A Couple Earning $178,000 With $186,000 in Debt: Ramit Sethi on Breaking a 20-Year Paycheck-to-Paycheck Pattern
I Will Teach You To Be Rich
Michelle and Jeff are both 45, have three children aged 16, almost 13, and 6, and will mark 20 years of marriage in January. In their application to Ramit Sethi's Money for Couples podcast, Michelle wrote that they were making the most money of their adult lives and still living paycheck to paycheck. The episode asks why that is happening and whether it can change. Sethi's position is that the problem is not a lack of information or tools. It is a relationship dynamic: one partner absorbs all the financial stress while the other avoids it. Neither budget tweaks nor higher income will help, Sethi argues, until both of them commit to working as a team.
"I give her the money and she does what she needs to do with it"
Michelle has managed the family's money since the start of the relationship. The couple jokes that it began with her taking Jeff's money in Monopoly. She explains that she simply had more experience at the time. She had lived on her own and was familiar with taxes and insurance, and the arrangement never changed. Jeff describes his philosophy plainly: he hands over his paycheck and thinks no more about it. He says he has to ask Michelle how much he earns because he doesn't look at his pay stubs. She set up a 401(k) for him only a week or two before the recording.
Michelle describes her side differently. She sits down before the bills are due and decides which ones can be skipped this month and which can be partially paid. She worries at the grocery store on Sunday about the total. She moves money between accounts so there is enough to feed the kids for the week. Jeff says he can see the worry on her face and doesn't like it. The couple has also set a rule that Jeff cannot spend more than $20 without her permission, which he accepted because, in his words, he is an impulse buyer.
When Sethi asks whether the arrangement works, Jeff answers honestly that it works for him but not for her. Michelle says it is overwhelming and that she doesn't really feel she knows what she's doing. She is piecing things together to reach the next paycheck. Asked why she is the one doing it, she says she doesn't trust Jeff to handle the money. She has seen his splurging and doesn't believe he has the confidence or follow-through to make sure nothing gets shut off.
Their attempted solutions show how the hole deepened. They used credit cards, which Michelle calls a temporary fix that let her pay bills. They took a personal loan to pay off the cards, but did not "follow through the right way" and ended up with both the loan and the card debt. They have looked into bankruptcy. Sethi asks whether they have ever tried to learn how money works through books, courses, or videos. Michelle says she avoided them because the material seemed aimed either at people who already had money or at people willing to "eat beans and never leave your house," which she did not find sustainable. Sethi says outright that he isn't interested in what they've done in the last month. People clean the house before the house cleaner comes, and the real question is what they did over nearly 20 years.
The ostrich and the dream of a $2,500 cremation
Sethi opens by asking what a "10 out of 10" conversation would leave each of them with. Jeff says he wants more insight. Sethi points out the contradiction with his happiness to hand over the money, and Jeff concedes that for him "ignorance in financial is bliss." He calls this selfish and unfair to Michelle, who has to make every decision and play "the bad guy" who says no. He adds that as a project manager who does risk assessment, he can't plan without information. Sethi rejects that framing immediately: "It's not about information, it's not about tools." Jeff agrees that it was simply easier to look the other way.
Later Jeff describes himself as "the ostrich in the sand." If he doesn't ask about money, he doesn't feel anxious about it. Sethi notes that this ostrich is being fed, has cable and lights, and is "living quite a good life." When asked whether he will be the first to make a change, Jeff starts to explain until Sethi presses for a yes or no. He says yes. Speaking to the audience, Sethi admits to frustration with the "parent-child dynamic" and especially with the "tired old trope" of the man saying he doesn't know what to do because his wife is better at money. "Stop sitting around and waiting for somebody else to come and save you. No one is coming to do it."
Michelle's answer to the same question surprises Sethi. She wants confident direction, but the underlying goal is to make sure her children don't end up as she did when her parents died, unable to pay for their cremations because there were no savings or insurance. A cremation without a specialized urn costs about $2,500, she says. Sethi acknowledges what prompted this but pushes back. A life whose financial goal is a $2,500 cremation is "really depressing," and they need to dream bigger. Michelle also says she worries about retirement only when she thinks about it, and admits she doesn't think about it the way she should.
The smoker at Costco: re-enacting a money fight
To find out how money conflicts actually happen, Sethi asks Jeff when they last had tension around money. Jeff says he tends to walk away and agree. He brings money up "only when I don't get what I want." His example is a pellet smoker he wanted at Costco a few months earlier, around Father's Day. Sethi has them re-enact the conversation. Jeff talks up smoking turkey, bacon, and cheese, and says it doubles as a grill and would be easier to maintain. Michelle counters each point: she doesn't like smoked food, they already own a smoker he barely used, they don't have room, her barbecue works fine, and pellets are more expensive, which is partly why the last smoker went unused.
They didn't get the smoker, and Jeff admits he knew it wasn't practical. Asked why he asked anyway, he says, "Cuz it's shiny." Then he adds that he is "competing with my father": his father had one, so he wanted one. Michelle immediately agrees. His dad gets a smoker and Jeff wants a smoker; his dad praises a Blackstone griddle and Jeff wants a Blackstone.
Sethi asks each of them to name their role. Jeff calls himself "the dreamer" and Michelle the realist who keeps him grounded. Without her, he says, he would have bought it and dealt with the consequences later, "and that's what I've always done." Michelle calls herself "the authoritarian," trying to put down rules and control things. Sethi reframes it as Jeff pushing limits and Michelle, voluntarily or not, becoming the parent whose job is to say no and defend that no with a list of reasons. Michelle says she left frustrated that she was having to defend the no again.
When Jeff says he doesn't know why he asked, Sethi doesn't accept it. Jeff eventually says there was a "50/50 chance" she would say yes, and that this impulsiveness is "how we got into 95% of where we're at." Sethi compares it to gambling: it's fun for Jeff because once in a while he wins. Michelle says what frustrates her is that he knows what he's doing and does it anyway, which feels intentional. Jeff points to an earlier and bigger example, talking her into a timeshare on a Las Vegas vacation. The couple dates the dynamic to around 2010–2011. Michelle says that when their first child was born, she recognized she needed to start saying no to Jeff, and Sethi observes, "thus the pattern was born." In his reading, Michelle chose to become a force field absorbing all of Jeff's requests, and sometimes she cracks, which leads to more financial trouble.
Michelle says their current situation is "almost a mirror image" of 20 years ago, with a bigger paycheck. Jeff recalls that when they met he was going through a divorce and living in an RV on his parents' property, paying only rent, with disposable income and no concern for the long term. He says he used to think long-term, including with his first wife, but became short-term and cynical as he got older. He gives the example that someone could go on a rampage while you're grocery shopping at Walmart. When asked what happens if he doesn't change, he describes his parents: living in a place they can't afford to leave, floors falling apart, wiring failing, mold spreading, on Social Security and too deep in debt.
ADHD, avoidance, and "I'm cautious of me being selfish"
Sethi asks what it was like to make a Conscious Spending Plan together. Jeff says they didn't: Michelle tried to show him the numbers, but "my ADHD had me thinking about other stuff." He has not been diagnosed. He says he knows he has it, and that his son is diagnosed and he sees the same patterns in himself. Jeff got help for his son "right away" in elementary school but has never sought help for himself. He says he doesn't like doctors, doesn't want "the reality or the medications," and finds it easier to blame things on ADHD. He calls this selfish more than once. Sethi remarks that it's rare to hear someone admit that, and points out that Michelle is the one dreading a declined card at the register.
Jeff points to recent steps. Over the last week or two he has started going back to school and applying for new jobs, which he describes as far outside his comfort zone because he dislikes uncertainty. Sethi replies that trying harder won't change much. Michelle tells Jeff she suspects part of his fear is that a doctor will say it's just his personality. She says this as someone who avoided seeking care for her own mental health issues for a long time out of fear she'd be told it was all in her head. Jeff says he doesn't know how to get out of the cycle. Sethi says Michelle has just given him a very clear next step and asks him to state it. Jeff says it is to talk to his doctor after the call. Asked his response, he says, "we will talk about it."
Sethi stops the session
At this point Sethi tells them that with debt of this size, in their forties, with three children, he cannot help unless both are 100% committed, and he is hearing "we should think about it" and "I've started trying in the last two weeks." He asks them to go off camera for five minutes and decide whether they are both ready. If not, he says, they can part ways with no hard feelings.
To the audience, Sethi says this almost ended the call, something he never does, and that he wasn't sure they would come back. Five minutes passed, then seven, before they returned. Sethi praises them for coming back and acknowledges how hard it is to discuss a relationship publicly, share embarrassing numbers, and admit that one's behavior or character may need development.
Jeff says they realigned expectations. He accepts that he needs to see a doctor about whether it's ADHD or personality, and to stop looking only at what's right for himself. He has already committed this to Michelle. Michelle says she told him he has to want this for himself, not because she wants it, and that she accepted she needs to share control and talk about things instead of bottling them up. Sethi says ADHD and money is a well-studied topic. He mentions that an ADHD and money expert, Dr. Christine Hargrove, spoke in his Rich Life program, and he applauds them, suggesting this could change their trajectory and their children's.
The numbers: negative net worth and 87% fixed costs
Their Conscious Spending Plan shows $26,800 in assets, $264 in investments, $571 in savings, and $186,000 in debt, for a net worth of –$159,170. The debt includes student loans for both of them (Michelle estimates around $65,000), the car loan, about $18,400 in credit cards, and a personal loan of about $17,500. Michelle explains that the personal loan was taken out because creditors were about to win a judgment and garnish 25% of her take-home pay, which would have left them unable to pay rent. The loan prevented the garnishment, but she says it ultimately hurt because they didn't handle it properly.
Gross income is $14,887 a month (about $178,000 a year), with $10,600 a month take-home. Sethi calls this a lot of money in the context of a family of five. They are contributing almost nothing to retirement. Michelle started her 401(k) at about 1% because she was nervous about losing money from her paycheck. Fixed costs are 87% of take-home. Sethi says this is why Michelle feels stressed, along with Jeff's avoidance, and that it effectively means they are spending more than they earn each month.
Line by line: rent is $1,695 (11.39%), and Michelle credits an "amazing landlord." Sethi's advice is "never leave." Utilities are $668. A debt management plan costs $486; Michelle describes it as a nonprofit that closed their credit cards and negotiated lower rates, paying creditors on their behalf without extra fees. There is also the personal loan and a nearly paid-off furniture loan of about $3,000 for a new couch and seating. Michelle says that purchase was partly emotional coping after her mother died, when they took over the upstairs of the house that had been her mother's and wanted it to feel like theirs. Further down are $200 medical, $2,000 groceries and household goods (an average she hasn't managed to lower), $100 clothing, $300 for pets (eight of them, five cats and three dogs, including one inherited from her parents), $446 phone, $192 subscriptions, and $500 miscellaneous. Savings is $150 a month, recently started. Guilt-free spending is listed at $1,252, which Sethi says must actually be higher, and Michelle agrees given how every month feels.
The $76,000 Pathfinder
The car payment is about $1,000 a month for a single Nissan Pathfinder that Jeff says cost $76,000. They reason that they needed seating for five and a vehicle that could handle harsh winters and steep hills. Jeff says the purchase began with a flyer in the mail offering to get them into a better car. They went in planning not to pay more than their existing payment, but he decided a newer car with a warranty and fewer miles would be better. Their payment rose by about $300 a month. Jeff now calls it a bad decision. Michelle says he was very convincing, and that part of the appeal was simply being approved for financing on a nicer car. Jeff adds that dropping from a 26% car loan to about 10% felt to him like a reward for getting back on track.
Sethi says mail offers are "by definition, a bad deal," and that lenders buy high-risk addresses and target exactly people like them. He frames this as accountability rather than berating: they were susceptible to the game, but they also willingly participated. Jeff estimates that "90% of my spending was emotional and self-convincing," and says he is then able to bring Michelle around to his way of thinking. Asked what the CSP says about them as people, they answer impulsive, short-sighted, driven by instant gratification and "that dopamine." Sethi checks in on Michelle, who looks shaken. She says she doesn't feel hopeless; it's just an emotional conversation.
Jeff's childhood: poverty, silence, and a disappointed father
Asked why he spends this way, Jeff says he grew up being told no and not having what he wanted. His family was just over the poverty line. They got government cheese and reduced-price lunch rather than free lunch, and sometimes couldn't pay even that. Some days there was no electricity or running water. They never talked about it and never asked for help. From age 14 until he was 24, when a tree fell on the motor home and he and Michelle moved in together, he paid his parents rent from his job. He says this was a way to pass responsibility to someone else.
He describes his father as "a drill sergeant." Sethi asks whether his father was disappointed in him. Jeff says, "Oh, yeah, 100%." His father reminded him constantly and still does. His mother was a "typical 80s housewife." Jeff says he has always tried to be better than his father and not raise his children the same way, and that he values Michelle as a strong, opinionated woman who calls him out.
Sethi suggests that, having grown up with a directive father, Jeff hates being told no. Jeff begins by saying he also understands the value of Michelle's no. Sethi points to the smoker and the car as counterexamples. Jeff concedes and says disagreeing "was a game for me with my father." Michelle adds that Jeff overcompensates for his father in positive ways, such as taking on household chores he never saw modeled. But his argumentativeness collides with her conflict avoidance, and she often says yes just to avoid the fight. She also thinks his spending reflects growing up poor and now having "adult money." Sethi calls this classic.
When Sethi then compliments Jeff for helping around the house, Jeff starts with "Well, no." Sethi stops him and points out that he's disagreeing with a compliment he actually agrees with. To the audience, Sethi calls this a reflexive contrarianism Jeff doesn't notice, and reads a definition of "oppositional reflex." Sethi recounts being called out personally by a coach for starting answers with "no," and says it was shaking to realize the habit. Sethi encourages Jeff to raise this with a therapist and doctor and to feel "a sense of delight" at learning something about himself.
Michelle's childhood and parents who took debt in their names
Michelle says her family was "okay, but barely." They weren't as poor as Jeff's family and never on state assistance, but they couldn't pay bills, were kicked out of houses, and went through foreclosures. She remembers her mother kicking her father out until he got his back pay, her mother being unable to open a checking account because of bad checks, and being told not to answer the door if it looked like the electric company coming to shut them off. She grew up thinking it was normal not to be able to pay all your bills each month.
The couple doesn't talk about money with their kids beyond "we can't afford that," the same thing her parents said. Michelle explains this as programming: you don't burden children with money problems. She has begun telling the kids what things cost and talking to their son about saving before his first job. Jeff disagrees with this and tells the kids, "It doesn't matter. We got it for you." Michelle says she wants to model three things: it's okay to ask for help, it's okay not to know all the answers, and there are concrete ways to avoid repeating their cycle. Jeff says he has been more open with their son too, and adds that they'll never open credit cards or bank accounts in their kids' names.
That remark leads to a revelation. Both sets of parents did exactly that. Jeff's parents forged his name on checks a bank sent to their house and did the same with credit cards. Michelle's mother maxed out a department store card in Michelle's name (she recalls Macy's or JCPenney) on Christmas presents. Her father used her checking information to sign up for something online. Michelle also notices aloud that part of why she fell for Jeff was that he reminded her of her father's jokes, and her father was also bad with money, though she hadn't made the financial connection before. Sethi says to the audience that knowing this earlier would have given more empathy. Being betrayed by the people closest to you pollutes your relationship with money, and while that was not their fault, Sethi says fixing it is still their responsibility as adults with children.
Into the transactions: Klarna, a broken TV, and $9,000 eating out
Using their connected accounts, Sethi finds Klarna buy-now-pay-later charges. They used Klarna when their TV broke, and again when a child broke the replacement about a week later and it wasn't covered. Sethi asks whether they needed a new TV at all. Michelle says it felt like they needed a new TV, just as it felt like they needed a new car and a new couch. Sethi's point is that neither has ever said "we simply don't have the money for it." Michelle agrees that it has always been "we'll figure out how to get the money" or how to make the purchase happen. Jeff says the TV was how he unwinds after 12-hour days, and it was for the kids. Michelle says the idea of not buying one crossed their minds "for like 30 seconds" before they justified it.
Sethi says nothing should go on credit anymore. Michelle notes that the debt management plan already closed the cards, and she has removed all pay-later apps.
The monthly eating-out chart rises from $447 in November to roughly $1,000, $800, $1,500, $1,400, and then $2,747 in a single month. That spike was a spring break trip to Las Vegas with the girls. Michelle says she planned to "figure it out later" and admits she hasn't. Next year, she says, they'll take the time off but stay local. Jeff guesses they've spent about $6,000 eating out this year. Monarch shows more than $9,200 as of August. Sethi says that with no debt the spending would look great, but with little savings and three kids, "if something happened, you all are in big trouble."
Michelle concludes she needs to be stricter and stick to her guns, then admits that this feels like being a kid told no: "I just want to go out to dinner with my husband." Sethi points to her body language and the parallel to Costco. Being strict, as she describes it, feels like being attacked. Asked what easy money would feel like, she imagines knowing they can afford Jersey Mike's one Saturday a week while grocery shopping. Jeff imagines planning things with the girls instead of canceling. Sethi notes that neither mentioned automatic savings, a debt payoff date, or shared limits. Both described wanting to spend more, which is what got them here.
Philosophy, rules, then numbers
Sethi says to viewers that cutting a few dollars from eating out would "do nothing." The plan instead is to show them what excellence looks like, even if they reach only part of it. The structure has three steps: a money philosophy, money rules, and only then changes to the numbers. Sethi argues that most people skip straight to trimming something like a cell phone bill, save $15, and slide back. A philosophy, on the other hand, gives a "why" that settles decisions when a "shiny coat of paint" tempts them. The example offered is touring Bel Air's mansions during COVID, being enchanted, then remembering that walkability is what actually matters.
The couple's philosophy: they are a debt-free family; they prioritize saving, at 7% of net pay (Sethi typically suggests 5–10%); and they communicate about money once a week. Sethi insists on a specific time. Sethi admits to having missed evening "Rich Life review" meetings until their spouse noted the irony of writing a book on money for couples while skipping them, and moved the meeting to 9 a.m. Michelle and Jeff choose Sundays at 11 a.m.
Their rules: run the numbers before any purchase; Jeff does not try to manipulate Michelle (his suggestion); and eating out is limited to once a month for $75. Jeff proposed twice a month, Michelle proposed the $75 single meal, and they agreed that the limit covers coffee, pizza, and gas station stops.
Sethi then asks Jeff to get fixed costs below 60%. Jeff suggests cutting about $200 from the phone bill and $50 from subscriptions, and the percentage barely moves. "Got to think bigger." Groceries, bought weekly across Safeway, WinCo, and Walmart following sales plus a monthly Costco run, but never to a set number, drop from $2,000 to $1,500, bringing fixed costs to about 80%. Miscellaneous goes to $100, bringing it to 76%, and pets to $200. Sethi suggests reconsidering eight pets. Michelle says the pets are their kids, and Sethi lets it go: "We all have our own rich life."
Sethi then adds $750 a month to savings (about 7%) on top of the existing $150, held for emergencies only. Even then, Sethi says, $1,752 in guilt-free spending is too much. Sethi suggests $500 extra toward debt and $500 into investments, with the couple deciding together at their Sunday meetings where any additional money goes. Sethi's team calculated that on her current trajectory, Michelle would retire with about $117,000, roughly $4,700 a year of income, leaving them on Social Security without a house. Michelle says she'd end up living with their kids. Jeff says they are overspending and under-earning, and estimates about seven years to pay off the credit-card debt alone, not counting student loans.
Jeff mentions that Michelle pushed him to look for a new job after 13 years in the same one. He is targeting around $130,000 versus his current $90,000, and Michelle is pursuing a role that could double her take-home. Sethi says one raise would be transformational and two "earth-shattering," but only with a plan. Without one, an extra $50,000 or $100,000 would simply be spent. Michelle says she needs to shed her "oldest daughter" persona and involve Jeff, and that this now seems less scary than she thought. Asked what she would tell herself in 2010, she says to get Jeff involved and share responsibility so she isn't the only one worrying at night. It won't be easier in 15 years, she says, only more stressful.
To viewers, Sethi says change is possible at any age, but a solidified relationship dynamic is very hard to shift. Sethi hopes Michelle feels validated and challenged, and hopes Jeff follows through with medical professionals.
Follow-ups
In separate recorded follow-ups, Michelle says her biggest takeaway is that she should speak up and push Jeff to be involved instead of carrying everything alone, and that they are not their parents. They adjusted the budget to make it more realistic. They expect to pay off one debt within three months and the personal loan within 16, then roll those payments into other debts. They agreed that if their salaries rise, they won't let their lifestyle rise with them, and will direct the extra money to savings and investments. She tells viewers that saving and investing are not just for the rich, even if you start with $10.
Jeff says he avoided knowing where the money went out of anxiety, leaving Michelle to deal with his impulse spending and to play the parent. He commits to having money conversations even when they make him anxious, and they have started the Sunday meetings. He says they restructured their short-term debt to pay off a large loan within about three months and will redirect that payment to a bigger bill. He wants to teach their kids to avoid debt and plan ahead.
In a joint update a month later, Michelle says it's okay to speak up and not quietly take responsibility. Jeff says he is asking more questions and treating the finances as a team effort. Michelle adds that a plan is never perfect at first and you have to "pull the trigger." Their paychecks now automatically fund retirement savings and extra debt payments before they can touch the money. They have already decided where an upcoming new income stream will go, and they split their banking into accounts for bills, groceries, and everything else. Jeff calls it a first month of trial and error: what didn't work this month, they'll adjust next month.
We're trying to figure out, okay, how are we going to get the kids to school? Or which of those we could skip this month because I feel like sometimes we're drowning.
Your fixed costs are 87%. You have very little savings, you have kids. If something happened, you all are in big trouble. What solutions have you looked for, engaged with?
We've done credit cards, personal loans. We have looked at bankruptcy.
My philosophy is I give her the money and she does what she needs to do with it.
Does it work?
No. I don't really feel like I know what I'm doing. I feel like I'm just piecing things together so we can get to the next paycheck.
Why is it you?
Honestly, I don't trust Jeff to handle the money.
I'm in my own little world. I just don't look at it. If I don't ask about it, then I don't have anxiety about it.
You both came on Money for Couples. The only way that two of you will succeed is if the two of you are a team. And right now, this is the opposite of teamwork.
I'm about to speak with Michelle and Jeff. They're 45 years old, they have three children, and in their own words, they are earning more than ever before, but they are living paycheck to paycheck.
Now, one of my favorite parts of my Netflix show was being able to look at my guests' actual spending before I ever met them. And now, with Monarch, I can. Monarch is a private personal finance app that brings all of a household's accounts, checking, credit cards, loans, and investments into one clean dashboard. And they've built my Conscious Spending Plan directly into their product exclusively for my audience. That means fixed costs, investments, savings, guilt-free spending are automatically tracked as a percentage of take-home pay.
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Loans, they have a Nissan Pathfinder for $48,000. What? That's a lot of money. Whoa. Okay, so their car payment, I think, is $999. Klarna, why are you using Klarna? I have a lot of questions, so let's get started with Michelle and Jeff.
Michelle, in your application, you said, "We can't get ahead. We're making the most money we've made in our adult lives, and it feels like we're still living paycheck to paycheck." Is that still accurate?
Yes. We were, or I was in the process of trying to figure out how to make our bills that month. We had just started working with a debt management plan, and I was trying to figure out a budget. I was trying to figure out how are we making as much as we are, but I still go to the grocery store on Sunday and worry about the total. I'm trying to piece it together.
Yeah, the worry is on her face of, "I got to move this money from this account to this account, or split it up between these two accounts so we can have money to feed the kids for the week." And it's the same, the worry, the anxiety, and the stress on her face is, it's not something that I want to see.
And Michelle, how long have you been the person in charge of managing the family finances?
Since the start. We joke that our relationship started with me taking his money in Monopoly.
Oh. Uh-huh.
My philosophy is I give her the money, and she does what she needs to do with it, and I take care of that.
And it just sort of continued that way, I think, because I had more experience at the time. I'd been living on my own for a while. So, I was more familiar with doing things like taxes and insurance and all of that.
Got it.
I have to ask her how much I make a year because I don't look at my pay stubs. She set up a 401(k) for me last week or two weeks ago because whatever we need to do to make sure her job's secure and comfortable and financially ready for the future, I'm on board for it.
Okay. How long you've been married for?
It'll be 20 years in January.
Ooh, congratulations.
Thank you.
That's cool. That's a big one. 20 years. Children?
We've got three of them. 16, 12, almost 13, and 6.
Okay, excellent. Outstanding. Let's say that we have a really good conversation today. 10 out of 10. That's what I always plan on. What does each of you walk out of here with? Jeff, you first.
For me, it's more insight, more knowledge of what's going on or ins and outs. And she's been trying to include me in more in the last month or two as she's getting into our finances. She's learning more about taking charge of our money and—
But I'm surprised to see you say you want insight on this call, but I think you also mentioned you're happy to just hand her the money.
Well, not 100%. For me, ignorance in financial is bliss. But it's selfish, yes, and not fair for me to put it on her shoulders. It's not fair to let her carry all the financial burden and have to make all the decisions and have to be the one saying, "No, we can't do this. No, we can't do that." And have to make her feel like the bad guy. It's easy for me to focus on the kids and the house and everything else in between than it is to focus on the finances.
Do you really want insight today?
I do. I think we both need to be on the same page, so I'm not just thinking, "Okay, she's just being overreactive," or being paranoid.
So, you want to take on some of that burden?
Yeah. I'm a project manager. I do risk assessment, but if I don't know what's going on, if I don't have all the information, I can't plan.
Jeff, this is not about information. I want to set that right away. It's not about information, it's not about tools.
No, I agree. It's just, again, it was easier just to look the other way.
Yes. Great. That's honest. So, Michelle, what about you? 10 out of 10. What would you walk out of here with?
Confident direction of what steps I need to take and what steps I can take to make sure that we are eventually in the best financial shape possible. I want to make sure that my kids don't end up in the same situation I was when my parents died.
Mhm.
Which was not being able to pay for their cremations, because they didn't have any savings or insurance or anything.
I'm sorry, this is interesting because this doesn't usually happen. When I ask people, "What do you want to get out of this?" most people say, "I want a plan," or something like that, which is fine. I love hearing what you both want. But, Michelle, are you telling me that what you want to get out of today is making sure that your kids can pay for your cremation?
I mean, that's kind of what prompted all of this.
We'll get to that, but that's what you want to walk out of here? How much does a cremation cost?
If you don't get a specialized urn, it's about $2,500. But—
That's the dream? $2,500 for your kids? I like hearing what you want. Sometimes I'm going to push on a little, because I don't think your life is about being cremated for $2,500. That actually is really depressing.
Yeah.
We got to dream bigger than that, right?
Mhm.
The language in your application really stands out to me. We're living paycheck to paycheck. We've been doing it the same way for 20 years. Tell me more about that. What does that feel like to you?
It's stressful. It's scary. I don't like not knowing what we would do or trying to figure out, "Okay, how are we going to get the kids to school?" Or, "How are we going to get my daughter up to her doctor's appointments?" We don't have anybody to help us with it, and we would be pretty out of luck.
Do you ever feel that way about savings or retirement?
If I think about it, yes.
But you don't.
Not the way that I should, no.
And Jeff, what is your role when it comes to money in this relationship?
As I said at the beginning, I give her my paycheck, and that's all I think about it. She's been taking my money over 20 years now.
Does it work? Because this is actually quite a common dynamic.
It works for me, not so much for her because—
Honest answer.
It's, hey, there you go. My lights are still on, there's gas in the car, and we finally set and established ground rules of I'm not allowed to spend anything over $20 without her permission.
Okay.
Which I agreed to because I'm an impulse buyer.
But it works for you. Okay. And Michelle, does it work for you?
No. It can be overwhelming.
Mhm.
And I don't really feel like I know what I'm doing. I feel like I'm just piecing things together so we can get to the next paycheck to make sure we can get through the month.
Why do you do it?
Somebody has to, and we have the kids.
I'm not making the connection. Somebody has to, why is it you?
Because honestly, I don't trust Jeff to handle the money. I've seen his splurging, and I don't feel like he has the confidence or the follow-through to be able to handle it and trust that something isn't going to get turned off or something isn't going to happen.
So, you do the best you can. And then what?
I'm looking at which of those we could skip this month.
Mhm.
Which ones we could do a partial pay on, looking for solutions because I feel like sometimes we're drowning.
What solutions have you looked for, engaged with?
We've done credit cards, personal loans.
Wait, wait, wait. Credit cards is a solution?
It's a temporary solution.
Oh, okay. Okay, go on.
It made it so I could pay the bill. We did get a personal loan at one point to pay off the credit cards, but did not follow through with that the right way and ended up with that debt plus the credit cards.
What else?
We have looked at bankruptcy.
Okay. What would somebody else do in terms of a solution if they don't know how to manage their money?
They would look at learning how to and figuring out a way to manage it with what they have.
Yes. Have you done that?
I'm starting to. But I'm very new to it.
You've been married almost 20 years. Can we just cut to the chase? I'm not interested in what you've done in the last one month. People always clean their house before the house cleaner comes. I'm not interested in that. Have you looked into books and courses and videos and learned about how money works?
I didn't look into courses and videos because to me it always felt like they were geared either towards people that already had money—
Mhm.
Or it was eat beans and never leave your house until you're completely debt-free.
Okay.
And that didn't seem sustainable either. That wasn't the way that I wanted us to live my life or wanted us to have to live our lives.
Jeff, do you want to add anything to what you just heard there?
No, I'll be honest, until she mentioned she's been watching this, and I mean, I knew we had problems, but again, it's the ostrich in the sand.
Mhm.
If I don't watch anything she watches, I'm in my own little world, and—
Are you in your own world about money as well?
100%. I just don't look at it. If I don't ask about it, then I don't have anxiety about it. In my world, it was better for me not to know than to cause myself anxiety and worry and stress.
Meanwhile, it's not just the ostrich in the sand. The ostrich in the sand is being fed, cable is being provided, lights are being provided for the ostrich. The ostrich is living quite a good life. They're chilling.
Yeah, I'll be the first one to acknowledge that I've saddled the burden of our finances.
Will you be the first to make a change?
I'm trying. Michelle is, she's—sorry.
I didn't get a yes or no answer to my question.
Yes.
You will?
Yes.
It's pretty easy to tell that I am frustrated in this conversation. Here we have the parent-child dynamic again, which is inherently frustrating talking about two adults. But it's especially such a tired old trope to have the guy be the one who's just like, "I don't know. What should I do? You're better at money." I'm kind of just tired of it. I hope I'm not too forward in saying this, but get up, guys. Stop sitting around and waiting for somebody else to come and save you. No one is coming to do it. Apologies if I come off a little too strong, but this is what's going on with me inside right now.
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Jeff, when's the last time you and Michelle had tension around money?
The thing is, I just walk away from it. So, I don't let the tension. I just, I think I just tend to be an—
Agreement person of okay.
I feel like you're doing that right now to me.
Jeff, do you bring up money conversations?
Only when I don't get what I want.
Give me an example.
The last biggest thing I asked for was a smoker.
Okay.
Realistically, I knew we're never going to use it, but I wanted to have it.
When was this?
Before Father's Day, I think, Michelle, wasn't it?
A few months ago.
And what did you say to Michelle? Where were you and what did you say to her?
I now remember it. We were at Costco.
Actually, can we just recreate this? Say what you actually said back then. Go ahead, Jeff.
Look at the smoker. It'd be nice to put a turkey or the bacon or the cheese.
Yeah, I don't really like smoked foods, and we already had one and you barely used it.
This one is newer. It has pellets. We would use it more. It's not just a smoker, it's also a grill.
Well, we don't have the space for it, and I really don't think we need it.
But we got your old barbecue, and we can put the new one there.
I like my barbecue. My barbecue works absolutely fine. We just need to clean it before the summer hits.
This will be easier upkeep because it's pellets and not gas.
Yeah, no. I remember pellets being more expensive, and that was one of the reasons we didn't use the last smoker you had.
Okay, okay. Time out. Pause. Great job. That was very authentic. Did you reach a resolution on that conversation?
No, I didn't get it. In the long run, I know it's not practical.
Uh-huh. Why'd you ask then?
Because it's shiny.
Is this serious? Are you being serious right now?
No, I'm serious. Yeah, no, it was shiny. It was something new. It was something that I wanted. I've seen it before, and I'm competing with my father, because he had one, I wanted one.
Whoa. Michelle, what was that reaction from you?
That was agreement because that's a lot of what it comes down to. His dad gets a smoker, and suddenly he wants a smoker. His dad gets a Blackstone and talks about how great that is, and Jeff wants to get a Blackstone.
Wow. That little example there shined so much light on the dynamic here. Can I ask you both what role was each of you playing? Jeff, what role were you playing?
I was more of the dreamer. She's more realistic. She's the one that keeps me grounded, saying it's kind of dumb. You're not going to use it. You used the last one maybe once.
Okay, dreamer. And when you say she keeps you grounded, if she wasn't there, what would you do?
I would have bought it. I would have spent the money and dealt with the consequences later, and that's what I've always done.
Okay, and Michelle, what role were you playing?
I was being the authoritarian. I was trying to put rules down and control things.
I agree with everything you both just said. And I see Jeff as pushing the limits. You kind of said it with a smile, Jeff. I knew I really shouldn't get it. I knew it's not practical, but let me try to get it anyway. Pushing the limits. And Michelle, whether involuntarily or voluntarily, takes on the role of...
The parent.
The parent. And the parent has to do what, Michelle?
I have to say no.
You have to say no. You have to give a list of reasons. And I noticed that you both engage in this thing. Jeff says, "What about this?" Then you have to explain why not. "Well, what about this?" No. Well, I don't know. "Well, what about this?" The pellets are actually more expensive. And then does anyone walk out of there feeling good? Well, I'll just ask you, did you walk out of there feeling good?
Eventually, but I was initially frustrated that it was a conversation again, and it felt like I was having to defend the no.
Yeah. I don't know what I was expecting when I asked. I knew the outcome eventually was going to be no. But I don't know why I did it.
You know why. Think about it. Why did you ask? You know why.
There's a 50/50 chance that she would say yes.
Exactly.
And that's how we got into 95% of where we're at, is because I'm an impulse. And there's sometimes you just want to deal with it, and then I'm dealt with the consequences.
Who's dealt with the consequences?
Well, both of us. Well, mostly her, because then she has to figure out, okay, that $500, where is that going to be pulled from?
Michelle, what are you noticing as you hear this from Jeff?
It's kind of frustrating because he knows what he's doing and still does it, even though it puts more pressure on me and makes things more difficult for me.
Yes.
And I feel like he's doing it intentionally, which doesn't feel cool.
It doesn't feel cool, Jeff. That's why I didn't really buy you saying, "I don't know why I do it." You know why you do it, just like anybody knows why they walk into a casino and they gamble, because once every 20 times they win a little bit of money, and it's a little bit of fun. It's actually fun. I could kind of see the glee on your face when you talked about the smoker and the pellets and the this and the that. It's fun for you to talk about, but it's not fun for Michelle.
Because she's thrust into this role of being, as she put it, the authoritarian or the naysayer, the no. That kind of just sucks.
No, it's not right for me to put her in that spot either.
How long have you been doing this for?
The last biggest thing was when I convinced her to buy a timeshare when we were in Vegas on vacation.
It's been going on a while.
Yeah.
This dynamic, I would say probably since around 2010 and 2011.
Back in 2010, it was just me and her. Back then we were paycheck to paycheck, but we were making it work.
Looking back, I'm always curious about this. Do you see any clues with each other early on in your relationship, financially speaking, with where you are now?
Oh, yeah. We have a bigger paycheck, but it's almost a mirror image of where we were 20 years ago. Still feeling like we're not making enough. Still doing the silly splurges, just with a little more responsibility now because we have the kids.
When we met each other, I was going through a divorce, and I had disposable income. I didn't care. I was living in an RV at my parents' property, and I didn't have any other expenses except for the rent I was paying them to live in the RV. I don't look at long-term finances. I look at the here and now.
Do you look at long-term for anything?
I do have life insurance.
Just in general, are you a long-term person or no?
I used to be, but as I got older and more cynical, I stopped.
What caused you to become more short-term thinking?
Just the way our world is. You see every day, you could go out of Walmart grocery shopping, and somebody else is having a worse day than you and decides to go on a rampage. You could be watching a movie.
Were you ever long-term thinking about money?
Yeah, with my first wife, yes.
Okay. Michelle, are you a long-term thinker or no?
I think it depends. I want to be a long-term thinker, but I don't always have the patience for it.
But oddly enough, you talk about your impending cremation decades from now. I don't mind it. I'm learning a lot already. This is very helpful.
I wasn't caring, but then we had our first kid, and I recognized that we needed to be more careful in some areas and needed to start saying no to things.
Who needed to say no?
I needed to say no to Jeff when he would want to do things or get things that didn't make sense.
And thus the pattern was born, 15-plus years ago. First kid was born. Who was the person who made the decision to change the dynamic around money? Michelle. In the sense that I need to now take on the burden and say no. So I'm going to create this almost force field. I will absorb all of Jeff's inquiries. Can we get this? Can we get that? What about this? Let's buy a timeshare. And I'll take on the burden myself. And once in a while I'll crack. Or as Jeff puts it, 50% of the time I'll crack, which will lead us into more financial trouble, but I am the one who's going to have to say no to Jeff.
I think in the last six months I'm understanding that we're not in a good spot. I've not been trying to play the games of let's buy this, buy that.
What? When was the Costco thing?
Father's Day.
And...
It's two months ago.
I'm trying to be better, as she's explaining more and more and opening up more and more.
How long is it going to take?
I don't know. I'm big-headed. I know the ramifications if I don't learn and if I don't ask.
What are they?
We're going to be like my parents, living in a place that they can't afford to move out of when the floors are falling apart and the wiring is going and the mold is spreading, and there's nothing else they can do because they're on Social Security and they're too far in debt.
I'm being pretty relentless with Jeff. I'm asking him a lot of questions with increasing intensity and specificity. It's not an accident. I'm doing this on purpose. Jeff lives in a world where he says a lot of words that are up in the clouds, and Michelle simply accepts them. You see this in couples where they've been together for a time, so they don't really interrogate what each other means, but I don't accept that. And I have the latitude to ask him questions to make him own what he's actually saying. I think he probably has never actually heard himself say what he actually means. He's been living in the clouds, and I'm here to bring him down to the street.
What was it like doing the Conscious Spending Plan together?
We didn't. She tried to show me the numbers, but my ADHD had me thinking about other stuff.
Are you diagnosed?
No. But I have it, because not something, because reality, ignorance is bliss. I know that I have problems. It's definitely there. My son has it.
Yeah. Is he diagnosed?
Oh yeah, 100%. Yeah. I definitely see the patterns of him in me.
Why have you not gotten diagnosed?
I don't like doctors. I don't like going to doctors. Michelle tells me to do it all the time. I think, again, it goes back to I don't want the reality or the medications. It's easier for me to blame it on that than anything else.
When you suspected your son had ADHD, did you seek out help?
For my son, yes, right away.
Right away?
Yes. When he was in elementary school.
But not for you, even though it affects your wife.
To me, it's being selfish.
You're okay being selfish? It's rare that I hear someone admit that. You've now mentioned it twice.
It's me. It comes down to that. It's my health.
Look at your wife. You told me that she's the one worried at the grocery store about going up to the counter and the card doesn't charge.
But it goes beyond that. Again, if nobody communicates about where we are with the money, where we stand, it's hard for me to focus on, okay, these are the issues.
Okay. I want to ask you both how you'd like to proceed here today, because you both came on Money for Couples. This is not money for one person in a couple. It's Money for Couples. I have a very strong philosophy. The only way that the two of you will succeed is if the two of you are a team. And right now, this is the opposite of teamwork.
I've been trying to be more engaging, because I know this is important. We're 45 years, 46 years old, and...
Jeff, I don't think trying harder is really going to change much.
And for me, trying harder is better than not trying at all. The last couple of days, last week or two, I've been showing commitment to move outside of my comfort zone. I'm going back to school. I got super out of my comfort zone and started applying for new places, and it took a lot because I don't like uncertainty and I don't like new things. And anything going forward is trying rather than just sitting back and letting Michelle shoulder the burden. For me, putting in an effort is trying rather than not.
And part of that might be you admitting that, or at least trying to go to the doctor. I think part of your fear is going to the doctor, them saying, "Oh, there's nothing wrong. It's just your personality." And I say that as somebody with mental health issues that didn't go to the doctor for a very long time for them, because I was afraid they were going to tell me it was all in my head.
I know. It's again going back to that fear of the unknown. Yeah, is it my personality? Then how can I fix the personality?
Well, there's lots of ways to do that, too.
No, I, Amy, I know. Again, I'm conscious of me being selfish. I don't agree with it. It's my personality. It's easier for me just to laugh it off, push it aside, and just to move on to the next thing. Yes, I know it hurts Michelle, but at the same time I don't know how to get out of the cycle.
What do you mean? She's telling you a very clear next step to get out of the cycle. Are you hearing her?
I am hearing her.
What is she saying? Put it plainly in English for me.
That at the end of this call I should speak to my doctor.
Yes, and what is your response to that?
That we will talk about it.
I'm struggling a bit right now. I want to help. I'm here. I'm prepared. I'm ready. This would be one thing if the two of you had $2,000 of credit card debt. We could be flexible. We could work through it. The status of your financial situation is much different. You are in your 40s. You have three children. Now, is there a way to fix it? I think so. But I cannot fix it. I cannot even help you fix it unless both of you are 100% in and committed. I'm not hearing that right now. I'm hearing we should think about it. We should talk about it. I've started trying in the last two weeks. The only way out of this is full commitment from both of you.
So here's what I would like to propose. I would like for the next five minutes for you two to go off camera, and I would like for you to talk. What do you want? Because if the answer is, hey, we're not both ready to fully commit, just come back here, tell me, and we will part ways. No hard feelings at all. But if you want my help, if you want to have a future that is bigger than a cremation, there has to be full commitment. So I want to give you the next five minutes. Talk, come back, and let's discuss. Whatever decision you reach, I will respect it.
Okay.
See you back in a few.
I almost ended the call right here, and I never do that. I want to help. I believe that I can help most people if they are willing to be helped. My show is called Money for Couples. It's not money for individuals. And if I'm going to do what I do, I need both parties to want to be here. So I sent them away. I'm not sure how this is going to go. I think for the first time on this podcast, they may leave and not come back. We'll find out.
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One of my favorite things on this podcast is watching my guests have an aha about their money dynamics. Because these money problems are not just numbers they put on their conscious spending plan. You can build the perfect CSP, but if you don't understand why you behave the way you do, the numbers are just going to keep repeating themselves. That's what growing feels like. It's a mindset shift. It's a different way of looking at the same problem. And therapy can help you do that in every part of your life.
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I waited. Five minutes came and went. Seven minutes came. It was like the Apollo 13 movie. The time has come and gone. And suddenly, the flickering came back. And to me, this is actually a beautiful moment. You have to really want help to come on Money for Couples. It's not easy. It is hard. It's hard to talk about your relationship publicly. It's hard to share numbers that are often embarrassing or shameful. Maybe to even admit that you or your behavior or even your character may need some development. That is incredibly difficult. So I give them props for coming back. I appreciate every guest that does.
How was your conversation?
I think we're on the same page. It's realigning. We took a second to realign expectations and both express what we wanted out of this. That I need to take that step of going to the doctor and seeing if it's in my head or if it's just my personality, but I have to make that conscious step of being supported and not just looking at myself and what's right for me. But I'm willing to change. I'm willing to learn.
And Michelle, what about you? What'd you talk about?
Straight up, I asked him or let him know that this needs to be something that he wants to do because he wants to do it, not just because I want him to do it. I also accepted that I need to be willing to share the control and talk about it and not just bottle it up.
Great.
This is about creating an action plan, not an 'I hope this happens in the future' plan.
I love that. Just so I'm clear, are you agreeing you're going to go talk to a doctor about ADHD and whatever else may be on your mind and see what they say?
Yeah, I've already committed to Michelle.
I think that's awesome. It's going to make a profound change in your life. ADHD and money is a studied phenomenon. This is very well studied. We had an ADHD expert on money from the Financial Therapy Association, Dr. Christine Hargrove, in our Rich Life program. We're going to put a link for people if they'd like to join the program and they can access that. We have a whole community in the program where many people share openly about what it's like to have ADHD, how it relates to their money. This is an important topic, one that we talk about. That's number one. I want you to get diagnosed if appropriate, or at least talk to your doctor. It's a massive change.
I actually want to just take a second and give you both a round of applause. I actually think this could be a different trajectory for the two of you for the rest of your lives and for your children. Fantastic. This is big.
Shall we continue on knowing Jeff has work to do? He's going to see a doctor. He's going to pursue that of his own accord, not because Michelle wants it. Michelle has already committed to being willing to give up some control. And so we know those things are going to require a lot of work, a lot of time and compassion from each other, but let's just assume that those happen very well. Let's keep moving. I would like to put this conscious spending plan up on screen. And I would like to go through it.
Okay, assets, $26,800. Investments, $264. Savings, $571. Debt, $186,000, for a total net worth of negative $159,170. Okay, what is the debt?
Both of our student loans. I want to say we're around 65.
Okay.
The car.
Mhm.
And then the credit cards and the loans.
How much are the credit cards?
The credit cards are at 18 four, and the loan is currently at 17 five.
What do you make of these numbers?
They suck.
Yeah, what else?
From my perspective, it doesn't look like there's a way out of it. One thing I did want to add that I didn't get to, when we took out the personal loan, what spurred it on was we were going to have a judgment against us from creditors. And we were facing garnishment.
Yeah, so—
And we needed the loan to pay that off. There was still student loans at that point, too, but we were focused on not getting garnished.
Why?
It was 25% of my take-home pay.
That would have killed us. We wouldn't have been able to pay rent. We wouldn't—
What did you end up doing? Took the loan out?
Took the loan out.
Did it help or hurt?
It ended up hurting because we didn't do it the right way.
Exactly. Okay, income. We have $14,887 a month in gross income. That's $178,000. That's a lot.
Yeah.
Didn't feel like it.
Your take-home is $10,600 a month. That's pretty good. Again, keeping in mind you have three kids, so we need to put this in context. $178,000, you're essentially contributing nothing to your 401(k).
We just started the 401(k)s. I was nervous about losing money in the paycheck, so I started off at, I think, 1%.
Your fixed costs are 87%. Well, right there is why you feel stressed out about money, Michelle. That plus Jeff ignoring it. 87% means you can't get ahead, and it effectively means you are spending more than you make every single month. Are you aware of that?
Yes.
Yeah. All right, let's take a look. Your rent or mortgage is, am I reading this right, $1,695?
It is rent. We are extraordinarily lucky. I have an amazing landlord.
Amazing. 11.39%. Never leave. Where's all the rest of the money going? 87%. Utilities, 668, fine. Car payment, $1,000. Is this for one or two cars?
One.
What did you get?
It is a Nissan Pathfinder.
Why? And how much did it cost?
Because we needed the seating for five people. The winters here can be harsh and you do need to be able to get up your hills, otherwise you're going to be walking half a mile in the snow.
How much did the car cost?
76,000.
$76,000? Who decided on that one?
That was me. We got the little flyer, 'Hey, we can get you in a better car and all this.' And we just went in there with the understanding that we would not pay more than we were paying when we left. I decided in the long run that it would be better for us to have a newer car with a better warranty, that has less miles, that we could maintain compared to—
Looking back, was that a good decision?
No, it was not, because I think our payments went up. It was like $300 extra a month.
He was very convincing at the time, and the idea of having a more reliable vehicle did seem like a smart move.
Grew up poor?
Yes.
Yeah.
Well, technically, yes.
That's a luxury vehicle.
I will also add that part of it, I think, was also the fact, 'Oh, you're going to approve us for financing on a nicer car.'
That's a classic. That's exactly who they target. First of all, you should not be responding to things coming in the mail. Any mail you get is, by definition, a bad deal. They're literally buying high-risk addresses and sending out and giving you the worst deal. And you bought it. Again, I'm not saying this to berate you or beat you down. I'm actually trying to show you the game being played around you, and you were susceptible to it, but you also willingly participated in it.
So this is accountability. It's learning, 'Hey, we did this decision.' Jeff was convinced by the 'we need this and that.' And he says, 'Looking back, it's a bad decision.' Agreed. Michelle, 'We need a more reliable car.' And now here you are with a $1,000 payment. That's crazy. All right, let's move on. Debt management plan, that's $486. What is that?
It's a nonprofit. They helped us work with our credit cards to get them shut down, get the interest rates lowered on most of them, and we pay that, they pay them. There is no additional fee that they add on to it or anything.
Cool. What's the other debt?
Loans that were not rolled into the debt management plan, because that was just credit card. So that's the personal loan. We had a loan for furniture that we're almost paid off on.
You took a loan for furniture?
Yes, because we couldn't afford to pay.
How much was the furniture?
I want to say it was $3,000.
What did you get for $3,000?
We got a new couch, we got a new loveseat. I will also 100% say part of this was emotionally coping with my mom passing and us having to take over the upstairs of the house that had been hers.
Mhm.
And wanting it to be ours.
I'm sorry to hear that. I want you both to get out of this cycle where it feels like there's always something coming up. That's what it feels like, right?
Yes.
We're not even halfway down the fixed costs, and there's just something that comes up. There's a car, there's a credit card, there's a sofa, there's on and on and on. How long has it felt like that?
Always.
The car did not need to happen. Not that car. And there are a variety of other decisions I'm sure we will discover that did not need to happen. So the real path forward is for the two of you to do some heavy, sustained work on what are we getting out of being in this really reactive place? Both of us. Can I just check in before we get into the numbers? How's everybody feeling right now? Michelle?
I'm okay.
You look a bit like there's something going through your head, and I just want to check in with you. And I want to make sure that nobody feels like, 'Hey, this is just hopeless.' That's never my intention. Michelle, how are you feeling?
Yeah, no, I definitely don't feel hopeless. I think it's just emotional conversations.
Yeah, they're hard.
Yeah, and I can be overly emotional.
There's a lot of work to unpack there. Let's keep going. We have medical, 200, groceries and household goods, $2,000 a month. What's that?
I have been struggling to get that down. That was our average over the last several months when I was looking at our purchases.
Okay, we'll look at that in detail. Clothes, 100, pets, 300. How many pets?
We've got three dogs, and then we also have three cats.
Oh my God.
Yes.
We have—
Yes.
We have five cats and three dogs.
You have eight pets?
Yes.
Okay. All right.
One of them we got from her parents after they passed away, so we can't really just tell him to go find someplace else to live.
How much of this stuff that we're seeing on the CSP is emotionally driven?
The debt, most definitely.
The car was emotional?
Yes.
The car, we went from having 26% interest on a car loan, and I'm like, 'Oh, we'll give you this loan for 10%.' And it was kind of a reward for us. In my mind, it was a reward for us getting back on track.
Jeff, that's emotional.
I think 90% of my spending was emotional and self-convincing.
Yes. Yes.
It's why we need it, and then—
Thank you.
I'm able to then put Michelle into my way of thinking.
Let's just continue going down the list here. We have eight pets for $300 a month. Phone, $446 a month. What?
I'm working on that one.
Subscriptions at $192 a month. And miscellaneous at $500 a month. 87%, you're broke.
Yeah.
Just looking at it, what do you see here?
I'm spending too much.
Okay. Jeff?
Yeah, we're spending more than we make.
Okay. Your investments are at zero. Your savings are at $150 a month. And that started recently, because your total savings are $571.
Yes.
And finally, your guilt-free spending, or what remains, is $1,252. I'm certain it's higher than that. Would you agree?
It has to be with the way we feel every month.
What does this CSP tell you? Besides you're spending too much. What kind of people are you based on these numbers?
More impulsive.
Yeah.
We are short-sighted rather than long.
Yes.
More instant gratification.
Mhm.
If we're able to buy it, makes that dopamine.
Yes. Why do you think you do it?
Just how I grew up. I didn't have what I wanted. We were told no a lot.
What did your family say about money when you were growing up? When you were young?
We didn't talk about it. We had the government brown box cheese, and there was times we didn't have the quarter for lunch.
Mhm.
Because my parents made $100 more than the poverty line. So they didn't get the free lunch. We had reduced lunch. But at times we couldn't have the breakfast or lunch because we didn't have the money to pay the school. But we didn't talk about that. You don't ask for help. We just do it. And consequently, there was times where you get home, there's no electricity, there was no running water. You just dealt with it.
What happened as you got older?
I ended up starting to pay my parents to live where I was living with them. I've been paying my parents since I was 14. I would work my job, then my money would go from my hands to my parents, and that was it. Yeah, and that continued on.
How old were you when you stopped paying your parents?
When me and Michelle moved in together after the tree fell into the motor home. So, 24.
You basically have been paying somebody since you were a kid.
Since I was 14, yeah.
Yeah.
It was for me a way for me to pass some of the responsibility to somewhere else. So, took it off my shoulders and put it on somebody else.
Let's go back to your childhood. What do you remember about your dad?
He was a drill sergeant. So, wasn't a good relationship. Didn't have a good relationship with my mom. My mom was that typical housewife of the '80s, and yeah, she perpetually was circle from her dad, and—
Can I ask a question? This is going to be a tough question. You don't have to answer, but I have to ask to understand something. Was your dad disappointed in you?
Oh, yeah, 100%.
Okay.
He would remind me of that all the time.
Does he still do that?
Oh, yeah.
What do you see in the fact that you compare yourself to your dad, he gets a smoker, you want a smoker, et cetera?
For me, I see that. I always strive to be better than him. I've always made it a point not to be like him, not to raise my children the way I was raised. I have Michelle, who's definitely a strong, opinionated woman, unlike what I grew up with. That's what I value about her, because she will call me out on my stupidness.
As opposed to your mom, who is the quote 'traditional '80s housewife.' And because your dad was a drill sergeant, who I'm assuming was very directive, told you all the things he needs from you and you're doing wrong, et cetera, you now what? Hate being told what to do? Hate being told no? Look at Michelle's face.
Yeah, I don't like being told no. But then I also understand the value of when Michelle says no.
Not really. You hate being told no. We've seen that multiple times. 'No, we can't get the smoker.' 'Come on, the pellets.' 'No, we can't get the car.' 'Well, come on, it's for the warranty.' This seems to be a recurring trend. Am I reading it wrong?
No.
So why are you disagreeing with me?
It's my nature, I guess.
Yes.
This nature to disagree, to be contrarian, to provide the devil's advocate.
Yeah, it was a game for me with my father.
Exactly. Because I'm saying something that's so obvious, it's transparent. It is axiomatic. And yet you're disagreeing with me. Why? Because you love it. You get pleasure in disagreeing because, probably going back to your dad, there's all kinds of stuff that was developed there. But it's very hard to be a partner with someone who disagrees reflexively, just because. What are you realizing right now, if anything?
There's more things I have to work on.
Yes. And man, it's probably been really hard for Michelle. So I would love it if we can agree on some basic stuff and then move forward. What do you say?
Yeah. That's why I'm here, is to see where I can improve.
Great. Michelle, you heard all of that. I want to give you a second and invite you to chime in.
I think part of it also is because Jeff tries to overcompensate because of the type of father figure he had. So he tries to overcompensate in some areas, like helping around the house and taking on household chores that he never saw happen. But on the flip side of that, that argumentativeness comes up, and I don't like conflict, so I try to avoid it. And I think that's a result a lot of times of me saying yes, too, is because I don't want the argument.
Yes.
But I do think a lot of his choices, his spending, his habits are a result of growing up poor and not having, and now being an adult with adult money, and somewhere in the back of your mind, oh, I can do that because I have my adult money.
It's classic. Happens to so many people who grew up poor. They make a little bit of money, they go, "I'm never going to go there again. I'm going to spend more," etc., etc., etc. It's normal. But it can become destructive. What's interesting, Jeff, is hearing that you overcompensate, as Michelle puts it, but you overcompensate in some really adaptive, positive ways, like helping around the house. That's actually awesome.
Well, no. I mean, okay, again, we'll go back to me.
Are you agreeing or disagreeing with me?
I'm agreeing.
He's overexplaining.
And why do you start your answer by saying no, no?
Reflexive? I don't know.
It actually reflects your worldview that I need to disagree. You're saying no. The way you said it was even disagreeable, but you're actually agreeing with me. Just say you're right. And actually, I'm complimenting you, and so is your wife. Hey, this guy helps around the house. That's great. Jeff, take the compliment. Go ahead.
Yes.
That's it.
Boy, this is fascinating. This is why I do what I do. Yeah, money's fine, but I love human nature. And when I give Jeff a compliment, and his first reaction is to say, "No, no, no, actually da da da," I go, "Oh my God." The lights started going off in my head. Even when I'm complimenting him, he's rejecting it. He's a contrarian. And he doesn't even know he's doing it.
There's a constellation of psychological, social dynamics going on here. There's something actually called oppositional reflex. Let me read it to you. Oppositional reflex is an innate physical and instinctual reaction where an animal or human automatically pushes or pulls against any applied physical pressure. I once got called out on this by a famous coach. He said, "Why do you say no when you answer questions?" It shook me to my core. Because not only did I not realize I had this verbal tic, but if you dig in, you realize, "Oh, I'm disagreeing for no good reason."
Jeff has a lot of layers to pull on. It's one of the reasons that I really want him to see a doctor. Because we can only do so much in a few hours here, but there's actually a really beautiful life ahead as you start to understand yourself. One thing I've discovered on this podcast is that a lot of us are confused by our own behavior. Are you? Think about it. Do you not know why you spend money a certain way? Do you not know why you tell yourself, "I should go to the gym. I should eat better," but you struggle to? You might actually be confused by your own behavior, and that's a really perplexing place for us to be.
That's why there's so much beauty in being able to understand yourself. That's why I love what I do. And I want you to see these different aspects of human nature, and why I interject so often saying, "Hey, here's what's really going on here." I think it's so beautiful to see how we are irrational, and confusing, and complex. That's what this is about. As for Jeff, I really want him to get a better understanding of himself, not only for his own life, but also for his wife.
Jeff, I want you to see—I actually want you to feel a sense of delight because you just learned something about yourself. You are reflexively oppositional. And it doesn't actually help you. You disagree even when we are talking in a complimentary way about you. And it's actually not serving you. This would be topic number one or two that I would bring up with my therapist. And I would also bring it up with my doctor.
Because you will be able to go so far. You cannot imagine how many opportunities have been around you, but you oppose them just normally, being a contrarian. But actually, if you can change your way of looking at the world, you might find that a lot of people are much more agreeable than you think. It's profound how deep you can go with this. So I hope you take that and run with it as you speak to some of your medical providers. It's actually amazing what you're going to be able to do. Are you cool with that?
Yeah.
Okay. Michelle, what about how you grew up? What do you remember about your family? What did they say about money when you were young?
Not a whole lot. Sometimes I did hear, "No, you can't have that. That's too expensive." We were okay, but barely. I remember my parents having an argument and my dad leaving. My mom kicking him out, actually, until he got his back pay.
Mhm.
I remember my mom not being able to open a checking account because she wrote too many bad checks. I remember being taught, don't answer the door if it looks like it's the electric person because they're here to shut us off.
In what ways do you continue on the models that your parents set for you today?
There was a lot of struggling with managing bills. I thought it was normal to not be able to pay all of your bills every month.
Okay. What else?
Obviously, we haven't had conversations about money. It's not something that we really talk about.
Talk to your kids about money?
No, this has been a point of contention. We will tell them no, we can't afford that.
That's what your parents told you.
Yes.
Why do you continue the cycle?
One, it's programmed. That's how it's supposed to be. You don't burden the kids with the problems of money.
Great.
Other than to tell them, no, we can't get that.
And you today do not burden the kids with money, right?
No.
Mhm. Mhm. That's quite interesting. But you grew up poor, right? That's how you described it? Close to poor?
Close to. We weren't as poor as Jeff's family.
Okay.
We were never on state assistance, but we couldn't pay our bills. We got kicked out of houses.
Okay.
Foreclosures.
Lower middle class, let's call it, maybe poor.
Yeah.
In what ways are you trying to break the cycle of money that you were taught?
I have started pushing to, when our kids ask how much do things cost, telling them. Something that Jeff's very much against. He will often tell them, "It doesn't matter. We got it for you." Being transparent with them on cost of things, talking to our son about savings and things that I would like to help him do when he gets his first job to get him into the habits that I didn't have when I had my first job.
What about actually modeling it?
I'm trying to, yes. Again, that's a piece of why I'm doing what I'm doing right now. I want to be able to show him, number one, it's okay to ask for help.
Yes.
Number two, it's okay if you don't know all the answers. You can figure it out.
Yes.
And number three, here are the things you can do so that you don't fall into the same cycle that we were in.
Great. Jeff, you?
Yeah, no, me. I have been more open with our son about it because he's at age, and I wish my parents would have sat me down and explained things better. But I think also me and Michelle have better patterns than our parents. We're not going to take out credit cards in our kids' names or bank accounts in our kids' little hands.
That?
Both of our parents.
What?
I went away, and there was a bank that sent checks to my house thinking I was there. My parents forged my name on these checks. And same thing with credit cards.
What? And Michelle?
My mother used credit cards. I think it was a Macy's or JCPenney credit card that I got, maxed it out buying Christmas presents. My dad, unknowing—my dad was kind of like Jeff's in that he was not very good with money.
No, hold on. I'm so shocked.
I'm sure.
The parents are similar to what? This is like saying I drink water. Whoa, really? Oh.
Yeah.
But recognizing that pattern is powerful. It's great. Did you know that before today?
I didn't make the connection on the financial side. I knew part of why I fell in love with Jeff was because he reminded me of my dad with his stupid jokes and wanting to make people laugh and everything.
Mhm.
But I hadn't made the connection on the money side.
Okay.
But my dad unknowingly used my checking information to sign up for something online.
I hate that. I hate that your parents did this to you. The people you should love and trust the most took advantage of you. I want you, if you will allow me, to trust that there is a way that you can actually feel good about money. Do you believe that?
Yes.
Michelle says yes. Jeff?
Yeah, no, definitely. I do believe there's a way for us to feel better about money.
I had no idea that both of their parents had taken out debt in their names. I actually wish I had known this earlier because it gives me so much more empathy. The feeling of being betrayed by the people closest to you and the way that that has to leak over into money, just make you feel horrible about money, hate money, be obsessed with money, want to ignore money. It's all bad.
Now, that was not their fault that debt was taken out, that their relationship with money was polluted from early on. But it is their responsibility to fix it. They are adults. They have children. It's important, and nobody else is coming to do it for them. So that is where we are. I'm glad to understand it. It provides a little bit more context. And it's still their responsibility.
I have a lot of friends who are entrepreneurs, a lot of friends who are not entrepreneurs, and one difference between the two is that the friends who run businesses basically have to be proactive at work all the time. They cannot wait for something to happen or a boss to tell them what to do. So you'll find that they're constantly looking around corners, trying to figure out what's next so they can make plans. And I have found that being proactive is a skill.
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I'm opening up Michelle and Jeff's Monarch accounts so we can drill down into their actual spending over the past couple of months. Now, our partners at Monarch have customized their accounts to follow my exact Conscious Spending Plan categories, and you can download the CSP template for free at iwt.com/csp or try out a customized Monarch account and see all of your numbers in real time. The two actually work together beautifully. This is available only for my listeners at monarch.com/ramit, and you can use code RAMIT to try it for free and get 50% off your first year of their core tier.
All right. Can we look at some of the actual spending here?
Yes.
So I did a little digging using Monarch. We had you connect your accounts, and so this allows us to drill down a little bit deeper and see where some of the money is going. So let's take a look here. We have Klarna. Why are you using Klarna?
Yeah, we used it when our TV broke, and then a week later, when the child broke the new TV, we had to get a new TV because it wasn't covered.
Can I ask you a question? One thing after another. You have a family with three kids, you're in severe debt, you have eight pets, and your TV breaks twice in five days. Do you need a new TV? Wow, dead silence on this.
Felt like we did.
It felt like we needed a new TV. It felt like we needed a new car. It felt like we needed a new couch. It felt, it felt, it felt. What is my point?
That it's reckless spending.
You don't have the money for it. I don't think either of you have ever said we simply don't have the money for it.
It's always been we'll figure out how to get the money for it.
Or how to make the purchase happen.
Yeah, you're not figuring it out. You have done everything except say no.
For me, the TV was a way for me to unwind after 12 hours a day. And it was a way for—it's for the kids.
It's not about the TV. It's about the fact that we have a couple here, you in your 40s, in severe debt, an inability to say no. It didn't even occur to you that maybe we just say no to a TV.
It occurred to us for 30 seconds, and then we justified it to ourselves.
Yes, and you do that a lot, and that's what has led to this spending. So I'm not going to sit here and do some abracadabra with your Conscious Spending Plan. It's actually you two that have to do the work here, not me. What needs to change?
Our mindset. Just because we have the ability to put it on credit, you shouldn't put it on credit.
Guys, nothing goes on credit anymore. Tear them up. It's over. Nothing goes on until you pay it off. That's it.
That is part of why I did the debt management plan, because it shut down all the credit cards, so we can't go back and fall back on them or use them impulsively. I've removed all of the pay-later apps so that we can get them paid off and be done with them.
Okay, let's take a look at some other expenses here. I actually love being able to dig and see these through Monarch. Let's take a look here.
Honestly, I kind of liked it, too.
Yeah, it's fun, right? It's quite revealing. And again, I like the CSP for being able to see the big picture, and then we can dig into—what the hell?
Spring break. Okay, that was spring—
Just hold on. Not everyone can see this. Let me just describe it for a second.
Sorry.
I'm looking at a monthly view of how much they spend eating out, and the chart is quite interesting. So I can see their eating out, and November is 447, then December is 1,000, 800, 1,500, 1,400, and then $2,747 in one month.
We took the girls to Vegas for spring break. That was the spike in eating out because we were enjoying ourselves. And I was going to figure it out later.
And have you figured it out?
No.
What would the correct decision have been?
We would have done something locally.
Yeah.
I would have still taken the time off, and that's what our plan is for next year.
Again, if you had no debt and all your stuff was dialed in, I'd be like, "God bless. This looks awesome. Looks like great food. Fantastic." You don't. You've put yourself in a position where you're in debt. You have very little savings. You have kids. If something happened, you all are in big trouble. I think that's why you came to me. Am I reading it right?
Yes.
Yes. So, what are you learning so far on today's call right now, looking at these numbers?
That the little stuff adds up. Yeah, you would just see that you're happy.
Are you happy?
No, not looking at the numbers. I didn't know we spent that much money eating out last month.
Okay. And Michelle, what are you learning on this call?
That we need to be stricter with what we say yes or no to.
Keep talking. I want to hear more.
For example, the eating out, I need to stick to my guns of we're not going to eat out, and we'll be eating at home.
Mhm.
No matter how tired I am or what the week was like.
Success requires hard work, but it often feels good. Being strict, sticking to my guns, that doesn't feel good. What does it feel like?
It sucks because it feels like when I was a kid and my parents told me no.
Exactly.
I just want to go out to dinner with my husband.
Yes, and yet you are telling me that what you need to do is to be stricter and stick to your guns. Look at the body language, right? Look at that deep breath you're taking. Being strict and sticking to your guns sounds like you at Costco with your husband begging you to get a smoker, and you have to put up this wall and be like, "No, no." It's almost like you're being attacked. Left punch, right punch. What if it felt easy? What would that look like?
I would know that we have enough money to go out and have Jersey Mike's one Saturday a week when we're going grocery shopping.
Jeff, what would it look like and feel like if money was easy in your family?
Being able to plan more with the girls rather than canceling all of our plans.
You should be able to have some fun, no doubt about that. I want you to. But that cannot be the primary thing that you are focusing on now. Because nowhere in your descriptions did you talk about, "We should automatically save money. We should know our debt payoff date. Our money should be going to our debt aggressively. This is how many times a week we can eat out, and both of us respect it." It was just, "I want to be able to spend more on stuff," which is the same thing that got you into this position in the first place.
No, I agree. Shifting that mindset is going to be hard, but it's not unattainable.
The stakes here are very high. If you're in your 20s and you accidentally don't pay a credit card bill one month and you rack up interest charges, it's not great, but you could fix it. You have time. When you get into your 40s, you need to be pretty dialed in. If they don't change this dynamic, they will be in severe debt. No housing options. It's quite ominous to look 15 years down and see where they might be.
So, my goal is to get them to break this habit and to build a vision together which they're both bought in on. So, I decided that I wanted to show them and to show you exactly what I would want. What would I do in their situation? I'm taking a structured approach, doing three things. Number one, philosophy. Number two, develop money rules. Number three, actually make some changes. And I'm going to do this fast.
It would be super easy instead to just be like, "Okay, let's fiddle around the edges and cut the amount down that you spend eating out." It's going to do nothing. I would rather elevate them, and I hope maybe they reach 50% of it, 40%, 60%, but I want to show them what excellence looks like. That's what I'm going to do.
This is what I would do if I were in your situation. A philosophy around money. That means something like, "In our family, we save at least 10% of our net pay." That's an example of a philosophy around money. "In our family, we have a no-debt policy." That's another example. What is a philosophy with money that each of you want to begin starting immediately?
That we're debt-free.
We are a debt-free family. I like that. Are you willing to make changes in order to support that philosophy?
Yes, I am.
Great. Michelle, are you willing to make changes to support that philosophy?
Yes.
Great. What's your philosophy?
In this family, we prioritize saving.
Love it. And what does that mean? Give me a number, a percentage. Typically, I say 5 to 10% of net pay.
Let's go in the middle with 7%.
7%.
In this family, we save 7% of net pay.
Beautiful. Next.
In this family, we communicate about money.
I love that. You agree with that, Michelle?
Yes.
Yes, that is powerful. We communicate. How often do we talk about money? Be specific.
Once a week.
Love it. Once a week. What day? What time? I share my own misery because I had a Rich Life review. It was at 6:00 p.m. on a weekday, and I kept on kicking the can down the road. My wife actually told me, "Dude, let's be honest. You're writing a book on Money for Couples, and you've missed the last two meetings." That was very embarrassing, but she was right.
And I realized I was missing them because I was tired at the end of the day and other meetings started encroaching. So, what did I do? I took a hard look in the mirror. I looked at what was going on. I realized this needs to be a priority. I moved it to a 9:00 a.m. slot. So, I'm not saying it has to be at 9:00 a.m., but I'm saying don't set yourself up to fail.
I think we could commit to Sundays at 11:00 or after breakfast.
Sunday, 11:00 a.m. Does that work for you, Jeff?
Yeah, that works for me.
I honestly think you have an amazing philosophy here. We are debt-free, we prioritize saving 7%, and we communicate about money once a week on Sunday at 11:00 a.m. If you just did this, you could make radical changes with your money. I think you're doing amazing so far. That is a powerful philosophy. Now, you can have a philosophy and not yet be there. That's okay. In this family, we are debt-free. Well, you're not debt-free right now, but you can take steps to get there. That's cool.
Why am I starting with a philosophy, and what the hell is a money philosophy? A lot of us do not have a money philosophy, and I can see it when I look at your spending, because it's sloppy. It's spending money on pickles. "Oh, I bought some corn, and then I bought eight dogs." What? Makes no sense. There's no cohesive philosophy.
But when I see somebody's spending where they are spending a ton of money on traveling, or on their car, or on their house, and they explain it to me, "Here's why. We love where we live. We have two kids. We want to have a big space to save." Amazing. You have a philosophy.
What I want you to do is start off with your philosophy because it gives you a why. It makes it really easy to make decisions when one partner or both say, "Hey, should we take this trip, or should we buy this car, whatever?" You look at your philosophy, you go, "Is that important to us?" Because in the moment, you're going to look at a shiny coat of paint. "Oh, I love it. So cool." But actually, look at your philosophy.
I once went on a tour of the expensive neighborhoods in LA. Okay, this is during COVID. There's nothing to do. We drove to Bel Air. Beautiful houses. Twenty bed, twenty bath. You can only see through the shrubs. I'm looking at it, "I could live here. Bel Air. So nice. Such a rich life." And then I got home, and I was like, "What the— My philosophy is I love walkability." So for that moment, I was enchanted by how cool these trees looked. I come home, I go, "I don't really like that stuff. I don't want to live up there in the hills. No."
Have a philosophy. Write it down. Next up, rules. What are your rules? The things that, if you do these, they are going to make you successful. We always save 10%, and we increase that number 1% every December, et cetera, et cetera. Third and last, we go in and we fix the numbers.
I think most people just skip right to the numbers. They do this all the time on this show. I go, "Hey, what's the problem?" They go, "Well, we should cut down on our cell phone." I go, "No, don't cut your cell phone until you know why and what your rules are. Otherwise, you're just going to pick something that's going to save you $15, and then next month you're going to go right back to it." You need to think methodically. If you're sitting around fiddling in a spreadsheet, and you don't even know what the problem is, you have taken a very wrong turn.
Join my Rich Life program. I'm going to put the link, iwt.com/100k. Learn how to think like this, or just watch this show and do it every single week. All right, back to the show. What kind of money rules can we create?
We run the numbers before any purchase.
Okay, great. We run the numbers. What's next?
Don't try to manipulate Michelle.
That's a great one. I like that you're saying these out loud because you can actually print them out, put them on the fridge, make a little index card, and if something happens, you can pull it out. "Hey, wait a minute. Are you violating rule number three? Ah, come on. We both agreed." It becomes a fun thing. Money should be fun, even if it's tough times. Great. What else? Hey, how about eating out?
Reduce it down to no more than twice a month.
I was going to say once a month with a limit of no more than $75.
$75 per month eating out. That includes coffee, that includes pizza, that includes gas station stops, whatever. All of the above, $75. So, that's basically one meal.
Yes.
And from looking at where you order, it's Jersey Mike's or Domino's type of place, right?
Yeah.
Are we on board with that?
Yeah.
Okay. Just to give you some perspective, do you know how much you spent on eating out this year? It's August.
Well, considering that in that one month was $900, I'm thinking we're close to six grand.
Six grand. Let's take a look at Monarch. What's this number right here?
$9,235. That was one heck of a burger. We're not even—
At the end of the year yet. In this family, we eat out once a month for $75. I think it's incredibly powerful. I think it's amazing, actually. I'm really pleased. I think that's awesome. I actually think it gives you a lot to look forward to every month.
All right, final thing we're going to do here. We got some rules. We run the numbers before any purchase. We don't try to manipulate Michelle. We limit eating out to $75 a month. All this feels good. We're going to now make some changes to the actual CSP. Jeff, it's up to you. I want you to get us below 60%.
Our cell phone bill can come down.
To what?
I think it was like $200 off of that.
What did it drop to?
85.
Yeah. What's next?
Subscriptions. Again, we've been working on that, and I think we can take $50 off of that.
Watch the number. Went from 85% to 85%. Got to think bigger, Jeff.
Groceries, I think that's our next biggest expenditure.
Yep. Michelle, looking at it, how can we bring that down to 15?
I think we can do 15.
How often do you all go grocery shopping?
Once a week. We do Costco once a month, but then once a week we do Safeway, WinCo, and Walmart because we shop the ads and shop sales, shop clearance.
Do you shop to a number, Michelle?
Right now, no.
Yeah, nobody does.
We have been cutting back on what we used to spend.
Look, let me just be blunt. $2,000 a month is just too much for a couple that's in debt.
Can we aim for 1,500?
Yes. Drops to 80%. Okay, that's a big difference. What else?
The miscellaneous uncategorized spending.
Yes.
$100.
Great. We took it down to 76%.
Well, it was at 300. Again, I don't see us spending $300 a month on the pets. I think we could drop that down to half, so 150.
Make it 200. Also, I think having eight pets is something you should think about.
But the pets are our kids. We can't get rid of our kids, so we can't get rid of our pets.
Well, you're talking to the wrong guy about that.
And that's fine. That is one of the—
We all have our own rich life. Fine. What else? I want to show you something.
Okay.
We need to not get stuck. We need to keep moving. Savings account. I just want to point out you currently have $571 in savings. If one of you gets in an accident or there's some kind of repair that needs to happen, there is no place for the money to come from. You will simply rack up more debt, and you just end up in the same place you've been for the last two decades.
Therefore, we need to move money to savings. So right now you have $150 going, which is good. Let's add $750 because that was about 7%. $750 just automatically going into your savings account, never to be touched except in an emergency. That's great. You still have $1,752 for guilt-free spending. That's too much.
Yeah.
We calculated some of your math, and by the time you retire, Michelle, on the current trajectory you're on, you'll have about $117,000 in retirement. What do you think about that?
I know that's not enough.
Yeah, that would give you about $4,700 a year.
Yeah.
You two would be living on Social Security. No house. What do you think would happen?
And I'd be living with our kids.
Yes. That is the track that you are on right now. That is the track. Nothing we have done has changed that. Jeff, it looks like you're having a moment of realization. Am I reading that right?
No, I'm just—the eyes—we are still not—we're overspending and underearning.
Yes. When are you going to be debt-free, do you know?
Like seven years for the credit card I paid, at least. I didn't even put in student loans.
Need to pay that off faster. Let me show you. You have $1,752. That's just not going to work anymore. We need to put an extra payment towards your debt. I would, if it were me, an extra 500, and I might put 500 in investments because you need to invest. You see how I'm starting to split this money?
Yes.
You'll actually feel incredibly empowered when you do this. And then the two of you can decide in your Sunday 11:00 a.m. meetings, "Hey, I think we have an extra 100 bucks. Where should we put it? I think it should go to investments. I think it should go to debt. Well, tell me a little bit about why you think that, because I'll tell you a little bit about why I think that, and then let's come to a decision." That's how healthy money conversations happen.
And I think we had that conversation, too, and that's what pushed—she pushed me to look for a new job that makes more. I've been in the same job for 13 years.
I would love that. Could you do that?
Yeah. With my skills right now, we were looking at 130,000 compared to the 90 I'm making now.
That would be game-changing.
And Michelle's also looking at something that would double her take-home now.
If one of you does that, it will be transformational. If two of you do that and you follow a plan like this, it will be earth-shattering for the trajectory of you and for your kids. Earth-shattering. It is simply the biggest possible thing you could do, second to following this plan. But if you do not follow this plan and you go and make an extra 50 or 100K, it doesn't matter because you'll just spend it all. The plan is what matters. The connection between the two of you is what makes it possible.
If we have a solid game plan and a solid list of rules that we can follow without feeling that it's taking away.
Great.
In order for this to work, I need to ask for help. I need to shrug off the oldest grandchild, granddaughter or daughter persona and involve Jeff in the conversation and the planning. And it is powerful, actually, it's possible. And it doesn't seem as insane or scary as I thought.
Yes. If you could go back in time and see Michelle in 2010, what would you tell her?
I would tell her that she needs to get Jeff more involved. She needs to share the responsibility and make sure she's not the only one that knows what bills there are and what needs to be paid, so she's not the only
One that's worrying about it at night.
Nice. And what if that Michelle from 2010 said, "Yeah, but it's easier for me to do it because I don't trust Jeff"?
It's not going to be easier in 15 years. It's going to be more stressful. And it's better to build that habit now than go through 15 years of worrying about going up to the register and whether your card's going to clear.
That's honest. I really appreciate that. Do you think you would give yourself the same advice today?
Yeah. I recognize that Jeff needs to be a part of it. It's hard to let go because I want to control. And I want to know that things are going to be okay, but I recognize that it needs to happen.
Cool. I always believe that people can change. And I think there will be some change here with Michelle and Jeff. I think that Michelle hopefully feels validated that there are some real issues here. And I hope that she feels challenged and encouraged that she can learn more and develop her skill.
I hope that Jeff follows through. I really want him to speak to some medical professionals and see what, if anything, might be available to him. I think that once you have a relationship dynamic that has solidified, concretized, it's really, really challenging. So I'm wishing them the best. I know change is possible at all levels, all ages, all scenarios. It just becomes harder over time.
I want to give a huge thank you to our partners at Monarch. You are now making it possible for us to take the CSP and for me to dive into the transaction level. So many awesome insights here. We find that this couple spent $9,000 this year eating out. This is actually immensely shocking and useful to know. You can do the same thing using Monarch.
Hey Ramit. First I want to thank you and the entire team for the opportunity and for taking the time to work through all of this with us. It was extremely helpful, and honestly, it was a conversation we really needed to have.
My biggest takeaway was that I need to learn to speak up more when it comes to finances. And it's okay for me to push Jeff to be more involved instead of feeling like I have to carry it all for myself. I also realized we're not our parents. We're not in the same financial situation they were in, and we don't have to carry the same beliefs or issues with money. We have the ability to save, invest, get out of debt and build something different for our family. We're not trapped.
We did end up making a few adjustments to the budget to make it more realistic, but we do have a concrete plan now. We are on track to have one of our debts paid off fully within the next three months and then have the goal of having our personal loan taken care of within the next 16. And then as things get paid off, we're going to roll that into other debts to get those paid off faster.
We've also agreed that when and if our salaries increase, we're not going to let our lifestyles automatically increase with them. We want to put that extra money towards savings and investments instead.
And I guess last thing, if there's anybody watching who thinks saving isn't for me or investing is only for rich people, I want you to know that it is for you. You don't have to make millions of dollars. You can start where you are with what you have and build from there, even if it's just $10. And I think that's probably the biggest thing I'm walking away with: feeling like we can actually do this. Thanks again.
Right off the bat, one of the surprises was not knowing where our money was going, how it was being spent, just because I was afraid. I had anxiety over spending and just relied on Michelle to do all the burden, to deal with the impact of my spending. And a lot of times, how she felt and putting her in a position of where she had to be the parent because of my impulse buying and lack of long-term thinking.
My biggest takeaway, I need to change my behavior so we can change the way we approach money together. Having that conversation, regardless if it makes me anxious or not. Learning more about financial planning. And it also means communicating more openly about what we want for our future to look like.
Specific changes, as we discussed, we scheduled the Sunday meetings to set up goals, to look at our monthly plan. We looked it over and our short-term debt management, we were able to restructure and pay off a large loan within the next three months. And then take that and then put it towards one of the bigger bills. Treating that money as if we never had it because it's going to pay our bills.
I believe that's our biggest, is just being able to sit down and talk to each other openly and having that conversation that we've been avoiding just because we were afraid. And the goal again is to break that cycle. Talk to our kids about debt management, about not getting into debt. Plan for your future. Again, we're not our parents. We want to be better. We want to show our kids what it means to be financially responsible.
Hey Ramit team, you guys wanted to know what the biggest things that stuck with us since we talked about it a month ago. And for me, it's that it's okay to speak up about everything. I don't have to quietly take responsibility of things and really shouldn't avoid the conversations just because I think they're going to be uncomfortable.
For me, it was asking more questions, taking ownership of our finances, and knowing that we're a team, and not letting Michelle just take the burden of it all and expect that it's just going to be magic.
I have also learned that sometimes you just have to pull the trigger. The plan's never going to be perfect the first time, and that's okay, but spending forever trying to get the details right isn't the way to go. The only way to know if it's going to work is to try it.
The way we did this this month was to take our paychecks and automatically move it to retirement, savings and extra debt payments so we can get that down. This happens before we even get to touch it.
Yep, and we also have a new income stream that's going to be starting soon, and we've already decided where that money is going. We're also trying to use our bank accounts a little more intentionally. We've got one for bills, one for groceries, and one for everything else we might have forgotten about.
I know this is our first month. I know it's going to be trial and error, but that's the nice thing. We learn as we go. And we can use it. What didn't work this month, we could try it out next month.
Yep. Thank you again for the opportunity and the direction you gave us. It's really helped, and I think we both feel like there's big things ahead of us. Thank you, guys.
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