Episode #149: “We have no savings but bought our kid a $500 toy for Christmas” (Part 1)

Elizabeth and Jonathan are in their mid-thirties, have been married for 13 years, and share a young daughter. They bought a starter home after getting married, but expensive renovations are still underway. They struggle with debt and spend a lot on their child. They’re wondering—is this it?

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Show Transcript

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[00:00:05] Elizabeth: We’re still in the same house that we bought when we first got married. It was supposed to be a starter house, and here we are 13 years later, still in the same house, still in the middle of renovating it. I thought we would be done with renovations. I thought we would be not living paycheck to paycheck.

[00:00:23] We couldn’t save $1,000, which is pathetic, but we needed the money. I would save $100, and something would come up or $50, and something else would come up again. We could never get past that step

[00:00:37] I’ve failed our, I don’t want to say our marriage, but I’ve failed to provide us a life that we deserve. Technically we’ve made it. We’re making way more than we made when we first got married. But still in the same place that we were 13 years ago, but worse.

[00:01:00] Ramit: Meet Elizabeth and Jon. They’re in their mid 30s. They’ve married for 13 years with an 8-year-old daughter, and they spend way too much. They’re stuck. They’re in debt. They admit to being impulsive with their money, but they can’t figure out what to do to make a change.

[00:01:18] They told me in their application that they have a 10 out of 10 problem and that within one year they’re going to reach a breaking point. But when I talk to them, I’m surprised at how casual they sound about the severity of their situation.

[00:01:36]  Listen in as you meet Elizabeth and Jon.


[00:01:39] Elizabeth: For me, Christmas is a huge thing. We’re huge on giving gifts. We’re huge on family. We’re huge on food. And usually, Christmas is the time where we are overly strapped. We overspend. We want to give the best gifts for our daughter. She’s our only child. She’s obviously very special to us. She’s our miracle baby, so we like to spoil her. We like to give her everything she’s asking for. That usually requires us borrowing against every little thing we can possibly borrow against.

[00:02:15] Ramit: Like what?

[00:02:16] Elizabeth: We’ve used the prepay apps like Klarna and Sezzle. There’s a whole bunch of them where you pay in increments, like your credit card, but not really. You’re still charged interest rate, and it’s like payments in four or payments in six months. So I used those apps basically to fund our Christmas this year.

[00:02:40] Ramit: What did you get your daughter for gifts?

[00:02:44] Elizabeth: Her big gift was a ride on pony. it was like $500. So for us, that was a huge spend.

[00:02:53] Ramit: Wait a minute. This is one ride on a pony?

[00:02:56] Elizabeth: No, no, sorry. It is a toy. You ride on it, like a hoverboard and a pony put together.

[00:03:04] Ramit: How big is a 500-dollar pony hoverboard?

[00:03:10] Elizabeth: It’s pretty big. It lives in our living room right now. There’s no place to put it, so yeah.

[00:03:15] Jonathan: Like any kid, she had a big list, and we could have bought her any number of other things off of it, and she’d have been just as happy about it than the pony. When I asked about did we really need to spend $500 on a pony, it was, I’ll make it work. And I felt pushed aside because what I said just didn’t seem to matter.

[00:03:45] Ramit: How did you decide the financial part of that purchase? Did you say, oh, this is how much we can afford, or was it more like, she wants this, and so we’re going to find a way to get her that?

[00:03:59] Elizabeth: More that, yes. More I will find a way. I will make it work.

[00:04:03] Ramit: How did you make it work?

[00:04:06] Elizabeth: By borrowing against money that I didn’t have. Yeah. Once January rolled around, the payments started coming in, and once those payments started hitting, I realized we couldn’t afford those payments, utilities, house payments, car payments, all of that in one month.

[00:04:24] So then I have a nice little system where I’ll pay this this month, not that, and then catch up when I can, wherever I can save a few bucks. So I have this wonderful– I’ll show you– little diary that I write everything down within a two-week period that our paycheck covers, the bills that are due within those two weeks. And I just keep track and hopefully by the– right now we’re $200 away from paying off Christmas, and it’s February

[00:05:00] Ramit: If you were to describe how that notepad makes you feel, what words would you use?

[00:05:07] Elizabeth: Oh, anxious, for sure, sad because I have to use it. I would say doubly sad because it’s been going on for so long. We started this when we got married, and I haven’t seen the end of it. I thought this was going to be a stop gap for when we started making more money, because when we first got married, we were dirt poor. We were making minimum wage.

[00:05:36] We had just bought a house. We just paid for the wedding out of pocket. Between the two of us making no money, we couldn’t afford to go on a honeymoon. We couldn’t afford to take vacation days. Married young and poor, so I thought, surely, by the time we get to our 30s, things would be great. And obviously it’s continued on and on. And here we are in our late 30s. It’s the same process.

[00:06:04] Ramit: Jon, what do you think hearing Elizabeth describe the notebook and how she manages one account to another every single month?

[00:06:14] Jonathan: It’s a bit chaotic to me. I’ve always been the more structured person. I may not pay the bill on time, but it’s getting paid this month. I would give up luxuries or other things to make sure like the electric bill, or the gas bill, or the house payment was paid.

[00:06:34] It makes me sad to see how much that book just beats her down because there’s times in the book where it’ll look like we’re going to finally start to outpace it and get ahead. But then life in its funny way comes up and kicks dirt in your eye. And we’ve gotten just about there to start outpacing it, and then we fall back into where we were at and fall right back into the rut.

[00:07:06] Ramit: What is your role in the finances in your family?

[00:07:10] Jonathan: Moral support. I started out with being the one paying the bills because of the way that I handled money. Our spending tendencies started to get away from us, and it started to frustrate me, and so we started to split the bills.

[00:07:33] We started to fall into the position then where we would get paid and one of us would pay all of our bills because we got paid, but then the other person didn’t have money to pay their bills that were due because we weren’t really talking about who needed to pay what and when. Our communication was just non-existent about what needed to be paid when. Elizabeth said, I’ll take it all. Just give it to me. I will start doing it. And that’s when the book started.

[00:08:02] Ramit: 10, 12 years ago. Is that correct?

[00:08:06] Elizabeth: Yeah.

[00:08:07] Jonathan: Yeah, probably about 10, 12 years ago. I’d ask questions. If we were going to go do something, I would say, hey, are you sure we have money to go do this?

[00:08:15] Ramit: What would she say?

[00:08:16] Jonathan: The phrase that I feared the most, I’ll make it work.

[00:08:19] Elizabeth: He doesn’t see the numbers every day. I wake up and check everything every day.

[00:08:26] Ramit: Mm-hmm. I’ll make it work. And when did you stop asking that question, Jon?

[00:08:30] Jonathan: I never stopped asking.

[00:08:31] Ramit: Did you ask it about the pony?

[00:08:34] Jonathan: Oh, yeah.

[00:08:35] Ramit: Okay. What’d she say?

[00:08:36] Jonathan: I’ll make it work.

[00:08:37] Ramit: Is she making it work?

[00:08:43] Jonathan: Are you making it work?

[00:08:48] Elizabeth: We’re still here, but no.


[00:08:50] Ramit: The big clue here is a lot of chaos, chaos in the way that she manages money, chaos in the way that they make decisions about money. Even physical chaos in having a huge toy pony in the middle of their living room. When you think of your money, it’s very common for people to say overwhelmed or reactive, both of which are trouble signs.

[00:09:14]  I’d like for you to think about something in your life where you’re really good at. It might be your workouts, your cooking, your job. How would you describe yourself? Maybe confident, maybe competent, maybe calm, relaxed. When it comes to your money, think about the way that you describe yourself today and think about what you might like to describe yourself as.

[00:09:36] Ramit: For me, the ideal words with money might be calm, cool, collected, present, safe, future-focused, even indulgent, luxurious, and prudent. You choose, but I want you to notice what it sounds like to be in control of your money. It’s not this,

[00:09:57] We’ll be right back.

[00:09:59] Now back to Elizabeth and Jon.


[00:10:01] I don’t have any guidelines in the way that I do the finance, I guess. I don’t have any guardrails. Whatever I can make work, I can make work.

[00:10:12] Ramit: What do you mean make work, though? It’s not working.

[00:10:14] Elizabeth: It’s not working, no, but whatever I can pay with the money I have, I pay. And if I don’t have the money, I borrow.

[00:10:22] Ramit: So can you say that to me in a complete sentence? Because it’s not working, and it’s not the money you have. So how do you decide if you’re going to buy something?

[00:10:31] Elizabeth: Complete impulse. It’s, I want it, I buy it.

[00:10:35] Ramit: Thank you.

[00:10:36] Elizabeth: Mm-hmm.

[00:10:37] Ramit: Now we can work with that.

[00:10:39] Elizabeth: Yeah.

[00:10:40] Ramit: Okay. Are you in a better or worse financial situation than when you first got married?

[00:10:45] Elizabeth: Worse.

[00:10:47] Ramit: Because?

[00:10:49] Elizabeth: We’re in debt.

[00:10:51] Ramit: What was the first thing you got into debt for?

[00:10:53] Elizabeth: House, and then car, or truck, I should say. I know your feelings on trucks.

[00:11:02] Ramit: What are my feelings on trucks?

[00:11:05] Jonathan: It’s just an F-150. It’s an F-150.

[00:11:07] Ramit: All right. You need it. You need that. You need it.

[00:11:11] Elizabeth: it was used. It was used. We didn’t pay full price.

[00:11:15] Jonathan: Yeah.

[00:11:15] Ramit: Uh-huh.

[00:11:16] Elizabeth: But at the time we probably couldn’t afford the car payments anyways, but we needed a second vehicle, and that’s what he picked.

[00:11:24]  Jonathan: I needed the four-wheel drive.

[00:11:28] Ramit: Why?

[00:11:28] Jonathan: I work in maintenance at a retirement community, and I need to be able– it was during the winter. If we get a lot of snow around here, I still need to be able to get into the facility to clear the parking lot and stuff like that.

[00:11:45] Elizabeth: I will give him the benefit of the doubt here. When other people are snowbound, it is his responsibility to go out and pick them up.

[00:11:55] Ramit: Because of his job?

[00:11:56] Elizabeth: Because of his job, yes. That it falls on the maintenance crew to go collect people when they’re stuck.

[00:12:05] Ramit: Does the company pay for that.

[00:12:07] Elizabeth: No. On company time.

[00:12:11] Jonathan: Yeah.

[00:12:12] Elizabeth: But they don’t pay for the vehicle.

[00:12:13] Ramit: What if he just told them like, I have a little car. What would they say?

[00:12:16] Elizabeth: I don’t know. That’s a good question.

[00:12:18] Jonathan: I don’t know. That’s never really come up.

[00:12:20] Ramit: It never occurred to you, right?

[00:12:23] Elizabeth: No.

[00:12:23] Jonathan: No.


[00:12:24] Ramit: I need to cut in here. That was a major, major clue. Did you catch it? Elizabeth and Jonathan just calmly told me that he needed a truck, which they admit he couldn’t afford because he has to clean the roads and pick up stranded people at work. But it literally never occurred to them that their job should pay for this.

[00:12:46] This is very common among people who grew up poor or work in low-wage industries. Basically, jobs where employees don’t have a lot of power. The invisible script here is the job tells me what to do, and I do it. That is the power dynamic.

[00:13:03] But in industries where employees have a lot of power and among communities where there’s a lot of agency, this would never happen. For example, if this interview were held in San Mateo and I were interviewing for the job, I would literally say, well, I expect you’ll be providing a work vehicle, and they would.

[00:13:23]  Already, we can see how they view the world, profoundly differently. There’s a lot of passivity, a lot of accepting that that’s just the way it is. And one of my dreams with my book, and my podcast, and my show is to show you that you have power to change the situation that you are in.


[00:13:46] Ramit: What’s the status today? When do you talk about money?

[00:13:48] Elizabeth: I show him my little notebook, and I show him what bills we have due within that two weeks. I show him which ones we can afford to pay, and I show him which ones are getting bumped.

[00:14:02] Ramit: And what does he say?

[00:14:03] Elizabeth: And why. And he usually just says, okay.

[00:14:07] Ramit: When you are going through the process of showing him, what are you really trying to accomplish there?

[00:14:16] Elizabeth: I’m trying to engage him maybe a little more with the finances, to prove that what I’m doing is correct. But no, no, he doesn’t. He just says, okay. And that’s usually the end of it.

[00:14:30] Ramit: Can I tell you I love talking about Rich Life, and personal finance, and stuff? Even I would not be engaged by that.

[00:14:38] Elizabeth: Yeah, fair enough.

[00:14:38] Ramit: But I did think you were pretty perceptive there about the second thing you said, the idea that I’m trying to prove to him that what I’m doing is right, because if you were doing it wrong, what would that mean?

[00:14:58] Elizabeth: I would hope that he would point it out and correct it or help give me a better idea of what to do.

[00:15:04] Ramit: When was the last time he’s done that?

[00:15:07] Elizabeth: Never.

[00:15:08] Ramit: So can I ask again? If you were doing your finances wrong, what would that mean to you?

[00:15:25] Elizabeth: That I’m responsible for putting us in the position that we are in now. I am the reason we’re in debt. I’m the reason that we can’t pay our bills, because it’s all on me. That I’ve failed our, I don’t want to say our marriage, but I’ve failed to provide us a life that we deserve.

[00:15:50] Ramit: What does that mean, deserve?

[00:15:55] Elizabeth: We’re still in the same house that we bought when we first got married, and when we bought the house, it was supposed to be a starter house, and here we are 13 years later, still in the same house, still in the middle of renovating it. None of the renovations are done.

[00:16:12] I thought we would be in a nicer place. I thought we would be done with renovations. I thought we would be not living paycheck to paycheck. Technically, we’ve made it. We’re making way more than we made when we first got married, but we haven’t. We’re still in the same place that we were 13 years ago, but worse, actually, because we’re so much in debt. So it feels counter counterintuitive to, you know what, I thought we would be where I thought we would be.

[00:16:47] Ramit: Yeah. We’re going to have money to be able to– what? Tell me.

[00:16:52] Elizabeth: Go on a vacation, a honeymoon. We’ve never done that, ever.

[00:16:56] Ramit: Okay. What else? Tell me.

[00:16:58] Elizabeth: Honestly, I don’t think we’ve dreamed past vacation as far as money goes, because we’re so in debt.

[00:17:05] Jonathan: I’m with her on it. I would’ve thought since we both started out making minimum wage and all we had to worry about was making sure the utilities were paid, we had gas in the cars and our home. We’re making considerably more than we’d made then, but we find ourself in the same circumstances. I wouldn’t have necessarily said that we deserve to be better off, but I would’ve hoped that we would’ve been in a better position to just enjoy the simpler things.


[00:17:45] Ramit: There’s a recurring theme on this podcast, where people say what they deserve, and usually it’s them describing things they want, a truck, an expensive mattress, all kinds of stuff for their kids. I think you deserve to have a good education, healthcare, a safe place to live, which is why I vote for progressive politicians who want to build more housing and expand access to public education and healthcare.

[00:18:10] But too many of us have twisted the concept of deserving into random desires, which are coincidentally the very same things we see advertised all over TV and social media. Is it any wonder that American consumers love to spend the majority of their money and they have very low savings rates?

[00:18:28] Personally, I would like you to banish the word deserve from your vocabulary when it comes to money. You and I can set big ambitious goals, but if we want something, we have to work hard for it. We have to save money, and yes, we even have to incorporate a bit of luck.

[00:18:45] If we are lucky, and if we work hard and save money, then we can buy the truck, or the trip, or new clothes. In fact, I support it. I want you to. But if you begin with the idea that you deserve certain things, it’s very likely that you’ll find yourself in financial trouble because you’ll add more and more things to that deserve category without ever focusing on the hard work and habits that actually let you comfortably afford them.


[00:19:10] Ramit: One thing that I hear when you describe the situation you’re in is it sounds like you both are passengers on the ride of life.

[00:19:25] Elizabeth: It feels like it.

[00:19:27] Ramit: I bet it does. You wake up first thing you do, think about bills. Go to work, maybe get the paycheck. That’s not even going to cover what we need to. Sit down every two weeks, talk about money, but it’s never a positive conversation. It’s never, oh, we’re going to save this much, or we’re going to do– it’s, okay, we’re going to pay this, but not that. And then every so often, spend a whole bunch to feel good for that moment.

[00:19:54] Elizabeth: Yeah. Very accurate. Very accurate. Yeah. Because we’re living so down on ourselves for weeks and weeks at a time. I feel like we need to have that spending spree or whatever have you. Buy that pair of shoes, or buy that movie, or whatever, to make us feel good, to feel like we’re not complete failures at life.

[00:20:26] Ramit: Do you think you’re a failure at life?

[00:20:29] Elizabeth: It feels a little bit like it right now.

[00:20:31] Ramit: Why?

[00:20:32] Elizabeth: Just financially I feel like I’ve failed at providing for my family, providing for my daughter. I hustle at work a lot to try and hustle my way up the corporate ladder to try and make up for my lack of financial sense, I guess. You’d call it. I try and do a lot of side hustles. I fail at them, but I try, but I feel like it’s my responsibility to fix it.

[00:21:10] Jonathan: Her work allows her to do overtime. They’re constantly busy. Even if I could do overtime, she’s usually doing overtime. So our daughter dances, so I take her to a lot of her dance stuff, and I try and help around the house, make sure it stays picked up, and dinner gets made, and everybody gets to eat.

[00:21:33] Ramit: Okay.

[00:21:33] Jonathan: With my maintenance background, I fix things around the house.

[00:21:39] Ramit: All right. Well, that’s valuable.

[00:21:41] Elizabeth: Right. It is. It is. 100%.

[00:21:45] Ramit: All right.

[00:21:46] Elizabeth: So that’s why I took on the financial side of it. He has his value in the household things, and I try and use my position to do what I can to help with the finances. Well, I will say I have tried to make changes. It’s not that I’m not aware that it’s not working. I’m very aware of it. I’m very conscious of it. It is more so that I’ve tried many different things, and I always come back to the notebook.

[00:22:23] Ramit: What else have you tried?

[00:22:25] Elizabeth: The Dave Ramsey, we’ve done tried that. That didn’t work.

[00:22:30] Ramit: Why not?

[00:22:32] Elizabeth: We couldn’t get past the first step. We couldn’t save $1,000, which is pathetic, but we couldn’t save $1,000.

[00:22:42] Ramit: Hold on, hold on, hold on. Step one, save $1,000. What happened?

[00:22:47] Elizabeth: Yeah. We needed the money. I would save $100, and something would come up, and the money would be needed for something. $20 or $50, and something else would come up again. We could never get past that step because I couldn’t save more than 100 bucks, if that.

[00:23:06] Ramit: What does that tell you?

[00:23:07] Elizabeth: That we’re spending too much. Jon, what do you think? Why do you think we couldn’t save 100 bucks?

[00:23:21] Jonathan: We couldn’t say no to things.

[00:23:23] Elizabeth: Yeah.

[00:23:23] Jonathan: It didn’t matter whether it was something we wanted or needed. We couldn’t say no, and we would spend the $100.

[00:23:35] Ramit: The way you describe your situation is something is always happening to you. It’s coming at you, a bill, an expense. But when I dig down into it, a lot of it, maybe not all of it, but a lot of it is we couldn’t say no. We couldn’t change our own behavior. It’s not the world. The world is going to always throw things your way. We couldn’t change our behavior.

[00:24:00] Elizabeth: Yeah.

[00:24:01] Ramit: You notice that?

[00:24:03] Elizabeth: Yes. Unfortunately, yes.


[00:24:06] Ramit: I have a lot of sympathy for people who overspend, and it can sound infuriating to others to hear people overspending when they’re in obvious financial trouble. But one of the reasons I started this podcast was that I want you to hear the stories underneath the spending. For example, Elizabeth said, we’re so down on ourselves. Sometimes we need to have a spending spree to feel good. People are not robots. When people feel bad, we will do almost anything to stop that feeling. And the reason I can see this is how I was raise,d with my immigrant parents taking us to India every few years and studying psychology and persuasion.

[00:24:47] Now, because of that, I also believe we can make changes. I believe in personal responsibility, but I also understand why people make irrational decisions.

[00:24:58] We’ll be back after these messages.

[00:25:01] Let’s get back to the show.  

[00:25:02] I suspected part of their behavior came from how they grew up, so I asked Elizabeth to tell me about her childhood.


[00:25:08] I grew up in a very conservative Christian family, and I rebelled against a lot of the things and didn’t end well for me a lot of the times. So I always felt out of control in my life, like I didn’t have control over anything. So obviously, as soon as I went to college, I immediately got a credit card and lost control of finances.

[00:25:40] Ramit: You said it didn’t go well for you.

[00:25:43] Elizabeth: No, I was constantly in trouble, constantly grounded, constantly pushing back, constantly fighting, constantly being shamed for everything.

[00:25:56] Ramit: I hate that for you. It’s okay. Take as much time as you need today. We have plenty of time. I’m sorry you had to go through this. Nobody, no adult, no kid should have to go through that.

[00:26:14] Elizabeth: As far as money goes, my horrible spending habits, I know that I need to do this, and I rebel against all rules. I know we need to save, so I spend. I know we need to buckle down and do a no-spend month, and immediately I can think of five things that we need right this second.

[00:26:40] Ramit: Mm-hmm. What is that phrase you use to explain how you’re going to make it all work? What do you say?

[00:26:50] Elizabeth: I’ll make it work.

[00:26:51] Ramit: I’ll make it work. And if you do make it work, then who do you become? Who are you in that scenario where you made it all work against all odds?

[00:27:04] Elizabeth: I’m the hero of my own story.

[00:27:07] Ramit: Yes. We all love to be the hero, but in your case, you’re the hero of a story you’ve created, where the hero only buys one more month before they have to go back into turmoil again.

[00:27:26] Elizabeth: Yeah.

[00:27:26] Ramit: I understand that you speak to a therapist.

[00:27:34] Elizabeth: Yeah.

[00:27:35] Ramit: I would imagine this is one of many topics you’ve talked about.

[00:27:39] Elizabeth: Oh, for sure.

[00:27:40] Ramit: Okay, good, good. I’m glad. This is exactly the kind of thing that I always encourage my guests to go. This is something that does not get changed in one conversation. So I’m happy to hear that. Thank you.

[00:27:51] Elizabeth: Yes. Thank you.

[00:27:54] Ramit: When you were younger, what do you remember your parents saying about money?

[00:27:59] Elizabeth: We never had enough. When I was young, my mom was working minimum wage job. My dad was still in college, and then he got a job. Things were looking great, and then he was laid off, and I think he was laid off for probably two years, so that was really hard. Lights would get turned off. We would have to move to grandma’s house for a week or two if we needed to, food bank, that whole nine yards, for a while. And then things would get back.

[00:28:37] Ramit: Can I ask a question?

[00:28:38] Elizabeth: Yeah.

[00:28:39] Ramit: When the times would get really tough, what would your parents say to you about money, about the things that were going on around you?

[00:28:49] Elizabeth: They didn’t. They would ignore it, very much so.

[00:28:53] Ramit: Hmm. How would they explain that you don’t live in your apartment or house anymore and you’re moving to grandma’s?

[00:28:59] Elizabeth: We were just going to go visit grandma for a while, for a couple weeks. It was just a visit. But I was just aware enough to know what was going on. I knew fully why we were– at that age, I think it was, I was eight or nine. I knew the lights weren’t on. I knew we didn’t have electricity. It wasn’t hard to put two and two together. When the money came in, you got what you got because we could finally afford it. So get it now or forever hold for peace, because who knows when that’s going to come back?

[00:29:35] Ramit: This is classic from people who grew up poor. Hurry up, eat what you can when it’s there. Spend what you can when it’s there because we don’t know what’s even going to be here tomorrow.

[00:29:46] Elizabeth: Yeah.

[00:29:46] Ramit: And you’ve carried that with you.

[00:29:48] Elizabeth: Very much so. Yeah. I still live in that mentality. Hurry up and get what you want now when you have the money because– and honestly, that’s one of the major reasons we’re in the position we’re in.

[00:29:59] Ramit: That’s right. That was extremely insightful. What I love about that example is you connected it to your childhood, but you also took responsibility for your behavior.

[00:30:11] Elizabeth: Oh, yeah.

[00:30:12] Ramit: I spend, we spend. That is powerful.

[00:30:18] Elizabeth: Yeah.

[00:30:19] Ramit: How many people in your family?

[00:30:21] Elizabeth: I have the two younger sisters, so there’s three girls, and then my parents.

[00:30:26] Ramit: I see. And what general area did you grow up in?

[00:30:31] Elizabeth: Indiana, at a small town.

[00:30:34] Ramit: So it’s like already we’re in a community where probably money’s not really talked about with kids.

[00:30:40] Elizabeth: No.

[00:30:41] Ramit: All right. And them it’s religious. Okay. And then there’s a lot of income instability. So 1, 2, 3. All right.

[00:30:49] Elizabeth: Yeah. Like I said, my dad was in college when I was young, and he made sure that he got his degree in engineering, and he wanted to make sure that his family was taken care of. My mom went back to school in her 30s to become a nurse.

[00:31:08] Ramit: Wow.

[00:31:08] Elizabeth: So they made progress, as far as financially to make sure they could take care of their family. So they were very adamant that I get an education and that I get a good job, so that I could thrive later in life.

[00:31:27] Ramit: Did you end up going to college and graduating?

[00:31:29] Elizabeth: Yes. I went to college. I did not graduate.

[00:31:33] Ramit: You did not. How many years were you in there?

[00:31:36] Elizabeth: I was there three years.

[00:31:37] Ramit: Oh.

[00:31:38] Elizabeth: And I didn’t get as much financial aid as I needed, and I was going to have to borrow a lot more, and I didn’t want to do that. They also discontinued my program at the school that I was going to. I went to school for a library. I got to remember the name of it. It’s library science basically, but for education. So it should be a librarian at a school.

[00:32:06] And mind you, this is around 2008. So at the time, all of the librarians and schools were being laid off. The professor that was teaching the program was in her 70s and wanted to retire.

[00:32:23] And so they discontinued the program. So I left, and I did eventually go back online, but I am literally one class away from graduating.

[00:32:35] Ramit: Why don’t you do it?

[00:32:36] Elizabeth: Because I’m in $50,000 worth of debt for school, and I don’t want to go into more. For me it’s almost like, what’s the point?

[00:32:48] Ramit: Yeah, I understand. Your two sisters, how are they with money?

[00:32:52] Elizabeth: Yeah. They’re both really bad at it as well.

[00:32:55] Ramit: Mm-Hmm. Bad means what?

[00:32:57] Elizabeth: Probably the same situation that we’re in, living paycheck to paycheck. Lots of credit debt.

[00:33:02] Ramit: Hmm. What about your parents? How are they with money now?

[00:33:06] Elizabeth: They were living paycheck to paycheck for a really long time, and in lots of credit card debt. I don’t know. I’m assuming they’re much better off now. All of us are out of the house. That changes financials there.

[00:33:20] Ramit: Do you not have a relationship with them?

[00:33:23] Elizabeth: I do, but we do not talk about money.

[00:33:26] Ramit: Oh. Have you ever?

[00:33:27] Elizabeth: No. When we got engaged, Jon and I, my dad told him that never to let me get a credit card because I’m really bad with money and to always use cash. That was his preface to whether or not he could marry me, was if he could reign me in because I’m so bad with money. That was the running joke.

[00:34:03] Ramit: What do you make of that? Is it funny?

[00:34:07] Elizabeth: No, it’s not. It’s hurtful, but it’s honest. I’m not great with money, I feel.

[00:34:16] Ramit: Hmm.

[00:34:16] Elizabeth: Yeah. I don’t know. I’m afraid of the other side, because I do this to myself a lot. I self-sabotage. Things are going great, and I’m doing what I’m supposed to do, and then I self-sabotage, and I’m back at square one.

[00:34:34] Ramit: Why do you do it?

[00:34:36] Elizabeth: Why do I self-sabotage? That’s not something I’ve completely figured out, but I’m assuming I just don’t feel the greatest about myself, I would assume.

[00:34:50] Ramit: That’s probably true.

[00:34:51] Elizabeth: Right. Yeah.

[00:34:53] Ramit: Because if–

[00:34:54] Elizabeth: I sabotage myself.

[00:34:56] Ramit: Maybe you just don’t care that much to change.

[00:34:58] Elizabeth: I fought with myself about that thought. Maybe I’m just comfortable living in this cycle because it’s my comfort zone. It may suck, but it’s comfortable, but I know that that’s not where I need to stay.


[00:35:17] Ramit: I want to reiterate how happy I am that Elizabeth is seeing a therapist, something that I want to de-stigmatize. I get the chance to spend a few hours with couples here, but sometimes there’s a lot of work that needs to be done with a therapist, and I’m really glad that Elizabeth is doing that.

[00:35:34] Elizabeth mentioned self-sabotage, which happens with her finances, and I would be willing to bet almost certainly other parts of her life. Imagine if you grew up in a chaotic childhood. Imagine if you came to expect chaos, almost like a familiar sweatshirt.

[00:35:51] And if things started going well, suddenly it would feel weird, unfamiliar, even uncomfortable. And what do a lot of people do in that situation? They self-sabotage. They’re used to a lifetime of chaos, or when it relates to money, money scarcity. And so when they finally see money in their savings account, they quickly spend it because who knows if it’ll be here tomorrow. Chaos. You can see how deep this goes.

[00:36:19] We’ll be right back.

[00:36:21] Now listen to Jonathan describe his childhood


[00:36:24] Jonathan: Well, growing up you weren’t allowed to have a job. Your job was the farm, going to school. I was born and raised on a farm.

[00:36:34] Ramit: Midwest, right?

[00:36:37] Jonathan: Yeah, Indiana.

[00:36:38] Ramit: Mm-hmm.

[00:36:39] Jonathan: There was always something to do on the farm. My dad worked and still to this day, works, 12 to 14 hours days. He’s a workhorse. When we would have the weekends to do stuff, that was the time that we got stuff done on the farm with my dad. And we also took care of my grandparents’ farm further north, so we would go up there on Sundays and do farm stuff up there. They had an old, wood-burning furnace, so in the wintertime we’d go up there, and we’d chop trees for an entire Sunday.

[00:37:19] Ramit: Did you like it, looking back?

[00:37:21] Jonathan: I enjoyed it. Yeah. It was just time spent with my dad and that. And as far as money went, my parents never talked about money. We were poor in the sense of having money because it was just my dad working and my mom stayed home and took care of– I have four siblings. And at some point in time she ended up going back to work. She was a medical transcriptionist.

[00:37:44] Ramit: Mm-hmm.

[00:37:45] Jonathan: But as kids, you ask for things and it was constantly no.

[00:37:51] Ramit: What’d they say after that? We can’t afford it?

[00:37:56] Jonathan: You’re just not getting it. It was just a hard no.

[00:37:59] Jonathan: We were poor, but there was still food on the table. We still had clothes. We had roof over our head. My parents had debt. I knew they had tons of debt because they had five kids to put through school, buy clothes for, and all of that. I knew we had debt, but I just never knew how much.

[00:38:26] Ramit: Did they help you with your college loans?

[00:38:29] Jonathan: Yes, they did.

[00:38:31] Ramit: How much?

[00:38:32] Jonathan: All of them.

[00:38:33] Ramit: How much was that ballpark?

[00:38:34] Jonathan: Well, I went to a technical school. I’d say probably about $25,000 maybe.

[00:38:41] Ramit: All right, so let’s just assume that all your siblings were the same ballpark. That’s $125,000 in debt your elderly parents have helped out with and are helping out. That’s a lot, right?

[00:38:53] Jonathan: Yeah.

[00:38:54] Elizabeth: Yeah. They’ll help the kids with whatever they need no matter what. They’re so giving of themselves. They watch our kids for free. They provide us with meat from the farm for free. They will pay truck payments when we need truck payments paid. They will pay for our gas if we don’t have gas.

[00:39:19] To them that’s their way of showing love, is whatever they can give of themselves, they will give. And they have given us an immense amount of just everything in the context of free childcare for one is an insane financial help.

[00:39:38] If we didn’t have that free childcare, we would be even worse position than we already are in, because childcare is insane. Yeah, his family, his parents are just all about whatever they can do for family, they will do. And it’s been very much of a giant blessing for us financially as well as–

[00:40:00] Ramit: Okay. I love hearing that. I think from a family perspective, they sound like lovely people. So you sound lucky to have them in your lives.

[00:40:08] Elizabeth: Yes.

[00:40:08] Ramit: That’s awesome.

[00:40:09] Elizabeth: We’re very lucky. Very lucky.


[00:40:11] Ramit: I wanted to move to the present day and try to understand exactly where all of their money was going. I asked Elizabeth to give me a tour of their house. Here we are in her closet. What do you notice?


[00:40:22] It’s literally just a hole in the wall, but it’s jam packed full.

[00:40:27] Ramit: Go in tight on that. Let’s look at these clothes. Describe them for us. Would you?

[00:40:33] Elizabeth: They’re just clothes, nothing very exciting.

[00:40:36] Ramit: Mm-hmm.

[00:40:37] Elizabeth: I didn’t grow up with a lot of options when it came to clothes because we were poor. So clothes are my outlet, where I go crazy, because I didn’t have a lot of options as a bigger girl as well. So now there’s a store in my area that carries clothes that I actually like to wear that fit me. And so I overspend there.

[00:41:10] Jonathan: Her clothes, that’s her pitfall. That’s usually her go-to. The other day, she had a Target run, and she likes to shop the clearance stuff. I think it adds up faster than she realizes at times. Generally, if we have to do grocery shopping of any kind or have to run to the store, I do it because I go in, get what we need, and walk out.

[00:41:40] If Elizabeth goes in, she thinks of 50 other things that we could use, but we don’t necessarily need in the moment. Or she runs across something that she likes that we don’t need, but it’s grabbed her attention enough to want it and gets it.

[00:42:07] Ramit: What do you think about that, Elizabeth?

[00:42:11] Elizabeth: It’s accurate. I do like the rush of finding that good deal. And I do like to buy clothes for my daughter. That’s probably where the other big portion of it is, clothes for my daughter.

[00:42:29] Ramit: What do you think that that’s cost you? I don’t mean financially.

[00:42:34] Elizabeth: Oh. Probably trust. My husband doesn’t trust me to go to the store on my own without coming back with five other things that we didn’t need, but I wanted, or I wanted for the family.

[00:42:52] Ramit: The way he described it, it sounded like he treated you like a child.

[00:42:59] Elizabeth: Yeah, a little bit.

[00:43:00] Ramit: Do you think you could change it?

[00:43:05] Elizabeth: Yes. I have tried to change it in the past. I do try to–

[00:43:11] Ramit: Sorry. Not could you try to change it? Could you change it?

[00:43:14] Elizabeth: Yes, I could change it.

[00:43:18] Ramit: If you keep going the way you’ve been going with your finances, where do you end up a year from now, two years, five years from now?

[00:43:28] Elizabeth: In the same position and-or worse than we are now.

[00:43:33] Ramit: Mm-hmm. You have a house. You have a roof. I think I saw a TV, piano, got kid’s toys and clothes. What’s so bad about that?

[00:43:48] Elizabeth: Nothing’s bad about it, but are we guaranteed to keep the house? Are we guaranteed to keep all these nice things? If bills are paid or not paid, there’s no guarantee we get to keep the house. We could end up living back with his or my parents.


[00:44:09] Ramit: At this point in the conversation, I was getting frustrated. The stakes are dire. There are bad habits, deep family histories, a daughter who’s being spoiled, debt. Even with all this, I was getting very little engagement from them, and remember they called me.


[00:44:26] Do you both realize that you cannot get out of this with just one of you doing it?

[00:44:29] Elizabeth: Yeah.

[00:44:29] Jonathan: Yeah.

[00:44:30] Ramit: Because if you did, both of you would be engaged in this conversation. Jon, you’d be asking me questions. The two of you would be talking back and forth. What’s up with the dynamic here? I’m curious.

[00:44:45] Jonathan: I don’t know.

[00:44:52] Ramit: Why are you disengaged with money?

[00:44:54] Jonathan: I never really had much money, so I never really had to deal with it. I went from having a minimum wage job, living with my parents, straight into us being married, and it’s all new territory for me, and I’m just trying to gain footing where I can, but it all seems like it moves so fast. I’m trying to play catch up with the things that are going on.

[00:45:34] Ramit: Jon, it’s been 13 years.

[00:45:47] Jonathan: And I was disengaged for most of them.

[00:45:52] Ramit: What happens if nothing changes, Jon?

[00:45:55] Jonathan: We stay stuck in the cycle we’re in.

[00:45:58] Ramit: Yeah. And what happens with your daughter?

[00:46:02] Jonathan: She learns the same cycle.

[00:46:04] Elizabeth: Because she asks us all the time. She’ll say, mommy, do we have money for this? Or mommy, do we have money for that? She knows. She already knows what we’re doing. She’s smart enough. She’s caught on.

[00:46:21] Ramit: So the cycle repeats.

[00:46:22] Elizabeth: Yeah.

[00:46:22] Jonathan: Mm-hmm.

[00:46:25] Ramit: What do you think happens as she gets older?

[00:46:27] Jonathan: Just continue to get more expensive.

[00:46:29] Ramit: Mm-hmm. Or she’ll be asking for more things. Fine. What will you two be doing when she asks for more expensive stuff?

[00:46:37] Elizabeth: Probably saying yes.

[00:46:39] Ramit: That’s honest. I agree.

[00:46:40] Elizabeth: Making it work.

[00:46:42] Ramit: Making it work. Okay. This sounds familiar, doesn’t it? Making it work. She goes off to college. Let’s say she’s in her mid 20s. What’s happening in her life, financially speaking?

[00:46:53] Elizabeth: She’s going to get a credit card because she’s going to want what she wants, and it’s going to start the process all over again.

[00:46:59] Ramit: Mm-hmm. And when she has an eight-year-old daughter?

[00:47:05] Jonathan: She teaches it to her children.

[00:47:09] Elizabeth: She’s going to continue the cycle.

[00:47:09] Ramit: You want to keep doing it?

[00:47:10] Elizabeth: No, not at all.

[00:47:12] Ramit: It’s really hard, but it can be done. I’m not going to give up on you.

[00:47:18] Jonathan: Let’s do it.

[00:47:19] Ramit: Okay?

[00:47:19] Elizabeth: Yeah.

[00:47:20] [Narration]

[00:47:21] Ramit: Well, as you can tell, we have just scratched the surface. In part two of this conversation, next week, I’m going to go much deeper on their numbers, and I think you will be surprised by what you find.