282. “We spend 154% of what we make. Will we ever stop drowning?”

Ramit digs into how years of overspending, money avoidance, and relying on future income have left a couple with more than $428,000 in debt, no savings, and a financial life they can no longer sustain.

Ramit Sethi of I Will Teach You to Be Rich talks with Addison, 39, and James, 43, who earn around $138,000 a year but have $0 in savings and fixed costs consuming a staggering 154% of their take-home pay. Addison feels responsible for keeping their finances afloat, while James admits he's spent years relying on optimism and money he expects to earn in the future.

As Ramit digs deeper, it becomes clear they are both contributing to the problem through restaurants, concerts, Ubers, shopping, and pet spending that has reached thousands in a single month. He helps them uncover the childhood money patterns behind their behavior, confront what they can actually afford, and make some of the biggest lifestyle changes attempted on the show all in an effort to stop living on future money and build a financial life they can actually sustain.

A special thanks to our new partners at Monarch for sponsoring this episode. Try Monarch for free today, and get 50% off your first year of Monarch’s core tier at https://monarch.com/ramit, promo code RAMIT. When you sign up with my link only, you’ll get your Monarch account customized with my exact CSP categories so you can see exactly how you’re stacking up to your plan each month. That’s https://monarch.com/ramit, promo code RAMIT.

In this episode we uncover:

• Why Addison says they may divorce if their relationship with money doesn’t change
• How more than $428K of debt, $0 savings, and 154% fixed costs have left them financially exposed
• Why James admits he has been “betting on money that’s not there yet”
• How Addison became the financial safety net while increasingly feeling like a caretaker
• Why restaurants, concerts, Ubers, shopping, and convenience spending became part of their everyday life
• How they planned to spend more than $3,300 a month on food and over $1,000 a month on their dogs
• Why Addison’s frustration with James is only part of the story and how her own spending contributes too
• How growing up around financial stress and poverty shaped the way they both think about money today
• Why 30% of their spending went toward shopping and why they couldn’t even remember some of what they bought
• How they radically restructure their spending, savings, investments, and rules around money

 

Chapters:

(00:00:00) Introduction
(00:03:31) Why divorce is already on the table
(00:08:54) The spending habits keeping them stuck
(00:19:09) How Addison became the financial safety net
(00:34:54) The true scale of their $428K debt
(00:55:29) The childhood patterns behind their spending
(01:17:08) Their shopping wake-up call
(01:18:08) Making a radical lifestyle reset
(01:30:26) Building a new financial plan
(01:47:02) Follow-up

 

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Transcript:

 

00:00:00:04 - 00:00:04:20

Addison

The spending is out of control. We have no savings. We are living way beyond our means.

 

00:00:04:21 - 00:00:09:22

Ramit

Fixed cost 154%. That is one of the highest numbers I've ever seen.

 

00:00:09:23 - 00:00:19:11

Addison

Shocking to see the numbers and a little thankful in that I was finding out the debt that James has is just way more than I could have ever anticipated.

 

00:00:19:12 - 00:00:22:21

James

It was very foolish. You can't plan a life on vibes.

 

00:00:22:21 - 00:00:27:08

Ramit

I never met a couple in $400,000 of debt that went to a beer garden once a week. With tacos.

 

00:00:27:08 - 00:00:29:23

James

We overvalue the almighty convenience.

 

00:00:29:24 - 00:00:35:15

Ramit

You said we will likely divorce if things continue on as they have.

 

00:00:35:16 - 00:00:46:13

Addison

I am supporting his career. I am the safety net and I am taking care of everything. Just done with the defensiveness and the excuses and the reasons why I can't literally keep doing this anymore.

 

00:00:46:14 - 00:01:12:23

Ramit

Guys, we can't get any further if you're not honest about what's going on 154%. It's not about cutting your phone bill down by $20 a month. If you want to make radical change, you have to admit some deep things about yourself that might be quite uncomfortable. You ever feel a little nosy? I do, and recently I started having couples on my podcast connect all of their accounts to monarch so that I could see every transaction.

 

00:01:12:24 - 00:01:41:15

Ramit

Monarch is a platform that puts all of your accounts, your income, even those individual transactions in one place. Today I'm speaking to Addison and James. They're 39 and 43, newly married, and Addison says they will likely divorce if things continue as they have. Listen to this line from the application. I've had to actually take on more work and student loan debt to subsidize his career growth and financial stability at the literal expense of my own.

 

00:01:41:16 - 00:02:07:11

Ramit

If we don't nip this in the bud now, we will retire homeless from their application. You can see that the stakes are as high as they come. Okay, let's take a look. Here we have. Whoa! $2,690 earned, but 7889 spent. Where's the savings? Where's the investments? What's going on here? All right, I'm starting to develop some suspicions. You know what?

 

00:02:07:11 - 00:02:32:17

Ramit

Let's go back a month and see what happened a month before. I'm back here in July. Fixed costs now at 14,659. Whoa. That's 154% of take home pay. Well, that's the ball game right there. You are spending more than you make every single month, just in fixed costs, and not even at 100%, 154%. I mean, take a look here.

 

00:02:32:17 - 00:03:01:24

Ramit

I can see pets that month at $2,667. Notice another thing their groceries, the amount they planned to spend in one month, $3,363 for two people. The fact that they are planning to have that much money spent on groceries in a month tells me that they're probably not looking at the big picture, nor are they particularly in touch with where their money should go.

 

00:03:02:00 - 00:03:31:18

Ramit

Also, notice that the amount they have planned to spend on debt every month $1,798. If you're spending almost $2,000 a month to pay off debt, you probably have a huge amount of debt. The question is, where does it show up here? I'm not seeing any particular debt. I'm seeing $4,882 on credit cards, which is a somewhat reasonable amount, but there's got to be a large amount, tens of thousands of dollars of debt somewhere that's not showing up here.

 

00:03:31:18 - 00:03:53:11

Ramit

I want to find out where it is. We have a lot of work to do. Let's talk to Addison and James. Addison. When you applied to speak to me, you wrote something in your application. I'd like to read it back to you. You said one of the first things James said to me when we first started seeing each other six years ago was, I'm not good with finances.

 

00:03:53:15 - 00:04:09:03

Ramit

I now know what he meant, and I didn't know it was this bad. We will likely divorce if things continue on as they have. Where were you and what was happening when you wrote this application?

 

00:04:09:05 - 00:04:34:17

Addison

It was probably 4 a.m. on my computer. At a moment of desperation, we had been trying to have more conversations around money and just having transparency about our lives, what we want, how we're going to move forward, challenges with being able to pay rent on time. The past it was just flat out. I will talk about it until I feel confident, until I have money.

 

00:04:34:19 - 00:04:58:19

Addison

So the burdens been on on me to manage that and also to be the project manager of like the rest of our house and everything. And I just got to a point where I felt like I was putting myself on hold and feeling responsible for everything while not moving forward with my own career. And I was just really nervous about how things were going to look moving forward.

 

00:04:58:19 - 00:05:11:04

Addison

Do I really have a partner or am I a caretaker? And I'm not caring for myself? So at a desperation, I sat down and typed up a very, very long application and sent it your way.

 

00:05:11:05 - 00:05:22:07

Ramit

Okay. I'd like to ask just a couple of questions about your relationship. And then, James, I'd love to hear your thoughts. How long have you been married?

 

00:05:22:09 - 00:05:23:16

Addison

A little over a year.

 

00:05:23:19 - 00:05:27:02

Ramit

Okay. And how long have you known each other before you got married?

 

00:05:27:06 - 00:05:28:02

Addison

A long time.

 

00:05:28:05 - 00:05:40:09

James

So we knew each other. At least we're running in the same circles and kind of in a adjacent or friend groups for 20 years before we got together.

 

00:05:40:10 - 00:05:43:04

Ramit

Okay. Any children?

 

00:05:43:06 - 00:05:45:01

Addison

No, no, just the two dogs.

 

00:05:45:02 - 00:05:46:09

Ramit

What do you both do for a living?

 

00:05:46:10 - 00:05:51:03

James

I work in garage door sales in the service.

 

00:05:51:05 - 00:05:54:02

Addison

Academic scholarship. Researcher, consultant.

 

00:05:54:03 - 00:06:04:11

Ramit

Great. Okay, now, James, hearing Addison's application, some pretty strong words. How does that strike you?

 

00:06:04:12 - 00:06:26:09

James

I mean, it made me feel guilty and kind of forced me to confront the realization that I had been getting by on a lot of wishful thinking financially and making promises based on that, and that it was gutting and deteriorating like some of the foundations of our relationship.

 

00:06:26:11 - 00:06:31:03

Ramit

When did you first hear about the application? Was it just now or was it weeks ago?

 

00:06:31:04 - 00:06:46:20

James

Weeks ago, she she read it to me. Oh, we had both, you know, watched the podcasts and read the books and been aware of you in this program and everything for a couple of years, I think for a little while.

 

00:06:46:22 - 00:06:51:18

Ramit

How were you aware of it? But you were not making changes in your own financial life?

 

00:06:51:20 - 00:07:17:06

James

I at that time had been working in, you know, a commission only door to door solar sales and relying on fees or famine windfalls was kind of how my income came in. The big winds were always just around the corner, you know? And so, as Addison mentioned, I was reluctant to.

 

00:07:17:08 - 00:07:28:24

James

To talk about it until, you know, I had closed enough deals to have enough in the coffer to be comfortable talking about how to use finances.

 

00:07:29:03 - 00:07:31:09

Ramit

Looking back now, what do you think about that approach?

 

00:07:31:11 - 00:07:33:13

James

It was very foolish.

 

00:07:33:15 - 00:07:34:04

Ramit

Why?

 

00:07:34:05 - 00:07:45:14

James

Because you can't plan a life on vibes. You know, I was just sort of relying on Addison's steady income.

 

00:07:45:14 - 00:07:49:06

Ramit

Once Addison told you this application, what did you do?

 

00:07:49:08 - 00:07:57:01

James

Took a deep breath. I thought it was very fair. I think I apologized.

 

00:07:57:03 - 00:07:58:04

Ramit

And then what did you do?

 

00:07:58:05 - 00:08:03:14

James

I guess we we talked about it. And, you know, I agree that change needs to happen.

 

00:08:03:18 - 00:08:07:21

Ramit

What changes have you made since you had that conversation with Addison.

 

00:08:07:23 - 00:08:36:19

James

At the time that it happened? I just started a new job. And basically, you know, the changes that I think needed to be made that were led up to that letter was working a working jobs for several years that were with no base, you know, so, I mean, one big change like it did make was getting a job that has steady income.

 

00:08:36:21 - 00:08:54:19

James

Great. I guess that had occurred right around the same time. And I jumped into these 60 hour weeks, and I felt like that was kind of my contribution is like I'm bringing something more steady and reliable to to the table.

 

00:08:54:21 - 00:09:03:18

Ramit

Okay. Addison, has your combined relationship with money changed significantly since you wrote that application or not?

 

00:09:03:19 - 00:09:33:10

Addison

I wouldn't say significantly. I think initially following the application and the discussion about it, I started putting together some spreadsheets and a CSP and calling for money meetings, and we were having those every week, and that was new. Being able to talk about it and look at our spending on both of our parts and just like, gosh, really taken aback by what we're seeing here because neither of us up until that point had really been tracking things.

 

00:09:33:10 - 00:09:44:22

Addison

We're just kind of getting through life, and it's happening as it's happening and, oh, we're out of money. So we're finally looking at things, being more conscious about spending a the grocery store or on other things.

 

00:09:44:23 - 00:09:50:04

Ramit

Sorry. What does it mean when you say being more conscious about spending at the grocery store, specifically.

 

00:09:50:06 - 00:10:09:21

Addison

That weekly quit herself on a challenge to do under $150? We just wanted to see if we can do it. And we did it. But but it also took hours of needed by hours, about 2 to 3 hours. And I just don't I don't have that kind of time. So that wasn't something we were able to realistically keep up on a weekly basis.

 

00:10:09:21 - 00:10:12:11

Ramit

What happened the next week with groceries? How much did you spend?

 

00:10:12:12 - 00:10:19:00

Addison

Probably up to 500. We'll go to a Costco brand. We'll go to target, we'll go to TJ S, we'll do all the things.

 

00:10:19:00 - 00:10:33:02

Ramit

What do you notice about that? You know, going like we're going to do 150 in a week which is quite lean. And then hey this is not sustainable. So we kind of really loosen it and go back to 600 a week. What do you notice about that?

 

00:10:33:03 - 00:10:52:11

Addison

It's a trend. It's like we make a commitment to do something, but we've gone about it in a completely unsustainable way. And so kind of seeing thing with like, let's dial back our restaurants and going out to eat or going down to the beer garden with the dogs, because I'm not home all the time. I need to get out of my four walls here.

 

00:10:52:11 - 00:11:04:23

Addison

He's working 60 hours. We're tired, so we'll make the excuse and justify to ourselves that we deserve this. We can do this because we're tired. We don't have time. This isn't sustainable. So we're going for the convenience. Convenience that we simply can't afford.

 

00:11:04:24 - 00:11:05:21

Ramit

You like it?

 

00:11:05:22 - 00:11:28:08

Addison

I don't like where it's leading us, that's for sure. But we are putting our CSP together. There's all of those fixed costs and we're like, well, what do we do with our beer garden and entertainment and going down to get wings? That should probably go with that last line at the very bottom, right after we send up for monarch, it sent a notification regarding my recurring costs and that being the beer garden.

 

00:11:28:08 - 00:11:40:03

Addison

So like it's a fixed cost and I don't see my life being we go to the dog park and the beer garden and we go to get weights. I'd rather use my money for anything else besides that.

 

00:11:40:05 - 00:11:43:18

Ramit

What do you say, James? What was your reaction when you got that alert?

 

00:11:43:19 - 00:11:54:06

James

I mean, I liked that aspect of our life. If it needs to be dialed back, I under. I accept that.

 

00:11:54:07 - 00:12:15:05

Ramit

Guys, we can't get any further if you're not honest about what's going on. If you're getting alerts that you spend so much so consistently that it is a fixed cost, that tells me you love it. Now you might say, hey, this is out of alignment with what I want our life to be or looking at it. We can't afford this, so I like it, but like, we need to make a change.

 

00:12:15:05 - 00:12:21:08

Ramit

But I'm not hearing that. I'm hearing like, well, you know, we spent a lot of time apart, so we need to spend some time together. Do you love it or do you not?

 

00:12:21:09 - 00:12:38:12

Addison

I enjoy it, but to your point, like the spending is out of control on those areas of our life, we have no savings. We are living way beyond our means, and we can't just do all the things we love all the time. We don't have unlimited time or resources to do that. Like, I don't want to take that part of our life away.

 

00:12:38:12 - 00:12:51:14

Addison

It's important for our own socialization, so I wouldn't want to just stop doing it because I do enjoy those things. We just can't do it as much as we have been doing it to the point where monarchs say, hey, this is the recurring cost. I don't love that.

 

00:12:51:15 - 00:12:57:06

Ramit

What do you want to get out of today? Like ten out of ten? We have an awesome conversation. James, what would you walk out of here with.

 

00:12:57:09 - 00:13:10:17

James

A newly established framework and understanding of money and personal finance that I, we can use together to build a future that we want.

 

00:13:10:18 - 00:13:12:09

Ramit

Okay, Addison.

 

00:13:12:15 - 00:13:29:01

Addison

I want to understand how we got here. And I'm really interested in our psychology around money because I feel like I've read books, we've watched the episodes, we have conversations, and nothing is changing.

 

00:13:29:03 - 00:13:49:06

Ramit

I love that Addison is asking this question because she already knows that just learning more about money is not enough. That tells me something important. Addison and James realize that they do not have an information problem. They have a behavior problem. They can recognize what they're doing. They can agree that it needs to change. They can even make a plan.

 

00:13:49:06 - 00:14:10:04

Ramit

But when real life happens, they keep falling right back into the same old habits. So before I give them yet another plan, I want to understand what happens between them when money gets hard. When I started, I will teach you to be rich. Over 20 years ago, business organization platforms were not really a thing, especially for small businesses.

 

00:14:10:05 - 00:14:36:18

Ramit

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00:14:36:18 - 00:15:04:11

Ramit

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00:15:04:11 - 00:15:19:05

Ramit

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00:15:19:07 - 00:15:38:13

Ramit

All right, here are some of my meeting red flags. Number one, the person who set it up is late. Number two, there's no agenda number three, while we are talking, this is what I hear. Why do you have to type so loudly? And also, what could you possibly be typing? I want my calls to be productive. I want us to both be listening to each other.

 

00:15:38:13 - 00:15:59:21

Ramit

And if you are like me, you want to use a tool like granola, which will help automatically capture those meeting notes and turn them into action items. Granola is an AI powered notepad that makes your meeting notes useful. It captures what happens in your meetings and turns it into clean, structured notes with decisions and action items pulled out and made easy to find.

 

00:15:59:22 - 00:16:25:18

Ramit

What's great is that it seamlessly integrated into how you already work. No setup, no awkward bots or unneeded friction. Just jump on a call like usual, and granola will transform your fragmented call notes into actionable insights you can reference and still understand. Weeks later. One of my colleagues uses it and told me what I love about granola is that I can stay focused on the conversation instead of scrambling to take notes and capture every detail.

 

00:16:25:22 - 00:16:38:11

Ramit

After the meeting, I have clear notes and action items ready to go. Once you try it on a first meeting, it's hard to go without. You can try it totally free. Head to granola.

 

00:16:38:13 - 00:16:54:24

Ramit

That's granola to get your time back, especially if you do lots of calls. Go to granola and try it on your next call. Can you think of a time in the last few months where the two of you really disagreed about money?

 

00:16:54:24 - 00:17:30:13

James

So when I started this new job, I had plans to work a bunch of extra shifts in the first couple of months, and there were some concert tickets. They came up and there was a week in the way that that Addison had suggested we planned, and I said yes to those things. And once I got out of training and started a new job, it turned out it's a lot more than I expected.

 

00:17:30:14 - 00:17:45:12

James

And we learned it didn't make sense for me to pick up the extra, and therefore I didn't have the money. I said I would, and we got in a number of hidden arguments.

 

00:17:45:13 - 00:17:50:14

Ramit

Okay, okay, take me back there. In fact, just role play it with each other. I just want to watch you have that conversation again.

 

00:17:50:16 - 00:17:53:13

Addison

Hi, James. Hey. How's how's. How are things in Phoenix?

 

00:17:53:16 - 00:17:56:14

James

Oh, you know, they're they're busy, but but good.

 

00:17:56:16 - 00:18:06:01

Addison

Some really excited for you to come home. Do you want to go to Mount Princeton and go to the hot springs? Maybe to celebrate. When you get back, it's going to be like $600, probably. Is that going to be okay?

 

00:18:06:01 - 00:18:16:10

James

Yeah, absolutely. I'm you know, I'm going to be working like super hard. I get back. I'm picking up all these extra shifts so I can definitely, you know, we can we should definitely do that. Sounds great.

 

00:18:16:11 - 00:18:40:04

Addison

Okay, well, I will go ahead and get all of that book today. A couple other things. Some camping. Found a couple of really rad camping spots. So that's not going to cost as much. Probably like 50 bucks for the weekend and then tickets to a concert. But with the concert, the transportation situation is really weird. So I would recommend that we stay at the lakeside camping, but it's going to be like $800 for the lodging.

 

00:18:40:07 - 00:18:44:09

James

Yeah, perfect. Let's do it. I'll be I'll be good. Like I'm crushing it.

 

00:18:44:14 - 00:18:59:00

Addison

Okay. Awesome. So I'm going to go ahead and get all of that booked here today. Just keep me posted on how things are going. I'm so excited to see you. And then let me know about your flight and I'll I'll pick you up and then we can just head to Head Springs.

 

00:18:59:01 - 00:19:09:19

Ramit

Okay. Great job, great job. Thank you. That was very good. Very enlightening for me. I was following along, noting some things. And then what's the tension part. What happened on the next conversation. Go ahead.

 

00:19:09:20 - 00:19:35:08

Addison

I really wanted us to start splitting those costs a little bit more and said it all being on me. So called, got the permission, was told that he was going to be able to pay for this trip. We could go on said trip and I'd pay for it all. And it is back to the beginning of our relationship, where I am supporting his career and I am the safety net, and I am taking care of everything, and I'll get you back for that.

 

00:19:35:08 - 00:19:54:14

Addison

And then it never happened. It's about $30,000 of trips and things and rent and bills over the years that I've just been covering, and it's why I worked full time. I teach two classes every quarter. On the first being in a relationship. It's really expensive, especially when you have to bear the burden of all the finances on your own.

 

00:19:54:15 - 00:20:05:17

Addison

And so we fought a lot on that trip about my frustrations of taking on all the project management and the household, all the financial responsibility, the detriment to my career.

 

00:20:05:17 - 00:20:24:08

Ramit

And when you had this argument, was the dynamic you sharing these things, all of the debt that you have put yourself into to support his career, all the work, all the labor, emotional labor, all of this stuff, and James agreeing and saying, I will do better.

 

00:20:24:13 - 00:20:36:12

Addison

Yes. And with some defensiveness, understandably, I've just done with the defensiveness and the excuses and the reasons why. Like we need to make changes and I can't literally keep doing this anymore.

 

00:20:36:13 - 00:20:54:12

Ramit

Okay, I want to ask another question as well. So you brought up to him, can we go to the concert and this place in that place, and it's going to cost this much and that much. And James was quite agreeable in this role play. Yeah, let's do it. I'm killing it at work. It's going to be good. Did you believe him?

 

00:20:54:14 - 00:21:18:08

Addison

Maybe that's folly. Like this is not the first, second, third or fourth time this has happened. But it was a new job and things were going well. And he was even getting paid during training. So I really did believe in this time. I should have known better, because James does tend to be a little bit more optimistic than what reality presents itself, but it also want to be able to trust my partner at the same time.

 

00:21:18:12 - 00:21:34:08

Ramit

Yes, nobody wants to be in a relationship where you can't take your partner at their word if they say something by default, we want to believe it, I get that. Of course, that's where we want to go. James, when you answer that question, it kind of rolled off the tongue. Yeah. Let's go.

 

00:21:34:10 - 00:21:43:06

James

At the time, I had planned on just picking up any extra work necessary. So. No.

 

00:21:43:08 - 00:21:44:12

Ramit

Why'd you say yes?

 

00:21:44:18 - 00:21:51:01

James

I was feeling confident that I. That I wouldn't have the money.

 

00:21:51:03 - 00:21:53:05

Ramit

How often do you feel confident about money?

 

00:21:53:06 - 00:22:02:21

James

Too often I project that confidence. Even if I don't feel that confidence, I don't know. I don't know why that is, but that's not healthy at all.

 

00:22:02:22 - 00:22:25:05

Addison

I think part of it is it's always worked out because I've been there as a safety net. So there's been no actual consequences really for anything. And he's really confident until the shoe drops and I'm picking things up and then getting upset about it. I think he dreads those conversations, and the disappointment that comes along with the expectations weren't met.

 

00:22:25:06 - 00:22:43:02

Ramit

Do you both like this dynamic? No. Okay. Because I hate it. I see it all the time. We have the dreamer here, James. You're the dreamer. Like success is right around the corner. If I just close this deal, if I just get this job, I could pay off all the debt and actually build up our savings. And we're going to be good.

 

00:22:43:04 - 00:23:02:12

Ramit

Some familiar, right? Yeah, yeah. And the dreamer is almost always only able to exist because they are subsidized by somebody else. James, if you did not have Addison picking up the pieces, what would happen to you?

 

00:23:02:17 - 00:23:14:03

James

I would radically change my spending habits and and what I'm able to do with the money that I make.

 

00:23:14:04 - 00:23:16:19

Ramit

I agree, Addison, any thoughts on that?

 

00:23:16:20 - 00:23:29:20

Addison

I feel like if I would stop, but then if I stop helping, then we might get evicted. We're not going to get our bills paid, so. Or my credit is going to take, because I'm not taking care of the things that we mutually should be taking care of.

 

00:23:29:22 - 00:23:35:03

Ramit

What do both of you think needs to happen for you to change?

 

00:23:35:04 - 00:24:00:18

James

I need to radically transform and establish a understanding of money and how it works. In particular, the word afford. Wow. I don't think I know what that means. I think I've been using that word wrong my whole life.

 

00:24:00:19 - 00:24:14:16

Ramit

Wow. Okay. Wow. That may have been one of the best answers I've ever heard. Well, let me just ask you, when she said, can we go to this concert? It's going to be 500 bucks. And you said, yeah, sounds great. What was the sentence you said after that.

 

00:24:14:17 - 00:24:15:21

James

We couldn't afford it?

 

00:24:15:22 - 00:24:17:12

Ramit

Yeah. And then after that.

 

00:24:17:13 - 00:24:20:05

James

We got this. He can, you know.

 

00:24:20:06 - 00:24:22:10

Ramit

No, you said I'm working hard.

 

00:24:22:11 - 00:24:23:12

James

Oh, yeah.

 

00:24:23:13 - 00:24:25:14

Ramit

So what does that mean?

 

00:24:25:16 - 00:24:32:24

James

That I am betting on money that's not there yet?

 

00:24:33:00 - 00:24:35:16

Ramit

Bingo. Do you know that?

 

00:24:35:18 - 00:24:40:14

James

I think deep down. But it's hard to admit to myself. But yes.

 

00:24:40:14 - 00:24:54:20

Ramit

If you want to make radical change, you have to admit some deep things about yourself that might be quite uncomfortable. This is just one of them, so I appreciate that. I think that was really, really insightful. Addison, what do you think needs to change here?

 

00:24:54:21 - 00:25:22:20

Addison

I really need to get a grasp on what I want my life to look like, and really come to terms with the consequences of not making better choices today that are in line with that. I just need to be thinking a little bit more about safety, security, and the long term consequences if we don't change. Otherwise, I'm going to see the money's in the account and probably be very tempted to spend it on the things I want now for instant gratification versus my long term stability and quality of life.

 

00:25:22:22 - 00:25:33:08

Addison

It's easy for me to just forget and want to live in the moment, because I've had a really stressful day, really stressful week, and I feel like I deserve to treat myself.

 

00:25:33:09 - 00:25:53:05

Ramit

I appreciate you admitting that you have a role in this dynamic, that you have co-created it, that you spend money too, that you both don't have. James is nodding. Addison, I can tell that you've been frustrated at the way James spends and manages money. James, have you ever been frustrated at Addison for the same thing?

 

00:25:53:07 - 00:25:53:24

James

Yes.

 

00:25:54:03 - 00:25:55:11

Ramit

Really? Tell me.

 

00:25:55:13 - 00:26:28:14

James

Every quarter there is student loan money or other loan money. Most recently, $35,000 loan that came out a couple of months ago. And we adopted a dog. And I was I pushed back pretty hard on whether that was a smart move. And the bucks promise it's not going to be that much. And I found out after the dog was here, after the thing was that that she spent $6,000 and that's money she took out.

 

00:26:28:15 - 00:26:44:12

James

That's loan money. But I guess it frustrates me a little that Addison sort of feels like almost like a car, Blanche, to just go hard, wild because there's a bunch of loan money in the account, which isn't really designed income, you know.

 

00:26:44:13 - 00:26:46:08

Ramit

Did you say this to her?

 

00:26:46:10 - 00:26:50:09

James

No, I did not suppress frustration. No.

 

00:26:50:10 - 00:27:07:01

Ramit

And can I guess why? I'm going to guess that because you feel so guilty about the way you spend, you feel you don't really have a leg to stand on. And anyway, if you bring up money, then she's going to turn it back on you and say, well, what about this? What about that? What about this? So you say, better just not talk about it at all.

 

00:27:07:04 - 00:27:08:00

Ramit

Nailed it.

 

00:27:08:03 - 00:27:28:07

James

Yeah, right. You know those signs at work places. However many days since the accident, it's an accident. I feel like I have a mentor of those for when my past transgressions gets brought up in an argument. And so anything I can do to avoid that sign going back to zero.

 

00:27:28:10 - 00:27:57:23

Ramit

It's very difficult to escape from the quicksand money dynamic that the two of you have willingly entered into. There have been legitimate bad financial decisions made on both sides, and because of the particular way that you have enacted this relationship and this dynamic, it's really touchy. Yeah. So everybody kind of tiptoes around it and the roles are set.

 

00:27:58:03 - 00:27:59:23

Ramit

Can we change this?

 

00:28:00:00 - 00:28:00:14

Addison

We asked you.

 

00:28:00:15 - 00:28:01:20

James

Yes, we have to.

 

00:28:01:21 - 00:28:03:12

Addison

I believe we can.

 

00:28:03:14 - 00:28:29:24

Ramit

Good answer. I think couples often revert to the very American idea of y'all just need to talk it out. You need to communicate. We love it. We love saying communicate. It never works. Just communicating alone is not an effective strategy. Right now you are communicating about each other. You're not even communicating about money. You're just communicating about each other like two boxers.

 

00:28:29:24 - 00:28:34:24

Ramit

But what are you communicating towards? Is there a vision?

 

00:28:35:03 - 00:28:55:00

Addison

You don't have a shared vision. We are just one on things that may or may not be aligned with the life that we want to have. That like you're right, talking about money. What? It's just like, here's a crisis or I'm upset about this. Where there's a problem that we need to solve right now, it's not enjoyable. I'd like talking about money to be fun and exciting.

 

00:28:55:06 - 00:29:11:08

Addison

And perhaps if we had this plan that brings us excitement about things, that we're not going to go to the beer garden this week two times, and we're going to put that towards something else that we're really looking forward to and really want to spend our time on would be, I think, way more enjoyable. But we're we're definitely not there.

 

00:29:11:09 - 00:29:16:12

Addison

We're trying to figure out crises. How are we going to pay rent? How are we going to pay this bill? And it's not fun.

 

00:29:16:13 - 00:29:21:19

Ramit

Let's take a look at your numbers. All right. What was it like doing the conscious spending plan together?

 

00:29:21:23 - 00:29:49:12

Addison

Shocking to see the numbers like, oh, my God, this is out of control. And a little painful in that I was finding out new information. The debt that James has is just way, way more than I could have ever anticipated. I knew he took it up personal loan. Didn't know he had three credit cards. Didn't know he had $50,000 in federal back taxes, which is not even in the CSP because I found that out the day after I submitted it.

 

00:29:49:13 - 00:29:54:01

Addison

Like I'm just finding out about all of these skeletons, so that was just frustrating.

 

00:29:54:02 - 00:30:07:03

Ramit

You rightfully are upset about all these what, you put skeletons in the closet, but you kind of glossed right over the $6,000 on the dog. How do you think he feels about that? Is it? Do you think he feels similarly?

 

00:30:07:04 - 00:30:26:15

Addison

Yeah, he definitely has shared that. And I honestly was shocked that it was at that amount to I was not out there going. This is my budget for the dog. The dog was free. It was a very emotional purchase. He was the dad of our first dog. He died a couple of years ago from cancer, and nobody wanted to adopt him because he was old.

 

00:30:26:17 - 00:30:55:05

Ramit

It's pretty interesting that Addison is sure the problem is James. She brings up multiple ways that James has been guilty of being irresponsible with money. And I agree, the way that he behaves with money is not great. However, she is also part of the mix here and it's very tempting when she paints the picture of James being absent with money, not picking up on the labor to suddenly say, oh, I recognize this pattern.

 

00:30:55:05 - 00:31:12:00

Ramit

We have the man here who doesn't talk about money. He's irresponsible with money. And we have the beleaguered wife who's here. Please talk to me about money. Please connect with me. We've seen that pattern many, many times. But we can't just accept the caricature of a pattern. When I dig in, I find out that she's also spending a lot of money.

 

00:31:12:00 - 00:31:33:20

Ramit

Both of them actually have a dynamic where they love to spend money today and not think about tomorrow. So that is what I'm starting to pick up on. The question I have is, where is this pattern coming from? That's my job. I want to keep digging so I can start to understand how they got here. One of the worst feelings in the world is wandering around the gym and not knowing what to do.

 

00:31:33:21 - 00:31:51:07

Ramit

I did this for years. I would end up doing the exact same things dumbbell press, never moving the weights up. And then I would go behind the relative safety of a treadmill. You have no plan, you see. No progress. You go, why me? It sucks. Now I solve this with a trainer, but there's also an amazing app that anyone can use.

 

00:31:51:07 - 00:32:14:21

Ramit

It's called the latter app. The latter app is an expert strength training plan, not a random collection of workouts. It's real progressive programing designed by certified coaches with a new plan every week that builds on the last. It's like having a personal trainer in your headphones. Now, I actually tried it myself and having done many different workouts in my life, I approached it a little skeptically.

 

00:32:14:22 - 00:32:32:05

Ramit

Is this thing going to be good, or is it going to have a bunch of BS in it? And I have to say, I was impressed. I chose bodybuilding, I chose to use machines, dumbbells, etc. I focused on specific areas that I wanted to work on that I'm currently working on, and then I evaluated the workouts and did it myself.

 

00:32:32:06 - 00:32:53:05

Ramit

I thought it was great. If I did not know how to program my own workouts, I would use this app. It tells you exactly what to do. It shows you the form. It helps you enter your weight and your reps, and then you can track it all. And I like that. It included bodybuilding, but also pilates at home, dumbbells, kettlebells, and a whole bunch more.

 

00:32:53:06 - 00:33:17:23

Ramit

The app costs less than a dollar a day. Compare that to over $100 for a single session with a trainer. Remove the guesswork with latter and get a real coach in your ear telling you exactly what to do for every workout. No thinking everything planned for you. If you have an iPhone, head to ladders and take a quick quiz to find your perfect ladder plan.

 

00:33:17:24 - 00:33:27:24

Ramit

Use my link and get a free seven day trial with no credit card and $10 off your first month if you join, that's.

 

00:33:28:01 - 00:33:46:00

Ramit

Attention all spreadsheet nerds. I don't like you, but I am going to talk to you. I know it's tempting to brag about the 74 sheets you have in your spreadsheet tracking the price of Fritos, but let me ask you this what have you done to protect your family? If you get hit by a bus tomorrow, please zoom out and look at the big picture.

 

00:33:46:01 - 00:34:05:18

Ramit

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00:34:05:19 - 00:34:28:15

Ramit

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00:34:28:16 - 00:34:31:22

Ramit

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00:34:31:24 - 00:34:54:17

Ramit

Policies issued by Western Southern Life Insurance Company, Cincinnati, Ohio, which operates in DC and all states except New York. Distributed by Gerber Life Agency, LLC using fabric technologies. See Meet fabric. Com for additional disclosures. This is a paid ad. Okay, I'm going to put up the CSP on screen. Addison, can you read the word in bold and then the household number next to it, please.

 

00:34:54:19 - 00:35:14:12

Addison

Assets $20,780. Investments 14,227. Savings zero. Debt 428,263. That should be about $22,000 more. Total net worth -$393,256.

 

00:35:14:12 - 00:35:15:13

Ramit

What's the debt?

 

00:35:15:14 - 00:35:20:15

Addison

Majority of that is suited loans. How much? About 350,000.

 

00:35:20:15 - 00:35:22:00

Ramit

How much on the credit cards?

 

00:35:22:01 - 00:35:24:08

Addison

Ballpark? Let's say 2020.

 

00:35:24:09 - 00:35:26:10

Ramit

Okay. Personal loans.

 

00:35:26:11 - 00:35:29:19

Addison

Let's actually do 25 there and 15 on the credit cards.

 

00:35:29:20 - 00:35:32:12

Ramit

Okay. And then there was back taxes.

 

00:35:32:14 - 00:35:36:02

Addison

Yes. And that would be the remaining now plus 22.

 

00:35:36:03 - 00:35:38:19

Ramit

James, do you know how much you owe in back taxes.

 

00:35:38:20 - 00:35:40:03

James

$40,000.

 

00:35:40:03 - 00:35:43:09

Ramit

All right. How much are you going to make when you graduate.

 

00:35:43:13 - 00:35:45:17

Addison

Between 150 and 2? Realistically.

 

00:35:45:23 - 00:35:50:10

Ramit

How are you going to pay off $350,000 of loans?

 

00:35:50:12 - 00:35:56:03

Addison

It's a long term. It's a 30 year repayment plan. I've already calculated my payment will be about $1,000 a month.

 

00:35:56:05 - 00:35:59:23

Ramit

Let's get forgiven at all. Yes. In 30 years.

 

00:35:59:24 - 00:36:00:15

Addison

Yep.

 

00:36:00:21 - 00:36:07:19

Ramit

Okay, let's look at income. James, can you read off your combined gross monthly income, please?

 

00:36:07:21 - 00:36:11:15

James

Gross monthly income $11,550.

 

00:36:11:15 - 00:36:22:11

Ramit

Okay, so y'all make $138,000 per year. Did you know that? Silence suggests no. Okay. What do you think you made?

 

00:36:22:13 - 00:36:26:11

James

I thought it was a little closer to two.

 

00:36:26:14 - 00:36:27:14

Ramit

200.

 

00:36:27:15 - 00:36:30:23

James

Between the two of us, when she's working full time.

 

00:36:30:24 - 00:36:32:23

Ramit

Okay. And Addison, how much did you think you made?

 

00:36:32:24 - 00:36:49:15

Addison

Honestly, I had really no idea. I knew how much I was bringing in. I did. Nope, did not know what to expect from James when he started his new job. How much we realistically could be expecting because it's still commissions based job, so I had no idea. I just knew my own stuff.

 

00:36:49:16 - 00:36:53:08

Ramit

What do you think about making $138,600 a year? Is that a lot or. No.

 

00:36:53:09 - 00:36:55:04

Addison

No, not it's not okay.

 

00:36:55:04 - 00:37:05:14

Ramit

Both say no. Okay. Let's just go down and look at the fixed costs here because this number really caught my eye. Fixed cost 154%. What does that mean?

 

00:37:05:16 - 00:37:07:03

Addison

Oh, things are out of control.

 

00:37:07:03 - 00:37:24:24

Ramit

It means that you are spending far more than you make and you have no savings. So you are going into debt every month. And it means that it's literally just a matter of time until you lose everything. There are moments where it becomes irrecoverable, and right now that's obscured because you have a humongous student loan. So you go like, that's just this big thing.

 

00:37:24:24 - 00:37:47:01

Ramit

It doesn't really count, but you are actually incurring serious debt. The credit cards are very high interest. Personal loans, I'm willing to bet are back. Taxes is a huge amount. There's a lot. And every month you're going further and further into the red. Let's take a look at the rest of the fixed costs. We have utilities at $700, insurance at 500, car payment 1353.

 

00:37:47:02 - 00:37:48:22

Ramit

That's a lot. What do you think about that?

 

00:37:48:23 - 00:37:58:21

Addison

It will go down soon. That includes my car payment which is about 638 Ubers. We need to be taking less fevers and then also the train.

 

00:37:58:24 - 00:38:00:00

Ramit

While you take Uber.

 

00:38:00:05 - 00:38:13:23

Addison

To get around town and get to shows, not deal with parking, not deal with DUIs. If we want to have drinks at a show, it's it's being it because we can also take the train. But Uber is a lot faster.

 

00:38:14:00 - 00:38:26:13

Ramit

One time I was I had a couple on this show and they were in a lot of debt and they I asked him, you know, they had some car payment or something. It was pretty high. I was like, why you, why you, why you pay so much for this car? They go, it's not a car, it's a truck.

 

00:38:26:14 - 00:38:45:20

Ramit

I go, okay, why do you buy this expensive truck? And he looked at me like I'm crazy. He goes, so I can pull my trailer. Do you see any similarities to what you just said? We take Ubers so that we can go out to shows and have drinks. And PS, we are spending 154% of net income on fixed costs.

 

00:38:45:23 - 00:38:50:15

James

We overvalue the almighty convenience, I think, pretty clearly.

 

00:38:50:16 - 00:38:52:04

Ramit

Okay, what do you see, Addison?

 

00:38:52:05 - 00:38:54:05

Addison

We shouldn't be going to these shows in the first place.

 

00:38:54:05 - 00:38:55:03

Ramit

That's right.

 

00:38:55:04 - 00:38:58:13

Addison

Let alone the Ubers. We're spending money to spend money that we don't have.

 

00:38:58:14 - 00:39:19:23

Ramit

That's correct. It's like people saying, like, you know, I actually decided to go to a cheaper casino, even though I'm in $75,000 of credit card debt. I went to Circus Circus because it's actually cheaper slots there. It's like, you shouldn't be in that casino. You shouldn't even be in Nevada right now. So when you both talk about radical change, we're not even scratching the surface yet.

 

00:39:19:23 - 00:39:36:23

Ramit

But I want to share this with you because I need you to know the truth. The reality of what it will take 154%. It's not about cutting your phone bill down by $20 a month. That's going to do nothing. It's a complete inside out lifestyle change, complete inside out way of looking at the world that has to change.

 

00:39:36:24 - 00:39:42:10

Ramit

Again, you don't have to. I'm just telling you, we're only on the fifth line of the fixed costs. But this is what I'm observing.

 

00:39:42:10 - 00:39:56:24

Addison

We absolutely have to come to terms with these numbers. It's not even about alignment at this point, with our rich life and how we want to be living, we're not going to be able to live if we keep living like this.

 

00:39:57:00 - 00:39:58:10

Ramit

That's correct. James.

 

00:39:58:11 - 00:40:05:23

James

We know we've known this is coming like we we know this is not sustainable.

 

00:40:05:24 - 00:40:31:23

Ramit

If you've known this and changed nothing, then maybe knowing actually is not the key here. You all have had the spreadsheets and had access to all this information. You didn't do anything with it. Knowing is highly overrated for many parts of behavioral change. Everybody knows they should probably eat more vegetables. They don't do it. So we actually need to stop this endless search for knowing and take a much deeper look at what is the way that we are looking at the world.

 

00:40:31:23 - 00:40:52:06

Ramit

What are our deeply held beliefs that I call invisible scripts, and what kind of behavioral changes can I make? Maybe I don't actually need to know anything different. Maybe I need to literally create a rule that says we're not ever going to the beer garden again. Or a more positive one would be every single week we are putting $200 into a savings account.

 

00:40:52:08 - 00:41:05:02

Ramit

That's what we're talking about. We're not talking about knowing. Although I will show you some stuff. Let's go through the rest. Oh, clothes and personal care are $1,066 per month. What kind of clothes?

 

00:41:05:03 - 00:41:15:14

Addison

I redid my entire wardrobe when we moved from where we were living before to here across the country. We got rid of everything, so those numbers will definitely not be the norm.

 

00:41:15:15 - 00:41:17:12

Ramit

What about this? The other self-care?

 

00:41:17:15 - 00:41:21:13

Addison

All new hair products, getting all of those things. I get my nails done.

 

00:41:21:14 - 00:41:28:13

Ramit

Okay. Got it. Let's go to pet expenses $1,029 a month. Food treat, toys, vet, etc..

 

00:41:28:15 - 00:41:34:03

Addison

Yep, that's that's what that is definitely a little bit overboard with chewy.

 

00:41:34:04 - 00:41:51:07

Ramit

This is a great opportunity for me because I've had a lot of parents here in severe debt and they go, our kids deserve, you know, the the best this or the best at. And I'm like, no they don't. I point blank will be like, your kids don't deserve that. How can they? Your kids deserve to have a safe household, not to be homeless, to have parents that are not stressed out about money.

 

00:41:51:07 - 00:42:18:01

Ramit

But I've never gotten the chance to say that about a dog. So allow me to be the first time. Sorry, but your dog does not deserve $1,029 of food, treat and toys per month. America, hear my voice. Your dog does not deserve it. I'm sorry. If you were at 154% fixed cost, your dog doesn't deserve it. What's your reaction, Edison, though?

 

00:42:18:02 - 00:42:18:15

Addison

Liz.

 

00:42:18:16 - 00:42:21:10

Ramit

Should we get that dog on camera? Where is that dog?

 

00:42:21:11 - 00:42:23:12

Addison

They're supposed with them there. They're out there to.

 

00:42:23:13 - 00:42:25:08

Ramit

Bring them. Are they close?

 

00:42:25:10 - 00:42:27:01

Addison

Yeah, they're. They're close.

 

00:42:27:02 - 00:42:29:14

Ramit

Okay, bring that dog. I want to tell him or her.

 

00:42:29:16 - 00:42:30:15

Addison

It's him and or her.

 

00:42:30:20 - 00:42:45:21

Ramit

Okay, bring them both. I'm going to tell them this is the greatest day of my life. Oh, they're like, literally right there. Oh. She's gesturing. They're well trained. She's gesturing to them. Oh my God. This dog came right. Oh wait, are these Bernese Mountain dogs.

 

00:42:45:24 - 00:42:46:22

Addison

Yeah yeah.

 

00:42:46:24 - 00:42:51:13

Ramit

There's huge they're beautiful dogs. Okay. What are their names?

 

00:42:51:15 - 00:42:54:09

Addison

Barca isn't Chewbacca and Rainbow Barca.

 

00:42:54:10 - 00:43:16:04

Ramit

I assume that's Barca. Yeah. I need to tell you something. You and your sister are lovely dogs, but you all are going on a very, very, very strict diet. And I'm talking about toys too. It's been a nice run, but that's it. It's time to batten down the hatches. And Mom and dad are going to be extremely strict with you.

 

00:43:16:08 - 00:43:44:18

Ramit

All right. Thank you for that. Let's continue on. Subscriptions and entertainment $1,754. All right. We're going to dig into this in a minute. Miscellaneous. Fine. Just scrolling down, looking at the CSP, I noticed that after we get to the fixed cost, which are $14,659 a month, then we have $0 on investments, $0 on savings, and -$5,000 on guilt free spending, which of course we know cannot be true.

 

00:43:44:18 - 00:43:50:24

Ramit

Before I go on, I want to drill into some of these actual spending. Like what does it tell you about you?

 

00:43:51:04 - 00:44:04:03

Addison

We're living in the here and now and not taking a modicum of time to think about tomorrow, let alone the secure and stable feature for retirement. It comes in, it goes out. What we need today, we get great.

 

00:44:04:04 - 00:44:04:23

Ramit

James.

 

00:44:05:03 - 00:44:21:02

James

I don't know if the kids still say YOLO, but that's, I think, what we've adopted for our financial decisions. In fact, I don't even know if I would call them financial decisions because I don't think enough I don't think enough thought went into them to qualify them as decisions.

 

00:44:21:03 - 00:44:38:04

Ramit

That's very good. That's a very good catch on your language. Most people say like, oh, I have goals or we're not living up to our goals or we're not making the right decisions. You actually not making any decisions at all. It's literally whatever's in front of us toys, nails, clothes, beer, garden shows. It's just like swipe, swipe, swipe, swipe, swipe.

 

00:44:38:04 - 00:44:59:19

Ramit

There's no decision at all. I think that is honest. Okay, I would like to look at the actual spending. This is going into your monarch account. And we're going to do a little drill down here. So I want to look at, for example, your debt payments. So we have Bureau of Tax. This is your back tax. Is that right James.

 

00:44:59:20 - 00:45:03:22

James

Yeah that's a state. And the state taxes for this last year.

 

00:45:03:23 - 00:45:06:13

Ramit

Have you called them and tried to negotiate that.

 

00:45:06:15 - 00:45:09:14

James

No no that's just what I just took that.

 

00:45:09:15 - 00:45:40:08

Ramit

Call them okay. Negotiate. Sometimes they will be able to do that here. Let's go back a month ago. Let's look at transportation are on one day July 20th. We have Ubers for $111 for trips. A couple days before we have $106. We have a gas station and parking, etc. lots of Ubers here. You notice that. Do you think that couples who have $400,000 of debt take Uber?

 

00:45:40:14 - 00:45:41:04

Ramit

No.

 

00:45:41:08 - 00:45:42:00

Addison

We do.

 

00:45:42:01 - 00:45:43:02

James

Well, yeah.

 

00:45:43:03 - 00:46:04:03

Ramit

Both of you. Both of you are correct. No, they typically don't. But we do. And that needs to change. Let's keep looking. Groceries always very interesting. Let's look at the actual spending on groceries. So we have King Soopers. Interestingly that's $11.56. Who who shops for $11.56 at a grocery store. Like what did you get.

 

00:46:04:04 - 00:46:08:02

Addison

For James that might like, maybe popped in and got a sandwich while you were out?

 

00:46:08:03 - 00:46:12:11

James

Yeah, that's likely what that was because I my job, I'm driving all day.

 

00:46:12:12 - 00:46:25:14

Ramit

All right, let's look. Circle K, 7-Eleven, circle K, Murphy, USA and Maverick. Lots of gas stations and convenience stores. Lots. Look at how many. What do you make of that?

 

00:46:25:14 - 00:46:39:20

James

Just, you know, a quick break for me to go in and grab a snack or a light beverage or something called to drink some working outside, I mean, there's no excuse for it, but that's what that's what that is.

 

00:46:39:21 - 00:46:41:08

Ramit

What do you get at the gas station?

 

00:46:41:09 - 00:46:50:05

James

Gatorade? Water, energy drinks? Probably 90%. Occasionally. Occasionally a slice of pizza or a snack.

 

00:46:50:05 - 00:46:51:16

Ramit

You get a hot dog.

 

00:46:51:18 - 00:46:57:11

James

Occasionally hot dog. Usually it's beverages because I'm working outside, you know, a lot.

 

00:46:57:12 - 00:47:04:13

Ramit

Out of curiosity, why not just buy the beverages from, like, Costco or or something and take them in your car with you?

 

00:47:04:14 - 00:47:09:01

James

We do we and we have bring it in and it's not enough. Like I want another one.

 

00:47:09:03 - 00:47:11:06

Ramit

Why not bring two or 3 or 5?

 

00:47:11:07 - 00:47:14:01

James

I just need to get that bigger, cooler.

 

00:47:14:03 - 00:47:22:13

Ramit

What do you think's behind your answer? Like, why do you think you really don't pack enough water or something for a long day out on the road?

 

00:47:22:14 - 00:47:25:12

James

I think I enjoy the break in the AC.

 

00:47:25:14 - 00:47:26:13

Ramit

Yes.

 

00:47:26:15 - 00:47:28:04

James

I feel like I deserve it.

 

00:47:28:05 - 00:47:32:00

Ramit

Yeah, yeah. Why do you deserve it?

 

00:47:32:01 - 00:47:38:20

James

I feel like I earned I earned this little treat. Whatever happens in the day.

 

00:47:38:22 - 00:47:56:03

Ramit

I've been driving out in the sun. I've been talking to a lot of people. Maybe I close the deal or I'm going to close a deal tomorrow. Like we're talking about a $4 Rice Krispie treat. Like I deserve this. I've been working hard. That's the thing, right? Okay, Addison. What else? What do you notice.

 

00:47:56:04 - 00:48:15:22

Addison

I do here? And understand James's need to get out of the. Dan and I do similar things. I have a pound of green tea here. My favorite kind. But I still go down to the coffee shop to go get it from the coffee shop, because I want to get out of the house. I like getting out of the house and socializing with other people.

 

00:48:16:01 - 00:48:23:24

Ramit

Sorry. How do you think people who like to get out of the house but they don't go into debt? How do they do it?

 

00:48:23:24 - 00:48:32:10

Addison

I am not sure what they are doing. I am sure what we are doing and it's spending money on things we shouldn't be spending money on.

 

00:48:32:12 - 00:48:44:13

Ramit

What's striking to me is the lack of curiosity about how other people do it. I don't think you've really thought about anybody except for what you two want.

 

00:48:44:15 - 00:48:45:21

Addison

I'm sure.

 

00:48:45:23 - 00:49:10:14

Ramit

Because there are millions and millions of families who don't spend $3,000 a month on groceries and food and beverage. You all put in your CSP $3,363 a month for groceries, food and beverage. That is one of the highest numbers I've ever seen. And this is two people we're not talking about a family of six. Even still, I would tell them it's too much.

 

00:49:10:17 - 00:49:23:07

Ramit

All right, let's look at a couple other things. In Monarch Pets, you plan for 1020 9IC 2667. This is in one month. Somebody gets sick this month.

 

00:49:23:09 - 00:49:25:23

Addison

Yes. We had a that bill.

 

00:49:25:24 - 00:49:42:05

Ramit

Yeah, there's a lot I can tell. I mean one of them one vet bill is $1,500. I then see Chewie for 114 $60 and a lot more. What do you think about, like spending thousands of dollars on dogs when you're in this much debt?

 

00:49:42:06 - 00:50:00:00

Addison

Doesn't seem to make any sense and can't afford to continue spending all the dogs like we have been. And we probably couldn't afford this second dog, but we didn't crunch any numbers. I think I realistically said, oh, it's just going to be an extra bag of food and maybe a couple of that bills here and there for wellness checks.

 

00:50:00:01 - 00:50:01:10

Ramit

Why did you say that?

 

00:50:01:11 - 00:50:05:18

Addison

I think I wanted this dog, that I needed to reassure herself so we could afford it, but we really couldn't.

 

00:50:05:19 - 00:50:15:12

Ramit

How much of the decisions you make around money? I want this and I'm going to come up with a reason that sounds logical to justify it.

 

00:50:15:14 - 00:50:21:12

Addison

The majority. And we'll we'll justify it to each other and support each other in our justifications.

 

00:50:21:14 - 00:50:23:24

Ramit

How do other people make decisions like this?

 

00:50:24:01 - 00:50:31:23

James

They look at the preplanned budget and base decisions off of off of that.

 

00:50:31:24 - 00:51:01:11

Ramit

Yeah, you have that though. I mean, you have a CSP. All right. Let's look at a couple more expenses. I want to see what's going on with dining out. One of my favorites. Let's read off some of these, shall we? Wendy's Mexican place beer. Some beer garden and tavern the same day. What's this one for? $300?

 

00:51:01:16 - 00:51:03:13

Addison

First day anniversary dinner.

 

00:51:03:19 - 00:51:06:06

Ramit

What do you think about that? Was it good?

 

00:51:06:08 - 00:51:06:21

Addison

Excellent.

 

00:51:06:22 - 00:51:10:17

James

It was.

 

00:51:10:19 - 00:51:27:03

Ramit

That's a good answer. Yeah, it was good for me. Okay, I like that. Can I ask you a question? Like when a birthday or an anniversary or or holidays coming up, how do you decide, like what you're going to do and how much you're going to spend?

 

00:51:27:05 - 00:51:32:03

Addison

The decision is based on the menu and never on the price.

 

00:51:32:06 - 00:51:43:10

Ramit

Yeah, yeah. What does it feel like to even imagine a future where you have to make many, maybe most of the decisions based on price?

 

00:51:43:12 - 00:51:48:12

James

It feels like, I mean, responsible.

 

00:51:48:14 - 00:51:51:18

Ramit

Who wants to be responsible? I'd rather have fun.

 

00:51:51:21 - 00:51:55:06

James

Yeah, but look, we're fun. Got us.

 

00:51:55:07 - 00:52:10:16

Ramit

To me, it sounds depressing. Yeah, if I'm being honest. Yeah, it sounds horrible. You're telling me that I got to do all this fun stuff and, like, look, we got a pretty nice place we live in. And now you're suggesting that I have to look at price for everything. So that means what? We have to go to Wendy's for our anniversary.

 

00:52:10:22 - 00:52:14:00

Ramit

Sounds like it sucks. Yeah. What do you think.

 

00:52:14:04 - 00:52:34:22

Addison

Said that way? It sounds like it sucks. But having had the opportunity to review all of our finances are spending, I think it kind of sucks to spend money on mid-tier restaurants or go to the beer garden as often as we were. Rather, once a quarter, go to a really nice, awesome restaurant if we can afford it versus just spending hundreds and hundreds of dollars on it.

 

00:52:34:24 - 00:52:56:21

Ramit

Wow, that is a great response. I happen to agree. I would rather have one memorable experience than five forgettable experiences. So I love that reframe because if you go through life saying, oh my God, we have to look at price as the first thing, and basically we have to get the cheapest thing always. It's going to suck. Your entire life is just going to feel depressing and you cannot win.

 

00:52:56:21 - 00:53:17:23

Ramit

When you feel depressed about something, you have to find a way to find joy and purpose and meaning. And you can do that simultaneously while cutting expenses and saving and investing more. Okay, I'm getting on board shopping. Yes, Amazon, Macy's, Costco. Rocket. Is that what I think it is?

 

00:53:17:24 - 00:53:19:15

James

It don't do the gas station.

 

00:53:19:16 - 00:53:33:11

Ramit

Oh, okay. That's a gas station. All right. Stop at a lot of gas stations. Home depot. I hate that place. Okay, Costco. Love that place. Ikea. So looking at this spending is quite interesting. I mean, how would you describe the spending in a word or two?

 

00:53:33:12 - 00:53:34:14

James

Unconscious.

 

00:53:34:15 - 00:53:35:11

Addison

Reckless.

 

00:53:35:15 - 00:54:07:00

Ramit

I agree with both of those. What strikes me is that there's a huge volume of spending. I mean, we are talking about 50 plus dollars a day essentially on gas stations and random things. Purchases food for the dog like random random stuff. I don't see a lot of focus. Like if you were to have one expensive sushi place or one expensive dinner place per year, or even every six months, I'd be like, oh wow, they're foodies, or they love this.

 

00:54:07:00 - 00:54:16:24

Ramit

Or they love they love that with their dogs. I don't see that. I just see a lot of random stuff. I also am surprised that it's not all James is spending. Addison, you contribute a lot to this spending.

 

00:54:17:00 - 00:54:23:08

Addison

I absolutely do. I do most of the spending in our household, but we don't need all the things that I bring.

 

00:54:23:09 - 00:54:25:20

Ramit

Why did you just tell me that? What's the point?

 

00:54:25:21 - 00:54:29:17

Addison

To justify it to myself and to everyone in this room?

 

00:54:29:18 - 00:54:49:04

Ramit

The two of you talk a lot when it comes to your spending, and when you talk, you are justifying, you are explaining, and you do it to each other. I don't even think you might even hear the words. Sometimes it's just spending and then blah blah blah blah blah blah blah and whatever's being said in there is sort of irrelevant.

 

00:54:49:04 - 00:55:05:23

Ramit

It's just here's why I need a way to justify it to me or to you or to us. We need this for the dog. We need this for us. We need to take a trip. I need to go outside. I've been inside all day. You've been inside. So I need a thermos. And on and on and on. I don't talk like this with money.

 

00:55:05:23 - 00:55:29:18

Ramit

If I buy it, I don't need to explain it and justify it because I made a good decision months or years ago. I planned for it. There's money set aside. You're explaining because you realize you probably shouldn't be doing it. Yeah, so that's a good cue for yourself. If you find yourself already launching into this thing, you've probably taken a wrong turn.

 

00:55:29:19 - 00:55:38:24

Ramit

James, I want to understand about how you grew up with money. What do you remember your family saying about money when you were a kid?

 

00:55:39:01 - 00:56:08:01

James

Remember money being a source of stress? Although my folks were pretty good with the money they made, my dad did really well. He was a top salesman for a fortune 500 pharmaceutical company, same company for 42 years. But growing up, which for me was in the 90s, all these pharmaceutical mergers happened. You know, we had food in the table.

 

00:56:08:01 - 00:56:27:09

James

We were able to take vacations and everything else. It wasn't like scarcity. But seeing my my dad very frustrated occasionally, you know, pounding his fist on the table or my parents going over their budgets, it was a really, I guess, tough time in that industry.

 

00:56:27:10 - 00:56:29:11

Ramit

Did they teach you how money worked?

 

00:56:29:17 - 00:56:58:22

James

My dad tried once I got out of the house and started making money mistakes almost immediately. Yeah, my parents were like very generous, very good with money. I remember my late teens, maybe early 20s. They got me this, like little organizational thing where I'm supposed to put money in envelopes and this is how you budget. And like, I got it and I sort of paid attention to it for a bit, and then I just just reverted right back to basically how I've always with my life, you know.

 

00:56:58:23 - 00:57:08:02

Ramit

Do you see any connection between that and then what Addison did recently where she brought you all the files and we need to really buckle down. And you did it for about a week, and then you stopped.

 

00:57:08:04 - 00:57:11:16

James

Yeah, yeah.

 

00:57:11:18 - 00:57:12:21

Ramit

What does it tell you?

 

00:57:13:01 - 00:57:43:04

James

Maybe. Determine, for some reason, to avoid digging into money organization? I think I just remember those the, the stress, you know, seeing my parents stressed about when I was a kid and maybe just subconsciously or consciously connecting that, or if I just make enough to get by and make, you know, then I can breathe easy.

 

00:57:43:06 - 00:57:45:13

James

Which, you know, sounds insane.

 

00:57:45:15 - 00:57:51:16

Ramit

Are both your parents still alive? Yeah. Are they still together? Yeah. How are they doing? Financially?

 

00:57:51:19 - 00:57:55:06

James

Fine. My dad retired. They're doing. They're doing great.

 

00:57:55:07 - 00:57:56:22

Ramit

Do you talk to them about money?

 

00:57:57:03 - 00:57:58:15

James

No.

 

00:57:58:17 - 00:57:59:11

Ramit

How come?

 

00:57:59:13 - 00:58:02:10

James

I think a mixture of pride and shame.

 

00:58:02:12 - 00:58:03:06

Ramit

Tell me.

 

00:58:03:11 - 00:58:28:13

James

I mean, I'm in my mid 40s. Yeah, like I don't want to, like, admit again that I've, you know, messed it all up and I. Don't want to ask for advice this late in the game because I feel like I pretended like I knew what I was doing so long that I have to admit that I don't. And I just, you know, I only get so much time to spend with them.

 

00:58:28:13 - 00:58:30:17

James

I don't want to spend time on that.

 

00:58:30:18 - 00:58:35:15

Ramit

Finish the sentence. I don't want to spend time on that meaning money, because.

 

00:58:35:17 - 00:58:38:10

James

Afraid of their reaction.

 

00:58:38:10 - 00:58:46:09

Ramit

Which will be disappointment. Yeah. Another similarity to when you don't bring up topics with Addison. Do you notice that?

 

00:58:46:10 - 00:58:54:23

James

Yeah. I don't want to disappoint her or hurt her far worse than if I were to just rip the freaking mandate off, you know?

 

00:58:55:03 - 00:59:21:23

Ramit

Yes. Interesting choice of words. Even the idea that in order to communicate about uncomfortable things, you have to rip the Band-Aid off. Implying pain, implying a wound. Maybe there's a different way to describe it. Maybe there's different ways. Such as, gosh, I've been uncomfortable talking about money for pretty much my entire adult life, and I've realized this cost me a lot.

 

00:59:21:24 - 00:59:41:24

Ramit

It's caused a lot of pain to my wife and my family, and I realized that I don't want I'm not that person anymore, and it's going to take me a lot of retraining. I'm going to have to have uncomfortable conversations. I don't even know if I have the skills to do it. But I'll tell you what. I'm going to build the skills.

 

00:59:41:24 - 01:00:02:18

Ramit

Im going to do it on my own through books, through watching videos. I'm also going to get help through a therapist, a coach, and my commitment is that I'm going to talk to you at least every Saturday, 11 to 12 a.m. I'm making the agenda, I'm going to bring it up. And I think it's going to be hard.

 

01:00:02:18 - 01:00:13:15

Ramit

It's going to be uncomfortable right now. But my hope is that within six months it's actually going to start to feel fun. It's going to start to feel pleasurable. That's a different way to look at it. What do you think about that, James?

 

01:00:13:17 - 01:00:18:23

James

It sounds like when I've I've said to myself in my head many times over the years.

 

01:00:18:24 - 01:00:20:09

Ramit

Never out loud though.

 

01:00:20:11 - 01:00:21:00

James

No.

 

01:00:21:02 - 01:00:40:19

Ramit

Yeah. Your your response is very common. I mean, for a lot of people and especially for men, the idea of like, I don't want to disappoint a lot of men will basically say, I don't want to burden my wife with these kind of things. Look at the nodding in your head. It's very kind of toxic, masculine idea that I can take it on.

 

01:00:40:19 - 01:00:59:17

Ramit

I can take on the pain. But my wife, I don't want to burden her with it. And in a way, it actually is quite insulting to your wife to treat her like a delicate little flower that can't take tough conversations. Women are smart. They can handle a lot. It's quite demeaning to assume that they can't. And actually the people who then take on the burden themselves often not even good at it.

 

01:00:59:17 - 01:01:11:07

Ramit

So we need to share, and we need to maybe reframe it as it's not a burden, it's just something that I'm not particularly good at yet. But we've got to both get good at it. Addison, do you want to add anything to what James told me about his upbringing with money?

 

01:01:11:08 - 01:01:34:15

Addison

He shared with me a number of times. A situation where they were on a hunting trip. He was with his father, and they stopped in at a gas station, gas station, stopped to generational here, and he said, hey, can I go in and get a soda bag of chips? And As'ad said, no, we can't afford it. And James, what what was your reaction?

 

01:01:34:17 - 01:01:56:10

James

I remember saying, like, what do you mean we can't afford it? I saw one of my dad's paychecks sitting there was like, it was, you know, some couple thousand dollars or something like that. And, and to me as a little kid, like, gosh, it's like so much money, you know, I was like, I remember, like, not able to wrap my head around how you couldn't afford something when you had that much money.

 

01:01:56:10 - 01:01:59:12

James

And I don't know if I ever figured that out.

 

01:01:59:13 - 01:02:01:22

Ramit

Did you tell your dad that?

 

01:02:01:24 - 01:02:03:04

James

No.

 

01:02:03:06 - 01:02:05:08

Ramit

Okay. That's interesting. What do you make of it now?

 

01:02:05:10 - 01:02:20:22

James

The very tight and very like to the dollar budget that they kept meant that there wasn't any room for buying stuff from gas stations that month. There's my my guess.

 

01:02:20:23 - 01:02:42:09

Addison

I would agree. And because they had a shared plan and they stuck to it, they were able to retire and buy a home on a beautiful lake that we visit often and get to enjoy, and we are not taking a note out of their playbook at all, and we are not going to be able to enjoy those things because we're too caught up in enjoying the day moments.

 

01:02:42:13 - 01:03:01:18

Ramit

You know, it's interesting. I see this a little differently. I think you might both be right. I don't necessarily think that you can say they were good with money, because they may have done very well for themselves, but isn't one of the ultimate signs of being good with money that if you have children, you actually teach them, which they have failed to do?

 

01:03:01:19 - 01:03:22:20

Ramit

And another example of that is saying we can't afford it, which leaves kids feeling very confused. What do you mean we can't afford it? We just went hunting. We just went fishing. We just stayed in a lodge for two days and now I can't get a bag of chips. It doesn't make sense. Mixed messages. And so kids are left defenseless not knowing what that means.

 

01:03:22:20 - 01:03:40:12

Ramit

And then they just go into the world. And in your case, you just were like, affordability is just made up. I don't really care if I have money or I even think I'm going to have money. Sounds good. I think a different approach would have been for your parents and for both of you to say, that's not part of our plan.

 

01:03:40:13 - 01:04:02:00

Ramit

Had your parents said that, you might have been like, wait a minute, what's a plan? What do you mean by plan? Who made the plan? Can we change the plan? Because I really want these Doritos. But instead it was just blanket. We can't afford it. Kid left to figure out what that means. Let this be a lesson for every parent soon to be parent, maybe parent or kid of a parent on this show.

 

01:04:02:02 - 01:04:22:15

Ramit

Stop using the phrase we can't afford it, please. That phrase causes often lifelong dysfunction with money. All because you want the kid to stop asking you some annoying question about money, which, if you really trace it back, is that you yourself are not good with money. So you want to shut the conversation down by saying we can't afford it.

 

01:04:22:15 - 01:04:45:11

Ramit

It will cost you and your children dearly. Here's what happens. Kids hear you saying we can't afford it. Not once, not ten times a thousand times over their childhood. And they start to associate feeling bad with money. Then they experience mixed messages. Wait a second, we can't afford it. But we're also eating out a Cheesecake Factory, And so they just start to believe money is just made up.

 

01:04:45:11 - 01:05:01:23

Ramit

Whatever somebody says, whatever, oh, we can't afford it. But then we actually can. So I'm just going to do the same thing with my money, throw my hands up, spend on whatever I see in front of me, and boom, we'll figure it out later. You can see how the toxicity becomes layered and essentially intractable over time. We don't want that.

 

01:05:02:00 - 01:05:16:24

Ramit

I would rather a parent say, we're not going to buy that, because in this family we don't care about $300 shoes or we're not going to buy that because I love it too. But it's not on plan right now. However, we can start saving for it, and three years from now we'll be able to do it. Love that.

 

01:05:17:00 - 01:05:37:15

Ramit

But you've got to go beyond. We can't afford it. Also, if you grew up with your parents saying, we can't afford that, you can't change how your parents raised you. You can learn from it. You can adapt. You can start to zoom up and say, hey, they were probably trying their best. They maybe didn't know about money, but today, what can I do to get better with money?

 

01:05:37:16 - 01:05:58:15

Ramit

I'm listening to this podcast. I can join a Rich life program. I can start to apply these principles differently. But I can't constantly live in the past because of something that my parents did to me. I'm now an adult. It's time for me to take responsibility for my rich life, and we're going to hear about the surprising way that Addison grew up with money right after this.

 

01:05:58:17 - 01:06:23:16

Ramit

Let's take a look at your to do list. How many things are on there that you've been putting off for nine months or more? I'm talking about important stuff like booking doctors appointments and getting your estate plan in order. We can knock them out in about an hour. You can get your estate plan handled today, for example, with help from trust and Will trust and Will offers a portable, attorney designed estate plans online that you can create in minutes.

 

01:06:23:17 - 01:06:43:08

Ramit

Everything is state specific. It's tailored to your needs, regardless of what stage of life you're in. And we actually had one of my coworkers create a will using trust and will. Here's what she said. Getting started was incredibly easy. In less than an hour I had a will power of attorney, last Will and Testament and HIPAA authorizations, all of which I downloaded.

 

01:06:43:08 - 01:07:04:02

Ramit

And if I wanted, I could have them checked by another attorney. Their platform makes it easy to keep these things organized and updated, so your loved ones don't have to manage tons of paperwork down the line. Now you can use an attorney for your estate plan, but that's not an option for everyone. If you know that you have loved ones that you need to protect, trust and will is worth considering.

 

01:07:04:03 - 01:07:25:04

Ramit

Trust and will. Affordable estate plans priceless peace of mind? Go to trust and will to get 20% off. That's trust and will to get 20% off to trust. And I.

 

01:07:25:06 - 01:07:48:19

Ramit

Amit, I want to thank our new partners at monarch for setting up our couples on their platform to see their exact conscious spending plan. Categories. Monarch is a private personal finance app that brings all of a household's accounts, checking credit cards, loans, and investments into one clean dashboard on your phone or computer. If you're trying to pay off debt, monarch makes it easy to see your progress.

 

01:07:48:19 - 01:08:15:03

Ramit

You can see your whole payoff timeline for credit cards and car loans in a way that you can clearly visualize. No more juggling apps or manually updating spreadsheets. I've always said that a rich life is lived outside of the spreadsheet, and monarch lets you save time so you can do exactly that. Try monarch for free today and get 50% off your first year of monarchs core tier with code at monarch.

 

01:08:15:05 - 01:08:32:18

Ramit

And when you sign up with my link only, you'll get your monarch account customized with my exact CSP categories so you can see how you are stacking up to your plan each month. That's monarch with code. Meet Addison what do you remember.

 

01:08:32:18 - 01:08:35:13

Ramit

About growing up with money? What did your family say about it?

 

01:08:35:14 - 01:09:08:24

Addison

I grew up in credibly poor, lots of hammy downs, lots of arguments between my parents about finances, kind of this mentality. Like, we can't take it with us and we're going to die poor. So it was a very heavy topic and I knew I was poor. It was embarrassing. Yet my mom, you know, she would put things on credit card and layaway and got to kind of keep up with the Joneses and we'd need to very similar patterns I see in myself where I want this thing.

 

01:09:08:24 - 01:09:30:14

Addison

So I'm going to buy it. We're going to finance Christmas if we have to, because the kids really deserve to have a nice Christmas. I'm going to take on additional debt for vehicles eventually went back to school and changed our family situation. But the spending continues. They do not communicate really about finances anymore. My mom just handles everything.

 

01:09:30:16 - 01:09:51:19

Addison

My dad is very secretive about things, has a lot of pride and that's caused a lot of problems. And I talked to my mom about our own financial situation for guidance. And she's like, I can't I can't really help you when your dad's the same way. If you figure out how to work with, you know, James, you let me know.

 

01:09:51:21 - 01:09:58:05

Addison

So not a lot of guidance, not having a plan, not really having anything to plan with. It was really hard.

 

01:09:58:07 - 01:10:03:21

Ramit

That sounds like really tough. I have a couple of questions for you. You mentioned you knew you were poor. How did you know?

 

01:10:04:00 - 01:10:16:00

Addison

Just kind of comparison to other people. Also, my parents literally saying we're poor and they don't have any money. And based off the food, we're not having food.

 

01:10:16:03 - 01:10:18:07

Ramit

You went sometimes without food.

 

01:10:18:08 - 01:10:20:18

Addison

Very little food at times.

 

01:10:20:20 - 01:10:26:06

Ramit

That's tough. That's really difficult. How do you think that colors your view of money?

 

01:10:26:08 - 01:10:47:00

Addison

I was resentful of growing up here and made a commitment to myself and very proudly of boldly shared with my parents. I'm going to college and I'm going to have all these things in a different life. I'm not going to live my life like this trapped on a foreign poverty. I'm going to break out of this. And I left home and gone to college.

 

01:10:47:00 - 01:10:56:13

Addison

I'm really not doing anything different. It's the same stuff in a different place, maybe fancier stuff, and I have more things, but it's also.

 

01:10:56:15 - 01:11:27:05

Ramit

It's quite profound. The idea that you said, I'm going to college. Were you the first to go to college? Yeah. Very impressive. Not only did you go to college, you're now a PhD student teaching as well. Extremely impressive for anyone, but especially considering your background made a huge amount of change in terms of education and yet still find yourself repeating the same patterns as before, just as you put it, just in a different place.

 

01:11:27:05 - 01:11:30:05

Ramit

Maybe a little bit nicer stuff.

 

01:11:30:06 - 01:11:56:01

Addison

Yeah, it's the same patterns and trends. Like my mother following right in her footsteps. I have very little in my 401 and have cashed out several 401 KS to, you know, finance needs across the country for school. Like the future is there for me. There is no plan to get there whatsoever. I feel like I know better, but I'm definitely not doing better.

 

01:11:56:01 - 01:11:58:13

Addison

But perhaps I don't even know better as well.

 

01:11:58:19 - 01:12:01:24

Ramit

Do you find yourself confused by your own behavior?

 

01:12:02:01 - 01:12:09:14

Addison

Not necessarily. Confused. Disappointed. Frustrated with myself for not making better decisions on a day to day basis?

 

01:12:09:16 - 01:12:20:21

Ramit

That's interesting, but I don't get the sense that you feel frustrated when you buy something for the dogs or clothes, or you go out to the beer garden or a concert. When does the frustration come, if at all?

 

01:12:20:23 - 01:12:25:01

Addison

Oleg, our numbers and seeing like how? Why are our numbers like this?

 

01:12:25:02 - 01:12:27:06

Ramit

How often does that happen when you pull the numbers?

 

01:12:27:07 - 01:12:28:24

Addison

Maybe three times in a year.

 

01:12:28:24 - 01:12:40:19

Ramit

So you feel frustrated. Think about you feel frustrated for what, three minutes times three, nine minutes a year, and the rest of the time you get to eat out and do all this cool stuff. Sounds like a pretty good deal to me.

 

01:12:40:20 - 01:13:05:18

Addison

And then when things are running low and they're tight and there's concerns about being able to actually cover costs, like right around healthcare, that's another point of frustration and disappointment. Like, we had those funds at one point and they got spent on things we didn't need because we weren't planning for a rainy day or things that we actually do need to thrive.

 

01:13:05:21 - 01:13:28:12

Ramit

Yeah. Neither of you plan. No, you don't plan for retirement. You don't plan for going out and driving for eight hours. Enough to take enough drinks for the day. Like there's a systemic lack of planning. Now, I'm going to tell you, most Americans do not plan. They don't plan for their retirement. They don't plan more than a month ahead with their money.

 

01:13:28:13 - 01:13:48:10

Ramit

So when you have all these financial people going on TV and talking about, look at this compound interest chart, and if you do 40 years from now, that might as well speak Martian to people they're not thinking beyond a month later. And I'm not saying that to make you all feel like, oh, it's okay not to plan. I want you to know that it's quite normal that most people don't plan ahead with their money.

 

01:13:48:13 - 01:14:17:09

Ramit

For the exact reasons that you are as well. One of the things I love about this show is I get to speak to people from all over the socioeconomic spectrum. It is really hard to escape the social class and the structure that you grew up with. As the phrase goes, wherever you go, there you are. So here we have Addison getting her PhD, but still essentially spending the same way her mom did decades ago.

 

01:14:17:09 - 01:14:39:23

Ramit

Just because you make more money, just because you get a PhD, does not mean that you are going to change your psychology around money or relationships. And that's what this show is about. The numbers here are outrageous. I mean, 154% for fixed costs. One of the highest numbers I've ever seen on this show. If they want to get out of this, it's possible.

 

01:14:39:24 - 01:14:51:05

Ramit

But they will have to make severe radical changes. And I wonder if they are willing to do that. James, do you have a magic wand? What do you think? Our approach should be together right now?

 

01:14:51:11 - 01:14:56:13

James

Wayne it and be good with cutting back on everything.

 

01:14:56:15 - 01:15:00:14

Ramit

Okay, cool. Addison. What's your magic? One. What would you do?

 

01:15:00:15 - 01:15:24:08

Addison

Similar. I want to get our KSP dialed in. And based in reality, what we have to work with. I want more going towards savings and investments, and we need to reallocate this whole thing. Like, we need to get a plan that we can commit to here together and then start implementing, knowing that if we don't commit to this and implement this, like the future's looking pretty darn bleak.

 

01:15:24:09 - 01:15:25:23

Ramit

Why? How bleak is it?

 

01:15:25:24 - 01:15:36:15

Addison

I don't want to get a divorce. I don't want to be homeless. I don't want to have to move in back with either of our parents. And I definitely am not going to be able to work for the rest of my life and want to be able to retire.

 

01:15:36:16 - 01:15:42:01

Ramit

Okay, James, what about you? Why is the why make the changes of cutting back? That sounds like a lot of work.

 

01:15:42:03 - 01:16:23:24

James

Because the pattern of feast or famine and uncertainty and embarrassment coming from not knowing which way is up with my finances has had, has, has had horrible outcomes many times, repeatedly before Addison and I were ever together. And now it is to the detriment of my relationship in my marriage, in addition to all of the other things. So I'm I'm ready for a way out.

 

01:16:24:01 - 01:16:32:07

Ramit

Okay, great, I love that. I love a couple that's ready to make changes. I can work with that. Addison, you want to add something?

 

01:16:32:12 - 01:16:49:20

Addison

Yeah, like I'm thinking about magic wand. If it was waived and we did this, like, I want us to feel good and excited and proud. Like that instead of, like, this, like, oh, gosh, that is scary. And it's awful. And we're gonna fight about it and feel depressed about it. I want us to get excited talking about money.

 

01:16:49:23 - 01:17:08:10

Ramit

Okay, I agree, we got to take a different approach. All right. So this is what we're going to do. We're going to redo the CSP. First I want to highlight something I did a using monarch did an analysis here of your last year of spending. What do you think your biggest category of spending is. Take a look. What does that say?

 

01:17:08:11 - 01:17:16:22

Ramit

Shopping. 30% of your spending was shopping. James read off a few of the vendors on the left.

 

01:17:16:23 - 01:17:23:09

James

Amazon, Amazon, Amazon, target, Bucky's. Google. Etsy, Costco, Amazon, Macy's, Costco.

 

01:17:23:10 - 01:17:24:05

Ramit

What do you think of that?

 

01:17:24:06 - 01:17:27:19

Addison

It's a lot of spending. And as we're going through it, I'm like, what was that for?

 

01:17:27:24 - 01:17:35:07

Ramit

What'd you get? Put your hand out like this. Put your hand out like this. Palm up to the sky. What did we get?

 

01:17:35:10 - 01:17:42:24

Addison

It feels empty because I don't recall what we got for some of those transactions. It leaves me feeling empty because it's not something I needed.

 

01:17:43:00 - 01:18:08:00

Ramit

Thank you. This is so much of how we spend money unconsciously. I'm not opposed to spending money. I'm not even opposing spending a lot of money. But I want it to be meaningful and it could be a physical item. I love a beautiful thing. It could be an experience. It could be a food. But something where you look back, you go, wow, that was awesome.

 

01:18:08:00 - 01:18:28:01

Ramit

But right now, just looking at this Amazon Etsy random stuff. What do we get? Nothing. We just bought what was in front of us. So here's what we're going to do. We're going to throw these CSP up on screen and we're going to make some changes here. You're at 154% fixed cost. The goal is to get down to 60%.

 

01:18:28:01 - 01:18:48:01

Ramit

It's going to be really challenging. I'm going to be honest. But we are going to make some changes. Now here are the rules. Because I've done this many times with couples, they inevitably end up fixating on should we cut $20 or $40 off of our cell phone? I'm just going to show you right now, if we go from 1029 to 800, I'm just cutting off like 200 bucks.

 

01:18:48:02 - 01:18:54:24

Ramit

Look at this number up here. The 154%, it drops down 2%. So what does that tell you?

 

01:18:55:00 - 01:18:56:01

Addison

Got to go big.

 

01:18:56:03 - 01:18:57:16

James

More more drastic.

 

01:18:57:17 - 01:19:16:00

Ramit

Exactly. We're talking massive changes. So we're going to go one at a time. And I want you to remember we're trying to actually change your entire lifestyle. So before we jump into all this, tell me your philosophy on money. In our relationship. We what? James.

 

01:19:16:00 - 01:19:18:13

James

Treat money with respect.

 

01:19:18:14 - 01:19:25:06

Ramit

Yes. Damn, that is great. We treat money with respect. Okay, Addison.

 

01:19:25:06 - 01:19:30:00

Addison

We recognize it's a finite resource, just like our time and other resources. So we have.

 

01:19:30:00 - 01:19:30:13

Ramit

To.

 

01:19:30:15 - 01:19:31:13

Addison

Treat with respect.

 

01:19:31:14 - 01:19:49:13

Ramit

We treated with respect. We recognize it's a finite resource, which is exactly what the CSP allows you to do. It's finite. You have this much money to distribute. Okay. Great. And do we have any rules here like in in in our family it might be we are a debt free family or we save at least 10% or 20% or whatever.

 

01:19:49:13 - 01:19:52:00

Ramit

What kind of rules might you have.

 

01:19:52:02 - 01:19:59:13

James

Delaying or putting a hard stop on any excess spending? Until we have a savings or an emergency fund of X amount.

 

01:19:59:14 - 01:20:01:09

Ramit

Why don't you just pick one.

 

01:20:01:11 - 01:20:02:09

James

$10,000?

 

01:20:02:10 - 01:20:04:16

Ramit

Great. So what does excess spending mean?

 

01:20:04:18 - 01:20:11:11

James

We cut off on, you know, cut out going out to eat and like, a lot of gas station trips.

 

01:20:11:12 - 01:20:31:15

Addison

Yeah. Unnecessary subscriptions, gas station, convenient Ubers, all of the things that basically we don't require to live, but also giving ourselves a small amount of like we need to enjoy ourselves a little bit. It's I don't think we can go completely down to zero. So maybe slightly go to the gear, go to number one night and the music's there.

 

01:20:31:15 - 01:20:35:02

Addison

And the talk was, you know, we don't need to go 20 times.

 

01:20:35:03 - 01:20:53:02

Ramit

I like the principle. I think that it will be important to get specific about what does unnecessary mean, because what James thinks is unnecessary is different than what Edison is certainly different than what I think. I never met a couple in $400,000 of debt that went to a beer garden once a week with tacos. It's quite interesting. We should talk about it, though.

 

01:20:53:03 - 01:21:12:00

Ramit

Let's see how the numbers play out. So the rule is we are at least the rule you're proposing is we do not spend unnecessarily until we have $10,000 in a savings account. Is that right? All right, let's let's give it a shot, James. Make a change first, then toss it to Addison. What do you want to do?

 

01:21:12:01 - 01:21:19:01

James

I think groceries, food and beverage can be slashed to $800 a month.

 

01:21:19:02 - 01:21:25:23

Ramit

$800 a month. Okay, so you're going from 3300 bucks to $800 a month. How are you going to do it?

 

01:21:25:23 - 01:21:28:14

James

Specifically meal prep on Sundays?

 

01:21:28:15 - 01:21:30:04

Ramit

Okay. What time Sunday?

 

01:21:30:04 - 01:21:37:21

James

We do brunch a lot on Sunday, so maybe on Sunday for brunch time we can do some meal prep together.

 

01:21:37:22 - 01:22:00:23

Ramit

Very good. You know, it's funny every minute that you are fulfilling one of the guidelines of your money rules, like prepping food on a Sunday is a minute you are not out spending money, so that is a way to look at it like, oh, this, this meal prep is doing us double good. Number one, we're going to get prep food for the whole week.

 

01:22:00:23 - 01:22:20:22

Ramit

It's going to be awesome. Number two, every minute I'm doing this is a minute I'm not outside spending money at the gas station at Home Depot at any of these places. Double whammy. Awesome. Okay, let's keep going. I love that you're going to meal and $800 a month. Addison, are you cool because you're the one who does grocery shopping?

 

01:22:21:00 - 01:22:34:10

Addison

Yeah, I feel like that's a good amount because that whole category also includes speed and beverage. That's all the restaurants. That's the beer gardens. That's the branch. That's everything. So cutting all of that as an unnecessary expense out, that's realistic for groceries.

 

01:22:34:14 - 01:22:39:03

Ramit

Okay. And eating out, that sort of implies you're eating out like not much at all.

 

01:22:39:06 - 01:22:57:03

Addison

Yeah, that would be not much at all. Like, can we go cold turkey on this? I know that we we need to and this is something we have to commit to. And having a savings goal could help us with that. I know, James, like, can we never go out until we hit 10,000? Do you think that is realistic?

 

01:22:57:03 - 01:23:04:10

Addison

I just think it's going to be hard. I think we should leave a little bit in the budget for like when we have friends that are visiting, our families are in town.

 

01:23:04:12 - 01:23:11:00

James

Yeah, that's a goes back to that crash diet saying like, I guess it sounds really great. Can we do it though?

 

01:23:11:01 - 01:23:33:04

Ramit

You're not thinking about it the right way. Okay. Both of you are expressing a fear of having to change your lifestyle. And the way that you are articulating this is by saying, what about when our family visits? Now notice what is in that example number one. What about it's the sporadic thing. We don't know when it's going to happen, so we can't even plan for it.

 

01:23:33:04 - 01:24:03:05

Ramit

It's just whenever. And second it's family. And in your case you use family dogs and your own need to be outside as political shields because nobody can argue against the importance of family and the importance of recuperation and the importance of your beautiful dogs, we have to change this entire way of operating. First of all, we're not going to plan for a random, sporadic might happen thing of other people visiting us.

 

01:24:03:05 - 01:24:19:17

Ramit

We are planning what we are going to do. We are the family that matters right now. And second, if they come, great, but we can't spend money with them. We don't have the ability to spend money, so they want to go out to dinner. I'm sorry, that's just not in our plan. A phrase I wish your parents would have shared with you, James.

 

01:24:19:17 - 01:24:31:23

Ramit

We can't. Oh, what about this? Can't do it. Oh, we really want to do this. I'm sorry. We'd love to, but, you know, we have a nice patch of grass outside. Let's take 10,000 steps in that patch of grass. Let's have some fun. That's how you do it.

 

01:24:31:24 - 01:24:39:10

Addison

Yeah. That's feasible. And we have role models that are also modeling this behavior. We can easily do things like that with our current amenities.

 

01:24:39:11 - 01:25:01:20

Ramit

Good, good. And I like that. I like you said modeling. We have to remodel who you have been modeling after. Of course. It's so easy these days to just oh, let's go out to let's order something in whatever that that can't happen under this. So all right. While I am sensitive to the fact of going cold, turkey is very difficult, I am not trying to make allowances for random family to come over.

 

01:25:01:20 - 01:25:12:01

Ramit

It's you simply do not have the money to be able to provide for that. So I'm going to keep it at 800 because right now you're at 127% fixed costs. Addison. You're next.

 

01:25:12:03 - 01:25:16:07

Addison

Let's go ahead and take a look at subscriptions. Lots of fun category.

 

01:25:16:11 - 01:25:36:18

Ramit

Subscriptions it is. Here we are. Let's read them off. We have monarch for $210. Every guest on this show gets a free subscription to monarch. YouTube, open AI, Spotify, Amazon, Google One, Uber, Paramount+, New York Times, Apple Doodle, Prime Video What do you want to cut?

 

01:25:36:18 - 01:25:43:07

Addison

Addison everything but ChatGPT YouTube, Adobe and the doodle.

 

01:25:43:08 - 01:25:56:22

Ramit

All right, so everything else is gone. What the. It went from 1754 to $55. No, we got to look at what else is for entertainment here. What surf house.

 

01:25:56:24 - 01:25:59:05

Addison

Suppose is tickets to a show.

 

01:25:59:11 - 01:26:03:16

Ramit

Okay. And the movies meow Wolf. What's that?

 

01:26:03:22 - 01:26:05:10

Addison

Interactive art exhibit.

 

01:26:05:11 - 01:26:09:09

Ramit

Okay. Geocaching access. What's that?

 

01:26:09:11 - 01:26:10:07

Addison

Tickets.

 

01:26:10:08 - 01:26:14:10

Ramit

All right, so it's a lot of, like, shows and concerts. What do you want to do about that?

 

01:26:14:11 - 01:26:25:20

Addison

We got a stop. There is a lot of free entertainment options in our city. We do not need to spend hundreds and hundreds of dollars going to show so we can see it for free.

 

01:26:25:21 - 01:26:34:19

Ramit

All right. Fine. So what we have decided is that there are no more shows. Yeah. That's it. All right, I'm down. Let's keep moving. I like it back to you, James.

 

01:26:34:20 - 01:26:37:09

James

Let's do pet pet expenses.

 

01:26:37:15 - 01:26:45:10

Ramit

Okay, $1,029. We got PetSmart, Rover, chewy vet, and on and on and on. What do you want to do?

 

01:26:45:11 - 01:26:54:22

James

I think just just dark dog food and treats for for for training purposes.

 

01:26:55:01 - 01:26:56:02

Ramit

How much each.

 

01:26:56:02 - 01:27:06:12

Addison

That's 110. And we go through two of those for the two. So that's 220 for food. And then the jurors of trees, we go through two of those. That's like 30 bucks. So 250.

 

01:27:06:13 - 01:27:07:17

Ramit

Per month.

 

01:27:07:19 - 01:27:08:09

Addison

Yep.

 

01:27:08:12 - 01:27:16:01

Ramit

Okay. So I like the change. You're at 101%. But you know a lot of those expenses came from your dog being sick. So what do you want to do about that?

 

01:27:16:02 - 01:27:26:06

Addison

I think we also need to allocate a little bit of money every month into a pet emergency account to help cover those, because, you know, the doc, every three years they have to get cleaned.

 

01:27:26:07 - 01:27:33:11

Ramit

Would you rather allocate money towards your retirement or towards your dog's upcoming health expenses?

 

01:27:33:13 - 01:27:34:14

James

Can we do both?

 

01:27:34:15 - 01:27:39:13

Ramit

No. You told me that one of your money rules is that money is a finite resource.

 

01:27:39:15 - 01:27:40:15

James

Yeah.

 

01:27:40:17 - 01:27:50:10

Ramit

Notice your initial reaction is to try to find a way to wiggle out of the rules that you yourself said. What would you rather put money aside for your retirement or your dog's upcoming health expenses?

 

01:27:50:12 - 01:28:02:13

Addison

It's a really difficult call. I want to make both work by cutting drastically in other areas where we can, because those are two really important things like I want to retire, but these dogs are like, they're like our children. So.

 

01:28:02:14 - 01:28:18:00

Ramit

Okay, the one option is that you cut so drastically that you then have extra money to put towards both. We can see if that's possible, but it will reflect on your lifestyle. Let's take a look. What's next to cut.

 

01:28:18:02 - 01:28:29:02

Addison

The car payment can calm down a little bit because we will be paying things off, so I think we can get that to about $1,000. So we're not going to be taking our Ubers.

 

01:28:29:03 - 01:28:50:09

Ramit

Okay. Done 98%. What's Addison notice what you're doing. The over explaining what I'm looking for from the two of you is concise answers, so we can move on. If you are spending a ton of time explaining decisions when we already made it, we're living in the past. We got to save that and focus on the future. Let's move on.

 

01:28:50:10 - 01:28:58:21

Addison

Yep, we could do close and personal care. That's mostly my category. We can bring that down to 303. That way haircuts are still possible.

 

01:28:58:22 - 01:29:02:15

Ramit

And okay, we're at 89%. What else? Let's move fast.

 

01:29:02:16 - 01:29:09:08

Addison

Utilities. We can bring that down to five because we need to. We have four phones between the two of us. We can get that down to five.

 

01:29:09:09 - 01:29:27:23

Ramit

500. It is okay fine. You're at 87%. Just want to point out at 87%, you're still spending more than you make every single month. What about this miscellaneous. Let's take a look here. Miscellaneous. We have upstart IV and.

 

01:29:28:00 - 01:29:30:15

James

I was like interest payment for the loan.

 

01:29:30:16 - 01:29:49:06

Ramit

There's quite a bit of uncategorized and sloppy spending that needs to be corrected. I will not cut this down to zero, but I'll keep it at 300. Which means you all need to be looking transaction by transaction until you really smooth out your spending. You're down to 83%. All right, I'm going up to income. What do you got?

 

01:29:49:12 - 01:29:56:13

Addison

I'm going to be resuming full time. And so my income is going to go from 4000 a month to 7100.

 

01:29:56:14 - 01:29:58:02

Ramit

Great. What's the take home. Do you.

 

01:29:58:02 - 01:30:00:15

Addison

Know that's that's going to be the net. That's the home.

 

01:30:00:16 - 01:30:24:08

Ramit

Wow, 7100 net. That's great. All right, watch what happens to the numbers here. Wow. 63% your fixed cost. That's not bad. That's really impressive. Great job so far. Very, very impressive. You cut your expenses down by over half. Great job. But we need to go one step further. Are you building savings? If we end the call right now.

 

01:30:24:10 - 01:30:26:09

Addison

We are not currently. But we need to.

 

01:30:26:11 - 01:30:43:02

Ramit

Okay, so let's do that right now. One thing that people often do is they will over. They'll focus on expenses, which is great, but then they don't go the final step of saying like, what do we do with the extra money now? And they just let it sit there and then it gets spent because it's sitting there and you two know if the money is in your account, you will spend it.

 

01:30:43:03 - 01:30:49:02

Ramit

Yeah. So look at this. You have $4,697 a month left. What do you want to do with that?

 

01:30:49:03 - 01:31:10:12

Addison

We got to hit 10-K for that savings account that we talked about as our first rule. No other spending until that's built up. So that's going to need to primarily go towards that. But I feel like we also need to be putting some towards retirement. And I that's where I don't know. Do we build up our emergency account first and then start contributing?

 

01:31:10:13 - 01:31:36:05

Ramit

You do both. First of all right now you have $0 in savings. You're at extreme risk. If one of you gets in an accident or something happens, you're in real trouble. So there is no perfect answer here. This is really about making a decision based on risk, age, all kinds of stuff. But if it were me, I would put more of the money available towards savings because I need to build a moat in case something happens.

 

01:31:36:11 - 01:32:03:11

Ramit

Technically, if you all stuck to this at $8,000 a month, you know you should have like $50,000 minimum in a savings account for like roughly six months of expenses. Okay. That would be 8000 times six. But we can start with less than that and we can build up over years. So let's take a look here. We can put, I don't know, maybe $3,000 a month towards savings.

 

01:32:03:12 - 01:32:06:20

Ramit

What's up with the debt. What's your debt payoff date.

 

01:32:06:20 - 01:32:17:13

Addison

So other than my seat at loans I will have everything paid off in 2031. But I have a lot of stuff falling off in 2026 and 2027 and 2029.

 

01:32:17:13 - 01:32:24:13

Ramit

Nice in 2026 and the other 2020s. How much is the payment that you're going to now have?

 

01:32:24:14 - 01:32:26:12

Addison

About $1,000 will be awesome.

 

01:32:26:13 - 01:32:31:03

Ramit

All right. So like what would you do with that $1,000 once it gets paid. Do not say the brewery.

 

01:32:31:04 - 01:32:50:05

Addison

No, no, I wouldn't know. I would say like I really I am worried about retirement. I feel incredibly behind and so I need to figure I need to calculate what do we need or want for retirement and how much do I need to start putting towards. I think if that isn't, dollars is going to be a really healthy amount to get caught up since we're starting.

 

01:32:50:05 - 01:32:51:01

Addison

So wait.

 

01:32:51:02 - 01:33:03:03

Ramit

It's a good start. You're going to need to get even more aggressive with that much more. First of all, I love that you know your numbers. I'm so impressed. That is, less than 5% of people know their debt payoff plan. Extremely impressive. James, did you know that?

 

01:33:03:04 - 01:33:03:20

James

No.

 

01:33:03:22 - 01:33:21:12

Ramit

Okay. You got to know it from now on. The idea of letting Addison know this stuff and carry these and have these numbers. It's not okay for the two of you as partners. So I have to redo that relationship where the two of, you know, these key numbers, and you know what they mean. Okay, if that is the case, then here's what I propose.

 

01:33:21:16 - 01:33:37:04

Ramit

We are putting, let's just say 500 bucks a month away for retirement. Not bad, not bad, not bad. Hair and clothes. What's 300 bucks a month? Because I don't know too many people with this much debt who spend $300 a month on self-care.

 

01:33:37:05 - 01:33:45:01

Addison

That's there. I think that it probably go down to how often do you need your haircut? Jeans?

 

01:33:45:03 - 01:33:46:14

James

5 to 6 weeks.

 

01:33:46:14 - 01:33:50:16

Ramit

How much you pay for a haircut, James. 60 bucks. How much you tip.

 

01:33:50:18 - 01:33:51:15

James

20%.

 

01:33:51:16 - 01:34:09:11

Ramit

Okay, so 70 bucks for a haircut. Like, here's what I'm proposing. I don't care if you get if you cut your hair at home or that's up to you. But I am proposing, like, there are so many things that you both take for granted. Like, of course we got to like, go to a show. Of course we have to have this in Uber and get a haircut every four weeks.

 

01:34:09:14 - 01:34:29:11

Ramit

How does a couple that does not go into debt? What do they do? I'll tell you right now, they don't get their haircut for 8070 to $80. Every four weeks. They stretch it out, they go to a cheaper place or they do it at home. Up to you what you want to do. But I'm trying to show you some of the things you just take for granted are actually just assumptions, and there are much cheaper ways to do them.

 

01:34:29:11 - 01:34:34:04

Ramit

What do you want to do for the amount of $300 a month for self-care?

 

01:34:34:06 - 01:34:37:04

Addison

I'd be lying to not do many, many other stuff.

 

01:34:37:05 - 01:34:38:07

Ramit

What's the number?

 

01:34:38:09 - 01:34:40:24

Addison

So I'd leave it at $70 a month.

 

01:34:41:00 - 01:34:42:07

Ramit

Can you stretch that, James?

 

01:34:42:08 - 01:34:43:13

James

Yeah, I can do elsewhere.

 

01:34:43:14 - 01:35:01:22

Ramit

Love it. 40 bucks it is. That includes the tip. So make it 30. Supercuts. Here we come. All right, next up. Oh, call and negotiate your back. Taxes and even your credit card. See if you can do it. You might not be able to, but at least try. Okay. All right. We're at 4% on investments that can come up over time.

 

01:35:01:22 - 01:35:20:21

Ramit

Right now might be the best you can do. Savings at 24%, which is quite good. You know what? You all have 12% left or $1,457 for guilt free spending. That's too much. What are you going to do with $1,400? I know you'll spend it, but I think that money would rather be allocated somewhere else. Y'all want to take care of your dogs?

 

01:35:20:23 - 01:35:24:00

Ramit

All right, well, here's where it comes from. How much you need to put aside for your dogs.

 

01:35:24:01 - 01:35:26:05

Addison

I'd say $100 a month.

 

01:35:26:06 - 01:35:40:08

Ramit

What is happening right now? I saw the transactions where you spent $1,500 and then $200, and on and on and on. That happened last month. How much do you think, on a yearly basis, you're going to spend on medical or unexpected expenses for these dogs?

 

01:35:40:09 - 01:35:41:13

Addison

Well, it's you grand.

 

01:35:41:17 - 01:36:06:03

Ramit

Two grand. Okay. I'll put it there if you want, but I'm going to try to show you a different way of thinking about it. Yeah. When I plan for uncapped expenses. First of all, I'm very wary of anything where there's a potential limitless amount that I will have to spend. I'm talking about houses, cars. But if sometimes we have to have things that are just going to potentially cost money and we don't know how much or how, that's okay.

 

01:36:06:07 - 01:36:29:16

Ramit

In those cases, I always am conservative. So for example, when people buy a house, the typical guideline is you assume 1 to 3% of the purchase price in maintenance every single year. I always assume 3%. Why? Because I don't want to be caught surprised with a 10,000 or $100,000 expense. Same thing here. Assume it's going to be bad and save for that.

 

01:36:29:16 - 01:36:31:05

Ramit

So how much you want to save.

 

01:36:31:09 - 01:36:41:00

Addison

Let's say for the year 5000. Considering when we have insurance, I think we get 90% coverage. So five five in cash is going to go a long ways.

 

01:36:41:01 - 01:36:58:07

Ramit

All right. So I'm going to save dog health. All right. We're going to call it 400 bucks a month. And that's going to sit in a sub savings account or a special savings account called Dog Health. And that's where you pull from okay. Damn. You still have $1,057 left. How much do you want to have for like quote fun?

 

01:36:58:07 - 01:37:20:17

Ramit

Most times people I recommend they have 20 to 35%. Okay, you all are at 8% right now, so you're well below. But you also have a high income, okay. And you're in a lot of debt with pretty poor habits. And your habits have shown that when you give yourself an inch, you take a mile. So sometimes it's easier to just cut it off completely and not to think about it.

 

01:37:20:18 - 01:37:35:09

Ramit

Therefore, I would recommend you bring that number down. Even though it seems crazy. I rarely recommend somebody go this aggressive, but you actually need to be aggressive so you can send a signal to yourselves. Our lifestyle is totally different now. Therefore, what percent do you think you should have in guilt free spending?

 

01:37:35:13 - 01:37:48:11

Addison

Less? Let us say zero because I feel like we've lived like our fun life for so long. Yeah, and I'm feeling pretty guilty about that. So I don't know if we deserve that right now. We'd kind of spent that in advance of now.

 

01:37:48:12 - 01:38:13:19

Ramit

I love the way you are. You are thinking, that's awesome. I don't want this to be punitive. We're not doing the whole like you have sinned. That's not what this is, okay? Instead, I would like you to look at it this way. We are taking our finite amount of money and we are redirecting it, allocating it with ruthless and relentless force towards the things that are important to us.

 

01:38:13:19 - 01:38:33:13

Ramit

You told me we respect money in this family. I see that because you are saving a huge amount of money every month, 27%, and you need it because you have zero savings. That shows me respect. Hey, we made a mistake in our past, but we are fixing it and we are fixing it with overwhelming focus and force. Now that's respect.

 

01:38:33:13 - 01:38:53:18

Ramit

I see investments, it's small, but it's a start. I like that, that's respect. Hey, we'll do more once the other car is paid off. And once we have the credit card, that's money's going to go directly towards investments. Great. I think you should give yourself a little bit of grace. If it were me, I might take 800 bucks and put it to investments.

 

01:38:53:18 - 01:39:24:13

Ramit

So that's a very healthy investment rate to start with. But I think. Could you do $257 on fun for the entire month? Now think about it. Fun includes Gatorade. From now on, we're drinking water. Oh, I need hydration. Salt. Goodbye. Next. No more shows. We already talked about that. No more brewery. You could go once a month, but you all have to plan ahead and say, we are going to get one beer and no pretzels or whatever else.

 

01:39:24:14 - 01:39:25:15

Ramit

What do you all think?

 

01:39:25:19 - 01:39:40:06

Addison

The great thing about our plan is like, we set the roll. We're not spending anything until we get our savings built up. It's like a huge goal and an accomplishment. And then maybe at that point we can reward ourselves with just a little bit more. Everything else.

 

01:39:40:07 - 01:40:03:06

Ramit

Yeah, I love that. And can I add something else? I love? You mentioned earlier, Addison, that you looked at your transactions and you're like, what do we even get for it? Like just a bunch of random stuff. But if you have $257 per month and that is it for fun stuff, then I bet you the two of you are going to plan and talk about it, and it's actually going to be meaningful.

 

01:40:03:07 - 01:40:17:14

Ramit

So maybe you do decide to go to the brewery, it's on the calendar and then you can talk about it. Hey, I think you should do January. I'll do February, you do March, I'll do April. What are we going to do? Let's do this all. But let's do that. Well, this is how much we have, including tax tip, all of it.

 

01:40:17:15 - 01:40:38:12

Ramit

Do we want to take an Uber there I don't know that would cut that would cut into like 40% of our thing. So you become actually hyper focused. And when you get there, whether it's a movie restaurant, whatever you you looked at the menu, you're salivating, you're ready to go and you actually appreciate it even more. That's how you do it.

 

01:40:38:13 - 01:40:43:03

Ramit

What surprised you about the changes that you have made today?

 

01:40:43:07 - 01:40:53:04

James

Although there was a pushed back in apprehension and explaining less than I thought that it would be.

 

01:40:53:06 - 01:40:54:18

Ramit

Why do you think that is?

 

01:40:54:20 - 01:41:10:05

James

2026 years of adulthood that have viscerally punished for all the decisions I've made, the potential relief from these decisions is looking feeling pretty good right now?

 

01:41:10:06 - 01:41:12:21

Ramit

Love that. Addison. What surprised you?

 

01:41:12:22 - 01:41:34:16

Addison

We actually have a concrete plan to move forward with, and it's not as painful as I thought it was going to be. Am I going to be really excited for some safety and security financially? But we have an emergency account. Heck yeah. Am I excited about having retirement? Yeah. So this was actually more fun and exciting than I thought it was going to be, because I was very nervous, and we're going to have to dig through a lot of things and feel a lot of shame, perhaps.

 

01:41:34:16 - 01:41:37:17

Addison

But I'm leaving feeling excited, and I'm surprised I feel that way.

 

01:41:37:18 - 01:42:10:02

Ramit

I love that, I love both of your receptivity to these changes. These are really big changes. They're not to be taken lightly. Some of the biggest changes that we have made on this podcast, and it's actually really hard because what you are seeing is the lifestyle that you knew being systematically removed, one thing after another, and that if that's the way you look at it, it's like I'm cutting off one finger after another.

 

01:42:10:02 - 01:42:32:02

Ramit

It's just increasingly depressing, sad, hopeless. But what I notice is that the two of you actually started to move towards something. And so it's like you have a philosophy, you have rules, you have a goal of having $10,000 in a savings account and feeling more secure. And I kind of love that you push back on me with the dogs.

 

01:42:32:02 - 01:42:50:17

Ramit

You go, hey, we're going to these dogs are part of our family. We are going to find a way to do it. Amazing. That means you can't do this or that. And you both said, fine, that's priorities. I love that, Addison. You came on asking to learn a little bit more about your psychology. A few things I want to observe.

 

01:42:50:19 - 01:43:12:07

Ramit

First, a lot of explaining and over explaining is kind of a tip off as you two of you go forward. If you find yourself over explaining, maybe just pause, make a joke of it. But it's actually something to notice in your relationship. A lot of leaning on comfort and double talk, you know? Yeah, we love we like comfort, but actually it's not that important.

 

01:43:12:07 - 01:43:31:20

Ramit

It's because there was a new job and then this happened and that happened. Important to be honest. Hey, in our past chapter we loved comfort. In fact, it was the overriding thing that guided us. And when we take a look at it from perspective, yeah, it was nice in the moment, but it didn't really leave us with anything of lasting meaning.

 

01:43:31:21 - 01:43:51:00

Ramit

And so we've decided to change to being a little bit more plan full, a little bit more deliberate, and then when things come up, which they will, like your family visiting or dog needs something special, then you go, okay, great, we already plan for it. Or hey, we're not able to do this because that's not part of our plan.

 

01:43:51:02 - 01:44:18:13

Ramit

So that's a really savvy way to look at your money. And then the two of you coming together will be the most important thing. This plan can work or fail based on the two of you. Right now, there is still a disconnect between how both of you engage with money. It's a very common dynamic. You know, he kind of goes and goes to work and then comes home and is disconnected from the finances.

 

01:44:18:13 - 01:44:39:16

Ramit

She is managing the money, but managing to her means, you know, making a bunch of spreadsheets but not really having a clear distribution of money. And then they fight and she asks what's happening and he retreats. We don't want that anymore. We need to be teammates. When you do that as partners, it's going to be very, very connective the way it has been today.

 

01:44:39:20 - 01:44:54:07

Addison

This has been so helpful. Like we clearly we wanted to make changes. We got started. We just couldn't do it on our own. So we needed this firm intervention and it's been really great. So like thank you. It's not enough to.

 

01:44:54:09 - 01:45:18:01

Ramit

Yeah. It's absolutely my pleasure to see the way that you both came here. Ask for help with a little probing. You were honest, which I love. And as I said from the beginning, I'm not here to judge. I'm here to help you be honest with yourselves and with me and then make changes. And also, it is especially meaningful to me to help you because of the lack of financial education that you got growing up.

 

01:45:18:03 - 01:45:32:12

Ramit

And I don't mind if people did not learn this stuff. I never mind that as long as you're willing to change which you are, I love to lavish my time and attention on you, so thank you both. Stay in touch.

 

01:45:32:17 - 01:45:34:13

James

Me well thank you.

 

01:45:34:15 - 01:45:53:09

Ramit

I really like Addison and James at the beginning of our conversation today, I think it was a little bit combative. I personally will take some responsibility for that. I was trying to pull out what's really going on here, feeling a little resistance, but I noticed this inflection point where they started to be more into it. They started to actually think about the future.

 

01:45:53:10 - 01:46:16:10

Ramit

James came along, Addison, to both taking responsibility. I like that, and you could see my energy shift to when they are open to change. I lean in, I get excited, will they follow through? I actually think they will make some serious changes. I think some of the examples that I shared with them today, they had simply never experienced them in their entire life.

 

01:46:16:11 - 01:46:42:23

Ramit

For example, the idea that if family comes around, you don't have to go out to eat with them. If you've never heard that, that might seem radical. It might seem like, wait, I can just not go out to eat with them. And so I think they will make dramatic changes, cutting down their spending. I also think that they will find their childhood lessons coming up, and they will start to reason away their plan.

 

01:46:42:24 - 01:46:58:03

Ramit

They will start saying, you know, I think we deserve it. We worked hard. We saved 8000. That's pretty close to 10,000. Let's go out and celebrate those kinds of things. And I hope that they acknowledge those voices in the back of their head and they say, hey, that was the voice from yesterday. But today we are a different couple.

 

01:46:58:04 - 01:47:02:17

Ramit

If they can do that, they have a good shot at sticking with this plan.

 

01:47:02:19 - 01:47:21:04

Addison

What surprised me most is the amount of studying we've had a couple of big spending periods like our wedding and moving across the country, but in looking at the details, there's also been a shocking amount of mindless, unnecessary spending with very little to show for it. Through all of this, my biggest.

 

01:47:21:04 - 01:47:44:24

Addison

Takeaway is that we do not need to spend money to experience comfort and joy, and in fact, our out of control spending has resulted in less comfort and joy due to stress and arguments over money. Thankfully, through this process, we have learned a lot about our relationship with finances, more about our financial reality, and we've begun to take some steps to do better.

 

01:47:45:00 - 01:48:08:03

Addison

Not sexy or groundbreaking, but for the first time ever, we are taking it upon ourselves to actually manage our money. We've taken some measures to reduce our fixed costs, and we are committed to not spending beyond our fixed costs so we can focus on our savings goals, as well as aggressively paying down our debt. Now we've cut a lot, but we're still alive and kicking.

 

01:48:08:05 - 01:48:18:11

Addison

It really has not felt like a sacrifice because for the first time ever, we are on the same page and we are actually investing in a future that we truly want to.

 

01:48:18:11 - 01:48:49:12

James

My biggest surprise was just how far apart my perception was from reality when it came to all those little purchases, the convenience store, and going out for beers and just seeing it all laid out and how much it add up. It was shocking how much we spent on convenience. And when it asked Addison about that, it really made me think a lot about how much we spent on companions.

 

01:48:49:14 - 01:49:22:13

James

The biggest takeaway, well, frankly, is a pretty humbling realization that we've both lived with more of a sensitive entitlement than I really care to admit. You know, we work hard. We feel like we deserve these little treats, the beers after a long day, going out to eat, etc. but seeing the financial impact of that made me realize we need to dig deeper into the why of why we're doing those things, instead of just trying to treat those choices and change things on our surface level.

 

01:49:22:17 - 01:49:47:23

James

That said, we've made some big changes. You know, no more convenience store treats. We're not eating out. Anyways. Started meal planning and planning a grocery budget. So, you know, we're also looking beyond immediate changes to allocating money towards the emergency fund, paying down our credit cards, getting out of debt and starting an IRA, setting aside money for things to help plan for the future instead of just hoping that we'll get there.

 

01:49:48:00 - 01:49:51:24

Addison [inferred]

Hey guys, it's Alison and James here checking in with our one.

 

01:49:51:24 - 01:49:57:24

Addison

Month update. We have been busier than ever, but we have some exciting progress updates to share with y'all.

 

01:49:58:05 - 01:50:21:03

James

Yeah, so we've been able to put a lot of the information and the tools that we received into practice. Our monarch is more dialed in and categorized than it's ever been. And our CSP, we actually do that monthly now to account for variable income to track all of this. We've been consistent with our weekly money meetings and getting all that dialed in.

 

01:50:21:05 - 01:50:34:05

James

And then for some of the stuff like the back taxes and and such, we actually retained a CPA. So we would be working with them to help us navigate these challenges moving forward.

 

01:50:34:07 - 01:51:05:21

Addison

And reflecting on our session with Remy and how we were approaching money and our relationship with money, we've really begun to both respect and manage all of our finite resources. So not just money, but also our time and our energy. Realizing, as was highlighted in our meeting, our reliance on convenience. So to counter that and to stay on track, we've been working intentionally to budget all of our resources.

 

01:51:05:23 - 01:51:33:10

James

And yeah, we've been doing that. I mean, really working together as a team more more so than we ever have. We've we have a shared vision, shared goals. Now we've we've really match all that out. Where before I feel like we're just kind of shooting from the head, which was clearly not working. But now we have a much clearer understanding of shared understanding of what's necessary versus was unnecessary and what we deemed, you know, what we deem as such.

 

01:51:33:12 - 01:51:55:21

James

We supported accountability and, you know, discussing the consequences for purchases of as a factor as well. To kind of help with that, we also opened up a couple of joint accounts. And so we have those everything's out on the table. It's a lot more it's a lot easier that it's all transparent and it helps us with our joint decision making.

 

01:51:56:00 - 01:52:15:15

Addison

Yeah. So we're just really grateful for the opportunity and the experience. We've had the information and tools at our disposal, but I really think without this opportunity we wouldn't be putting those into practice like we have been and we wouldn't be on the path we are now, which gives us a lot of hope for the future. So we're just getting started.

 

01:52:15:15 - 01:52:23:19

Addison

But we're really excited for the future and really grateful for me and team and for everyone else who's also been along on this journey. So thanks to time.

 

01:52:23:19 - 01:52:24:19

James

Thank you guys.