then they just get a check every month.

And by the time the two of you retire, your house will be paid off. Your expenses will be way lower. Perhaps the food goes down. Certainly all the savings going to 529s, investing, all that stuff goes away. And you're just like, "Oh, wow. This is a lot of money." And we're 54, 55, which is quite young.

Yeah. It's a great life. That was more typical in our parents' time. And then companies took that and they said, "This is really expensive, especially because people are living longer, and also we can get away with just shifting the burden onto people. Let's make them save for it. You are responsible for your 401(k) or your IRA, and we don't have to account for this for the rest of their lives," right?

So cool. Y'all living in the public system of getting a pension. It's awesome if you are in it. Awesome. Okay. Saving $700 a month. How did you pick that number?

I think it was 1,000. I think we started with a round number, didn't we?

Yeah.

And then it was just like that seemed like too much with what we were spending. We just kind of went down to 700, I think. I don't remember. There's not... It's just a...

It's arbitrary. It's arbitrary. It could be anything.

So, I just want to point a couple things out. As we have made some adjustments, you'll notice that you are now spending more than you make every month.

That explains the savings.

Yeah. That's why your savings are being depleted. And that's why, in part, you feel scared about money and scarce and like it's bad news.

Mhm.

Because it kind of is.

Yeah.

But we could make some changes. What are the other big numbers on the CSP that are kind of flashing bright red?

Well, the 529s is a lot. Yeah, that's a big one.

So, tell me, what is the thinking behind the $2,700 a month going towards the kids' 529s?

When I was growing up, my parents told me, "What you want to avoid more than anything else is debt." And even though paying for school is a good investment, if you can avoid debt, do it. And they helped me so that I didn't have any debt coming out of college. So that's one, is probably that's just in my mind, something that was always a given. If I can pay for my kids' college so that they don't have debt when they graduate college, I want to do that.

Because?

Debt is bad.

Because debt is bad. Anything else?

The cost of college now, it's just so outrageous. If it was even 15 years ago and they were taking out a total of 60K for college, okay, not ideal. But now it's like 100, 150. That's so much debt. It just seems so big.

Okay. Okay. Is there any element of this was done for me, so I want to do it for them?

Yeah. I think the reason I hesitate is because I'm just trying to emotionally gauge, is it that? And I do think there's some element of pay it forward, right? I was given that. This is what parents should do.

Yeah, that's reasonable. What if the two of you did not make 230-plus thousand a year? What if you made 75K a year? Would you still be saving for kids' 529s?

I think we would probably still. Don't you think we'd still do some?

Yeah, I don't think we could, but I'd be doing everything I can. I think that my thing is it was done for me, and I want my kids to have that same advantage that I had. We'll give it to you, but you got to go earn it after that kind of thing.

And I know there's so many different avenues of making money. But my way of thinking is safe, and just go to school, get a job that pays, and that's all I was told. And so I think that that's just anxiety telling me to make sure my kids have that same opportunity that I had.

Yeah. Okay.

Yeah. The more you dig in, it's harder to defend and talk about. But I just don't know. It's just this agreed-upon truth that we've really not dove into.

Agreed-upon truth being?

That we pay for our kids' college.

It's just a universal truth, axiom.

Yeah. But it's agreed upon that we've never really dug into why. And I think this is very eye-opening.

That's what I specialize in, and that is what I love. I don't mind if people take a quote universal truth that we have, like "I should buy a house," and they end up buying a house. I don't mind that. But we've got to interrogate the logic.

Yeah.

There's a very simple message that many parents in America have, and that is, "I need to pay for my kids' college." Now, I think it's a very nice idea. I also think it is a bit simplistic. The idea that I simply need to take all the money I've got and hand it over to my kids. I don't know how much. I don't know where they're going to go. I haven't talked to them about it, but I will sacrifice heaven and earth so that they don't have to go into debt. It feels really good, but it lacks any analysis at all.

This is not about loving your kids. It's about thinking critically about one of the biggest financial decisions in your life. And what I am begging everyone on this podcast and everyone who watches it to do is to go deeper. Go beneath the surface of this very nice, positive idea of helping kids and calculate how much. How are they going to use it? What if we contributed this much, not that much? What if we gave them nothing? What if we gave them a million? And really start to craft that decision as part of your rich life.

Mia, can you tell me what your family said about money as you were growing up? What do you remember?

I just remember, "Do not spend." And I remember always feeling like I always wanted to spend money. I was the kid who, I got babysitting money, it did not go into savings. I wanted to spend it right away. And I always felt like I was doing something wrong. Spending money is wrong. My parents are so amazing. They're true minimalists. They don't need much stuff. They will eat the exact same meal for the rest of their lives.

You would like them.

Yeah. Interestingly, they also did take you to travel, and you've mentioned you would like to take your kids to travel. So, a lot of similarities in how your parents raised you. Of course, the college thing, paying for you, you want to pay for them. Makes sense. Did you ever find yourself confronting any contradictions about money?

I feel like the only contradiction that we ever confronted was the fact that I didn't seem to be able to do what they were doing. The contradiction was they do it, they're able to do it. It doesn't seem hard to them. And for me, I'm not able to do it. It seems very hard to me. That was the contradiction.

Is it still hard?

Yeah.

Okay. Are they still alive? Still married?

Yep.

Cool. How are they with money now?

Exactly the same.

Really?

Incredibly responsible. I think maybe the only difference is that they're spending more on travel in their retirement than they did when we were kids, which I think makes sense.

Are they enjoying their money?

A thousand percent.

Wow. This is a very healthy relationship in general.

Yeah. Maybe I wish that they could have explained to me how it felt easy to them. What I saw was there were spreadsheets.

Mhm.

And there was money tracking. I didn't see, and they didn't talk about, maybe the choices that they made, like, "We could buy this, but I'm not buying it because we want to travel," or what. I didn't see any of that. They're super responsible with money. They were obviously making tradeoffs.

They didn't tell you.

But they didn't tell me that.

Okay, Jake. Anything that Mia is missing? Partners often know best.

They are a unit, and they are methodical, and everything she said is exactly correct. It just seems flawless. They just...

It seems flawless. It's like they never make a mistake.

We go over their house, I know exactly what meal we're going to get every single time.

Oh, really?

Yeah.

That's interesting.

Yeah. It's very systematic.

Do you have that with your food at home?

No.

No. No.

Do you have that with your savings? How did you choose the number 700? Is it methodical?

No. No. They have a system where they're...

I don't know what it is.

Yeah. I don't know what it is, but they definitely have something.

But it's quite interesting, right? It's not that they are the perfect unit. It is that their behavior and attitudes are methodical.

Yes.

The clue is when you go over there, you know exactly what you're going to eat. That actually is a huge reveal.

Yeah.

That they have some type of system. It's not surfaced to you, but they have it. Just the same as if you ask me what's my savings amount and savings rate, there's a reason for it, right? And the best part of all is you all can do that for your system.

And I think the part that I'm most envious about is how much they're willing to help their family and help their kids or Mia's brother, or something, those kind of situations.

But you're helping your family a lot.

Yeah. And I think that maybe that's part of what the allure is, too.

I do think that's something we both value, helping out my kids when they're older. When you talk about, I know consciously that the idea of paying for college 100% doesn't necessarily need to be, it doesn't have to be 100%, right? But when you talk about lowering that, it makes me feel a little... I don't know if I can do that, because I think we both have this value of we take care of our family. That should be...

So what if, when I suggest, which by the way I have not even done today, but what if I were to suggest instead of paying for 100% of college, you pay for 90 or 80 or 50?

Yeah.

And it makes you feel anxious and guilty. So what?

Well, that doesn't feel a lot better than feeling anxious. So if I was already feeling anxious about money, and you say, "Let's just trade the anxiety for guilt," that doesn't sound very good.

My point is that just because you feel guilt does not mean that you have to follow that feeling. So sometimes the question is, so what? Oh, I feel guilty. And?

Yeah.

I'm going to feel guilty. That's how I was trained for generations. I'm going to acknowledge that feeling. I'm going to ask, why am I feeling guilty? Oh, because my invisible script is that I have to pay for 100% of college. I'm going to write that down, and I'm going to turn the page and say, "Okay, I'm going to set that aside for a minute." So what?

Yeah.

What if instead of following that feeling, I followed the decision? The one that's informed by numbers, by connection, by conversation, and by a rich life vision.

Can I just stop there for a second? Because that feels like a really big shift in my thinking, is that idea of I don't think I realized how much I was letting feelings and not decisions impact the money picture. I never thought of it that way, and I feel like you just captured it. I let the feelings instead of the decisions control what I'm doing.

Yeah. Amazing. Well done. That takes a lot of introspection to make that connection.

Feelings are valid, but in my experience, way too often, I'm talking over 95% of the time, people are making life-changing financial decisions through feelings alone. Feelings do not come first on this. We got to start with the vision of a rich life and then the

Numbers, and then we can talk about the feelings. Great insight. Okay, Jake, what do you remember your family saying about money when you were a kid?

My parents were fantastic. They were so supportive, but money was never discussed, ever. I knew we were well off. I knew we got basically whatever we wanted. But I have, to this day, no idea how much money we had or what they had, what they have currently. They're separated now. I have no idea.

You mentioned well off. Would you say upper middle class, wealthy?

Yeah, I would say upper middle class, probably towards wealthy in the Midwest, in the small town that we grew up in.

They helped you with college?

Yes. Yes.

They paid for the whole thing?

Yep. Yeah. I didn't really try until about 25. I think I was kind of a late bloomer. I joke about, I wasn't getting scholarships. It was just getting into school. So they just blindly supported me, and they got me. And I've had conversations with them that said, "We gave you that opportunity, but you took it and ran with it."

Are they going to give you money as part of an estate or inheritance?

Yes. I've talked a little bit to my dad. It's a mythical number. I don't know.

He hasn't told you?

No. And I've discussed a little bit with him, but it's just the way they... I have no hard feelings. It's just not a conversation we've had ever in 38 years.

What money messages do you think you are bringing from your childhood to this relationship?

I think I follow every pattern of the idea of just avoid it, shut the door, pretend it doesn't exist. Are we rich? Are we poor? I'd just love to ignore it. But I think that's something that's been really hard because I think there's the fear and then the unknown. So it's just avoiding.

Okay. So avoiding. What about you, Mia?

I think I watched my mom, every weekend she would be on the computer doing the spreadsheet, I think.

She kind of just copied it.

Yeah. And I don't know what she was doing, but I have a spreadsheet.

It's really funny. It's just the same thing generation after generation.

It's a little ironic, isn't it, that Jake's parents are going to give him some amount of money. It sounds like it could be somewhat large. And he's afraid of money. He doesn't know what to do with it. He doesn't want to pay attention to it. Doesn't want to pick up a book about it. He's playing defense. And yet at the same time, that is the exact same lesson they are passing on to their kids.

These generational messages do not fade easily. If you do not fight to develop a new relationship with money, you're probably just passing on the one that your parents gave you. And frankly, although most parents tried to do their very best, most parents didn't know what the hell they were doing with money. So I want you to do more. Your parents didn't have access to YouTube. They didn't have my book at their public library. They didn't have access to all this stuff for free. You do.

What is your rich life vision together?

I think both of us agree that in our rich life, we don't have to track every penny. I think that would be number one for me. I would love to have that feeling I feel about the house, like I made the right decision. I'm doing the right things. That is what I want. And I think for both of us, that is what we want to feel.

Great. Okay. What else is in your rich life?

I would add that I think after this, just in this conversation alone, it's changed to I want to be confident in the decisions we're making. I think knowing we're doing this, and I love the conversation about using data to make those decisions. Right now we're just using opinions and feelings, and that's something we hate at our work.

It's like, well, if we're just going off opinions, we're going to go off of mine then.

Exactly. I say that a lot.

Yes. And in our jobs, we're always trying to use data to make decisions.

I think the two of you have been playing not to lose with money. I don't sense that the two of you are playing to win right now. It's like, let's just not make a mistake, and let's just put the money for the 529s.

Yeah.

Is there anything in the rich life, anything about we want to get food delivery service three times a week? We want to travel. We want to take our kids or put them in this type of tutoring service. What else? Give me specifics.

A thousand percent the landscaping and the hot tub.

Yep.

How come you're saying that even though it's your thing?

I agree. I think that's something that we're talking about lately, and I think it started with your book. I'd never ever thought about what I was saving my money for. And I think that's really kind of driven me a little bit more about where we're saving this money.

So you never...

I never had a thing.

You never had a vision?

No. I would be, I just want to save money. I don't want to spend money.

Playing not to lose.

Yeah. Playing not to lose. That was my M.O., 100%.

In life, if you do not have a vision for your money, one will be created for you.

Right.

And that vision typically is buy a big house, buy a big car, etc., etc., etc., and then just fast forward until you die. Actually exactly what you...

Hit pause and rewound, but then...

Yeah, you went back, and so you unwound some of that, which was awesome, but still did not replace that with a new vision. It was just like, save the money. And then, Mia, your vision was first we need to have the house, etc. And then after unwind, it's like, well, I need to be doing these things that my parents taught me. And so how am I going to do that? Take all the money and put it for my kids. $3,000 a month.

The thing about this is it's actually a very loving decision. It can be seen as a very rational decision. All those can be true, but I don't think you would be here if it weren't actually causing a problem.

Right.

And what is that problem in a sentence?

We don't have the money to do it. It's making us take out of our savings.

Yeah.

So you agree we don't have the money?

Not the way we're spending now.

Okay. I want to get back into the numbers, but before we do that, conceptually, what do you think needs to happen?

I think the number one thing is we cannot take money from savings anymore. That is our last thing. And I think I'd almost like to put more money into savings because of the fear of, I think we could...

Where's the money going to come from?

Probably the 529s, I think, would be one. I think that we talked about those minimal things that we talked about.

Mia, what do you think conceptually needs to happen with your money?

We need to make a decision about the amount of money that we feel is right for college, and then use that decision to then make the rest of the money work. Right now it's just, it should be 100%, but should it? We've never actually questioned that in any way.

Yeah. You never thought about the number itself. Whoa. Okay. I have to ask some questions.

Because it's that blind, you're supposed to do this, and it's like this ghost telling us that we have to do that.

Yes. Well said. It's a ghost. Probably no one has even ever explicitly said you need to be funding 100% via 529. Nobody.

And if somebody would have said it would have been a bajillion dollars, I'm like, "All right, well, let's start saving. Work." It's a Midwest work ethic.

Set a goal and we can execute. In fact, you even asked me to do that for you today.

Yes. Yes.

Give me a plan and let me execute. I don't want to have to think about it. And you notice I listen, but I never accept that mantle because you two will have to think. And then it will make it that much more likely that you will actually follow through.

Yeah.

I think Mia and Jake have this one invisible script that is so firmly rooted in the center of everything related to their money discussions that they just cannot see around it. Whenever they start talking about money, this looming ghost, as they called it, is standing right in front of the living room, and it's saying, "You got to pay for your kids' college. In fact, you have to send them every last cent you've got."

On the question of the amount that you are putting aside, which is $2,700 a month for 529s, do you know how much that will turn into for your kids?

Yes. It's like 98.

For our oldest, because we have the least amount of time, because he'll be in college in four years. So that'll be about 100,000.

I think it was 98. I remember.

Okay, let's say 100. That's fine. And then how about for the others?

And then I think it's 130. And then for our youngest, who's three, I think it's like...

50.

No, I think it's more than that. I think it's like 170.

So is that the right amount?

I have no idea. It's not amusing. Thought about that, shocking that you are spending almost the most on this entire sheet. I'm just looking, is there any number higher than that?

I don't think so.

Your pension, but aside from that, you are spending the most amount of money, and you haven't asked yourself, is this the right amount?

No, we've never. And then we get the idea that it'll transfer over to the next kid or something. We just justify without...

Of course. No wonder you feel guilty. You don't know the basic numbers. And in many ways, I think you like feeling guilt because it's a familiar feeling. The minute you sold the house, which was a momentous move, what do we do next? Put it over here for five minutes. It's like no time to stop and think and say, what is the right decision for us, even though we made this huge life change?

Yeah.

Is 100K right or not? I don't know. Have you talked to your kids about college funding?

Yes, a little bit.

What does a 14-year-old say? What's the conversation been?

The conversation has been, we can help you with public university, but if there's something else that you want to do, you're going to have to do scholarships or loans. And I think I've talked with him too about, as much as possible, you don't want to have debt.

Can I suggest a reframe of that conversation? Because it feels like almost every conversation that people our age, the parents who were lucky enough to talk to us, that's how they talked. So it's like, "All right, got to dust off this document. All right, here's what I can do for you. I can pay for this, but not that. So you need to not do this." And it's just like a lecture. Meanwhile, you're actually telling them something amazing.

Yeah.

Hey, Dad and I saved up this much money. We worked really hard. I want to tell you what it took for us. This is what we did, and then this happened. And as you know, education's been so amazing for us. We went to college, we teach, etc. And so when it comes time for you to get to college, we want to give you an amazing gift. And that gift is that we can fund $75,000.

Now, that could be your first year. You could split it out over four years. At that point, you're an adult. It's going to be up to you. But we are going to teach you, and we trust that you will make the right decision. But we worked really hard, and we love you, and we trust you.

Mhm.

What is the difference?

Well, one, it communicates the message of him being the decision maker.

Yes.

Also, it shows confidence.

Yes. Keep going. What else?

It makes him a collaborator, and we're bringing him in. We're together and not like, "Stop whining. I'm paying for your college," the message.

Exactly. And what about the part about how you share what it took for you?

Totally different than what we got. That's one of the things I said I wish my parents would have done, is say, how did you do that?

Yes. And I love that you caught that. Yes. Notice that you were invisibly passing on the same message to them: don't tell them how it happened. Because deep down a lot of parents believe we got to shield our kids from money. Wrong. You get the gift of talking about money in every function, at the grocery store, at a department store, and for college. You get the gift of talking to them about that. So flip that entire worldview. We don't get to protect them. No, they're not weak little fragile beings. They are strong. And of course, what this really, if you peel it all the way back, implies: we need to get good about money.

So we can share.

So that we can share that with our kids. And guess what? It's totally okay to tell your kids. In fact, they love it when you admit mistakes. Hey, we don't actually know any of this. We had to fly across the country to meet this guy who lit us up. And that's why we came back and we started reading this book.

Yeah.

Kids eat that up.

Yeah.

Can I tell you what I'm feeling right now? I had a way bigger positive emotional response to thinking about empowering my kids with money than when I thought about saving for college. There was no feeling associated with that. But the feeling of, I want my kids to know how to do this, that's what I want. These are everything we believe in, in education and building kids up. You can handle it, and you're part of this. I don't know why I...

I'm just thinking about, in 20 years, I don't want them flying to California to have your kid tell them about money.

Yeah, that's amazing. It's funny, when you mentioned that, actually I felt my own heart beating faster. It's very powerful what is happening right now, especially the fact that you were both teachers. You're incredibly connected to this concept of teaching and empowering. I love that. I'm a teacher as well, just in a different format. I actually think, Mia, based on what you told me, it would be more empowering for you to give 30K and teach.

Yeah. Yeah.

Than to give 120K.

Yeah.

So what does that open up?

My mind's just blown right now. A phrase that I talk about in my school is that high expectation with high support. And I have low expectation with low support, and do not look at that, and let's make decisions on feelings. I am having the most cognitive dissonance I've had in 20. It's just this weird... Keep talking. My hands aren't sweating. It's a tingling feeling a little bit. That's really interesting.

Yeah. This may be the first time that I've felt hopeful about money.

Yeah, I would agree with that too. We just weren't making decisions.

Correct.

No, everything was feeling based.

Invisible scripts, feelings.

Yeah.

And letting those guide everything.

Yeah. Mhm.

Honestly, pretty amazing to watch this breakthrough. But what you're about to see makes this all the more magical because at this moment while we were talking, we stood up to take a quick break, and I walked out of the room, but the cameras kept rolling. Take a look.

I think that I need to figure out the hot tub. We need to disconnect it.

But I think with the kids, we could say, "Guys, food. We want to have healthy food. So we're going to eat pretty much the same thing every week. If there's something that you want that's different, we're going to give you a budget, and you have that amount of money that you can spend to plan a different meal. But otherwise, every week it's going to be the same thing because..."

I love

We want to spend our money elsewhere. Dude, I think about the point where he said, "I'm afraid of falling on the bath, but I'm not going to put a mat down."

The other thing that I'm realizing about—

We need to talk to kids about money.

Well, that's the biggest thing.

Yes, for sure. But I think when he was talking about feelings and not decisions, I would just look at the budget and be like, "We're spending too much." That was a feeling. So then I'm like, "We just have to spend less." But then it was just how, where, what. There was no—

Type it in this chart.

There was no, "I want this, so that's what I'm going to do." Even though I knew that, kind of. But yeah, I don't want my kids—I want to teach them. And I love how he's talking about, "Hey—"

The way he phrased it, I was like, "Oh my God, this is—"

I'm giving you this. It's a gift, and I'm so excited to be able to do it. Whenever you want to look at your account, we can pull it up and see how much is in there.

This is why I do this podcast, and it is why I am so proud that hundreds of thousands of people are here every single week to witness it. Well done. I am honored to watch this happen in front of me. Now, let's get back to their numbers.

The question is, what can we do to use our money to live our rich life? Who would like to go first?

I think I would like us to make a decision about an amount of money that we want to give the kids, and it's not hypothetical. It's not. It's like, "We're going to give you this much money." And then once we've made that decision and we know how much we have left each month, then we look at everything else.

Yeah.

And figure out.

That sounds awesome. Do you have a sense of the number?

My gut right now is saying 75,000. If that feels high, I'm open to that being lower.

Let's meet in the middle and go 60, because I was thinking 50. Would that be something you'd be—

Are you okay with 65? Let's do 65.

65,000. Okay. Is that random? Again, I feel like I'm—

It doesn't matter if it's random because at least we decided.

Yes. Yeah. Great, great, great, great. And so, would you then adjust and go back, and it's like—

Yeah. What I'm going to try to do right now—so we know the age of your kids.

14, 11, and three.

And your ex is contributing some too.

That is true. Their dad, it's a smaller amount, but 15,000 per kid.

Oh, okay. So he'll contribute 15,000 for the two kids, the older kids, and then you want to get a total of 65,000.

Yeah.

Let's look at the rest of this. We ran some calculations, and we'll speak broadly. It will change specifically as you dive into your own numbers, but in general, what we found is that you need to be saving—you want to guess?

2,300.

Okay. What do you think?

1,900.

Good. It's about 1,600.

Okay. That's a lot less. It's a lot less.

A lot less. About half.

Yes. Yeah.

And the reason that you can save less and still hit your numbers: one, you've lowered the amount, although you didn't really even know how much you were saving anyway, right? But two, your oldest obviously needs more because they're going to be going to college in just a few years. Your youngest has almost decades. So that number is way less that you need to be putting. So when we combine it all, it's about 1,600 a month. Again, the number will change depending on several variables. You should calculate this carefully at home. So let's put that in. 1,600.

That's a lot.

From 2,700 to 1,600.

Yeah.

Okay. So let's take a look at what's going on here. Right now, we have 57% in fixed costs. We have your investments at 22%. That is your post-tax retire—well, that's your pension.

Yeah. $1,600 a month going towards the kids, and then you've got 700 bucks going towards your emergency fund, leaving you only 4% in guilt-free spending.

You know how you recommended separating groceries and gas? Can we just do that?

Yeah. Okay. How much is gas?

Probably 200 a month.

200. I'm moving gas up here to 609.

And then I think we can get the groceries and gas—I think we can get groceries to 800.

Yeah.

All right. We put the subscriptions down already. What's this miscellaneous?

I actually think that we don't have to do that. I think we could—if miscellaneous was half of that.

All right.

Because—

Okay, let's do that. 600.

Yeah.

All right. You are down to 52%. Outstanding. Okay. Very good. You've got 9% or $1,216.

I feel okay with that because in a year we won't have preschool, and that will free up another—

Oh, let's look at it. I like it. Let's zero that out and see what happens. Are you ready?

Yeah.

So this is what the CSP is most powerful at, is projecting ahead. When you pay off debt, like credit card debt, when you pay off a mortgage, when you don't have preschool anymore, it's like, let's just look at our crystal ball a few months in the future. Boom. Here we go. You're at 52% fixed cost. I'm zeroing out your preschool. Whoa. Down to 43%. That's extremely low.

Going down now.

You all have 18% guilt-free spending, or $2,400. What do you think about that?

That seems like a lot. That feels really good. That's the rich life. The idea of being able to spend—

Okay, now let's talk about it, because what do you want to do with that money?

I'd like to put more into savings. I think I would feel most comfortable if we had six months of liquid money.

Yeah. So that's about 30, 35,000, let's just say. So how much do you want to put into savings?

Put 1,000.

At least 1,000.

You're putting 700 right now.

Should we do 1,200?

Yeah. Okay.

1,400. Double it.

Yeah.

All right. I like that. 1,400 a month, which is great.

Yeah, that feels really good.

That now leaves you with $1,700 a month guilt-free spending.

Yeah, that's pretty cool.

What would you do with that guilt-free spending money?

I'm trying to decide if it's travel first or house first. You'd say house first.

Probably house first.

I'm okay with that.

Great. So let's do this. Instead of vacations, which it sounds like you're not prioritizing, let's call it house.

Mhm. Mhm.

And let's put 750 a month. Let's just see what happens. 750 a month.

That builds quick.

Yeah. So how long would you need for you to be able to get something for the house?

Well, let's say we just started with a hot tub. That's probably 6K.

A year. Are you cool with that?

Yep.

Great answer. Amazing answer. I just want to point something out to you. Most people, when I say it'll take a year—sometimes it'll take seven years to get what they want—and I go, "Are you okay with it?" They go, "That seems like a long time." I go, "And?"

Right.

So what? Everybody should be looking—get tight on this shot. So what? Oh, it's going to take a long time. And you're going to be seven years older anyway in seven years. You might as well have a ton of money, right? A year from now, that's nothing, to be able to get this awesome hot tub and to have saved for it. No debt. Amazing, right?

Okay. 750 a month. That leaves you with $1,000 a month guilt-free: eating out, a random thing you saw on Amazon that you wanted to buy. But that's it.

Yeah.

And I personally would prefer you clear—leave a little bit of—do not get to $1,25.

Yeah. Right. Right.

Clear it with room to spare. Can you all agree to that?

Yes.

Yes. And I would love some specific strategies for when people are doing that.

I'll tell you how to do it. So the biggest thing that comes up here and surprises people is eating out. Eating out is a variable cost, and it's one of the very few numbers I suggest people track. Here's how you do it to make it even easier. Like I said, people who tend to be successful with grocery store shopping tend to basically buy the same thing all the time. Same thing with eating out. They go, "Okay, we are going to spend $400 a month eating out. Okay, each time we eat out, on average, this is how much we can spend."

And so let's even reverse it one more. How many entrées do we get? Are we getting a drink or two, or is it none? You already know every month where you are going to go out to eat and what you're going to order. It's that boring.

I like that.

People really do not like this. They're like, "Takes all the fun out of it." I'm like, "But it's actually really fun when you know that on Friday it's pizza, and you're looking forward to it." You get to think about it, you're talking about it, and then when you go there, you get to experience it two times. One is planning it, thinking about it, talking about it. Then two, while you're there.

Yeah.

So yeah, you may not have as much serendipity, but didn't you both tell me you want to not have to worry?

Yeah. And that's the thing.

Yeah.

And that's above—that's more than the other one.

Exactly. And now you have a plan, and you can just execute it.

Yeah. I love it.

Good question. Great question. If we zoom out of these numbers, are you living your rich life? Often when we are fiddling with numbers, we're down in the weeds. And I always like to zoom out and be like, "Hey, does this actually feel good?" If we execute on all this stuff flawlessly, are we actually living our rich life, or did we just mechanic our way into moving numbers around in another way? So do you all like this as your rich life or not?

I absolutely do. And I think that having a plan—and I think that through this conversation, part of my rich life is not stress of pulling from savings. And I think that I've recalibrated a little bit in a way of understanding it. Now I'm trying so hard to not go straight to approaches and how I'm going to do this, this, this, but I'm already planning afterwards what the app's going to look like. And I think that is going to be helpful, knowing we know exactly what day we're going to go out to eat, and that is part of my rich life. And I've talked about that with Mia, about those kind of things.

Mia, how do you feel? Is this living your rich life?

Yeah. And I think especially because I think I was confusing saving for college with preparing my kids for the future.

Yeah.

And those aren't the same thing.

Great insight. Great insight. If anything, dumping a bunch of money on kids, it helps them with avoiding some amount of debt, but it doesn't teach them much, right? You both are examples of that. And so, you changing the generational messages you received—in general, you received very good messages, which is nice. But because of the benefits your parents gave you, you can raise the bar on what you give your kids. That's amazing.

What surprised you about our conversation today?

My biggest thing is how I'm perpetuating so much of what I had as my own childhood of money being, and how I've gone against every belief I have about using data, building capacity, trusting our kids. And how just because I was scared of something, I've been the worst version of myself around money, I think is probably what I would describe it as. And I think that was very eye-opening today. And I think, like you said, is digging in. And I'm starting to feel a little bit more comfortable digging in if there's an actual goal there.

Nice. Beautiful. Mia?

I think my biggest surprise was that confusion between giving the kids money versus preparing them for money. I did not think about it like that at all. And I feel so much lighter.

Yeah. Yeah. I can see that specifically, I think probably because of your professions and the way that you relate to your kids, that really connects, and that's beautiful.

Yeah.

That's beautiful. What about resentment? When we began talking, there was a difference in how you looked at money. Do you think there will be resentment about money ongoing?

I don't feel like it because I feel like a weight has been lifted off our chest of taking from the savings. And I think that if we follow our plan, which I know we will—once we get a clear plan and have steps to it, we'll do it—that it's not going to be like all this hard work is for nothing. It's all this hard work is so that we're setting up for everybody to thrive and kind of do that, as opposed to setting up all this hard work so it can just all go to this big lump of money that we don't even know, we haven't thought about.

Great.

I absolutely do not think that there will be resentment. And I think one of the reasons is that we have a way to make a decision that we feel good about. And when we do that, there won't be resentment because we made the decision together. And that difference between letting feelings guide our money instead of decisions guiding our money.

And that resentment or the resistance came from a lack of clarity and a lack of understanding. So I didn't want to dive in because it didn't make sense to me. And now, seeing you go through the numbers, we can do that. That makes sense, other than just clicking numbers on a keyboard.

Totally. There's a purpose behind it.

Yeah.

I have a lot of confidence in them. Mia and Jake were so open with the feedback that I gave them, so willing to engage, that I think they're actually going to do an amazing job. For years, they have been talking around making decisions, and I helped them immediately make some of the biggest decisions of their financial life. Watching them light up when they talk about getting their kids involved, that was when I knew this is going to stick. So I cannot wait to hear what they end up doing. Let's take a look at their follow-ups.

Hey, Ramit, it's Mia and Jake, and we just wanted to follow up with our homework. Our biggest surprise, or for me at least, is the unwritten rules that I followed that were really guiding my past, and I wasn't really diving deep into them. So it was really fascinating to explore.

My biggest surprise is how much better I felt even though we're saving less for college. And that's because we feel really aligned in the belief that we want to teach our kids about money, not just give them money.

My biggest takeaway is it doesn't matter how much money we have, I'm always going to have to be concerned with money. I used to think that if I could just keep making more and more money, eventually I wouldn't have to worry about it. All my problems will go away, but that's not the case, and I'm good with it because we have a purpose and a process now for that.

My biggest takeaway is that we are finally aligned in the way that we talk about money, and that is aligned in our values. So we just feel really connected, and it doesn't feel stressful anymore. We've made a few specific changes. So now that we know how we want to spend our money, it's been so much easier to go through our subscriptions and our regular expenses and say, "Yes, we want to keep doing that. No, we don't want to do that." So it's probably the biggest change that we've made so far, is just really starting to audit our spending and say, "Keep doing it, stop doing it."

And we have confidence in doing so. And that makes the biggest difference. So we just want to say thank you so much. We're so lucky that you guys took time to meet with us.

Hey, Ramit, it's Jake and Mia here. We just got back from vacation, and I actually enjoyed it because for the first time ever, I knew where our money was coming from and how much money we had and how much money we could spend. So it really took a lot of the fear out of it.

Yeah, we've had two of our money meetings so far, and those are the first two conversations we've ever had as a couple about money that did not feel contentious and actually felt like we

We're on the same team working forward, and it's allowed us to be super intentional with our money, which I think is one of the biggest shifts for us. We're not necessarily spending less. We're just really investigating why we're spending what we're spending and then choosing to do it with much more intentionality.

Yeah. And I've really realized how we have to be consistent. We can't just miss certain things. But it's definitely worth it because I'm no longer a grumpy old man on vacation. I'm still grumpy, but at least I know where the money's coming from. So we just want to thank you so much for everything.

Thank you so much. It was life-changing.

Absolutely. Thank you.

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

Article published September 29, 2026