Episode 207. “I’m 40, burned out, and don’t know what’s next in my life”

Courtney (40) and Ray (41) have spent their entire adult lives in the structure of military life—but with retirement on the horizon, they’re about to face a future filled with choices for the first time.

For Ray, that means walking away from the rank, routine, and pension he’s built for over 20 years and entering a civilian job market he knows little about. For Courtney, it means finishing grad school, becoming a therapist, and finally stepping into her own career after 12 years as a stay-at-home mom.

With three kids, a cross-country move coming soon, and dreams of settling down for good, can they stop optimizing for retirement and start asking better questions on building their Rich Life.

This episode is brought to you by:

Masterclass | For unlimited access to every class and 15% off an annual membership, go to https://masterclass.com/ramit

DeleteMe | If you want to get your personal information removed from the web, go to https://joindeleteme.com/ramit for 20% off.

Stamps.com | Sign up at https://stamps.com/ramit for a special offer that includes a 4-week trial, plus free postage, and a free digital scale. No long-term commitments or contracts.

Leesa | Go to https://leesa.com for 20% off sitewide PLUS get an extra $50 off with promo code RAMIT, exclusive for my listeners.

Upwork | Visit https://Upwork.com to post your job for free and connect with top talent ready to help your business grow.

Links mentioned in this episode 

Get my no-numbers journal

Transcript 

Download the full transcript PDF 

[00:00:00] Courtney: I'm 40 years old, and I'm tired of reinventing myself all the time and having to make new friends. It's exhausting.

[00:00:05] Ray: I don't know what I want to do when I grow up, and that's a little scary.

[00:00:08] Courtney: We've always agreed that we will live off of his income and anything that I would bring in is extra. He didn't like that I separated that money.

[00:00:15] Ray: It felt like she was trying to hide something. It’s a little sneaky. It felt like she was trying to hold something back.

[00:00:20] Ramit: Well, one thing we all have in common is we lie to the people that we love. There is love in lying. I'm about to open Courtney and Ray's conscious spending plan, which breaks down their net worth, their income, and where they spend their money.

[00:00:33] You can download and create your own conscious spending plan for free at iwt.com/csp.

[00:00:51] Ramit: The application says, "We're wondering if we've prepared enough and we can afford for my husband to leave the military." Assets are $90,000. Investments are $590,000. Savings are $34,000. Debt is zero, for a total net worth of $715,000.

[00:01:09] All right. Without even looking at their income yet, nobody trips and falls into having $590,000 of investments. That is careful, consistent investing over the long term. So well done on that.

[00:01:19] Let's look at their income. They're making $17,000 per month. Fixed costs are at 57%. So let's talk about two things that I see in this CSP. First of all, there's the question about cash flow. What are they doing on a monthly basis?

[00:01:33] The second question they want to know is, do we have enough? In order to answer that question, I would need to talk to them about their pension, their lifestyle, what kind of life do they imagine for themselves, what's going to happen and change with their expenses as they get out of the military. I'm really looking forward to speaking to this couple.

[Interview]

[00:01:51] Ray: The reason we came on is because we're unsure for the first time in 20 years knowing what the future is going to hold for us financially.

[00:01:59] Courtney: Our life has been pretty, I don't want to say scripted, planned, just due to the nature of his job. So pretty soon we're going to start getting to make choices for ourselves, which we've never done.

[00:02:09] Ramit: Yeah.

[00:02:10] Courtney: And that's scary.

[00:02:11] Ramit: Courtney, in your application you wrote, "We are a military family getting ready to embark in this civilian world in the next few years. We've spent our entire adult lives as a military couple with job stability. We live in a high cost of living area and would love to settle here and buy a home, but we're not sure we can." Tell me about the options you have when it comes to retiring from the military.

[00:02:38] Courtney: I actually ran the numbers. Did I tell you I did that?

[00:02:41] Ramit: No, but I love it. Oh my God. By the way, I love it. This is how you can tell. We've been talking for like 15 seconds, and an optimizer's like, "I ran the numbers. Everybody, look, I ran the numbers." They cannot wait to show their numbers. We'll get to the numbers. Okay, Ray, financially speaking, what are your options when it comes to potentially retiring or not from the military?

[00:03:04] Ray: I'm at about 18 and a half years now, so at 20 years I'll get a pension, and it is 50%. And then every year after that, I get an extra percentage on top of that.

[00:03:14] Ramit: Okay.

[00:03:14] Ray: Where we're going with that is, what makes sense? How long to stay in. What does a civilian life look like after retirement?

[00:03:20] Ramit: Do you have to retire, or no?

[00:03:22] Ray: I don't have to, no.

[00:03:24] Ramit: Okay. When you started the military, which was basically when you were 20 years old, how long did you think that you would stay in?

[00:03:31] Ray: Man. My initial contract was about 10 years, and I thought that would be it. I never thought I would be in the military this long.

[00:03:39] Ramit: Mm-hmm.

[00:03:40] Ray: But things just got kept going right and I kept enjoying it, so I stayed.

[00:03:43] Ramit: Wow. What happens at nine years and six months? Do you get called into a meeting? What happens?

[00:03:51] Ray: You actually have to make the decision a little bit prior to that. But the military knows what they're doing, so they offer you money to stay in as a signing contract.

[00:04:00] Ramit: I like this. I like the optionality. And then every time they offer you a contract, do they offer you more money?

[00:04:06] Ray: They do. They do.

[00:04:07] Ramit: Okay. All right. You're right. They know what they're doing. And so the two of you talk about it. You go, "Hey, they're offering this. What are we thinking?" Etc.

[00:04:14] Ray: Mm-hmm.

[00:04:15] Ramit: In many ways, isn't this upcoming contract just one more conversation that you've had many times over the last 20 years?

[00:04:22] Ray: This one is a little bit different.

[00:04:24] Ramit: Why is it different now? Why not just roll into it like you did so many others?

[00:04:28] Ray: Honestly, our family, I think we're ready to move on.

[00:04:32] Courtney: So that's the thing. When he was in the military starting 18 years ago, we were 22 years old. We had no children. We have three children now. We have three daughters. Our oldest daughter is in middle school. And as they get older, it gets harder. And it's not just our lives that are affected, it's theirs.

[00:04:49] Also, I'm 40 years old and I'm tired of reinventing myself all the time and having to make new friends. It's exhausting. We love the lifestyle. We don't know any different. But also, there's something to say. We love where we are right now, and if we could stay here forever, we would. And could he earn more in the private sector? This is what we don't know. This is why we're here.

[00:05:09] Ramit: A lot of good questions. Especially the ones about the kids as they get older. It's tough to move. How many times have you moved?

[00:05:16] Ray: Oof.

[00:05:17] Courtney: I actually counted. So our youngest daughter is six, and we're moving this summer, and she will have lived in five houses.

[00:05:24] Ramit: Wow. What's the language you use in the house when it's time to move? What do you say?

[00:05:28] Ray: It's gotten harder as they get older. It used to just be, we're going to go on a new adventure but it's more of a brace for impact.

[00:05:35] Ramit: I appreciate you sharing that. I can see how it would get more and more difficult, of course, on your kids, also on you. And at a certain point you go, "Hey, wait a minute. This is a natural time to really think about what we want to do. We're 40, 41. What do we want the next chapter of our life to be?

[00:05:53] Courtney: Where we are right now, we're very happy. And eventually we would love to come back here and live here. And so it's like uprooting this life that we don't really want to uproot, but we have to due to his job. We want to maybe be able to make the decisions for ourselves at some point.

[00:06:06] We've had a lot of fun, but we're starting to get to the time now that we can make those choices. And it's just, I don't know. It's being 40 years old and being able to make a major life decision for yourself for once is new.

[00:06:17] Ramit: Yeah. How have you structured your career goals over the course of the last 20 years?

[00:06:25] Ray: It's really mostly been around are we having a good time? Am I enjoying what I'm doing? And knock on wood, I've been successful up to this point. So it's been a steady climb in rank and those types of things.

[00:06:37] Ramit: Got it. Courtney, what about you in terms of your career? How did you think about that?

[00:06:42] Courtney: So mine's completely different. We were married. I was a teacher. When Ray and I decided to have our first child, we decided that I would stay home. So I have been a stay-at-home mom for 12 years. I am lucky that Ray has provided me the opportunity to dabble and find what I'm interested in. And so in October, I went back to grad school to start my next phase.

[00:07:05] Ramit: Oh, what's that phase?

[00:07:07] Courtney: I want to be a therapist.

[00:07:09] Ramit: Oh, cool. How did you make the decision to go back to school?

[00:07:12] Courtney: I've wanted to do it for 10 years, but there's always an excuse. I tend to make decisions in fear. I live in fear a lot, and I was scared to invest in myself and do that. But when he was deployed last year, I was like, "You know what? Time's going to go by. I may as well just do it."

[00:07:31] Ramit: Where'd that come from?

[00:07:32] Courtney: I think turning 40 is a big--

[00:07:34] Ramit: Yeah.

[00:07:36] Courtney: Years are going to go by. So I can either do grad school or not do grad school, but those three years are going to happen.

[00:07:41] Ramit: Very courageous, honestly. That's awesome.

[00:07:44] Courtney: Thank you.

[00:07:45] Ramit: Are you both feeling that same, "We turned 40. It's time to zoom out, take stock of where we are, where we're going."?

[00:07:52] Ray: Yeah. Yeah, I think so. Not only how you've done, but how you're going to do in the future. And then with kids, it's like, how are we setting them up too?

[00:08:00] Courtney: I think we also thought 40 is like, oh, it's so old. Once you're 40, you're settled. You have your life together. And I was like, "You know what? It's not that old, and it's never too late to try something new."

[00:08:09] Ramit: Yeah, I love that. Let's talk about potentially retiring from the military. So Ray, if you were to retire, what does that look like for you?

[00:08:21] Ray: It would be in about two and a half years. And then I would be out in the military, and I would get that 50% pension, but after that, I don't know, because I don't know what I want to do when I grow up, and that's a little scary.

[00:08:34] Ramit: Yeah. I can see how it could be even more scary for you because there's been structure since you were 22 years old. It's like, do this. You'll get that.

[00:08:45] Ray: Yeah.

[00:08:46] Ramit: But going into the civilian world is very nerve wracking.

[00:08:49] Ray: Yeah. And I got to imagine it's probably different at 44.

[00:08:53] Ramit: That's true. The opportunity cost or the alternative you have is to stay where you're at the peak of your career. You know everybody. You know the systems. You know how it works. And you can play that game on relatively easy mode. Versus going to a different world where the rules are unclear and maybe your skills aren't what others have. That's a very scary moment.

[00:09:18] Ray: Yeah. Absolutely.

[00:09:20] Ramit: I remember interviewing a football player. He had been in the NFL. I think he'd been to the Super Bowl, and he retired. And it was a very stark awakening for him because he went to being at the absolute top of his game to being a "nobody." And to me, I found that incredibly courageous because that scares the [Bleep] out of me.

[00:09:42] I'm good at what I do. And if you took it all away and I had to start off, could I do it? Yes. Is it really scary? Yeah. All right. So let's say you retire. It's unclear what you would do. I can hear that there's some interests. Any other goals that you would have if you were to retire?

[00:09:59] Courtney: My goal is he gets a job making at least what he makes now, and then hopefully I'll be working by then. And then we have his pension. So now we're a three-income family instead of a one income family. And he continues to work and work for 10 to 15 years, sock away his pension, and then retire by 60. Hopefully he would have enough to be able to do that.

[00:10:22] Ramit: And then what?

[00:10:22] Courtney: I don't know. That's a great question.

[00:10:25] Ramit: I'm actually really glad that we get a chance to talk. I don't think a lot of people know, unless you have somebody in the military or you grew up with friends who are in the military. For many people, it's a different world.

[00:10:35] Courtney: Yeah, we knew nothing. We did not come from military family at all.

[00:10:39] Ramit: Is that right?

[00:10:39] Courtney: Nothing, no.

[00:10:41] Ray: No, nobody. Yeah.

[00:10:41] Ramit: How'd you decide to go in the military, Ray?

[00:10:43] Ray: My father, actually. He said, "Hey, why don't you go try this summer seminar for the college? And I tried it, and I loved it.

[00:10:53] Ramit: Isn't that crazy? Your entire life can change from one comment somebody makes.

[00:10:59] Ray: It was one weeklong, and it changed my entire life.

[00:11:01] Ramit: Okay, back to the goals of retiring, anything else in the near term that you would want to do?

[00:11:06] Courtney: We do want to own a home. That's part of our goal for us. We're leaving this summer. We hope to come back and buy a house here.

[00:11:12] Ramit: Got you. Okay. So we would need to factor that into the calculations as well to see if at some point you could be able to afford something in that area. Okay. All right. Ray, have you thought about what careers you might go into after you retire?

[00:11:25] Ray: I really haven't. This is just one of those civilian military disconnects. I don't even know what I'd qualify for. I know I have experience in leadership, but I don't know how far that takes me.

[00:11:37] Ramit: We'll come back to the career stuff because I understand that's a big part of this decision.

[Narration]

[00:11:42] Ramit: I just want to cut in here to give a little bit of context on how big this decision is for Ray and Courtney. Now, I've spoken at military bases before, and one thing I didn't expect was the structure of each day. They handed us an itinerary of what we were going to do while we were there, and it was detailed down to the minute. I'm not kidding.

[00:12:02] I'm talking 0652, morning workout. 0745, helicopter tour. Personally, I loved it. I loved that level of detail, but you have to remember the effect that that has on somebody. For 20 years, Ray and Courtney lived that structure. The military told them where to live, when to move, what to do.

[00:12:28] And now they're considering leaving that structure behind. No regimented schedule, no next contract. Just as big open question, what do we actually want? And when you spent your whole life following the rules that someone else said, that can be really scary.

[00:12:47] You don't have to be in the military to understand what I'm talking about. Maybe you grew up with strict parents. When you finally got to college, you weren't sure how to decide what you wanted to study. Maybe you got divorced or you left a religion and suddenly nobody was there telling you what to do anymore.

[00:13:05] You get used to the structure. Many of us even come to depend on it. But when it's gone, it doesn't always feel like freedom. It can feel scary. And sometimes we just feel lost. That's exactly where Courtney and Ray are right now.

[00:13:22] After the break, we'll get into the numbers, and just wait until you hear what happened when Courtney quietly sets some money aside.

[Interview]

[00:13:33] Ramit: Why don't we take a look at the numbers?

[00:13:34] Courtney: Okay.

[00:13:35] Ramit: Courtney, why don't you read off the word in bold and then the full number next to it for this entire box?

[00:13:41] Courtney: Assets are 90,000. Investments are 590,571. Savings are 34,782. Debt, 0. Total net worth, 715,353.

[00:13:57] Ramit: Okay, cool. What do you think of those numbers?

[00:13:59] Courtney: They're fine.

[00:14:00] Ramit: That's a very lackluster word.

[00:14:01] Courtney: They're remarkable. They're average. I don't know.

[00:14:04] Ramit: Okay. Ray, what do you think?

[00:14:05] Ray: I think they're good. I like the debt number, really. That's what I'm proud of.

[00:14:08] Courtney: Proud of the debt number.

[00:14:10] Ramit: Okay. What else?

[00:14:12] Courtney: We are proud of ourselves that we've done it all by ourselves. We don't come from money and things where people have helped us. So everything we've built, we've built together on one income.

[00:14:21] Ramit: Yeah.

[00:14:22] Courtney: I wish they were more, but I think it's a good place to start.

[00:14:26] Ramit: Okay. Let's keep going on the numbers. This time I'm going to ask Ray to read off this combined gross monthly income here.

[00:14:36] Ray: All right. $17,487.72.

[00:14:40] Ramit: All right. So that's $209,000 household income. Did you know that?

[00:14:47] Ray: Yeah.

[00:14:48] Ramit: Okay. Courtney, did you know that?

[00:14:49] Courtney: Mm-hmm.

[00:14:50] Ramit: Wow. All right. Very good. In order to live a Rich Life, you have to know your numbers. That is a core part of it. Great job. What does it mean to make $210,000 at the age of 40 and 41?

[00:15:03] Ray: I don't try to look at it by the numbers, and I think we do all the things we want to do, and we're never really hindered by financial things. So I think it's a good number.

[00:15:12] Ramit: Courtney?

[00:15:12] Courtney: I think it sounds like it's a lot more than it feels sometimes. Maybe I'm overthinking this, but if one individual makes 200k a year is very different than a family of five.

[00:15:24] Ramit: Hmm. Tell me more.

[00:15:27] Courtney: So we have three children. We have all their activities and expenses that come with children.

[00:15:34] Ramit: Yes.

[00:15:34] Courtney: We have savings that we have to take into account that someone without children or one or an individual wouldn't have to.

[00:15:40] Ramit: Mm-hmm.

[00:15:40] Courtney: So I think the money, it's all being utilized for a purpose.

[00:15:46] Ramit: Listen, everything you're saying I can understand and empathize with. In some cases, I agree with you. $210,000 is a lot of money and it's very successful. And also, if you have a family of five living in a high cost of living area, I can also see that that money can get spent quite easily.

[00:16:08] Courtney: I'm looking at it, and it is a lot of money. We're paying for my grad school out of pocket. Most people can't do that. And I'm grateful that we have those opportunities. It's just the money can get used very quickly.

[00:16:20] Ramit: Courtney, have you earned any money since Ray has been in the military?

[00:16:26] Courtney: I was a teacher and then I had my own business doing nutrition.

[00:16:30] Ramit: Okay. What was that like when you were earning money and he was deployed, etc.? What's that look?

[00:16:36] Courtney: So when I do earn money, which isn't much, I took all my little money-- I think I earned-- was it like $3,300 last year. It was very little. And I put it in a little special account. He didn't like that I separated that money. But to me, I separated the money because we've always agreed that we will live off of his income and anything that I would bring in is extra.

[00:16:57] So I put it aside so it didn't get wasted and blown on whatever. And we had a lot of travel plans last year that we had to cancel for a few different things. So I wanted to make sure the money was there so we could use that money to travel. And he got really mad that I would separate that money.

[00:17:15] Ramit: What did he say? Do you remember?

[00:17:16] Courtney: I think that I was trying to hide the money or something.

[00:17:20] Ramit: And do you remember where you were when you had this discussion the first time?

[00:17:24] Ray: That was right before deployment. Some way I found out that that money was going into a different account and it just didn't make sense to me. And I said, "I don't understand why this is your money to save on a different trip that she wanted to go on, to see a friend in Germany. Whereas everything that I make is, what we make, it's together. So why wouldn't what you make also go into that same account, and then we just do the same thing we've always done with it."

[00:17:51] Courtney: So here is my thing. I gave up my career 12 years ago. It sounds really lame, but making that money felt special that I earned money. So I just wanted to make sure that I used it in a special way. It's lame, but when you hadn't had a career or an income, and that's a bummer sometimes, it just felt more precious.

[00:18:15] Ramit: So how did you all resolve it?

[00:18:17] Courtney: I don't make money anymore, so it's not an issue.

[00:18:20] Ramit: Uh-huh.

[00:18:21] Ray: Yeah, it honestly hasn't been resolved. I'd say that's a contentious thing that we have in our relationship.

[00:18:25] Ramit: What'd it feel like for you, Ray?

[00:18:28] Ray: It felt like she was trying to hide something. It's a little sneaky. It felt like she was trying to hold something back. I didn't like it. I still don't like the idea of it.

[00:18:37] Ramit: It sounds like there was no resolving it, but rather, Courtney, you stopped earning money, so the problem has temporarily vanished.

[00:18:46] Courtney: Yeah. But I will say, if I were to make money again now, I wouldn't do the same thing.

[00:18:51] Ramit: What if you made $3,000 in a year?

[00:18:53] Courtney: I wouldn't do it again because it upsets him. I wanted to take this trip last year for my 40th birthday to go see Taylor Swift in Germany with my best friend. And so I just wanted to make sure that there was no reason that I wouldn't be able to do this because of finances. And so that's why I squirreled it away to make sure that money was there.

[00:19:11] Ramit: Why would you be worried about not having enough money if, Courtney, you like control? You seem to know your numbers quite intimately. Why would you be worried?

[00:19:20] Courtney: It felt like an accomplishment for me to be able to buy that for myself. I think that's mostly what it was. He's been our sole income for so long, so it felt cool to be like, "Hey, I did that for myself."

[00:19:30] Ramit: Yeah. Do y'all have independent guilt-free spending amounts that each of you can use on your own?

[00:19:37] Ray: No, it's all together.

[00:19:38] Courtney: Yeah.

[00:19:38] Ray: Everything we do financially is together.

[00:19:41] Ramit: You ever disagree about like, why'd you spend on this or that?

[00:19:44] Ray: We used to when we were younger. But I think we had an epiphany at one point, and we were just like, "You know what? We trust each other that we're not going to do something silly." That it doesn't matter. And if there's something that is "expensive," we'll talk to each other about it.

[00:20:01] Courtney: We both trust that we're going to spend appropriately. Like he just bought a new bike.

[00:20:06] Ramit: Did you bring the conversation up or did you buy it on your own?

[00:20:09] Courtney: He was going to die if he kept riding his old bike.

[00:20:11] Ramit: Mm-hmm.

[00:20:12] Courtney: It was broken. And he was like, "I need a new bike." And I said, "Great." He bought it on Marketplace. He didn't buy it new. It's like probably a 7,000-dollar bike.

[00:20:19] Ray: Yeah.

[00:20:19] Ramit: $7,000? What brand is this 7,000-dollar bike?

[00:20:24] Ray: It's a carbon fiber bike.

[00:20:25] Courtney: That changed everything for you now, right?

[00:20:28] Ramit: Yeah, yeah, yeah. Definitely. Please don't write me in the comments explaining how cool these bikes are. I do not care. How did you have the money for it? Where did it come from?

[00:20:37] Ray: We had already planned from the tax return. I was overseas last year, and we had a lot of tax-free money coming, so it was a big windfall.

[00:20:43] Ramit: How much did you get in that tax refund?

[00:20:46] Ray: 15 grand.

[00:20:47] Ramit: Okay. What are y'all going to do with the rest?

[00:20:49] Ray: So the idea is to fund the IRAs with that.

[00:20:52] Ramit: Okay. So you all agree on that?

[00:20:54] Courtney: Boring, but yeah.

[00:20:58] Ramit: Is it?

[00:20:58] Courtney: Some of it. Not all of it, but some of it.

[00:21:00] Ramit: Let's go through the rest of the CSP. So your fixed costs, what's that number, Courtney?

[00:21:05] Courtney: 57%.

[00:21:07] Ramit: 57. So this is great. It's below 60. 50 to 60 on one income, in a high cost of living area, impressive. Yeah. Let's break it down. Your rent, because you're currently renting, is $4,050 per month. You guys get a housing allowance from the military?

[00:21:23] Courtney: We do.

[00:21:24] Ramit: Oh, okay. And the military's housing contribution, you factor that into your income?

[00:21:29] Courtney: Yes.

[00:21:29] Ray: Yes.

[00:21:29] Ramit: Got it. Okay. Good to know. All right. Let's keep moving along here. So I have no notes. As long as you're within 60%, you can spend it however you want, as far as I'm concerned. But just out of curiosity, looking down here, we have car payment at 500 bucks. It's very nominal. Amazing. Great. No debt. That's awesome. Groceries at 1,500. That's five people in the house. What do you think about that number?

[00:21:51] Courtney: A priority for me is to have high-quality food in the house. So it's hard to get it lower here, to be very honest.

[00:21:57] Ramit: I'll say, it's a little higher than I normally see, but then again, you have a pretty big family and your number is still within 60%. So totally up to you. That's your Rich Life. It's your priority. I'm all for it. What's up with this subscription being $1,800 a month?

[00:22:12] Courtney: That includes my grad school. That's my monthly bill. So I didn't really know where to put that.

[00:22:16] Ramit: Okay.

[00:22:17] Courtney: So if it wasn't for my grad school, that would be at $500.

[00:22:21] Ramit: Can we just model it for a second? So let me just show you. Instead of 1,800, I'm going to make it 500. Look at this number up here, this 57% fixed cost. It drops to 48%. Whoa.

[00:22:31] Courtney: I know. I'm bringing us down.

[00:22:33] Ramit: No, no, no, no. Not at all. In fact, if anything, I'm like, "Wow, that's great." You can fit grad school and still be below 60%? Amazing.

[00:22:42] Courtney: Thank you.

[00:22:43] Ramit: Great. Let's continue moving along. Investments are at 20%. That's 20% of after-tax money. So you are contributing $1,900 a month to post-tax retirement. And then you have 700 bucks a month for a 529 for your kids.

[00:23:01] Courtney: Yeah.

[00:23:04] Ramit: When you look at your numbers, what do you both think?

[00:23:07] Courtney: I think that we can get a little more sophisticated and optimize and make them better choices and set ourselves up better.

[00:23:13] Ramit: Okay. What does that mean, set yourself up better?

[00:23:16] Courtney: For the future.

[00:23:18] Ramit: Okay. Got it. Ray, what about you?

[00:23:21] Ray: It's hard for me to visualize what the future's going to look like with the investment number. And especially the 529, honestly, it's hard for me to see how I'm going to pay for kids' colleges and going forward. But at the same time, I'm proud of where we're at. It's cool to be in a situation of, hey, maybe I have the opportunity to take my investments even down a little bit. That's a pretty cool position to be in.

[00:23:45] Ramit: Yeah. Let's say instead of X dollars, you took it down by 500 bucks a month. What would you do with that money?

[00:23:51] Courtney: If we're taking away something as precious as $500 a month from investments, I want to make sure that money's being used wisely in a way that'll serve our family, something that's intentional.

[00:24:01] Ramit: Let's do it right now. We're here.

[00:24:03] Courtney: Let's do it. I would love to take that $500 and go get microneedling done, but--

[00:24:07] Ramit: Okay. Hold on. Why is there a but?

[00:24:10] Courtney: Because what would that $500 be in 10 years in an investment account versus my amazing skin.

[00:24:16] Ramit: Mm-hmm.

[00:24:17] Courtney: What's worth more?

[00:24:19] Ramit: Can you answer that for me?

[00:24:20] Courtney: Yeah, it would be the investment account.

[00:24:23] Ramit: Oh, so all that matters is what's going to be in your portfolio 25 years from now. Am I hearing you right?

[00:24:29] Courtney: No, I don't agree with it.

[00:24:31] Ramit: Yeah. The microneedling, how much does that cost anyway, microneedling?

[00:24:34] Courtney: We're probably somewhere around 750.

[00:24:37] Ramit: $750?

[Narration]

[00:24:38] Ramit: Courtney says she wouldn't feel comfortable spending $500 on herself, "unless it benefits the family." Did you catch that? It's not just a throwaway line. It's a window into how a lot of women think about their money, especially mothers. I've spoken to many of them on this show, and many of them will say something to the effect of, "Spending money is okay, but only if it's for the family, particularly for the kids."

[00:25:08] And then she tells us something that seems small, but it provides a really big insight into what's going on. She earned $3,000 last year, and she put that money into a separate account. She says, "It's not to be sneaky, but because it felt special." The money wasn't just money; it was identity and accomplishment and freedom.

[00:25:31] Now, Ray doesn't get this. He sees it as a betrayal, and I can understand that. Why would your partner want to put money in a separate account? Doesn't feel like there's trust. That doesn't feel open and transparent at all. What we see here is a clash, not just of hiding money, because I don't think that's what's going on, but a clash between meaning and control and autonomy and partnership.

[00:25:57] Courtney says she won't do it again. Good. Because I don't think hiding money is okay in a relationship. I think we all get that. But there is another issue that I want to highlight here. It's what happens when you start treating every dollar like it has to justify itself. It's when you are happy to spend money on everybody else, but you find it almost taboo to spend on yourself.

[00:26:24] This is one of the reasons that I insist everybody having individual guilt-free spending account, and that you use it. You can't just let it sit there and grow and do nothing. Your skills at spending money deteriorate. And when you start using the word justify, how do I justify spending money on taking a trip or playing golf or getting my nails done? You're not just avoiding conflict; you're actually building a life where fun and whimsy doesn't even make the list. After the break, I'm going to dive into this topic even more.

[Interview]

[00:26:59] Ramit: One of the gifts that I can give people is a different view on their money, and one of the things that I often hear from people who are very sophisticated with their numbers is that they often live in the future. This is typical of optimizers. I know because I am one. Optimizers see today's money as how much it could compound into in 20, 30, 40 years. They're intuitively attuned to that.

[00:27:28] But the problem is they can become unbearably cheap and unbearably future focused, meaning they often can't enjoy the present. Now, I'm not saying you should go today, and if you want to get microneedling-- I don't know. We have to look at the numbers still. But I am saying, your numbers look pretty good to me. Let's continue moving along. Savings are at zero. You have about 35,000 in savings, which is about four and a half months of fixed costs. What's up with that?

[00:28:00] Courtney: He's not going to lose his job tomorrow, so we felt comfortable with that much money in savings

[00:28:04] Ramit: Got it.

[00:28:05] Courtney: So we'd rather let it grow in investments.

[00:28:07] Ramit: Okay. Your go free spending is 23%, which is nice. 20 to 35% is what I typically recommend. For you, that's a relatively high number. $3,616 a month. And would you say that in general you spend that every month?

[00:28:22] Courtney: Not all of it.

[00:28:23] Ray: No.

[00:28:23] Ramit: Okay. What kind of stuff do you spend your guilt free spending on?

[00:28:26] Ray: We do like to eat out when we can.

[00:28:28] Courtney: I like to go thrifting or just going out with friends on a weekend. I guess the way I think about it is all of our money is allotted where it's supposed to go. And so whatever is left, we just spend how we want.

[00:28:41] Ray: Yeah.

[00:28:41] Ramit: Yeah, that's the way I see it as well. Make sure that you're paying yourself first. Your money's going where it needs to go. And whatever's left over, enjoy it guilt-free. Your numbers look pretty good to me. It's very impressive what you've accomplished on one income, three kids, moving around a lot, living in a high cost of living area, having a pension that's going to pay 50% and possibly more. This is really, really impressive. And if by the age of 40 or 41, if you want to get microneedling, I am 100% sure we can figure out how to make that happen. How does that sound?

[00:29:19] Courtney: It sounds great.

[00:29:21] Ramit: I think the real crux of it is, what do you actually want in your Rich Life?

[00:29:26] Courtney: We just have never really pegged down what it is.

[00:29:28] Ramit: Have y'all ever talked about what is our Rich Life?

[00:29:31] Courtney: We have. For me, I have your journal right there, the couple's journal.

[00:29:35] Ramit: Hold on. Go get it. Let's take a look for a second.

[00:29:37] Courtney: I don't even know if I have to get out of my seat, Betsy. Look at that. Look at this. I even have a pencil in it.

[00:29:45] Ramit: Oh, I love that. Okay. First of all, hold that cover up to everyone. Listen up all you, optimizers, who can't dream worth a damn. Get this journal right now. This is the same one I use on my Netflix show and go through it. It's no numbers. Do it with yourself. Do it with your partner. Now just flip it open. Show us. Is there any writing in there? No, there's not.

[00:30:04] Courtney: There's a pencil.

[00:30:04] Ramit: The optimizer didn't get to the writing part. The optimizer just bought it. Didn't go through it. Okay, that's fine.

[00:30:11] Courtney: Oh no, I did. I did. I did. I wrote it.

[00:30:13] Ramit: Okay, tell us.

[00:30:14] Courtney: In your Rich Life, how would you travel differently? Business class.

[00:30:17] Ramit: Ooh.

[00:30:18] Ray: That's true. You say that all the time.

[00:30:20] Ramit: Give me some more. What else you got in there?

[00:30:21] Courtney: That's it, Ramit.

[00:30:23] Ramit: The whole journal, you wrote one answer?

[00:30:25] Courtney: He wasn't home last year, and I didn't want to do it by myself. I wanted to do it together.

[00:30:30] Ramit: That's sweet.

[Narration]

[00:30:32] Ramit: What a revealing moment. When I asked Courtney and Ray about their Rich Life, it went silent. Because they've been asking a totally different question this whole time. Can we retire? That is the question they have optimized their lives for it. Safe. It's practical. But for so many people who build their entire lives around that boring question, it doesn't actually provide insight into meaning.

[00:31:01] Can we retire? That's a good question. It's valuable. It involves a lot of math. It involves values and expenses and savings rates, all that. It's a good question, but it's not the question. I'm not here to retire. I'm here to live a Rich Life. And that is what I want for Courtney and Ray.

[00:31:20] That's actually exactly why I love role playing. Because it takes people out of this intellectual space. They think they need more data. Oh, we need more information. Well, I'm not sure if this worked. No, you don't need another spreadsheet or another calculator. You don't need somebody like me coming and telling you if you can retire.

[00:31:41] What you really need to do is start by asking a much more important question. What do we want? If we assume for the moment that we probably have all the information we need, if we assume that, hey, if there's a math thing we don't know, we can probably figure that out, then you realize you don't need a magic number.

[00:32:02] What you need is to ask and answer the question, "What do we want?". This is one of the most important questions in life. Do you know? They could answer that question today. And after we finish with their numbers, that's exactly what I'm going to help them do.

[Interview]

[00:32:21] Ramit: I just want to put a little bow on the numbers from what I see in the CSP. And then if you're cool with it, I'd like to go through a little exercise with you to try to help you figure out what your Rich Life may be, because I think that will help you make some decisions about your future.

[00:32:36] Courtney: I love that.

[00:32:36] Ray: I love that.

[00:32:37] Ramit: All right. So we pull up your CSP. We see that you have almost $600,000, age 40. I'm almost certain it's probably invested in low-cost index funds and it's compounding, etc. Your fixed costs are at 57%. 57% fixed costs means your fixed costs are well within parameters, especially considering you have grad school in there. Great. How long is grad school going on for Courtney?

[00:33:05] Courtney: So about two and a half more years.

[00:33:07] Ramit: Okay, great. And then do you know what your income will be once you graduate and start earning?

[00:33:12] Courtney: Maybe around 50k. If I was working full-time, I could probably make a lot more than that, but my priority will always be to be able to be home with our kids but also have this fulfillment of my own career.

[00:33:22] Ramit: I love it. Okay. Back to the CSP. Let's just say you're making 4,000 a month gross. Let's just say for easy math, 3,200 net. I'm plugging it in right here. Can we watch this? Oh my God. Look at this. What's that number that your fixed cost just went to?

[00:33:39] Ray: 47.

[00:33:40] Ramit: 47%. That's really low. Amazing. And we got to take off your grad school here.

[00:33:45] Ray: Yes.

[00:33:45] Ramit: Are we? We're down to 40%. Come on. That's very impressive. What do you take away from that, Courtney?

[00:33:52] Courtney: That would give us the ability to spend a lot more money to buy a house.

[00:33:56] Ramit: Yeah, that's true. You would have thousands of extra dollars per month if you wanted to buy a house.

[00:34:02] Courtney: Yeah.

[00:34:02] Ramit: Okay. So right there, we're assuming that Ray is earning the same income. All that stuff we're holding constant just for this hypothetical. But we're seeing, wow, a second income at $50,000 a year can be incredibly powerful.

[00:34:16] Courtney: It's just enough to really tip the scales and give us a lot more flexibility to have business class or to buy the house in the expensive area that we want to do. And it wouldn't feel constrained. I don't like feeling constrained or that there's not enough money. I don't want to be house poor.

[00:34:32] Ramit: Are you sure you don't like feeling constrained? I think you love feeling constrained. I think you love it. What are you talking about? I don't love feeling-- you literally love it. You love every part of this spreadsheet. You love the rules, the ability to have to make it work within a certain number. What are you talking about you don't love it?

[00:34:50] Courtney: I have anxiety. Weird. And having that control is really comforting for me. There's not a lot we can control all the time in our life.

[00:35:01] Ramit: Yeah.

[00:35:01] Courtney: So when I can control the things that I can control, I control them.

[00:35:06] Ramit: Honestly, I'm with you. I totally get it. When I'm doing things that are out of my control, like when I was shooting my show or I'm on tour, it makes me understand all these celebrities who have these writers of all the stuff they need in their green room.

[00:35:27] It's not just that they're divas; it's that they are completely out of control on these national tours, and they need to know that when they walk in, they're going to have the type of sparkling water that they want because it's that one thing that they can control.

[Narration]

[00:35:40] Ramit: I get why Courtney wants control. When you don't get to decide where you live or how long you'll stay there, you start clinging to the things you can control, like the numbers. I have personal experience with this. When I was traveling, shooting my show for Netflix, I had very little control over my schedule.

[00:35:58] What did I have control over? Which deodorant I brought, which soap I use, which shampoo I brought with me. Those were the things that I could control, the things I brought with me. That's it. That's why I didn't use the hotel soaps, because I don't know if it's going to make my skin dry. And it seems like this trivial little example, but it's true for all of us.

[00:36:18] In times where we don't have control, we will often narrow our world down to a tiny soap so we can feel like we at least have something that we're in charge of. But here's the catch. If you are focused on managing every detail, you often don't leave room to ask the bigger questions, which we still haven't answered.

[00:36:43] What do we actually want? The answer is probably not more and more control. Maybe the answer is actually letting go or just zooming out for a minute, just enough to dream a little bigger.

[00:36:57] So the question they came in with today was, can we retire? Well, let's take a look at their retirement numbers and let's finally answer that question.

[Interview]

[00:37:07] Ramit: Do you guys know how much money you're going to have when you retire?

[00:37:09] Courtney: No. And here's my question for you. We haven't even talked about his pension. Do we need to save like we are?

[00:37:16] Ramit: Isn't this the question?

[00:37:18] Ray: Yeah.

[00:37:19] Ramit: How come when I talk to couples, especially where one is really knowledgeable about the numbers, like they know their numbers, how come they never run the one number that actually matters, which is how much are we going to have if we continue on this path? Courtney, I'm asking you because this is you.

[00:37:38] Courtney: I did it.

[00:37:40] Ramit: You ran the number?

[00:37:41] Courtney: Uh-huh.

[00:37:41] Ramit: No, I don't believe you. I just asked you do you know the number?

[00:37:45] Courtney: Well, I don't know if it was accurate because I don't know if I used the right calculator

[00:37:49] Ramit: Okay. Tell me your number. Let's find out about this calculation. What number do you have?

[00:37:53] Courtney: It was either 4.7 or 7.4. I'm not sure.

[00:38:01] Ramit: Hey, listen, I'm all for approximate numbers, but that's a big deal.

[00:38:04] Courtney: It's approximately between 4 and $8 million.

[00:38:07] Ramit: So the number was 4.7. That's about right based on the numbers you just inputted. And that would assume that you retired at 60, Yeah. which is totally fine. I ran a similar calculation for you all retiring at 65, and I took what you have at $590,000. I assumed you're contributing about $37,000 a year, plus or minus. 24 years at 7%, gives you $5.1 million. That does not include the pension.

[00:38:43] Ray: Oh, wow.

[00:38:44] Courtney: Yeah, that sounds like a lot. It feels like pretend.

[00:38:50] Ramit: What money feels real to you, Courtney? Of all your money, which money feels real to you?

[00:38:55] Courtney: The money that exists today.

[00:38:56] Ramit: What else?

[00:38:58] Courtney: The numbers that we have access to.

[00:39:00] Ramit: The checking account?

[00:39:02] Courtney: Yeah.

[00:39:02] Ray: Mm-hmm.

[00:39:03] Ramit: What else? Does your savings account feel real?

[00:39:05] Courtney: Yeah.

[00:39:06] Ramit: Does your $590,000 in investing feel real?

[00:39:09] Courtney: Mm-hmm.

[00:39:10] Ramit: Oh, all of your money today feels real, but the money tomorrow, the millions does not feel real?

[00:39:17] Courtney: No. We're about to get to our most expensive years with our kids when they're in high school and college. We might not be able to put in as much money. We just don't know.

[00:39:26] Ramit: Mm-hmm.

[00:39:27] Ray: I've never heard that number before, but it feels pretty awesome to me.

[00:39:31] Ramit: Is that for real? You've been carefully saving and investing money for close to 20 years but didn't run how much you're going to have and really interpret that. Is that accurate?

[00:39:45] Courtney: Very accurate.

[00:39:46] Ramit: It's quite interesting, don't you think? What do you think's going on there?

[00:39:49] Courtney: I think we're so used to just living in the present, we don't think about the future that much.

[00:39:53] Ramit: Yes. And even when I ask you-- this is just math. Of course, maybe you won't invest the same amount for a couple of years, but on the other hand, maybe you'll start earning $50,000 a year and actually invest more. Who knows? So we have to pick some variables and hold them constant. But even if you're off by a couple of percentage points, we're talking about $5-plus million dollars, and a pension of a lot of money.

[00:40:18] Courtney: Yeah.

[00:40:19] Ramit: That's a ton of money. And what this really tells me is like, this isn't a math problem. 5 million bucks, you can safely withdraw quite a bit of money from that, plus the pension. You'll have a very nice income, hundreds of thousands. What's more interesting to me is that, because of how you've been relating to your money, it's been like, get to the next contract, short-term thinking. And now you're being asked, hey, in this potential civilian world, what do we want to do? What do I want to use this money for?

[00:40:48] Courtney: Yeah.

[00:40:49] Ramit: And that is a really different skillset than the one that the two of you have quite frankly thrived on.

[00:40:55] Courtney: Mm-hmm.

[00:40:56] Ramit: What do you take away from that?

[00:40:58] Ray: I think change is scary.

[00:40:59] Ramit: Do you know how much you're going to get in your pension right now?

[00:41:03] Courtney: If he got out the next chance that he can, this is just base pay. This is without VA stuff, which is probably another, let's say, 30,000 a year maybe. So he'd be at 78,000 a year.

[00:41:18] Ramit: Okay. Up to potentially, let's just say 110,000 a year. Fine.

[00:41:23] Courtney: And then if he got out in--

[00:41:26] Ray: Six years.

[00:41:27] Courtney: Six years, it would be about 110,000 plus that.140.

[00:41:34] Ramit: Guys, this is really important. It's one of the main factors in this decision. You have to carefully calculate how much are you going to have, and also do you need it. First of all, in any case, it's a lot of money. 78 to 110 if you retire in a couple years, or up to 140, that's also a ton of money.

[00:41:56] Not to mention your investments. Not to mention that, Ray, you're probably going to get a job, and then Courtney, you're going to get a job as well. We got money coming in from lots of places. The question is, how much do we need? Do we need 5 million? Do we need 7 million? Do we need 10 million?

[00:42:12] Courtney: We don't know.

[00:42:13] Ramit: What would it take for you to know?

[00:42:15] Ray: Man, I think just envisioning what we want from the rest of our lives. But we want to buy that house. We want to be able to travel business class, and it's putting a number on that.

[00:42:25] Courtney: I grew up in the same home until we got married. I had one house my whole life, and I can look back and picture my bedroom. Our girls can't do that because they've had so many. And I just have this sadness for them that they haven't had stability and settled in one place. And as they get older, I want that for them.

[00:42:45] Ramit: If you asked your kids that, picture your bedroom, and they said, which one, just as you described it, what would their tone be when they said, which one?

[00:42:56] Courtney: They might all have a different tone.

[00:42:59] Ray: Yeah, I agree. I think the oldest one would be negative, but the other two might be more positive.

[00:43:04] Courtney: As you get older, your friends are more important to you. You don't want to leave those things.

[00:43:08] Ramit: My parents, we moved around a bit, not as much as you, but when I look back, I'm thankful that we had the chance to move because I was exposed to different types of people, different things that I never would've had in one place. I'm also thankful that I got to go in the same friend group pretty much from like seventh grade on until we graduated. So I'm thankful for that as well.

[00:43:34] I had to say one thing that my wife and I talk about a lot is how thankful we are there are parents pushed us to see the world. We're thankful that we had that, our parents encouraging us to, even though it would've been very normal for them to be like, "Stay close." We've seen things. We've learned things. We've tried different foods, seen languages, all this stuff. How do you feel about that when it comes to your kids?

[00:43:56] Ray: I'm super grateful that they've gotten to see a lot of stuff in this country, live at different places. And I think it's made them more resilient. I'm grateful for that. We were high school sweethearts, and we both lived in the same town growing up, so it's pretty different for them. Yeah.

[00:44:11] Courtney: I agree. I think it's very cool that they've gotten to see a lot of things. They've lived in the middle of the Wild Wild West and gone to real rodeos and see real cowboys. And we've driven across the country, what, four times I think.

[00:44:22] Ray: At least.

[00:44:23] Courtney: So I am grateful for those things, but I think there is also something to wanting to feel settled and wanting to have a place to call your own.

[00:44:33] Ramit: Hmm.

[00:44:33] Courtney: And I think, you do get to that point where you're like, "All right, we've done this, and maybe we don't want to do it anymore."

[00:44:41] Ramit: Should we retire from the military? Is that what you mean?

[00:44:45] Courtney: Yeah. I think most people don't have a cut, like, I'm done. There's always a little trepidation there.

[00:44:50] Ramit: That makes perfect sense to me. It's a whole institution that you know. You've done well. You know how to win at that game. But the non-military world can be very intimidating for somebody who's not done it for a while. That's why I think sometimes it's easy to blame money. Money's a very convenient enemy.

[00:45:09] Money is always something that we can worry about. Do we have enough? Did we make the right decisions? Money doesn't really talk back to us. It simply fills our minds with whatever anxieties we already have, and we rarely get the chance to have a third party look at it and give us some feedback. What if I told you that financially speaking, you can retire?

[00:45:30] Ray: It's still hard to believe, but it's cool.

[00:45:33] Courtney: I think we're still having fun.

[00:45:35] Ray: Yeah.

[00:45:36] Courtney: And we're not sure if that's something we want to give up yet. Maybe we'll know more after this next tour.

[00:45:41] Ramit: Yeah.

[00:45:42] Courtney: Like today definitely we could not make that decision, I don't think.

[00:45:45] Ray: And I'd say there is a variable in there that we haven't talked about, is that hopefully, if we do stay in for the six years instead of the three, everything plays out the way it is, we will end up back here in the place that we want to eventually retire. And it's a good military job. And it's still that factor of we are still having fun. But it's starting to weigh on us, and we do have to start looking at the future of when this does happen inevitably.

[00:46:09] Ramit: Can I ask you guys a question? What do you want? Because what we just did was go in a complete circle. I was like, "You can retire. You're going to be able to safely withdraw like roughly $200,000 a year off of 5 million bucks. You're going to have 78 to $110,000. That's $300,000." That's basically more than you make right now.

[00:46:29] And that doesn't even account for the next two years of you investing, which will pump things up even more. You're going to have quite a bit of money. But what you did was you went in a complete circle. So you basically kicked the can down the road.

[00:46:40] Now, if that's what you want to do, that's fine. Nobody's forcing you to make a decision today. But I figure you guys came on the show for a reason. Maybe a little gentle nudge. Maybe get out of the spinning and start to pick a few key variables that really matter. Do you think it's money?

[00:46:54] Ray: I'd say, I think we've proven it's not money.

[00:46:56] Courtney: I also think we haven't defined our Rich Life.

[00:46:59] Ramit: Should we do it?

[00:47:00] Courtney: Yeah. Because it's more than buying a house and being able to fly business class.

[00:47:03] Ramit: Yeah. I actually am not even sure if I believe those two things. I'll just tell you why I say that. You've known each other since you were in high school, a long time ago. And you've been married for a long time. When was the last time you flew business class?

[00:47:17] Courtney: Never.

[00:47:17] Ray: 0 times.

[00:47:19] Ramit: Yes. When somebody has a Rich Life, it often leaves clues. For example, when I was seven years old, my whole family has this story about me throwing a fit in a store because I couldn't get a Ralph Lauren shirt. I was young. My mom wanted to kill me. She was mortified.

[00:47:38] I had a taste for fine things, even back then. Your Rich Life leaves clues, hotels. A lot of people started going to concerts when they were really young, or listening to music. So when you tell me, I want to fly business class, I go, "That sounds amazing." And then when you tell me, "I've never done it," I go, "Hmm, do you really?" Because I feel like maybe you would've found a way to do it once. So tell me what's going on, Courtney?

[00:48:05] Courtney: You did bring up one thing that I know is my Rich Life, and I know concerts for me are one. Nothing makes me more excited than like being in live music. I live music. That is where I always just feel so happy. And so being able to go to a concert and get really good seats would definitely be part of my Rich Life.

[00:48:23] Ramit: Can we go back and forth? I love the concerts with great seats. That's one. Just give me some cool things that come to mind. Ray, what about you?

[00:48:29] Ray: My girls love soccer, so we went to a professional female soccer, and we paid for the founder's club.

[00:48:38] Ramit: Amazing. Love that. Courtney, back to you.

[00:48:42] Courtney: I love a good massage, but I also love facials. I'd like to try other things.

[00:48:47] Ramit: Try new stuff with self-care. I like that.

[00:48:50] Courtney: I don't know, it sounds so materialistic.

[00:48:54] Ramit: What's the problem with that? I like nice material things. Does it mean I'm a shallow, bad person?

[00:48:59] Courtney: No.

[00:49:00] Ramit: Where do you think this idea came from, this almost need to apologize for wanting to try some self-care stuff?

[00:49:09] Courtney: I am very debt adverse.

[00:49:12] Ramit: Okay. You have zero debt, so good job.

[00:49:14] Courtney: That's intentional. I did grow up with my parents. I think the biggest takeaway is if you don't have the money for it, you don't buy it.

[00:49:20] Ramit: Okay.

[00:49:21] Courtney: And I feel like going to spend $750 in a skincare treatment is very extravagant, and that takes away from money that other people could use or that I could use on our kids or whatever else we would need it for.

[00:49:36] Ramit: Okay. Did you grow up with two parents?

[00:49:37] Courtney: Mm-hmm.

[00:49:38] Ramit: Okay. Did they talk about saving?

[00:49:41] Courtney: Here we go. So I think the thing is, Ray and I had to build everything ourselves, and we want to build so that we can help our kids out financially when they're older too. Because that's something that we will have, I don't think, for the most part. And so when we're talking about building all this money, it's not just for us. It's also for the kids.

[00:50:03] Ramit: Yeah, I love that. If we take that to its logical extreme though, why don't you just never get any self-care? Why don't you never fly on business class? Because all of that money can and should go to your kids. And in fact, isn't that almost exactly what has happened?

[00:50:20] Ray: It's right there on the CSP. We're trying to maximize everything we can to build our empire, as they say, because it was never provided for us.

[00:50:30] Courtney: And again, neither of our parents ever talk to us about saving or investing or what you are supposed to do.

[00:50:37] Ramit: Yeah.

[00:50:37] Courtney: So to us it's just like, we'll just save and invest as much as you can because that seems to be the right thing to do.

[00:50:43] Ramit: Okay. And then?

[00:50:45] Courtney: I don't know. That's why we're here.

[00:50:48] Ramit: Love the honesty. I don't know. At least we got this far. We got 600k, and we got more on the way. Whatever. We'll deal with that later.

[00:50:57] Ray: Yeah.

[00:50:58] Courtney: Mm-hmm.

[00:50:59] Ramit: How old is your oldest?

[00:51:00] Courtney: 12.

[00:51:01] Ramit: Okay. So let's fast forward. She's 30 and I ask her, "What'd you learn about money from your parents?" What's she going to tell me?

[00:51:07] Courtney: I've actually asked her what she thinks about our finances. She said, "I think you have more money than most people." But she also knows that if something's extravagantly priced, she knows I likely won't buy it. I think she knows that we spend appropriately, and I've watched her with her own money, be like, all right, that's really expensive. Maybe I shouldn't get it.

[00:51:28] Ramit: It's great. You must be very proud.

[00:51:30] Ray: I think she does a great job with her money. She has her own little 12-year-old debit card, and it's great.

[00:51:35] Ramit: Congratulations. That's no accident.

[00:51:37] Courtney: Yeah. I think we've modeled for her needs versus wants and like, hey, if you want that, then you might have to sacrifice somewhere else.

[00:51:44] Ramit: What are the wants that you model as her parents?

[00:51:48] Ray: My bike.

[00:51:50] Ramit: Great example. Love that. Courtney, how about you?

[00:51:52] Courtney: If I go shopping, like, "Oh, look what I bought." And I'll show them. And like I said, I like to go thrift shopping, so I'll show them what I bought or whatever.

[00:51:59] Ramit: I like that. Can I ask you guys, when you both talk about the bike or a thrift purchase you made, what do you say after you show them? Is there some meaning that you teach them behind it? Or why did I purchase this thing? Do you maybe tell them how little you spent on it?

[00:52:15] Ray: We'll very rarely buy something new or not on sale. And it's always, "Hey, this is a 7,000-dollar bike, but I bought it off Marketplace for 2,500."

[00:52:24] Ramit: Okay. Courtney, you?

[00:52:26] Courtney: Yeah, because I feel like the point of thrifting is to get the best deal. So I get really excited about that. But if I buy something new, I'll never tell them how much it costs.

[00:52:34] Ramit: Right. Okay. One thing we all have in common is we lie to the people that we love. I don't tell my parents how much my freaking clothes cost. You think I'm crazy? I'm not trying to tell my mom how much this Cashmere sweater from Italy costs. No, thank you. So there is love in lying. However, what message do you think your kids are picking up about money right now?

[00:52:55] Ray: That everything is a want.

[00:52:57] Courtney: I don't know.

[00:52:58] Ramit: I just don't think they are seeing a refined set of lessons around spending on the things you love. Because even when both of you spend money on the things you love, you highlight how little you paid for it. In other words, if you don't get a deal, you're not doing a good job.

[00:53:14] That's the same thing where you accidentally tripped and said something really honest. You said spending is wasting. I don't think so. I'm not stupid. My eyes are wide open. I know what I'm doing. When I spend money on something, whether it's cheap or expensive, I know what I'm doing. I'm an educated consumer. Nobody's tricking me into spending X or Y dollars on a flight or this or that. You guys trust yourself?

[00:53:35] Courtney: I do. I think that also goes back to our Rich Life because now that you just pointed that out, if we go out to eat, I don't care what it costs. And if Ray and I are going to go out on a date night, I'm going to get what I want, and I don't feel guilty about that. But I think that's because it's important to me. But other things, I don't care. It doesn't have to be an all or nothing thing.

[00:53:58] Ramit: Right. Good lesson right there. Do you think that the all or nothing example plays in different parts of your financial life?

[00:54:04] Ray: Absolutely.

[00:54:06] Courtney: I can tell you right now, if we didn't hit, these numbers automatically come out of our account for our investing, and if we missed that for a month, I think that would trip me up. I think I would ruminate like, oh my gosh, we didn't hit that savings goal that month, and there's really no reason for it.

[00:54:20] Ramit: Yeah, that's--

[00:54:21] Courtney: But I think it would mess with my head.

[00:54:22] Ramit: You are me.

[00:54:24] Courtney: Why? Nice to meet you.

[00:54:25] Ramit: Yeah. The optimizer lives by a series of rules, and those rules can be very adaptive. They can help them operate through chaos, through lack of control. However, they can become a victim of their own rules. They often let the tail wag the dog. Like you, when I set a rule for myself, nothing is going to change it. And for the most part, that's good, but sometimes it can become very maladaptive.

[00:54:51] Courtney: Yeah.

[00:54:51] Ramit: You seeing any of yourself in this, Courtney?

[00:54:54] Courtney: Yeah, for sure. I actually wrote down victim of our own rule. I've never thought about that before, but I agree.

[00:55:01] Ramit: Should we create some new rules maybe?

[00:55:03] Courtney: Do it.

[00:55:04] Ramit: Okay. I'd love for the two of you to really almost form this web where the two of you are starting to create a new way of talking about money.

[00:55:14] Courtney: I guess I feel like if we keep doing what we're doing now, then we will be able to do that later. But we should also be able to do it now. What do you think about if we didn't meet certain savings goals for months to be able to do a trip in a way that we haven't done before?

[00:55:28] Ray: I don't think it's the end of the world if you don't max out a TSP or max out on an IRA. Investing in us and our family is more important, so I think that's a good idea.

[00:55:38] Courtney: Yeah.

[00:55:38] Ramit: What would you do with the money? Where would you go?

[00:55:41] Courtney: I really want to go to Japan. I'd like to start in Tokyo, and I really want to do Kyoto because everyone's talked about that. One of our best friends lives in Japan. So essentially, I just want her to plan our trip around the country and just experience that culture. Because our kids have seen most of the US, but we haven't done that much internationally. And I think it's important for them.

[00:56:00] Ramit: All five of you, would you all go?

[00:56:02] Courtney: If it was a long trip like that, yeah. But I would also love to do smaller, shorter trips, just the two of us.

[00:56:09] Ramit: Okay. And how long would a trip like this be?

[00:56:12] Courtney: If we're going to Japan, probably 10 days.

[00:56:15] Ramit: Great. Would it be hot or cold?

[00:56:17] Courtney: I think early fall.

[00:56:19] Ramit: Ooh, very nice. And you've mentioned food a lot. What food are you eating over there?

[00:56:24] Courtney: So I would love to do some really high-end Omakase menus. But I would also love to just experience a Japanese Seven-Eleven. So I want to do a combination of really high-end but also street food to get the feel of the place.

[00:56:35] Ramit: I love that.

[00:56:35] Courtney: A mix.

[00:56:36] Ramit: Love it. Anything else that would make it magical for you?

[00:56:39] Courtney: I'd like to go to a Japanese baseball game. All of our friends that have lived there said it's one of those things that you need to experience.

[00:56:45] Ray: Sumo wrestling. I want to do sumo wrestling.

[00:56:48] Courtney: Okay.

[00:56:48] Ramit: I love it. Baseball, sumo. Okay, let me get you in on this now, Ray.

[00:56:52] Ray: It's funny. I've never actually been there in 20 years in the military, but I would love to go there. If I can add to the vision, at least it would be winter and we would throw in seven days of skiing in there as well.

[00:57:05] Ramit: Wow. I love your vision. That was really vivid. Ray, was there any other experience that you wanted to add as part of your Rich Life?

[00:57:12] Ray: I want to buy a house in Tahoe. Absolutely, love that place. And a vacation house there.

[00:57:18] Ramit: Okay. How much would that cost?

[00:57:20] Ray: For something that we'd want, I'd say 1.2 million.

[00:57:24] Ramit: Can I ask you guys a question? Ray, specifically, would you rather own a primary residence in the area that you are currently in, or would you rather have a Tahoe vacation home?

[00:57:34] Ray: Probably renting here and then owning someone something there.

[00:57:37] Ramit: Courtney, what do you think about that?

[00:57:39] Courtney: I'm not on board.

[00:57:41] Ramit: So you would rather own a house where you currently live in that area and then rent a Tahoe house.

[00:57:47] Courtney: Yes.

[00:57:48] Ramit: Okay. Do you have a sense of how much the house you might buy in this area might cost?

[00:57:53] Courtney: Anywhere from 1.2 to 1.5.

[00:57:55] Ramit: Could you afford it now?

[00:57:57] Courtney: No.

[00:57:58] Ramit: It's something I would like the two of you to really explore. As you know, in the area, there's probably a lot of people who rent as there are in many high cost of living areas. In fact, there are lots of people who rent and their families grow up there. Or they move one street over to a different house.

[00:58:14] Now, I know you've been through a lot of instability. All I would ask is that you really entertain what the Rich Life is to you. If your Rich Life is owning a house in that area, you could probably do it. You might not be able to travel the way you envision. You might not be able to eat out the way you envision.

[00:58:32] The risk I see with the two of you is that you are so goal-oriented, it's almost like the two of you have the calm within the storm. And you can choose now to step out of the storm, meaning you can retire from the military, if you want. If so, you have infinite choices as to what to do.

[00:58:49] I think it would be very easy for you two to go the rest of your lives saving and investing money for the future and for you to both basically selflessly say, "Okay, we don't need it for ourselves. This is actually for our kids." But I wonder, when do you get to live your Rich Life? Because you're 40, 41. It doesn't happen unless you make it happen. What do you guys want to do?

[00:59:09] Ray: I want to start looking at our Rich Life more intentionally, whether that's putting money away towards it or setting up a separate savings for it. Or if it's just not worrying so much about what the investments and all those goals are, maybe missing that once a month and doing something we want to do.

[00:59:27] Ramit: Good. Courtney, what about you?

[00:59:28] Courtney: I think when it comes down to it, is we really need to define what our Rich Life is and what our priorities are and then adjust according to that.

[00:59:35] Ramit: We've gone through a lot of it. Like a concert, how would you make it possible, so you guarantee that you are able to see an awesome concert sometime this year?

[00:59:43] Courtney: Choose who I want to see. See where they're playing and buy the ticket. Pretty simple, right?

[00:59:50] Ramit: Any reservation to that?

[00:59:51] Courtney: No.

[00:59:52] Ramit: How much is it going to cost?

[00:59:53] Courtney: 500 to $800.

[00:59:55] Ramit: Okay, five. Let's say 600 bucks.

[00:59:58] Courtney: Mm-hmm.

[00:59:58] Ramit: And how many people would go?

[00:59:59] Courtney: Ray probably wouldn't want to go with me though I would probably be just buying one ticket and see if someone wanted to come. If not, I'd go by myself. I don't care.

[01:00:08] Ramit: Okay. [Bleep]. I wish I had that courage. That's amazing. Okay, so 600 bucks. Great. I think you could probably just do that with whatever's in your checking account because you got the money. Can we play one level up?

[01:00:20] Courtney: I would like to go on a weekend away, just Ray and I.

[01:00:25] Ramit: Where are you going?

[01:00:25] Courtney: If we're local, we'd be going to very cute town by ourselves that has a really nice inn.

[01:00:30] Ramit: Ballpark it for me. How much is it going to cost?

[01:00:31] Courtney: All in, it would probably be two grand.

[01:00:33] Ramit: Okay.

[01:00:34] Courtney: If we're driving.

[01:00:35] Ramit: Yeah, that's a lot of money. So where would that come from?

[01:00:38] Courtney: The checking account.

[Narration]

[01:00:39] Ramit: Did you catch that moment? Courtney wants to take a weekend away, just her and Ray, and she's pulling from their checking account to make it work. That tells me everything. They're doing a great job saving and investing, but they haven't built a system that actually lets them enjoy it.

[01:00:58] They don't have a travel bucket, a sub-savings account. They don't have money intentionally set aside for fun. It might seem small, but it's the reason they've been stuck asking this esoteric, insular question of can we retire instead of what do we want? Listen, as I challenge them to finally change this dynamic.

[Interview]

[01:01:20] Ramit: There's several reasons you have been not able to move past saving and investing. At the deepest level it is the way that you both conceptualize money, especially, Courtney, you see it like spending is wasting. Ray, you're happy to support what Courtney does, but neither of you have taken the first step in the dance of saying, "Hey, we have to start living our Rich Life today because we're 40 and 41."

[01:01:45] And that Rich Life could be as simple as an extra iPhone charger, as self-care oriented as eyebrow thing, as glamorous as a family trip to Japan. It could be all or any of the above. I also think that you don't do these things in part for structural reasons. Because I even hear you talking about things like, we'll take it out of our checking account, which works when it's 3 or 500 bucks, not when it's $2,000 or $5,000.

[01:02:10] Second, the way you describe it is, "Oh, we cannot contribute to our retirement one month. What we might do instead is calculate how much we're going to have. We're going to have 5 million. What's our safe withdrawal rate off of that, plus the pension, plus the side income? How much do we need?" And then we go, "Hey, maybe we can actually dial back by $500 a month."

[01:02:31] Now where's that money flowing? First, we're going to cut back, and where's that money going to go? It's going to go right down here to our new savings account called Japan Trip or Concert and Soccer Game fund. That's where it would go. So it's not about these one-off transactional changes. Let's just pull the money out of here. No, it's actually making a bigger plan and then setting your money up to support it. What do you guys think about that?

[01:02:54] Courtney: No, I agree. I think we just blindly maxed everything out every month because that's just what we're supposed to do, but we weren't intentional with what we want to do with it today. I'm a victim of my own rules. I set these rules that we have to follow for money because I think it's the right thing to do, and I just never thought to even veer from them. And maybe it isn't the best thing or the most sophisticated thing to do to benefit our family.

[01:03:15] Ramit: Yeah, and it's time. It's time because by exercising that muscle now, you're going to start to realize all these things that you thought happened someday in the future, that someday is now, and you can start doing them. You can even start tasting some of the things that you've dreamed about, trying them once. Being like, let me try business class once on an affordable flight.

[01:03:37] And then if it becomes something that is so important to you, then you all go back and say, "Hey, I really like that. Can we tweak our numbers so that we can do that once a year?"

[01:03:48] Ray, I want to talk about your role because you had said, if I retire in roughly three years, I'm not sure what I would do. I help a lot of people get jobs, especially people who are trying to make a complete transition. Let me just walk you through something really quick. This is an exercise from our Dream Job program. Do you have a sense of what your perfect role would be?

[01:04:11] Ray: Yeah, it would be owner or a project or some kind of manager or in a leadership role.

[01:04:17] Ramit: Okay. And leadership specifically around operations or what?

[01:04:21] Ray: Yes, operations.

[01:04:23] Ramit: Okay, I like it. What are the job titles in that role?

[01:04:26] Ray: Project manager. Some kind of operations officer.

[01:04:30] Ramit: I'd encourage you to go on LinkedIn, and I would start looking at, for example, project manager. And then you start to look at what is their roles, what is their level of experience. If they've been doing it for 10, 15 years, we're probably talking about the right folks. If it's three years, they're too junior for you.

[01:04:47] And then as you go through them, you're looking at what they used to be or what they are now. Is it project manager, senior project manager? Are there other titles where you start to look at the job description and you go, "Wait a minute, I could do all those things." Go for the most senior level you can. Suddenly you're going to have two or three job titles where you're like, "I could do that." Second question for you, do you have a sense of a perfect company, one that you might want to work at?

[01:05:15] Ray: Yeah. I think we've looked at a company like Patagonia.

[01:05:19] Ramit: Oh, okay. Patagonia, great company. And do you have a sense of what the role at Patagonia might be that you might seek out?

[01:05:26] Ray: No, I don't.

[01:05:28] Ramit: Okay, fair enough. This actually is really helpful. So if I'm you, I'm going on LinkedIn, I'm looking at Patagonia. You can find all the people who work there. I'm looking at anybody who's a project manager. Or similar, I'm looking at what their job history has been, what other companies have they worked at? Because, oh, I didn't think about working at REI or whatever other company. And I'm even reaching out to do informational interviews with people who used to work there.

[01:05:53] So I might send them an email that goes something like this. I might say, "Hi. My name is Ray. I'm currently working in the Navy. As I'm starting to think about making a transition out, honestly, they don't teach us how to do this, and I'm trying to learn some of the roles in the civilian world. I would love to get 10 minutes of your time to understand your role.

[01:06:14] "I've seen your background. It looks incredibly fascinating to me. I promise I'll respect your time, and we can do it through Zoom. It would be an honor to be able to talk to you." People really want to help. Especially somebody who's in the military thinking about making transition out, you're going to get 90% response rate to that message.

[01:06:30] I'll give you access to the program, and you can start to discover, hey, do I like this company? What role would be good for me? And now you can really start to get excited about knowing these are the exact jobs that I'm going to pursue. And when the time comes, you're good to go. In fact, you may even have people at those companies who will shepherd your resume through the front door. How does that sound?

[01:06:53] Ray: Fantastic.

[01:06:54] Ramit: Okay. Quick numbers that I want to summarize for you all. Ray, if you retire in 2.5 years, you will have roughly $78,000 a year in pension, possibly more. Courtney, you'll have roughly $50,000 of income. Ray, what do you think you can earn in a civilian world?

[01:07:12] Ray: 250.

[01:07:13] Ramit: Damn. What do you guys think about that?

[01:07:16] Courtney: I feel like those are make believe numbers.

[01:07:17] Ramit: All right. Let's drop it by 10%. Make it 225, 225 plus 50k of Courtney income plus 78k of pension. Let's just call it 80.

[01:07:26] Courtney: That's 350. We could buy a house with that.

[01:07:28] Ray: Yeah, that's definitely doable.

[01:07:29] Ramit: [Bleep] yeah, you could literally buy a house roughly 1 million. And certainly, with the money that you're saving and investing, you could put some down.

[01:07:36] Courtney: Be comfortable.

[01:07:38] Ramit: What does it make you feel when you hear these numbers, which I think are all quite reasonable?

[01:07:42] Courtney: Hopeful.

[01:07:43] Ray: Yeah. It makes me feel like we can get to the place that we want to be.

[01:07:47] Courtney: And it feels like it's in a short time if Ray retires in, what do we say, five or six years even and had that bigger pension. And then with that income and my income, we're at almost 400k, and that's in six years from now.

[01:08:00] Ramit: Don't forget about the investments.

[01:08:01] Courtney: Plus the investment.

[01:08:03] Ramit: The real thing I want you to take away from this is how much is enough? I don't think saving and investing blindly is the right answer here. I think you've done a really good job. I think you're going to keep doing a great job. Even if Ray doesn't earn 225 but rather earns 175, you're still going to have more than enough. So the question is, what do we actually want?

[Narration]

[01:08:24] Ramit: It can be humbling to realize you've been going through life asking a question that is not the right question. Maybe it's incomplete. Maybe it's the wrong question overall. And a lot of times we get frustrated with ourselves. How am I supposed to know what to ask? Or I know I need to be better. I need to give up control a little bit.

[01:08:42] Okay, yes, we probably need to learn how to ask better questions. Yes. But we also need to change the systems in our life, the infrastructure. For example, if you want to take more couple's trips, you probably need to have a sub-savings account called couples trips, and it probably needs to have a few hundred or a few thousand dollars in it. So it's not just about being better and trying harder. If we want to create our Rich Life, we actually need the systems to support that.

[01:09:14] I'm really glad I had the opportunity to talk to Courtney and Ray at such a critical time in their lives. And they've done the hard part. They built a strong financial foundation. They made it work on one income, and they raised three kids while moving every few years. Now they're facing a totally new chapter, something that all their work and accomplishment might not prepare them for. In fact, if anything, it makes it harder. And that new chapter is starting over in their 40s.

[01:09:46] For Ray, it means walking away from the safety and structure of a 20-year military career. For Courtney, it's rediscovering a career path for the first time since becoming a mom. And until now they've been holding on, in control, rigid. But that control with the rules and the plans and the spreadsheet turns out to be the thing that's holding them back.

[01:10:10] Ramit: Because when you're focused on staying safe and being in control, it's really hard to zoom out, loosen up, and say, what do we actually want? As part of their homework, I asked them to go through my journal together. I'll put a link below in the show notes. This is my no numbers journal, and it helps you do something that Courtney and Ray haven't done in a long time-- dream about what their Rich Life is. I'm excited to see what they come up with. 

[01:10:10] Courtney: Ray and I tend to live on autopilot, so I think my biggest takeaway from the conversation with Ramit is to be intentional. And that's not just with our money. That's with everything that we do in our lives. Instead of going on autopilot through our day, I am trying to make decisions that are intentional, that support what I really care about. And I'm also working on deciding what is important to Ray and I, how we want to utilize our time, our money, our assets, to live the life that we really want.

[01:10:48] Ray: I've learned, through this journey, that we don't have a Rich Life planned out yet. And that's what the homework is all about. And that is what's going to drive the intentionality and what we do with our money. And additionally, setting myself up and really thinking about what life after the military looks like. So I appreciate the Dream Job program that you sent me. I think it's going to be very helpful. So I really appreciate it. I haven't really taken an active look at what my life outside the military will look like, but it's definitely something I need to start doing, and get ahead of that game.