Episode 47. We make $500k. Why are we carrying a balance on our credit cards?

Transcript

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Ashley: [00:00:00] He will say, “Well, why do you need someone to take care of you? You have your own money. Are you trying to get someone to take care of you? Is that what you’re doing?” I don’t know about his money. I’ve always been so confused as to, like, you make so much money, and we have no money. 

Charles: [00:00:17] We both want to fix this. I love her. I want to stay married. This is the biggest catalyst to our relationship that we are now pulling apart that we need to fix.

Ashley: [00:00:32] We either need to fix this or it’s not going to continue. There’s no sense in arguing every day day in, “This is mine. You owe me $2. Oh, I didn’t tell you about this.” Or nothing is transparent. “Oh, I won’t share my credit card expenses with you.” I’m not okay with continuing on.

[Narration]

Ramit Sethi: [00:00:55] Today, I’m speaking with Ashley and Charles. And what a fascinating story they have. They’re in early 40s. They’ve been married for six years and they have five children from previous relationships. Now, Ashley is going to tell you a story about how she went to the grocery store and she couldn’t use her account because there was no money there. But together they earn over half a million dollars a year. 

Ashley just can’t figure out where the money is going. Have you ever felt like your partner was hiding something from you–something big? Well, what if you discover that there are lies in your relationship about money? What if you find out that your money is so confusing to the two of you that you just have no idea what’s going on?

Well, as I probe into their finances today, I find that their income is hard to understand because it’s erratic and it involves investments and stock options and all kinds of confusing things. And as I mentioned, there are also lies about money. What I’m going to do today is try to help them simplify their money in the hopes that they can build trust together. 

And at the end of the episode, you’re going to hear a follow up from this couple. After I helped them organize their conscious spending plan, you’re going to hear what that was like for them. To download your own copy of the conscious spending plan, you can visit iwt.com/episode47. That’s iwt.com/episode47. All right, let’s get started. I’m Ramit Sethi, and this is I Will Teach You to Be Rich.

[Interview]

Ashley: [00:02:36] I feel like ever since we’ve gotten married, we haven’t been on the same page with finances, and it’s just gotten worse recently. I feel like we’re more disconnected and everything is mine and yours now and we don’t have a plan. About a month ago or two months ago, Charles gets a KSO, which is like a commission check and he gets it every three months. 

And since we’ve been disconnecting recently with our joint accounts, he had told me that he didn’t receive the KSO checks anymore and that he didn’t understand and that it was built into his salary. And the reality is that he did receive it and it went into his own personal account. And he didn’t tell me about it until a couple of weeks later he told me the truth.

Ramit Sethi: [00:03:35] How did you find out?

Ashley: [00:03:38] I just knew. There was my intuition that he had received it and he wasn’t being honest. So I asked actually to look at his personal account and he never shows me his personal account. And he did this one time and the deposit was in there. So that’s when I saw it.

Ramit Sethi: [00:03:53] And when you brought that up to him, what did he say?

Ashley: [00:03:57] He said that he needed it to pay his credit cards, the $8,000. So that was his reasoning for taking it. With the amount of money, his salary that he makes, it doesn’t really add up to me. He says he’s putting $1,800 into his own personal account, but it could be more, I don’t know.

My credit card bills had gotten beefy because we went on a family trip. So I’d put all the airplane tickets on my credit card. And then also I was reserving the hotels because I tend to be the planner when we’re traveling. So my credit cards had gotten really big. I was okay with that because I knew the commission check was coming. And so I thought that we could tackle it when the commission check came. And so that’s what stressed me out, was that I couldn’t pay my credit cards because there was no money.

Ramit Sethi: [00:05:03] Charles, tell me your perspective. What happened with the commission check? Why did you hide it?

Charles: [00:05:10] Because Ashley and I were in a fight and we’ve been disagreeing on moneys and I’ve been accumulating a lot of this debt on my credit card that I wanted to get away from. When it started to accumulate that started to stress me out. And I wanted to pay for it. But she didn’t think so because she wanted to pay for other expenses that she wanted to take on. I take the burden of the majority of the expenses on a day to day basis. I take on a lot of our Comcast bill.

Ramit Sethi: [00:05:51] Hold on. How much money do you make, Charles?

Charles: [00:05:55] About $400,000 a year.

Ramit Sethi: [00:05:56] Why are we talking about your Comcast bill?

Charles: [00:06:00] Because you’re asking about all these expenses.

Ramit Sethi: [00:06:02] Comcast is 100 bucks a month. Why are we talking about that? That’s not why you’re in the red.

Charles: [00:06:07] It’s 250.

Ramit Sethi: [00:06:07] Okay, 250. The two of you make $534,000 and the first expenses you’re telling me about are your Comcast bill and cell phone bill. Do you already see the problem? 

[Narration]

This is just absurd. And it’s a great example of how people cause themselves to get stuck with their money. If you make $500,000 a year and your first response about expenses is to start talking about your Comcast bill, you have a serious problem. From the look on Charles’s face, I’m guessing he’s never actually been called out for his money attitude except obviously by his wife. 

You’ll notice this pattern of thinking small happens again and again. Last week, I helped Gavin and Carolyn stop talking about password managers and start thinking about their rich life. Today, I’m telling Charles that he’s not running out of money because of his Comcast bill. Guys, the key lesson here is to focus on the big wins. 

You’re not in financial trouble because of your lattes no matter who told you that. You’re in trouble because of your housing costs or car costs, debt, including student loans and credit cards and sometimes health care. It’s the big things that trap you, but it’s also the big things that can set you free. If you focus on those five big wins in life, you don’t ever have to worry about the price of coffee or your Comcast bill.

[Interview]

Ashley: [00:07:39] Charles sees money as his and “mine” and I see money as “ours.” When we got married, we didn’t talk about things. He has a lot of property, and I may get an inheritance. So I just assume we just put it all together and share it all, because this is what my parents did. So that’s my role models. He did not want to do that and put things in trust behind my back and we just never had a discussion about it. 

And now I’m in the picture and I feel like I’m a burden. He doesn’t want to take care of me. And I’ll say that and he will say, “Well, why do you need someone to take care of you? Are you trying to get someone to take care of you? Is that what you’re doing?” Yeah, when you’re in a marriage, it’s I take care of you, you take care of me and we work this out together. And I have come to terms with the premarital things.

Charles: [00:08:52] We both consciously came in guarded to try and build something together, but by building, we became more enemies than allies. And now that we’re here, we’re still arguing. I think we’re still in the mindset of our past relationships where we felt we were beaten down by our other partners. So I’ve been carrying all the debt in the family for a long period of time, which I’m okay with. 

We had some credit card debt that was piling up and we got into a fight again. And I felt like I had the burden of all this debt under my name and she didn’t want to relieve me of any of that debt. So I said, “Why don’t you transfer the Audi into your name?” She said, “No.” So I had a little bit of resentment. And now that we’re talking through this, I’m okay with carrying this. As long as we’re focused on paying all this jointly, I’m okay with it.

Ramit Sethi: [00:09:53] That’s the way to go.

Charles: [00:09:54] And before I was just resentful of the arguments and the trust of, “Hey, we’re going to pay this off together and we’re going to agree to do this.”

Ashley: [00:10:06] Okay. Because you keep saying, “That’s your car. That’s your car. That’s not my car. That’s your car.” And I feel like it’s our car. Both cars are our car. If we were to get divorce, guess what the judge would say, both cars are our cars. We’re both responsible for the debt and we’re both responsible for the other one that we sell. It’s us together. It’s ours. It’s not yours. It’s not mine.

Charles: [00:10:31] Did you hear what I just said?

Ashley: [00:10:35] Yeah, that you’re okay with it now, but I’m struggling.

Charles: [00:10:39] Help me understand why you’re struggling when I just agreed to do this together.

Ashley: [00:10:45] I’ve just been hearing this for so many years that I want it to happen. I want it to happen.

Charles: [00:10:54] I’m telling you I want the change and I want this to change.

Ashley: [00:10:57] I do, too, that’s why I’m here.

Ramit Sethi: [00:11:00] It’s going to be tough to move forward if you’re both constantly living in the past.

Ashley: [00:11:05] Yeah.

[Narration]

Ramit Sethi: [00:11:08] I don’t know if they really want to change. I don’t know if it’s too late. But I do know that they’ve never really talked about money in an honest way. I can tell that from just a few minutes of talking to them. Whenever I ask people if they want to change, they almost always say yes. That’s because it’s easy to say yes. It’s easy to claim you want to change. But when people see what it actually takes, many of those same people vanish. 

I don’t mind if someone looks at what it’ll take and they consciously say, “Hey, I’m not going to do that. It’s not worth it for me.” But that almost never happens. It’s much more common that someone will tell me they want to change with their money, and then they’ll simply not do it. They’ll do one rich life review, then they’ll stop or they’ll try talking about money and it will end up in a fight again. And they’ll say, “See, I knew it would never work.” 

If you want to change something big like your money, your body, your psychology, yeah, it’s hard. The first time you try, you will fail. We have to expect that we will fail. It took a lifetime to get to where you are. It will probably take years, if not the rest of your life, to truly change. 

I’m over people saying two minute abs. That’s not how it works. Two minutes to financial freedom. It’s bullshit. It will probably take you a lifetime to truly change. But what I try to do on these calls is to find out if they’re honest about actually wanting to change. I don’t think most people even know themselves. 

In Ashley and Charles’s case, to help them change, one thing I need to do is help them stop living in the past. I need to get them to focus on where they are today and where they want to go. So to do that, I asked them to fill out a conscious spending plan before getting on this call with me. We’re going to go through it together. By the way, to get your own copy of the conscious spending plan, go to iwt.com/episode47.  Now listen to them describe how it felt to fill out the plan together. 

[Interview]

So let’s look at the numbers here. I had you go through a conscious spending plan before we got on this call.

Charles: [00:13:35] Yeah.

Ramit Sethi: [00:13:36] Now, what was it like to do this conscious spending plan together?

Charles: [00:13:40] Well, I have spreadsheets and a budget, but she just kept saying, “No, wrong, wrong, wrong, wrong, wrong.” I said, “Okay, nice.” It was a little uneasy during that exercise.

Ashley: [00:13:54] It was completely frustrating. It was very challenging because I don’t know what’s going on. I have spreadsheets, I don’t know what’s real, what’s not real. I’ve never seen accounts.

Ramit Sethi: [00:14:11] Okay, so here I see gross monthly income of $35,000, which adds up to $420,000. Isn’t that missing almost $100,000?

Ashley: [00:14:31] This was rough numbers. We did not–

Speaker3: [00:14:35] It’s pretty rough. Wait. It’s so rough that it’s missing over $100,000.

Ashley: [00:14:43] Well, I don’t know. Again, because nobody knows what’s going on except for maybe Charles knows his number.

Ramit Sethi: [00:14:51] No, no, no. Well, let’s just do it right now. See, this is one of the things that couples often use to stay stuck. “Well, we got the money coming in here and the RSUs and the KSOs, and blah, blah, blah.” Why don’t we just start by putting it all out on the table? Then we can start chopping up things and moving them over here and there. Let’s just put it all out on the table. What is your gross monthly income? [Silence]

[Narration]

No. Your podcast player is not malfunctioning. That silence is that they simply don’t know the answer to the most basic of questions, “How much do you make?” They really don’t know. What an effective shield that must be to avoid ever having to talk about money. They make over $500,000 a year and they’re off by over $100,000. 

Now part of that confusion comes from all the different ways they make money. Charles has KSO, so basically a bonus. He also has RSUs or restricted stock units which are company shares that vest over time. Just for fun, let’s listen to that deafening silence when I ask them how much they make again.

[Interview]

What is your gross monthly income?

Ashley: [00:16:14] Well, let’s see. So we’re missing some.

Charles: [00:16:21] I’m bringing mine up just to make sure that I’m getting the exact number.

Ashley: [00:16:33] So I’ll look at my last paycheck.

Ramit Sethi: [00:16:50] I’m going to skip ahead here, not to end your suffering, but to end mine. I spent so long working through basic numbers with them. Let me just skip to it. And notice how confused they are about their own numbers and how confusing this must be to their partner.

Ashley: [00:17:08] I can give you my net paycheck, 9,930, but I get paid 10 months out of the year.

Ramit Sethi: [00:17:16] Ashley, what do you do to get paid only 10 months a year?

Ashley: [00:17:19] I’m a school nurse.

Ramit Sethi: [00:17:20] Cool. Charles, what do you got?

Charles: [00:17:23] Take home 4,393 times 2. That’s take home.

Ramit Sethi: [00:17:26] Take home is 8,786.

Charles: [00:17:30] Yeah, and then every quarter I get a KSO. So it’s very sometime time based on it. So I would say 5,900.

Ramit Sethi: [00:17:38] 5,900 per quarter is 23,600 in addition.

Charles: [00:17:43] That’s correct.

Ramit Sethi: [00:17:44] Okay, fine. And is there some RSU you want to put in here too?

Charles: [00:17:49] 30,000 per year.

Ramit Sethi: [00:17:52] So $400,196, does that sound right?

Charles: [00:17:55] Yeah, that’s perfectly right.

Ramit Sethi: [00:17:57] So what’s the take home on that?

Charles: [00:18:03] Gosh. Eliminate the RSU because I don’t pull anything out of there.

Ramit Sethi: [00:18:08] I just want to know the take home. Just tell me the number.

Charles: [00:18:11] 25,636 [inaudible 00:18:13].

Ramit Sethi: [00:18:14] 25,636 net per month.

Charles: [00:18:19] That’s about right, yeah.

Ramit Sethi: [00:18:22] Do you guys see how already there’s so much that you two have not talked about? You’re giving me these numbers. So one of them’s in 10 months, one of them’s in a year, one of them’s by month. It’s very confusing. That’s the whole point of the conscious spending plan is you put it in the same format so you’re all working from literally the same page. 

[Narration]

Let me recap. Ashley’s gross monthly income is $11,189. Charles’s gross monthly income is $33,349. 27,000 of that is cash, and the remaining $5,000 to $6,000 is stock. At this point, I don’t know. Maybe I have all these numbers wrong. I don’t know what the hell is going on anymore. I’ve been listening to them talk about decimal places and quarterly bonuses for so long. I have no idea anymore. Basically, they make a shitload of money. That’s all you need to know. 

Now most households won’t have such a complex financial picture. But this is a great example of how couples let complications stop them from getting on the same page. Listen, I don’t know shit about measuring a house, but I’m going to go out on a limb and assume you can’t measure half of your house in inches and then the other half in centimeters.

Ramit Sethi: [00:19:39] You can’t compare annual incomes versus incomes from 10 months versus incomes from quarterly bonuses. You need to standardize everything. You can use my conscious spending plan on the podcast page, iwt.com/episode47 to do this. Ad now I want to highlight something interesting for you. A lot of you think if you just had transparency in your relationship, suddenly you’d feel better. Transparency, that’s all I need. Transparency. 

Transparency is highly overrated. Yes, transparency is good. It’s table stakes in a relationship. But a lot of you think it’s going to magically solve your problems. Really? Well, here we have a beautiful case study. Ashley just learned about 10,000 a month coming in that she didn’t know about. So do you think it actually changed the way she feels about money now that it’s more transparent? Let’s find out.

[Interview]

I’d like to just show you something. So currently you wrote that your gross monthly income is 35,000. In reality, it’s $44,511.

Ashley: [00:20:52] Wow. Why is our bank account always empty? Because I don’t see that money going to our joint account.

Charles: [00:21:01] I don’t know where the money is going.

Ashley: [00:21:03] I don’t know why $13,000 goes out the window one month for all of his credit cards. I don’t know why.

Ramit Sethi: [00:21:10] That seem curious, Charles.

Charles: [00:21:13] Yeah, I agree. I mean, I spend the money on furniture, on tires, on getting cars.

Ashley: [00:21:20] Can you show the KSOs, what you get per a KSO?

Charles: [00:21:23] Some of these are here.

Ashley: [00:21:30] So you got $13,000.

Charles: [00:21:35] In the KSO. Zero is take home. You see that?

Ashley: [00:21:39] So you got a $13,000 KSO check on April 26?

Charles: [00:21:45] That goes into the E*TRADE account.

Ashley: [00:21:51] What E*TRADE account are you referring to and why isn’t it going to us? Because I feel like we’re drowning.

Charles: [00:21:58] This is cash in the E*TRADE account.

Ashley: [00:22:02] Why are you putting cash in an E*TRADE account?

Charles: [00:22:07] It’s not cash. Actually, it’s not cash. It’s stock.

Ramit Sethi: [00:22:12] Charles, what is she really asking?

Charles: [00:22:15] She thinks I’m taking this money and putting it somewhere else and hiding.

Ramit Sethi: [00:22:19] Are you?

Charles: [00:22:20] No. It’s in the E*TRADE account.

Ashley: [00:22:24] I don’t know about this money. I’ve always been so confused as to, like, you make so much money and we have no money. We have to take money from our brokerage account sometimes because we don’t have any money in our joint account.

Ramit Sethi: [00:22:40] Charles, you got to stop looking at the screen, man. Your screen is not going to help you on this one.

Charles: [00:22:44] No, no, no. Because I want to show you where the money is.

Ramit Sethi: [00:22:47] Charles, before we get into you showing your P&Ls, and this is a handmade document in Google Docs financial statement, what do you think that Ashley’s reaction is going to be to this?

Charles: [00:22:58] I don’t know.

Ramit Sethi: [00:23:00] I know. I could tell. I never even met her. I know looking at her face. What do you think it’s going to be?

Charles: [00:23:06] I don’t know.

Ramit Sethi: [00:23:08] Can you guess? You’ve been married five years. Do you think that this is going to actually address what she really wants to know? 

[Narration]

This is getting frustrating. Charles is so focused on his spreadsheets and his weird P&Ls that he won’t even look up at me, and he can’t even bring himself to guess what his wife is really looking for. He keeps getting drawn into the weeds, not realizing that the weeds are the problem. When I press him, suddenly they both start to tell me the truth–the actual truth.

[Interview]

Do you think that this is going to actually address what she really wants to know?

Charles: [00:23:54] I don’t know, actually. Ashley, what are you thinking?

Ramit Sethi: [00:23:57] That’s a good question, Charles. Keep going.

Charles: [00:24:00] I want to know what you’re thinking because I want to show you where that money is going, that I’m not taking it anywhere.

Ashley: [00:24:08] But we have a brokerage account together, a joint account, and it’s been sitting there doing nothing. That money, you’re watching it grow. I don’t see it grow. I had no idea you were putting that money into an E*TRADE account. And my heart is–

Charles: [00:24:26] I didn’t set up that account. That’s a company account that was set up by my company.

Ramit Sethi: [00:24:33] Can I just make an observation here, just point out what I’m seeing?

Charles: [00:24:39] Mm-hmm.

Ramit Sethi: [00:24:39] Ashley is frustrated because you both make $530,000 plus, but you’re in the red. You’re having to draw from here and there, there’s no communication, and she feels like there’s money that’s being hidden. And she does have a reason to feel that way. She did discover that you were putting money and secretly paying off credit card debt. Charles, you’re saying, “Well, I have this money, but it’s actually an RSU and it’s actually not me creating the account. It’s employer created. And I would rather see that money grow than take it out and pay taxes on it.” Am I fairly representing both of your positions here?

Ashley: [00:25:24] Yes.

Charles: [00:25:24] Yes.

Ramit Sethi: [00:25:27] Well, do you see how fucking crazy this is? What the hell is wrong with you two?

Ashley: [00:25:33] I feel like he wants to do his own deal, and he looks at it as his own money. And I’m sitting over here drowning, begging, like, “Oh, we don’t have any money to go to the grocery store.”

Ramit Sethi: [00:25:48] Charles, she makes a pretty valid point. She can’t afford groceries and you got this $13,000 every quarter or whatever it is being squirreled away in some account that she doesn’t even know about. It feels a little unfair, wouldn’t you say?

Charles: [00:26:06] Yeah.

Ramit Sethi: [00:26:08] She doesn’t have money to pay for apples. So what is all this compounding matter if your relationship breaks apart because you can’t afford 20 bucks at the grocery store? It doesn’t make sense to me. What’s really going on, Charles? Why do you have all this money stuff going here and there? And I don’t understand it. Tell me. I want to know your position.

Charles: [00:26:34] I want to retire early. And I want to save as much money as possible to be able to retire in seven years. My earning years are probably at the peak right now, and I want to take advantage of that as much as possible and save as much money as possible.

Ramit Sethi: [00:26:54] Got it. So you want to sprint as fast as you can, and I’m going to guess that you want to minimize your expenses for the next seven years. Am I reading that right?

Charles: [00:27:04] Yes.

Ramit Sethi: [00:27:05] And so when you have to pay for skis or Comcast or whatever, how does that feel to you?

Charles: [00:27:16] A little bit of a burden, but a necessity.

Ramit Sethi: [00:27:22] You feel resentful?

Charles: [00:27:23] A little bit, yeah.

Ramit Sethi: [00:27:24] Ashley, did you know any of this?

Ashley: [00:27:29] No, because I’ll tell you why. He goes on extravagant trips with his friends. He goes to Vail and skis and spends a boatload of money. He’s been on a ton of ski trips this winter. So I don’t see him living the life of scrimping and investing.

Ramit Sethi: [00:27:52] You started using my recommended system, a joint account and two separate individual accounts with guilt-free spending. I was happy to hear that, but it seems that you’re not doing that anymore. What happened?

Ashley: [00:28:09] Charles has decided that he doesn’t want to put money in the joint account anymore and I do.

Ramit Sethi: [00:28:14] Charles, whenever anyone deviates from my plan, I always get to ask the question, why? Tell me why.

Charles: [00:28:23] We got in a big fight about a year or so. I don’t know how long it was. And out of that joint account, she liquidated all of the account.

Ramit Sethi: [00:28:36] What! What happened?

Charles: [00:28:39] When she did that it scared me the bejesus like, “Oh, wow, all that money is gone now.” And I felt very unsafe in her doing that.

Ramit Sethi: [00:28:54] Why did you think she did that?

Charles: [00:28:57] That if we got a divorce or got separated, she would take the money and support herself and her kids.

Ramit Sethi: [00:29:07] Ashley.

Ashley: [00:29:10] Back up just a little bit. When we met, we had no money. We had no savings. We had nothing. And we built up a little bit of money, like $3,000. We got in a big fight and I told him to leave. And I did as a knee jerk reaction because I’d just gotten out of my divorce where I got financially very screwed big time. 

I ended up with a lot of debt. So I got scared. In a knee jerk reaction I took the $3,000 and put it in my account for about 6 hours and then I put it back because we had a discussion. I knew it was wrong. And that was not a year ago. That was five years ago when we first moved into the house that we’re living in now. So that’s what happened.

Ramit Sethi: [00:29:58] Okay. So you both have things you’ve done in the past that have made your partner not trust you?

Ashley: [00:30:05] Yes, but that was a long time ago. And I feel like I’ve proven to him. I don’t even think we had that joint account. We’ve had a joint account. I proven to him over and over and over again. I’ve never taken any money. I’ve never done anything like that since for five years.

Ramit Sethi: [00:30:23] Do you both want to create a joint account?

Ashley: [00:30:26] I do.

Ramit Sethi: [00:30:28] Charles?

Charles: [00:30:29] Yeah, sure.

Ramit Sethi: [00:30:31] Okay, so what’s stopping the both of you from doing it? You know how.

Charles: [00:30:35] But we have a joint account.

Ramit Sethi: [00:30:37] Why did you stop?

Charles: [00:30:39] Because all this arguing that we kept arguing back and forth.

Ashley: [00:30:41] It started with him taking that money. That’s when he decided. I feel a little controlled. I feel like it’s a control piece.

Ramit Sethi: [00:30:52] Yeah.

Ashley: [00:30:54] I want everything to be open and honest and transparent, Ramit, but I want validation because so much money has been, I feel, hidden. I want validation to see that that is that right amount.

Ramit Sethi: [00:31:05] I mean, the fact is you two didn’t even know how much you made. You were off by over $100,000. So there’s a variety of reasons why you’re not transparent. Some of that is just pure competence. You two don’t know how to calculate your numbers. And some of it is history, deception, and other reasons. Now, transparency will be on the table. That’s a given.

Ashley: [00:31:31] He doesn’t want to.

Ramit Sethi: [00:31:33] He’ll do it. Charles, would you be open to being transparent?

Charles: [00:31:36] Yes.

Ramit Sethi: [00:31:36] Done. I will make sure that it’s transparent. For all the money you make, over half a million dollars, you don’t even know how much you make. You don’t know how much you spend. You come in here talking about Comcast, which is the least of your problems, and you have all this complexity of quarterly payments and 401Ks and all this stuff being taken out. Think of what a sixth grader would understand when it comes to money. I’m talking one page. That’s the level of simplicity the two of you need to start. 

How much do we have? The numbers are quite large. You have $694,000 of investments. Your savings, $20,000. That’s way too low. But okay, at least it’s got a few zeros in it. You have debt of $135,000. Don’t worry. We’re going to talk about that. The point is, you have some of these basic numbers out here. 

I’d like for you to put them together using the conscious spending plan, single page, and then you two can agree, “Hey. Oh, I didn’t know we have 135,000. I thought it was less. Can we double click on that? Can we learn a little bit more? Let’s make sure we both understand it correctly.” One of the reasons that there’s conflict is that you two don’t know what you actually have.

Ashley: [00:32:55] I think that that comes from no desire to want to share. I feel like I’m in the dark. That’s how I feel.

Ramit Sethi: [00:33:07] Charles seems relatively open, willing to share. I don’t think his style was particularly good, the P&L and all that shit. Even I don’t want to look at that. But he seems pretty open in terms of like, “Hey look, here’s my paycheck, here’s my credit card payments.” I don’t know. What do you think about that, Ashley?

Ashley: [00:33:25] I think I need validation more. Yes, I hear an E*TRADE account, but what does that look like? Why can’t you show me that account?

Charles: [00:33:34] I showed you the account. I will show you all the accounts.

Ramit Sethi: [00:33:38] Watch this. This is not the real question. Open up that E*TRADE account, Charles. Ashley, as he’s opening it up, I’m going to talk to you for a second. So you’ve asked him, “Why won’t you show me the E*TRADE account?” I’m going to get him to show you that.

Ashley: [00:33:56] Okay.

Ramit Sethi: [00:33:57] How do you think that seeing this is going to make you feel?

Ashley: [00:34:03] Temporarily probably better, but then tomorrow it could change. I feel like I’m in the dark about our future. Initially, you asked us the question, “How do you feel about money?” And he’s excited. And it’s because he knows what’s going on with everything. He sees that everything is making money. I don’t see any of this. What I see is our joint account with a $0 or a negative amount. And so–

Ramit Sethi: [00:34:36] So again, how do you think that this is going to make you feel when you get the exact thing that you asked for?

Ashley: [00:34:43] I think it will reassure me, but I want for us to be open about all these things in the future. I’m afraid it’ll be a temporary thing and then it will go away.

Ramit Sethi: [00:34:55] Let’s see. Charles.

Charles: [00:34:58] Yeah.

Ramit Sethi: [00:34:58] Go ahead and share your screen. Talk us through what we see on screen here.

Charles: [00:35:03] So these are the total assets that money is coming in. So every time that the assets come in, it’s 21,000. We have a current count value of 7,000, potential benefit of 132,000 for 139. And then I have in this individual account is what I said every year I get to buy stock at a lower price and it gets invested in here. Every time the additional stock comes in to my vesting period, it’ll start jumping into the potential benefit as soon as I hit certain periods in my work career. So every quarter–

Ramit Sethi: [00:35:47] Okay, that’s enough. Charles, all those words you just said, what do you think Ashley took away from that?

Charles: [00:35:55] Mumbo jumbo.

Ramit Sethi: [00:35:56] Exactly. Look at her face. Charles, what’s up, man?

Charles: [00:36:02] I’ll try to keep up.

Ramit Sethi: [00:36:04] I do this for a living. Even I don’t know what the hell’s going on right now. You just spurted a million numbers at me. Charles, you are not actually addressing what she really wants to know. What is she really asking?

Charles: [00:36:19] Ashley, what are you looking for?

Ashley: [00:36:25] Security and awareness of our money and feeling of “our money” instead of mine and yours.

Charles: [00:36:36] I can show you these numbers every month and we can talk about it. I’m happy to do that if you want to do that on a monthly or quarterly basis. I’m just saying that that money is there and it’s growing. It’s growing for us. And I can show you that the money is going there from the paycheck. I want to make you feel safe and secure as it relates to the money situation. And I get caught up in what Ramit had said earlier that I do start spitting out numbers and it may sound like mumbo jumbo to you.

Ramit Sethi: [00:37:06] It is mumbo jumbo, Charles, because you’re not actually addressing what she really wants to know. Which is what?

Charles: [00:37:18] Where the money is and that she’s part of the decision making process.

Ramit Sethi: [00:37:22] Yeah. So how do you show that, Charles?

Charles: [00:37:26] I don’t know, Ramit. I’m trying the best that I can. I think that how I explain it would be best to explain it, but I think–

Ramit Sethi: [00:37:36] Maybe it’s not about explaining. Charles, maybe it’s not about explaining. Let me ask my question again. Notice my use of words. How do you show her that you’re doing this together? You’re stuck?

Charles: [00:37:55] Yeah.

Ramit Sethi: [00:37:56] Okay. Let me give you a hint. What was the thing that she is most frustrated about when it comes to our money? There’s one specific moment. How does it manifest?

Charles: [00:38:08] Yeah.

Ramit Sethi: [00:38:09] Is it at the grocery store?

[00:38:10] Yeah, there’s no money in advance.

Ramit Sethi: [00:38:14] What would go a long way in showing her that you’re doing this together?

Charles: [00:38:18] Jointly, putting money into a joint account. The money is there.

Ramit Sethi: [00:38:24] Yeah. And even saying, let me give you an example, “Ashley, I know it must be frustrating to go to the grocery store and not have enough money in the account to buy groceries. And it seems crazy. We’re making over half a million dollars a year. Something’s not working right. If you go there and you feel like there’s no money in the account. So I want to come to an agreement with you so that you never feel that way again, so that you feel safe.” Let me pause right there.

Ashley: [00:38:56] I’m already crying. You haven’t even said it. It makes me feel–I don’t want to feel that way ever again. And you taking that away sounds amazing.

Ramit Sethi: [00:39:12] Why are you crying?

Ashley: [00:39:17] I think it’s really hard. I feel

Ashley: [00:39:28] I want to  say insecure, but I feel like a failure. When I can’t buy food for the kids it’s the worst feeling in the world. I feel like we are poor and we have no money. And I want I don’t want that. I want to be able to have a wonderful life for our kids and be able to do something simple, like go to the grocery store and buy groceries or pay a bill or buy them clothes. I can’t even I can’t even Venmo them money when they’re out and about asking for food when they’re not with us, but when they’re with their friends. I can’t even do that because there’s no cash.

Ramit Sethi: [00:40:17] So, Charles, hearing this, what does it make you realize? Anything?

Charles: [00:40:25] I feel terrible. I feel like there’s mismanagement of funds and I don’t want her to feel that way and our kids to feel that way. I feel horrible.

Ramit Sethi: [00:40:35] So, Charles, when I spoke to Ashley that way, what did you notice about the way that I approached it?

Charles: [00:40:44] You were curious, trying to understand and listen.

Ramit Sethi: [00:40:54] I’m sure she’s talked about the grocery store example many times in the past, right?

Charles: [00:41:01] Yes.

Ramit Sethi: [00:41:01] And yet when you’re listening, you can pick up on it in 15 minutes. People, especially the people you love when they whisper something, a great author said, treat it like a scream. If they say something once or twice, treat it like they’re screaming it in your face. If your wife or your husband says, “I don’t like going to the grocery store and not knowing I have enough,” that’s a red flag, red alert. Let’s fix it. I love you. And how do you want to fix that? I would like for the two of you to come up with a solution together. So I’m going to sit back and listen to you.

Charles: [00:41:47] Ashley, I would like to create a joint budget monthly from that 90% of money that comes into our joint account on a monthly basis, and we stick to it. That would give adequate money to all our expenses and especially food bill. Then we don’t have to have this conversation so that you don’t ever have to feel that way.

Ashley: [00:42:13] It would be awesome and I am down with talking about all this stuff together. I really would like that. I want to be on the same page with you. And if you think that I’m spending too much money at the market, then I want to have a conversation about it. So it’s just I would love to do that. I want to know about it. It makes me feel secure if I know what’s going on.

Charles: [00:42:46] So let’s agree to sit down and create a budget that we both agree on and be open and transparent like you said.

Ramit Sethi: [00:42:54] That was awesome. I love seeing the two of you unified. And I like that it’s a simple example–groceries. Let’s start there. Simple. And then it can become increasingly more complex as you build those skills.

[Narration]

It’s demoralizing to know that you make hundreds of thousands of dollars a year, and yet you can’t pay your grocery bill. Now, luckily, their income is so high that once Charles and Ashley shift their focus, they’ll start to see things fall into place almost immediately. Surprisingly enough, once I open up the conversation around the joint account and shared expenses, you’ll hear them start to agree and collaborate on a plan. 

This is the magic of a conscious spending plan. By getting everyone in one sheet, you can move past the mechanics and focus on where you want your money to go.

[Interview]

So let’s just be hypothetical about this for a second. I’m not going to ask you to commit to changing anything about your joint setup. But if you were to create a joint account and each of you contributed to it, how would you decide how much you’d put in there?

Ashley: [00:44:09] I would like to put all of our account except for a decided amount of sum of money.

Ramit Sethi: [00:44:14] How much? Tell me.

Ashley: [00:44:17] $1,000 a month to spend on how we choose.

Ramit Sethi: [00:44:21] Great. That is your proposal. Charles, what’s your proposal?

Charles: [00:44:26] 90%.

Ramit Sethi: [00:44:28] Wow. So one of you says $1000 and the other says 90% and then 10% is for fun money.

Charles: [00:44:37] Yes.

Ramit Sethi: [00:44:37] You’re actually pretty close. Do you realize that?

Charles: [00:44:42] No.

Ramit Sethi: [00:44:43] That’s really close.

Ashley: [00:44:46] Did we disagree on something? Wait a second.

Ramit Sethi: [00:44:49] It’s pretty amazing. I’m really happy to hear that. Okay, that’s cool. So let’s come to a conclusion right now. Go ahead, have the discussion. One of you says 1,000 each. One of you says 10% each. Talk about it.

Charles: [00:45:05] I propose 90/10. Would you be okay with that?

Ashley: [00:45:11] Yes, I would be okay with that. I would feel like we were working together instead of working against each other.

Charles: [00:45:20] Can I go above and beyond that and say we have to create a plan for that 90% on a monthly basis and stick to it?

Ashley: [00:45:29] Absolutely. I would love to do that with you. That’s what I really want. That’s what I’ve been asking, is to work with you and be partners in this. And I would like to be a part of that plan and make some decisions as well.

Ramit Sethi: [00:45:46] Okay. Great. Hey, round of applause for everybody here. Everybody give yourself a round of applause. I’m not kidding. It’s sometimes important to do something a little theatrical. And that was cool. You just came to a huge conclusion. Let’s take the win.

Ashley: [00:45:59] Yeah, absolutely.

Ramit Sethi: [00:46:02] That’s cool. It started with, like, we’re up in the clouds and here we go, 90% joint. That’s awesome. And 10% to yourself also very cool. Now I want to get a little bit more specific. So when we say 90/10, what exactly does that mean?

Charles: [00:46:25] Take home. That’s money that comes in from–like I get paid from ADP, so I can easily do that 90/10 split.

Ashley: [00:46:33] Ashley.

Ashley: [00:46:37] I don’t have that option through my pay check, so I would have to manually do it.

Charles: [00:46:44] So I would propose all the when goes into the joint account and automatically every 1st or 2nd when the money comes in. 10% of that money goes to your personal. Or vice versa, 90% automatically transfers into the budget.

Ashley: [00:47:02] So that’s our money total, not 10% of my own money. It’s 10% of what we put in together.

Charles: [00:47:15] Say that again.

Ashley: [00:47:16] So it’s not 10% of what I’m putting in every month, correct?

Charles: [00:47:22] Yeah, it is.

Ashley: [00:47:23] It’s 10% of the total of what you’re putting in and I’m putting in.

Charles: [00:47:29] You’re saying now that’s going to be 20%. So that’ll be 10 and 10.

Ashley: [00:47:38] Whatever amount of money we put in per month, whatever that looks like, what is that number, Ramit, if you could help?

Ramit Sethi: [00:47:44] So I’m going to propose to use simple math. I’m going to propose that for this exercise, Charles, you contribute 4,000 a month into the joint account. And for the example of math here, Ashley, you contribute 1,000 per month.

Charles: [00:48:02] Now that’s every 15 days.

Ashley: [00:48:09] Oh, yeah. So it would be 8,000 per month for you. I’m still confused as to why you’re putting in the same amount per month as I am and I make $135,000.

Charles: [00:48:27] I don’t think you heard what he said.

Ashley: [00:48:33] We’re putting in an equal amount of money into the joint account, but you make way more money.

Ramit Sethi: [00:48:37] Are you guys ready to actually listen to me or do you want to just keep doing what you think you know?

Ashley: [00:48:40] Yeah, sorry.

Ramit Sethi: [00:48:42] Because I don’t need to be here.

Ashley: [00:48:44] Oh, please, you’re helping us.

Ramit Sethi: [00:48:47] What simple math do you want to use for this monthly example? I noticed that both of you are covering up the real issues with layers of complexity. Is it 15 days or 30 days? Is it I only get paid for 10 months? Is it gross? Is it net? It’s too many variables. I’m just trying to simplify this down so we can actually get the logic and then we can apply it to the numbers. So for this exercise, every month, Charles contributes $4,000 into the joint account. It’s just a made up number. And Ashley contributes $1,000. So how do you want to split that up?

Ashley: [00:49:34] So it would be 90/10. It would be both of us put in $5,000.

Ramit Sethi: [00:49:39] No, you don’t both put in $5,000.

Ashley: [00:49:40] I mean, total. I put in 1000. He puts in 4,000, 5,000 total. So 90% of that would stay in the account and 10% of that, which would be $500 would go into our personal accounts.

Ramit Sethi: [00:49:55] Okay. So that’s your proposal. You take 10%, you split it in half, and each of you gets that same amount. Charles, I’m willing to bet you have a different perspective.

Charles: [00:50:06] I’m okay with that.

Ramit Sethi: [00:50:08] Really?

Charles: [00:50:09] Yeah, I want to keep it simple.

Ramit Sethi: [00:50:12] Great. Love hearing that. I’m going to lock that in and I’ll take the win on that one too. Let me just explain what happened so that you don’t feel bamboozled. Typically we talk about spending money proportionately. So if somebody makes more, they pay more towards the joint expenses. That’s typically pretty fair. Well, also, you might apply that to how much percentage they take out. If Charles is making four times the amount, then his discretionary income might be four times higher than yours, Ashley. That would be fair.

Charles: [00:50:51] I’m good with that.

Ramit Sethi: [00:50:53] I’m sure you’re good with that, Charles. But I think what Charles has generously just agreed to is, “No, I’m actually totally cool doing 50/50.” And what that means is it actually reduces the amount that Charles gets for his discretionary income, and it actually increases the amount that you get, Ashley, for your discretionary income. So it’s quite generous of Charles. And fair is just a word, fair is what the two of you decide it is. I just want to point out, I think Charles is pretty generous to offer that. I think it would be nice maybe to acknowledge that he’s doing something quite generous.

Ashley: [00:51:36] Yeah, thank you. I’m surprised. It’s a nice surprise. Thank you for being generous.

Charles: [00:51:45] You’re welcome.

Ramit Sethi: [00:51:46] Awesome. Okay, great. So to simplify and summarize, Charles contributes 4,000 a month, actually contributes $1,000 a month. You have $5,000 in your joint account and you will each take 5% of that money. And it goes 5% to Ashley, 5% to Charles. Do we all agree?

Charles: [00:52:13] In theory, yes.

Ashley: [00:52:15] In theory.

Ramit Sethi: [00:52:16] In theory, yes. Fine. That’s all I want. Perfect. Okay, good. Perfect.

[Narration]

Ramit Sethi: [00:52:21] Have you heard that phrase “Don’t let perfect be the enemy of good.”? That’s what Ashley and Charles have been doing for years, and it’s almost driving them to divorce. They are so obsessed with getting all their numbers perfect that they never even pulled out a sheet of paper and a crayon and just wrote down the important ones. 

And Charles especially is really living in the weeds, all these complicated factors preventing him from just saying, let’s simplify things. How much do we make? How much do we spend? How do we want to contribute to our joint expenses? In my book, I Will Teach You to Be Rich, I talk about the 85% principle. It’s better to get 85% of the way there than to dream about getting 100% of the way there and actually do nothing. 

I think we’ve established that you both have a vision, you both want transparency, you both want to be open, you have some desires that you should probably talk more about, early retirement, etc. I’m looking at these expenses and I just want to probe on a few things. So you have a $3,800 a month rent or mortgage, which is quite good. It’s great, very good. One of the best things I can see from a single individual or a couple is underspending on their housing. And you two are doing an awesome job. So well done.

Ashley: [00:53:52] Thank you.

Ramit Sethi: [00:53:53] I love seeing people make strategic decisions like that. You have a car payment of $475. Is that one car?

Charles: [00:54:00] That’s one car, yeah.

Ramit Sethi: [00:54:02] You have $10,000 of debt payments per month. What’s this?

Ashley: [00:54:10] This is credit card.

Charles: [00:54:12] So that’s the credit cards that we’re using for the expenses.

Ramit Sethi: [00:54:15] You pay it off every month?

Ashley: [00:54:17] Yeah.

Ashley: [00:54:17] I don’t.

Ramit Sethi: [00:54:19] Ah. Shall we talk about this?

Charles: [00:54:22] Yes.

Ashley: [00:54:22] Yes. We had this conversation before.

Ramit Sethi: [00:54:27] Okay. Tell me.

Ashley: [00:54:28] I was carrying a balance and so I finally took some savings that we had, and I just paid it all off because I can’t deal with that credit card.

Ramit Sethi: [00:54:37] No more of this. It’s just bad money management. You cannot be drawing from savings to pay off credit cards when you’re making $530,000. It makes no sense. So you made the mistake once. Fine. It’s not going to destroy the two of you. In fact, what’s better is that the two of you are now psychologically aligned and structurally you’ll get your conscious spending plan all set up and get it all together. Now that you have 90% of your incomes going to joint, is paying this credit card bill every single month in full going to be a problem?

Ashley: [00:55:16] Not for me, no.

Ramit Sethi: [00:55:18] Not for either of you. You two are a team now.

Ashley: [00:55:20] Yes.

Charles: [00:55:20] Okay.

Ramit Sethi: [00:55:23] What’s up with this debt that says $135,000?

Charles: [00:55:27] That’s our school loans.

Ramit Sethi: [00:55:29] You’re going to need to add that to your conscious spending plan as a fixed cost. I would like to hear your initial gut take on how you want to start paying this debt off. Where does it come from?

Ashley: [00:55:45] I would like to have it considered a bill from the joint.

Ramit Sethi: [00:55:53] Charles.

Charles: [00:55:55] I was just going to take my RSUs and then pay off that debt.

Ramit Sethi: [00:55:59] Not anymore. That’s not how it works. Remember, you can’t be doing all these side band things. It’s going to totally screw up your entire trust system here.

Charles: [00:56:08] I hate that. I want to get that off.

Ramit Sethi: [00:56:13] That’s fine. Listen, if you hate it, like I said, some people really hate debt, but you have to respect the system. You cannot go around it because that is exactly what got you into this trouble here. I’m going to go and take the secret money and secretly pay it off and then not tell you about it. So what is a better way? You want to pay off this debt aggressively?

Ashley: [00:56:32] I would prefer not to use the RSUs because we would have to pay capital gains and I would rather make monthly payments if possible. Do you know what the monthly payments will be?

Charles: [00:56:44] Yeah, I think it was calculated like 1,200 or something like that.

Ramit Sethi: [00:56:48] It’s not that much for you guys.

Charles: [00:56:51] That seems like a lot to me.

Ramit Sethi: [00:56:52] Well, it seems like a lot because you don’t know any of your numbers here. Let me zoom out and allow you to hear some different numbers. You two make $530,000 a year. You think paying 15,000 bucks a year is a lot. It’s not. It’s nothing. Come on. You have a lot of money. 

Listen, rich people like you two have a lot of money sitting under their couch cushions, 10,000 here, 50,000 over there. It’s exactly. We already found all this money sitting around. There’s a lot of money to be found in actually looking at what you are spending and how your money is flowing and you could direct it to your debt. It’s not hard. Are you on board with me so far? Am I just speaking crazy?

Ashley: [00:57:42] No.

Charles: [00:57:42] No, I’m understanding what you’re saying.

[Narration]

Ramit Sethi: [00:57:47] I don’t know if he really gets it or not, but let me clarify what’s going on here. Like a lot of people, Charles absolutely hates debt. That’s fine. It’s a stylistic choice with money that usually manifests itself by people paying off their debt early, even if it’s not the mathematically correct decision. For example, if I had a 30-year mortgage with a 2.7% interest rate, I would never, ever pay it off early. That’s because I know I can make around 8% in the stock market.

So if I could, I would stretch that damn loan until I was sitting in a rocking chair and invest the difference so I could make more. Just kidding. Indian people don’t get rocking chairs. Again, that’s fine. Some people don’t mind debt. Other people hate it. Somebody like Charles would pay that debt off early just so he could feel better. And that’s fine. You don’t always have to make the mathematically correct decision. You want to make the right one for you. 

But the problem is virtually nobody actually runs the numbers. Instead, they let their feelings dictate what they do, “I hate debt. I need to pay this off. Haaa.” Stop it. If those same people sat down and ran the numbers for five minutes, they might discover they’re losing $75,000 by paying off their mortgage early.

Ramit Sethi: [00:59:14] In Charles’s case, he’s also losing the trust of his wife by doing all this secret stuff on the side. It’s like dealing with some emo teenager. I don’t know if this metaphor is making any sense at all, but basically, Charles, stop doing this shit. Run the numbers. There’s a lot of things that you’ve both agreed to. Simplifying your money. 90/10, that is huge. Never worrying about how much you have at the grocery store. These are big, big moves. You want to get on the same page. You want your money to be working together. Simple as that. 

Let’s just check this and move on to the next stuff, because we have a lot more important stuff than all this weird stuff about, should we wait on the debt and this and that? No. Put it in the fixed category in your conscious spending plan. Set up a number every month and it’s drawn directly from your joint account, which is going to be loaded with cash. What’s the smile on your face, Ashley?

Ashley: [01:00:15] I like hearing that.

Ramit Sethi: [01:00:17] Simple. Let’s get decisive. Yeah, I love the smile on both of your faces. And then you’ll notice that the conscious spending plan automatically adds 15%. Did you see that?

Ashley: [01:00:28] Mm-hmm.

Ramit Sethi: [01:00:28] How’d that feel to see?

Ashley: [01:00:31] It was a large amount number. It was like something else, another layer on top of the budget.

Ramit Sethi: [01:00:38] That’s right.

Ashley: [01:00:38] But it makes sense.

Ramit Sethi: [01:00:39] Yeah, for you it’s $3,000, which is a considerable amount, but you spend a lot. And that 15% accounts for that anniversary dinner that you forgot to put in here. It accounts for that last-minute trip that you had to take and you could not find a cheap flight. It accounts for all of those things–when your car breaks down, all of it. Also, let’s not forget about the income. The two of you forgot your income was down by $10,000 per month. So that’s a relief. Like I said, 10,000 here, 10,000 there starts to add up, right?

Charles: [01:01:16] Yes.

Ramit Sethi: [01:01:17] So you actually are in a fairly good position. Not fairly good. The two of you are fucking rich. What am I talking about? You make over half a million dollars a year. Let’s not kid ourselves. Hey, do you two know that you’re rich?

Charles: [01:01:29] No.

Ashley: [01:01:29] No.

Ramit Sethi: [01:01:30] Well, you are. You two make 530,000 a year. You are rich. You’re wealthy. You better accept it.

Ashley: [01:01:40] No.

Ramit Sethi: [01:01:43] You’re not accepting it.

Ashley: [01:01:44] It’s hard to accept.

Ramit Sethi: [01:01:45] Why?

Charles: [01:01:49] I feel it could all go away. I’m trying to make sure it doesn’t.

Ramit Sethi: [01:01:55] It can’t really go away. I mean, you have hundreds of thousands of dollars invested and you have savings. Well, your savings is not good, but your investments are quite large. Both of you have good incomes. So even if one of your incomes went away, you still have another income. Nothing like spending valuable time convincing two wealthy people that they’re actually wealthy. I’m like, “What planet am I on right now? What am I doing here?” You guys want to go your whole life playing defense?

Charles: [01:02:32] No, absolutely not.

Ashley: [01:02:35] No, I know. I feel like that’s where we’ve been playing, though.

Ramit Sethi: [01:02:39] Sitting here arguing about Comcast, such a waste of time. That’s a $3 question, literally. To the two of you it’s a $3 question.

Ashley: [01:02:51] How do you get past that, Ramit? So how do you shift? How do you make that shift?

Charles: [01:02:59] Now, what’s that psychological shift?

Ramit Sethi: [01:03:02] What changes your money psychology is that the two of you do not have a rich life vision together. You want to create one right now?

Charles: [01:03:13] Sure.

Ashley: [01:03:13] Yes.

Ramit Sethi: [01:03:15] All right, what is your rich life?

Charles: [01:03:17] I would like to live in three cities, so where we live now, Newport Beach, Keystone, Colorado, and New York City. I’d like to rotate between all three of them based on what we are doing and how we want to visit our kids while they’re in college or wherever they’re living for us to visit them.

Ramit Sethi: [01:03:41] What about on a given week? Right now, not 10 years from now, now. What is your rich life on a perfect week?

Charles: [01:03:50] I don’t know because I’m constantly working. I feel I can’t answer that right now.

Ramit Sethi: [01:03:55] So in other words, you want to wait for seven magical years and at the end of those seven years, magically, you’re going to be able to breathe and then figure out what you want to do with the rest of your life. How old will you be at that time?

Charles: [01:04:08] 57.

Ramit Sethi: [01:04:09] That sounds like a shitty plan to me. You want to be almost 60 and then deciding, “Hmm, what do I want to do?” You know anybody who’s 60 years old?

Charles: [01:04:20] Yes.

Ramit Sethi: [01:04:21] Some people in good health, right?

Charles: [01:04:23] Yeah.

Ramit Sethi: [01:04:24] Some people not so good health.

Charles: [01:04:26] Yes.

Ramit Sethi: [01:04:28] I think we’ve all heard stories about people who had grand plans to hike this and that and two weeks after they retire, they die.

Ashley: [01:04:35] Yes, he has a lot.

Ramit Sethi: [01:04:37] Yeah. It doesn’t sound like a great plan.

Charles: [01:04:41] I guess I got a better answer for that. I’d like to travel as much as we can afford with my wife and our kids.

Ramit Sethi: [01:04:51] Tell me more.

Charles: [01:04:53] Easy for us to get away every other week like we used to. The closest is about 2 hours we can drive to or we can fly to you for an hour somewhere to get to and spend quality time doing things that we want to do and spending as much time and doing as much things with the kids as we possibly can.

Ramit Sethi: [01:05:13] So traveling twice a month?

Charles: [01:05:15] Yeah.

Ramit Sethi: [01:05:16] Perfect. All right. Ashley, your rich life.

Ashley: [01:05:22] My life is similar to Charles’. I really love to travel. We love to play golf and see new places and try new restaurants. I’m a big food person, so I would love to be able to do those things without guilt. We have one kid in college. Go out and see him. So that would be my rich life today.

Ramit Sethi: [01:05:51] Not later, but bigger. What’s bigger than every two weeks with the kids?

Ashley: [01:05:56] I want to be a professor when I retire. [inaudible 01:05:59] too.

Ashley: [01:06:01] So I want to continue to be a life learner and have an income and make a difference in the world. I own a company too and I want to continue on with that. So be an online professor and run the business from home. So we can do what he said.

Ramit Sethi: [01:06:18] Awesome. This sounds like a very rich vision.

Ashley: [01:06:21] Wow.

Ramit Sethi: [01:06:22] How are you feeling right now, Ashley?

Ashley: [01:06:26] I am feeling hopeful for the first time in a very long time. And I’m excited for the first time in a really long time.

Ramit Sethi: [01:06:38] Why is that? What happened to you today?

Ashley: [01:06:43] I wasn’t sure it was fixable. And what I’ve learned today is that we do want similar things and we can work together. And it will no longer be yours and mine. It’ll be we. And so I’m hopeful, very hopeful.

Ramit Sethi: [01:07:07] Charles, what about you?

Charles: [01:07:09] You know, I came in extremely nervous, a little afraid. But what it gave me is an ability to now feel that we can create that vision and strategy together. And the minuscule details that you talked about that we’re finding out are just meaningless. And they should go away pretty quickly by aligning our vision and strategy and going through these exercises together.

Ramit Sethi: [01:07:38] How are both of you feeling right now?

Charles: [01:07:42] Perhaps better than when I started.

Ashley: [01:07:46] Yeah, it feels nice to not be yelling and arguing over these things. How did you turn that around in two hours? We’ve been working on it for five years.

Ramit Sethi: [01:07:58] [Narration]

What stood out to me most about Charles and Ashley is what a tragedy it is to allow yourselves to fight over money when you have more than enough all because they were allowing this complication in their life, KSOs, RSUs, all this money to simply go unaddressed. And what I did with them is to simplify it. 

My role is not to get every last decimal place perfect. My role is to simply get them understanding the basics of their money. And here’s what happened. I received a follow up from Charles and Ashley after I spoke with them. Here’s what Ashley wrote, “Charles and I had a great conversation about this over Sushi last night. I have regained hope after five years. We’ve been working on our CSP and completed the first tab with our actual numbers. It took us a little while to comb through everything. We did it without an argument.” This is progress. 

They were also able to take their fixed costs from 86% to 63% just by getting a clear picture of where their money was going and then re categorizing appropriately. The conscious spending plan is an amazing tool to get on the same page with your partner about money, or if you’re single, to finally understand where your money is going. 

To get your own copy of the plan for free, go iwt.com/episode47. 

Thanks for listening to I Will Teach You to Be Rich. I’m Ramit Sethi. Please follow the show on Apple, Spotify or wherever you listen to podcasts. If you haven’t read, I Will Teach You to Be Rich, my book, pick up a copy. You can get it at any bookstore or any library and it will show you the specific tactics for how to build the I Will Teach You to Be Rich system into your personal finances.