Episode #137: “MLMs, crypto, real estate—I can’t stop falling for get-rich-quick schemes” (Part 2)

David, 33, and Halima, 37, return to follow-up on last week’s episode, where we learned about their debt, painful backgrounds, unrealistic expectations, and patterns of negative behavior with money. Today, Ramit brings them back down to earth, dissects their numbers, and sets the stakes.

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Show Transcript

Download the full transcript PDF.

[00:00:00] Ramit: If you keep doing this, you’ll just be stuck here forever. We’re not hoping for the next big thing to come around the corner. There’s no secret money coming in. This is it.

[00:00:07] David: We see the fire.

[00:00:08] Ramit: What happens if you change nothing?

[00:00:10] David: I will be working till I die. And what’s worse is she’ll be working till she dies as well.

[00:00:17] Ramit: You said, looking at the numbers, I feel rich. How do you reconcile that?

[00:00:22] David: I don’t know. Wanted to create a life where I can provide for my wife and kids, give them a better life than what I’ve had. We shouldn’t be in this type of position. I’m failing. And I feel like I’ve gotten us into this.

[00:00:40] Halima: And I do want to live bigger. It’s hard to put into words, but at the end of every week, I’m just like, is this it?


[00:00:51] Ramit: Welcome to part two with David and Halima. They initially approached me wondering if he could retire early, and Halima felt disconnected about money.  At the end of our conversation last week, we discovered they’re in $500,000 of debt. They’re in the middle of a renovation that has no end in sight. They have credit card debt. They have a timeshare. And they finally started to realize what a situation they are in. Today, we are dropping right back into the heat of that conversation, and I want to urge you to stick with us because this conversation takes a lot of turns.

[00:01:26] You know what? You don’t need some dude coming on a video and telling you that you’re spending too much on Topo Chico. Get a life. What I’m going to give you instead this Saturday is actual numbers from three real people, their actual spending, how much they make, their debt, and where their money is going. And then I’m going to tell you what I would do if I were them. You and I don’t need more tips. What we need is to see real numbers, and you can get it this Saturday, January 6th, at iwt.com/podcastnewsletter.

[00:01:58] Let’s get to David and Halima part two.


[00:02:01] Ramit: You two spend a lot of money on fun stuff. The way that you talk about spending is a couple that makes $350,000. Three vacations a year, multiple weekend trips, a new car, etc., renovations. I know you make a lot of money, but you don’t make that much money.

[00:02:23] So I’m confused because you could see these numbers. These are very large numbers. And yet the conversation for most of our conversation today was, how do I retire early? And I compete against my partner because I want to make $2,000 more. Do we not ignore the fire happening in the relationship? Halima, what did you think when you put these numbers out here?

[00:02:52] Halima: Honestly, it seemed like a lot of debt. But when I saw that percentage in the 70s, I honestly thought it was going to be higher for the fixed costs. We’re not where we need to be, but we’re not at a 100%.

[00:03:10] Ramit: You’re probably at 85 to 90%. If you were to see another couple in exactly the situation, how would you describe the characteristic that you see? How would you assess what’s going on?


[00:03:24] Ramit: This is a helpful little trick. Sometimes the reality of a couple’s situation is too close, so I ask, what would you do for someone else in a similar situation? And I found that couples are extremely savvy. Their responses are usually 100% correct.


[00:03:41] David: Just spending too much money on fixed costs.

[00:03:45] Ramit: Yeah.

[00:03:45] David: They need to get serious about the debt, tackle that as fast as possible

[00:03:52] Ramit: I agree. Why did this couple get into this situation in the first place?

[00:03:58] David: Being compulsive.

[00:04:00] Ramit: Are you compulsive?

[00:04:02] David: Yes. Yes, she said in the beginning of the call.

[00:04:05] Ramit: Yeah. Are you getting help for that?

[00:04:07] David: We both see a therapist, so probably need to give her a call.

[00:04:13] Ramit: I think so. I think that would be a really good idea. And I think that some of the clues that you might be able to speak to your therapist about would be the timeshare, and the renovations. Halima, how would you assess a couple, if you were speaking to them, they were in the same situation? What would you say is going on?

[00:04:30] Halima: That they’re not managing their finance as well.

[00:04:34] Ramit: Uh-huh.

[00:04:34] Halima: They’re not realizing what they’re doing, that they’re spending more than they’re making.

[00:04:39] Ramit: Right. They did not even know that. What else?

[00:04:41] Halima: They need help.

[00:04:42] Ramit: Are they communicating well?

[00:04:44] Halima: Probably not.

[00:04:46] Ramit: Well, what’s the dynamic between the couples?

[00:04:49] Halima: He is the one that’s handling most of it, and she is going with the flow.

[00:04:57] Ramit: Yeah, she delegates it, and she shuts down. And she just figures it’ll be okay. But the irony is that you were in that situation before. So you worked on yourself. You told me you went through a lot of changes in self-development. This one has proven really difficult for you, right? Why?

[00:05:16] Halima: Because it doesn’t make sense to me.

[00:05:20] Ramit: Okay. That’s fair enough. What would it take for it to make sense? When you started driving, it probably didn’t make sense to you.

[00:05:27] Halima: You need to take more control, not be so passive.

[00:05:33] Ramit: Usually, when I speak to somebody in this situation, I have to spend a lot more time on helping them understand the stakes of what’s happening here. But the thing is, Halima, I don’t think I need to do that with you because you went through something that was worse, financially speaking, than almost anyone I’ve spoken to on this show. Secret foreclosed house, ex-husband who left abruptly. You’ve been through it. What I want to know is what is stopping you from taking control now.

[00:06:04] Halima: I have David to rely on.

[00:06:10] Ramit: And David represents what?

[00:06:11] Halima: The man of the house.

[00:06:13] Ramit: Which in your cultural background is supposed to do what?

[00:06:18] Halima: Support the family.

[00:06:19] Ramit: Right. Provide, take care of the family. Even though your previous man of the house did not do that, in fact, did the opposite, that cultural belief is so deep that you’re just back on that train. And David, you play a part in this as well. David, what do you tell Halima when it comes to money?

[00:06:38] David: Oh, we’re fine. Things are looking good. One thing that I need to start working on, I need to get on top of the disability rating from the VA because I’ve sustained injuries when I was in Iraq. But I know in the state of New Jersey, if you have a 100% disability rating, you don’t pay property taxes.

[00:07:04] Ramit: So I hope you take care of that, and I hope that you’re able to get that. But David, that is just one more example of you looking for some secret around the corner. Do you see that you naturally are drawn towards some secret that’s going to solve all the problems? Catalog it for me. What were they, starting from when you were a teenager?

[00:07:28] David: Boxing, being a thief. I would steal bikes as well and resell them. The MLMs.

[00:07:38] Ramit: Timeshare.

[00:07:39] David: Timeshare.

[00:07:40] Ramit: It goes on and on. We could spend another half an hour digging into all of them. Credit cards one upon the other. You told my colleague that you had an idea. You said, “I want to take our car loan balance and transfer it to the balance transfer on our credit card. That will give us 0%, and then we can do that every year and not have to pay interest on our car loan.” You remember that?

[00:08:11] David: Yes.

[00:08:12] Ramit: You’re talking about this stuff as of a week ago. How is it that you’ve listened to so much of my material, which is focused on long term, low cost, no gimmicks, and then everything you do with your money is centered around get rich quick and schemes and gimmicks?

[00:08:35] David: I don’t know. Step by step, I’m doing stuff that I’m reading in the book, but I guess that’s something that’s been ingrained in me.


[00:08:53] Ramit: I had to get honest here so David and Halima understood the stakes of what was going on. Until now, they had a vague feeling that things weren’t right. But please remember that he came on this podcast to ask if he could retire early. At this point, they are losing money every single month. The primary reason that they don’t feel the pain is that their credit card payments are temporarily giving them 0% interest. But the minute that that finishes, they will be financially decimated, and I think now their eyes are open. This is where the real work begins.

[00:09:32] We’ll be right back.

[00:09:34] Now back to David and Halima.


[00:09:36] Ramit: Right now you have $11,000 in investments. That’s not a lot, especially at your age and especially with your income of $200,000 a year. Your savings are $62,000. What’s really interesting to me is that you have a kids savings account of $22,600. Why?

[00:10:02] Halima: I’ll chime in with that. I went through that part of my life. I did have a savings account for both my children, and that was also taken from us. I had to file bankruptcy and move back in with my mom and start my life all over again. I vowed to create the savings account for the kids. And ever since then, I’ve just been saving the two savings accounts for the kids.

[00:10:39] Ramit: Two, meaning they each have 11,000.

[00:10:42] Halima: Yes.

[00:10:42] Ramit: Okay isn’t it fascinating that you were able to create such a specific mission and execute on it at a very high level when it came to your kids?

[00:10:51] Halima: Yes.

[00:10:51] Ramit: How come you didn’t delegate that to somebody else?

[00:10:56] Halima: Because I only trusted myself with that.

[00:10:58] Ramit: Well, then trust yourself for this money. I would take that $22,000, and I would use it immediately for the credit card debt. If you’re able to get control of your finances and potentially grow your income, you can easily save that much down the road. But right now, this is in my opinion, a 9-1-1. These credit cards have got to go immediately. So right now you’re paying $2,000 a month on your debt. Is that credit cards?

[00:11:31] David: Yes, that’s just for the credit cards, and it’s not the minimum balance.

[00:11:35] Ramit: Okay, so you’re significantly overpaying.

[00:11:38] David: Yes. Yeah, we were using that to pay our outings, our bills, and everything. We were using that because we were getting points on it.

[00:11:52] Ramit: Please tell me this is a joke. Why do you care about points? How many people come on here with $50,000 of credit card debt, and they’re talking about points? Why are you talking about points?

[00:12:03] David: We’re using the points for stuff.

[00:12:06] Halima: For the outings and bullshit.

[00:12:09] David: Prepare for the outings and bullshit.

[00:12:11] Ramit: Do you realize what’s actually going on here? Your house is on fire, and you’re talking about accumulating points.


[00:12:20] Ramit: Remember on the last episode when I said that you have a very small chance of winning when you go up against multi-billion-dollar companies? This is the perfect example. Humans are drawn towards free points, like moths to a flame. Here we have a couple that is drowning financially, and they’re sitting here talking about accumulating points that are worth one cent each.

[00:12:42] Here’s what I really want you to hear. This is not the first couple that has said the same thing, which means there are millions of couples out there in credit card debt, thinking that it is still a good idea to use credit cards, even though with interest, it will cost them two times more, three times more, even 10 times more for their purchases all because they earn a few points.  If you have credit card debt, please stop chasing points. They are not worth tens of thousands of dollars in debt just so you can get a 235-dollar free flight on JetBlue.


[00:13:17] Ramit: All right, how do you decide which card you’re paying towards?

[00:13:20] David: Whichever one is due for the 0% to be over. For example, that Quicksilver one, we paid it down because next month, all that interest is going to hit.

[00:13:32] Ramit: All right.

[00:13:33] David: So it’s a 0% interest card. And yeah, the other ones are also 0% interest.

[00:13:39] Ramit: All Right, here’s the deal. Pay them off aggressively, but I just have to tell you something. Sometimes it’s helpful to hear someone from the outside say something like this. I’m going to tell you this. At $192,000 of income, you should not be playing games like this. No way. Leaving a balance of $64.23 because you don’t have the money for it and then rolling over to another card and always having to stay one step ahead is not a way to live. It’s not normal.

[00:14:08] David: That one we are paying off.

[00:14:11] Ramit: I don’t think you’re hearing my message. What did I just say?

[00:14:14] David: To not play those games. To just pay it off.

[00:14:19] Ramit: I’m saying the entire game you’re playing is the wrong game to be playing, right?

[00:14:24] David: Mm-hmm. Understood.

[00:14:27] Ramit: I think it’s probably time to write a new chapter for yourself. And you probably need to be really strict because when you deviate, you end up in a really bad place. If you keep doing this, you’ll just be stuck here forever. That’s the bottom line. Especially because you have two kids. That’s it.

[00:14:47] Second marriage. Both of you have gone through financial stress, huge financial stress, and you’re making huge life-altering decisions again. We’re not hoping for the next big thing to come around the corner. There’s no secret money coming in. This is it.

[00:15:06] David: Yes.

[00:15:07] Ramit: All right. David, how do you feel before I move on? You look a little down.

[00:15:12] David: I am.

[00:15:13] Ramit: What’s going through your head?

[00:15:17] David:  I feel like I’m not going to be providing as much as I’d like for my wife and kids.

[00:15:32] Ramit: What are you not providing now?

[00:15:38] David: I’d like to provide more trips, more weekend getaways and stuff, but it’s not realistic.

[00:15:46] Ramit: And when you provided those things, what did you actually provide for them?

[00:15:52] David: Memories.

[00:15:54] Ramit: Yeah, true. You were providing that. What else were you providing? What else were you giving them?

[00:16:01] David: Something I didn’t have.


[00:16:03] Ramit: This is poignant. I’ve seen this with many dads. They want to provide for their family. They want to give their kids everything they didn’t have. But they don’t realize that by giving them everything, they are not teaching their family how to say no. They’re not teaching their kids how to say no. They are creating a huge problem that will only show up later.

[00:16:27] Also, by the way, people who say, I want to give my kids everything I didn’t have, are also acting a bit selfish. The idea is that they get to be the hero by saying yes to everything. Yeah, we can go on vacation. Yeah, I’ll figure out how to deal with the credit cards. Yeah, Halima, it’s going to be fine. David becomes the hero.

[00:16:47] But that’s not a real hero. A real hero sets boundaries. A real hero talks about money, makes it a regular part of a family’s discussion. A real hero teaches their family how to make decisions and incorporates them into the decision-making process because they can’t know everything, and they certainly cannot say yes to everything.

[00:17:10] Now, at this point in the process, it is really easy to get down, to feel depressed. David and Halima are facing the realization of what their actions have done and also realizing how hard it’s going to be to get out of this. So I wanted to nip that in the bud, and I wanted to ask them, what would they get if they made all these changes? What’s the purpose of it all?


[00:17:36] Halima: Yeah. It’s for the security of the family, and that we’re on the same page. And that when I feel like the numbers don’t add up and I feel like we’re spending more than we’re making, I need you to stop telling me that we’re okay, that everything’s going to be fine, and for us to be realistic with the numbers.

[00:18:00] David: Yeah. Be more conscious about being compulsive. Not be compulsive and call me out when I’m being compulsive. We see the fire.

[00:18:17] Ramit: What is it? Describe it for me. What happens if you change nothing?

[00:18:21] David: Debt’s just going to keep accumulating, and I will be working till I die. And what’s worse is she’ll be working till she dies as well.

[00:18:32] Ramit: Definitely true. What else?

[00:18:34] David: Kids are going to be going in the same path as us. And I definitely want them to be better off than we are.

[00:18:42] Ramit: Halima, what lessons did you learn from your mom about money?

[00:18:46] Halima: We didn’t really talk much about money.

[00:18:49] Ramit: Hmm. So who taught you about money?

[00:18:52] Halima: I learned it myself.

[00:18:54] Ramit: Right. And as you told me at the beginning of our conversation, money makes you feel what?

[00:19:00] Halima: Comfortable. I want to be comfortable with money, but it makes me nervous, and I don’t understand it.

[00:19:09] Ramit: You feel scared. You feel overwhelmed.

[00:19:12] Halima: Mm-hmm.

[00:19:12] Ramit: Do you talk to your daughter about money?

[00:19:16] Halima: Not really, no.

[00:19:17] Ramit: Do you see any connection between the generations? What is it?

[00:19:23] Halima: We don’t talk about money. It’s just there.

[00:19:26] Ramit: It’s just there. You’re going to be taken care of, and then we’ll leave you to fend for yourself and figure it out.

[00:19:34] Halima: Yeah.

[00:19:35] Ramit: Want that for your daughter?

[00:19:37] Halima: No.

[00:19:38] Ramit: All right. What changes do you want to make?

[00:19:42] Halima: To create a better plan that we stick to, that we’re realistic with. Like you said, we have to be disciplined with it.

[00:19:52] Ramit: You ever say no to them with their behavior?

[00:19:57] David: We’ve gotten better at that.

[00:19:59] Ramit: Oh shit, that’s code for no. All right, what happens to kids who are raised never being told no? Any experience with that?

[00:20:07] David: We’ve already had a conversation with our seven-year-old today.

[00:20:10] Ramit: Oh, okay, today. And so what happens when kids are never told no?

[00:20:14] David: They’re very bratty.

[00:20:16] Ramit: Correct. And what happens when adults are never told no?

[00:20:22] Halima: Mm-hmm.

[00:20:24] David: Assholes.

[00:20:25] Halima: Yeah.

[00:20:26] Ramit: Yeah. Assholes.

[00:20:27] Halima: Entitled.

[00:20:28] Ramit: Entitled. Maybe ignorant of how the real world works.

[00:20:33] Halima: Mm-hmm.

[00:20:35] Ramit: You can provide in so many different ways beyond having to give them an entitled blank check. What do you say?

[00:20:44] David: Yeah.

[00:20:46] Ramit: Yeah. Different way to think about it. It’s really easy to say yes. You’re the hero. Everyone goes, oh, he’s got it. You need to be a different type of hero, and you too, Halima, the one where your kids look at you and say, wow, they really made a turnaround with their finances. I remember they used to be stressed, and then they sat down with us and they talked about what we were going to do, and they always had us excited. They didn’t let us do everything, but they showed us how money works. Wouldn’t that be an amazing story?

[00:21:20] Halima: Mm-hmm. And I do want to live bigger. It’s hard to put into words, but at the end of every week, I’m just like, is this it?

[00:21:32] Ramit: Tell me about that.

[00:21:35] Like, is this it in terms of the house and getting ready for the work week, and making sure there’s groceries in the fridge, and making sure that we have our meals planned for the day. And I was like, I want more.


[00:21:54] Ramit: Is this it? This is such a common phrase that I hear from people and something that is so real. It’s like we go to work. We save our money. We go to the grocery store. We do all these things. And then we go, is this it? I’m going to be doing this for the rest of my life? That’s why I get so angry when people tell me that Target is their rich life.

[00:22:19] Because often they’re not even asking that question, is this it? Can my rich life really be limited to four walls in a retail store where I buy random commodity products that I throw away a week from now? No, there has to be more. But you have to be the one to make the change because nobody accidentally lives a rich life.

[00:22:40] It’s intentional, always. And what that means is you have to get honest about how you treat money. And you have to learn about money so that you can understand cause and effect. For example, how buying a 10,000-dollar sofa affects your dreams of an early retirement.

[00:22:58] We’ll be right back after this.

[00:23:00] Let’s get back to the show.


[00:23:02] Ramit: So what I really want for the two of you is a vision. Not a series of transactions. So I’m going to put the numbers up on screen. I’d like for you to tell me what you would like to change. Here’s your fixed cost at 85%. Where do you want to begin?

[00:23:17] Halima: Spend less on the miscellaneous Amazon.

[00:23:19] Ramit: How? Can’t just say we’re going to spend less. How are you going to change your habits? Why’d it get so quiet in here?

[00:23:33] Halima: Honestly, I don’t know.

[00:23:35] Ramit: What do you get on Amazon, Halima?

[00:23:38] Halima: Toys for the kids, gifts. I feel like when I’m down, I usually just go on Amazon and buy a bunch of stuff because it makes me feel better.

[00:23:48] Ramit: And do you know why you’re down? Have you been able to note that?

[00:23:53] Halima: It’s like what I said before. Is this it?

[00:23:55] Ramit: Yeah, it’s a Friday night or a Sunday evening. I bet if you were to track it, you could see some patterns. Well, Halima, I totally understand that. is this it? Okay, let me go get my dopamine rush. At least I’ll order this. I know it will be here tomorrow. It’s going to feel good. Give it to the kids. They’re going to smile. Everybody hugs. And it buys you a couple of days of feeling good. Have you ever known that?

[00:24:26] Halima: No.

[00:24:26] Ramit: How long has it been going on for?

[00:24:28] Halima: Since we bought the house.

[00:24:29] Ramit: Because of the renovation? Think it traces back to that?

[00:24:33] Halima: The renovation yeah, everything with the house

[00:24:37] Ramit: Okay. So first off, thank you for being so honest. It’s a great topic to bring up with your therapist. A great topic because life is always going to have some element of difficulty to it. We can’t wish that it’s always going to be easy. It’s not. What instead we want to do is try to build the skills to handle it. So if you’re feeling a certain way on a Sunday evening, a therapist will work with you on some skills on how to deal with that. As for the renovation, shall we talk about that?

[00:25:09] Halima: No.

[00:25:15] David: I already told her that once we’re done with the basement, no more renovations until we actually save up for the next project.

[00:25:23] Halima: I agree with that.

[00:25:25] Ramit: Okay. Because frankly, you can’t afford renovations. Had you come to me before you started, I would’ve said no way. You have no money. So wrap it up, and I would not spend any more money on it. The fact that you’re even saying it’s going to the end of the year still makes me nervous because that’s several thousand more dollars that needs to be going towards credit cards. So what if I challenged you to just stop right now? Could you?

[00:25:55] Halima: Yes, but I know I’m going to get backlash from my family.

[00:26:02]  Ramit: Halima, this is actually a really interesting moment. Is that the primary reason that you both plan to continue the renovation?

[00:26:10] Halima: Yeah. 

[00:26:11] Ramit: This really shows the power of culture. Your house is on fire. You’re losing money every single month. You have tens of thousands of dollars of credit card debt, car loans, and then hundreds of thousands in mortgage debt, and you’re planning to still continue spending thousands of dollars more that you do not have because you’re afraid of a conversation with your family. Halima, when I say it like that, what do you think?

[00:26:43] Halima: It’s true.

[00:26:44] Ramit: Okay. So what do you want to do about it?

[00:26:46] Halima: I need to put my foot down.


[00:26:49] Ramit: It’s amazing to me that we all fancy ourselves rational and logical with money. But when you get to the root of it, we almost always use simple emotions to make huge decisions. Here we have a renovation that’s costed them literally tens of thousands of dollars more than they planned. But because they’re afraid to have a single difficult conversation, they’re planning to just sail on with it, keep going with the renovation.

[00:27:16] And here’s the truth. If it’s not the renovation, it’s going to be something else. That is why this is a skill that they have to learn– the skill of setting boundaries and having a difficult conversation.


[00:27:28] Ramit: Do you want to practice it right now?

[00:27:30] Halima: Sure.

[00:27:31] Ramit: All right, I can be her family, or David, you can be her family. Who wants to play the role?

[00:27:36] David: I know exactly how her family responds.

[00:27:39] Ramit: Let’s do it. All right, Halima, go ahead. And is this conversation going to be with your dad?

[00:27:44] Halima: Yeah.

[00:27:44] Ramit: Go ahead.

[00:27:45] Halima: So dad, I know you’re here and you want to help out, but we’re going to put a pause on fixing the basement.

[00:27:58] David: Why?

[00:28:01] Halima: Because we don’t have the money right now, and we need to put that money into paying off our debt.

[00:28:07] David: I’ll pay for it, and you pay me back.

[00:28:09] Halima: No.

[00:28:10] David: Why not?

[00:28:12] Halima: I’m a grown adult, and it’s enough that I’m getting help from mommy and daddy all the time. I need to do this, and you need to trust me to let me do this. When I need your help, I will ask you, but right now we’re putting a pause renovations.

[00:28:28] David: Okay. Now with your mom.

[00:28:31] Ramit: Hold on, hold on. Fuck. That was awesome. Damn. Round of applause. That was very impressive.

[00:28:37] David: Her dad is not the issue.

[00:28:39] Ramit: We’ll get to the mom in a second, but Halima, several things you did that were so cool. I just want to call them out. I don’t want to take them for granted. I was impressed. You came out of the gate. Dad, this is what we’re doing. And then you were very clear, no beating around the bush, very blunt. We don’t have money. We need to put it towards our debt. And then when dad came back with an alternative, which was basically code for just take on more debt, the last thing you need is more debt, and you nailed it.

[00:29:14] And so I love, Halima, that you said, no. We have decided we are going to do this. Nobody can argue with we, as a married couple. You are stronger together than you are as individuals. That’s the beauty of marriage. So, damn, I just have to say that was so good. Keep that energy up. Okay. And you can throw in the little, I love you, dad. That’s okay. Fantastic work. All right. Now, mom, go ahead.

[00:29:47] Halima: So the next time you come over and you see that we haven’t fixed anything in the house, I don’t want to hear about why things haven’t gotten done in the house. David and I have agreed that we’re putting a pause with fixing the house because right now we want to put our energy and our finances to debt, and I need you to respect that.

[00:30:12] David: You’re still going to hear what I have to say. I don’t like the way my grandchildren are living, or the way you’re living. You need to improve that.

[00:30:21] Halima: And when the time is right, we will improve that. But the condition of the house is fine. We have a roof over our head. We have running water. There’s food on the table. We’re fine.

[00:30:32] David: I don’t think this is acceptable. You need to find a way to get this done.

[00:30:40] Halima: Why?

[00:30:40] Ramit: No, no, no, no, no, no. Stop. I’m stepping in. That was good.

[00:30:45] David: Her mom would not stop. She would not stop.

[00:30:47] Ramit: I know she’ll keep going. Okay. I got to give another round of applause to David. David, who knew you were such an actor?

[00:30:54] David: It’s just stressing me out just thinking about her mom.

[00:30:58] Ramit: Maybe it’s time to create a concrete vision and slowly start to quiet all the other noise outside. Because unless your parents are going to write you a 517,000-dollar check, then you are not creating your own family unit with your own rich life values. They may say that you can’t leave a basement like that. It’s not fashionable. It’s not good for the kids. You need more space and on and on and on.

[00:31:30] But as you aggressively pay your debt down, as you build your savings up, as you start to live your vision of a rich life, taking the kids to an afterschool tutor, taking a glamorous trip, maybe even splurging for your parents to come along, there will be a day where they’ll say, how’d you do that? Must be nice.


[00:31:52] Ramit: We spent a lot of time practicing here. And I taught them about the social psychology concept of inoculation, where you can intentionally make a plan to resist attempts at persuasion from people like your parents. And I encouraged them to speak to a therapist. I have a lot of confidence that they can have this conversation and do it very well.


[00:32:14] Ramit: All right, back to the numbers. So we stopped all the renovations. You just saved about $3,000. Great, but that’s scratching the surface. I need to get this number down to 60%. What do you want to do?

[00:32:29] Halima: Taking that money that we have in that savings, the kids’ joint, pay off the Amex card, especially since we need to do that soon. And actually, I feel like with that money, we can pay off all those credit cards.

[00:32:46] David: Yes.

[00:32:48] Ramit: Be specific. All means what?

[00:32:50] Halima: So the Amex, maybe even the Bank of America car loan. I would want to see– I know you said not to mention it, but I would want to see the APRs of each of those cards. And then, based on that, then we can decide, like what’s the most important? And then go down the list.

[00:33:11] Ramit: Very sophisticated question. David, what are the APRs of those credit cards and the car loan?

[00:33:16] David: The one from Bank of America is 5.6%.

[00:33:21] Ramit: That’s a car loan of $13,000. What else?

[00:33:25] David: The Amex. It’s at 0% right now. In February, it’s going to skyrocket to 26%. The Quicksilver, I believe that one’s going to go up to 24%. Synchrony, the one for ADT is at 6% right now. The kitchen one is going to skyrocket to 28%. The Best Buy one, we have two and a half years to pay that off still before the interest rate kicks in for the Best Buy.

[00:34:00] Ramit: I think that as a general guideline, credit cards are your enemy. I don’t say that for most people, but in your case, you two have a history of overspending and using credit irresponsibly. So anytime you find yourself talking about playing a game, a gimmick, a hack, like 0% balance transfers, that’s a gimmick. Any of that should be a red flag for the two of you. You should have a word. What’s your red flag word where you just stop everything? It’s like that button on the treadmill. You hit it, everything stops. What is the word?

[00:34:37] Halima: Bananas.

[00:34:38] Ramit: Bananas. Everybody stops. Okay, great. That’s what one of you says when one of you is about to pull some type of scheme. Can you give me some examples of what schemes you would have used the term bananas for? Go ahead. Halima, you first.

[00:34:53] Halima: The whole timeshare thing.

[00:34:55] Ramit: Bingo. David, you go next.

[00:34:57] David: The 0% transfer that I was going to do with the car loans.

[00:35:01] Ramit: Exactly. So now we’re starting to see over and over and over bananas, bananas, gimmicks, schemes, scams, things that sound too good to be true. They’re too confusing. I couldn’t explain it to my mom. Bananas. Stop.


[00:35:16] Ramit: I love this word bananas. It’s such a perfect word to use in what has so far been a pretty heavy conversation. If you’re listening to this or you’re watching this on YouTube, what is a situation where you and your partner can set up a word that alerts you when there’s something bad happening, something you need to take a break from, and also something good that you want to celebrate? What’s a word for that? That’s my challenge to you this week.

[00:35:43] Ramit: Now a quick message from our sponsors​

[00:35:52] Ramit: Now back to the show.


[00:35:54] Ramit: We’re currently at 82%. I need to move faster now. I need to get this down to 60%. What do you want to do? Your debt payments, how much is this going to drop?

[00:36:04] David: Zero.

[00:36:05] Ramit: Hold on. Okay, you’re right. Damn, nice work. Hell, let’s take a round of applause. Hit this with a zero, and we’re– damn, we’re down to 66%. Okay. I really did not think that was going to happen. That’s a big difference. I am loving what I’m seeing so far. What else? Didn’t we talk about Amazon?

[00:36:30] Halima: Yes.

[00:36:31] Ramit: So what do you want to do here?

[00:36:32] Halima: Let’s bring that down to 800, I want to say.

[00:36:36] David: I would say 500.

[00:36:37] Ramit: No, be realistic. You’re not going to cut it by two thirds. 800. I like it. I would like to see that better. I think you need to build the skills to get there. David, this is an area where you can help Halima. So you don’t have to be the police. Hey, did you spend too much this month or this week? But it’s like having open conversations about money. So just keep asking that as it relates to money. And I see Halima– gosh, I got to put you up on screen. Halima. I see you nodding a lot. Tell me about that.

[00:37:09] Halima: That’s just the way that I communicate. When I agree with something, I nod, try to be an active listener.

[00:37:15] Ramit: I love it. I appreciate it. And would you like it if he asked you those kind of questions?

[00:37:19] Halima: Yes.

[00:37:20] Ramit: Okay. And he did, right? Which is fantastic. Such a good clue of your relationship. Okay, I’m getting excited now. I got to keep going. What’s that number up there right now? What is that?

[00:37:33] David: 60%.

[00:37:34] Ramit: Holy shit. Guys, I have to tell you, I didn’t think we would get there. I didn’t. I thought we’d get somewhere in the neighborhood, but I didn’t think we’d get to 60. What do you want to do with your additional $2,000 a month of cash flow?

[00:37:48] David: I would put 15– Halima, what would you like to do? Thank you.

[00:37:54] Halima: Yeah, I wouldn’t say the full 2,000 but I want to say the 1,500 into the investments.

[00:38:01] Ramit: Nice. I like that.

[00:38:03] David: That’s exactly what I was going to say, and that’s why I love her.

[00:38:05] Ramit: Great. So that’s beautiful. It’s way more aggressive than what you used to put in. Okay. You’re doing it automatically, but you’re leaving a little bit of buffer. I like that. All right. Damn, that’s at 21% of net. That’s quite high and I think appropriate for a couple. Let me tell you why I say that because I want you to know. Typically, I say five to 10%, but that’s really the bare minimum. I like that number to be higher. I see a couple making almost $200,000 a year with a relatively small amount in investments, $11,000. It’s time to get aggressive.

[00:38:43] David: Can I also just say that investment part doesn’t include either of our pensions?

[00:38:50] Ramit: Exactly. That’s true. That’s a good point. Oh, you have a pension too, Halima?

[00:38:54] Halima: Mm-hmm.

[00:38:55] Ramit: Wow, what are you going to get paid out when you retire?

[00:38:58] Halima: Honestly, I’m not sure.

[00:39:00] Ramit: Okay, go find out. No more passive, Halima. What’s the new Halima called? We got to describe her. Give me an adjective.

[00:39:07] Halima: She’s active. She’s direct.

[00:39:09] Ramit: Uh-huh. What is it, like Crown Halima? Give me something visual because active is boring. I want to see it. A movie character. What is it?

[00:39:19] David: The goddess.

[00:39:21] Ramit: Now we’re talking. Halima, what do you say? You the goddess?

[00:39:24] Halima: I already knew it.

[00:39:25] Ramit: Fuck, yes.

[00:39:26] David: I say that to her all the time.

[00:39:27] Ramit: That is the kind of confidence I want to see. Okay, I’m loving this. Goddess Halima damn well better find out her pension amounts because that actually dramatically affects how much you need to save. Let me put it this way. Right now, if you can afford to put 21% of net towards your investments in your early 30, I think that’s a really good thing.

[00:39:52] Maybe after a couple of years, maybe you pull back, but honestly, I find that people tend to learn to live on the amounts they have leftover. And since your investments are being automatically swept away, you just have to retrain yourself to live on a little bit less. Fantastic. All right. You got $11,000 in your joint checking. What’s up with that?

[00:40:15] David: We haven’t been putting it towards the debt.

[00:40:18] Ramit: Why?

[00:40:19] David: We should have

[00:40:20] Ramit: Why?

[00:40:22] David: Because I was thinking of waiting till the last possible minute to pay off the debt because of the 0% interest.

[00:40:33] Ramit: Say it, Halima.

[00:40:36] Halima: Bananas.

[00:40:37] Ramit: Bananas. That’s a banana, if I ever heard one. I really want to just take a second and celebrate. First of all, round of applause. I’m so amazed at what you’ve accomplished already. Second, you have a word that the two of you use to celebrate or something that you do when something great happens?

[00:40:58] David: We only have words for when things are going bad.

[00:41:04] Ramit: Yeah. That’s real. That’s honest. You had bananas. That came out like that.

[00:41:10] David: Because we use that for when one of us is yelling at the kids.

[00:41:16] Ramit: Yeah.

[00:41:17] David: We say bananas, and then the other one steps in.

[00:41:20] Ramit: Guys, what a great tool that you’ve had that conversation and you’ve developed that language. Can we develop a positive language for a second? What would it be where you just stop what you’re doing and you just go over and give the other one a big hug? What would it be?

[00:41:37] Halima: I’m proud of us.

[00:41:38] Ramit: How do you feel about that, David?

[00:41:43] David: I want it to just be a one-word thing. How about Hershey’s?

[00:41:54] Halima: Hershey’s. I like it.

[00:41:57] Ramit: I like the smiles on both of your faces right now.

[00:42:01] David: Because we just went to Hershey park. The kids loved it.

[00:42:04] Halima: Good memory.

[00:42:04] Ramit: Love it.

[00:42:05] David: Yeah, good memories.

[00:42:06] Ramit: All right. Hershey’s it is. So what would you like to say, looking at this new fixed cost that you’ve got up here?

[00:42:14] David: Hershey’s.

[00:42:19] Ramit: Beautiful job.


[00:42:20] Ramit: I’m proud of the conversation that I had with David and Halima, and I’m extremely proud of how far they came. They could have coasted along for the rest of their lives, trapping themselves, drowning in debt, and never really understanding why, but they showed up for this conversation, and I’m very impressed with them.

[00:42:40] Now, are they going to make every single change we talked about and stay on track? I don’t know. Candidly, it’s really hard to change a lifetime of attitude and behavior towards money. It’s hard.

[00:42:54] But if they took this seriously, and if they made this a top priority, they got a therapist, they set up time to speak to each other every single two weeks, they were aligned, they started to slowly change the way they talk about money, think about money, feel about money, they could do it. They have a chance to totally change the trajectory of their lives and the lives of their kids. Now let’s check in on their follow-ups, starting with David.

[00:43:24] David: What I’ve learned is that we can work better as a team, my wife and I. You don’t just bench a good player or let a good player not reach their potential. My wife has a lot of potential, and I need to use that more. I also learned that I need to stop trying to outsmart these banks because they’ve been playing this game a lot longer than I have.

[00:43:49] What was surprising to me was It’s the fact that I listen to every single episode and I still need numerous changes to make because, I don’t know, I thought I’d made enough changes and stuff. I got surprised with that.

[00:44:07] The changes that we’re making, specifically, are we’ve already paid down the debt. We already moved some money into a high yield savings account. And we’re reading the book together. We’re trying to get through it to make sure that we actually put everything into use.

[00:44:27] Ramit: And now let’s hear from Halima.

[00:44:29] Halima: I learned that my feelings were validated, and that my instinct, I should trust it that maybe we are spending a little more than we’re making. I needed to hear that.

[00:44:40] I’m surprised that I was falling back to these familiar habits. My whole life, I always had a caretaker to take care of finances, and now that I’ve given the second chance to be with a wonderful man, I was falling back and being dismissive about things

[00:45:03] So if I have questions, I have to ask, and I do need to stay on top of the finances because David and I we’re a team, and he deserves a teammate. I need to not only read through the book, which I got through three chapters already, but like a book club, David and I want to go through every chapter, take notes, dissect it, and then come together and really break it apart and see what kind of changes we’re going to make as a team.

[00:45:29] Ramit: David and Halima, I want to thank you for showing up, for following up, and for doing the work that can change your life.