A Couple $1 Million in Debt Learns That a New Budget Won't Fix Their Money Problem
I Will Teach You To Be Rich
Rebecca, 43, and Matthew, 42, have been married for 16 years and have four children, ages 12, 10, 8 and 5. They live in an expensive area and, by Ramit Sethi's reading of their accounts, spend more than they earn every month. Their debt is about $633,500, or close to $1 million if Matthew's law school loans are counted. They have $1,000 in savings and about $45,000 invested.
They came on I Will Teach You to Be Rich asking whether they could still recover. Sethi's argument across the conversation is that their problem is not mainly a missing spreadsheet. It is a dynamic between them. Rebecca chases answers she never gets. Matthew avoids the subject and tries to fix problems on his own. Because of that pattern, neither of them faces the numbers. By the end, Sethi concludes that Matthew's self-employment income cannot support the family. He then addresses Rebecca directly, as the person who may have to lead.
"It's feeling hopeless to me"
Before meeting the couple, Sethi reviewed their linked accounts in Monarch, which he uses in this episode to see transactions directly. Several things stood out:
- a $13,000 credit card balance
- a $214 interest charge, with a $40 past-due fee a few days before it
- frequent purchases at Amazon and Target
- $550 a month in church giving
- a $526 charge at Carmel Valley Lodge from just days earlier
Sethi estimated the couple is probably spending thousands of dollars a year on fees alone.
In her application, Rebecca wrote that in their 40s they have essentially no savings and little retirement money. She added that Matthew had pulled from that retirement "to make ends meet at different times," and that she didn't see how their relationship and family could last without a major shift. She said she still feels that way. She wrote the application on a road trip while the two of them listened to the podcast in the front seat and the kids wore headphones in the back.
Rebecca said money had been hard for most of their marriage, and especially in the last five or six years. Both of them run their own businesses, so income isn't guaranteed. She also pointed to "a lack of accountability about discussing really what our true financial situation looks like," which leaves her "in the dark." Matthew is a civil attorney. Rebecca works a few hours a week as a stylist, and most of what she earns goes to groceries.
How the money moves, and why it doesn't work
Rebecca described a routine she repeats constantly: asking Matthew when they will be paid. Sometimes he says Friday. Sometimes he says something like, "Yeah, well, we already took that other part, so I don't know. I'll let you know." She said she can't plan without consistency. She is also told she isn't good with money and needs to understand the budget, while she is the one who does the household shopping and covers the kids' needs. "When there is no money, it definitely is felt by me," she said.
Matthew said her feelings made sense. He explained the system:
- Money from the business goes into a joint account.
- Matthew pays most of the fixed bills from it.
- Money then moves into a joint flexible account that they can spend freely until it's gone.
- It usually runs out fast, and they end up "pointing fingers" and "steal[ing] from different sources" to cover the rest.
Asked whether this works, he answered, "No. We wouldn't be here if it worked." Sethi said this is common among guests. They describe a system in exhaustive detail, admit it fails, and keep using it.
Replaying the fight about a plane ticket
Their most recent disagreement had happened two days earlier, and Sethi asked them to replay it. Matthew had encouraged Rebecca to take a trip with her mother and aunt. When she needed to buy the plane ticket, he proposed using borrowed money that was set aside for house repairs.
Rebecca objected. In the past, she said, money taken this way was promised back and never returned. She also asked how he had planned to pay for the trip when he encouraged it. Matthew answered that leaving money untouched for a project that hadn't started made no sense when "we have to pay for both things." He said he felt she was putting the whole burden of finding a solution on him and then rejecting his solution without offering another.
They never resolved it. Asked whether money arguments ever get resolved, Rebecca said, "They just move to a new day." She described the feeling as overwhelming, hopeless and frustrating. Matthew said it was "a burden that just you carry around all the time." He added that he tiptoes around the topic because reopening it brings back "all these old wounds" from conversations that never got settled.
Sethi asked each of them to step back and describe their role, as if looking down on a chessboard. Rebecca said she tries to keep them accountable and stop the "robbing Peter to pay Paul." She admitted it almost never works. Matthew said Rebecca comes to him "hat in hand." He then has to approve, reject or set conditions, and he gets defensive because he feels expected to supply every answer. Rebecca said that was fair, but she goes to him because he is the main earner and, as the business owner, "he decides when we get paid."
Sethi asked whether the lower earner should have to ask the higher earner for permission. Rebecca said no. Instead, she said, they should have a joint account with real money in it for necessities. Sethi agreed. He suggested rules about which purchases need no discussion, a spending threshold above which they talk first, and shared values that decide where they spend more, such as safety, and where they spend less, such as "fancy food." He called the pattern of a wife asking the primary earner for permission "a tale as old as time" and said he hates it.
When Rebecca said the fix was consistent paychecks, Matthew called that "a super reasonable request." He said the obstacle was inconsistent revenue in his business.
The numbers, and a debt left off the list
Asked how they felt about their numbers, Rebecca said "despair" and Matthew said "embarrassed." Matthew read out the figures:
| Item | Amount | |---|---| | Assets | $840,000 | | Investments | $45,000 | | Savings | $1,000 | | Debt (excluding law school) | $633,500 | | Net worth | $252,500 |
Matthew said he had expected to be much better off by his 40s. Rebecca said the numbers made her insecure and unsure how to get out.
Sethi pointed out that the debt figure left out about $350,000 in law school loans. Matthew explained that he consolidated the federal loans in his first year after school and enrolled in an income-based repayment plan. Under that plan, the balance is supposed to be forgiven after 25 years of payments. He said they paid for about a decade and haven't made payments in several years. Interest is still accruing, and the balance is now twice what it was when he graduated. It has "ballooned so out of control," he said, that paying it down feels pointless. The goal is to get through roughly ten more years and hope the forgiveness still exists.
Matthew said he had confirmed before the call that the 25-year forgiveness option is still available. Rebecca said this was news to her. Asked why he hadn't told her, Matthew said it belonged "on the list of things that I don't communicate to her." He gave two possible reasons. The positive one was not wanting to burden her. The negative one was wanting to "get it all figured out" first.
Sethi called this a "very old gendered sort of thing": a husband protecting his "delicate" wife not only from bad news but even from good news. He said it demeans the partner. Rebecca said she thrives on information and feels "in the dark 90% of the time."
Rebecca then asked whether the years of COVID-era forbearance count toward the 25 years. Matthew said he didn't know. Sethi noted that Rebecca had started taking that responsibility on herself, and that she probably does this often. He told Matthew he needs crisp answers in writing, because "candidly I don't trust what you're telling me." Matthew's new role, Sethi said, is to share proactively and exhaustively: what he tried, what he couldn't learn, and how he plans to find out.
In an aside, Sethi said he doesn't want any graduate stuck with hundreds of thousands of dollars in undischargeable loans. Still, at this scale, "hope is not a strategy." The couple needs to call the lender and get answers in writing. He added that Matthew's reaction to the debt, hoping it will somehow be handled and making no plan, was a clue he expected to see elsewhere. For the rest of the session, he said he would assume the law school debt will be forgiven.
Income that doesn't arrive the way the spreadsheet says
The couple listed combined gross monthly income of $15,488, or about $185,000 a year. Matthew said the figure "misleads a little." It combines personal expenses paid by the business, his owner's draw and Rebecca's revenue, and they often don't see that much money. Sethi replied that feelings about money are "extremely uncorrelated" with the balance, and that with $633,000 in debt they would feel bad even with triple the income.
Pressed for specific numbers instead of ranges, Matthew said a really bad month brings about $7,000 in draws and a good month about $15,000. Rebecca earns about $2,350 a month. Their youngest is starting kindergarten, which will free up a lot of her time. She hasn't expanded her client list because of limited time, but she said growing it is "certainly an option."
Sethi also noticed that their reported net income was almost the same as their gross. When he asked how they pay almost no taxes, Matthew said they do owe a lot. The plan was to save for taxes inside the business and take tax draws, but that hasn't happened for about two years. Later in the episode, Sethi found about $65,000 in IRS debt.
Rebecca said she had recently asked Matthew for a list of which bills come from the business and which come from their draw. He said he would make one. Weeks passed, she asked again, he got angry, and the cycle repeated.
Sethi asked what each of them gets out of the dynamic:
- Matthew: He said he gets "to escape and deal with it later," or to solve the problem and "feel like I'm the hero."
- Rebecca: Sethi suggested she gets a sense of control through worrying, and also gets to say she isn't the higher earner and doesn't know what else to do. Asked what she had done to learn a different approach, she said she listens to podcasts but otherwise "nothing really."
The spending plan: 84% fixed costs
The couple's Conscious Spending Plan showed fixed costs at 84% of take-home pay. Sethi said he likes to see that number below 60%, and that this alone explains much of their stress. The main lines were:
| Category | Monthly amount | Sethi's comment | |---|---|---| | Housing | about 32% of take-home | "A little on the high end" but understandable with four kids | | Utilities | $1,350 | — | | Debt payments | $2,110 | They don't know when the debt will be paid off | | Groceries | $1,600 | A bit high but reasonable for a large family | | Kids' school | $800 | Private: daughter's preschool, now son's junior high | | Subscriptions | $200 | Reasonable | | Church giving | $550 | Tithing | | Miscellaneous | $1,574 | Built in automatically by the CSP |
Investing was 0%. Savings were 1%: $200 a month going into small Roth IRAs for the kids, who help with the business. Guilt-free spending was listed at $2,173, or 14%, and both of them said the real figure is surely higher.
What the transactions showed
Their plan listed $0 for transportation, presumably because the cars are paid off. Monarch showed $3,414.68 over the past year in gas and car washes, about $300 a month. Matthew said this shows they don't think about "the true cost of things." Rebecca said they aren't paying attention. Matthew added that they both basically knew: "We just don't do anything about it."
Sethi kept asking why. Rebecca first said she lacks budgeting skills. Sethi asked why, if that were the only issue, she hadn't learned years ago. She then gave a more candid answer: money has been hard for their entire marriage, she feels hopeless, and she doesn't think Matthew knows how to manage it either. Sethi said people who feel hopeless don't learn; they give up. Rebecca's version of giving up, he said, is asking leading questions that really mean "please take this burden," which Matthew neither hears nor acts on. Matthew's approach is to end money conversations as fast as possible. Matthew agreed and said they both see budgeting as "telling ourselves no" and "going without," not as freedom. Sethi asked, "Are you free right now?" Matthew said no.
In a separate aside, Sethi said his goal was not to get their numbers perfect, which he called unrealistic. It was to make them see how serious the situation is. He expected them to feel that "yesterday," with restaurants, concerts and hotels, was better. In his view, they weren't living a rich life then. They were ignoring the numbers and piling up debt.
Looking at their accounts, Sethi asked why they have several checking accounts: one in Rebecca's name for her business, one for bills, one for flexible spending. Rebecca said the separation came from past problems with money running out. "You set up accounts instead of fixing your spending behavior," Sethi said. "You all cannot account your way out of this. You have to change and probably change radically."
Rebecca said it was uncomfortable to see real transactions instead of the numbers they had estimated. The $526 Carmel Valley Lodge charge was a two-night anniversary trip that Matthew planned as a surprise. Asked how he decided they could afford it, Matthew said it was "a vague sense." Rebecca said this was exactly what had puzzled her during the flight argument: how he decided there was money for the weekend but not for her ticket.
"We don't have the money"
Sethi asked Rebecca for the real answer to all her questions about the flight. She said, "We don't have the money... We didn't have the money for the trip and we don't have the money for the flight." Sethi said this was the truth everyone else could see. Matthew never planned the trip and never had the money, and he avoids admitting it. Rebecca avoids it too, by asking questions instead of facing the fact.
Asked what he would do differently, Matthew first suggested setting aside $200 toward the ticket. Pressed on where that would come from, he listed food, household shopping or events. Sethi pointed out that these all happen to be things Rebecca spends on. Matthew tried listing what couldn't be cut, such as the power bill, HOA and insurance. Sethi pushed back: "Don't tell me where it can't come from." Matthew admitted he didn't know, and said telling Rebecca to skip a Target run didn't seem "true or fair." Asked what a team would do, he said they would look at the numbers together and realize they couldn't buy the flight.
It then came out that they had a budget, which Matthew pulled up. It was last used a year earlier. Rebecca said she couldn't understand it and couldn't budget without a fixed payday. Matthew said it "felt like a reminder of all these rules and failures," as if it were mocking them. Sethi called this an honest and very human response: people don't pursue self-improvement in an area where they keep failing. They give up. In this family's case, he said, they stopped tracking, the only money conversations became fights, and the four children are watching.
Sethi described the flight as a "microcosm" of the whole dynamic. With shared roles and a clear rich-life vision, he argued, it would have been obvious that the trip wasn't a priority. One partner couldn't have offered it without knowing where the money would come from, and the other wouldn't have considered it. Instead they argue over Target purchases while spending, in his words, "tens of thousands of dollars more per year than we even realized."
Who asks questions, and the families they came from
Sethi pointed out that Rebecca kept asking questions while Matthew answered "like this is a job interview." Asked whether he asks Rebecca questions about money, or about anything, Matthew said he asks about her day but not about bigger things. Rebecca said their life is fast-paced and they "don't connect a lot." Matthew called that devastating to hear, and said he could see it was accurate. He suggested he might be scared of her answers or might assume he already knows them. He said he was seeing "for the first time with more clarity that we're not being equal partners," because he hasn't invited Rebecca in. Rebecca said she feels like she is "running parallel next to him, but not really knowing what's happening in his lane."
Sethi named this the chaser-avoider dynamic from his book Money for Couples: the more one person chases, the more the other avoids. He added that, in his view, the lower earner is almost always the one asking for permission, and in heterosexual couples it is almost always the woman. He also challenged Rebecca's repeated claim that she is bad with money. Parents would never accept a child saying "I can't read," he said, yet adults accept that about money.
Asked what happens if neither of them changes, Rebecca said, "We'll always be broke," and that their kids would repeat the cycle. Matthew described his own father, who ran a small business, did no long-term planning and had no retirement savings. His mother was the chaser and his father the avoider, and they divorced. His father is older and still working, and Matthew said he probably needs to be. Matthew said he thinks he is "on track to be in that exact same position," and that it concerns him. He had already described wanting to protect Rebecca and save the day the way he watched his father try to be the hero, "buy a boat," and keep problems to himself.
Rebecca's parents never had much money, but they sat down on weekends and budgeted together. Sethi said most people mirror their parents' money habits. In Rebecca's case, he said, that shows up as thinking in terms of tracking and budgeting, though "you can't budget your way out of this situation."
Writing new rules together
Sethi told them to stop asking each other permission-style questions and start making proposals. When Rebecca asked whether consistent paychecks were possible, he redirected her to state a need. She said, "We have to have consistency on paychecks in order to be able to function as a household." Matthew proposed $9,000 a month, paid in two installments. Sethi coached him to follow up by asking how that sounded, and Rebecca said it would help her plan. Sethi made them applaud the moment. He said that because the way they talk about money is so negative, they may need to be theatrical to start feeling good about it.
Matthew proposed a fund for dining out and concerts. When both of them described the amount only as "really small," Sethi said vagueness lets people "fight about it" later. Matthew then named $200 a month. They agreed to keep it as cash at home, which Sethi called the envelope system: when the cash is gone, the spending stops. They also agreed to meet twice a month, when each paycheck arrives. Rebecca asked Matthew to choose the dates based on his business, and he chose the 1st and the 15th, paying a day early if either falls on a weekend. Sethi said they had made more decisions in two minutes than in perhaps ten years. He argued that asking questions can feel respectful but is often "intellectually lazy." It is better to say: here is my research, here is my proposal, now tell me what you think.
Rebecca asked what happens if the business can't produce the $9,000. Sethi explained a reserve fund. Income above $9,000 goes into a savings account that is never touched except to top up a short month to $9,000. The target is six months of paychecks, or $54,000. He also proposed a rule: if the business misses the $9,000 for three consecutive months, it shuts down and Matthew gets a job.
Should Matthew close the business?
Matthew said they had discussed this and that Rebecca had raised it before. He estimated he could earn $14,000 to $18,000 a month in a salaried job. He chose $9,000 because it felt like an easy baseline. He hesitated because a job lacks "the upside," which he sees as a possible key to long-term wealth. Sethi called him "a bit of a dreamer." In Sethi's view, the conversation isn't about long-term wealth but about preventing homelessness and surviving the emergency expense he considers almost certain within 15 years with four kids. Earning $15,000 consistently versus maybe $9,000 with upside, he said, is "a no-brainer."
Rebecca said she had asked Matthew when it would be time to "pull the plug," but didn't want to force him out because she wanted him to feel successful. Sethi asked why she was protecting that feeling when they were $633,000 to $1 million in debt. She acknowledged the business is clearly not successful.
Monarch's monthly income figures were erratic: amounts such as $9,779, $1,887, $13,824 and $11,965, plus one month of roughly $4,000. Matthew said the data might not be fully accurate, but the point stood. Asked what he would tell another couple spending more than they earn, he said, "Spend less and make more." Applying that to himself, he admitted they spend "as much as we want to" on food, travel, home goods and the kids, regardless of income.
Rebecca said they had set a deadline: if things weren't working by October, Matthew would change course. Sethi had her say it directly. She told Matthew, "This is not sustainable, and you have to get a different job if you're not going to make more money." She tied it to a family goal: not passing money trouble on to their four children.
Matthew responded that Rebecca had trusted him that self-employment was still better. He said the good years had let them buy a house and a car, and that the flexibility let him be home with the kids and with her. Sethi called this unconvincing. He said the hardest position in a relationship belongs to the partner of a dreamer. Dreamers avoid numbers, build narratives when they do look, and are often subsidized by someone else. Sethi said he doubted Matthew would change substantially beyond a few meetings and $9,000 a month "until you don't," and turned to speak with Rebecca. In an aside, he said this may have been the only time he had done that on the show. He explained that Matthew is a "dreamer," the hardest money type in his book, and that the couple's age and four children made drastic action necessary.
Rebecca's numbers: why trimming isn't enough
Sethi modeled several scenarios to show why small cuts can't solve this:
- Matthew drops to $9,000: fixed costs jump from 84% to 115% of take-home.
- Realistic $6,500 take-home from that $9,000: fixed costs reach 143%.
- Groceries cut to $1,400–$1,500 and subscriptions to $150: still about 140%.
Rebecca said, "We'll lose our house." Sethi said he hoped she would get angry, take bold action and put herself and her children first, while still giving Matthew a clear path to join. He repeated that closing the business for a stable job is "the single best thing that you could do for this family."
Rebecca identified their son's private school as a big cost but said public school isn't in his best interest. Sethi asked whether parents fighting about money every two days is in his interest either. He left the choice to her. He offered a story she could tell if she made the change: the family is prioritizing stability, debt payoff and savings, and her son will adapt "because he is strong."
The other changes came quickly:
- Miscellaneous: Sethi cut it to $500, freeing about $1,000 a month.
- Church giving: When Rebecca began to ask Matthew how he felt, Sethi said he wanted proposals, not questions. She said she would lead "for now." She proposed $200 a month, with the rest going to debt, and asked Matthew to agree until they feel more stable. He did.
- Clothing: Rebecca cut the $300 herself.
- Rebecca's income: She said she earned about $4,000–$5,000 a month when she worked full-time. Sethi entered $4,000, which he estimated at about $2,800 after taxes. Fixed costs were still about 114%.
Rebecca asked whether the point was that income simply has to rise. Sethi said yes. If Matthew earned $15,000 a month in a job, about $11,500 take-home, fixed costs would fall to 74%. Rebecca said that was "the only way forward." She said it was hard to hear, because for years it had been "don't spend that," and it felt like fixing things was on her. Now it was clear there wasn't much she could have changed.
Sethi acknowledged real financial mistakes, such as a $500 getaway the week before. But he called the dynamic the actual problem. Raising income by $5,000 a month, he said, would fix "not a single thing" without changing how they deal with each other. He recommended therapy to explore how they got here, individually or as a couple.
Retirement math and an aggressive plan
With Matthew at $15,000 and the private school kept, Sethi showed they would still be saving and investing almost nothing, though about $3,300 a month would remain unallocated. Matthew estimated they could invest about $2,000 a month. Sethi ran the projections:
| Scenario | Projected balance | Annual withdrawal | |---|---|---| | Current $45,000 plus about $100/month for 23 years | about $292,000 | about $12,000 ("the Chipotle budget") | | $2,000/month | about $1.5 million | about $60,000 | | $2,000/month, one extra year | about $1.7 million | — |
Both projections are before Social Security.
Rebecca said that was their only option. Sethi said it wasn't, and showed what he would do in their place. He would:
- Take the child out of private school.
- Volunteer at church instead of writing a check the family can't afford.
- Cut miscellaneous to $350.
- Have the kids wash the cars. He said it isn't about the $21.99 car wash but about involving the family together, "not in a punitive way."
- End the kids' Roth IRA contributions.
- Take no vacations "for the next decade." He said he grew up in an immigrant family where vacation meant driving the van to visit relatives. Rebecca said she didn't fly until high school, and Sethi asked why their spending is so different now.
Under his version, he estimated about $1.7 million at retirement, or about $70,000 a year plus Social Security, around $100,000 in total, presumably with the house paid off by then.
On the debts, Sethi said to pay off the credit cards first. He told them to call the IRS about the $65,000 and explain the hardship, noting the IRS "will often, though not always," negotiate. He said to negotiate the medical debt too, and was unsure what could be done about a LendingClub loan. A $21,500 family loan from a parent, used to fix water intrusion in the house, is being repaid. He said the tax debt was another sign the business should close and Matthew should take a 9-to-5 job, which he framed as "not a failure."
Rebecca said, "I don't think it's about what we want. I think we don't really have a choice." Sethi then described what a family in severe distress would do on top of that:
- Subscriptions down to $50 and miscellaneous to $200.
- Simpler meals and no eating out.
- Money meetings twice a week.
- Each spending category owned by one person who is responsible for staying under it.
He said the freed money would go to savings, reaching about $1,700 a month, "still lower than I'd like, but not bad."
Rebecca said the plan felt "much more calming," not restrictive, because it gave them control. Matthew said it scared him: they would have to say no so often that he worried they wouldn't be strong enough. But he said it felt doable. Asked where he would spend lavishly now, he named their emergency fund and retirement account. Sethi encouraged them to see this as winning, not losing, because people only get good at things they see as winning.
Sethi's verdict
In his closing remarks, Sethi called them one of the most challenging couples he has worked with. He pointed to "layers upon layers of disconnection": gender roles, religion, family upbringing and children, each pulling them apart. He said any couple can change, and a focused one can change faster than expected, but it takes "near flawless execution." His prediction was that they had seen something important, especially Rebecca, and that she would set higher expectations or even demands. He said he watched her realize, as he went through the aggressive version of the numbers, that "there's a level of boldness that I never even contemplated." He attributed that partly to years of accommodating Matthew. Whether Matthew will meet those expectations, Sethi said, he truly hopes so. His larger hope is that they build a shared vision together, though he could not say whether that will happen.
So many years. It was like, "Well, don't spend that. Well, don't spend that."
Your debt is between $633,000 and a million dollars.
Wow.
How do you feel about your numbers?
Despair.
Embarrassed. It's heavy. It's like a burden that you carry around.
I don't feel like I have a lot of control because I just am waiting on him to give us paychecks all the time.
It feels like you're putting all the burden on me to come with a plan.
I need communication. I'm a person that thrives on knowing what's going on.
Do you resolve your money conversations or do they just get swept under the rug?
They just move to a new day.
What does that feel like?
Overwhelming, hopeless.
What's going to happen if you get hit by an emergency expense?
We'll lose our house.
Yes.
We'll always be broke.
Now, it's one thing if it's just the two of you, but you have four kids. I'm not okay with it. You have to change and probably change radically.
Today I'm talking to Rebecca and Matthew, 43 and 42 years old. They have four children and they live in an expensive area, and every single month they spend more than they make. They're in a pretty difficult financial situation. And to figure out what's going on, I realized I needed to go deeper with their numbers.
So today, we're doing something new. I'm going to be able to go deeper into the details of our guests' spending, how much they actually spend on eating out and vacations and even random Amazon purchases. I can now see it all and so will you. And sometimes what we see is not going to equal what they tell me.
We found a great partner to help with these financial drill-downs: Monarch, which is a private personal finance app that brings all of a household's accounts into one clean dashboard, including checking, credit cards, loans, and investments. You can now try it for free and get 50% off your first year of Monarch's core tier using code RAMIT at monarch.com/ramit.
So, let's take a peek in their Monarch account to see what jumps out. Credit cards, $13,000. I kind of want to see what's getting spent on their credit cards. Let's take a look. I see a lot of assorted spending at Amazon and Target. As recently as a couple of months ago, they spent $214 on interest charges. And then just a few days prior to that, $40 on a past-due fee. So, they're probably spending thousands of dollars a year on just fees.
Let's take a look at their transactions. Carmel Valley Lodge for $526. And that's just a few days ago. So, we have a couple that's in hundreds of thousands of dollars of debt spending $500 at a hotel. I'm definitely curious about that. Church giving, $550 a month. I have questions. You know what? Now that I'm looking at it, there's a lot of frequent shopping here. All right. I have a lot of questions. Let's go meet Rebecca and Matthew.
In your application, Rebecca, you wrote something that caught my eye. I want to read it. You wrote, "We are midlife in our 40s. We have basically no savings and hardly anything in our retirement, and my husband has taken from that retirement to make ends meet at different times. I don't see how we will sustain our relationship and family long-term without a major shift. It's feeling hopeless to me a lot of the time." Do you still feel that way?
Yes, I do.
Where were you when you wrote that and what was going on in your life?
Ironically enough, we were on a road trip and we were actually listening to your podcast in the front of the car while our kids were on their headphones in the back. And I just said, "You know what? I'm tired of this. We need help."
How long have you felt tired of your financial situation?
Probably most of our marriage, but particularly in the last maybe five or six years has been hard.
Got it. How long have you been married?
We'll be married 16 years in a couple weeks.
Wow. Congratulations.
Thank you.
Okay. And how many children?
Four.
Four kids. Okay. What are their ages?
12, 10, eight, and five.
Great. Okay. Great. All right. So, married 16 years, four children, and you mentioned that in the last five or six years, money has become more challenging. What happened five or six years ago?
We both run our own businesses, so there's not a lot of guarantee of any income when you do that. And then I think just maybe a lack of accountability about discussing really what our true financial situation looks like. That has made it hard for me because I kind of feel like I'm in the dark a little bit about it.
What's the dynamic? Does one of you ask the other about their business or do neither of you talk about it? How would you describe that dynamic?
I feel like I'm over here being like, "Hey, when do we get paid? What does that look like?" And then I'm not always given a lot of answers. And then I will say my business is rather small. I don't make a lot. Mostly my money just goes to groceries.
So when you ask, "Hey, when are you getting paid?" what's the response you get?
Sometimes it's like, "Oh, I can do it on Friday." And then sometimes it's like, "Yeah, well, we already took that other part, so I don't know. I'll let you know." I don't feel like I'm able to plan. I don't know how to function when we don't have any consistency.
Yeah. And out of curiosity, why are you the one who, quote, has to plan?
I mean, I don't have to, but I think I'm told a lot that I am not good with the money and that I need to understand the budget and I need to do these things. But it's really hard for me to understand a budget or how to do monthly cash flow when there's no consistent monthly cash flow.
Who tells you you're not good at planning?
Matt.
Okay. So, Matt says you're not good. Then why are you the one managing it?
I mean, I don't technically manage the actual budget, but I am the one who is doing all the household shopping, taking care of the kids' needs and things like that. So, when there is no money, it definitely is felt by me.
All right, Matt, what's your reaction to what Rebecca said about how she feels about money in the household?
I think it makes a lot of sense based on our situation. She has such good reason, I think, to feel like that, to have the inconsistency wear on her.
What's the dynamic of money management in your household?
It's varied over time, but for the last number of years, we put money into a joint account from our business and then I pay most of what I try to describe as the fixed bills. And then we've typically had the agreement that we'll then move money into a joint flexible spending account, and that's where we can spend however much we want until it's gone. But that money is usually gone really quick. And so we're then left pointing fingers about why there's not enough money left and what we should now need to pay for that we can't, etc.
And then we try to steal from different sources to kind of pay for everything else.
Does it work?
No. No. We wouldn't be here if it worked.
Wait, this is a dynamic that I see a lot with my guests. They go, "We're doing this thing." And they describe it in exhaustive detail and then they just look so depressed, and I go, "Hey, does it work?" They're like, "No, this thing sucks." It's actually very human to have something that's not working and we just keep doing it.
And one of the greatest gifts that I can give is to give you a bird's-eye view of what's happening with your money, maybe even how you're relating to each other. And then once you see it in a different perspective, it actually becomes very obvious what needs to change.
Okay. When was the last time that the two of you really disagreed about money?
Literally two days ago.
Amazing. Take me there. In fact, just roleplay it and I'll just watch.
I asked Matt about a plane ticket that I needed for a trip that he really encouraged me to go on with my mom, and then it just kind of unfolded from there. And it was like—
Talk to Matt as if it's 48 hours ago.
So, I'm just feeling really nervous because we need to get this ticket, and if we don't get it soon, I might not be on the same flight as my mom and my aunt. So, how are you going to pay for that?
You're going to have to let me use some credit, some borrowed money, to be able to buy the ticket if you want to buy the ticket right now.
So, the money that was borrowed is earmarked for the house repairs that we have, and I have a really bad feeling about taking that because in the past we've done stuff like that and you've told me it would get put back and it doesn't. And so I'm really not super interested in taking money from a specific account that is being held for the repairs and not knowing when or if that will ever get put back.
It's not helpful to leave it in one place for a project that we're not even starting yet and then try to pay money from some other place for this flight that I really want you to get to take. So, it's not different to spend some of that on this flight since we have to pay for both things and we have to use whatever is available right now.
I hear that. I just think when you agreed to, or actually when you encouraged me to go on this trip, that money wasn't a factor. And so I don't understand how you were going to pay for it if you now have to rely on that.
It feels like you're putting all the burden on me to come with a plan to figure out a way to pay for it, to now do it. And then when I'm coming up with a short-term solution, you're trying to tell me that it's not good enough, but you're not helping with the solution. You don't have any other ideas. So I've got to do what I can do right now, and it's one more thing that you're putting on me that I feel like I have to be responsible for and solve.
Okay, let me pause you right there. So, first of all, thank you. I can tell that was pretty real. Did you resolve it?
Nope.
Okay. Do you resolve your money conversations or do they just get swept under the rug?
They just move to a new day.
That's been going on for years, right?
Yes.
Okay. What does that feel like, Rebecca?
Overwhelming. Hopeless.
Frustrating.
Okay. Matt, what does it feel like to you to have these conversations about money?
It's heavy. It's like a burden that you carry around all the time. And then frankly you tiptoe around because you think if we open that conversation up again, it's all these old wounds. It's all these old conversations that never got resolved. I'd rather not have them.
Yeah. Are you feeling stuck with your money? Have you told yourself, "I need to figure it out," but you haven't really done it? I understand that not everyone is going to sit down and read multiple books about money. I get that. That is why I created Rich Life: Road to $100K.
This is a step-by-step program that shows you how to build a money system that works, like figuring out the date that you're going to have $100,000 invested, how to automate your money, and how to cut through the noise. Plus, you will get access to weekly live events and a community of like-minded people, plus a library of my best materials. This is the program that will finally help you get on track with your money, and you can join today at iwt.com/100k.
Can I ask you to do something? It's going to be a little challenging, but I think it's important. I'd like for you to zoom up and look down on the two of you almost as if the two of you are chess players, and tell me what roles each of you were playing in that conversation.
In a way, I was just trying to keep us accountable a bit because I feel like that idea of robbing Peter to pay Paul is what we always do, and it's super hard.
And did you succeed?
No.
Okay. Do you succeed normally?
No.
Okay. But you keep playing that role.
Yeah.
And what's the thinking there? Maybe if I ask another time, another way, Matt will have a magical answer.
I guess. Yeah.
It's pretty interesting. Matt, what was your role that you played in that conversation?
I feel like I'm over here and she's coming to me kind of hat in hand saying, "Can we do this thing?" And then I have to say yes or no, we can, or we can only do it in this way. And then I become super defensive about it because I say, "You're coming to me for all the answers. If you want a different answer, then we have to do something differently." So I feel like I'm kind of put in the spot where I've got to provide, figure out the way to do it, and then parry with her over the way that it's done.
That's quite insightful. Rebecca, what do you think about that?
I mean, he's not wrong, but I think from my perspective, it's like I'm not sure what else to do because not only is he the main breadwinner, but he's also his own business owner. And so, he decides when we get paid. And so, I'm coming to him because he's the person who pays us. And if he's not paying us consistently or there's no money or he makes a commitment for us like this plane ticket, then I'm expecting him to come up with how to pay for it because he makes all the money.
So what you just said which caught my eye was, "I don't know any other way to do it." Should you have to go to him and then Matt has to decide on a whim whether it's okay or not, or if the money should come from here or there?
Should I have to do that? No.
Cool. Why do you do it?
Because I don't have any personal money, and if he's not paying us, I have no way to pay for it. So, I have to go to him.
Good answer. You two are married with four children. You've been married for 16 years. This is easy for me to say and very difficult to do. But let's just wipe away the many, many years of financial wounds just for one second. Yes, Matt earns more than you, Rebecca, but should the lower earner have to go to the higher earner and ask for permission to spend money on certain things?
No.
Okay, cool. What should happen instead?
We should be having a joint account with actual money available in it to be able to buy things we need.
Great. Agreed. And maybe there should be some set of rules as to these are the things that we don't need to talk about. Anything above this amount we talk about, and here are our core values. And for example, if it is something relating to safety, we are going to spend more there. But if it's something relating to, I don't know, fancy food, we are not. What do you think?
Yeah. Yeah.
Okay. It seems painful to have these conversations over and over and not come to a resolution.
It is.
Okay. Matt, what about you? You want to be in the position of having your wife come to you and ask you, and then you have to, quote, parry her questions?
No. No. As you describe it, you think, gosh, this isn't that hard. But as soon as you're in it, you're right back into the old routines.
What do you think would have to change? What would you have to do differently, Matt, in order for this dynamic to change?
I'd have to be a lot more, I think, a lot more open with Rebecca about what's available and asking for ideas or her involvement about if we can't do it today, what could we do this week to make it possible for next week or the week after?
Okay, Rebecca, what would you need to change in order for this dynamic to change?
I guess just being better about the monies that are available to me and trying to save more of the money that we're bringing in. But beyond that, I don't feel like I have a lot of control because I just am waiting on him to give us paychecks all the time. So I don't know what else I could personally do.
Does this all seem very traditional to you?
Yeah.
Wife comes hat: "Hey, primary earner. I would like to spend this money. Can I?" And then he goes, "I don't know. You seem to be spending too much at the grocery store." I mean, is this not the tale as old as time? I hate this story.
Yeah. And I for one feel like I do a lot better with accountability and someone who's in the trenches with me that feels like, "Hey, these are the rules we have or these are the things we're saving for. Let's do it together."
Oh, you want somebody, quote, in the trenches with you, creating rules with
You. Okay, Rebecca, are you not in the trenches with the money?
I don't know how to be in the trenches because I'm not great at budgeting. And the fact that we don't have consistent paychecks, and so I don't have a way to help myself plan or learn with him in the trenches.
So what's the solution?
Consistent paychecks. Literally, I don't understand why we can't do that. And I've asked, and I feel like I'm constantly nagging him: when's the paycheck coming? Is it coming? When's it coming? You said every Friday. You said every other Friday.
Matt, she wants consistent paychecks. That sounds reasonable to me. What's the problem?
That's a super reasonable request. I think part of it is struggle with consistent revenue in my business. And so sometimes the amount of money that's coming down to us isn't as much as we'd like. So it's probably at the top end, starts with not enough revenue.
I'm noticing a few clues, and I don't yet know what to make of it, but are you picking up on them too? They make a lot of circuitous arguments. If this, then that, but I'm not sure, and what about you? And it's just this never-ending loop. And she's upset. I would be upset too if I had these negative money conversations all the time and they never actually got resolved.
And then you just look at how confusing everything is. It starts to kind of fit together. We have this account, but we have to take this money out and pay this, but it's for a renovation. It's just a lack of clarity everywhere. So, I want to keep digging so I can try to get to the root of what's going on here. But are you seeing this too?
You know this phrase, once the toothpaste is out of the tube, you can't put it back in. Same thing is true for your personal information. Once the internet knows your siblings' names or your address and how much your house cost, you can't take that information back. So, what do you do? Well, the best thing is go back 20 years in time and change your data practices. But that can't happen anymore. The second best thing you can do is use DeleteMe, one of my favorite tools to protect your privacy starting right now.
DeleteMe is a subscription service that removes your personal data from the internet. We're talking about things like your full name, email, phone number, address, even your parents' names, all found and removed. They've been the leading expert in personal information removal for the last 15 years. They were recently named Wirecutter's number one data removal service. And I personally use and pay for DeleteMe, and I love it, and I know you will too.
You'll get 20% off all consumer plans when you go to joindeleteme.com/ramit and use promo code RAMIT at checkout. That's joindeleteme.com/ramit, code RAMIT for 20% off.
Okay, can I tell you something that I'm kind of proud of? Over the last few months, my wife and I took a long trip around the world. And before we went, we decided we wanted to stay as close as possible to being on our fitness plan. So, we created a plan of what we were going to eat and how we were going to train. And so, I know that if I start my day off right with a pretty healthy breakfast, the rest of the day is going to go pretty well.
But if you are looking for a simple way to eat healthier meals today, check out Factor. Factor is a meal service that delivers fully prepared, ready-to-eat meals directly to your door. And they have a lot of variety. They have over 100 rotating weekly meals, including high-protein options, keto, GLP-1 friendly. They even have a Muscle Pro collection for strength and workout recovery. Factor meals include lean proteins, colorful veggies, and healthy fats. Plus, they are never frozen, and they are ready to eat in under two minutes.
This is an easy way to try introducing systems into your health, specifically the way you eat. And if I needed healthy ready-made meals, this is what I would use. Let's eat real. Head to factormeals.com/ramit50off and use code RAMIT50OFF to get 50% off and one free breakfast item per box for one year while supplies last until October 31st, 2026. That's code RAMIT50OFF at factormeals.com. RAMIT50OFF at factormeals.com. See website for more details.
What do you say we take a look at your numbers? How do you feel about your numbers?
Despair.
Despair. Wow.
Yeah.
That's a strong word. Okay, Matt.
Embarrassed.
Embarrassed. Okay, Matt, can you read off the word in bold and the number in full next to it for this entire box, please?
Assets, 840,000. Investments, 45,000. Savings, 1,000. Debt, 633,500. Law school debt, an extra huge amount. The total net worth of 252,500.
What do you think about those numbers?
Well, they're certainly not what I would have expected 20 years ago when I thought where I would be when I was in my 40s.
You thought you would have more?
Yeah, I assumed I would be much, much better off than that.
Okay, Rebecca.
Makes me feel really insecure, and I don't really know how to get out of it.
Both of those resonate with me a lot. The idea that I thought I would be further ahead, and then one day in my 40s I wake up and look at it, and oh my God, how did we get here? We should be so much further along. And insecurity. You mentioned despair. What am I going to do? And so the only thing that I can resort to doing is asking and asking, and it comes across, as you put it, nagging. But I need some answers. I need some clarity.
When I looked at this, I noticed that your debt of $633,500 did not include your law school debt. Law school debt is a very, very substantial $350,000. Why is that not counted on your debt amount?
Didn't put it down because it's been on a debt repayment plan. So, we haven't made payments on it in a number of years. And so, we've made payments on it for a decade or so. And then allegedly it gets forgiven at the end of the 20 or 25 years.
Is interest accruing?
Oh, yes.
Oh, yes.
It's twice as much as it was when I finished school.
Damn. But did you know 20 years ago that you were going to be forgiven?
Well, sort of. In the first year, I did a consolidation with the government loans and got onto an income-based repayment plan.
Income-based repayment plan, but not loan forgiveness.
Well, the plan, the income-based repayment plan, was you make your payments as prescribed for 25 years, and then the balance is forgiven. So at this point it's—
Ballooned so out of control that it feels—
It feels like it doesn't help to even think about trying to pay it down. It helps to just think about how can we get through another 10 years, and hopefully that plan still exists and it gets forgiven then.
And if not, we're going to be talking to you again.
No, that's not what's going to happen. What will happen, Rebecca?
We'll have to make a lot of sacrifices to get it paid off. I don't know what else we would do.
So, right now you are making the bet that the income-based repayment plan, the forgiveness part of that, is going to forgive all of this. Is that the—
Whatever's left over is supposedly what's supposed to happen. Yeah.
And have you checked on the current status of that program?
Yes. Leading up to this call, forgiveness at the end of 25 years plan was still available.
Still available.
Yeah.
Okay. So, just to—
That's news to me, so that's good.
Oh, wait. How come you didn't communicate this to Rebecca?
I don't know. Probably chalk it up on the list of things that I don't communicate to her.
Why?
The positive way would be, oh, I don't want to burden her, or she doesn't need to worry about it right now. The negative would be, I'm going to get it all figured out and then I'll talk to her about it.
Who grew up in the Midwest?
Neither.
No, but we grew up with Midwest sensibilities.
Okay. I don't want to burden my little flower of a wife because she's so delicate. I better not tell her that we're still on track for loan forgiveness. I better not even burden her with good news, much less bad news. Anybody see how absurd this sounds?
Yes.
It's a very old gendered sort of thing. And it oozes into American culture in so many different ways. Let me just bottle it up because I'm a man and I can take it, but my wife knows. Meanwhile, is it working?
No.
It makes me very frustrated. I need communication. I'm a person that thrives on knowing what's going on, and I feel very in the dark 90% of the time.
Yes. It's not acceptable. It's not acceptable to be in the dark. And it's not acceptable to even take bad news or good news on yourself and not enlist your partner, because you're actually demeaning your partner. Oh, my partner is not capable of handling this bad news. Hey, maybe it's going to be hard. Maybe your partner's going to cry. Maybe your partner's going to be pissed. So be it. But to take it on yourself and actually not be effectively managing this stuff anyway, it's just not acceptable. So we're going to fix that today.
So, your debt is between 633,000 and a million dollars.
Wow.
It's unclear what will happen with the law school debt, but what you are telling me, Matt, is that based on your recent investigation, you are still on track for that entire amount to be forgiven. Is that correct?
The unpaid balance. Yeah.
And when would that term be that it would be forgiven?
About 10 years.
10 years, and just to confirm, that includes the interest as well.
That's the unpaid balance. So I think it's principal and interest.
Okay.
Can I ask a question, Ramit?
Please.
At one point you had said that it was based on you making payments for 25 years, but because of COVID we have been in this basically forced forbearance. Are those years, are they giving us those years, or are they counting those years against us?
I don't know.
How do we find that out?
It's a good question. I don't know.
Do you notice, Rebecca, that even in that subtle sentence, you started to take on the responsibility of that?
Yeah.
Probably do that a lot, right?
It's okay, Rebecca. I share your frustration. We're talking about $350,000 of additional debt. I need answers, and I need crisp answers. I need them written down because candidly, I don't trust what you're telling me, Matt. I don't trust that you know. I don't trust you're asking the right questions. Give me answers, and don't make me drag it out of you.
Yeah, I would agree with everything you said.
Yes. Matt, if you want to shift some of the dynamic here, this thing about letting Rebecca pull teeth and ask a million questions, and then you begrudgingly give her one piece of information which is incomplete, it's just not going to fly.
That's understandable.
It's a total reframe of, I realize that I have not been communicative, and I am going to bend over backwards to share everything, and I'll even tell you the things I don't know, because here are the things, if I were in your position, I would be wondering about. I tried to do XYZ. I couldn't get the answer. Here's what I don't know. Here's my plan to go find out the answer. Exhaustive. That's the new role that you will be playing.
I think it is shocking the way that he talks about his student loan. I don't want any graduate in America to have hundreds of thousands of dollars of student loans that just accumulate with no ability to discharge. I don't want that. But the fact is, here they are. And when we're talking about hundreds of thousands of dollars of debt in your 40s, this isn't something you just go, I don't know. I hope it works out for the best. Hope is not a strategy. We need to actually call our lender. We need to get answers. We need to get it in writing.
If you have to pay hundreds of thousands of dollars of debt, then you need to know so that you can start to make a plan. We're not talking about $10 for cutlery from Costco. I don't care about that. We're talking about hundreds of thousands of dollars. We're talking about an upset spouse. We're talking about children who may or may not be safe. I don't know. No, you need to know. For some things in life, you need to know. Do my kids have their seatbelt on? You need to know. Is my house safe? You need to know. Am I going to be on the hook for hundreds of thousands of dollars of debt, or is it going to be forgiven? You need to know.
But just the way that Matt reacts to the mere presence of the debt is starting to give me some serious clues. The hope against all odds that it will just be taken care of. The lack of clarity and planning. There's something here I'm willing to bet is going to show up in other places.
If you walked into a mechanic and they said, "Sure, we can fix your brakes. It's going to cost 1.5% of whatever's in your investment account," would you pay that? Of course not. It would be insane. And yet, that is what so many people do when they pay a percentage-based financial adviser. Don't get trapped paying exorbitant fees for money help. Instead, if you want to work with a financial adviser, use a flat-fee planner like our friends at Facet.
Instead of taking a cut of your money, our partners at Facet charge one flat membership fee for financial planning. Never a percentage of your assets, never a commission, so you know exactly what you pay upfront. And Facet gives you access to a team of CFP professionals. Always a CFP, always a fiduciary, who help you create a personalized financial plan that meets you where you are. Your team is there for decisions like buying a home, managing investments, saving for your kids' college, traveling in retirement, estate planning. You don't need to work with the same financial planner that your parents had. Try a better way with Facet.
As of the date of this recording, Facet is waiving the enrollment fee for new annual members. And for my audience, Facet is offering $300 into your brokerage account if you invest and maintain $5,000 within your first 90 days. Head to facet.com/ramit to learn about which membership option is best for you.
Facet is an SEC-registered investment adviser. I'm not a member of Facet, and I have an incentive to endorse Facet as I have an ongoing fee-based contract for cash compensation based on this endorsement. All opinions are my own and not a guarantee of a similar outcome.
Think about all the things you have to type out on a daily basis. Email, Slack, text messages, notes. Well, one of the tools that we love in my company lets us use voice-to-text to save tons of time on all of those things. You can be walking and talking and capturing your ideas straight into an Apple Note or a Slack message or a text message. That is why we love Wispr Flow.
Wispr Flow turns the way you naturally talk into clean, ready-to-send text in any app on any device. I'm talking about Slack, Gmail, Notion, iMessage, even ChatGPT and Claude on Mac, Windows, and Android. With Wispr Flow, you just hit a hotkey, speak, and the text appears way faster than typing it. Plus, it's smart, it's adaptive, so you don't send a block of huge, incoherent text. And unlike other dictation apps, it corrects mistakes. It gets names right the first time, and it can format bullet points and lists on the fly. I find that particularly useful.
So, if you send tons of emails and messages every day, if you want to be able to capture your own ideas just by talking, Wispr Flow is a no-brainer. Get one month of Wispr Flow Pro for free at wisprflow.ai/ramit. That's wisprflow.ai/ramit, wisprflow.ai/ramit, or click the link in the description.
As for today, I am going to assume that the law school debt indeed will be paid off. Let's move on. Now, I'd like to look at income. Rebecca, can you read off the combined gross monthly income, please?
15,488.
Okay, so that's $185,000 per year. How do you feel about that number?
Now looking at our debt, not super great, but it's not horrible.
Matt.
Well, I think the number misleads a little bit, because what that number is is the combination of all the personal expenses we pay from our business plus our draw plus Rebecca's business revenue. So, it looks, I think, a bit better than it feels, because plenty of times we don't maybe see that amount of money.
Well, the way that you feel about money is extremely uncorrelated to how much you
Have in the bank. I'm not surprised you feel bad about money. You have $633,000 of debt. You could triple your income and you'd still feel bad about it.
Yeah, sure.
So, what we need to do is we need to start by looking at numbers, and we need to get aligned on what is happening with the math. And then we can work on the feelings part about it as well. You make $185,000. What's this thing about? It's spiky.
Good month, we'd take somewhere in that $12,000–$15,000 of draws, or maybe we'd pay an extra thing that we owed that was a few thousand. A bad month, we'd take $6,000–$9,000 in draws.
I don't like ranges. Give me a number. What's a bad month? It's not six to nine. Those are vastly different numbers.
Really bad month, $7,000. Good month, $15,000.
Great. All right. And then, Rebecca, you take home 20—or you make $2,350 a month. What is that from?
I am a very minimal part-time stylist. So I do a few clients a week when I can fit them in between taking care of our kids.
Got it. And your youngest, are they in school?
She will be starting this month.
Okay. What's that going to do for your time?
It'll do a lot, actually, because after the first two weeks she'll be in school. Even though she's in kindergarten, she'll be—
What a blessing.
Yeah.
Oh my God. Do you think that that will affect your income at all?
Yeah, it could definitely. I haven't really been open to expanding my book because of the fact that I had such limited time. So it might take a bit and a little bit of creativity to figure out how to get that to happen, but it's certainly an option. Yeah.
Great. Okay. All right. So, the two of you, it says your gross monthly income is $15,488, but then it says your net is $15,88. Can anyone tell me how they're paying almost no taxes?
Oh, I don't know.
We do owe a lot of taxes. But the design is that we're saving for taxes in the business and then taking tax draws. That has not happened for probably two years.
Is this a healthy way of setting your accounts up?
No. It stresses me out better.
So, why do you do it?
Part of it's probably aspirational, that it could work if everything went right.
Come on. Is this not the Arrested Development meme? It's never worked for anyone, but it could work for us.
I'm also fine if he wants to pay some of our bills out of his business. I just asked him recently, could he make a list of exactly which ones are coming from the business and exactly which ones are coming from our draw so that I know what's going on? Because I don't even know.
Okay. And what was the response?
Yeah, I'll do that. But then weeks go by and it doesn't happen, and then I have to ask him again, and then he gets mad, and then I ask him again, and then he gets mad. There's no conclusion.
What do you two get out of this dynamic?
It makes me want to rip my hair out. I don't know what else to do.
Okay.
I don't know how else to approach it.
When I was learning how to tie a knot, I didn't know how to tie a knot. So what did I do to learn how to tie a knot?
Ask someone for help.
Yeah, I went to Cub Scouts. Webelos love teaching you how to tie knots. What have you done, if anything, to learn a different way?
Nothing really. I listen to podcasts and try to understand more about financial planning, but I don't know a lot.
Okay, fair enough. Matt, what do you get out of this dynamic?
I either get to escape and deal with it later, or I get to solve the problem and then feel like I'm the hero and—
You're the hero for now.
Yes.
Or, I don't want to deal with this. Let me use a variety of conscious and unconscious techniques to avoid this.
Yeah.
And Rebecca gets to feel slightly in control because you're looking at the numbers and worrying. You get to feel worried. I'm going to guess that's a familiar feeling to you, Rebecca. You feel worried about other things, too?
Yeah.
And felt that way for a long time or no?
No, I wouldn't say so.
Okay. And get to, in a way, say, I'm not the higher earner. I'm throwing my hands up. I don't know what else to do. Absolve me. So, both of you playing a role here, getting something out of this. Let's continue on with the CSP. I see fixed costs. What's that number, Rebecca?
84%.
Okay, that's pretty high. We like to see that number below 60%. So, right there, that explains so much. That explains why you feel stressed out. In addition to the debt, taking a look at your expenses, your housing is about 32%. It's a little on the high end, but you have four kids. Okay. But the problem is you have other expenses. Your utilities are $1,350. Your debt payments are at $2,110. So that's a lot. And do you know when your debt will be paid off?
Oh, no. Of course we don't know that.
Okay. Groceries at $1,600, a little on the high end, but then again, you have a large family. Clothes are reasonable. Phone is reasonable. Kids' school, $800 a month. What is that?
It was our daughter's preschool, and now it's rolling into our son's junior high.
Is it private?
It's private. Yeah.
Okay. Subscriptions are at $200. That seems pretty reasonable. Church giving, $550. Is this tithing?
Yes.
And miscellaneous. Our CSP automatically builds this in at $1,574 a month. Would you say that that's accurate?
It might be a little high, but I'm sure that's reasonable.
Okay. Down the road moving here, it's kind of no surprise that you don't have a substantial amount of investing. You don't invest. Savings are at 1%, and that money is a college fund for your kids. $200 a month. What's the thinking there?
We, as self-employed, they help around the business. They have a little Roth IRA that we put a couple hundred dollars into with the idea that they take it out for college or they save it to roll it through to their own retirement.
And then finally, guilt-free spending at $2,173, or 14%. What do you think about that?
I'm sure it's low.
Yeah, I'm sure that that's low as well.
You think it's more? You spend more?
Yeah.
Now I am curious about some of the numbers. I wanted to drill down a little bit. You connected your accounts using Monarch, and I would like to drill into some of those numbers so that we can start to get a better sense from your CSP down to the actual transaction level. Can I do that?
Yeah, sure.
All right. Great. So, you have not tweaked any of this. You have basically just connected your accounts, and then you gave us access, but you haven't recategorized anything. So there's probably going to be a few mistakes here. No big deal. Let's just go through it. We're going to find some valuable stuff regardless. I noticed that your transportation, you have zero dollars spent on that. I assume a paid-off car or cars.
Yes.
Okay. Let's take a look at transportation, which actually shows $26. And I want to look over the course of a year. So this is how much you spent on transportation. What's that number?
$3,414.68.
What does that tell you?
Is that including gas, or that's just cars?
Here, I'll show you. Let's take a look at the actual transactions. Gas. Gas. Gas. Car wash. Gas. What do you think about that?
I think it just shows we aren't really thinking about the true cost of things when we're thinking about how much money we have available.
Yes. Because you said zero, and the actual number is like 300 bucks a month, and that's just a tiny, tiny example. Rebecca, what do you make of that?
We're just not aware. We're not paying attention to what's going in and coming out.
Correct. What else?
We're not communicating about it, for sure.
Yeah. Is this a pleasant surprise or an unpleasant surprise?
Unpleasant. It's also pretty much known. I would think both of us knew that. We just don't do anything about it.
Oh, why?
Well, I think it's definitely showing how little control and concern for our real money that we have. How little we really pay attention to the numbers, how little we look at it on an ongoing basis, and how little we really plan for it.
The next why.
I think in some regard, from my vantage point, it's like I don't know how to budget well, and I need to learn. I don't have the skills.
If that were just the case, like I need to learn this, wouldn't you have learned it 10 years ago or five years ago or three years ago?
Probably.
So, is there something potentially deeper here than I need to learn how to budget?
Money is just really a topic that is hard. I feel like we've always thought about it for our entire marriage, for our basically entire existence together. And I feel kind of hopeless about it. And I feel like I'm looking to him to help me learn, but I don't feel like he knows either. And so it's just really daunting.
That's actually super honest. I think that's really revealing. If you feel hopeless about something, which you totally have the right to be—I would feel hopeless in your position from what you have told me—then you're not going to want to learn about it. People do not learn something when they feel hopeless. They give up.
And your reaction, Rebecca, is, I've given up. Matt, you do it. But you don't actually say that. You ask him lots of leading questions. Where's the money coming from for the flight? I thought you were going to—when are we going to get paid? Lots of these types of questions. What you are really saying, it seems to me, is, please take some of this burden over because I don't know how to do it. But he doesn't hear that. And also, he doesn't do it.
So, Matt, your worldview is, I don't like talking about this, and every time I talk about it, we get in a fight, and so I'm just going to try to get this conversation over as quickly as possible. Both of you are basically tossing the ball back and forth, and neither of you wants to actually take the lead or even be a teammate.
Right.
Now, it's one thing if it's just the two of you, but you have four kids. I'm not okay with it. Why am I not okay with it, but you two seem to be okay with your financial situation?
I think we both feel like budgeting and planning becomes telling ourselves no.
Yes.
And I don't want to do that, and I know Rebecca doesn't like to feel that. So I think we don't see it as some way that it'll give us freedom and possibility and hope for the future. I think we both see it as going without.
Are you free right now?
No.
Here is my challenge today. My challenge is not to get them some magical other side of the rainbow where all of their numbers are dialed in. That is simply not realistic for the scenario that they are in. My goal is to be able to get them to understand how serious this is. That they cannot keep doing the same thing they've been doing, having the same old conversations and the same old arguments. We can't do that anymore. That is yesterday. Today is a brand-new day.
And the hardest part of it is that it was actually better yesterday. At least that's the way they are going to see it, because yesterday they could go out to restaurants and concerts and hotels. But that's not how I see it, though. I see it as, hey, we were not living a rich life yesterday. We were just ignoring our numbers and racking up a bunch of debt. Hundreds of thousands. Today we actually get to be united. No, we probably don't get to go to hotels anymore. No, we probably don't get to go eat out this often. But what we do get to do is use money to connect and to be ruthless about honing in on a rich life goal. And that might be as simple as paying off our debt.
One of my colleagues recently took Matthew Walker's Science of Better Sleep class on MasterClass. And he said, "I've always thought I had pretty low sleep needs. I used to run on four or five hours of sleep, but in reality, I was just building up sleep debt. The number of people that can actually run on that amount of sleep is tiny. So I've started putting my phone in jail once I'm in bed to make sure I'm not mindlessly scrolling when I should be sleeping."
I think this is an amazing example of how learning from the best can make real improvements in your life. And that's why I love MasterClass. Unlike other platforms, MasterClass puts you in the room with people who defined their fields, like Amy Poehler, Gordon Ramsay, Chris Voss, Serena Williams, Margaret Atwood, and more. With plans starting at just $10 a month, you get unlimited access to over 200 classes taught by the world's best business leaders, writers, chefs, and even me talking about financial wellness.
There's no risk to joining. Every new membership comes with a 30-day money-back guarantee, so you can try it out before you commit. MasterClass keeps adding new classes, so there's never been a better time to get in. Right now, as a listener of this show, you get at least 15% off any annual membership at masterclass.com/ramit. That's 15% off at masterclass.com/ramit. Head to masterclass.com/ramit to see the latest offer.
I want to thank our new partners at Monarch for setting up our couples on their platform to see their exact Conscious Spending Plan categories. Monarch is a private personal finance app that brings all of a household's accounts—checking, credit cards, loans, and investments—into one clean dashboard on your phone or computer.
One of the biggest reasons I chose to partner with them is that Monarch is built for couples. You can add your partner or even your financial planner at no extra cost, so everyone can see the same financial picture with shared goals. This turns your monthly money meeting into calmer check-ins where everyone is on the same page.
One thing I love about Monarch is it allows you to save up for your rich life goals. If you want to save for a wedding or an amazing vacation, an emergency fund, a house, a baby, college, retirement, Monarch makes it really easy. You set your goals up. You tell it how much you want to save towards that goal every month. Monarch lets you see your progress visually along the way.
Try Monarch for free today and get 50% off your first year of Monarch's core tier with code RAMIT at monarch.com/ramit. And when you sign up with my link only, you'll get your Monarch account customized with my exact CSP categories so you can see how you are stacking up to your plan each month. That's monarch.com/ramit with code RAMIT.
Let's look at your accounts. So, I'm looking at your—you have several checking accounts. Why?
So I have one that just is my name only that is for my business money to flow through.
Mhm.
And then we have one that we use to swipe at the grocery store.
Isn't grocery store bills?
Yeah. Yeah, but I think the idea was anything that was set up on a pre-draw kind of thing came from that bills account, and then the more flexible things. Because in the past we've had issues with there not being money if we don't separate it out.
Well, considering you have $633,000 or a million dollars of debt, I don't think your system is working.
No.
So, what I'm trying to do is help you deconstruct the logic that brought you here.
Yeah.
You set up accounts instead of fixing your spending behavior. You all cannot account your way out of this. You have to change and probably change radically.
So when you tell me we don't like to tell each other no, I don't know. One way or another, you're going to either change the way that you react to the world in a dramatic way, or you're not, and you will continue on as this is. We'll see.
If we look at the rest of your accounts, we have some investments here. This adds up nicely to $50,000 or so. We have your house. We have loans of $510,000. What's this?
That's your mortgage.
Mortgage.
That's your mortgage. Okay. And if we look at some of your other loans, we have credit cards at $13,000. So you're carrying payments on that, correct?
Yes.
So, if we look back just a few months here, we have an interest charge for $214.
Yeah.
And five days before that, a past-due fee of $40.
Yeah.
Okay. I see a hotel. What is this hotel for?
I think that was actually a dinner.
Okay, got it. Let's just take a look at
Some more of your spending here. So, I saw this.
God, it is so uncomfortable to see the real cost of these things. Jeez.
Really? How come?
It feels even worse when you see the real numbers versus writing down your voluntary numbers.
Yeah. This is the beauty of actually going deeper to be able to see what you're truly spending. What's this Carmel Valley Lodge spent yesterday?
We just went away for our anniversary for two nights.
$526. Okay, let's talk about it. How did you decide how much you could spend?
It was a surprise to me, so it wasn't talked about. So, I guess technically I didn't decide, but—
Okay. How'd you decide, Matt?
A sense of what felt like we could afford.
A sense.
Yeah. A vague sense.
Let me smell. Can I afford this new sweater? Yes, I can. Bring it on. Is that how it works?
That's how it sort of worked. Yeah.
That actually came up in our discussion that we were reenacting earlier.
Yeah.
Because I told him, "You knew that this flight was coming. How did you decide that we had money for this weekend, but we didn't have money for my flight and you wanted to borrow it from the money that I'm saving for our house repairs?" I just did not understand that thought process.
I love the language you're using. It's super honest. You said, "I'm trying to understand, but I don't understand it." I want you to get real with me right now. When you simulated that conversation you had 48 hours ago, you asked Matt, "Where did you plan for the money to come from?" You asked over and over and over again. You're trying to understand.
Yeah.
You know the answer. What is the actual answer without you having to ask him 50 times? What is the actual answer?
We don't have the money.
That's correct.
We didn't have the money for the trip and we don't have the money for the flight.
That's correct. That is the truth. The dynamic here, as painful as it is to realize, is that, Rebecca, you are asking questions over and over to avoid the reality of the situation. Matt never planned it. Matt never had the money. It's easy for Matt to say, "Go on this flight. Of course, I want you to." But he never planned it. And then Matt simply does not want to say, "I don't know. I never had it. I never had a plan." So, he avoids it. But Rebecca, you avoid it, too, by asking questions instead of looking at the honest truth that everyone else can see.
Yeah.
What are we going to do about this?
Stop.
Yeah, ma'am.
Stop behaving like that.
Good. What else?
I don't know that it has to be like this. What I'm hoping is that we get to a place where we can both see that and then both work towards whatever it is that we want to do.
This conversation is not going to change anything. I hope you change. But this amorphous conversation, this is not—no, it's you. A different way of saying that would be, "Wow." Actually, why am I telling you what to say? You know what to say, Matt. You're pretty intelligent. What needs to change?
We need to change, but we need to actually look at our numbers and then actually save for the things that we want to spend on.
Okay, let's go back to that conversation about the flight that Rebecca was going to take with her mom. What would you do differently?
I think the right answer, maybe you tell me, is to say, "Honey, let's put aside the $200 right now so that in four weeks you're buying the flight, or two weeks or whatever," and not to try to just point fingers back about, "We don't have the actual money for this."
Save $200 for what? What does that mean?
For a flight. Save towards the flight versus just—
Where's the money coming from?
It's going to have to come from spending less on something that we would normally pay for. Whether that's the food, whether that's the household shopping, whether that's the event that we wanted to go to that we don't go to instead.
But if you are the one who's answering this question, then you can't just throw the ball back and say, "Rebecca, it's got to come from this or that or this or that," which all, by the way, happen to be the stuff that she spends on.
Yeah.
That's not how you do it.
Right.
So, where does it come from?
Can't come from our power bill. Can't come from our HOA costs. Can't come from our insurance.
Don't tell me where it can't come from. Tell me where it would come from.
Yeah. So, it has to come from—I don't know. I guess I don't know because it does feel like I'm just telling Rebecca, "Well, you need to skip the Target run and then we could do it." And I don't want to say that. That doesn't seem even true or fair.
So then the two of you right now are acting as competitors. It's like the two of you are boxing each other. What would it look like if the two of you were actually a team right now?
We would sit down together, look at the numbers, and then come to the realization that we actually can't buy the flight.
Okay. Shall we look at those numbers right now?
There's no money to do it.
Great. Where would you look? Let's do that right now. I love your answer. Where would you do that?
Well, we do have a budget.
Huh? You do?
Yeah.
Matt, pull it up. Ooh. Okay. Okay. Okay. When was this used last?
This was used last year.
Why'd you stop using it?
I don't really understand it. Also, back to the recurring issue of there's not a consistent paycheck. I don't understand how to budget if we don't have a day of the month where the money comes in every month and then we tell our money what to do. I need to see that happen in order to participate in it.
Matt, you kept this budget. Why'd you stop using it?
It felt like a reminder of all these rules and failures, and so it was mocking us with, "This is what it could be or should be." And so eventually you're just reminding yourself of what you could have done or should have done that you didn't actually do.
That's actually really honest, and that's a really honest way that humans behave. We don't like to do something that we are failing at over and over. When people are failing at something, they don't magically become interested in self-development. They just give up. And that's exactly what's happened here.
You stop tracking it. You stop talking about it. The only way you talk about money is a fight. And then you bury the fight, only to recur three days later. And on and on, and here we are 16 years later. Four children obviously watching this and learning from the way you behave around money as well.
Yeah.
Ouch. The truth is, when it comes to that airline flight, it's actually a beautiful microcosm of the dynamic you both have around money. That conversation should have never happened that way in the first place. The solution should have been designed way earlier. We are both teammates. We love each other. What are our roles? We need to talk about that first.
Next, we need to decide on what our core Rich Life vision is. What are we spending more on? What are we spending less on? And right now, as a couple that makes $185,000, it is not acceptable for us to be in credit card debt. It is not acceptable for us to have all this debt and not even know about it, not track our gas, not track all this stuff. This is where we are putting our time and attention, right there.
That airplane ride should have never come up because both of you would know that's not part of our Rich Life right now. And certainly one person could not say, "Oh, you should do it." How can that person say you should do it when they don't know where the money's going to come from? And the other person shouldn't even be entertaining the idea. No one should be talking about this because it's not on your list.
You can see by having a clear team vision that the two of you are not even going to bring up things that are going to lead to a fight. Why would you? You're focused on winning, not on fighting. But none of that is happening. And so what you find yourselves doing is fighting over the price of Target. It's so irrelevant. Instead of realizing, "Oh my God, we are spending tens of thousands of dollars more per year than we even realized."
What are you noticing as I'm saying this to you, Rebecca?
That we really just need to hone in and cut out all the noise and focus together as a team to achieve our goals.
Great. Matt?
We can't avoid talking or planning this stuff together. And I can't point fingers of, "Well, stop doing this." We have to actually review what we're going to do together, plus what we've done, and then be able, like you said, not have to even have the conversation when it's, "Should we go to dinner? Should we not? Should we go to the concert? Should we not?" We would already know the answer, yes or no, but we would already know in a better, healthier way.
Would you be comfortable if the answer to those questions was no?
Obviously that would be new for us.
But I think it's necessary.
Yeah. What just happened right there?
I don't know. I'm taking control, I guess.
Yeah, but Rebecca, don't you say that kind of thing a lot? "We need to do this. I need that. I need this." Don't you say that a lot?
Yeah.
Does it work?
No.
But you just did it again.
Yeah.
What I'm trying to show you, Rebecca, is that there might be a different way of interacting. So, Rebecca, Matt just said, "Oh, that would be new for us." What could be a different reaction you might have?
Gosh, it would be new, but it would be great if we could do it together, and it would be really helpful.
Are you curious why he said, "Oh, that would be new for us," instead of telling him, "Hey, we need to do this"?
Because we both just do whatever we want all the time and we don't talk about it.
You know the answer already?
Yeah.
You know why he said that?
Yeah. Because it'll be really hard. He'll have to tell himself no and he'll have to tell me no, and that's challenging.
You've been married a long time. Would you say you can pretty reliably predict what the other person's going to do?
Yes.
I think so. But I think maybe we're both smart and know each other well, and so probably even to our own detriment, we feel like we know what the other person's going to say and do.
Do you know why the other person does what they do with money?
Yes.
No.
No. But you just told me you already know him. You already know his answer. Do you know why you're not curious?
I guess I am curious because I don't really always know what he's going to do because he doesn't really communicate with me about it.
Keep going.
Do you think that going forward you can start having important conversations with me about this stuff so that I do understand what's going on with you?
It's scary to be open and honest about some of this because I feel like I want to be positive and optimistic, or I want to be able to provide you or the kids or myself with something and not have to worry about things we feel like shouldn't be that big of a deal financially, but—
Why do you want to feel like that?
It feels like I'm inadequate as a provider or planner, and I don't want to say no to some of these things. I also want to feel like I'm in control, that I'm saving the day sometimes by making something work.
Why do you feel like that?
I don't know. But I definitely watched my own dad try and run his own business and try to keep it to himself and then suddenly be a hero and buy a boat, or be the hero and figure out a way to provide something. So, I feel like I want to take the burden on and then keep it from you and provide something that I feel like you deserve or that the kids deserve. But maybe I don't know what you want.
Do you know what I actually want?
Do you want me to guess?
I guess if you don't know.
Well, I think you want a yes from me. I think you want to be able to say yes to the things that you want to do when you want to do them. But underneath that, I think you want a real sense of security and stability.
How come Rebecca's asking questions and Matt's just answering them like this is a job interview? Matt, do you ask Rebecca questions about money?
I don't know that I do.
Do you ask Rebecca questions about anything?
I think I ask, "How was your day? How was this? Did you see this?" Maybe I don't ask, "How do you feel about bigger life things? How do you feel about where we'll be in 10 years financially?"
I'm talking about any questions. "What do you think about this?" Rebecca, you're shaking your head now.
I feel like our life is so fast-paced and we don't connect a lot.
Wow, that's devastating to hear. But even right now it's dawning on me that that might be really accurate.
Look at the role you're playing, Matt. She's asking you questions and you're not asking her anything back. You're just dead-ending her.
Mhm.
Why?
Maybe I'm scared to hear your answers. Or maybe I think I already know them, and so I'm not being curious about how you really feel.
What are you both discovering right now?
I think I'm seeing for the first time with more clarity that we're not being equal partners. And that's maybe because I'm not inviting Rebecca in or seeking her to be involved in the way that I should.
And Rebecca?
I would definitely agree with that. And I would invite more openness so that I feel like I can participate. I feel like I'm kind of over here running parallel next to him, but not really knowing what's happening in his lane.
Yeah, you two are exhibiting what I call in the Money for Couples book the chaser-avoider dynamic. One person's chasing, that's Rebecca. "Please give me answers. Please give me answers. Please give me clarity. Please answer this." And the more you chase, the more Matt avoids, and it becomes this cycle, and it's actually like tying the knot tighter.
And in part, I think, Matt, there's something to the idea that you don't respect Rebecca. And Rebecca, you've even said multiple times, "I don't know how to budget. Money is hard. I'm not so good at it." But I actually think you could become very good at it. I think both of you may not be particularly skilled at money. But money is a skill, like anything.
What if one of your kids told you, "I'm not good at reading"? What would you tell them? "Oh, that's okay. It's fine." Would you say that to them?
No.
Hell no. Absolutely not. Pick up that book and read it until your eyes bleed. Oh, sorry. Sorry. That's Indian parents.
We would never accept a kid telling, "I can't spell. I can't read. I don't know how to ride a bike." We actually approach it in a fun way, but when we're adults, we don't do that with money. And Rebecca, I see you tearing up a lot today.
Yeah, it's hard.
Yeah. What's going on? Why do you think that's happening?
I see what you're saying. And I feel like I'm kind of caught in a mouse wheel, and I don't know how to change it. I know in my mind, inherently, we need to meet and have meetings together, and I'll ask him about it, and I feel like I just get pushback.
Yes, you do. You do. You're right.
Or I'm blamed, like, "Oh, well, you don't put it on the schedule. Well, you don't make time for it."
It does not come to fruition because of the dynamic that you have both adopted invisibly. Rebecca is the beseecher. "Please schedule the meeting. Please answer my questions. Please give me $200 for this. Please, please, please."
I really dislike this. I really dislike this dynamic. It almost always is the lower earner, and it almost always is the woman in a heterosexual relationship. I don't like it. And then the guy in this case is, "Well, you didn't do this," or, "I don't know about that," or, "You make the decision," and, "If you had just done it this way, this perfect sequential order, then maybe I would have given you an answer." I hate that.
Both of you are nodding.
Yeah, because you're describing it exactly. It happens weekly.
So what is the different solution? Of course Matt needs to change. Of course Rebecca needs to change. Yes. And I hope you do. But what if you don't?
We'll always be broke.
Yes.
Our kids won't learn how to be good with money.
Yes.
Repeat the cycle, and we'll somehow have to try to help them even when we're broke.
You will not help them.
We won't be able to.
Mhm. And then what?
It'll just keep repeating itself.
Your 12-year-old, your 10-year-old, and on and on, as they meet a potential partner, they will spend more than they make. They will think it's normal. My parents did it.
And is this similar, Matt, to—you mentioned your dad when you grew up? Your dad was an entrepreneur.
Yeah. He had a small business like I do.
Uh-huh. And what happened with him and money?
Not very great with it. Never any kind of long-term planning.
Retirement?
Nonexistent.
Was he married to your mom?
Mhm.
And what was their dynamic?
She was the chaser, and he was the avoider.
Yeah. And how long did that last?
Well, they got a divorce. And he's now older and still very much working, and probably needs to work.
Do you think that you are on track to be in that same position?
Yeah, I think I am on track to be in that exact same position.
Does it concern you? It would concern me.
It does concern me.
Mhm. And Rebecca, what was your family like with money?
We never had a lot of it, but my dad did the most that he could with it. My parents were budgeters. I saw them sit down on weekends and go over budgets together, and they did it all together.
Many people, I would say most people, essentially mirror what they saw their parents doing with money. Do you see that here?
Yeah, totally.
Matt's is quite obvious.
Yeah.
Dad runs a business, sporadic income, wants to be the hero, not particularly skilled at money, resists his wife who pursues him, and he just puts his arms and says, "No, I'm the decider. I'm the hero." What's that phrase? Like father, like son. We mirror what we see from our parents.
And Rebecca, a family of budgeters. And so you think of the world in terms of, am I tracking things right? Am I budgeting? Am I noting it down correctly? Can't budget your way out of this situation. But even that, you should know that you're spending $4,000 a year on gas, and you're not doing that, in part because it's helpless.
Yeah.
I'm helpless. And in part it's very rational. I ask him questions. He doesn't give me anything. So what am I supposed to do? You two have a choice to make today. You can echo or mirror what your family dynamics were, or you can change it. What do you want to do?
I would really like to meet regularly and have some very open and honest conversations about what our month-to-month looks like each month, and what the things that we want to do that month look like. And if we can't do them, we need to say no.
Great. That's good. That's one thing. I hear you loud and clear. Matt, your turn.
I'd like to feel like I'm not trying to come up with plans and solutions all by myself. So I'd like to feel like we're in this together, and we have prearranged rules about what we're going to do or how much we're going to spend, and then we're going to help each other keep those to be true.
Great. What are the rules?
Can we have consistent paychecks? Is that even a possibility? Because sometimes it doesn't feel like it.
Sorry. We don't ask questions about, can we do this? We as teammates create rules, and then we say, tell me what you think about that. Rebecca, I'm shifting you from asking please because I'm shrinking myself. No, stand up. You're an equal partner in this. Just because you make less doesn't mean you are smaller. You are an equal partner.
We have to have consistency on paychecks in order to be able to function as a household.
Well done. Beautifully done. That is the beginning of the new chapter of your life. You're not asking questions anymore. Can we please do this? No. This is what we need. And if you disagree, I'm open to it. Tell me why. Show me. But this is what we need. And unless you've got a better suggestion, that's how we're going to do it.
Yeah.
Boom. Okay. Matt, go ahead and respond to that.
Sure. We can do a paycheck, like $9,000 a month split up in two paychecks. And so if we did one at the beginning, we could do one in the middle. And that's a small enough amount that I'd feel comfortable with that.
In a normal conversation, don't we say, "What do you think? How does that strike you?" Why are you still adopting this role of, I'm this terrified person whose job is to answer my wife's questions? You got to get over that.
Yeah.
Teammates don't treat it that way. Teammates are eager to say, "What do you think? Hey, I could be wrong. Does that work for you? How could we improve that?" Ask the follow-up question.
What do you think, babe? How can we make $9,000 work?
I am totally happy to do that. I think that that would actually help me in the long run because I would know what to expect, and then I would be able to plan accordingly. But—
Great, great. Round of applause. This was like 16 years of work just right there culminated. Great. How come I'm the only one clapping? I'm literally saying clap, clap. Yes. No jokes. You might have to be theatrical with this stuff. It feels foolish. Why are we clapping to my husband and wife? This is crazy. Because the way you talk about money is so toxic and negative right now that you might actually need to freaking dance a little.
We got to start feeling good about money because feeling hopeless does not change anything. So you just had a major breakthrough. I think that's awesome. We're going to incorporate that into the CSP in just a minute. What are your other rules? Go ahead, Matt. You got one.
Yeah. Rebecca, I propose that we have a certain amount that's set aside that's going to be that slush fund for things like dining out and concerts, etc., so that if there's no money there, then we both know what the answer is. Do you think that would work?
Yeah, I would prefer that because then I know exactly what our options are.
Okay, great. I love that. But do we know the actual amount?
Yes.
Yeah.
So it's going to have to be really small. And if we can't add to it, then we can't do it. So—
Sorry. Where's my calculator? I'm going to type in really small on my calculator. Why are you both avoiding getting specific? Do you realize you're doing that?
Yes.
You're doing it because it makes you uncomfortable to actually be specific and answer questions, because then you have to follow through. But if you leave it vague enough, oh, really small, then later we can fight about it. You're actually giving yourself more heartache down the road because you're refusing to be specific now. You're kicking the can down the road.
Yeah.
That's a pattern I want you to notice about yourself. Change it now, Matt. Go ahead.
Let's do $200. And maybe that's too much, maybe that's too little. But if we know that that's the number, I think that would help.
Where are we putting that?
We could put it in one of the—what? One of those savings accounts that we already have. Does that seem like a good idea, or should we take it out and have it in cash at the house?
Cash at the house is fine.
Okay. First of all, Matt, good job asking questions. I noticed it already. You're doing a great job. Rebecca, I love the dynamic change here. Both of you are like, it feels like a team, right? This is cool. My suggestion to you is, you all have a history of overspending. So it's cash.
Okay.
200 bucks a month. Cash it is. And when the cash is out, it's over. It's called the envelope system.
Yeah.
Done.
All right.
Do we have any more rules? I propose that we meet at least once a month, but I'm wondering if we should meet at both paycheck deposit intervals so we can talk about it when it hits the account.
Sure. Yeah, I think twice a month would be a great idea.
What day? What time?
A Sunday afternoon would be great. And if that's too exhausting, then I would say a middle day of a workday.
Okay. If we're doing that, are our paychecks going in on a Friday? What is that looking like, and how are they getting deposited?
You probably want to meet a handful of days into the month, or the second or the first, but yeah.
That's a day that's going to move around. So what do you—I'm down for whatever you want.
I would like you to select it based on your business and how you run it, and then stick to that.
Yeah, that's fair. Then let's do the first and the 15th.
Perfect. And if it falls on a weekday or weekend, then you can pay the day before.
True.
What do you notice is happening in this back and forth now?
We're both contributing.
Yes.
And I'm not feeling so out of control.
Yeah. What else, Matt?
I think we're both speaking up and kind of discussing and negotiating, if you will, but coming to an answer instead of just one person throwing it out and the other one—
Rejecting.
Going with it or rejecting it.
Yeah, agreed. I feel like you've made more decisions in the last two minutes than you've made in maybe 10 years. Do you notice it's focused on key decisions that need to be made? We're not talking about what happened last week and feelings and you always do this. None of that. It's just like, this is what I want. Okay, respond to it. And do you notice that by each of you taking the first step and saying, this is what I propose, it actually shortcuts so much heartache and difficulty?
Yeah.
Yeah.
In many ways, in many relationships, when people ask questions of the other person, what they are doing is, yes, they want clarity, but they're also avoiding making a decision themselves.
Each of you is responsible for being proactive. Each of you. That's what a team is. A team does not only ask the other person. I know that we think of asking questions as being respectful, but in many ways it's intellectually lazy, because it'd be better for the person to say, "This is what I think. Here's the research I've done. This is my proposal. Now tell me what you think." This is how we do it at work.
Sure.
That's what we can do here, too. Okay, great. We're going to go into the CSP, and we're going to make some other changes. Anybody have anything they need to cover before we do that?
I just had one question.
Yes.
Because his business is his, and sometimes the income is varied, how do we handle that when he comes to me and says, "Well, I can't do the first. There's no money to deposit," or—
Excellent question. First of all, when you make above $9,000, that needs to go into a reserve fund, a special savings account, and this is never touched. Never touched except in the one case I'm going to share with you.
So let's say one month you make $15,000. That's an extra $6,000 that goes into that reserve account. Then there might be a month where you make $8,000. Okay? Well, you pull $1,000 out, and you simulate a stable paycheck. Over time, you want to get that number to about six months. Okay? Six months. So six times $9,000 is what you want to have in that account. Sounds like a lot of money. Yes, keep it there. That's the mechanics of it.
The second thing is you need to make that $9,000. We can come up with a rule right now. If there are, I don't know, three months missed consecutively, then it's time to shut that business down and go get a job.
Yeah.
If you can't do it, this business is over, and it's time to go get a job. How do you feel about that, Matt?
That's something we've talked about that Rebecca's even raised before.
I mean, if that's been raised, do you want to just go get a job? It would solve a lot of different problems.
We've talked about that, too.
How much can you get paid?
Probably something more like $14,000 to $18,000.
But right now, it currently says you make $15,000 a month.
Right. That's why we're talking about $9,000 as a very baseline, easy, attainable number. But if we can't make that minimum number a couple months in a row, then we should probably not be doing this business.
Why not just go get a job?
Well, you can see even in these hard times, we're at $15,000 collectively. And so going to get a job without the upside, where we make $14,000 or $15,000, feels good for the stability, but it also feels like that's not the key to maybe long-term wealth.
What do you do for a living?
I'm a civil attorney.
I'm going to be real direct with you about this. Seems to me you're a bit of a dreamer. And the way I see it, you have no retirement. You have maybe $20,000 a year to live off of, plus Social Security. We're not talking about long-term wealth. We're talking about preventing you two from being homeless.
Sure.
We're talking about what's going to happen if you get hit by an emergency expense, which almost certainly will happen in the next 15 years with four kids. The idea that I can consistently make $9,000 with upside, but I could make $15,000 consistently at a job—I'm just going to tell you, qualitatively, it's a no-brainer.
I've repeatedly asked him, "Hey, when is it time to pull the plug?"
You asked.
Yeah.
Do you notice that?
I don't want to force him out of it.
I wouldn't want to force my financial and intimate partner into making a decision that serves our family. Why?
I feel like I want him to feel like his business is successful, and so I want to support it, but it's really hard.
What is with this tiptoeing around partners' feelings? $633,000 to a million dollars in debt, and I want him to feel successful.
I mean, when you put it like that, it's clearly not successful. So—
It's not, and it's okay. It's okay. There are things we try in life that don't work out. Better to call the ball. I actually think you can create amazing turnarounds once you get focused with two people.
Yeah.
But you cannot do it independently, and you cannot do it by ignoring the reality of a situation. You have $633,000 to a million dollars of debt. It's actually getting bigger, not smaller.
Yeah.
By the way, I'm looking at your Monarch account. Let me show you something. We're talking about income, right? Do you see the actual income? What is that income for last month?
13,58.
Yeah. What is it the month before?
Yeah. 4,13.
And what is it the month before?
9,779.
Okay. And I'm going to keep going back. Matt, you read it off.
1,887.
And then?
13,824.
And then 11,965.
7,58.
What are you noticing?
May not be totally correct, but the point is correct, which is that it's inconsistent and not great.
Yes. So if it's already inconsistent as recently as a few months ago, what are you going to do if you make $2,000 one month? You cannot sustain this spending. You're actually spending more than you make every single month.
Yeah.
Are you aware of that?
Yes.
Feels like it.
It's real.
Yeah.
So if that's the case, pretend it's not you. You hear that my wife and I are spending more than we make every single month. What would you tell us to do?
Spend less and make more.
Okay, that's it. Just simple as that. I'll be like, "Yeah, I know, but it's hard. We're trying, and we got this accounting. Hopefully this thing works out." What would you say to me?
Say, gosh, for me, that sounds like kind of vague dreamer talk. What are you really spending your money on?
Great. Okay, now turn that question around on the two of you. What's the answer?
Well, we still spend on the things we have to, which are utilities and our mortgage and our HOA. And then we are still spending as much as we want to on whether it's our food or our travel or our home stuff or stuff for the kids. And we're really not changing that based on how much money comes in.
Okay, Rebecca.
I've said, you need to look at this in a constructive way, and we need to set a date of when this isn't going to work anymore.
Cool. When was that date?
It's supposed to be October.
Okay. And what are you on track for? Is it going to happen or not?
He needs to get a job. A different job.
Why don't you tell him that?
Matt, this is not sustainable, and you have to get a different job if you're not going to make more money.
We need this because—and then pin it to your North Star. What is your North Star as a family?
We don't want to perpetuate money trouble for our four children. We need to be setting a better example, and so we have to make different choices.
Beautifully done, Rebecca. Beautifully done. Matt, what's your response?
She has expressed that before, and then I think she's just trusted me that having self-employment is still better than a consistent paycheck.
No, that's not true. It's point-blank not true. Look at your wife. She's been crying for the last two hours. She cannot even get straight answers on when, how much money is coming in. You're actually making way less than you thought. It's super sporadic, and you're in increasing amounts of debt. How is this better?
The times where we've had extra money and we've bought a house or we've bought a car, we've done these other things that wouldn't happen. And then the times that I've had freedom where we've been able to be home or be available or be with the kids or be with her or travel or whatever it is, those things would be different. And so it could be better for us. I certainly acknowledge that. But I think reasonably we've looked at it and decided, after giving a lot of thought, that it wasn't.
Well, it's not a convincing answer. The hardest person in a relationship is the partner of a dreamer. And Matt, I don't get the chance to talk to a lot of dreamers that often. A dreamer is somebody who often lives in the clouds. They don't look at numbers. When they look at numbers, they create narratives to avoid the reality of the situation, and oftentimes they are subsidized in some way by somebody else. Often it might be their spouse or their parents or whatever. But if they did not have that kind of support, their world would crash and burn very quickly, and they would very quickly adapt.
Now, I don't want you to have to get to the point of crashing and burning, but the person for whom it's the hardest is the partner of a dreamer because they try valiantly to convince them using data and stories and examples and all kinds, and bringing them on a podcast, and they just don't listen.
So, Matt, I hope you change. I hope you listen. I've tried my best, but I don't get the sense that you are actually listening or willing to substantially change. I think you're willing to have a couple of meetings a week. I think you're willing to maybe do $9,000 a month until you don't, and then it's going to be back to the old ways. So I think unless you want to change something, I'd rather spend my time with Rebecca talking about what your next steps might be, Rebecca.
Yeah.
I want to show you the numbers. So if we see here that you are currently spending 84% of your fixed costs. Okay. And let's say that this number actually goes down to $9,000 instead of $13,000 of Matt's income. Okay, you're now spending 115%. And by the way, this net income needs to actually realistically go down. So that would need to go down to about, let's just say, $6,500. You're now at 143% fixed costs.
Now, sure, you can cut down a little bit on your groceries. All right, fine. You want to bring it down to $1,500, maybe even $1,400. All right, we'll nibble around the edges. You're at 140%. You want to cut down on your subscriptions to $150? Fine. Doesn't even change your number. You're at 140%. What are you noticing?
This is absolutely unsustainable. We'll lose our house.
Yes. Rebecca, I know you're upset. I want to acknowledge that this is really hard. There is no easy answers here. Your back is against the wall, and so you have to start making some very difficult choices.
Now, in light of the severity of this situation, my hope is that you actually get angry and that you actually say, "That's enough. Enough is enough, and I'm going to take bold action. And one way or another, I am going to protect myself and my children. And I sure hope Matt comes along. I hope he does. I will provide him a clear road. But I am putting myself and my children first." How does that strike you?
It's intense, but I understand what you're saying.
I wish that I could be more gentle about the options.
Yeah.
A lot of times people come on, we can fiddle around the edges, but those options are unavailable to you now.
Yeah.
I would like to show you a few things that you may want to keep in your back pocket as knowledge.
That may have been the only time I have ever done that on this podcast. Matt is a dreamer, and as you know from my Money for Couples book, dreamers are the most difficult money type to work with. And I have really been trying on today's conversation, and I hope that Matt changes, but I have to take drastic action because they are in their 40s and they are in a severely dangerous financial position compounded by having four children. I have to get through to this couple. And if that means that I have to talk directly to Rebecca, and whether or not Matt comes along, I hope he does. But right now, I'm focused on Rebecca and letting her step into who she can be.
I'm going to put these on screen. I want to acknowledge that all of this is incredibly difficult with variable income. So you were very, very astute to say that the number one rule you need in this relationship is a stable income. I totally agree. None of this works without a stable income. You need that. And therefore, I genuinely hope that, Matt, you are hearing this. Closing the business down and getting a stable job is the single best thing that you could do for this family.
Whether that happens or not, Rebecca, you need a stable, predictable income, whether it's coming from Matt's business or ideally his full-time job. My suggestion in looking at your spending here on fixed costs, what are some of the things that you could change here?
I can do my very best to change our groceries, for sure.
Yes, maybe you bring that down a couple hundred bucks. What else? Look at the big stuff.
Our kids' school, which would really be difficult for me.
For you?
Yeah. I'm just not super interested in him going to our available public school. It's not in his best interest.
I mean, is it in his best interest to have parents who fight about money every two days?
No.
Again, no easy choices here. But what I'm trying to do, Rebecca, empower you to make bold choices.
Yeah.
And in my experience, even when I've had to make bad decisions, if I did them boldly and I did them intentionally, I can create the narrative around it. I'm going to give you an example. I know you'd hate to have to take your kid out of this school. And maybe you do, maybe you don't. That's up to you.
Yeah.
Here's a good way. We have decided that we are prioritizing stability in our family. For too long, we have let money just flow through our fingers. We have not been a unified team. We have not looked at our spending. We have not made priorities. And now we are. And our priorities are debt payoff, building a healthy savings account, and that means we're going to have to make some tough decisions. And one of those decisions is my son is going to have to go to the public school. He's going to make friends, and he's going to have a great time, and he's going to adapt because he is strong. That's a story that I want you to think about.
It would be doubly powerful if Matt were on board. That's not up to me.
Yeah.
But Rebecca, you can control the story you tell yourself and the story that you communicate to your kids. Next, what do you see for spending?
I don't know what the miscellaneous spending is, but definitely if it's miscellaneous, it's not really a need.
Agreed. But I think miscellaneous is actually really helpful because, for example, you did not capture things like gas.
Yeah.
You did not capture things like car repair and a variety of other things. Here's my suggestion for you. You can't afford to have that much miscellaneous right now. I'm going to bring it down to $500, which is an extra $1,000 a month that you now have. And what about this church giving?
I think we need to look at what is reasonable and maybe talk that over together about what that looks like.
So why don't you just talk about it right now?
How are you feeling about that number?
Not interested in questions. I'm interested in proposals.
Oh gosh, I don't even know.
Your mental model that you are about to do is, "I'm the non-breadwinner who's non-knowledgeable about money, and can you please tell me, guide me respectfully?" The new mental model is, "I am in charge of this family financially. I need to provide leadership because I have not gotten what I've been asking for for 16 years. And while I hope that my partner steps up as a teammate, right now I need to step forward." I mean, my dream for the two of you is to be partners. That's my dream. But if you can't be partners, then somebody's got to lead.
Yeah.
Who is that person that's going to lead?
I will be leading for now.
Love that. So, as a leader, a leader might ask their team for input, but a leader also has a vision. What is your vision for, for example, how much needs to be given to the church every month?
I would like to see, for the time being, $200 to go, and the rest of it has to be used to pay off debt.
Great. And then ask the question to Matt if there's anything you need from Matt right now. Go ahead.
Can you come to an agreement for that until we feel more stable?
Yeah, thanks for asking, babe. I would think that's a good number. So, good idea.
Great. $200 it is. All right. Just to note, you're down to 124% fixed costs.
I mean, nobody really needs $300 worth of clothes. Honestly, we have plenty of clothing at our house.
Okay, great. Goodbye. Love it. I love how decisive you're being. Can you make more money, Rebecca?
Yeah, I can.
How much more?
A lot more. Babe, you probably remember better than me, but when I was working full-time, I feel like I made—
Four or five. Yeah.
Yeah.
On a really good month.
Yeah. Let's put $4,000. I think that brings you down still to about 27, I don't know, $2,800 with taxes. So it's better, 114%, but unsustainable still.
Yeah.
Ramit, is your point that the monthly income just needs to go up, right? There's not ways to reduce this.
That is correct. Let's take a look. I want to show you because you can actually see your future. This is like a simulator for yourself. So if, for example, instead of $9,000 a month, you made $15,000 a month, what would the take-home on that be? Maybe like—
$11,500.
Yeah, $11,500. Look at what just happened to your fixed costs. It went from 114% to 74%.
Yeah.
What does that tell you?
That's the only way forward.
Yes. There's no amount of tweaking groceries or clothing. And even that still requires more. But that is a big step forward.
Really hard for me to hear that because for so many years it was like, "Well, don't spend that. Well, don't spend that."
Yes.
And it's really blaring in my face that there's not a lot I could have done to change it, even though it felt like it was on me to fix it.
This conversation is hard for so many reasons. So many. Of course, there are financial decisions you made that were not great. The fact that you have a vacation taken as recently as a week ago for $500, that's a financial mistake. The dynamic that the two of you have allowed is the actual problem here. Could you make more money? Sure. Would that fix anything if you just increased your income by $5,000 a month? Not a single thing.
The dynamic of Rebecca asking for permission, asking, asking, asking for information, treating yourself small. And also being a busy mom of four. That's real. That's not easy. I don't think any of us could understand what that is like. In addition, asking Matt, not getting answers back, getting a lot of confusing messages. "We don't have money, but let's go on this vacation." "Stop spending money at Target," but also, "I can pull money out magically from this business," which you have no visibility on.
Matt feeling put upon. "Every time we talk about money, it's bad. I'm failing. Am I living to basically what my dad did?" This whole dynamic, you'll notice there's no joy, there's no success, there's no possibility. So everybody just shuts down and goes like, "Ah, whatever."
Yeah.
That's it, right?
Super accurate.
Yeah.
But what are you going to do? Because we could spend a lot more time, and I would encourage you to do so in therapy, of analyzing what got you here. I think there's a lot of threads to pull on. I think it's really, really beneficial for you to both explore that, whether solo or as a couple as well. But you brought me here to help you. So what are we going to do about it?
I want to put this CSP back on screen. We're going to do a little bit more numbers, and then I just want to hear from you. Right now, I still have your $800 a month on your children's school. Do you want to keep that, or do you want to remove it and see what happens?
I think it's really important to me.
Okay. So you're at 74%. Which again, that number—
That would entail Matt getting a different income.
Yes. You would have to be making $15,000 a month.
Yeah.
And I want to point something out. You would be investing essentially 0%. And you would be saving—
Zero.
Essentially 0%. Now, you do have a little bit of money left over, $3,300 a month. You could allocate that as you see fit. We could do that if you want to go through the exercise, but I just want to point out you're saving and investing nothing.
Yeah. Ramit, with those numbers, how much could we save and invest?
Probably $2,000 a month.
If we do that long term, I mean, what does retirement even look like?
Excellent question. So let's take a look. Let's say that you retire in, what, 22 years or so.
Sure.
You have currently $45,000. I'm using my calculator. You can just search for Ramit calculator. And right now you're investing, let's just say basically $100 a month. You're going to invest for 23 years. You would have $292,000. What does that tell you?
That is not okay.
That would be $12,000 a year you could withdraw every year to live on.
That sounds like the Chipotle budget.
So what do you want to do?
We have to invest more.
I mean, you could take $2,000 a month. We can add that. You'd have $1.5 million, $60,000 a year.
Yeah, it's not great.
Let's not forget Social Security. And maybe if you gave it an extra year, let's just say $1.7 million. It really grows substantially by that point.
Yeah. I mean, at this interval, that's really our only option. So we have to—
Not really. That's not true. Can I show you?
Definitely, please.
Yeah, for sure.
I would get so aggressive. It would be insane. Okay. I would take, let's see, clothes. Yeah. Good. Children's school. Love you, my son or daughter, but not anymore. Well, I love you still, but you're not going to that school. That's me. Again, this is just me.
Subscriptions, fine. Church giving. I also love the church, but I love volunteering on Sunday and not writing a $200 a month check that we can't afford. Finally, miscellaneous. No way. I'll give you $350. I noticed that you have money spent on car washes and stuff like that. Who gets the car washed right now?
Both of us.
Oh, great. Your 12-year-old and your 10-year-old. I grew up with four kids in my family. I don't think my parents have ever paid for a car wash. And I use that as an example. It's not about the car wash, which was like $21.99 that I saw in Monarch. It's about getting your kids involved together. Not in a punitive way, but rather we are a family and we all have a part to play. That's how we do it.
Okay, moving along. $1,500 a month. Oh yeah, kids' IRA, not in this world. They can figure that out later. I'm sorry. Parents didn't save enough early enough, so you're going to have to figure that out yourself. And we can guide you. We can take you to resource centers like my parents did, but we simply don't have money for it. Okay. 9% for four kids.
You could get a little bit more aggressive. We need to fix your car amount. Car? This is 300 bucks a month. Can you spend less on gas or no?
No.
300 bucks a month. All right, fine. Let's take a look at where we are now. According to me in this simulation, you all are not going on vacation for the next decade.
Yeah.
I'm not kidding. I want you to think, like I grew up in an immigrant family. We didn't go on vacations. We drove our van down to visit our family and that was it. We didn't go to these places. We didn't have the money for it.
Yeah. I grew up in the same. We didn't go on vacations. I didn't fly. I didn't fly till I was in high school.
Then why is it that you spend dramatically differently today?
I feel like you're right that I haven't been assertive enough about the things that I think we actually need.
Yes. And hoping that Matt would magically rise up and make wise decisions has not worked. And Matt, I actually think you are capable of doing that with Rebecca.
Sure.
But if both of you are not going to do it, then one of you has to start. And the way I see it, if we are looking at this, we have $2,50 a month. That gives you $1.7 million at retirement or $70,000 a year plus Social Security. We're talking about $100,000. Keep in mind that presumably by then your house will be paid off.
Do you have a home equity line of credit?
No.
Thank God. Credit cards get paid off immediately. Those get prioritized first. Am I reading this right? You have $65,000 in IRS debt.
Mhm.
Because you never saved for taxes.
No.
Another reason that this business is not working. It needs to be shut down tomorrow and get a 9-to-5 job. It's not a failure. It's a success. You're moving boldly. Call the IRS and negotiate that debt. They will often, though not always, negotiate the debt, but you tell them your hardship. Try medical. Call that and negotiate that immediately. LendingClub. Not sure what you can do about that. Family loan, 21,500. What?
Yeah, we have a home that had some significant issues that we had to take care of, like water intrusion problems. We borrowed money from my mom, but we're paying it back.
You can go even bolder if you want to. Do you want to?
At this point, I don't think it's about what we want. I think we don't really have a choice.
I love that. If you were a very frugal family because you had to be, then you could cut even more because at this stage, every $100 actually makes a lot of difference. So now we're really at the margins, but I just want to show you a couple things that a very, very frugal family in severe financial distress would do.
Subscriptions would go down from $150 to $50. Miscellaneous would go down to 200 and you would be dialed in. You would be meeting twice a week about money. You would have a number and each of you would have ownership over it. For example, this is how much we're spending on household expenses. One person owns that number and it is their job to stay underneath it.
Yeah.
Okay.
Groceries, I hate to say it, but would probably come down and it would be very simple meals. Eating out, not happening.
Yeah. And you would take this number down and you'd have a couple extra dollars and I would put that directly into savings. So, you're now at $1,700 a month. Still lower than I'd like, but not bad. Not bad. Thoughts?
For me, it just feels much more calming. It doesn't feel restrictive. It feels like we actually have control.
And Matt, what about you? I want to check in with you.
Yeah, it does scare me in the sense of, feels like a lot of, gosh, we're going to have to say no so many times. We're not going to be strong enough to do it. But it does feel doable.
Matt, if your mindset can shift to we are going to win at building our rich life, then suddenly it becomes actually quite easy and fulfilling to reduce spending on certain areas and lavish other areas. Now in your case, it's not lavishing hotels and vacations. That's not going to happen. That's just not. If you were to lavish money, where would you lavish it, Matt, based on what we've discussed today?
On our emergency fund and then our retirement account.
Yeah. Yeah.
Yeah. That would be the rich life that at least Rebecca has talked about in terms of stability, predictability.
Sure.
And lavishing, $2,000 a month is a lot of money. So, I will encourage both of you to reframe the way you see this as winning, not losing. Because you can get good at something if you see it as winning, but if you see it as losing, you'll never get good.
I think this is one of the most challenging couples that I've ever spoken to. There are layers upon layers of disconnection. There are gender roles. There's religion. There's family upbringing, children. There are just so many things. And each of them is pulling in a direction that brings them apart instead of bringing them together. Could they change? Of course, anybody could change. And a couple, when they focus, can change faster than you ever thought possible. But it takes near flawless execution. And that's really hard.
What do I think will happen? I think that Rebecca and Matthew have seen something today, especially Rebecca. And I think that they will realize what they have been doing has not worked. I think that Rebecca will make some changes. I think that she will set higher expectations for what she wants or even demands. Will Matt rise up to them or not? I truly hope so.
What I think the ultimate dream that I have for them is to create a powerful vision and to do it together, to get out of the weeds. I saw the look on Rebecca's face when we started to really go through the numbers. And when I said, "Hey, do you mind if I just show you what I would do?" And when I did that, it almost was visible that it was dawning on her. Oh my gosh, there's a level of boldness that I never even contemplated. I think in part because she felt she always had to accommodate Matt.
But what if she took bold action? I saw it. Now, can she make those bold choices? She could. Will it be harder for her to make those changes than for somebody else? Yeah. But ultimately, sometimes we are able to break free of some of the constraints that were set upon us or we even accepted being set upon us. That's what I'm always hoping for.
I want to thank our partners at Monarch for setting my guests up with one free year of the Monarch service so they can stay on the same page with their money. And if you want your own Monarch account with my exact Conscious Spending Plan categories already built in, go to monarch.com/ramit. Try it for free and get 50% off your first year of Monarch's core tier. Use the code RAMIT to get
Article published · Updated