Episode #163: “I work & watch my infant FT b/c we can’t afford childcare”

James and Nicole, 42 and 44, just had a second baby—but they weren’t prepared for the additional costs associated with a growing family. They spend 90% of what they make and struggle to afford childcare. Nicole’s maternity leave is ending – how will she balance work and raising an infant? 

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Show Transcript

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[00:00:00] Nicole: What is the plan once the baby gets here? Daycare is obviously very expensive, and I know we can’t afford that. At this point in my life, I should be able to buy the expensive set of knives. I should be able to buy the expensive furniture. I should be able to go on the trip that I want to go on.

[00:00:20] James: And I think a lot of the decisions we make are like, oh yeah, we can afford that. We’re the type of people who should have that kind of thing.

[00:00:26] Ramit: Was that a problem?

[00:00:29] James: Not until I started having a family.

[00:00:31] Nicole: All the stuff that’s surrounding us is what we actually did choose, but that’s not what we really want.

[00:00:40] Ramit: Hold on. You went bankrupt?

[00:00:42] James: Yes. Three years ago, I filed.

[00:00:44] Nicole: I see this cycle and this thing that I’ve been doing, and I feel like we’re heading that way again.

[00:00:53] James: It’s a lot to change. It’s some radical changes, not only to our current situation, but our mindset, that’s hard to wrap my head around.


[00:01:01] Ramit: Today I’d like you to meet Nicole and James. Nicole’s 44. James is 42. They recently had their second daughter, and they tell themselves a lot of stories about money. Today we’re going to dive into those to try to understand why they can’t change their habit of overspending.

[00:01:18] Before we get to the episode, if you enjoy this show, please do me a favor. Go to apple.co/ramit and click follow. Talking about money is taboo in our culture. Every week I talk to couples who have never been able to talk about money together without guilt, without feeling overwhelmed, without bearing their head in the sand.

[00:01:39] And they tell me that by watching this show, they learn new ways to talk about money in a healthy manner. Now, my dream with this podcast is to inspire thousands of other people to build a healthier relationship with money. So by clicking the follow button on Apple Podcasts or Spotify, it really helps my team, and it helps me grow this podcast and get it in front of more people. So thanks again for watching. It means a lot.

[00:02:05] Let’s get into it and meet Nicole and James.


[00:02:08] Nicole: I was eight months pregnant in January. I was like, oh my God, I don’t know how we’re going to pay for our older child’s school for next year. I don’t know how we’re going to pay for the new baby’s childcare when I go back to work.

[00:02:28] Ramit: How would you describe where you were at that moment in a word or two?

[00:02:36] Nicole: Frantic, I would say. And scared.

[00:02:45] Ramit: Scared of what?

[00:02:46] Nicole: Well, scared of basically what’s going to happen, which is I’m going to go to work, and I’m going to have to also take care of the baby, and I’m scared. It’s a lot.

[00:02:56] Ramit: Okay. How’s the baby doing?

[00:02:58] Nicole: She’s great. She’s 11 weeks and just growing perfectly and is a sweetheart. I’m just going to have to at least for the next few months, work and take care of her. Not ideal, but once our oldest goes back to school, I think my mom will have some free time and can watch her a few days a week.

[00:03:24] Until then, it’s just going to be a little sticky. But still, I know how work is. I know how I am with work, and I know it’s going to stress me out, and I’m going to get resentful towards James because I have to work, and I have to take care of the baby. Because I work from home and he gets to go to the office and have a kid-free experience. I know how it’s going to go.

[00:03:56] Ramit: Okay.

[00:03:56] Nicole: A few months prior, he had tried to have a discussion of money, and I was the one that was like, no, it’ll be fine. We’ll figure it out. It’ll all work out. I know it will.

[00:04:07] Ramit: What do you remember him saying, Nicole?

[00:04:10] Nicole: What is the plan once the baby gets here? Meaning childcare. My idea was we’ll just hire someone privately. It can’t be that expensive. I hadn’t really looked into it. Then I started looking into it, and I realized, oh, this is a lot more money than I thought. Daycare is obviously very expensive, and I know we can’t afford that.

[00:04:34] And I started looking at our budget. I think I did your conscious spending plan, and I started looking at it, and I was like, oh yeah, we don’t have any money for this. We don’t have any extra money. And when I said I would take care of it, he probably let it just like, okay, she’ll take care of it. And didn’t really think about it again.

[00:04:54] Ramit: Okay.

[00:04:54] James: Honestly, money wasn’t on my mind, probably to our detriment. I’m glad somebody had it on their mind.

[00:05:04] Ramit: Okay, good. All right.

[00:05:05] Nicole: I will say also, in March, I received a small bonus from work. So some of that money is going to help pay for our oldest, her school up, until 2025. So we had her school from August until December covered.

[00:05:30] Ramit: What happens after December?

[00:05:32] Nicole: Oh, we have no plan.


[00:05:34] Ramit: How many parents run the numbers before they have kids? Truthfully, almost none. It’s the same as a house, which is the biggest purchase of people’s lives. Almost nobody runs even a basic calculation. The fact is, most of the time it actually does work out. See, most people don’t pay attention to their money closely at all, and they still have a place to live. They can still eat out at an occasional restaurant. They can still watch Netflix and have an iPhone. But I want more for you than being okay.

[00:06:06] I want you to live a Rich Life, and there’s no way to trip and fall accidentally into a Rich Life. You have to be strategic. You have to get proactive. You have to go from playing defense to playing offense, and most of all, you have to make a plan.


[00:06:22] Nicole: We’ll make more money by then. I’m going to get a better job where I’m making more money. You should get a better job where you’re making more money, and it’ll all work out. I think that was my plan. Neither of us have changed jobs. I don’t think I, in my mind, realized how much time I would need for recovery and to actually raise a baby, and I didn’t have as much time to do other things like get a resume together and start putting out my resume and applying for jobs, like I thought I would. So I’ve been looking but not really looking, and he’s fine where he’s at.

[00:07:11] James: I allowed her to push it off and let me put it back to the back of my mind. Filled out the application for this. That really got my mind turning about money a lot more, of course, knowing that this was coming.

[00:07:22] Ramit: Why? Hold on, hold on. When she filled out the application, did she tell you that she did?

[00:07:28] James: Yes.

[00:07:29] Ramit: And what was your reaction to that?

[00:07:31] James: I was with it. I wasn’t sure what it could do for us, because we don’t know exactly what our 100% problems are. So without knowing that, it’s hard for me to know what can be done if that makes sense. I like to pretend I’m a great planner. I’m not. I think about the plans, but then I don’t always have it completely locked in stone.

[00:07:54] Ramit: James, when you were speaking to my colleague about your situation, you said, I think we need to learn how to budget. Tell me about that.

[00:08:06] James: I feel we have done a good job of being very open about our spending. It’s not always a discussion before the money’s spent, but I think we do a good job of setting things up, but then we fail to really have a good grasp of our costs when it comes to food and entertainment and the little things that weren’t planned but are spur of the moment decisions throughout the month.

[00:08:27] Let’s do this. Oh, this came up because so and so called us, that kind of thing. Those things add up, and once you have that emotion of going out and doing something, I think we’re too quick to throw some money around because now we’re in this nice, fun situation that we didn’t expect. And we get a little carried away with that thinking that we’re doing a little better than we are.

[00:08:47] Ramit: Would a budget solve those problems you just described?

[00:08:54] James: I don’t know. Perhaps it’s too psychological, and I’d ignore the budget too, and we’d still do the same thing.

[00:09:01] Ramit: Like if you had a budget right now, what would you do with it?

[00:09:04] James: I’d try to follow it. I’d like to put it in my phone and stare at it and do my best and probably get angry when I still went over it. But I’d try to follow it.

[00:09:13] Ramit: Wait a minute. Even in this hypothetical, you already went over your budget. It took two seconds. What kind of budget is this?

[00:09:21] James: Not a great one, I suppose.

[00:09:23] Ramit: Okay. What do you think about this, Nicole? The idea that James said, I think we need to learn how to budget and stick to a budget.

[00:09:32] Nicole: I would’ve thought the same thing.


[00:09:36] Ramit: Another story they tell themselves, we need to budget. What’s funny is how many couples come on here thinking that some magical budget will solve their problems. Let’s get real. If a budget was going to solve your problem, you would’ve been using one already. The truth is, budgets rarely work, and more importantly, a spreadsheet is not going to solve an emotional problem, a psychological challenge, or an income deficit.

[00:10:02] We’ll be right back after this short break.

[00:10:05] Now back to James and Nicole.


[00:10:07] Nicole: Things will work out financially somehow. I don’t know how. I’ve had a few times where I was in debt and then something happened and then I got a little bit of money, and I was able to take care of that debt.

[00:10:28] Ramit: Did you grow up religious or poor?

[00:10:31] Nicole: Religious and poor. So my mom was a single parent. We were very poor. She finally became a teacher. She graduated from school. She put herself through college with two young kids and graduated in, I think, 1988, became a teacher, but we were still– teachers don’t get paid a lot.

[00:10:55] My dad never paid child support. He didn’t really have any money either. So just didn’t grew up with money. I grew up though with very rich friends, very wealthy friends, and I was very aware of it.

[00:11:13] Ramit: So what do you remember about that?

[00:11:15] Nicole: We to shop at Pick ‘n Save, and my friends got to shop at Gap. One thing that I remember my mom always telling my sister and I was that you have to be able to take care of yourself because you can’t depend on a man. And I remember I wanted to go into dance. I wanted to be a ballerina, continue that study.

[00:11:42] But no, that’s not dependable. You need something that you can make a career out of. And so I went with that in mind, and I actually do see it in our situation. I’ve just taken control because I can’t depend on a man, which I don’t know if I ever would’ve thought that’s why I’m doing it, but I think that’s why I’m doing it.

[00:12:12] Ramit: Never made that connection until just now.

[00:12:14] Nicole: Yeah.

[00:12:16] Ramit: What does it mean to you?

[00:12:19] Nicole: Well, annoying that I do that. I really didn’t want to be like my mom, and there I am or there she is. And it’s something like this because I do feel like I can depend on James. I feel I trust him completely, and I know that if he had to, he would handle things. He just doesn’t have to because I don’t let him.

[00:12:50] Ramit: Hmm. So you’re saying you trust him with your family finances?

[00:12:56] Nicole: Yeah.

[00:12:57] Ramit: Okay. What about before you two met and he was managing his own finances?

[00:13:02] Nicole: Well, he didn’t do a very good job at that, did he?

[00:13:05] James: Yeah. It wasn’t going particularly well.

[00:13:08] Ramit: Have you ever told him what your expectations are around money?

[00:13:12] Nicole: No.

[00:13:14] Ramit: Do you have any expectations of money?

[00:13:15] Nicole: I don’t think I have any. When I was able to get a credit card, I got a credit card, and I got into a lot of debt in my 20s. And I was able to get out of it because, I cashed in a 401k plan in my 20s, thinking, oh, I’ll have plenty of time to save later. Let’s just use this to get out of debt.

[00:13:41] And then I get back into debt. And then I got a chunk of money from my mom that was supposed to be used to put a down payment on health, but I used it to pay off debt. And then this latest time, my grandmother passed away and left my sister and I her house and an account that she had, and I was able to get out of debt with that.

[00:14:04] And the investments that we have, which you’ll see when we talk about the CSP plan, that’s because of my grandmother. It has nothing to do with me. So I see this cycle and this thing that I’ve been doing, and I feel like we’re heading that way again.

[00:14:24] Ramit: Why do you do it?

[00:14:28] Nicole: Because I can’t say no to myself. I remember in my 30s, I was working really hard, 80-hour week. I deserve this. And also at that point, I’m like, at this point in my life, I should be able to buy the expensive set of knives. I should be able to buy the expensive furniture. I should be able to go on the trip that I want to go on.


[00:14:55] Ramit: This is a phrase I hear, especially from people who have an unhealthy relationship with money. The phrase is, I deserve that. See, I almost never hear it from people who are high earners investing 18% of gross income. But I hear it all the time from people who are in credit card debt, people who cashed out their 401k to pay off debt, and people who save and invest almost nothing.

[00:15:18] I think the phrase itself is fascinating because almost nobody ever says it out loud. It’s simply a private thought that people have, and they say it to themselves when they want to buy something they like, like a dinner out, or a new car, or a beautiful bag. I wish I could ban this phrase as it relates to money, but really, it’s just a symptom of an unhealthy relationship with your finances.

[00:15:41] Because if you truly know your numbers, you realize that you don’t deserve anything. You can spend on the things you love, and you don’t have to justify those to anyone, but you do need to be able to afford it.


[00:15:54] Ramit: I’m curious, James, how you grew up with money. When you think back to childhood, did you grow up with both parents?

[00:16:05] James: Yes.

[00:16:05] Ramit: Okay. What are some phrases you remember your parents saying when you were young about money?

[00:16:14] James: I don’t remember them discussing it.

[00:16:16] Ramit: How come?

[00:16:17] James: We never really wanted for anything that I can remember. We knew we were middle class, but we were upper middle class, and we got what we asked. Well, no, we didn’t ask for a ton, but we got what we needed as a family. There was five kids, so we were a big family, so we knew we couldn’t be wealthy wealthy. But my dad made a lot of money.

[00:16:38] Ramit: How much?

[00:16:41] James: I don’t know exactly. I know he made more than $100,000 in 1986 or something like that, which–

[00:16:47] Ramit: That’s a lot of money.

[00:16:49] James: Was making good money. So I wouldn’t say wealthy because as I learned 20 years later, he never saved anything. He wasn’t even paying the IRS much. Wealthy would involve actual planning, but he had money coming in, and he spent it on the kids, and he spent it on his family.

[00:17:07] Ramit: Where did you grow up?

[00:17:08] James: I grew up outside of New York City and then upstate New York and then Pennsylvania.

[00:17:16] Ramit: What did your dad do? What was his occupation generally?

[00:17:18] James: He was a salesman. He sold tractor trailers, the big backend.

[00:17:22] Ramit: Okay, great. And what about your mom?

[00:17:25] James: She was a stay-at-home mom up until her late 40s.

[00:17:29] Ramit: Your dad bad with money as well?

[00:17:30] James: Yeah, almost to the exact degree that I am, including the cost. I think he didn’t pay his taxes, and I think by not paying his taxes, he had a lot of money. And I think at a certain point in my childhood, I want to say probably my early teens, it finally caught up with him. He needed to start paying the tax bill. We moved out of a bigger house into a smaller house. That was the big sounding bell to the family like, okay, times aren’t as good as they were.

[00:17:57] Ramit: Did you go to college?

[00:17:59] James: For two years. Didn’t graduate.

[00:18:01] Ramit: Okay. Who paid for that?

[00:18:03] James: Nobody. I did eventually. It’s a fun story.

[00:18:07] Ramit: Tell me.

[00:18:08] James: So I went to University of Pittsburgh because– actually, that’s a good thing to talk about because that was the first time I was told there was not enough money. I was accepted to University of Colorado in college, but when I presented the acceptance letter to my parents, that’s when I was finally told, oh, you know what? We can’t afford to send you to an out-of-state school.

[00:18:28] Ramit: Hmm.

[00:18:29] James: My dad just said, we’ll get you a loan. I said, okay, get me a loan. Great. The second year came up, and they were looking for money for me to continue going to school because I had two years of unpaid bills essentially. University of Pittsburgh was saying, you owe us for this dormitory bill. You owe us for this tuition.

[00:18:45] My dad had not actually gotten the loans. I don’t know the exact ins and outs because I don’t really want to get in a fight with him over it now, these years later. Basically, I owed these loans or owed money to the school and paid it for a good seven or eight years afterwards, just paying for those two years of school that I then ended up, because I was 20 and mad about it, dropped out. I gave up on college, walked away from it all.

[00:19:17] I did not learn I needed to pay for them until about two years later when my wages began being garnished when I was a bank teller in Colorado. That was when it really came out that my dad had used my social on the forms for the loans and stuff, but hadn’t told me and then had not started paying or anything like that after I had left school.

[00:19:37] Ramit: What about your dad as it relates to his finances during this time period, 2001 or so?

[00:19:45] James: Honestly, for my dad, this was the time of his life when he was forced to figure it out. He ended up getting a reckoning with the IRS. He had to live with his brother for a while after he left the family. He had to go through some lean times during these years making up for overspending, I think, on the family, the 15 years before.

[00:20:05] Ramit: What lessons do you take away from that story as it relates to your personal finances?

[00:20:14] James: I think I do a lot of the same things my dad does. I think I spend at a level I think I should be at as opposed to what I truly am. And I think a lot of the decisions we make are like, oh yeah, we can afford that. We’re the type of people who should have that kind of thing, not really thinking about whether we actually have the money for that kind of thing. And I know that’s the way he operated, and I know that’s the way me and Nicole operate, and I think it’s tough for me to break that mindset because it’s just so ingrained. I don’t know.

[00:20:48] Ramit: Mm-hmm. What other lessons did you take away from the family history? To me, the primary lesson is that nothing changed until your dad was forced to change.

[00:21:03] James: Yes.

[00:21:04] Ramit: And I think that’s exactly the situation with you. Obvious one would be like, pay your taxes.

[00:21:11] James: Yeah, pay your taxes. Great. We owe the IRS about, what is it? Did we finally get them paid off, or do we still owe them like 1,500 bucks?

[00:21:18] Nicole: We owe 2,000.

[00:21:21] James: I believed it was discharged in bankruptcy, but despite that, it’s still appearing on some–

[00:21:28] Ramit: Hold on. You went bankrupt?

[00:21:31] James: Yes. Three years ago, I filed. Was that not in the application we did?

[00:21:34] Ramit: No, I don’t think I saw that. Okay. Well, hey, let’s roll out the punches.

[00:21:39] James: Sorry to toss that on you.


[00:21:40] I love having conversations with the couples on this show. And the way that I can keep doing these conversations is if you click that subscribe button right now. That’ll help our channel grow, and that’ll help my team keep producing these videos.


[00:21:54] Ramit: Tell me what happened with the bankruptcy.

[00:21:56] James: I had been living on my own in Denver for 17 years and just overextended myself through all the same kind of things we do today, entertainment and food, and I lived alone, lived like I had more money than I did.

[00:22:14] Narration: Like what specifically? What’d you spend money on?

[00:22:16] James: Cars. Not many at once, but I liked to upgrade my car more often than I should.

[00:22:21] Ramit: Tell me what specifically? When you say more often, how often?

[00:22:27] James: About every year.

[00:22:28] Ramit: Okay. You bought a new car and then traded it in, that kind of thing?

[00:22:31] James: Every year. Yeah.

[00:22:32] Ramit: What kind of cars?

[00:22:34] James: Hondas.

[00:22:36] Ramit: What?

[00:22:36] James: Nice Hondas. Nothing fancy.

[00:22:38] Ramit: Hold on. You’re talking to Mr. Honda over here. What nice Honda are we talking about?

[00:22:43] James: Well, my first Honda, I’ve owned four different Honda Civics, an Accord, an S2000, and a CRV.

[00:22:50] Nicole: He had a [Inaudible].

[00:22:51] James: I did buy 911.

[00:22:53] Ramit: How come he didn’t mention that?

[00:22:55] Nicole: I don’t know.

[00:22:56] James: I didn’t get to that one yet. That was after all the Hondas.

[00:22:58] Ramit: Wow, that’s so interesting.

[00:22:59] James: That was the last one. That was the straw that broke the camel’s back. And after the 911, I’ve been–

[00:23:03] Ramit: Yeah. All right. What else?

[00:23:05] James: I don’t know. Electronics, the new iPhones, iPads, stuff like that, computers once in a while. There was never any one giant, oh, I spent 20 grand on this. It was just a lot of small items, living beyond my means, frankly.

[00:23:21] Ramit: What do you mean there was no 20 grand– you bought a Porsche 911?

[00:23:24] James: Well, I never bought it and paid cash. It was a loan I had that I suddenly was paying more on and got myself way too monthly overextended.

[00:23:31] Ramit: Okay. How much were you making at the time?

[00:23:33] James: Anywhere between 40 and 60, depending on the job. At one point, I had two jobs, so I was making a little more.

[00:23:39] Ramit: Okay. Why do you think you got into that situation, overspending?

[00:23:44] James: I think I spend emotionally. I think when I feel bad, I spend money. And I probably felt bad because I was single for a while and had been lonely. I don’t know.

[00:23:55] Ramit: All right. When did you know that you were in financial trouble?

[00:24:00] James: It was when I didn’t do my bankruptcy. That was obviously trouble.

[00:24:04] Ramit: Wait, wait, wait, wait. Did you know you were in trouble before you went bankrupt?

[00:24:10] James: Yeah, I always knew I was in a bit of trouble, but to be honest, if you want to ask when I knew I was in trouble, I’ve always known I’ve been not great with money. It’s been my whole life.

[00:24:21] Ramit: Why?

[00:24:22] James: I’ve never been able to accumulate it. I’ve always just spent what I had.

[00:24:26] Ramit: And was that a problem?

[00:24:30] James: Not until I started having a family.

[00:24:32] Ramit: What did you think when you had to declare bankruptcy?

[00:24:36] James: That I would try to do better next time.

[00:24:38] Ramit: Did you really believe it deep down?

[00:24:40] James: No. Because I know how I am.

[00:24:43] Ramit: Did that concern you when you were early on in the relationship?

[00:24:48] Nicole: Not really. I also am not that great with money.


[00:24:53] Ramit: Notice how these money messages are transmitted from generation to generation. Dad was bad with money and now James is bad with money. Then you see it in intimate relationships. As Nicole admits, she isn’t good with money either. And one clue I want you to notice here is how James constantly minimizes his financial behavior.

[00:25:13] He literally says, it’s not like I spent 20 grand on any one thing, while describing how he bought a Porsche 911 while making around $50,000 a year. And he does this a lot. In fact, you’ll hear him keep doing it over the next few minutes.

[00:25:29] We’ll open up the conscious spending plan after this.

[00:25:32] Let’s get back to the show.

[00:25:34] Assets, $547,000; savings, $12,870; debt, $269,300; net worth, $444,758; fixed costs, 90%.


[00:25:52] Ramit: Nicole, what’s that look on your face?

[00:25:54] Nicole: Terrible.

[00:25:56] Ramit: Let’s not passive value judgment. Let’s just analyze the numbers. What should this number be?

[00:26:02] Nicole: It should be 50 to 60%.

[00:26:04] Ramit: Yeah. So it’s 90%. It’s way above recommended parameters.

[00:26:09] Nicole: Our fixed costs are really, really high, and I think that is why we’re feeling the stress of just not being able to have enough.

[00:26:22] James: We’ve talked about fixed costs quite a bit, and I guess we keep bumping up against them. Short of selling the house and downsizing in the mortgage, I don’t really feel like we’ve found a way to change the situation though, right?

[00:26:38] Nicole: No.

[00:26:39] James: Okay.

[00:26:41] Nicole: And that’s the problem, other than making more money, which is also not a quick solution. So I see where all the spending is, and I see we’re not in the red or anything. We have just enough for right now. Obviously, now I have to think about, or we have to think about some big expenses, childcare, school, after December of next year, and where is that going to come from. And I don’t have a plan for that.

[00:27:13] James: At the same time, I just thought we had a handle on what money was coming in and where we were going to allocate it.

[00:27:22] Ramit: Can you give me an example where, as James mentioned, you got carried away with spending? This could be directed to either of you.

[00:27:31] James: Even this weekend, we went to– where do we go? To that little bar, just a little brewery around the corner that has a nice little kid’s area. Went out there and spent $60 some on drinks, and then another $30 some on food. That’s $100, and it’s not an insane amount of money, but it’s $100 we hadn’t thought about spending until we suddenly went out that day.

[00:27:56] Ramit: Walk me through how you got to that point of spending 100 bucks. I don’t mind if it’s 100. I don’t yet know if that’s a lot or a little. I don’t know. Were you walking past a brewery and you decided, or was it planned a month ahead of time? Give me a sense of that.

[00:28:09] James: It was an invitation from her friend to go out and meet for a drink on Saturday.

[00:28:17] Ramit: When that friend invited you, did you factor in finances at all, or was it like, hey, our friends invited us. We’re free. Let’s go.

[00:28:25] Nicole: We’ll make it work.

[00:28:27] James: No, there’s no discussion of money. It’s, let’s go. And then when the check comes to be paid, one of us just pays it. We generally split it, alternate. It’s not so formalized that we look at, okay, we spent $400 this month. Let’s make sure we each split two. Okay. It’s more just, I bought that last week. You get this this week.

[00:28:48] Ramit: Does it work?

[00:28:49] James: It seems to, however, we’re in this situation, so no.

[00:28:54] Ramit: Wait, what? It seems to, however, no.

[00:28:57] James: It seems to. To us, we keep doing it, but clearly, it’s brought us to where we are.

[00:29:02] Ramit: Let me ask that question again. Give me yes or no answer. Does it work?

[00:29:04] James: No.


[00:29:06] Ramit: Do you see what I mean? There’s a lot of double talk, circling around, admitting a problem, but then immediately saying it’s not like it’s that bad. And there’s a lot of, I’ll make it work. But with 90% fixed costs, which is way too high, you have to admit that something is very wrong.


[00:29:26] Ramit: Nicole, what do you got?

[00:29:28] Nicole: I did a photo shoot with my daughter over the summer. It was a fairy photo shoot. The photo shoot itself was $25. Well, then it was a few weeks after that. They have a Zoom call, and they go over all the pictures, and then it was the cost. And I swear the cheapest package was $3,000.

[00:29:57] Ramit: They show you the unveiling of the beautiful photo, you and your daughter. Everybody looks beautiful, and then they’re like, this will be a heritage piece. You can put it above your mental place. Pass it down. And your daughter will put it up in her house. I fucking love it. Fuck these photos. I’ve seen it before. Okay.

[00:30:16] Nicole: Going into it, I had in my mind the top of my budget. I think I was like, I can spend $500. I ended up spending $5,000.

[00:30:28] Ramit: [Inaudible]

[00:30:30] Nicole: Because I cannot say no to salespeople. I am every salesperson’s dream. I have a hard time saying no to salespeople.

[00:30:39] Ramit: Let’s do a little knowledge transfer because I have no problem saying no. In fact, I relish it. I love it. Tell me why do you have trouble saying no to a salesperson?

[00:30:54] Nicole: I feel bad. I feel like they’ve spent all this time talking to me, and I feel guilty. This is why I will never go to a timeshare presentation because I know if I go, I’ll end up with a timeshare. It’s a weakness of mine. I know it. I have a hard time saying no.

[00:31:15] Ramit: People pleaser?

[00:31:17] Nicole: I am very much a people pleaser. Yes.

[00:31:19] Ramit: Mm-hmm.

[00:31:20] Nicole: I’ve worked on it. I’m not as much as I used to be.

[00:31:23] Ramit: Mm-hmm. You ever buy a car on your own?

[00:31:27] Nicole: Yes.

[00:31:27] Ramit: Didn’t go well, huh?

[00:31:29] Nicole: No, no. They got me in a used Nissan Maxima V6, and I was 25 years old. But I remember driving that car to go visit a friend, and the gas was insane. And I drove it back, and I went to my parents, and I was crying. I was like, I can’t afford this car. My stepdad actually drove me back to the dealership, and he was like, drop the keys off. We’re not leaving. We’re not taking this car.

[00:32:04] Ramit: What did you learn from that?

[00:32:09] Nicole: Not to go to a car dealership by myself.

[00:32:12] Ramit: Okay. All right. Did you tell James about the price of this photo shoot? How did that conversation go?

[00:32:22] Nicole: No. I should have had him on the call so that we would’ve done it together, but I didn’t. I instantly regretted it, and I sent them an email and said, hey, I need to cancel this. And they wouldn’t let me cancel. I tried to dispute it with my credit card because I was like, I don’t want this. I was like, I have a baby on the way. We can’t afford this. It didn’t get approved, so we ended up with the pictures.

[00:32:52] And I just threw them in a closet. It was about a month after that, I pulled them out, and I was like, this is what this is. And I told him how much I spent. He was like, oh my God, you spent what? And I was like, yeah. And he was like, why didn’t you tell me? Or why didn’t we talk about this first? And I’m like, I know. And I felt really terrible that I made this huge decision without him. But then I was like, don’t worry, I’m going to pay for it. I’ll make it work, which I feel like I say a lot.

[00:33:32] Ramit: Did you work it out?

[00:34:00] Nicole: No, it’s part of our debt.

[00:34:02] Ramit: James, does this make you nervous, a guy who’s been through bankruptcy before?

[00:34:06] James: It does, but not to the extent, for some reason, as if I’d done it, if that makes sense. If I had been the one to do this, I would have more concern about that money.

[00:34:18] Ramit: You think she’s better at money than you are?

[00:34:20] James: I think we both have some serious flaws. I think they’re different, which might be how we piece it together. But I think she’s better at the day to day. I’m better at reigning in some of our worse impulses when it comes to bigger, medium-term spending like vacations, things like that, where it’s like we can’t afford to do that. I think I do a decent job of keeping us from going really out of our minds with that kind of thing.

[00:34:50] Ramit: Give me an example. How does that go?

[00:34:52] James: Well, most recently we went to Morocco for our belated honeymoon. We ended up going about two years after we were married. Spent about, what do you think overall dear? 12 grand on that trip between all the merchandise and everything too?

[00:35:13] Nicole: Yeah.

[00:35:15] James: It was our honeymoon. So on my one hand, I’m like, great. It was amazing lifetime experience, but 12 grand was a lot for a new family.

[00:35:24] Ramit: Isn’t this a story about you reigning in her spending? Where’s that part?

[00:35:30] James: Sorry. That went the wrong way.

[00:35:33] Ramit: Oops. I shouldn’t have told that story. Let me give you a different one.

[00:35:37] James: That wasn’t the right story.

[00:35:39] Ramit: By the way, what merch did you get in Morocco? What do you got?

[00:35:43] James: Well, the overall trip, I don’t remember how much of it. The big merch was a rug. We do have a nice–

[00:35:46] Ramit: How much?

[00:35:47] James: Rug that we purchased. I think it was about $4,000.

[00:35:50] Ramit: All right. So in this example of you reigning in, I heard zero reigning in, you got another example for us?

[00:35:56] James: Sorry. I was talking about reigning in on vacations and medium-term stuff. And I think maybe I’m not as good as it as I thought. I don’t know. I try to be.

[00:36:09] Nicole: He does not reign me in.

[00:36:11] James: She was in a trip to Iceland, and that’s not happening anymore.

[00:36:14] Ramit: I try to be. I try to flat my wings, but I just can’t fly. So what other stories do you think you tell yourselves about money?

[00:36:20] Nicole: That I can make it work. The money will come out of nowhere. We’ll find some money. We work so hard. We deserve. We deserve to go to a brewery and have some drinks with my friend. We deserve this.

[00:36:38] Ramit: Okay. James, how about you? What stories do you tell yourself about money?

[00:36:42] James: That we’ll keep making more and more without putting the work in to really make that happen?

[00:36:48] Ramit: Okay. That’s one. What else?

[00:36:50] James: That just grabbing little things throughout the month doesn’t add up. I don’t really look at the cost of things.

[00:36:57] Ramit: Okay. Good. And what about your daughters? What stories do you tell yourselves when it comes to money as it relates to your daughters?

[00:37:07] James: That it doesn’t matter as much if it’s for them. That they’re worth overspending for when there’s not really a plan to make that happen.

[00:37:16] Ramit: They’re worth overspending for. They’re our daughters.

[00:37:19] Nicole: I want them to have the experiences that I never had.

[00:37:24] Ramit: Mm-hmm. One of the most common stories of parents in America. Mm-hmm. What else?

[00:37:35] James: That I’ll do better than my dad did with me. I want that to be the case so badly, but I have no idea how to do that. I fall into the same traps he has.

[00:37:45] Nicole: I’m 44. I should be way further, and I should be able to afford a brewery once a week. I should be able to go out and have some beers and some drinks with friends and not have to think about it. The truth is, no, we do have to think about it. We don’t have just an expendable income.

[00:38:05] James: Yeah, I think we have an idea in our minds of what we should be doing as far as our money and how we should be living, and I don’t think it’s insane. I think it’s just a notch or two more than we can handle.

[00:38:17] Ramit: No numbers based in that, right? Just a feeling.

[00:38:20] Nicole: No. Yeah, totally a feeling.

[00:38:22] Ramit: Can I ask one more thing? Has it ever really affected you? Think about it.

[00:38:27] Nicole: No.

[00:38:27] Ramit: Got into debt.

[00:38:29] Nicole: Yeah.

[00:38:29] Ramit: Paid it off. Got in into debt. Money floats down from the sky. Paid it off. Again, probably five to seven times, right?

[00:38:37] Nicole: Yeah. So no. Until now. Now I’m like, oh my God, I’m 44. How are we going to retire when we want to retire? And I don’t want my girls to be in this cycle because it’s not a good cycle. It’s not healthy.

[00:39:00] Ramit: Why not? You’ve made it this far. 44, traveling, brewery. Why not?

[00:39:08] Nicole: Because it’s not real. It’s fake.

[00:39:19] Ramit: What’s not real? You have a 4,000-dollar Moroccan rug in your house, two cars. What’s not real about it?

[00:39:28] James: It’s a house of cards.


[00:39:30] Ramit: You can tell that James and Nicole are not honest about money. They’re not honest with each other. They’re not honest with themselves. In fact, I’m not sure they’ve ever been as honest as that last thing they just said where they both admitted they’ve built a house of cards. Listen to some of the stories they tell themselves about money.

[00:39:48] I can make it work. We work so hard, we deserve to go blank, blank, blank. We’ll keep making more. Grabbing small things throughout the month doesn’t really matter. It’s all for our daughter. I want them to have the experiences I didn’t have. I’ll do better than my dad, but I have no idea how to do that.

[00:40:07] Honestly, they need to get real. Even admitting they have a house of cards is just words. See, I’ve told you before, one of the things people with problems love to do is talk about their problems. But going from problem orientation to solution orientation is a huge journey.

[00:40:28] And one of the reasons they’ve never really gotten real is that someone else has always taken the burden away from them, so I decided to give them the responsibility. I urged them to take this more seriously. I urged them to come up with real solutions and to think of drastic changes they could make to get out from under their current situation.

[00:40:48] Hold that thought. We’ll be right back.

[00:40:51] Now back to the show.


[00:40:53] Nicole: You see where we’ve been with money. Where do you think we should go? How do you think we should handle our money moving forward?

[00:41:01] James: I haven’t thought about it to be honest because it hasn’t been in my hands. I don’t know exactly where, but I would move somewhere besides here. And I would downsize us a little bit as far as the mortgage we have, as far as how we’re living, as best I can.

[00:41:21] Nicole: How about like the day-to-day expenses? How would you manage those?

[00:41:30] James: Probably not well because of all the things I’ve talked about. I don’t know how to really get a better handle on that short of taking control out of my hands entirely and making me operate on cash, getting an allowance of some kind and saying, here’s your $15 for the day, little boy. Good luck.

[00:41:48] Because as long as there’s emotions and I worry that my spending, we’ll continue to occasionally end up getting dumb stuff. So I don’t have a solution for that part of it. I really don’t.

[00:42:01] Nicole: Mm-hmm. So he wants me to basically handle it, give him an allowance.

[00:42:05] Ramit: So analyze that dynamic. You asked him how would you handle the day to day, and what did he do in his response?

[00:42:12] Nicole: I felt like he gave it back to me.

[00:42:14] Ramit: Exactly. You tossed the ball to him, and he just, boom, right back like a volleyball player, just sent it right back to you. Are you going to accept that ball?

[00:42:24] Nicole: No.

[00:42:25] James: I’d try to come up with a budget because that’s what I know, that’s what I’ve been told is the thing to do my whole life. And so I try to budget out gas, food, and entertainment, which means toys for the kids or whatever, and formula and diapers. And I’d sit and try to think all that through and add it up and probably miss some things. And I don’t know the answer to that question because I don’t have a great solution because the only way I know is the way we’ve been doing it.

[00:42:57] Ramit: The way she’s been doing it. I’m going to jump in here for a second. James, I’m assuming you didn’t know what to do with a little baby.

[00:43:07] James: No.

[00:43:08] Ramit: Right. Scary. Now, what if you had said to Nicole, I don’t know. You’re better at this than I am. Go ahead. Take it over. I’m good over here. How do you think Nicole would’ve responded to that?

[00:43:21] James: Oh, I think she’d tell you I probably did do some of that, but obviously not well. She’s not going to accept that.

[00:43:26] Ramit: Really? How come?

[00:43:29] James: Because it’s all on her. We’re supposed to be in a partnership.

[00:43:31] Ramit: Any relation to money?

[00:43:33] James: Yes, there should be. I’ve allowed her to take the lead on money and have never offered to help or voiced any displeasure with how she handled it.

[00:43:45] Ramit: And what did that easy decision cost you?

[00:43:51] James: I don’t know because I’ve never seen the money.

[00:43:54] Ramit: I’m not talking about the financial cost.

[00:43:56] James: Oh. Well, an understanding of where we are. I have to rely on secondhand, thirdhand information about what our situation looks like. I trust her. I don’t think she’s misleading by any means, but at the same time, what’s being missed, or what am I not understanding?

[00:44:15] Ramit: But you never asked, right?

[00:44:17] James: No, I haven’t asked. I’ve felt like we’ve been blessed, and despite our limitations, we’ve done okay. We have a nice home. We have our kids. We’re able to create a nice life together. So I didn’t feel like we were falling apart necessarily.

[00:44:39] Ramit: Mm-hmm. Do you care, really?

[00:44:46] Nicole: I do care. I don’t want to go in this cycle anymore.

[00:44:58] Ramit: Why?

[00:45:02] Nicole: Because it’s exhausting. It gets to be stressful. I want to be able to enjoy my life with my girls and my husband. I want us to be able to enjoy our life and not have to worry about, oh, can we really afford this?

[00:45:18] Ramit: I like what you’re saying. I’m just not sure you two actually worry about affordability at all.

[00:45:25] Nicole: We’re failing. But the stakes haven’t gotten so high to where it’s like, oh, this is a very serious, serious, serious thing. It’s still like, eh, we could skate along for a little bit.

[00:45:43] Ramit: You could go a long time.

[00:45:45] Nicole: Yeah.

[00:45:46] Ramit: Feeling uncomfortable, having assorted disagreements, charging up random charges, things like that. People can go decades. The reason I’m pushing on this is not to make either of you feel bad. That’s never my intention. The reason I’m pushing is to understand if you have a real reason to change. I’m not so sure you do.

[00:46:09] James: I think the reason should be our daughters and wanting to provide something to them other than debt because we’re older parents. Our girls are both under five, and we’re over 40. When I think about what they’re going to be left with both in actual money and also, like Nicole was saying, just the cycle of the way they look at money, I don’t want to saddle them with that, and I don’t want to saddle them with nothing. I’m expecting no inheritance from my parents, and that’s fine.

[00:46:49] Ramit: Why isn’t it fine for your daughters too?

[00:46:51] James: Because I want to do better than my parents. I do. I want to try. I haven’t done it so far.

[00:47:01] Nicole: My reason is my girls. I don’t want to try. I want to do better. I have to do better. I don’t want them to be in a cycle like this.

[00:47:13] Ramit: What does doing better look like for your daughters?

[00:47:20] Nicole: I don’t know what doing better looks like, if I’m going to be honest.

[00:47:26] Ramit: Thank you.

[00:47:27] Nicole: I just know it’s not what we’re doing. I know that. l grew up, we couldn’t have anything, and I don’t want my daughters– I want my daughters to have everything, but that’s not good if we’re going into debt over it, because the next–

[00:47:47] Ramit: You’re not going into debt. You’ve been in debt.

[00:47:49] Nicole: We’re in debt. We’re in debt. Thank you.

[00:47:53] Ramit: What’s that side, Nicole?

[00:48:03] Nicole: I still want my life. I still want to go to the farmer’s market. I still want to go to breweries. I still want to do this. But we can’t. We just can’t.

[00:48:18] Ramit: Do you think you spoil your three-year-old?

[00:48:22] James: No.

[00:48:24] Ramit: Nicole, do you think you do?

[00:48:25] Nicole: Yes.

[00:48:27] Ramit: Okay. That’s pretty interesting. Nearly 100% of the parents I have met who have credit card debt have a very, very difficult time saying no to their children. Both of you are nodding your heads instantly.

[00:48:49] James: That’s the emotion. When I was talking about the emotional spending, there’s no stronger emotion than, oh my God, I need to take care of my kid. I better get them–

[00:48:58] Ramit: Wait, what is an emotion? Explain it to me like I’m a guy who looks like me. And I don’t have a lot of emotions. When you say that’s the emotion, what do you mean?

[00:49:07] James: I feel like a lot of my problem is emotional spending. Even though I do think I say no a lot, the desire to give my girls the experiences we talked about means I’m going to ignore the financial side of it if it means we can take her to Disney World last year, or, take her out to the zoo more often this summer, even though we may not be able to afford that. My desire to give them things is going to supersede my desire to be frugal.


[00:49:40] Ramit: James and Nicole could make a million dollars a year, and they would still overspend. One of the most striking things that I notice is how unspecific they are. They’ll say things like, I want to do better than my parents did. But when I ask what doing better looks like, they really have no idea because in many ways they’ve never thought deeply about money. Why? Because they never really had to.

[00:50:01] This is what happens to people who are subsidized or coddled or protected from true consequences. They simply never have to face reality. So you as the partner or the observer can get frustrated at them. You can yell at them. You can shake them all you want, but until they face actual consequences, they will not change.

[00:50:24] In fact, sometimes even when they do face consequences, they still won’t change. This happens with money. It happens with health, which is why people, even with life or death conditions, often don’t take their medication. They’re going to die. But that’s human nature. You can accept it, or you can go through life forever frustrated. Now let’s see what their numbers tell us.


[00:50:46] Ramit: Let’s just go down the list. We’ll get the other categories. Investments are zero. Okay. Savings are?

[00:50:54] Nicole: 2%.

[00:50:55] Ramit: All right. Guilt-free spending is $516, which we all know is not true because the photos alone cost 10 times that. So we know that’s not true.

[00:51:07] Nicole: Yes, it’s not true.

[00:51:09] Ramit: So your mortgage is 2,346. Your car payments and gas, that’s all factored in here?

[00:51:19] Nicole: Yes.

[00:51:20] Ramit: Is $1,200 a month?

[00:51:24] James: Yes.

[00:51:25] Ramit: Two car payments.

[00:51:26] James: She’s got a Volkswagen Tiguan we pay 360 a month on. I’ve got a Volkswagen. Oh, it’s right there in front of you. It’s a Tiguan and an Atlas, both Volkswagen SUV.

[00:51:40] Ramit: Two SUVs?

[00:51:42] James: That’s right.

[00:51:42] Ramit: Well, you got two kids. You need SUVs. You need it. Hold on.

[00:51:48] James: Absolutely.

[00:51:49] Ramit: America told us that once you have kids, you drop everything. You need a house with a huge backyard, and you need two tank-size SUVs. Is that correct, parents?

[00:52:03] James: I’ve got the tank size one, so yeah, that’s correct.

[00:52:06] Ramit: Check. And the house? Need that too, right?

[00:52:09] James: Absolutely.

[00:52:10] Ramit: I have to buy a house. America told me. All right. 1,200 bucks a month on car payments. Let’s look at your debt payments. 400 bucks a month. And I know you’re not paying that off too aggressively.

[00:52:22] James: No.

[00:52:23] Ramit: Was this the minimum?

[00:52:25] Nicole: So I have a line of credit.

[00:52:27] Ramit: Uh-oh.

[00:52:28] Nicole: It’s like a 10% interest line of credit that I used to pay off the ferry photos.

[00:52:39] Ramit: And when will your debt be paid off?

[00:52:43] Nicole: I actually do not know.

[00:52:46] Ramit: Okay. All right. Groceries are $1,000 a month. All right. Who does the grocery shopping?

[00:52:55] Nicole: I do.

[00:52:57] Ramit: Why do you say it like that? Let me show you what your face just did. I do.

[00:53:03] Nicole: James hates grocery shopping. In fact, when I try to send him to do grocery shopping, inevitably, he cannot find a very basic item.


[00:53:16] Ramit: Jesus Christ. Are you all still putting up with this bullshit? Do you need me to spell out what’s really going on when a guy says he cannot find the celery at the grocery store? He’s just saying that so you do it. And just as you have never faced financial consequences in your lives, he’s never faced consequences for his inability to find the Chobani yogurt.

[00:53:38] I guarantee if James was a bachelor, he would figure out how to go grocery shopping. He would figure it out. And of course you are setting an example of no boundaries for your daughters who will grow up doing exactly the same thing that they observe their parents doing. I can’t spend any more time on this because I’m just going to get too mad.


[00:53:55] Ramit: Phone is at 275. Why are you spending 275 bucks a month on phones?

[00:53:59] James: It does include two phones, the lines.

[00:54:04] Ramit: The watch. You have a watch?

[00:54:05] James: Of course, I do.

[00:54:06] Ramit: I fucking knew it. Hold on. Hold that up to screen. iWatch or whatever?

[00:54:11] James: Yes.

[00:54:12] Nicole: Yeah.

[00:54:13] Ramit: Oh two? Hold it up. Get it on screen. Both of you. Please hold it up to the camera. Wow. How come I’m the only person in this call with no watch? Can anyone explain that to me?

[00:54:26] James: I like to have fancy technology for probably no good reason other than I’m a American male.

[00:54:31] Ramit: Nicole?

[00:54:37] Nicole: Well, I told myself that I needed this watch for teaching yoga.

[00:54:45] Ramit: Oh, I need it because if they have to reach me when I’m in the Himalayas, then this provides a SOS through the satellite. Yours is yoga? What’s the logical reason there? Break it down.

[00:54:55] Nicole: Well, when I’m teaching the class, I need to keep track of the time.

[00:55:00] Ramit: And the iPad with the cellular connectivity?

[00:55:03] James: I like to have it for road trips for the daughter in the car.

[00:55:09] Ramit: If people have kids, 100% of the time, they will tell me one of those things is because of their son or daughter. These all fit the constellation of behaviors. There’s no mystery here.

[00:55:22] James: Sure.

[00:55:23] Ramit: None. Not to me. Is there to you? I think there is.

[00:55:26] James: I don’t feel like there is a ton of mystery. I think it’s pretty clear.

[00:55:31] Ramit: What is it?

[00:55:31] James: The bad decisions that are being made, I guess. I don’t know.

[00:55:34] Ramit: Why are they being made?

[00:55:36] James: I don’t know why, but it’s clear they’re being made.

[00:55:38] Nicole: Okay. I agree.

[00:55:39] James: That, I think, is part of my problem, is I know we’re not making good calls, but I don’t know why and I don’t know how to stop.

[00:55:45] Ramit: Do you want to ask someone on this call who does not own an Apple watch, an iPad with cellular connections or a Porsche 911 any questions about their spending?


[00:56:01] Ramit: Notice what I’m doing here. James and Nicole are perfectly comfortable talking about their own spending, even saying things like, I know we’re making bad decisions. But the one thing they are not doing is showing any initiative. They have zero curiosity as to how to fix it. They’re basically sitting back, passively answering my questions, much the same way they’ve gone through their financial lives. And what I’m doing here is I’m gently inviting them to get in the driver’s seat by asking me some questions.


[00:56:33] Nicole: How do you not buy those things that everybody else has? Because that’s the thing. It’s like everybody has this. How are you like, well, I don’t care that everybody has that. I don’t want it. How do you do that?

[00:56:47] Ramit: This is one of the best questions I’ve been asked on this podcast. How do you not want a big house? How do you not want that watch or that car? First of all, I like nice things. Let me start there. I think we all like something nice, whatever it may be. Ever since I was a kid, I always loved studying the best, people who had the best or were the best in the world at something. I was always fascinated with it.

[00:57:21] So I knew that eventually when I started to buy things, I would eventually want to buy the best. And to me, part of the joy is understanding what the best even means. I don’t find a lot of joy in just buying something that everybody else has. I don’t have an emotional connection to a lot of things like a watch.

[00:57:43] I don’t need it. On the other hand, I travel, and there are a few things I love to buy. I don’t need those either, but I love being able to go on a trip and not have to look at the price, or being able to go to a restaurant and not have to worry about appetizers, which came from my childhood.

[00:58:05] I think the big answer to your question is because I have a really strong vision of my Rich Life, I spend extravagantly on those things like travel, health, all convenience, and then I cut costs mercilessly on the things that are not a part of that vision. But I have a vision. Do you both have a vision of your Rich Life?

[00:58:33] James: If I can go on a little tangent, I’ve never known what the hell I wanted in life, never. Never had a clue what I wanted to do. I have no strong career direction. I met Nicole in my late 30s, fell in love, and never looked back. But until then, I’ve never really known what I wanted.

[00:58:49] So it’s tough even now for me to say, I want this, I want this, I want this. These are the things that are most important to me. Those things are the things that I feel like are what is best for my family, which I’ve decided in my life is the most important thing. Yeah, I want a nice car, but I don’t want to fill my house with a bunch of expensive tech anymore. I’ve done that in my 20s and 30s, so I’m trying to change my mindset of what’s important.

[00:59:15] Ramit: But if you tell me all these things like I want to provide for my daughters, well, let’s be honest. How much money have you put aside for your daughters in the last three years?

[00:59:23] James: None.

[00:59:25] Ramit: So do you really want it?

[00:59:27] James: Apparently not.

[00:59:28] Ramit: I think we’re getting closer to what the real problem is, but when you understand the real problem, then you start to be able to actually create a solution that works. The first solution that you came up with was a budget. A budget doesn’t solve an emotional challenge.

[00:59:47] James: Absolutely. I’m starting to figure that out. Yeah.

[00:59:50] Ramit: Okay. Nicole, what about for you? What’s your Rich Life?

[00:59:55] Nicole: I would want James and I to be able to take a year off of work so that we could travel in a van around the country with our daughters.

[01:00:04] Ramit: Okay. Beautiful.

[01:00:05] Nicole: I have all the Rich Life plans. I want us to have a house in Italy, just traveling, eating good food.

[01:00:18] James: Again, my first thought is, those are great dreams, but I don’t know how we get there with two girls in the day to day of raising a couple of kids. I love the ideas. They sound awesome. They both sound unrealistic.

[01:00:35] Ramit: Well, James, you’re spending 90% of your income on fixed costs. That’s unrealistic.

[01:00:41] James: Yeah, yeah. Fair.

[01:00:43] Ramit: So what are we doing here? If we’re talking unrealistic, what I’m seeing in front of my eyes is unrealistic? If you wanted to do one of those things that Nicole said about her Rich Life, how would you get there?

[01:00:54] James: We’d sell the house.

[01:00:56] Ramit: Okay. What else?

[01:01:00] James: I guess the cars too.

[01:01:02] Ramit: Mm-hmm.

[01:01:02] James: I don’t think we have much else to sell. I guess at that point, we’d have to buy a van.

[01:01:06] Ramit: You don’t have anything else to sell? What are those things on your wrist? What are the things on the floor?

[01:01:10] James: Oh, well, okay. We can liquidate a bunch of assets.

[01:01:14] Nicole: Yeah.

[01:01:16] James: Yeah. If we really chose to, we got a nice rug.

[01:01:19] Ramit: What was that phrase you just said? If we really–

[01:01:22] James: Chose to.

[01:01:23] Nicole: Chose to.

[01:01:23] Ramit: And that’s the difference between how you’ve been living life and what a Rich Life is. You didn’t really choose any of this except you just slipped into it. Let’s go to the brewery. Let’s get these photos that someone else told us to. Let’s get this rug that a salesperson told us to. Let’s get this. Let’s get that. But when I ask you what’s your Rich Life, it’s actually none of the things that you’ve built around yourselves.

[01:01:46] Nicole: Crazy.

[01:01:49] Ramit: What is that, Nicole? Tell me.

[01:01:50] Nicole: That’s just crazy that, yeah, all the stuff that’s surrounding us is what we actually did choose, but that’s not what we really want.

[01:02:04] Ramit: Yeah. What are you recognizing as you’re hearing yourself say this out loud?

[01:02:18] Nicole: I don’t know. That I’ve dug myself into this. I don’t know.

[01:02:38] Ramit: It’s okay. Take a second. I want to hear you keep going. Feel free to use the word we.

[01:02:46] Nicole: We’ve created this life that we currently have. We’ve created the situation that we’re in. We’ve talked about the future. We’ve talked about, oh yeah, it would be nice if we did this, but I don’t think we ever really talked about it– it’s more a pie in the sky instead of like, no, what is it that we really need to do to get this? This is what we really, really want.

[01:03:18] Ramit: Do you know why you never had a conversation like that?

[01:03:21] Nicole: I don’t know.

[01:03:23] Ramit: Ask James.

[01:03:25] Nicole: Why haven’t we had this conversation?

[01:03:28] James: I don’t know either. I guess we haven’t been ready to really consider those kind of changes.

[01:03:38] Nicole: Yeah, I think it’s scary. I think it’s scary to really dream that big.

[01:03:48] Ramit: Do you two think you genuinely have agency or control over your life? If we want to do something, we can make it happen, really realistically?

[01:04:03] James: I’ve never really believed in that, to be honest. I’ve always struggled with that.

[01:04:09] Ramit: Mm-hmm. How about you, Nicole?

[01:04:12] Nicole: I feel like if I want something, I will make it happen.

[01:04:18] Ramit: Okay. It’s pretty interesting. What did the two of you think about that? It’s quite a difference, right?

[01:04:23] Nicole: That is.

[01:04:24] James: We know that we’re different in that way. Very much.

[01:04:27] Ramit: If you don’t believe you have agency or control, why would you even bother dreaming? What’s the point of all this? Just pie in the sky. James, sound familiar?

[01:04:39] James: Yeah. I think about it every day.

[01:04:41] Ramit: Then the conclusion is? We’re not going to dream about all this stuff over here. Instead, we are going to what?

[01:04:50] James: Just going to focus on what’s in front of me.

[01:04:52] Ramit: Mm-hmm. How long you been doing that for?

[01:04:55] James: Probably my whole life.

[01:04:56] Ramit: Mm-hmm. Has it gotten you where you want to go?

[01:04:59] James: No.

[01:05:00] Ramit: Do you even know where you want to go?

[01:05:02] James: As I said, I struggle with that.

[01:05:05] Ramit: Part of the reason that you feel bogged down is you are, most people live day to day. The furthest they can think is the end of the month. Literally, people will say to me, we had a bad month. I go, month? Why are we talking about a month? We need to be talking about at least a year. But when was the last time you two mapped out what the next 12 months are going to look like financially speaking?

[01:05:27] James: Never have.

[01:05:28] Ramit: Yeah, most have not. Yeah. It’s hard to know what’s 30 miles down the road when you’re only focused on driving in thick fog with visibility of 20 feet ahead of you. What do you notice, Nicole?

[01:05:47] Nicole: Well, I go back to that whole opportunity cost with the fairy picture. And whatever we choose to spend our money on, it better be worth it, because otherwise it’s taking away from something else that’s more important.

[01:06:05] Ramit: That’s how I feel.

[01:06:07] Nicole: Yeah.

[01:06:07] Ramit: We floated along the river of life, and you let life take you wherever it was going to take you. Just like, look, I’m sitting in the raft. Ah, what’s happening today? Whereas someone else who has agency, they’re rowing. I’m going there. That’s where I want to go. That’s totally different. Until you two see yourselves as the driver of your own life, you will be carried wherever America wants to take you. And where does America want to take you? What is the river of life in America?

[01:06:39] Nicole: Freaking house with a picket fence.

[01:06:42] Ramit: Yeah. Keep going. What else?

[01:06:43] Nicole: SUVs, have children.

[01:06:46] Ramit: Yeah. And then where do you end up right before you die?

[01:06:49] Nicole: iPhone.

[01:06:50] Ramit: iPhones, watches, then move to Florida and die. Well, you’re halfway there.

[01:06:55] Nicole: Yeah, we’re already in the right spot.

[01:06:58] Ramit: It’s the difference between sitting back in the rowboat versus picking up the oars. Now I can’t make you do it. That’s not my job. My job is to simply show you the different options you have. If you wanted to, you could be millionaires or even multi-millionaires. It’s totally doable. You’d have to be totally dialed in.

[01:07:22] James: I don’t know. It’s a lot to change. It’s some radical changes, not only to our current situation, but our mindset that’s hard to wrap my head around.


[01:07:38] Ramit: It would’ve been a waste of time to go line by line through their CSP. So instead, I simply cleared all their expenses and together with them, we rebuilt their CSP from ground zero. By zeroing out the entire CSP and starting over, we got to 58% on their fixed costs, but it was very strict. No more watches, selling their house, one SUV.

[01:08:02] But I did the exercise step by step with them to illustrate how they might design their lives around their shared vision. I can’t tell them what to do. It’s their life. It’s their money. But I wanted to show them that it’s actually but possible.

[01:08:16] And the truth is, I don’t know if they will change. Even if they have the desire to make a major change, they might lack the skills to do it. In addition, their relationship dynamic is locked in. It will be very hard to recalibrate all of these things all at once. Now let’s listen to their follow-ups to see what they did.

[01:08:40] Nicole: The conversation was really enlightening for me, just showing how unintentional we’ve been living, our whole lives really. Just the necessary agency we’re going to need if we want to get out of this situation and make some real changes.

[01:08:56] The changes we are going to make, we’re going to be combining banking accounts this weekend and working on getting all of our finances into that one account to come out of so that we can both have a really clear picture of where our spending is.

[01:09:09] We’re looking at possibly selling our house and downsizing. We’re going to run the numbers to see what will work best for us, either paying cash for another house or renting and investing that money. We’re going to look at getting rid of one of our cars, go into a single car family, using that money to pay off debt, and just really tackle the debt that we have, and go from there.

[01:09:36] Ramit: And now the-follow up from James.

[01:09:39] James: Number one thing I think I learned was that I don’t have the idea that I thought I did of my finances. I’m not on top of them the way I thought I was, and we’re not in the situation I thought we were. It’s far more concerning than I was. We have to communicate differently. I need to change the way I talk to Nicole about our money and the way I think about it on a daily basis.

[01:10:04] That was a lot to learn and a lot to take in, and I think some of the tools you’ve given us will get us there. The most surprising thing was really the things I’ve allowed Nicole to take on without thinking about it, the things I’ve let her struggle with and really get to the point they’re at without really knowing I was doing it. That was sobering to say the least.

[01:10:24] It’s a little humbling to see what I’ve allowed to slip. Plan on, in the short-term, doing those things, and I think we’re going to sell the home. We’re going to make some changes in the way we handle our money, combine accounts, and things like that.

[01:10:36] So the CSP is going on the fridge right away, and we’re going to stare at it, and I’m going to use it as my North star. So thank you again. I really hope this will be the thing that will get us in better shape, and we’re going to live by those new rules and live our Rich Lives, and thank you again for all of it.

[01:10:53] Ramit: Okay. In some ways, I’m impressed. I will say I noticed that Nicole took on a lot of the burden of change and James still seems passive. What I’m hoping is that they both commit to changing and they both work on recalibrating their relationships to be teammates working towards a powerful shared vision. James and Nicole, thank you for sharing your story with me and all of the podcast listeners, and I wish you the best. Please keep me updated.