Episode #125: “He’s so afraid of money he can’t log into his own bank account” (Part 1)
Meet Cristina and Ron. Cristina’s 30, Ron is 45, and they’ve been married for four years. Cristina wonders why she’s the one managing money in their relationship, especially when Ron is older and he should be thinking about his retirement. We discover shocking surprises in their spending.
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[00:00:00] Ron: I never thought about the future. I was single until my mid to late 30s, before we got together. My money was my money. If I just wanted to go out with my boys, if I want to go out to Vegas, if I want to go out drinking a couple of nights a week, as long as I had enough in my pocket that I could go do those things, I was happy. Now that we’re together and our expenses are together, I’m so scared of spending anything because I don’t want to lose it.
[00:00:27] Ramit: What would you say your feeling is toward money, if you had to describe it in a word?
[00:00:30] Ron: One word? Afraid.
[00:00:32] Cristina: And it scares me too. And I feel like I can’t tell him I’m scared because I’m the one that manages it. It puts a lot of pressure on me to get my things together when I feel like, okay, I’m 30. I can make a little bit of mistake, but I feel like I can’t because he’s 45, and I need to think about him because he’s not thinking about himself. It makes me have doubts of our relationship sometimes.
[00:01:00] Ramit: Meet Cristina and Ron. Cristina’s 30. Ron is 45, and they’ve been married for four years. Cristina wonders why she’s the one managing money in their relationship, especially when Ron is older and he should be thinking about his retirement. Now, before I speak to couples on this podcast, I always get prepped, but I have to tell you, I was extremely surprised by a lot of what I discovered in today’s conversation.
[00:01:27] You’re going to hear financial decisions that shocked me, and you’re going to hear a lot of very, very surprising money psychology. By the way, speaking of money psychology, you ever notice when someone gets complimented on something they’re wearing and they’re automatic response is, thanks, I got it on sale. That’s just one of the many ways that we play small with money.
[00:01:49] And this coming Saturday, October 14th, in my newsletter, I’m going to be writing about five ways that we play small with money. Make sure you’re on the list so you can get this newsletter at iwt.com/podcastnewsletter. Okay, let’s get to the episode.
[00:02:06] Ron: There was a couple of vacations planned for this year, some together and then some separately. My thing is, she’s going on, in my opinion, too many little mini vacations, and I just see the dollar signs adding up in my head. She said, hey, me and the girls are going to plan a girl’s trip to New Orleans.
[00:02:29] My initial reaction is, no, we can’t afford it. It’s too much. You just got back from England. I just say, is this something we can afford? Because she’s more in tune with our finances than I am. She pays more attention. She does the day-to-day stuff. Whatever bills come in, she’s already working all the different accounts. So I full-heartedly just go with what she says.
[00:02:54] Ramit: Okay. All right. And then how did it get resolved?
[00:02:58] Ron: She’s going to New Orleans.
[00:03:01] Ramit: Okay. And Ron, can you afford it?
[00:03:06] Ron: In my head, no. On paper, yes.
[00:03:11] Ramit: Oh, what’s the difference between your head and paper?
[00:03:14] Ron: I’m cheap. I’m more frugal than she is. She’s just–
[00:03:19] Ramit: Which one? Cheap or frugal? Those are two different words.
[00:03:24] Ron: Frugal, I’m going to say. Yeah.
[00:03:26] Ramit: Okay. Why is that?
[00:03:29] Ron: I’m not cheap because I don’t mind spending money when we have it. I’m frugal because I just see dollar signs, dollar signs, dollar signs, and then I just imagine these numbers in my head like, we’re going to be spending this huge amount when in reality, she’s already got it budgeted because she’s good at doing that where it’s only going to be a small amount. So I’m already imagining the worst.
[00:03:50] Ramit: What’s the frugal part of that?
[00:03:55] Ron: Okay. Maybe cheap.
[00:03:57] Ramit: Remember that cheap people almost always describe themselves in favorable terms. They’ll say things like, I’m not cheap. I’m just selective. Or, I don’t need to eat in a frou-frou restaurant. I’m simple. Here, Ron uses frugal, which, in American culture, is a positive value. But of course, there’s a difference between cheap and frugal, which you can find on page 131 of my book, I Will Teach You to Be Rich. If you are a conscious spender like I hope you are, your frugality really only affects you. But if you’re cheap, your cheapness affects everyone around you. And I suspect that’s what’s going on here.
[00:04:35] Ramit: Cristina, I’m curious, from your perspective, that same conversation, what do you remember happening?
[00:04:42] Cristina: I told him about it and his automatic response was no. I know every time I approach him, I already have a game plan with him. I tell him like, this is how it’s going to be. This is how I’m going to save money. But before I get there, when he says no, it really frustrates me, and I get really sad that before I can even tell him how I can save money and enjoy my time, it almost seems like he is raining on my parade.
[00:05:10] And I can’t even plan with him or make proper decisions with him of like, if I give him a plan of, well, I’m going to use this, and I’m going to do this to save us money, so I can afford this, I can’t even have that with him. Automatically, the end of the conversation is, okay, you know, the money. If you say we can do it, then do it.
[00:05:32] Ramit: Okay. Out of curiosity, Ron, if I asked you how much is in your checking account, within 25,000, how much?
[00:05:45] Ron: Well, it’s not 25,000.
[00:05:50] Ramit: Ballpark it.
[00:05:54] Ron: Seven to 10.
[00:05:55] Ramit: All right. And within, let’s say a savings account, how much would you say is in there? Your savings account.
[00:06:02] Ron: Oh, I mean my personal savings, I don’t know, 2,000, but we’ve got a couple of different accounts though.
[00:06:09] Ramit: All right. And your joint savings account, how much would you say? Cristina is looking at this like this is literally the most entertaining reality show she’s ever seen. Cristina, am I getting this right?
[00:06:23] Cristina: Yeah.
[00:06:24] Ramit: She cannot stop smiling for the last two minutes. All right. Sit tight. Ron, joint savings account, ballpark it for me.
[00:06:31] Ron: 10.
[00:06:32] Ramit: All right, fine. Cristina, what do you say?
[00:06:35] Cristina: Off. Completely off.
[00:06:38] Ramit: Like how much off?
[00:06:39] Cristina: A lot off. Accounts are not even right.
[00:06:43] Ramit: Okay, well, the checking account, I think Ron said 7k.
[00:06:47] Ron: Yeah, seven to–
[00:06:48] Ramit: What was he talking about?
[00:06:49] Cristina: So his personal checking account is at 2,200.
[00:06:53] Ramit: Okay.
[00:06:55] Cristina: My personal checking account is around four because I just got paid.
[00:07:00] Ramit: All right.
[00:07:00] Cristina: Our joint savings account is about 8,500, and then our joint checking account is about 4,600.
[00:07:11] Ramit: He’s not that far off. Ron, I think you’re in the universe. He didn’t say $200,000.
[00:07:18] Cristina: Yeah, that’s right.
[00:07:19] Ramit: All right. You know what? Ron, I’m giving it up for you. You were closer than I thought. That’s impressive. Cristina, how come you think he’s wildly off?
[00:07:29] Cristina: Because every time he talks, he has two mentalities. It’s either we’re poor or we don’t have money.
[00:07:38] Ramit: Is that not the same thing?
[00:07:41] Cristina: To him it’s not.
[00:07:43] Ramit: What’s the difference between poor and not having enough money?
[00:07:46] Ron: Poor, we can’t spend a dollar on anything. Scared. She’s right with the other one. We can do something this month, but we can’t spend that much. We can go to the movies, but we can’t go out to dinner.
[00:08:04] Ramit: That’s what you describe as we don’t have money?
[00:08:06] Ron: Mm-hmm.
[00:08:07] Ramit: Does this seem a little hyperbolic to you? We don’t have money. Seems quite alarming to me. Oh my God. If we truly don’t have money, that’s a 9-1-1. But actually, we can go out to the movies, and we have a savings account, and we have investments. It’s fine. But we don’t have money.
[00:08:26] Ron: Sounds silly when you put it your way. It’s because I still want to have some life. I work really hard. I don’t want to have to just stay in and do nothing. So I’d like to think, hey, we could still go do a little something as long as we’re not spending a lot of money. We’ll spend $40 as opposed to 200 going out to dinner.
[00:08:47] Ramit: Listen, I’m with you. You should spend something, probably spend below your means, I agree, but I never say I don’t have money. I have money. I’m looking at your numbers. You have money too, right? Cristina, I understand that you come to him with an idea or something you want to do. He says no. You have already game-planned your strategy of how you’re going to convince him. That is your role in the relationship, right? Convince him.
[00:09:17] Cristina: Mm-hmm.
[00:09:18] Ramit: And then he is the “final decider,” but he decides by essentially delegating it to you, correct?
[00:09:26] Cristina: Yeah.
[00:09:27] Ramit: As I say that dynamic out loud, have you two ever considered that is the actual dynamic going on here?
[00:09:35] Cristina: Yeah, we’ve talked about it a lot. I’ve tried to address it with him how I don’t want to make all the decisions. That’s why we started doing the finance conversation every month. But that hasn’t really happened in a couple of months because I’m tired of making the decisions. I’m tired of managing everything. And then when I come to him, I still have to teach him about our finances. And then at the end of the conversation, he ends up reverting to me anyway. So what was the point of having a conversation with him?
[00:10:08] Ron: She’s 100% accurate. I can’t even argue with it.
[00:10:12] Ramit: All right. Is there a problem with it or are you okay with the way it is?
[00:10:18] Ron: I’m okay with the way that it is. I know she’s not. For me, it’s just easier because if I see us spending money, even though I know we have it, it’s going to cause arguments for me because I’m going to be so super cheap. I’m not going to want to spend a dime, even though we have it.
[00:10:36] Ramit: I’m curious about the way you just described yourself and your own behavior. You said, if it comes to spending money, it’s going to be a problem. It as if from heaven on down, it is a problem because I’m going to have to blank, blank, blank. It seems like you disembodied yourself in that description. Can we try that again? This time describe you. Tell me about you. What will happen next time there’s a financial conversation?
[00:11:08] Ron: I’m going to get worked up. I’m going to get nervous, and I’m going to get scared for the future.
[00:11:15] Ramit: Okay, I appreciate that. All right. It’s different, right, to describe yourself with agency?
[00:11:23] Ron: Yeah. I’m not used to talking about myself.
[00:11:26] Ramit: So much dancing around the truth going on right now. There’s the use of language, cheap versus frugal. We don’t have any money, while clearly having money. And then there’s the fact that she has to plan to have a conversation about money before ever actually having the conversation. And of course, beneath it all, Ron actually is not that engaged with money at all.
[00:11:47] There’s just a lot of narratives here, and in a relationship, narratives may or may not be true. I should note, by the way, that before we even started recording, Ron invited me to direct most of my questions towards Cristina. That alone is revealing in showing his lack of agency and also his way of delegating money right back to Cristina.
[00:12:09] We’ll be right back.
[00:12:13] Now back to Cristina and Ron.
[00:12:15] Ramit: Is there a time when you spend money where you don’t think about the cost?
[00:12:20] Ron: Me? No.
[00:12:22] Ramit: You like spending money on anything?
[00:12:27] Ron: No, because I don’t really have any hobbies or anything that I’m interested that I want to actually spend it on.
[00:12:36] Ramit: Okay. What would you say your feeling is toward money, if you had to describe it in a word or two?
[00:12:40] Ron: One word? Afraid.
[00:12:43] Ramit: Do you like money?
[00:12:49] Ron: I like it. I wish I had more of it.
[00:12:51] Ramit: How much?
[00:12:55] Ron: You mean to earn a year or in savings and stuff?
[00:12:58] Ramit: Let’s go with both. Let’s start with earning per year.
[00:13:02] Ron: I’d at least like to make 150 a year.
[00:13:08] Ramit: Do you make the higher income out of the two of you?
[00:13:11] Cristina: Right now, yeah.
[00:13:11] Ron: Right now, yeah.
[00:13:12] Ramit: So that’s basically like, you’d like to make about 30k more than you make. Right?
[00:13:16] Ron: Yeah.
[00:13:16] Ramit: Yeah. It’s always the same number. People always have a very similar number of how much more they want to make. And how much you’d like to have in savings?
[00:13:27] Ron: Eventually, probably like to have at least a 100.
[00:13:32] Ramit: 100k in a savings account. Okay. And what would happen one day when you have that? I feel actually very confident you will have that. What will happen on that day?
[00:13:45] Ron: Probably nothing. I’m sure I’ll still be pretty nervous, or I know it’s just–
[00:13:50] Ramit: That’s so crazy. So in other words, you could spend your whole life trying to get to this arbitrary number, and then one day when you reach it, which you actually will, then you realize the entire life that I spent agonizing over $5, $10, $50 actually meant nothing because my feelings are highly uncorrelated with the numbers in my bank account. Is that what you’re telling me?
[00:14:11] Ron: I like to hope that once we get to that number that it’ll change because that’s the number in my head, but until we get there–
[00:14:20] Ramit: I’ll just be your crystal ball. It’s never going to happen. I need to be a psychic. All right. I need to do this. Next time I go to India, I’m like, all right, I’m going put up my little shingle on the street. Ramit Sethi, Psychic from America. This actually would have been more successful back in the day when not as many Americans went there. Nowadays, they don’t care. And the only question I take is going to be, will I feel better about money one day when I have more? And I’ll just go, no, get the hell out of here.
[00:14:50] All right. We concluded that. Cristina, what do you think about hearing Ron’s answers about how he feels about money? Scared. That’s pretty open. I don’t hear too many people use words like scared or nervous. What do you think about that?
[00:15:06] Cristina: I’m happy he’s saying that to you. I was aware of it. We’ve talked a lot about it. I try to pry these things out of him. It’s like an occupation hazard almost, I’m at the point where I don’t know what to do with it.
[00:15:25] Ramit: Okay. Is Cristina the big picture thinker in your relationship?
[00:15:28] Ron: Absolutely.
[00:15:30] Ramit: And then what role are you, Ron?
[00:15:35] Ron: I like to think I’m still the one that keeps her grounded. I think if it wasn’t for me saying no to certain things, that she might overspend. So for me being cheap, I think that keeps us grounded.
[00:15:52] Ramit: By being cheap, by saying no, you’re actually doing a service to her and to the relationship.
[00:16:02] Ron: Not doing a service to our relationship by any means.
[00:16:06] Ramit: I’m not joking. I’m serious. I’m trying to interpret what you’re saying because you said, I keep her grounded. And then you said by being cheap, and I’m going to now paraphrase, I prevent her from what she might do, which would be to overspend. In other words, to translate it, I’m actually a really helpful, functional member of this relationship. I’m actually doing her a favor by keeping her grounded. Is that accurate or not?
[00:16:41] Ron: Yes and no. Me being the way that I am is actually a negative thing for our relationship. Causes a lot of arguments.
[00:16:51] Ramit: Cristina, how would you describe how you feel about money?
[00:16:57] Cristina: I’m okay with it.
[00:16:58] Ramit: That’s not a– what?
[00:17:01] Cristina: I know.
[00:17:01] Ramit: He told us nervous, scared, all these emotional things. And you’re like, I’m okay. What?
[00:17:09] Cristina: Okay, so I feel confused about it.
[00:17:14] Ramit: Okay. Tell me more.
[00:17:15] Cristina: Okay. I’m going to get emotional because you’re asking me emotions. I used to be very scared about it because just like Ronnie, my family are immigrants. I’m an immigrant. So we came from absolutely nothing as well. And then having to figure it out on my own. My parents didn’t teach me anything.
[00:17:35] I almost have to learn everything on my own. So it was a very scary process, but I feel proud where we’re at now and how far we’ve come as far as I could take it essentially on my own. So now I’m just confused and maybe a little lost of what do I do at this point? Because I just feel like I don’t know how far I can take this on my own.
[00:18:00] Ramit: And how long have you two been married for?
[00:18:03] Cristina: We’ve been together for 10, married for four.
[00:18:05] Ramit: Okay. All right. So when you say how far you can take it on your own, is the subtext there that you have done the finances in your relationship on your own?
[00:18:18] Cristina: Yeah.
[00:18:19] Ramit: Okay. Ron, is that accurate?
[00:18:22] Ron: Oh, absolutely.
[00:18:25] Ramit: Okay. That’s pretty honest. I appreciate that, Cristina. So how would you two describe the dynamic between the two of you when it comes to money?
[00:18:40] Ron: Babe, you can take this one first.
[00:18:43] Cristina: I think over the years, it was such a hard topic to talk about. It was a fight all the time, and it’s gotten better, but now recently, I feel like I just avoid it a little bit more, so we’re not fighting as much. I bring it up, but if I could tell, oh, he’s overwhelmed by it, or he doesn’t want to have a conversation about it, I just like, okay, fine. We’ll talk about it some other time. I’ll figure it out. And I just don’t ask him any more questions.
[00:19:12] Ramit: You take it on yourself.
[00:19:13] Cristina: Mm-hmm.
[00:19:14] All right, now we understand the roles. He avoids, she feels like she has to manage it, but she’s not really confident in money, so she feels alone. Have we heard this pattern before? Yes, many times on this podcast. The thing that stands out to me is Ron’s comment that his role is to keep her grounded. What’s the implication here? That without him watching over her spending she might just spiral and spend all their money. Is this real, or is this just a story? I want to find out by learning how they grew up with money.
[00:19:47] Ron: I’m nervous just because of the way that we grew up. We had some really good times, and then we had some really bad times. So I never want to put us in any financial troubles. That’s why I am the way that I am.
[00:20:02] Ramit: The troubling times happened, what, in your teen years?
[00:20:06] Ron: Great school middle school. High school, we had real good and then real bad. My dad was a contractor, so we’d have a good year, then we’d have a bunch of really bad months, and so fluctuated.
[00:20:17] My dad was the only one that worked in the family, so when he wasn’t in a contract, 23 still had bills to pay, so we had to borrow money from family sometimes. We almost lost the house, but grandparents helped out with that. I’ve got two older brothers, mom, and dad. We didn’t do a lot when we were kids because we didn’t have the money.
[00:20:44] We didn’t go on vacations. We didn’t go out to dinners. We still had a lot of fun because it was growing up in the 80s, but seeing the way that my parents fought about money or the lack of, I don’t want us to be like that. So those are things I just don’t want to have happen, and I would hate to ask for handouts from people.
[00:21:09] Ramit: Did you grow up in the Midwest?
[00:21:10] Ron: Yes, sir.
[00:21:11] Cristina: So whenever he said he was poor, he was cheap, he was this, not to diminish what he experienced because I get it, but it’s like, you don’t know war until you go in the Philippines. We were homeless at some point. I would have to beg neighbors for food, for dinner, so that our family could eat. That’s how poor we were.
[00:21:36] Ramit: Do you think that there’s a way to be a sensible spender without being cheap?
[00:21:44] Ron: Yes, if we have a budget set aside for each of us for each month. We can only spend this amount. You can spend this amount. I can spend this amount. And if that’s the case, then she can go do whatever she wants to with it as long as we’re still saving at the same time.
[00:22:02] Ramit: Okay. Uh, just a quick question for you. When was the last time you kept a budget for longer than two weeks?
[00:22:09] Ron: We actually just started it a month ago.
[00:22:14] Ramit: How about before that? Never?
[00:22:18] Ron: No.
[00:22:18] Ramit: What a surprise. Ron, is it possible that maybe a budget is not the solution?
[00:22:29] Ron: There’s a possibility, but I think the budget is the solution. And nothing’s ever 100% in this world, so I can’t say no.
[00:22:41] Ramit: I like it. I like the pushback. All right, let’s play it out. So you have the budget, and how did you both create this budget?
[00:22:50] Ron: Off of you, actually.
[00:22:52] Ramit: Okay, you used my conscious spending plan. Okay. First of all, that’s not a fucking budget. All right. Whatever. Used the CSP. You came up with some numbers which are forward-looking not backwards-looking. You have some guidelines. All right, cool. I’m happy to hear that. What was the process like creating the conscious spending plan together?
[00:23:14] Ron: Probably kick it over to her.
[00:23:16] Ramit: Oh, why is that? Wait, I want to hear from Ron. Ron, tell me, what was it like creating it? Did you create it together?
[00:23:22] Ron: No.
[00:23:23] Ramit: What the f– all right, okay. Even though the instructions explicitly say you must create this together. So how did that go down? Cristina, you applied to talk to me, right?
[00:23:38] Cristina: Yes. So we actually have had this CSP for three months, not one month, and we actually sat down together, not just me telling him. Don’t know if he remembers that. And even though we’ve created a budget, and this is not the only time we’ve done a budget, we’ve done it in the first few years of our relationship, it’s now coming up to itself as well, where we have a budget and Ronnie says, baby, we have a budget. We have to stick with the budget. We can’t spend that. So even if we have a budget, he still says, no, we can’t spend money.
[00:24:15] Ron: At least if I know that we are not going over that each, and even if she goes over and I still have some in mine, I always told her, just take some of mine. I’m not spending it. If you need to do it.
[00:24:28] Ramit: Okay, so does it make you feel better?
[00:24:32] Ron: To have the budget?
[00:24:33] Ramit: Yeah.
[00:24:34] Ron: It does.
[00:24:35] Ramit: All right, and do you still caution her about overspending now that you’ve got this budget, which is not a budget?
[00:24:43] Ron: Yes, because once she goes over the budget, then that’s when I chime in. I’m like, we’re over the budget, or she’ll tell me that we’re over the budget, and I’m like, okay, then why are we spending more?
[00:24:55] Ramit: So let me give some perspective. When you first start using the conscious spending plan, you try to get everything you can, but the whole point is it’s 85% of the way accurate. You’re never going to get a 100%. It’s actually prohibitively difficult to get every single expense. How much did we spend on celery? It’s irrelevant.
[00:25:15] And once in a while, you have these annual expenses like auto insurance, or a holiday trip, or an anniversary dinner. Those are bigger expenses, and people tend to forget we’re not built to properly account for all those things. So there’s a couple of solutions. Number one, the CSP in the fixed cost should actually include 15% miscellaneous expenses on top of everything. Just add a nice little buffer. And then second, you got to give each other a little bit of grace here. Hey, we’re going to make a couple of mistakes. It’s probably not going to sink us. Let’s just note it. We’ll adapt the CSP, then we’ll go forward. It’s a learning process.
[00:25:55] Ramit: I want to share the two types of people who find doing the conscious spending plan together really difficult. These two types are quite revealing, and they teach you a lot about money psychology. The first type are avoiders. This one is obvious because avoiders hate talking about money, and the CSP is literally putting actual numbers on a page, so they will do anything they can to squirm out from the process.
[00:26:18] We actually had one couple where a wife admitted that she started a fight on the day they were supposed to fill out their CSP so that she and her husband didn’t have to do it together. The second category of people who find it difficult to fill out the CSP together is a little bit more subtle.
[00:26:33] These are the people who like to get the right answer. These are the people who usually try to get an A in school, often took very safe career paths. They’re often people pleasers. They’re people who don’t like to get the answer wrong, and they find the CSP 85% approach really hard because they have a need to get every single number exactly correct.
[00:26:57] This predictably drives their partners crazy. So the get it right person, you know what they do? They snatch the CSP out of their partner’s hands, and they say, here, I’ll just do it. I’m telling you this to show you how money is never simply a series of numbers on a page. It’s contextualized within your culture, your upbringing, your risk tolerance, even your basic understanding of money. With all that said, if you want to live a rich life, just fill out the damn CSP. It’s one of the foundational pieces of your finances. Get the link in the show notes. Just get the link anywhere and fill it out.
[00:27:32] We’ll be right back.
[00:27:35] Now back to the episode.
[00:27:37] Ramit: Had you taken that approach? Do you think that the conversation in the last month would have gone a little differently? No. Cristina says, no. Tell me why.
[00:27:48] Cristina: Because we’ve done that.
[00:27:50] Ramit: Okay. What happened?
[00:27:51] Cristina: And he still freaks out. When we first started dating, I was only working part-time, and now that I’m full-time, we’ve created a buffer. We have a savings account. We have a budget. I’ve put a buffer in our checking account to make sure we are at least one month full of the budget, have a buffer before a paycheck.
[00:28:14] Ramit: And let me guess, it doesn’t change the way he feels.
[00:28:16] Cristina: Uh-uh.
[00:28:17] Ramit: Okay. Cristina, can I ask you a question? Did you notice who was involved in every step you just told me?
[00:28:23] Cristina: Me.
[00:28:24] Ramit: Yeah. I set up a buffer. I set up a budget. What’s special about one person taking on all the work and then another person or people being dissatisfied with it?
[00:28:42] Cristina: Nobody’s happy.
[00:28:43] Ramit: Yeah, nobody has any skin in the game. If one person cooks dinner, everybody might say, oh, I don’t like that. Too much salt. But if everyone is in there doing a little bit– I’m going to set the table. You’re going to empty the dishwasher, etc. It’s hard to complain if you’re involved. Would you agree?
[00:29:06] Cristina: I think that’s why I’m trying to have him be part of the conversation. And that’s why I asked for help, is because part of the reason is he’s 45, 46. He needs to be in this. I am planning for our future, our retirement, but I get no input for him, and I’m only 30. And I feel like we have such a big age gap. Your retirement is so much closer than I am. Why am I planning for your retirement by myself?
[00:29:34] Ramit: What do you think about that Ron?
[00:29:37] Ron: I hate hearing it, but it’s true because I never thought about the future. I was single until my mid to late 30s, before we got together. My money was my money. If I just wanted to go out with my boys, if I want to go out to Vegas, if I want to go out drinking a couple of nights a week, I never thought about the future. As long as I had enough in my pocket that I could go do those things, I was happy.
[00:30:11] Now that we’re together and our expenses are together, I feel like it’s putting so much weight on me to make sure that my family is taken care of, that we always have a future and everything, so I’m so scared of spending anything because I don’t want to lose it.
[00:30:31] Ramit: Which family are you having to take care of? The two of you, or are there others?
[00:30:35] Ron: No, us.
[00:30:37] Ramit: That’s a little confusing to me, Ron, because if I were you– I was single for a long time. I could go out to wherever and spend money, or whatever. But my wife, she works. Of course we live together. The way I look at it is like, oh my God. We can actually live in an even nicer place. We can travel longer. Why? Because the two of us are doing it together. I don’t need to buy a loaf of bread just for myself. We get to use our combined income for that.
[00:31:09] Ron: And I know my way of thinking is not right, and I know it’s caused a lot of arguments and everything like that. It’s just, like I said, when I said I was scared about money, that’s just not me using just a word just to say it. I truly am because I go through ups and downs in my business. I go through busy times during a season where I’m doing really well.
[00:31:33] And then in the off season, I’m not. So now that we’re going into the off season again, I know my pay is going to get cut in half or even in thirds. So I think about that throughout the year, like, oh, I’m doing good, so I want to keep saving it because I need that buffer for those off seasons.
[00:31:51] Ramit: Sounds very familiar. Who does it remind you of?
[00:31:58] Ron: My dad. Dad saved everything, and we never had any fun.
[00:32:16] Ramit: He saved everything. He never had any fun. And when times were good, meaning when he was making money, he was saving it. When times were bad?
[00:32:27] Ron: When times were bad, we didn’t spend it. We didn’t do anything. Everything was just, we got to pay for the bills, and we got to put food on the table.
[00:32:37] Ramit: Yeah. You carried that from your parents to the two of you. Now, what are the differences between your parents, financially speaking, and the two of you here?
[00:32:51] Ron: We were only a single-income family until times got really rough, and then mom took on a part-time job, where we are a dual-income family with no kids.
[00:33:07] Ramit: That’s a pretty big difference, don’t you think? Seems like a tragedy to be living the same way your parents did, full of worry, overconstraint, agonizing over these expenses. I’m sure your parents did the best they could. They had one income, different time, but you two have no children and two incomes. What do you think about that, Ron? I can see you taking some deep breaths right now. What is it, Ron? It’s difficult to talk about this, or what’s going on?
[00:33:44] Ron: Yeah, it’s a little difficult to talk about and just to know the burden that she has.
[00:33:57] Ramit: Yeah. If anybody needs to take a break at any time, just say the word.
[00:34:06] Ramit: Let’s talk about the ages here. She’s 30. He’s 45. Deep down, a lot of people really believe that other people are motivated by logic, reason, and numbers. And then when other people don’t act logically, we all get completely confused. Huh? Ron is 45. Theoretically, he should be more interested in money, more concerned with money. He should be taking over more of the money responsibilities. After all, logically, he’s older. He’s closer to retirement, and he has less time to compound. Guess what?
[00:34:41] The truth is he just doesn’t care that much. People are not logical with their finances. They’re not logical with their relationships. They’re not even logical with their medicine. Even when people have a life-or-death illness, a surprising number of people don’t even take their medicine. You don’t believe me? Go Google patient adherence. Look it up. See for yourself.
[00:35:01] Guys, the point of this podcast is to show you how complex money and psychology really is. The sooner that you realize we are all irrational with our money, you, me, all of us, the sooner you will be able to understand your own behavior and of course, others behavior. And what I’m going to try to do right now is to get them to both realize how their beliefs are affecting their relationship.
[00:35:28] Ramit: Ron, I’m curious about the burden that you are starting to understand. I wonder if you could talk a little bit more about that.
[00:35:36] Ron: She tries to talk to me about money, but she’s right. I usually don’t want to hear about it because I don’t want to see the numbers. And that just causes a lot of friction between us. She’s trying. I’m resistant about it.
[00:35:56] Ramit: And what effect do you think that has on her?
[00:36:00] Ron: Oh, man, just the stress and strain that it puts on our relationship. That she’s the one that she has the burden of doing it all. It’s not easy for her.
[00:36:24] Ramit: I don’t want to speak for you, Cristina, but I wonder if there’s any cultural issues at play. I wonder if there’s any age-related issues at play. Cristina, what do you think?
[00:36:38] Cristina: Age wise, it puts a lot of pressure on me to have to get my things together when I feel like, okay, I’m 30. I can make a little bit of mistake, but I feel like I can’t because he’s 45, and I need to think about him because he’s not thinking about himself.
[00:37:00] Ramit: Ron, you articulated it so well. You said, I’m resisting. She’s trying to pull me, and I’m resisting. And I think, Cristina, you just offered a really quite vivid demonstration of, if we contextualize it, why this is so important to you. You have a different view on what poor is. You want a partner. Did I get that right? Am I being accurate in that?
[00:37:34] Cristina: Yeah, you are.
[00:37:36] Ramit: Is there anything that you want to tell Ron that you’ve never told him about money before?
[00:37:40] Cristina: The more we talk about it right now, I do feel alone. It makes me have doubts of our relationship sometimes because of it, and it scares me too. And I feel like I can’t tell him I’m scared because I’m the one that manages it.
[00:38:05] Ramit: So you have to be strong, even though you’re scared.
[00:38:08] Cristina: Mm-hmm.
[00:38:11] Ramit: Tough to hear.
[00:38:15] Ron: I guess deep down I knew that was a case, but hearing it right now, that hurts. It doesn’t hurt me. It hurts that it hurts her that she’s feeling this way, because I never want my partner to feel that way. I never want to hurt them in any way. I think that’s why I work so hard. She is looking for a partner. She’s looking for someone that she can just bounce ideas off. She’s always said she doesn’t care if we don’t make that much money. If we made half as much as we do right now, she doesn’t care, just as long as we are there together, doing everything together.
[00:39:11] Ramit: You’re playing ball with me, and I really like that. These are tough conversations, and you have been here every step of the way. Cristina, you too. So Ron, what I like that I just heard you say is you understand the pain that you’re causing Cristina. That’s hard. I can’t make you realize there’s a problem, but you did that. I can offer you a couple of solutions, and then we can talk about it.
[00:39:38] This idea that she’s better at the day-to-day, first of all, let’s get rid of this dumb concept. It’s a thing in our culture. She does the day-to-day, and I make the big decisions about the car and the house. First of all, in order to make the big decisions, you actually need to be quite financially sad. You need to understand ratios and all kinds of stuff.
[00:40:03] Second of all, the day-to-day for a lot of the stuff that used to be valuable, like paying bills on time, please listen to me, America, that’s not valuable. It’s not. If somebody comes to me and says, I manage the money, I say, what does that mean to you? They go, oh, I’d make sure the bills are paid on time. I go, a robot can do that better than you. You have been automated. What has way, way more value, a 1,000 times more value is deciding is our savings rate 7% or 9%. Is our investment rate 6% or 11%? That is worth hundreds of thousands of dollars. Whether you paid your target bill, irrelevant.
[00:40:47] Ron: Okay.
[00:40:48] Ramit: All right. So the real solution here is that you’ve both got to get involved. Cristina, you’re probably going to offload some of what you’ve been doing to Ron. Ron is going to take it on. Ron may not be perfect at it. I don’t mind. Ron’s going to make a couple of mistakes. Big deal. Fix it. Get on with it next month. That’s my approach. Cristina, how does that sound to you? Would you be willing to offload some of the things you’re doing to Ron?
[00:41:19] Cristina: Would love to.
[00:41:21] Ramit: Can you think of anything that you’d like to?
[00:41:23] Cristina: Uh, insurance.
[00:41:26] Ramit: Okay.
[00:41:26] Cristina: Because he’s a finance manager, I feel like he’ll know all the insurance stuff better than I will.
[00:41:31] Ron: I guess I’m just worried what you want her to unload on me because you’re right. I am worried about making a mistake and putting us into some financial spiral or something.
[00:41:47] Ramit: What mistake are you worried that you’ll do? Give me an example.
[00:41:52] Ron: Bankrupt us.
[00:41:54] Ramit: Did Cristina mentioned that you’re a finance manager?
[00:41:58] Ron: Yeah.
[00:41:58] Ramit: Okay. So when you’re doing deals or whatever, you’re talking about interest rates, right?
[00:42:02] Ron: Mm-hmm.
[00:42:03] Ramit: What kind of interest rates are you offering right now? What do you sell anyway?
[00:42:08] Ron: Motorcycles.
[00:42:09] Ramit: Okay. So what kind of interest rate are people getting these days?
[00:42:11] Ron: Depending on their credit score, they’re going from mid-single digits up to bad credit, high 20s.
[00:42:22] Ramit: What the fuck? 20% interest rate on a motorcycle?
[00:42:27] Ron: Oh, depending on their credit score, 28, 29%.
[00:42:32] Ramit: And you’re buying a– how much do these motorcycles cost?
[00:42:36] Ron: Ooh, anywhere from 10 to 50.
[00:42:38] Ramit: What the fuck is going on right now? All right. I can’t believe– anyway, why was I even asking that question? Ron, I’d like you to read this off as well. Gross monthly income combined, what number do you see there?
[00:42:51] Ron: $17,044.
[00:42:54] Ramit: How much do you both make per year?
[00:42:58] Ron: Little bit shy of 100.
[00:43:00] Ramit: Um, what the hell are you talking about? Look at this number I just put on screen.
[00:43:07] Ron: Yeah, but you got to remember I go into slow periods where six months out of the year, it’s really good, and then the–
[00:43:14] Ramit: Oh, so this doesn’t account for that?
[00:43:18] Cristina: This is–
[00:43:20] Ramit: Go ahead, Cristina.
[00:43:22] Cristina: This is a projection of what we’re going to make this year.
[00:43:26] Ramit: Okay, hold on. I’m very confused because Ron said just shy of a hundred. Cristina, you want to speak up? You have a real big smile on your face right now.
[00:43:35] Cristina: He doesn’t know how much he makes. I told you we made 120 last year, but I never told him how much we were going to make this year because I was making money moves this year, so I couldn’t even project how much I was going to make this year. But that was my best guess.
[00:43:50] Ramit: Okay. This is an interesting scenario then. Ron, you told me a little while ago, I’d like to make more money. And when I do make 30k more, hopefully, I’ll feel better.
[00:44:03] Ron: Mm-hmm.
[00:44:04] Ramit: Just stand by. You’re going to make almost double what you made last year as a household. You feel better about money?
[00:44:16] Ron: Hearing you say it, yes.
[00:44:22] Ramit: Really? You feel better?
[00:44:24] Ron: I feel a little bit better now.
[00:44:26] Ramit: Tell me.
[00:44:27] Ron: I feel better knowing that we’re making more than we did last year.
[00:44:34] Ramit: Now, one more question for you. Can you tell me about a time in the next month where you will go to Cristina and tell her that you would like to go spend money on X, Y, or Z? What will it be?
[00:44:57] Ron: It’ll probably be something for the both of us. It’ll probably be either a dinner, or recently, I’ve been thinking like, hey, let’s just go get a hotel room overnight that has a water park kind of thing. Something that we could just get away from this or that for a night, go have a little fun together. I’ve recently been thinking about stuff like that.
[00:45:22] Ramit: I love that. Part of what’s going to happen is this recalibration of the roles, from one person pulling and the other resisting to maybe both of you trying to go the same direction.
[00:45:36] Ramit: First of all, hilarious. Yet again, let me remind you that fully 50% of the people on this podcast do not even know how much money they make. So when I’m on Twitter and some grizzled old financial advisor tells me that I’m irresponsible for not talking about the technicalities of municipal versus corporate bonds, I just stare at this person knowing that half of the people who affirmatively apply to be on this podcast in front of millions of people talking about their own finances do not even know how much money they make.
[00:46:08] The bar is so much lower than people in the financial industry realize in terms of knowledge. But of course, you’d only know that if you actually talk to everyday people. Do I have a bone to pick with the financial industry? You’re goddamn right I do. Anyway, back to Cristina and Ron. Let’s look at their numbers. They have $352,000 of assets, $83,800 in investments, 13,600 in savings, $497,000 in debt for a total net worth of negative $47,800.
[00:46:38] Ron: The debt is the first thing that I notice. It’s a big debt.
[00:46:43] Ramit: What kind of debt?
[00:46:46] Ron: The house and school are the big debts in there.
[00:46:49] Ramit: How much do you owe on the house?
[00:46:54] Ron: Around 200.
[00:46:57] Ramit: Okay. What is this life insurance? Is this whole life insurance, Cristina?
[00:47:01] Cristina: Whole and term.
[00:47:03] Ramit: Oh my God. What the fuck?
[00:47:04] Cristina: I know.
[00:47:06] Ramit: You’re putting 430 a month into this whole life insurance policy?
[00:47:11] Cristina: Yeah, for both of us.
[00:47:12] Ramit: That’s a lot of money. All right. You have pet insurance? Is this for real?
[00:47:17] Cristina: We do.
[00:47:19] Ramit: You know what? I don’t even know. Whatever. It’s fine. All right. Your car payment is a $1,000 a month. What car is this?
[00:47:27] Cristina: That’s two cars and two motorcycles.
[00:47:30] Ramit: Mm. Okay. That’s a lot of cars for two people. How much are these motorcycles?
[00:47:38] Ron: The one motorcycle is just about to get paid off. I think there’s only $2,000 worth that we owe on that. And then the other motorcycle is probably only 5,500 to 6,000.
[00:47:51] Ramit: Debt payments. 450, what is this debt payment?
[00:47:57] Cristina: That’s the credit card that–
[00:47:59] Ramit: Huh?
[00:48:00] Cristina: We have a credit card debt.
[00:48:02] How much? Right now about 30 of that is credit card.
[00:48:08] Ramit: 30,000 in credit card debt, how did this not come up before?
[00:48:12] Cristina: There was a year that Ronnie was switching jobs, had five different jobs in one year, and so we weren’t having a consistent income, and I wasn’t established in my career yet, so we needed some way to make ends meet, and the credit card was the easiest thing.
[00:48:35] Ramit: Is this the minimum, $450 a month?
[00:48:38] Cristina: Yeah. There’s no interest on them right now because I balanced transfer them, but 30,000 is the whole lot of it.
[00:48:46] Ramit: Let me just say, everybody sounds real calm about $30,000 of credit card debt. How come I’m the one freaking out about this?
[00:48:53] Cristina: I’m not scared of debt. $200,000 of student loan, that’s scary to me more than the 30,000-dollar credit card debt, and we’ve paid off a lot from that.
[00:49:03] Ramit: How much?
[00:49:05] Cristina: We were probably at 50, and then it came down to 30.
[00:49:09] Ramit: Ron, what do you think about that credit card debt?
[00:49:13] Ron: I hate it.
[00:49:14] Ramit: Really? You hate it? But you didn’t even mention it when we were talking about the debt.
[00:49:19] Ron: It’s just because it’s all lumped into one, but the credit card debt, that’s something that my parents got into trouble with when they weren’t financially doing well.
[00:49:32] Ramit: All right, let’s keep going, but I’ll just say that $30,000 of credit card debt is extreme red flag alert. Extreme. Your pet care is 500 bucks plus the 175. That’s 675 a month plus probably some extra stuff you didn’t counter. That’s 700, 800 bucks a month for pets.
[00:49:54] Cristina: Yeah.
[00:49:57] Ramit: Domestic help, 380. Somebody to clean your place, is that what we’re talking about?
[00:50:02] Cristina: Mm-hmm.
[00:50:02] Ramit: Okay, fine. And you have a vacation. Oh my God. Do you have a timeshare? Is this a joke? What is this?
[00:50:11] Cristina: I’m going to let him take it.
[00:50:14] Ramit: What is this shit?
[00:50:16] Ron: Yeah, it is–
[00:50:19] Ramit: What the hell?
[00:50:21] Ramit: I cannot believe this. If you’re not watching this on YouTube, my jaw is literally dropped. Cristina and Ron came to me because she was concerned he wasn’t taking finances seriously in their relationship. Now I find out they have $30,000 in credit card debt, which they seemingly are not even concerned about, and a timeshare. Oh, and two motorcycles, whole life insurance, and Noah’s Ark full of pets.
[00:50:46] Just wait until you find out how the timeshare actually happened, which I will pick up on next week in part 2 of my conversation with Cristina and Ron. If you liked this episode and you want to hear another example of overspending, check out this fascinating episode with Sarah and Kevin in which she says, “If I add any more to our $50,000 of credit card debt, he will ask for a divorce.” I’ll see you over in that episode right now.