258. “We had $900K. Now we’re $100K in debt”

Ramit Sethi of I Will Teach You To Be Rich talks to Kristina and Erin, a married couple who have been together for 10 years, raising two children in Toronto. They make good money, but they have no system for their finances, which has led to years of avoidance. They've accumulated $106K in debt and have only two weeks of savings. While Erin, the "stable one," has a full-time job, Kristina’s entrepreneurial journey has been marked by wildly inconsistent income, including a $50K loss on NFTs. They both admit they don’t trust each other or themselves with money. Ramit helps them confront their fears, redefine their relationship with money, and finally start working as a team.

In this episode we uncover:

• How Kristina lost $50K in NFTs
• Why Erin struggles with "spending with emotion"
• The cultural component of their Catholic guilt around money
• How their childhood experiences influence their money habits
• Kristina's fear that her income won't last
• The surprising truth about their combined income
• Why they avoid tracking their spending
• Their identity as "coach collectors" who avoid real change
• Ramit's "60-second truth-telling" exercise
• Why they need to be aligned as partners to achieve their goals
• The true cost of credit card debt
• Why their "guilt-free" spending is holding them back
• Ramit's radical advice on cutting fixed costs
• How they can quickly pay off their debt

 

Chapters:

(00:00:00) Introduction

(00:02:40) Feeling stupid about money

(00:05:23) Unspoken financial conversations

(00:08:44) Fear that money won't last

(00:09:25) Lack of trust around money

(00:15:16) Emotional spending and guilt

(00:22:52) The impact of high fixed costs

(00:27:00) "We work too hard to feel like we don’t have anything"

(00:30:45) Why past coaching failed

(00:34:54) Childhood money lessons and scarcity

(00:49:30) Goals for debt and savings

(00:54:30) Ramit's 60-second truth-telling

(00:58:33) Fixing the Conscious Spending Plan

(01:07:07) Aligning on a Rich Life together

(01:17:35) How Kristina and Erin are going to get on the same page

(01:21:40) Why they're afraid to talk about money with their kids

 

This episode is brought to you by:

DeleteMe | Get 20% off all consumer plans when you go to https://joindeleteme.com/ramit and use promo code RAMIT at checkout

Shopify | Sign up for a $1 per month trial period at https://shopify.com/ramit

LMNT | Get a free LMNT Sample Pack with any order at https://drinklmnt.com/RAMIT

Superhuman Mail | Turn your inbox into momentum. Sign up at https://superhuman.com/podcast..

Have you or your partner fallen for a scam? Maybe gotten bad financial advice from someone who didn't keep their promises? If so, I want to talk. Apply to be on my podcast at https://iwt.com/apply

 

Transcript:

[00:00:00] Kristina: I got really deep into NFTs. It went up to like 900 at some point. 

[00:00:05] Ramit: $900,000. How much did it go down to? 

[00:00:08] Kristina: Like nothing didn't recoup. 

[00:00:11] Ramit: You mentioned that you have $100,000 of debt. What's the plan for this debt? 

[00:00:16] Kristina: We don't have one. Why we're here feels like heavy. 

[00:00:20] Ramit: If nothing changes in the next five years, what will happen?

[00:00:24] Kristina: I'll probably be divorced. 

[00:00:26] Ramit: Well, how does it feel to have found between 60 and $110,000 in your couch cushions 

[00:00:32] Kristina: wild? That's a ton of money. Let's make that work for us. 

[00:00:38] Erin: We want to kind of be in more control of our own future. 

[00:00:41] Kristina: We work too hard to feel like we don't have anything at the end of the day to feel like we're struggling to feel like we can't figure it out.

[00:00:52] Ramit: I think I have an allergy. And that allergy is this godforsaken phrase that goes like this, investing feels like gambling. You ever heard this phrase, oh my God. The people who say this do not understand investing. They have never read a single book about money. They just hear the word investing and they know some crazy confusing phrases.

[00:01:12] Ramit: 401k sep IRA. So they equate investing to gambling in a Vegas casino. This is basically an easy way for people to justify not learning about investing, which incidentally is how the real wealth is created in this country. And what makes this even more confusing is that some quote investments actually are gambling.

[00:01:32] Ramit: They're not really investments at all. They're fads, they're traps, they're scams. Crypto rug pulls NFTs. Today I am speaking with Christina and Aaron, who have been married for 10 years raising two children in Toronto. They make good money, but they have no system for their finances, which has led to years of avoid.

[00:01:50] Ramit: And there have been losses around NFTs. I'm looking at their conscious spending plan. If you want my help with your own conscious spending plan, join my money coaching program at iwt.com/money. Coaching assets, 64,000 investments, 228,000 savings, 5,000. Remember, they have two kids in a high cost of living city debt, 106,000, total net worth, 191,000.

[00:02:18] Ramit: And here is how they spend fixed costs. 79%, which is quite high. Investments. 1%. That's a red flag. Savings, 1%. That's a problem. Guilt, guilt-free spending. 19%. What do you notice about their numbers? And if you were me, actually, what would you do? Put it in the comments below. I'm curious, before you get any further in this episode, put in the comments, what would you do?

[00:02:40] Ramit: Well, let's find out. Please meet Christina and Aaron. Christina, when I say the word money, how do you feel? 

[00:02:49] Kristina: Stupid. I think just finances in general bring up that like sense of, oh, I've done something wrong, or I haven't quite figured it out yet. 

[00:02:58] Ramit: Why is that? 

[00:02:59] Kristina: I equate money to numbers, and numbers to me have always been a problem since I started doing numbers in elementary school.

[00:03:09] Ramit: Okay. And when you say you feel stupid around money, how does that show up? 

[00:03:12] Kristina: Frustration, because I fear I'm not gonna know how to answer a question or I'm not gonna know what the next step is. And I get frustrated when I'm trying to fill something out. 

[00:03:23] Ramit: Mm-hmm. 

[00:03:23] Kristina: Or like, spreadsheets are my nightmare. Thank you for that.

[00:03:27] Kristina: Wow. Yeah. They, it becomes very jumbled and I, I lose track and then I get really frustrated and I just wanna throw my laptop. 

[00:03:36] Ramit: What about for the two of you, your relationship with money? How would you describe it? 

[00:03:42] Kristina: My first reaction was like non-existent. Like it's there, but we don't really have a relationship with it.

[00:03:49] Kristina: There's unspoken conversations. There's conversations that we know we should be having and we don't. I, I think I'll also included in the application, we're avoiders, we want what's best for one another, and it tends to be more in the moment versus the long term. 

[00:04:07] Ramit: You have the money 'cause somebody makes a paycheck and you can spend it at a restaurant or things like that.

[00:04:14] Ramit: But like, that's it. No real connection to it. It's just something we swipe our cards for. Is that what you're saying? 

[00:04:21] Kristina: Yeah. It feels like a, a means to an end. We like nice things. Um, we like getting the best for our kids. We like. Treating other people. But yeah, it's been more of an imposition than like a, a support to us.

[00:04:37] Kristina: We don't go on vacation 'cause we don't have money. We don't own a home because we don't have money. 

[00:04:42] Ramit: Erin. 

[00:04:43] Erin: Yeah. I would say like, we tend to avoid it until it comes to those big things. It's impactful things where like, okay, you know, you need to have X to do X, um, when it comes to money and then we try to tackle it as we go.

[00:04:58] Ramit: How do you feel when we talk about this? 

[00:04:59] Erin: Just that like sense of failure. I feel like we're both like high performers in like every other aspect of life that sometimes it feels like failure and it feels very emotional. Like a tightening, like a tensing, the guilt and shame and just like, yeah, I just feel bad.

[00:05:18] Ramit: Are you, um, typically feeling guilt when it's other parts of life? 

[00:05:23] Erin: Yeah, I would say. 

[00:05:24] Ramit: Okay. Yeah. Alright. You mentioned that you have $100,000 of debt, half of that on credit cards. Where did that debt come from? 

[00:05:34] Kristina: Living like having to, we put a lot of things on credit cards. During my time as an entrepreneur, when we couldn't afford something, we would just put it on credit card.

[00:05:45] Kristina: Okay. When I needed to buy something for the business or buy something for myself, I'd take it out my line of credit. 

[00:05:51] Ramit: What a line of credit. Why that? 

[00:05:55] Kristina: I don't know. And I didn't know the difference, to be honest. 

[00:05:59] Ramit: What's the plan for this debt? 

[00:06:01] Kristina: We don't have one. Why? We're here. 

[00:06:04] Ramit: Oh, we're here. So that Ramit creates the plan and solves it for us.

[00:06:08] Erin: Yes. Yes. 

[00:06:09] Ramit: Okay. Wow. 

[00:06:10] Erin: That's 

[00:06:10] Ramit: effective. 

[00:06:11] Erin: To learn. To learn. To learn. 

[00:06:12] Ramit: Alright. How does it feel to have this debt today? 

[00:06:15] Erin: It feels 

[00:06:16] Kristina: like heavy. 

[00:06:17] Erin: Yeah. Same. It feels, um. Heavy. And we know as interest rates and things, it's doesn't help either. Right? If you're trying to move in the right direction and you're stuck paying those payments, it's, it's not helping you move in that direction.

[00:06:31] Ramit: Mm-hmm. 

[00:06:32] Erin: We have tried to do things and, but then whatever we've tried just hasn't worked or hasn't, doesn't actually come to fruition. Like, that's a good idea. We should do that plan. And then I'm a shitter, so I think part of when we're talking about like the guilt and shame, immediately I go like, yeah, we should, so why?

[00:06:51] Erin: Like, what's the deal? 

[00:06:53] Kristina: We've sat down with a lot of different people in a lot of different instances over the years, but there's a lot that comes with money for us. There's a lot of shame. There's a lot of, you know, I'm 42, I shouldn't be having to sit down and have this conversation. All the things that we say to ourselves, and I know that oftentimes sometimes the story we tell ourselves is not necessarily reality.

[00:07:16] Ramit: You find yourself doing that a lot with money. 

[00:07:19] Kristina: Yeah. 

[00:07:20] Ramit: Until 

[00:07:20] Kristina: it's really bad, 

[00:07:22] Ramit: and then what happens? 

[00:07:23] Kristina: And then we freak out. 

[00:07:24] Ramit: Tell me about the tension in your relationship around money. 

[00:07:28] Kristina: The tension is the knowing, the knowing that things are not great financially. The tension is the, the unknowing, unknowing, how to move forward.

[00:07:37] Kristina: And the tension is just between us. We don't always know how to have the conversation together. 

[00:07:45] Erin: I feel, um, tension in my relationship around money. I think because it's been very, um, like, I guess not stable over the last number of years. I think what, um, Christina wrote in our application is very true.

[00:08:02] Erin: It's been like very up and down and can be unpredictable. So I feel a lot of, um, uncertainty. 

[00:08:09] Ramit: Mm-hmm. And who, who's been more unpredictable you or Christina's income? 

[00:08:13] Erin: Uh, Christina. 

[00:08:14] Ramit: Okay. Um, Christina, take me through your entrepreneurial journey. How long have you been an entrepreneur? Like 

[00:08:20] Kristina: eight or so years.

[00:08:21] Ramit: Okay. What's the most that you have made as an entrepreneur? 

[00:08:25] Kristina: Right now, this year that's like 79,000. Year to date, 

[00:08:30] Ramit: 79,000 year to date. How much do you estimate you'll make by the end of the year? 

[00:08:33] Kristina: Probably just under a hundred. 

[00:08:36] Ramit: What do you do for a living? 

[00:08:38] Kristina: Uh, I help people build their personal brands. 

[00:08:41] Ramit: Okay.

[00:08:41] Ramit: Okay. Wow. I was wildly off on that one. 

[00:08:43] Kristina: Yeah. 

[00:08:44] Ramit: And Erin, what do you do for a living? 

[00:08:45] Kristina: I work in marketing. 

[00:08:47] Ramit: Okay. Christina, you said, I finally started to make money in my business, which is a great feeling, but we both don't believe it's going to stay. Interesting comment. Why don't you think that the money's gonna last?

[00:09:01] Kristina: It hasn't lasted in the past. 

[00:09:04] Ramit: Mm-hmm. Meaning? 

[00:09:05] Kristina: Meaning it's been when I've had money. I haven't managed it when I've been making it for a period of time. I haven't figured out how to make that consistently. It's gone away. 

[00:09:19] Ramit: Got it. And so deep down you believe that's gonna happen again? 

[00:09:23] Kristina: Yeah, I think it's a fear.

[00:09:25] Ramit: Okay. Let's talk about the word trust in your relationship. Do Christina, do you trust Aaron when it comes to money? 

[00:09:33] Kristina: No. 

[00:09:33] Ramit: Aaron, do you trust Christina when it comes to money? 

[00:09:36] Kristina: No. Do 

[00:09:37] Ramit: each of you trust yourselves when it comes to money? 

[00:09:42] Kristina: No. 

[00:09:43] Ramit: Both shaking their head no. Gosh, that's a pretty tough thing to say.

[00:09:48] Kristina: Yeah, it doesn't feel great. I don't think we've ever said that to each other. 

[00:09:52] Erin: Yeah, not out loud.

[00:09:59] Ramit: Christina, why don't you think Erin trusts you with money? 

[00:10:02] Kristina: I haven't been trustworthy with money. There's a number of examples, but one of them is I've got really deep into NFTs and in that like crypto space, and I spent a lot of money, we didn't have. I, on paper, made a lot of money. I was playing in a market, having no idea what I was doing, and blew a lot.

[00:10:26] Ramit: What happened when you found out, Erin? 

[00:10:29] Erin: I think that was the first time and the only time that something like that had happened where I didn't know about it, like our communication, um, about that. So yeah, it was, it was hard. A little bit of trust. There was just, I was unsure. 

[00:10:46] Ramit: Hold on. How much money are we talking about?

[00:10:48] Kristina: Oh, like 40, 50 grand. It was not small. 

[00:10:51] Ramit: 50 grand in NFTs? 

[00:10:54] Kristina: Yeah. 

[00:10:55] Ramit: And how much did it go up or down to? 

[00:10:58] Kristina: It went up to like 900 at some point. 

[00:11:01] Ramit: $900,000. Okay. And then how much did it go down to? 

[00:11:07] Kristina: Like, nothing. Like didn't recoup by any means. I didn't sell, I didn't know what I was doing. You 

[00:11:14] Ramit: held it? 

[00:11:15] Kristina: I said I just held.

[00:11:17] Ramit: You held it to the moon. Except it went to hell. 

[00:11:19] Kristina: Yeah. LFG, bro. 

[00:11:21] Ramit: Wow. Um, you're the first woman I've met who was involved in NFTs. I'm not, I don't, I don't, I don't know if that's weird to say, but I've never met a woman. I know. It's 

[00:11:29] Kristina: not 

[00:11:29] Ramit: weird who was involved in NFTs. I know, 

[00:11:31] Kristina: I know, I know. So 

[00:11:33] Ramit: you had f between 50 K to 900 K and then it went to zero effectively to zero.

[00:11:42] Ramit: Yeah. Yeah. When did you tell Erin what was the price when you, when you told her? I know it wasn't at 900 k. 

[00:11:48] Kristina: No, no. Hell no. I think before it was probably, yeah, way before that. But it was like, probably like double or triple. And I was like, all right, we're good. Don't worry. 

[00:11:57] Erin: You told me once you had made the money back that you spent.

[00:12:02] Erin: So she didn't tell me until it had kind of broke even, I think. Right. Um, I think you broke even. And then it was doing quite well. So there was also this kind of, for me, unexpected like, oh. Okay, but not knowing how volatile the market is. So I didn't know anything about it. So 

[00:12:18] Ramit: what happened when it started to go down?

[00:12:21] Kristina: It happened really 

[00:12:21] Erin: quickly. Yeah. 

[00:12:24] Kristina: And 

[00:12:24] Erin: it was very like 

[00:12:26] Kristina: when they say like it goes like bowl to bear overnight. That's what it felt like. 

[00:12:32] Ramit: Listen up you NFT bros. This is you. The only difference is she admits it and you're still broke with your stupid avatar that you put on Twitter, but then changed it eight months ago.

[00:12:44] Ramit: I'm so mad right now. 

[00:12:45] Kristina: Yeah, you're allowed. 

[00:12:47] Ramit: I'm supposed to be here to help. Not ran about NF. Oh no, 

[00:12:50] Kristina: no, that's 

[00:12:50] Ramit: all right. How'd you get the 50 K in the first place? 

[00:12:53] Kristina: Uh, some was a line of credit. 

[00:12:57] Ramit: Whoa. 

[00:12:59] Kristina: Yeah, it was really up. 

[00:13:01] Ramit: You still owe on that? 

[00:13:02] Kristina: Yeah. 

[00:13:03] Ramit: Okay. I appreciate the candor. I can see why Aaron, you would find it difficult to trust Christina around money.

[00:13:12] Ramit: I am curious 'cause there was the reverse as well. Christina, you mentioned you don't trust Aaron around money. Why is that? 

[00:13:20] Kristina: I don't necessarily think we need to spend as much on food as we need to spend on food. 

[00:13:24] Ramit: Oh wait, you said you like to buy expensive food. Is that right? What is expensive food? Like what's an example?

[00:13:30] Kristina: We buy organic bananas. We buy like $7 crackers. And 

[00:13:37] Ramit: now you're speaking a language I can understand you're talking to a guy who does not know what the hell an organic banana is or how much it costs. That's not my, I mean, but talk to me about these crackers. What brand, what flavor, what kind 

[00:13:50] Kristina: they're made outta sourdough so that they don't have seed oils and preservatives in them.

[00:13:55] Ramit: Oh god. Oh god. And um, how much, how much do you get for $7? 

[00:14:01] Kristina: Oh, like. 

[00:14:02] Ramit: Like this much. 

[00:14:03] Kristina: Yeah, like a cup. Probably 

[00:14:04] Ramit: half the, A cup half, half the bag is full of air. They're like, we imported this air from the Himalayas. No, you didn't. What else? 

[00:14:13] Kristina: I don't necessarily think that we need to gift everyone a gift. That one, a gift period, and two like that is like the most beautiful or expensive thing that, that, that stuff.

[00:14:28] Kristina: Is 

[00:14:28] Ramit: that a trust issue or? I disagree with how she chooses to spend money. 

[00:14:32] Kristina: I think it's, for me it's a trust issue because we've talked about it, we've talked about how I don't quite understand it or I don't think it's like necessary. Okay. And it doesn't change. 

[00:14:44] Erin: I feel like over the past, like year or two, I've definitely, um, done my best to curb, my instinct to gift.

[00:14:53] Erin: So for me, I think I've also tried to explore where that like comes from. I'm a very emotional person. I lead with the emotion. So I think sometimes I spend. With emotion. Like I want this person to understand how much I appreciate them or, um, how grateful I am or how much I love them. So like, I wanna do this thing that's thoughtful, but I'm not necessarily going to say like, oh, that's too much to spend on that.

[00:15:16] Ramit: Can I, can I say that again? I just wanna make sure I'm understanding what you said. 'cause you just spoke a language to me that was like, Martian, sorry, I'm a very emotional person, so therefore I spend a lot of money. Can you explain the two? They don't necessarily follow for me. 

[00:15:33] Erin: Yeah, no, I think something I realized recently is that I will sometimes, um, spend to try to solve things, whether it's, um, like gifting or I'm anxious and I, if I get this thing that'll help us in the house and like, you know, it'll, it'll be like, um, the solve of some kind, but it's not the right thing to do if that, I don't know, I'm, maybe, I'm not making any sense.

[00:15:59] Ramit: I don't think you're being honest with yourself. 

[00:16:01] Erin: Okay. 

[00:16:01] Ramit: What you're saying is, I think if we were maybe peeling the layers back, we might say, I spend money sometimes because I'm anxious. Mm-hmm. Or because I'm worried, or because maybe I want somebody to like me or love me. How much of that rings true? 

[00:16:15] Erin: Yeah.

[00:16:15] Erin: Yeah. All of it. 

[00:16:17] Ramit: Okay. What you said is an interesting story, but to me it's just a story. I am an emotional person. Aren't we all, don't we all have emotions? 

[00:16:28] Erin: Mm-hmm. 

[00:16:29] Ramit: And then the next part of the story was, and therefore I spend a lot of money. Well, why don't we just flip that story and say, I'm an emotional person, therefore I, uh, invest 34% of my net income.

[00:16:40] Ramit: Why not that? If we're just gonna pick a story, why don't we just pick that I'm an emotional person, so I pay off my debt super aggressively. I'm an emotional person, so I talk about money every Sunday with my partner. 

[00:16:49] Erin: That sounds good. Sounds like a better story. 

[00:16:52] Ramit: You could choose our story. Yeah. Okay. With this lack of trust between the two of you.

[00:16:58] Ramit: Does that make it more or less likely for you two to talk about money? 

[00:17:02] Kristina: I think you're experiencing it. It's like pulling teeth. 

[00:17:07] Ramit: Yes. 

[00:17:08] Kristina: It's not knowing what to say. It's not wanting to hurt each other's feelings. It's all those things. 

[00:17:14] Ramit: Ah, not hurting each other's feelings. I don't wanna hurt her, but she doesn't wanna hurt me.

[00:17:19] Ramit: And now we have this cycle, which is building upon each other. 

[00:17:24] Kristina: Yeah. 

[00:17:25] Ramit: It's actually very difficult. Like we can look at all the numbers. I can give you some fancy math, abracadabra, but if the dynamic persists where nobody wants to speak openly and honestly, even to the point of saying when you do that, it makes me feel unwanted.

[00:17:42] Ramit: It makes me disappointed we can't get anywhere. 

[00:17:46] Kristina: Yeah, I think it's true. I think it's, if we can't talk about it, we'll never be able to change it. 

[00:17:53] Ramit: Did you catch. I asked Christina and Aaron if they trust each other with money, and they both said no. Then I asked if they trust themselves with money also. No, they answered instantly.

[00:18:07] Ramit: No hesitation, and that really tells me a lot. When you don't trust yourself with money, you cannot make good decisions. Every choice becomes a guess. You play defense, you second guess, or you just avoid it altogether. And that's exactly what I am seeing. Christina lost $50,000 on NFTs money she borrowed from a line of credit, Erin spends emotionally to manage her anxiety.

[00:18:33] Ramit: Neither of them can talk about it without feeling like I'm pulling teeth, and I want you to notice that until they develop competence around money, which then leads to confidence, nothing else matters. I could literally fly to their house and give them a line by line plan and it would fall apart within weeks.

[00:18:53] Ramit: Unless they made these changes. Remember competence, then confidence. Let's see what their numbers tell us. What was it like to do this CSP together? Wow. What's that big smile, Christina? 

[00:19:06] Kristina: Just the ridiculousness of the two of us tried to do something like that. 

[00:19:10] Ramit: Why is that? 

[00:19:11] Kristina: The way that I wanted to get my head around doing the conscious spending plan was I created a project in chat GBT that was gonna help guide us through what the, the conscious fessing plan.

[00:19:23] Kristina: Because I was so anxious about it, I didn't know how to approach it because remember, it numbers make me feel dumb and if I feel like it's gonna help guide me through it, then I feel like I can approach it better. But 

[00:19:35] Ramit: fair enough. 

[00:19:36] Kristina: I overcomplicated it. 

[00:19:37] Ramit: So then how did you resolve it? 

[00:19:39] Kristina: We looked at the numbers and we plugged it in.

[00:19:42] Ramit: Okay. Alright. Well that's great. I'm glad you did. Shall we take a look at the numbers from your conscious spending plan? Let's see here. Um, Aaron, can you read. The words in bold and the numbers in full for this entire box please. 

[00:19:58] Erin: Assets 64,000 investments, 228,251. Savings 5,000 debt 106,000 

[00:20:12] Ramit: total net worth.

[00:20:14] Erin: 191,251. 

[00:20:16] Ramit: Alright. What do you think about those numbers? 

[00:20:18] Erin: I love seeing it. I really liked the sheet a lot actually. But now what? Like where do we, where do we go? So I think I just end up looking at it and being like, I feel very lost and like 

[00:20:28] Ramit: okay to 

[00:20:29] Erin: do next. 

[00:20:29] Ramit: That's a candid answer. I appreciate that. And Christina, what about you?

[00:20:32] Ramit: What do you think about those numbers? 

[00:20:33] Kristina: I think if you had said to me before this like, what are your investments? I would've been like zero. Nothing. We have nothing. 

[00:20:42] Ramit: You have over a quarter million dollars in investments. 

[00:20:45] Kristina: Yeah. 

[00:20:46] Ramit: Why? The gap 

[00:20:47] Kristina: story versus reality. 

[00:20:49] Ramit: Yeah. Yeah. Like when people are like, you know, oh my gosh, I live paycheck to paycheck.

[00:20:57] Ramit: And then I look at their numbers and they're investing like over $5,000 a month, plus they have $4,500 a month on private school. I'm like, I'm going to kill you with my bare hands right now. Ramit Satie, bestselling author, convicted. 

[00:21:12] Kristina: It's not worth it, dude. 

[00:21:15] Ramit: Yeah. Alright, let's go on to the, the income part.

[00:21:19] Ramit: Christina, can you read me your combined gross monthly income, please? 

[00:21:23] Kristina: Mm-hmm. 17,560. 

[00:21:26] Ramit: That means your household income combined is $210,000 per year. By a show of hands, who knew that number? No hands have gone up in this room. Okay, cool. Um, how much did you think you made Christina collectively 

[00:21:43] Erin: a buck 50, maybe 

[00:21:44] Ramit: 150,000.

[00:21:45] Ramit: Okay. And, uh, Aaron, how much did you think your household income was annualized? 

[00:21:50] Erin: Maybe just over a hundred, give or take, depending on where Christina was at. 

[00:21:55] Ramit: Well, how does it feel to have found between 60 and $110,000 in your couch cushions? 

[00:22:02] Erin: Surprising. 'cause it doesn't feel like it. 'cause I think of the things we just talked about.

[00:22:06] Ramit: Okay, Christina. 

[00:22:09] Kristina: Now I just wanna know where it's all going. 

[00:22:10] Ramit: Good. Are you pissed? Are you shocked? Are you disappointed? 

[00:22:16] Kristina: I think more surprised and like that's ton of money. Yeah. So let's make that work for us. And then there's a little voice in the back of my head that's like, well, you don't know how long that's gonna last.

[00:22:30] Ramit: That's the voice of scarcity. It never has. It never will. 

[00:22:33] Kristina: Mm-hmm. 

[00:22:34] Ramit: So money comes. Money goes. You better spend it right now 'cause you don't know what's gonna happen tomorrow. That's that voice familiar, right? 

[00:22:42] Kristina: Oh yeah. 

[00:22:43] Ramit: $210,000 is an extremely high income at a. Pretty young age, like it's great. It's great.

[00:22:52] Ramit: What I would like to do now is to try to make sense of it. So let's go and look at your expenses. Let's look at where your money's going so that we can understand. Then we'll have everything we need. Fixed costs. Uh, Aaron, what is this number here? 

[00:23:07] Erin: It is 79%. 

[00:23:09] Ramit: Alright. Fixed costs are 79%. That's a bit high. Uh, investments, what's that number?

[00:23:14] Erin: 1%. 

[00:23:15] Ramit: Alright, that's pretty low savings. What the, it's 1%, but the reason I'm saying what the, is not that it's 1%. We could fix that. It's that the 1% of savings is going towards gifts. There's no money going towards like a savings account. The only savings are going towards gifts. That explains why there's not much in savings.

[00:23:36] Ramit: It actually all makes sense. One plus one equals two. And then finally we have guilt-free spending 

[00:23:43] Kristina: 90% 

[00:23:44] Ramit: or $2,465 a month. Is that number accurate? 

[00:23:48] Kristina: Yeah, I'd say so. 

[00:23:50] Ramit: Yeah. Aaron, 

[00:23:51] Erin: I, I think so. Link, if not, maybe slightly higher. 

[00:23:55] Ramit: I wanna point out a couple things that came to mind for me. First off, um, you have two weeks worth of savings in your savings account.

[00:24:06] Ramit: Means if you stopped making money, you would last two weeks and you have two kids. 

[00:24:12] Kristina: It's kind of terrifying. 

[00:24:13] Ramit: It's pretty scary. It's one thing if you're like a single person and, you know, worst case you go back and live with your parents if you're able to, something like that. But with two kids, you have a much higher risk.

[00:24:24] Ramit: The stakes are a lot higher. The next thing I notice is that within your fixed costs, I wanna go down these numbers very quickly 'cause why do you have 79% on a $210,000 income? Well, let's take a look. Your, do you rent or do you have a mortgage? 

[00:24:38] Kristina: We rent. 

[00:24:39] Ramit: So your housing cost is 25%. And what, uh, area or city are you located in?

[00:24:46] Kristina: Toronto. 

[00:24:48] Ramit: Very expensive. 

[00:24:49] Kristina: Yeah. 

[00:24:49] Ramit: Alright, so 4,000 bucks, how does that stack up relative to your peers with two kids? Is that higher or lower than what they're paying? 

[00:24:58] Kristina: We're the only ones that rent 

[00:25:00] Ramit: really. 

[00:25:00] Kristina: We don't know if we could have gotten a mortgage, we would've already bought for sure. 

[00:25:04] Ramit: Okay. Damn that Canadian propaganda is powerful.

[00:25:08] Erin: When we looked into it, like say a couple years ago now I think we can get a mortgage based on my like steady salary At the time it just was nowhere near high enough to break into a market where houses, housing in general is going for just so much money. 

[00:25:22] Ramit: Yeah. Still going up or what's the, what's the deal with Toronto housing?

[00:25:25] Kristina: It's kind of flattened a bit, but our, our landlord's just sold, so we got our eviction notice and we have to find a any place to live. Yeah. 

[00:25:35] Ramit: How much is the market going for? For what you're looking for? 

[00:25:38] Kristina: Uh, well, we're gonna get less for paying more, so it will be typically over like four grand. 

[00:25:45] Ramit: Over four again.

[00:25:46] Ramit: How many bedrooms do you have? 

[00:25:47] Kristina: Right now we have three, two and a half? Yeah. 

[00:25:51] Ramit: Hmm. Okay. Um, so that's notable at 25%. Not bad. Not bad. For a high cost of living city, we often see that number higher. Childcare at 1500 bucks a month. That's pretty pricey, there's no doubt about that. And then, uh, debt payments at 1200 bucks a month.

[00:26:13] Ramit: And is that the minimum? 

[00:26:14] Kristina: Yeah, like it fluctuates, but yeah, that's the minimum. 

[00:26:17] Ramit: So, so we're looking into your debt of $106,000. I see. Aaron line of credit, Christina line of credit, Aaron credit card, Christina credit card and monthly interest is approximately $1,200 for this debt. How long will it take you to pay that off?

[00:26:35] Erin: I have no idea. Never. Never is, it doesn't make it dent. 

[00:26:40] Ramit: Yeah, I mean, we could calculate it, but it would be decades if ever. 

[00:26:44] Erin: Yeah. Can, 

[00:26:45] Ramit: can I ask a really blunt question? 

[00:26:47] Kristina: Mm-hmm. 

[00:26:47] Ramit: Who the hell makes $210,000 and pays debt forever? 

[00:26:51] Kristina: I don't know if it's normal, but it doesn't feel right. 

[00:26:54] Ramit: No, it's not. Do you ever feel like I'm sick of this?

[00:27:00] Kristina: Yeah. Yeah. All the ton. It feels like we work too hard. Yeah. 

[00:27:04] Ramit: Tell me, we 

[00:27:05] Kristina: just, we work too hard to feel like we don't have anything at the end of the day to feel like we're struggling to feel like we can't figure the out. 

[00:27:15] Ramit: Hmm. I like hearing this. It's the first time I'm hearing it. Like if you think about it, when we started the conversation, it was a lot of like, yeah, this is kind of a nuisance.

[00:27:25] Ramit: It's slightly irritating, which is one thing, but if you're like this, like, I'm sick of this. We work too hard. This is unacceptable. We're gonna make a change that's different. 

[00:27:38] Kristina: Yeah. 

[00:27:39] Erin: Yeah, we're definitely at the point where we wanna move, having a nerve to change. And I think what we've realized about being renters now with two kids is it's a stability piece, right?

[00:27:50] Erin: Mm-hmm. Like the kids are a lot like older moving and it's, it's harder, it's harder to feel like you're not in control 

[00:27:56] Ramit: Yeah. Of 

[00:27:57] Erin: any of that. So I feel like that has really been like, challenging, tough, upsetting, and we wanna kind of be in more control of our own future. 

[00:28:09] Ramit: Ooh. I like that. Now you all have engaged with other people before.

[00:28:14] Ramit: In fact, I saw it repeatedly in your application. We've worked with multiple people before. Who are these people? 

[00:28:20] Kristina: Like I have had a money mindset coach who was very helpful. 

[00:28:25] Ramit: Yeah. 

[00:28:27] Kristina: We worked with, uh, like a financial coach previously. 

[00:28:31] Ramit: What happened? 

[00:28:32] Kristina: Nothing we don't talk about. So it just falls with a, because we don't.

[00:28:37] Kristina: Prioritize it and we don't, we haven't known how to talk about it and we don't wanna hurt each other's feelings. Like it felt like we were doing it, but it wasn't, it didn't feel like we were a team doing it. We were just kind of sitting beside each other. 

[00:28:50] Ramit: Right. Powerful. That's a powerful metaphor. The two of you were in the room, you were physically there.

[00:28:56] Ramit: You may have even been sitting next to each other, but you were still not a team. 

[00:29:00] Erin: Agreed. 

[00:29:01] Ramit: Aaron, what do you think? What people have you seen and what happened with them? 

[00:29:07] Erin: I don't know. Like I am, I don't know. It's failure, like it just all feels like we tried and I haven't been able to do it. So it just didn't feel like good enough.

[00:29:16] Erin: No, I don't wanna get emotional. 

[00:29:17] Ramit: Why not? 

[00:29:19] Erin: Yeah, it just, it feels hard. It feels like we've tried and it's just like, I think we're stuck in a cycle that's not gonna end until we end it. So 

[00:29:27] Ramit: yeah, it's 

[00:29:28] Erin: end it. 

[00:29:29] Ramit: What makes today different? Why is it gonna be different today? 

[00:29:32] Kristina: Well. I won't speak for error, but I'm just fed up and nothing changes until something changes.

[00:29:40] Kristina: We can't keep doing the same and expecting different results. 

[00:29:43] Ramit: But you did it for a long time. 

[00:29:45] Kristina: Mm-hmm. 

[00:29:47] Ramit: You still got the roof over your head, the food, so it wasn't that bad. Right? 

[00:29:54] Kristina: Yeah. But I think I mentioned it in our application, like we're so stressed all the time, like we are, we're sick. We don't have time to do the, that we wanna do.

[00:30:04] Kristina: Like it's not without its consequences. 

[00:30:07] Ramit: Okay. The good news and the tough news is that the two of you are a team, and as you've told me, you are an effective team in other parts of life, but not in money. That can be good and that can be tough. Good in that if you get this to work, the two of you can row your boat way faster together than ever.

[00:30:30] Ramit: Solo. Mm-hmm. The tough news is that it's gonna be tough. 'cause not only do you each have to change yourselves, you have to change your dynamic together. 

[00:30:38] Kristina: I think I would like that. I don't think that we have been able to do that in the past, effectively. 

[00:30:45] Ramit: So they've worked with multiple coaches before. A money mindset coach, a financial coach.

[00:30:53] Ramit: Why am I any different? My question is, what happened with all those other people? Here's what I think happened, because I have worked with many people who are coach collectors. They go from this coach to that, from this conference to that, this program, to that. The people who jump around a lot tend not to make major changes.

[00:31:14] Ramit: Here's what I suspect happened the last time. They hired a coach, they showed up, sat next to each other, nodded along, and then nothing. They went through the motions. They performed, but they never actually engaged. It's like this really peculiar dynamic I've noticed on Instagram. People will DM me, they've been reading my site for years, and then they will send me a DM saying, okay, you got me.

[00:31:39] Ramit: I've been following you for nine years. Today's post finally convinced me to buy your book. Now, I appreciate that they just bought. I will teach you to be rich or money for couples. But I've also learned over time that there's a deeper dynamic here. Deep down, they see our relationship as adversarial.

[00:31:59] Ramit: They feel their job is to resist me, and my job is to convince them to buy my book. They fundamentally misunderstand our relationship and even deeper, they think that buying a book equates to doing the work. It's the same as someone who hires a coach or buys a ticket to a conference. If I can be really honest, buying a book or attending an event is just the first step.

[00:32:23] Ramit: The real work has not even begun yet. So with Christina and Aaron, I can't fix this for them. In fact, no coach can because the problem isn't the debt or the numbers. The problem is that they don't trust themselves and they do not trust each other. So what would you do if you were in my position right now?

[00:32:43] Ramit: Well, we're gonna find out my approach right after the break.

[00:32:50] Ramit: What are your roles with the family? Finances? Who takes the lead? 

[00:32:54] Kristina: We have an accountant now for the first time I take the lead on the account and stuff, just because my business is also included in that now. 

[00:33:01] Ramit: Mm-hmm. 

[00:33:01] Kristina: But on the day to day, we operate very separately. 

[00:33:04] Ramit: How does it work? Like what kind of accounts do you have?

[00:33:06] Ramit: Anything joint? 

[00:33:08] Kristina: No, 

[00:33:09] Ramit: no joint accounts. Alright. Two kids, but no joint accounts. 

[00:33:12] Kristina: I know. 

[00:33:14] Ramit: Is there a reason for that? Or you just had your accounts and then you just slid in to the relationship and never really changed things? 

[00:33:22] Kristina: Yep. 

[00:33:22] Ramit: The second 

[00:33:23] Kristina: accurate. 

[00:33:24] Ramit: Yeah. Do you currently track any spending at all? It's okay if the answer's no.

[00:33:29] Ramit: Most people don't. 

[00:33:30] Kristina: We do now. We do not just with the account. And that's been helpful to sit down with them. 

[00:33:35] Ramit: This is for your business. 

[00:33:36] Kristina: For our business and our personal, we just got it. Um, this past year, it's really helpful to see where everything's going and just be in shock by it. 

[00:33:45] Ramit: Okay. 

[00:33:46] Erin: And he's great and I love it.

[00:33:47] Erin: And it, like I said, it's been good to see everything on paper, but I feel like as we go, we're kind of looking at it after it's spent right now. Um, and I think what we need is the plan for the month instead of just looking at it and being like, oh, where'd that go? Or it's gone. 

[00:34:01] Ramit: Okay. 

[00:34:01] Erin: What's the plan? 

[00:34:02] Ramit: What is this accountant's name like Walter or something?

[00:34:04] Ramit: I can just imagine him, what's his name? 

[00:34:06] Kristina: Taryn Pre. 

[00:34:08] Ramit: He's Indian. He's Punjabi Re my man. He's great. Okay, cool. Alright. Listen, accountants are great. I like, I I'm seriously, I have great things to say about accountants, but they are not meant to track day-to-day spending. That's not their purpose. They're there for taxes.

[00:34:25] Ramit: They're there for kind of like one time things or larger, once a year decisions that their purpose is not tracking where your guilt-free spending is going. So it's great you have an accountant for your business. I think that's great. That accountant can also work on your personal tax returns. Fantastic.

[00:34:45] Ramit: But you got, you gotta reset your expectations. They're not gonna fix knowing where your money is going. You are. 

[00:34:53] Kristina: Yeah. 

[00:34:54] Ramit: Christina, um, I wanna know how you grew up with money. What were some of the phrases you remember your family saying about money when you were younger? 

[00:35:01] Kristina: So there was a period of time when we didn't have.

[00:35:05] Kristina: Much money at all. And then as my parents advanced in their career, there was a period of time where they got to that kind of middle class. Um, but money was never discussed. It was, you don't talk about money. But then at the same time, it was very much like, do what you love and money will come. And 

[00:35:23] Ramit: they told you that?

[00:35:24] Kristina: Yeah. 

[00:35:25] Ramit: Usually you don't hear that from people who do not have a lot of money. Why do you think that? They said that 

[00:35:30] Kristina: I think they wanted better for us 

[00:35:33] Ramit: Uhhuh. When my Indian parents or my Chinese friends' parents want better, they're like, get your ass to work. I'm putting you to work in a restaurant at age six.

[00:35:42] Ramit: And then, but your parents were like, find your passion. Can you explain this to me? Blow my mind. 

[00:35:48] Kristina: I was, I was a kid with very big, uh, feelings and uh, I had a lot of, I had a lot of struggles with mental health. 

[00:35:56] Ramit: Uh, 

[00:35:56] Kristina: and I think my parents knew that no one was gonna be harder on me than me. 

[00:36:02] Ramit: Okay. 

[00:36:02] Kristina: And probably that had some impact on it.

[00:36:05] Ramit: How would you describe their reaction? Did they encourage you more? Did they walk on eggshells around you? How would you describe their approach with you? 

[00:36:15] Kristina: They just kinda let me be the intense kid that I was. Mm-hmm. They like, I wanted to be a lawyer, uh, like 13 'cause you got to wear a power suit. And I could work on Bay Street, like I was a little loser.

[00:36:31] Kristina: Mm-hmm. So I, and they just kind of were like, let her be. But at the same time, in, in school, I was very, like, I struggled intellectually. Like I was, I was incredibly shy and anxious. I had a speech impediment. I was kind of labeled like a dumb kid. So, um, I think they just kind of, there was probably that too, like walking on eggshells of.

[00:36:56] Kristina: You know, we don't wanna be too hard on her. 

[00:36:59] Ramit: You mentioned your mental health struggles and some of the speech impediment challenges. Were you able to, uh, get help for those as time went on? 

[00:37:08] Kristina: Yeah, I am. I have extreme privilege living in Canada, so I had a psychiatrist since I was 12 years old. 

[00:37:16] Ramit: Wow. 

[00:37:16] Kristina: And I've had access to medication, access to care as I needed it over the years.

[00:37:21] Kristina: So I'm incredibly privileged. Awesome, 

[00:37:24] Ramit: awesome. I'm really happy to hear that. That's amazing. In your discussions with the folks in your treatment team, did you ever bring up money with them? Like, I find it challenging to engage with money. 

[00:37:37] Kristina: No. 

[00:37:39] Ramit: Hmm. What if you did? 

[00:37:41] Kristina: I can't imagine them seeing a space for it in the conversation.

[00:37:46] Ramit: Like you didn't you mention something about the difficulty with numbers? 

[00:37:50] Kristina: Yeah. 

[00:37:52] Ramit: Seems to me there could be a conversation around that. 

[00:37:55] Kristina: Thought about it. Hmm. Um, but no, we never, okay. We've never discussed it. 

[00:38:01] Ramit: What do you think are the key lessons that you learned about money from your parents, your family? 

[00:38:08] Kristina: I learned that it wasn't always gonna be there.

[00:38:11] Ramit: Uhhuh, 

[00:38:12] Kristina: if you work really hard though, really, really hard, you could get it. You can access it. It was, it was scarce. Things cost, money. Things are expensive. You have to be careful with things. 

[00:38:26] Ramit: And what relationship do you see between those messages and what you bring to this relationship with money? 

[00:38:33] Kristina: I mean, it's very similar.

[00:38:35] Kristina: You can work hard and you can access it, but it doesn't mean it's gonna stay. 

[00:38:39] Ramit: Right. 

[00:38:39] Kristina: And you know, everything has a price and you have to be careful about how you spend your money and where you spend that money. 

[00:38:49] Ramit: Christina was labeled the dumb kid growing up. She had a speech impediment. She struggled with numbers in school, and now she's completely convinced that numbers are just too hard for her and therefore she can't handle money.

[00:39:03] Ramit: When I was a kid in seventh grade, I switched from an elementary school where I was probably the top student to join a group of kids in middle school who were way, way more academically equipped than I was. Suddenly I realized I could not compete with them no matter how hard I tried. I was the worst kid in my math class, and I spent a lot of time on math.

[00:39:28] Ramit: I still just could not compete with their intellectual horsepower, and over time I found this to be true in certain other areas of life. Computer science, navigation, and directions. Even packing my suitcase, I think they're all related, and no matter how hard I try, maybe I could be average, but the people who I've met over time, especially at places like Stanford.

[00:39:50] Ramit: Some of them were just simply naturally more gifted than me. Now, I think this is a very, very powerful, pivotal moment. I think that most of us don't experience what it's like to be around true excellence and see that some people just naturally are skilled in certain things. But I also think that when you do have the rare opportunity to encounter that, you can tell yourself one story or another.

[00:40:17] Ramit: One story is, I am not good at this. I can never be good at this. I'm going to give up on it. I hate that story, but I understand it. Sometimes it just feels really hard. That's a lot of kids in America when it comes to math. The other story is, Hey, I am never going to be great at this, but first, let me put in the time to make sure that I'm actually trying.

[00:40:43] Ramit: This is hard for me. I'm not naturally gifted to this. I have to work twice or three times as hard as everybody else. At least let me build up some basic capabilities, and then I will find ways of working around it. To this day, I am not great at calculus. I am bad at computer science, but I found ways of handling it, of making up for my weaknesses, and then focusing on my strengths.

[00:41:06] Ramit: Talking to Christina. She's obviously smart. She's very self-aware. She acknowledged their negative storytelling in the first 10 minutes of our conversation. She's very articulate. The problem is not that she's not smart enough. The problem is that she has believed she's not smart enough in this specific thing for so long that she's simply given up on it.

[00:41:26] Ramit: And here's what's wild. She learned as a kid that money was scarce. It wouldn't always be there. So what did she do as an adult? She becomes an entrepreneur with wildly inconsistent income. Then she borrows $50,000 to invest in NFTs. She's literally recreating the money lessons from her childhood, but she doesn't realize it.

[00:41:46] Ramit: Let's keep going. What else did you, uh, learn, Aaron, from your family growing up about money? 

[00:41:52] Erin: Not a whole lot. Um, the oldest of five kids, um, my dad had a very good job for quite a long time. So my mom was home, um, for the first 16 years with us. Uh, I would say like, I think my parents are quite good with money, but there's no conversation around money.

[00:42:10] Erin: Um, it was something kind that you didn't talk about. Um, at 16 my dad had a nervous breakdown and my mom went back into the workforce, um, at a very different pay grade, very different level. She'd been out for 16 years, um, and he did not end up going back to work following that. So we kind of had the experience of, you know, having some names after my dad working hard for a while to how are we going to do things And I know that they used all, any college university funds they used, um, just to make sure we were gonna be good.

[00:42:45] Ramit: Can I ask a little bit more about what happened with your dad? 

[00:42:49] Erin: Um, yeah, he's bipolar. 

[00:42:51] Ramit: Got it. Okay. That's gotta be difficult at that age for you? 

[00:42:57] Erin: Um, yeah, I think it was 'cause it, I, I think it was just like scary and unknown, but we weren't very good at talking about it as a family, I would argue we were still not good at that stuff.

[00:43:09] Erin: So I think this, like, we don't talk about it or know how, 

[00:43:13] Ramit: yeah. 

[00:43:14] Erin: It started a long time ago. 

[00:43:17] Ramit: Is there any cultural component to your family not talking about it or religious component? 

[00:43:22] Erin: Not that I, not that I know of, but I 

[00:43:24] Kristina: I mean, you're raised staunch Catholic. 

[00:43:27] Ramit: Oh 

[00:43:27] Erin: yeah. 

[00:43:27] Ramit: Say no more. 

[00:43:29] Erin: Yeah. Well there's that. 

[00:43:30] Ramit: Got that.

[00:43:31] Ramit: Hold on. Is it the same, uh, in Canada as the US got the Catholic guilt? Can we check that one off the box? 

[00:43:38] Kristina: Yeah. Yeah. We were, we were both raised Catholic and, 

[00:43:41] Erin: mm-hmm. 

[00:43:41] Kristina: Being a homosexual being raised Catholic. 

[00:43:44] Ramit: Yeah. Wait a second. Hey, we could have had this call in five minutes. 

[00:43:48] Yeah, 

[00:43:48] Ramit: you could have told me that.

[00:43:48] Ramit: I would've checked the box and said, here's the problem, here's the solution. See you later. 

[00:43:51] Kristina: Yeah, yeah. 

[00:43:52] Ramit: Alright. Okay. Wow, that's interesting. 

[00:43:54] Kristina: I think we just feel guilt about everything. Like we don all. Yeah. 

[00:43:58] Ramit: You feel guilt just normally and like 

[00:44:01] Kristina: all the time. All the time. 

[00:44:02] Ramit: This is like, are we good enough parents?

[00:44:04] Ramit: Are we in touch with our family? Are we doing well enough at work? How about with each other and on and on and on. That kind of thing. Yeah. 

[00:44:10] Kristina: Yeah, yeah. Exactly. 

[00:44:11] Ramit: Alright. You both see a therapist? 

[00:44:13] Kristina: Yeah. 

[00:44:14] Ramit: Okay. Do you foresee a future where you operate on a daily basis without guilt? 

[00:44:21] Erin: Oh, that would be nice. Can't fathom what that looks like.

[00:44:26] Erin: Yeah. I don't think I've ever thought about that. 

[00:44:28] Ramit: Wow. Very interesting. You see. When we talk about money, a lot of people think they're gonna come on here and we're gonna talk about their freaking ratios of housing or some stuff like that. Nah, we're talking about Catholic guilt today. Everybody. The, the reason that the rea, how do you think we wandered into this neighborhood?

[00:44:47] Ramit: I find it quite relevant. What do you both think? 

[00:44:50] Kristina: How you're raised deeply affects how you go about your day to day as adults. 

[00:44:55] Ramit: Mm-hmm. Exactly. Mm-hmm. And this explains some, not all, but some of why it has been challenging for you both to tackle your relationship with money. The way that the story that you've told yourself is like, oh, we just don't prioritize this.

[00:45:13] Ramit: And that's probably true. You've told yourself the story that, you know, I, I'm not really good with numbers. It confuses me and it makes me feel ashamed. Probably also true, but it's also probably incomplete. One way to think of it is like you've been wearing these. Uh, kind of like dirty glasses for a long time, trying to look through the world with all these smudges on them.

[00:45:36] Ramit: And you're wondering like, why is everybody else able to do this? And we're not like, are they all just smarter than us? Are we just stupid? Do we miss some day in school? It's a terrible feeling when you feel like everyone else knows something and you don't, that does not feel good. 

[00:45:52] Erin: No, 

[00:45:53] Ramit: there's of course one other variable, which is your kids.

[00:45:56] Ramit: And I'm quite certain that you do not want to pass on the same guilt to your kids. 

[00:46:01] Kristina: No. 

[00:46:01] Ramit: Both shaking their heads. 

[00:46:02] Kristina: I think we struggle with knowing, oh, what to say to our kids and what not to say to our kids about these things. 'cause we're worried we're gonna them up, we're worried we're gonna make them feel shame about the cost of something or make them have a scarcity mindset.

[00:46:17] Kristina: Well, 

[00:46:18] Ramit: do you both feel ashamed about money? 

[00:46:20] Kristina: Yes. 

[00:46:21] Ramit: Okay. Both, both nodding. Um, wait, so what's your strategy to. Not have your kids feel shame about money. Let me guess. Don't tell me. Let me guess. Let's not talk about it at all at home because let kids be kids. Did I get that? 

[00:46:38] Kristina: We some, yeah. Some of it like, yeah, I would say that's more likely.

[00:46:44] Erin: We've talked about the desire to not do the wrong thing when it comes to them with it and like we just dunno what that is yet. So I think we are getting to the point where they're getting older. We wanna understand how to make sure they have a positive relationship and we'd love to help 'em with that.

[00:47:01] Erin: And we, part of this journey is we wanna first have a positive relationship and feel like we have that in our, our life as well to be able to showcase that and be an example of that. 

[00:47:11] Ramit: Yeah, that's great. You, you cannot teach kids a healthy relationship with money without having one yourself. 

[00:47:16] Erin: Exactly. A hundred percent.

[00:47:19] Ramit: Both of them were raised Catholic. Both are gay. Both come from families that never talked about difficult things like money, mental health, and now they carry a lot of guilt. In fact, from my discussions with many, many people in my community, lots of Americans love to feel guilty about every major aspect of their life.

[00:47:39] Ramit: It is what many Americans grew up doing. It's what they know. Sometimes I ask people who are overwhelmed with guilt, I ask them, if you took away the guilt, who would you be? A lot of 'em do not have an answer. It's too scary to think about taking something that is so core to their identity. Can I be really honest about guilt and money?

[00:48:01] Ramit: It's gonna be very hard for you to fix money problems. It's gonna be almost impossible to live a rich life when you are operating from a baseline of guilt and shame. I've talked to couples in their twenties, thirties, forties, fifties, sixties, seventies, from all kinds of different backgrounds, and I hear variations of the same answer.

[00:48:20] Ramit: It's too complicated. I can't do this. I'm just not good at money. Money makes me feel guilty. This podcast is not for your intellectual entertainment. This podcast is to show you that despite any number of fascinating human dynamics, you too can create a rich life. In fact, it is an obligation. It is your responsibility to engineer a rich life for you.

[00:48:48] Ramit: You can learn this. It doesn't matter if you're making a late start. Think about anything else that you've learned later in life. A sport, a language. You didn't become elite but you didn't need to. Money works the same way. You can go really far learning the basics, and you can get results fast. If you're ready to understand the basics and work through the psychological barriers that have held you back, the same ones that I just talked about, my money coaching program will show you how you do not have to do this alone.

[00:49:19] Ramit: Join me at iwt.com/money coaching and right after this we will get back to this conversation.

[00:49:30] Ramit: When you think about your financial situation right now, what part feels the hardest? 

[00:49:36] Erin: Knowing what to do next and the fear of not wanting to, you know, fall into habits. 

[00:49:43] Ramit: Okay. Christina? 

[00:49:46] Kristina: I think for me it's the maintaining of the income 

[00:49:51] Ramit: because money comes and money can go away. Is that what you mean? 

[00:49:54] Kristina: Yeah.

[00:49:55] Kristina: Like when you talk, I keep being like, well, 210,000 is only based on the last two months and those have been my best months and blah, blah, blah. 

[00:50:06] Ramit: Yeah. Good, good. Identifying that invisible script. Um, Aaron, you've been described as the stable one when it comes to the finances. I think that's because of your full-time job.

[00:50:18] Erin: Yes. 

[00:50:19] Ramit: Do you accept that role? 

[00:50:21] Erin: Not as I think willingly anymore. I think at first, very much so. Like I think, um, Christina is like one of the most amazing people I've ever met, and I really believe in her and I think I fell into this role not wanting to like, um, not encourage or not support. But then because of that, like I think over time when it went like longer, me being with table one, it just got really hard.

[00:50:50] Ramit: Is it hard now? 

[00:50:53] Erin: I mean, it's been easier lately because it, she's crushing it. 

[00:50:58] Ramit: Hold on, let's repeat what just happened verbatim so you can see it. 

[00:51:01] Erin: Okay. 

[00:51:02] Ramit: You're crying. 

[00:51:03] Erin: Yeah. 

[00:51:04] Ramit: And I say, is it hard now? And your response was 

[00:51:09] Erin: No, because I don't wanna say maybe I still sometimes yes. 

[00:51:18] Ramit: Even in your hypothetical answer.

[00:51:19] Erin: Yeah. Mm-hmm. I 

[00:51:20] Ramit: read it. You said I Maybe I don't want to say maybe. Yeah. Notice the qualifications, the equivocations. 

[00:51:27] Erin: Oh yeah. 

[00:51:29] Ramit: Can I just tell you guys something? Sometimes feelings are not the most important thing in the room. Can we do an, can we do an exercise? We'll call it REITs, 62nd truth telling. Okay.

[00:51:39] Ramit: In this exercise, all of us are gonna be respectful of each other. There's no doubt about that. But we are going to say the thing that we have never been able to say that we really want our life partner to hear the thing that is so important. We are willing to potentially even hurt their feelings temporarily in order for us to build a stronger bond and a richer life together.

[00:52:07] Ramit: Let's just take a second and think about what we might want our partner to hear. I. 

[00:52:15] Erin: Want stability because I wanna have this great future together. And we talk about, I wanna feel more security. I want to enjoy, not stop working so hard all the time and actually enjoy. I feel like I miss her I the time because we're so busy.

[00:52:35] Erin: I think that as proud as I am with the entrepreneurship piece, it's just been just really hard. And I wish it wasn't so hard. 

[00:52:44] Kristina: Um, it's funny, like you don't say these things out loud, but you know, like we know, like, and I think in the past we've talked about like, I wouldn't blame her if she resented me. I wouldn't blame her if she were frustrated.

[00:53:03] Kristina: I don't discount the pressure that it puts on her for me doing what I wanted to do. And quite frankly, like her not. Her job is not easy, and I know she can't leave it, but I get to do what I wanna do. So I understand. 

[00:53:23] Ramit: Christina, what about you? What do you, if you could be open and honest about money, knowing that Erin would be receptive and you would not be concerned with hurting her feelings or walking on eggshells, what would you say?

[00:53:34] Ramit: How do you feel about money? What do you want and what do you need? 

[00:53:37] Kristina: I think I wanna feel more like a team. I wanna feel like I can tell you things, not like it's not gonna hurt your feelings, but feel like that's okay if it does. I think one thing I keep thinking about is we don't take any shortcuts in our life.

[00:53:56] Kristina: Like we, we buy the best stuff. Parents always making like the most amazing meals or like everything is done to the end degree. And I think because of that, we like, we don't get any time together and we don't. Get to connect. And it feels like if there were more, if we were okay with taking some shortcuts, it would be easier to do that stuff.

[00:54:23] Ramit: So again, feelings are important. Here's what I'm saying. I'm not trying to say you need to become a 10, you are who you are. But I will say that even in that experiment, I didn't hear specifics. What, what changes are gonna happen. I don't know. What do we need Christina to do? I don't know. Christina, what do you need Aaron to do?

[00:54:40] Ramit: I don't know. So it all felt very good. 

[00:54:44] Erin: Mm-hmm. 

[00:54:45] Ramit: But do y'all see how you're trapped in this dynamic? 

[00:54:48] Erin: Yeah. Yeah. Like you want specific action items, you mean, or 

[00:54:52] Ramit: you want specific action items? Not me. You should want them. 

[00:54:56] Erin: Yeah. That's what I mean. Like to hear from us. Yeah. I think like weird that we don't know what we want.

[00:55:00] Ramit: Exactly. That's really what it is. Does anybody know what? What do you want? Because making $210,000 a year, paying the minimum on your debt, saving no money, having two weeks of savings, to me, it's just not acceptable. 

[00:55:14] Erin: Mm-hmm. I wanna save $20,000 by January. 

[00:55:24] Ramit: Really? 

[00:55:26] Erin: Yeah. 

[00:55:26] Ramit: Don't mind that it's picked out of thin air.

[00:55:28] Ramit: I don't care. At least we're talking about a number and we can work with that. 

[00:55:32] Erin: Mm-hmm. 

[00:55:33] Ramit: But we can't go from just feelings and talking magically to a number. Sometimes we just have to start with the math. Right now I'm gonna put it up on screen. If we look at your fixed costs, they are $10,000 a month. You see that?

[00:55:47] Erin: Mm-hmm. Mm-hmm. 

[00:55:48] Ramit: So what you just described is, I want two months of emergency fund. Okay. Because if you got laid off mm-hmm. You would immediately cut all your spending on this stuff. Mm-hmm. You would cut your savings and your investments and all you need to do is just pay to keep the lights on. Just to overly simplify, so you just said, I want two months of an emergency fund.

[00:56:10] Ramit: I respect that Personally, I recommend people have six to 12 months. Okay. But I think two months is a great place to start. Do you see how what you just said actually fits in beautifully with your CSP? Outstanding. Yeah. Great work. Okay. Okay. Christina, what do you want? 

[00:56:28] Kristina: I wanna tackle our debt. I feel like it's crushing us each month.

[00:56:33] Kristina: I feel like we just give, we burn $1,200 every single month, just holding it 

[00:56:40] Ramit: Nice. You wanna pay your debt off? 

[00:56:43] Kristina: Yeah. 

[00:56:44] Ramit: Like, you wanna pay it off slowly, aggressively. 

[00:56:48] Kristina: No, I wanna, I want it gone. 

[00:56:50] Ramit: Really 

[00:56:51] Kristina: wanna get rid of it. 

[00:56:53] Ramit: Wow. That's, that's cool. You know, we could do this. We could all make all of these things happen.

[00:56:59] Ramit: What do you think? Does anybody believe me? Sounds like, is this a silent skepticism I'm seeing right 

[00:57:05] Kristina: now? You're, you're weirdly confident, so let's, yeah, I'm here for it. 

[00:57:08] Ramit: Hey, of course I'm confident I know what I'm doing. The thing is, I want you to be confident, not me. 

[00:57:14] Kristina: Yeah. 

[00:57:14] Ramit: Alright. Here's the deal. You wanna save money?

[00:57:16] Ramit: We can build up your savings. If I were you, that would make me feel so much more confident. Mm-hmm. That would make me feel safer. Aaron, which is something you have mentioned wanting. I would love that. Okay. Christina, if I were you, I would want to pay off this debt. Just get rid of it. Why are we even in this situation, we're making way more money than I thought.

[00:57:40] Ramit: I want this done so I can be free of it. 

[00:57:43] Erin: Mm-hmm. 

[00:57:45] Ramit: I'm gonna pull the conscious spending plan up on screen. I would like you both to just look at these numbers. If something is confusing, just ask. I'm happy to walk through anything and just what I'm looking for is conceptually what are the two or three major things that you would do in order to build up your savings and or pay off your debt faster?

[00:58:10] Ramit: Let's go through the key parts of this. We have your income over here, $210,000 a year. We have your fixed cost, that's 79%. That's pretty high. That will make it difficult for saving and investing a bunch of money. We have savings and investments at 1%, pretty low and guilt-free spending at 19% conceptually.

[00:58:33] Ramit: Aaron, what might you do? 

[00:58:36] Erin: Actually put a plan to the guilt free spending money, like actually consciously say, okay. An amount of that is going to go towards savings, investments, paid on debt, something like that. 

[00:58:49] Ramit: Great. Okay. So you would take some of that money, that $2,465 in guilt free spending and you would reallocate it towards savings and debt.

[00:58:58] Ramit: Mm-hmm. Great. Okay. I think that's a very good strategy. Uh, Christina, what about you Conceptually, 

[00:59:03] Kristina: Erin has some stocks, and we talked about cashing out a percentage of the stocks to be able to pay off the debts. 

[00:59:15] Ramit: We're not gonna do that. That's, I'm gonna tell you why we're not gonna do that. There's like several reasons why we're not gonna do that.

[00:59:19] Ramit: Number one, if you sell your stock, um, where does the money go for in your investments? It goes to your debt. So what's gonna happen as you two get older? You're gonna have no money. You're basically robbing your future self and gotten really nothing out of it. It's not a good situation. So gimme another conceptual choice you're gonna make.

[00:59:40] Kristina: I don't cut up my credit card. Um, I don't even want it. I've started using debit for everything. Mm-hmm. For a while I used credit for everything because I got points. 

[00:59:55] Ramit: You used a credit, you used a credit card because you got points when you're in credit card debt. 

[01:00:00] Kristina: Yeah, because at first it was like, well, I get points and then I'll pay it off.

[01:00:06] Kristina: Just being honest, it just is what went through my head

[01:00:12] Ramit: one day in my obituary. I want to be celebrated not for the millions of people I helped to lead rich lives, not for being a loving husband and son and brother, none, none of that. All I want to be celebrated for is for remaining sane. As I talk to person after person in severe credit card debt who still charges so they get free miles and points.

[01:00:43] Ramit: Why am I on this planet? Okay. I had to stop myself from exploding right there. Christina just told me she's still using her credit cards. Why Four points? And that is while carrying $50,000 in credit card debt, I'm sitting here thinking, are you serious? You're paying over 20% in interest so you can earn 1% back in points.

[01:01:08] Ramit: You know, the first time this happened on this show, I thought it was a one-off. Then I met guest after guest who's in credit card debt, but they keep spending on their card and when I ask 'em why, they look at me like I'm crazy. Uh, duh. For the points, you remember how happy we were when we were kids. We opened up a happy meal and we got a toy at the bottom.

[01:01:27] Ramit: That's essentially what a lot of people do with their credit card points. They spend $50 to get 25 cents in free toys. Let me tell you, as someone who has points and who has money, the very best rewards program is being able to pay for whatever you want, whenever you want. And if you are in debt, listen closely.

[01:01:46] Ramit: Credit card rewards should be the last thing that you are focused on. So what else can you do? 

[01:01:53] Kristina: Make more money. 

[01:01:54] Ramit: You could how? 

[01:01:57] Kristina: Keep doing what I've been doing. 

[01:01:59] Ramit: Okay. I agree. And hopefully that's great. What if it's not, 'cause you mentioned the last two months have been your best months ever. 

[01:02:04] Kristina: Mm-hmm. 

[01:02:05] Ramit: What if it goes down, 

[01:02:07] Kristina: that plan doesn't work, 

[01:02:08] Ramit: and then 

[01:02:09] Kristina: we, we need another plan.

[01:02:12] Ramit: No, we're not. Not even close. You two make $210,000. What the hell are you talking about? We're you make 85, 60 a month. Right? That's you. 

[01:02:20] Kristina: Mm-hmm. 

[01:02:21] Ramit: Meaning in the last two months, if we extend that out for 12 months, you're getting paid $102,000 per year. 

[01:02:28] Kristina: Mm-hmm. Right? 

[01:02:29] Ramit: Mm-hmm. How much could you make if you got a job on the open market?

[01:02:32] Ramit: I 

[01:02:33] Kristina: don't know. Buck 50 maybe. 

[01:02:36] Ramit: Oh, what the fuck? You can make 150 K if you got a full-time job. 

[01:02:40] Kristina: Mm-hmm. 

[01:02:41] Ramit: Just outta curiosity. Wait a minute. I'm kidding. Am I being led into a trap or am I the one leading the trap? 'cause usually I'm leading the trap. I'm not sure what's happening right now, but I'm gonna go with it.

[01:02:52] Ramit: Tell me, before these last couple of excellent performing months in your business where you've made 85, 60 per month gross, how much were you making before that? 

[01:03:01] Kristina: Like 5K, probably 

[01:03:03] Ramit: 5K per month, meaning 60 K per year. Mm-hmm. And you're telling me you can make 150 K on the open market? 

[01:03:09] Kristina: Mm-hmm. 

[01:03:10] Ramit: And this has been happening for a long time.

[01:03:11] Ramit: Out of curiosity, just asking an innocent question. Why not shut the business down? Go make $150,000 a year. 

[01:03:17] Kristina: It's my nightmare. We're working in corporate. I just don't function well. 

[01:03:24] Ramit: You don't like 

[01:03:24] Kristina: corporate there at all? I hate it. 

[01:03:26] Ramit: All right. I don't, one thing I don't like about corporate is, um, wearing those key cards, you know, on your wallet, you, or on your, you gotta pull that out and badge in.

[01:03:35] Ramit: I'm like you, I'm not wearing anything, just 'cause my boss told me to. That's why I'm not set for corporate. But you know what I hate more than wearing a key card is being in $106,000 of debt. Now, I'm not saying you have to go back to a corporate job. I'm not saying it's your life, your money. 

[01:03:53] Erin: Mm-hmm. 

[01:03:53] Ramit: I am saying this is a market difference in how much you can make.

[01:03:58] Ramit: If you can make 150 K on the open market, that is certainly one possible way to rapidly pay your debt off. Would you agree? Mm-hmm. Okay, great. Now we're getting stuff out on the table right now. Let's just come up with some general guidelines. Where do you think the $2,400 a month is going? 

[01:04:17] Erin: Eating out? 

[01:04:18] Ramit: How much Wow.

[01:04:21] Ramit: A look of alarm on Christina's face. How much. 

[01:04:25] Erin: Like four or five maybe. Probably at least five, probably. 

[01:04:31] Ramit: Um, have you guys ever listened to this podcast before? Whatever People tell me it's three times the actual 

[01:04:36] Erin: as much. Excellent. Yeah. Great. 

[01:04:38] Ramit: Especially for people who like good food as you both described.

[01:04:42] Ramit: So if you say 500, Hmm. Yeah. Right. It's a thousand at least. Okay. Alright. What's next? 

[01:04:49] Kristina: Coffee. 

[01:04:50] Ramit: That's already included in eating out. 

[01:04:53] Kristina: Okay. Oh, then yes, for sure. It's at 

[01:04:55] Ramit: 1,015 hundred, right? Yeah. Okay. What else? The house. How much stuff is coming onto this house? Better be honest too, 'cause I know we're counting Christmas in there and whatever, holidays, all of it.

[01:05:06] Kristina: Like birthdays and Christmas. 

[01:05:08] Erin: Yeah. 

[01:05:10] Kristina: Aaron loves a celebration, like the rest of 

[01:05:12] Erin: it, I guess. Like the rest, 

[01:05:13] Ramit: the rest of it. Okay. 

[01:05:15] Kristina: Like, yeah, I, 

[01:05:17] Ramit: oh, it's a lot. 

[01:05:18] Kristina: It's a lot. 

[01:05:19] Ramit: It's a lot. Okay. Alright. 

[01:05:20] Kristina: Yeah, 

[01:05:21] Ramit: I, I like, I like the honesty. Honestly. This is really helpful. There's definitely some other stuff in here that's not being counted.

[01:05:26] Ramit: Like if you travel once a year. Mm-hmm. And let's just say that it costs $12,000 for a trip. We spread all that out. That's actually $1,000 per month. So I'm being super approximate here. Mm-hmm. But if we just factor the following in, eating out 1500 a month, who knows if I'm right or wrong? I'm probably wrong.

[01:05:45] Ramit: I don't know in what direction, but let's just say Uber's 300. House 600. Okay. What do you notice about all these things? 

[01:05:53] Erin: It's a 

[01:05:53] Kristina: lot of money. 

[01:05:54] Ramit: Yes. What was your rich life vision again? Aaron? What was yours? 

[01:05:58] Erin: You mean like stability and being able to do what we want when we want? 

[01:06:00] Ramit: Yeah. Stability. Well, no, you're not gonna do what you want when you want.

[01:06:03] Ramit: You're gonna get stability first. That comes first. Like let's say it was six months of savings. And then Christina, what was your vision? 

[01:06:11] Kristina: Paying off the debt. 

[01:06:12] Ramit: What do you notice about these expenses in light of each of your visions? 

[01:06:17] Kristina: They would really contribute to them. 

[01:06:20] Ramit: Yeah. And actually every time you spend a dollar on these, they're actually leading you further away from your vision.

[01:06:25] Kristina: Mm-hmm. 

[01:06:26] Ramit: Like every coffee you buy is actually one step further away from the rich life that you yourself described. Every Uber trip you take, you're going to Tim Horton's. No, you're not going to Tim Horton's. No, you're going to hell. It's 

[01:06:40] Kristina: definitely 

[01:06:40] Ramit: not. You're gonna hell because you're going further away from your rich life.

[01:06:44] Kristina: Yes. That makes sense. 

[01:06:45] Ramit: Alright. Um, here's what I see, 2,400 bucks a month at least. That could be, at least in part, taking you closer to paying off debt and building up savings. I don't mind. If you want to eat out, that's gonna happen, but I think there's probably just a lot of unconscious money going towards random that feels good.

[01:07:07] Ramit: Mm-hmm. But at the same time, you're not feeling good. You're not living your rich life. You're actually out of alignment. 

[01:07:12] Kristina: Mm-hmm. 

[01:07:13] Ramit: What would you like to do? 

[01:07:14] Kristina: I wanna get the 19% down to, I don't know, like 7%. 

[01:07:22] Ramit: What do you wanna do with that money? 

[01:07:23] Kristina: So like half of that go towards savings and then half of it go towards paying off the debt.

[01:07:29] Ramit: I like that. That's a very reasonable assumption. I also especially like that you said 7%. That's picking a number. Who knows if it's right or wrong, but we are operating with numbers here. Let's see how it looks. What I'm gonna do is I'm gonna go up to debt, and right now you're paying 800 and 400, so you'll see it's still 19%.

[01:07:46] Ramit: Nothing has changed. You're currently paying $1,200 a month towards debt. You can see that I'm gonna add, hmm, an extra 200 bucks towards debt. You're only at 18%. So you can see that, wow, we can afford to do a lot more. Let's do a thousand extra dollars towards debt. Oh my gosh, you're at 11%. That's still $1,465 a month.

[01:08:10] Ramit: Let's put a little bit towards savings. I don't know. 500. Okay, you're down to 8%. Can I make an observation? Mm-hmm. Do you all really want to give $150 a month for gifts instead of gifting yourself that $150 and put it in your savings? 

[01:08:26] Erin: No. 

[01:08:27] Ramit: Christina's like, no. No. Aaron, 

[01:08:29] Erin: I, it's funny, like, I feel like immediately like selfish that I would put it towards like, like us versus like celebrating our friends and family.

[01:08:39] Erin: I don't know. I know that that might sound silly. 

[01:08:42] Ramit: I have this example where I tell people sometimes you have to imagine what somebody else would do, somebody who's really good with money and like you may have an old boss. Um, sometimes when I'm thinking of a management problem, I think about Captain Jean-Luc Picard from Star Trek, right?

[01:09:01] Ramit: Good leader. And so you could pick anybody, dead, alive, actor, whatever. You all need to pick me. For what you would do when it comes to some of the, because sometimes I think your picker is way off. Like what would Ramit say to do? Ramit say, would say he would take this mother. We're not paying them, we're paying us.

[01:09:19] Ramit: We come first as a family unit, us two, and our two kids. That's it. There's no selfishness involved. We are putting ourselves first. We are paying ourselves first. Literally. Now you're putting 5% towards savings. Not bad, not bad. But do you see that? What had to happen there in order for that to work, the spreadsheet doesn't matter.

[01:09:42] Ramit: It's about you becoming emotionally congruent with what your rich life is. You actually have to believe it. You actually have to live it. And if somebody comes up to you, Hey, why don't you give me that Christmas gift? You always give me that Christmas. You say, I love you. I wanna spend time with you right now.

[01:09:57] Ramit: It's important for us to focus on building our savings, and the two of you have to be aligned. Partners because you cannot get where you wanna go if one of you is out of alignment. What do you think, Aaron? 

[01:10:10] Erin: Yes. That you can't. We can't without being aligned. I agree. We're not gonna get anywhere, so we need to be a team.

[01:10:18] Ramit: I left 25 bucks a month for gifts. Are you willing to go from one 50 to 25? 

[01:10:23] Erin: Sure. Will it be easy? I'm not saying it will be, but am I willing to do it? Yeah. 

[01:10:28] Ramit: Great. That's it. I love that energy. 

[01:10:30] Erin: Like it's gonna be tough. Yes. But like 

[01:10:33] Ramit: yes. 

[01:10:33] Erin: You're gonna have to figure it out, right? Like 

[01:10:35] Ramit: all of this is going to be hard.

[01:10:37] Ramit: All of 

[01:10:37] Erin: it. Yeah, for sure. 

[01:10:38] Ramit: And it's important for you both to recognize that all the easy decisions happened five years ago. The easy decisions were ringing up the credit card and taking the line of credit. All that was easy. Now you are only left with hard choices, in my opinion. You either do the hard stuff yourself or the world is gonna force you to do it.

[01:10:57] Ramit: So why don't we just fix it now? What do you say? Yeah. Alright. My team ran some quick calculations. For your credit card debt. We assumed 20% a PR because of Canada. At a thousand dollars a month, it would take you nine years to pay it off and you would pay almost $60,000 in interest. At $2,000 a month.

[01:11:23] Ramit: That will take less than three years and you'll pay just $15,200 in interest. What do you notice about that difference? 

[01:11:35] Erin: It's pretty big. 

[01:11:36] Ramit: It's huge. It's, that's from 1000 to $2,000. 

[01:11:40] Erin: Mm-hmm. 

[01:11:40] Ramit: Now, just to put it in context, if you two are making $210,000, we're talking about the difference between 1000 and $2,000 per month.

[01:11:50] Ramit: Mm-hmm. What do you notice? It should be doable. 

[01:11:53] Kristina: Not that much. Yeah. 

[01:11:54] Ramit: Yeah. Why does it feel so hard when you have tried in the past? 

[01:11:59] Kristina: I think probably 'cause we don't have numbers attached to it. 

[01:12:01] Ramit: Exactly. Exactly. It's all like, it's all feelings that have calcified. It's like strong. I feel very strongly about this, but like, alright, that's fine, but like, what are the numbers?

[01:12:13] Ramit: There's no numbers. 

[01:12:14] Kristina: Mm-hmm. 

[01:12:14] Ramit: Mm-hmm. And in fact, what's happened is you've created an identity around things like, you know, I love, um, good food and like, um, decorating the house and giving gifts. Those have become part of your identity and that's actually what makes this really hard. This idea that like, I might have to actually change who I am.

[01:12:34] Ramit: I'm no longer the good gift giver. This actually really hard, but it can be done. Can we just look at your fixed costs really quick? Is there a way we can get those down? Your, oh, your fixed costs are 86%. That's be artificially high because you've decided to pay more off. Oh, okay. Don't freak out. 

[01:12:55] Erin: What happened?

[01:12:57] Ramit: I mean, look at this. In fact, if we look at it. $2,200 a month towards your debt payments. If you can stick with it, that will go away relatively quickly. Can we look at the rest of this? 

[01:13:11] Kristina: Mm-hmm. 

[01:13:11] Ramit: Mm-hmm. Um, your rent, your rent is gonna go up for less, is that correct? 

[01:13:15] Kristina: We don't wanna spend any more than what we're spending right now.

[01:13:19] Ramit: Great. Agreed. So how are you gonna do it? 

[01:13:22] Kristina: We have to accept less. 

[01:13:26] Ramit: Yes. You mentioned you have how many bedrooms? Three, two and a half. 

[01:13:30] Kristina: Yeah. 

[01:13:31] Ramit: Might have to go down. Would you be willing to do that? 

[01:13:33] Kristina: Yeah, I would. For this? 

[01:13:37] Ramit: Yes. That's the way you do it. Trust me. There's a light at the end of this tunnel. You start making these changes, number one you're gonna discover they're easier to do, they're compounding.

[01:13:46] Ramit: You make one change, you go, oh, like we're actually okay with a half less bedroom. We're fine with that. Oh my God, we're okay spending less eating out. We just plan a little bit more. We make our coffee at home, we're okay with it. The other thing is you're sending a message to yourself. I'm the kind of person that sets a goal and follows through with money, just like the both of you do at work.

[01:14:04] Ramit: It compounds. Alright, what else? Can we cut on this? Groceries? 

[01:14:09] Erin: I'm sure. Yeah. How much like having an actual plan? Seven. 

[01:14:13] Ramit: Seven. Can you do it? You tell me. 

[01:14:15] Erin: I don't know. 

[01:14:16] Ramit: Alright. I, I say 800, target that. Okay. And like if it's eight 15, don't beat yourself up. 

[01:14:24] Erin: Okay. 

[01:14:25] Ramit: Let me guess. Right now when you shop, you don't shop to the price, you don't shop at the labels or anything, right?

[01:14:29] Ramit: You just get what you want? 

[01:14:30] Erin: Uh, yeah. Mostly for like a recipe or plan or like that kind of a plan. But I don't do it from like a spending plan. Like I think it's not lining up obviously. 

[01:14:40] Ramit: Exactly. So from now on you're gonna have to shop differently again. It's gonna suck for a couple of weeks and then you're gonna quickly discover probably, uh, I can't make this type of dish that I used to make.

[01:14:49] Ramit: So sorry, from now on it's gonna be a little bit simpler. But you could do it. I know you can do it. Alright. 200 bucks actually is really powerful and I wanna show you something because I'm not just gonna let that $200 just get evaporated into your financial system. You just saved 200 bucks. Hard decisions at the grocery store.

[01:15:07] Ramit: Where do you wanna put that? 200 bucks. 

[01:15:09] Erin: Either savings or debt. I don't know what the right answer is here. 

[01:15:11] Ramit: Let's split. 

[01:15:11] Erin: Don't know which one. 

[01:15:13] Ramit: Split it. Let's split it. Okay. I mean, mathematically it's probably a better idea to put it towards the debt 'cause it's so high interest. Yeah, but I don't mind. We can do both.

[01:15:21] Ramit: Emergency fund becomes 2 25. 

[01:15:24] Mm-hmm. 

[01:15:24] Ramit: That's nice. That's 6% savings. And then we'll go over to the debt payments and we'll make this 1300. Holy. This is really starting to add up here. You're gonna have money automatically flowing into savings. You are literally going to have an automatic payment of $725 going into an emergency fund.

[01:15:42] Ramit: You will never have to think about it. But after three or so months, you're gonna see thousands of dollars just growing in there. And you're gonna be like, what the fuck? This is so easy. Why didn't we do this? 'cause you didn't have a system. The area you are most likely to fail is guilt-free spending at $965 per month.

[01:16:02] Erin: Right. 

[01:16:03] Ramit: You two are gonna have to make a very clear plan on what you wanna spend that money on. Okay. Because that's everything that's eating out. That's coffee, that's travel, that's all of it. 

[01:16:16] Kristina: How do you do that? Like how do you, how do you, how do you do that? 

[01:16:20] Ramit: Great question. How do you think 

[01:16:22] Kristina: we gotta get clear on where we're currently spending it and then probably set a budget based on item, like break it down even further.

[01:16:34] Ramit: I think that's conceptually right. Usually there are a couple of categories that people need to track. One of them is eating out of $965. How much do you want to go towards eating out? 

[01:16:47] Kristina: Realistically, like it would 

[01:16:48] Erin: probably be half. 

[01:16:49] Ramit: Okay, fair enough. I don't 

[01:16:51] Erin: know. 

[01:16:52] Ramit: 500 bucks approximately. Erin, what do you say?

[01:16:54] Erin: The best way for us to not fail at this is to realistically go like, okay, let's start with half while we're trying to figure out where we're at and then challenge ourselves to get it down. But I feel like if we're gonna be super unrealistic and be like, oh, well we could do this. That's where we're gonna be like, yeah, maybe like hard fail.

[01:17:10] Erin: So I think 

[01:17:11] Ramit: Agreed. Yes. Your instinct is right on. Yeah. So if it's 500 bucks, perfect, then the two of you need to decide that, and then you actually need to just like actually look at a month long calendar. And be like, Hey, let, because this is way tighter than we're used to. We're used to just going out whenever we want.

[01:17:27] Ramit: We just swipe. Mm-hmm. It doesn't matter. But actually now we actually have to plan ahead. So let's break it down. Um, right now, if each of us goes out to dinner twice and then we each get coffee three times a week, how much does that add up to remember to include tax tip? All of it. And then you're gonna quickly realize, holy, we probably can't afford to do delivery.

[01:17:47] Ramit: 'cause that takes up like half of whatever. We can't do coffee as much. You know what? I'd rather just make coffee at home, but we can do these two dinners, so let's plan it every other Friday we're gonna do a dinner. You do this one, I'll do this one, blah, blah, blah, blah, blah. Each of you can own your number $250 per month.

[01:18:06] Ramit: That's the way you do it for travel, if that's one of your things. One of you will own the travel number, and so when it comes to your next trip, you're in charge of making sure you are at the number or below it, et cetera. That's the way I would approach it. How do you, how does that feel to you, Christina?

[01:18:21] Kristina: It feels. Good. I think the, the one place my brain goes is like the, so do we get like a separate account to put those bits of money aside? 

[01:18:33] Ramit: Very good question. So, you know, one simple way to start, so first of all, I want you to reread. I will teach to be rich together and read it, not the audio version. You can have the audio version to supplement it for sure.

[01:18:48] Ramit: But I want you to look through the diagrams and the way that I talk about tracking, and I actually want you to do it together. When you do that, especially in chapter four, conscious spending, you're gonna see how to focus on the key levers. You're also gonna get some more ideas of how to reduce some of your current expenses.

[01:19:05] Ramit: You can take that money, you can redirect it to savings. Now there is one last piece that I want to emphasize, which is the income piece. Christina, you've mentioned several times, like, I don't know if it's gonna stay. My income is good for the last two months, but it could all go away. Here's what I tell every entrepreneur.

[01:19:26] Ramit: First of all, the fact that you're making a run rate of $102,000 a year is outstanding. That's awesome. But you know that Aaron craves stability. It's a big deal. It, and the whole entrepreneurship, which until recently has made, you know, around 60 K per year. The whole idea of being involved in NFTs, all of it, is the opposite of stability.

[01:19:56] Ramit: And so right now you're in an enviable position. It's awesome. Here's what I would suggest to you. I would suggest making an agreement with Erin, and I would suggest you take the lead, Christina, and you come with a, a suggested outcome. You say, look, I am going to commit that I'm going to make at least $8,000 per month.

[01:20:20] Ramit: At least $8,000 per month consistently on average for the next four months, five months, six months. And if by the end of six months my number is not there, I'm gonna quit and get a full-time job. And if it is off to the races, we're great, et cetera. Now, again, I'm not telling you have to do this. It may not be six months.

[01:20:45] Ramit: There's all kinds of variables you can play with, but you can see Aaron's nodding, just this idea that do the entrepreneur thing, great. You're crushing it right now, great. But if it goes away, if it doesn't hit the numbers you need, there's got to be a plan where you call it, you wrap it up, go get a well-paying job bank a bunch of money, and then when the time is right, you can come back and be an entrepreneur again.

[01:21:08] Ramit: How does that strike you, Christina? 

[01:21:09] Kristina: Yeah, I think that's fair. 

[01:21:11] Erin: Yeah, I think that's fair. As much as I've always wanted to just be like. No, do everything you want. Um, it just, I think it, I think it's a realistic look at like having what, having a plan in that situation looks like. Yes. And I think that's what I craved it.

[01:21:27] Erin: Not even like just the stability. It's like, what? What's the plan B? And I think not having the plan B has been hard. So if we had a plan B for that, I think that would be great. 

[01:21:36] Kristina: And I think some of what the hard part for you is that like not knowing if this is just gonna stay like this forever. Like not having a plan leaves you guessing.

[01:21:49] Ramit: Now let me ask you something, because it's all great to talk about all these cool ways that we can do this, but if nothing changes in the next five years, what will happen? 

[01:22:01] Kristina: I'll probably be divorced. Yes. Yeah. Or yeah, just, yeah. We need to change. 

[01:22:09] Ramit: Christina, why do you say that? It's pretty serious? 

[01:22:13] Kristina: Because I think that.

[01:22:15] Kristina: She would divorce me and she, and we've had to have like those hard conversations before. Mm-hmm. 

[01:22:23] Ramit: Like this is not just an intellectual exercise. It's actually like it has to work. Yeah. When you walk into something like this and you walk out of it saying like, this has to work and therefore we are going to make it work.

[01:22:37] Ramit: I don't care if it's hard, I don't care if we have to have difficult conversations. I don't care if I have to say things I've never said before, we are doing this because we as a couple, as parents need to make this work. 

[01:22:50] Erin: Yeah. I, I, I do completely agree. Like, like we have no choice but to like, make hard choices and changes.

[01:22:58] Ramit: Christina and Erin have a plan now two and a half years to pay off $106,000 in debt. Cut guilt-free spending from 2,400 to $500 a month, no more using credit cards while carrying a balance. This is a clear, simple plan. I love it. Now, simple is good, but simple is not the same as easy. Here's what I'll say.

[01:23:19] Ramit: I was pleasantly surprised by how they both showed up today. They were coachable. They were open. They ran the numbers themselves and faced uncomfortable truths. They were even willing to hear something that's really difficult, especially in America, which is that buying a house right now would actually make things worse.

[01:23:37] Ramit: They've worked with coaches before. I know that nothing stuck. Why? Maybe they were just performing. Maybe they were just going through the motions. The question of course is will it be different this time? I'm not sure, but I have hope based on what I saw today. It depends on them whether they are willing to do the ongoing work, not just the spreadsheets.

[01:23:58] Ramit: That part's easy, but the work of building trust with themselves and with each other, having uncomfortable conversations week after week, which will get easier and will eventually feel good. Good news, we have follow-ups. Let's check 'em out and see if they've been able to do that work. 

[01:24:17] Erin: Okay. Recapping my biggest surprise, biggest takeaway and what we plan to change from Christina and I having our chat with Ramit.

[01:24:26] Erin: Biggest surprise. I think for me, I think this is pretty mutual. Um, how terrible we are at having these conversations. Even though we're very well-intentioned and we don't wanna hurt each other's feelings that is doing more harm than it is doing good. So figuring out that clear communication. I love Ramit's suggestion of, you know, what are you dealing with the facts and what are you dealing with the, with the emotion.

[01:24:46] Erin: So there's probably ways we can separate that, which I think is really, really great. But that I think was my biggest surprise, um, biggest takeaway that I wanna make it personally, I will make it, um, easier for Christina to talk to me about these things so that we do take a little bit, um, of that hesitation out of it and figuring that out.

[01:25:06] Erin: Also, just. Conscious, being conscious and having a conscious spending plan. I do love the title of that. I think the unconscious piece has been not so beneficial for us. So yeah, bringing that conscious spending plan together is gonna be great. Um, and then specific action items. Meeting once a week for sure is what we're gonna do, um, to just kind of kick it off as well as really taking everything Ramit has said seriously and give it a go because we've got nothing to lose.

[01:25:33] Ramit: Hey folks. Uh, Christina here finishing my homework for Ramit. So the biggest surprise for me, I think was just how hard it was. Like the physical reaction that both of us had with telling each other how we were feeling about this. We knew avoidance was an issue, but I don't think I realized how bad it was and how much our fear of hurting and disappointing one another was driving our behavior.

[01:25:56] Ramit: Some of the takeaways for me are really related to just like, this isn't our. Our, the realm of possibility, this is something that we can do. This is something we're in control of, and it's not gonna be easy. I think Ramit said your easy time is over. You've had a very long time to say yes to everything, and it's gonna be hard, but the changes in the shifts that you have to make aren't as hard, I think as, as I thought.

[01:26:21] Ramit: And they're, they feel manageable. Um, and the difference between like a $100 a month in one place and $200 a month is substantial. So the more that, almost like gamifies it for me, the, the saving in one area and saying, okay, cool, that means that the reallocation of money and the debt payments and the debt reduction is gonna come much more quickly.

[01:26:45] Ramit: Um, feels really good for me. The biggest changes we're gonna make are we're gonna be meeting weekly about this, uh, and seeing where the money's going and making shifts and changes to the conscious spending plan, as well as just looking for a place we decided we're not going to pay any more than what we're already paying, even if it means we're gonna get less.

[01:27:06] Ramit: And it's just something that we're willing to accept before the show. We could tell we were kind of creeping up, like, well, maybe 4,500 is fine, or maybe, you know, maybe even more than that. And that's, both of us feel very uncomfortable by that now. So those are the updates from, uh, from my end, 

[01:27:24] Erin: latest updates since we last chatted.

[01:27:28] Erin: Is, um, I feel like a lesson that's come up that we learned with Rami, Christina and I, is something we talk to our kids about all the time, which is that we can do hard things. We spend a lot of time trying to explain this to them and what that means. And I think we've recently made a decision to do the harder thing.

[01:27:49] Erin: We had to move really quickly. A time where throwing a lot of money at a situation like that to make it feel easier, do the thing that is more convenient, could be so easy. But we're doing the thing that's a bit harder. We are moving in with Christina's parents. We are going to figure out the right thing, the thing that is going to be the right move for us financially.

[01:28:10] Erin: So I'm really proud of us for doing that. Next step will be to revise our conscious spending plan based on our new, um, you know, expenditures with our new living situation. And we will go from there and keep doing the, doing the work and doing the hard. 

[01:28:26] Kristina: Hey y'all. The biggest update from our end is that I am doing this video from my new spot, my new setup at my parents' house.

[01:28:37] Kristina: So we were evicted from our rental. We talked about that on the podcast, and I think we just weren't prepared after having the conversation to spend any more than we were already spending. We were kind of at the limit, and we have the privilege and are so incredibly grateful that my parents live 15 minutes down the road and have the room for us.

[01:28:59] Kristina: And they said, don't rush. Find something that works for you. Don't pay. More than you're willing to spend. Come save some rent over the next few months and an indetermined amount of time and bring the kids and we'll be here. Again, just so much privilege and, and gratitude in that. But, uh, the ego was fighting big time, a lot of resistance, uh, to the idea and a lot of pride in going back home to my parents.

[01:29:30] Kristina: But Aaron and I sat down. We made the call together, which is also a big update. We spoke about the things that made us uncomfortable, spoke about the things that we were worried about, and just said, let's do it. What's the worst that can happen? So we're taking it in stride. We're doing our best. We're continuing to just try to talk together more and stop avoiding really hard conversations, and that's the biggest thing.

[01:29:58] Kristina: So. Wish us love. We'll talk to you soon. Bye. 

[01:30:02] Ramit: Listen up if you want my help with your specific money questions. There are only two ways to get it. First, you can apply to be on this podcast at iwt.com/apply. Or second, you can join my money coaching program instantly at iwt.com/money Coaching. In that program, you get access to live virtual events, monthly group coaching calls, live q and as, and an amazing, huge community of other people like you.

[01:30:31] Ramit: Check it out at iwt.com/money coaching.