Episode #103: It’s time to cut off your son: Ramit’s 3 Lessons from Ep 102

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Ramit Sethi: [00:00:03] How are you both feeling about our conversation today?

Mike: [00:00:06] Excited and scared, I guess.

Janis: [00:00:07] I feel like I’m going to look really stupid.

Ramit Sethi: [00:00:11] Oh, why do you worry about that?

Janis: [00:00:14] Just because I don’t– Mike does most of the finances. I’m just like, tell me how much I should spend.

Ramit Sethi: [00:00:21] Okay. And Mike, you mentioned excited. Great. And scared. Why scared?

Mike: [00:00:26] Well, because I know that I’m not a good conscious spender. And I have a history of, I guess, enabling where I want my family to have what they want.

Janis: [00:00:42] Wow. We really need somebody to put these things in front of our faces and help us finally, after 38, almost 39 years of marriage, be able to dream and make it happen instead of one day, one day, one day.

[Narration]

Ramit Sethi: [00:01:05] This week in Episode 102, you heard from Mike and Janis. They’re a couple in their early 60s, and they told me we’ve been together for 39 years, and we’ve been broke for 39 years. This was an unforgettable episode with lots of twists and turns. We heard about their 31-year-old son that they can’t seem to cut off financially. We heard about Mike feeling like a commodity when he was growing up, and we heard about the ducks, and the cats, and the dogs, and all kinds of farm animals. 

So today I want to do something a little different. Starting today and every Thursday from now on, I want to take you behind the scenes of this week’s episode. I want to share the can’t-miss moments and even some cut moments that you didn’t hear the first time so you can go deeper when it comes to your money psychology. So let’s kick it off with three can’t-miss moments from my conversation with Mike and Janis. 

The first step, you got to listen to this background of Mike and Janis. You’ve heard me talk about how our upbringing affects the way that we look at the world of money. Listen to Janis as she describes what Mike’s parents gave him at his college graduation.

[Interview]

Janis: [00:02:20] At the graduation, my parents were there, or my mom and her husband were there, and Mike’s parents were there. And they handed him a graduation card. And he looked at it, and then he handed it to me, and I opened it up. And it had every single cent that he had borrowed, like Christmas present for Dad, $20. And she had listed every debt that he had to them and then put minus 100. We’re proud of you. And he had a master’s in architecture from University of Illinois.

Ramit Sethi: [00:02:55] Wait a minute.

Janis: [00:02:57] Yeah.

Ramit Sethi: [00:02:57] Mike’s mom listed every expense he incurred as a kid.

Janis: [00:03:02] Beanbag chair, college. Yeah.

Ramit Sethi: [00:03:04] Okay. And what was the minus 100? What is that?

Janis: [00:03:07] That was her gift– 

Mike: [00:03:08] For graduation.

Janis: [00:03:09] Graduating with a masters.

Ramit Sethi: [00:03:11] And Mike, was your reaction, here we go again?

Mike: [00:03:17] Right. Yeah.

Janis: [00:03:19] He didn’t do anything. I ripped it up and threw it on the ground.

[Narration]

Ramit Sethi: [00:03:22] Imagine getting a card like that from your parents on your graduation day. How would that affect the way you look at the world? And how do you think it would affect the way you think about money and time going forward? We spend a lot of time talking to couples about how they grew up. And one of the reasons I do this is I want to disabuse you of this idea that we are all rational robots, that we go to the grocery store and we compare the price of bread by number of slices per dollar, and then we buy rationally. That’s just not how it works. 

We are a product of our experience. It actually is shocking to me that people will listen to 100 episodes of this show and they’ll be like, wow, childhood really matters. And then they’ll go right back out in the world and post on Twitter, oh, pull yourself up by your bootstraps. It’s just a matter of showing up to work. That’s not how it works. We are a product of our experiences. 

What I didn’t get to tell you on the episode with Mike and Janis is a little bit more about their background. If you listen to them, you go, why don’t they just get their CSP in order, have a conversation about money, stop paying for their deadbeat son, and live a rich life? Mike actually sent me an email after our conversation, sharing some of his upbringing that I didn’t know about. Let me read you some of what he told me.

He said, “I had an alcoholic father. My grandfather would often send my mother his paycheck because my father had spent it on weekend drinking binges and not coming home. Janis also had an alcoholic father. Her parents divorced when she was 13. Her mom remarried when she was 17 to a guy who turned out to be horrible. So at 17, Janis and her older sister moved out of their house. When Janis was 19, her sister was killed by a drunk driver. Janis’s father was a homicide victim when our daughter was three and a half and our son was only 10 months old.” 

These experiences are deeply interwoven with who they are. And I share this because if you see someone acting in a peculiar way with money or a way that doesn’t match up with how you would act, there’s often a reason. Sometimes they don’t even know what the reason is. But there’s often a reason way, way back in their history. And as part of this podcast, my dream, my wish is for us to all become a little bit more compassionate about the people as it comes to their spending and financial behaviors. Next up, financially supporting their 31-year-old son.

[Interview]

Ramit Sethi: [00:05:56] Your son is 31, you’re 63, and you’re helping him with his finances.

Mike: [00:06:01] Yeah.

Ramit Sethi: [00:06:02] Does he have a job?

Mike: [00:06:03] Yes.

Ramit Sethi: [00:06:05] How much does he make, ballpark?

Mike: [00:06:07] Right now, he’s at 3,500 a month.

Ramit Sethi: [00:06:11] Okay. All right. And for his area, is that–

Mike: [00:06:16] He’s up in Seattle. So it’s pretty expensive.

Ramit Sethi: [00:06:19] Yeah, that’s expensive. Okay. All right. So you help him with some stuff, and you said to your own detriment. Hold on. Janis just let out a huge sigh, and she looks down at the floor. Don’t worry, Janis. I’m coming to you soon. I know you got a lot of stories. She’s probably going to pull out this scroll, 35 pages. She goes, Ramit, run the tape. I got a few things I want to talk about. All right.

Mike: [00:06:41] Jan wasn’t the only one who kept the list.

Ramit Sethi: [00:06:44] Okay. So Mike, to your own detriment, give me an example where you have helped your son financially speaking to your own detriment.

Mike: [00:06:55] I think it’s really in the past few years because when he was younger, we helped him financially as far as– he was in a few bands. He traveled the country, so we helped him with that, and it was a great experience for him. But then when he moved out, he got himself into situations with a variety of girlfriends that were not helpful economically.

Ramit Sethi: [00:07:29] What is that? That’s a very nice way of putting it. What does that mean?

Mike: [00:07:33] That they were freeloaders, basically. No, it’s been a few times, but there were two big incidents, one where his girlfriend wrecked his car. And to get it fixed, he couldn’t pick it up till he paid for it.

Janis: [00:07:53] His insurance lapsed.

Mike: [00:07:54] Yeah.

Ramit Sethi: [00:07:55] How much? Oh, his insurance lapsed. Okay, that’s not good. And how much did he have to pay?

Mike: [00:08:00] It was about 3,600.

Ramit Sethi: [00:08:01] And so what do he do? He picked up the phone to you?

Mike: [00:08:03] Yeah.

Ramit Sethi: [00:08:04] How’d that call go? Hey, Dad– what did he say?

Mike: [00:08:07] The bad thing was that he actually worked at the car dealership that was repairing it. And they wouldn’t give him a break.

Ramit Sethi: [00:08:17] This is crazy.

Mike: [00:08:19] Yeah. So they wouldn’t– it’s like, well, all right, take it on my paycheck. But they wouldn’t do it. They wouldn’t release a car until you paid for it. 

Ramit Sethi: [00:08:29] What kind of car, by the way?

Mike: [00:08:31] Well, that was actually a Land Rover because–

Ramit Sethi: [00:08:33] A fucking Land Rover. Are you kidding me? He makes 3,500 a month and he drives a Land Rover? What world is this?

Mike: [00:08:41] Well, previously, he had worked for Land Rover.

Janis: [00:08:47] He was making a lot more.

Ramit Sethi: [00:08:48] You don’t get that much of a discount.

Mike: [00:08:50] No. Again, instead of saying, no, I don’t have the money either, I put it on a credit card to bail him out because he needed a car to get around.

Janis: [00:09:02] But with the intention that he was going to pay us back.

Mike: [00:09:04] Right. Yeah.

Ramit Sethi: [00:09:05] Whose intention? Who said that?

Mike: [00:09:07] Well, it was an agreement that they were going to pay it back. And they started to–

Ramit Sethi: [00:09:14] When he stopped paying, were there any consequences?

Janis: [00:09:19] No. Well, because of COVID, they laid him off from his job, and they still made him keep the lease on the Land Rover for $400 a month.

Ramit Sethi: [00:09:31] That’s horrible. That’s why we don’t take those kinds of obligations from our employer. It’s handcuffs. And people think they’re getting a great deal, but they’re actually being encumbered. Did he learn any lessons from this?

Janis: [00:09:43] Oh, I don’t know.

Ramit Sethi: [00:09:45] No. Mike?

Mike: [00:09:46] No.

Ramit Sethi: [00:09:48] I like Mike’s honesty.

Mike: [00:09:49] No, because now he drives a Jaguar.

[Narration]

Ramit Sethi: [00:09:52] I have to admit that when I heard about their 31-year-old son calling them up and basically extorting them to send money otherwise, they’re never going to see their son again, I got pissed. I’m still pissed. How can you do that to your elderly parents? Especially knowing how they were raised. I just can’t stop thinking about this. I want to point out what happens when you enable someone else financially. And we’ve seen it. We’ve seen it in many examples of couples on this show, on the Netflix show, and many other places.

If you do not actually feel the effects of your behavior, if you don’t have to have a job because someone’s just sending you money, it’s probably likely that you’re going to lose touch with reality. It’s no surprise that Mike and Janis’s son lies to them, evades them, doesn’t take responsibility because in many ways the way that they treated him with money was to enable him. 

Mike and Janis know this. Janis is rolling her eyes the entire time. She knows it. But I want to emphasize for you to really be critical about any areas where you might be enabling someone else or even allowing yourself to be enabled. Think about it. A lot of people go, how would I turn down money from my parents if they want to give it to me? And sure, if your parents have the ability and willingness to give you some money for down payment or a car or whatever, fantastic. That’s awesome. 

But you have to remember that there are strings that come along. It may be explicit like, you need to have your wedding the way we want or maybe implicit like, because somebody gave me this money, mm, I don’t take it as seriously, or I don’t understand how hard it was to earn it. Now I want to add one last thing to confound this entire example. I used to think, growing up, going to public school that if you had wealthy parents and you went to private school, that you were spoiled. I just thought that. I don’t know where I got that idea from, but I think a lot of people believe that. I certainly did. 

And then I went to college, and within my first week, I met a lot of people who had wealthy parents and who had gone to private school. It was like my world shattered in front of me because I realized this thing I had believed fervently for so long was totally wrong. Doesn’t mean you’re spoiled just because your parents have a lot of money and even sent you to private school. My college friends, some of them worked really hard, some of them less so. But there was basically no correlation at all. And in fact, I really admire a lot of the friends that I met who grew up really wealthy and work insanely hard.

So being enabled or enabling someone with money is not as simple as it’s good or it’s bad. It is complex. But I just want you to understand that if you are considering paying for somebody, enabling them in a certain way, it might have effects. And if you are the recipient of that, it also might have effects. 

Finally, we have to talk about the phantom cost of these pets. A lot of people in America don’t like to talk about costs when it comes to their pets. It’s like very unromantic. It’s like talking about the cost of how much it costs to date, or be in love and build a relationship. It’s like, hey, money is real. Just because it’s romantic doesn’t mean that the money part of it fades out of the equation. Let’s be honest. It costs money to have pets. It costs money to date. It costs money to get married and have kids, and on, and on. 

Whenever someone dares to bring up the idea of the cost of pets, people get really defensive. Mike and Janis were actually great. They acknowledged, particularly Janis, that she hadn’t really thought that if once a year she has to take her duck to the vet and it costs 1,200 bucks, that she actually needs to spread that cost out or amortize it over the course of a year. That’ll be 100 a month for the ducks.

In fact, in America, we’re simply taught to look at the sticker price. That’s it. And companies incentivize us. They have no reason to tell us about all the secret phantom costs. They’re just like, oh, look at the price, the house, the car, the dinner. But of course, phantom costs are prevalent. For example, whenever I plan a vacation, I know whatever the hotel nightly rate is, I add 50%. That accounts for 38% taxes, if I get a drink, tip, etc. It was really important for Mike and Janis to grasp the importance of these phantom costs.

One, whenever you buy something, in fact, the more expensive you buy, the more phantom costs you’re going to have. Second, there are one-time costs that still need to be accounted for in your conscious spending plan. And if you don’t do this, you end up like millions of Americans who earn decent money but they are always confused, where’s it all going? That’s because you didn’t honestly calculate the insidious phantom costs that are present in many purchases.

[Interview]. 

Ramit Sethi: [00:15:01] So we talked about your pets costing 600 bucks a month, or– 

Janis: [00:15:05] $500.

Ramit Sethi: [00:15:06] $1,000 a month because we factor in– we got to amortize or spread all those costs out. I think that you need to be thinking very carefully about how much you can actually afford to spend on pets. I know you have a good cause, but if I were in your position, the first thing I would say is, absolutely no more animals.

Janis: [00:15:25] Oh, yeah. No, we’re in agreement on that.

Ramit Sethi: [00:15:28] Okay. And next is, how long– and like, what’s the plan for these animals? Do you plan to provide for them forever, etc? Just because $1,000 a month is a lot of money right now. It’s a lot.

Janis: [00:15:43] I thought it’s 500. That is a lot.

Ramit Sethi: [00:15:45] So let me give you an example why this is so important. So when I– you love ducks. I love hotels. Perfect example. So a duck, you go, oh, this duck costs 50 bucks a month. But then you forget that once a year you need to pay some expensive vet fee. For me, I go, oh, this hotel is 300 bucks a night. But I got to factor in taxes, tipping, eating at the restaurant. It actually adds 50% to the price. So 300 actually becomes $450 a night. It’s a lot of hidden costs in all these things that we choose. And a hotel is just a hotel. Animals are a whole different story.

Mike: [00:16:27] But we don’t make $1,000 in eggs.

Ramit Sethi: [00:16:31] Yeah. All right. I want to make sure that this is clear, Janis, because it’s really important. So let’s say you spend $100 a month for your pets. Just easy math. 100 bucks a month. That’s 1,200 bucks a year. Let’s say that you have to take one of the dogs to the vet and that costs 1,200 bucks. So if I were to ask you, how much do you spend on your pets every year, what would you say?

Janis: [00:17:04] I already lost you.

Ramit Sethi: [00:17:07] It’s okay. We’ll go slow.

Janis: [00:17:08] Okay. So $100 a month.

Ramit Sethi: [00:17:11] Yeah.

Janis: [00:17:11] Over 12 months.

Ramit Sethi: [00:17:14] Yeah. That would be how much?

Janis: [00:17:15] 1,200.

Ramit Sethi: [00:17:17] Yeah. And then your dog has an accident, and it costs 1,200 bucks.

Janis: [00:17:21] So that doubles it right there.

Ramit Sethi: [00:17:23] Yeah. So how much would that be per year?

Janis: [00:17:25] 2,400.

Ramit Sethi: [00:17:26] 2,400, which is 200 bucks a month, not 100.

Janis: [00:17:31] Right. I was just figuring the food and stuff.

Ramit Sethi: [00:17:34] Exactly. So what I’m doing is I’m helping you to think at a higher level. So now you have a bird’s eye view over all of your expenses. 

[Narration]

Ramit Sethi: [00:17:43] Fun fact. In their screening interview, one of Janis’s primary questions was to ask my producer, should we put the costs of our pets in this category or that category? It’s like, who cares? There’s so much chaos going on in their financial life, and she was worried about cell B32 versus B46. Again, we find comfort in three-dollar questions because it allows us to control something. How it’s categorized is totally irrelevant. We simply need to start from ground zero and calculate what’s really going on here. 

You’ll notice this in Episode 80, where I point out to Sarah and Kevin that the amount of their vacation is probably double what she thinks it is, and she is visibly startled. Same thing here, but this time with pets. All right. I want to thank you for listening to this Thursday episode. I have a podcast newsletter where you can come and ask me questions about these episodes or money psychology. Go to iwt.com/podcastnewsletter. Ask me your questions there, and I will answer them every Saturday. See you next week.