“$0 savings, $0 investments… Is it too late for us?”

I want to give a huge thank.

You for reading my material for listening for watching because i have some big news my new book money for couples is officially a new york times bestseller i want to give a special thanks to my team who helps take the material that we create and shares it with the world and to you who ordered the book who came to my live tour who tell your friends how important it is to live a rich life that means a ton to me and it also helps get this book in front of more and more people so thank you for your support if there is someone in your life who can benefit from money for couples please send them the link iwt dot com moneyforcouples so that they can get themselves a copy thank you again if you and your partner want my help with your finances please listen up i'm especially looking for couples who have been affected by identity theft or they have been a victim of a scam and if that has affected your finances your money psychology your relationship i want to help if this is you please apply at iwt dot com apply if i think i can help my team will reach out for an interview with you and your partner and if it's a good fit i'll invite you to join me on the podcast i'm only looking for couples who are serious and ready to do the work so so if that's you and you've been affected by identity theft or some kind of scam please apply at iwt dot com apply on last week's episode we met thirty eight year old lakeisha and forty five year.

Old james we've talked about money but it's come more from a lack of right i want to get on the other side of that the couple recently.

Moved in together and they're trying to get on the same page about their finances but it's a challenge i had.

A repossessed car credit cards and some.

Loans i have not considered my future self at all in fact i've pretty much set that person up for failure in a lot of ways they have.

No savings no investments and they both struggle with the money messages they received.

Growing up i'm scared to do things so i guess that's why i didn't.

Accumulate a lot today we're digging back into their conscious spending plan or csp.

The numbers are shocking we have to.

Do something okay guilt free spending.

I.

Always got guilt about that are lakeisha and james willing to change the way that they mindlessly spend money and get focused on their rich life we want.

To be better for each other so.

We can have a better future now let's get back to our conversation with lakeisha and james when we left lakisha and james last week we had just.

Learned learned they have zero savings zero.

Investments and one hundred ninety thousand dollars of debt between the two of them let's dig back into the numbers and we'll see if they're ready to make.

A change if something were to happen we have nothing like we would have to borrow money in order to mitigate whatever that something is and have you.

Ever gotten in that situation lakeisha like zero savings maybe you had you got sick or you lost your job or.

Anything like that fortunately no i have.

Not you're basically driving without a seatbelt you know most of the time you're going to be fine the one time you're not and it's over yeah and nobody can tell you no i'm not a parent here to nag you put your seatbelt on build a savings account i can't do it only you can but when i see this i feel extreme fear i'm not afraid of a lot i'm afraid of teenage girls because they're mean and i'm afraid of big old insects you know that fly maybe roller coasters but i'm afraid of this yeah because i know what can happen i know that you're skating really close to the edge and if something bad happens especially with kids you're in a loop and it is really hard to get out of it so that's how i feel let's talk about the debt for you lakisha you have one hundred sixty five thousand dollars of debt what is that student loans couldn't discharge us in bankruptcy okay we know that thanks republicans right anyway how much is your interest rate on one hundred sixty five.

K i'm going to be honest i have no idea i haven't even bothered to look i'm in one of those income based repayment plans after seven more years it'll all go away anyway so.

Oh all right that's actually really helpful to know and that explains why you're paying almost nothing towards it yes thank god because i was looking at these numbers like what the hell is happening here yeah okay good to know shall we continue moving along yes yes income james break it down for me let's get the combined monthly income gross monthly.

Income combined is twelve four five three.

James did you know that you make sixty thousand seven hundred and thirty two dollars per year that's horrible yes that's an interesting response we can work on that and then lakisha did you know you make eighty eight thousand seven hundred four dollars a year yes okay both of you knew your income great combined you make one hundred fifty thousand dollars that's kind of a lot right yeah.

I think it's good let's keep going.

It doesn't look like either of you are doing too much pre tax like four hundred one k investments is that.

Correct that is correct the place that i work for they were just recently integrated so it's going to be a new company where i have benefits so now starting twenty twenty five we'll have four hundred one k have the option of getting the hsa and so i wanted to max it out from the beginning i told him as i was doing open enrollment it was going to be like with insurance taxes everything it was going to be like nine hundred out of my check and he was he was like what no like and so i still open the account but i i put it as zero because i was told from the person that i could change that amount later can i just say i want to and i had a conversation with james about that recently and he was like let's.

Wait let's wait till what james why did you react the way you did.

Well first of all is the amount that she was trying to put away and i would just i would just wait till later until we get out of this hole that we're in it was basically the message i was trying to convey to her wait till what.

James you're forty five years old and you have zero savings and zero investments how long do you want to wait.

I i wasn't saying like don't ever do it or let's wait forever it was just a large chunk but we at that point we were not living together yet as well you know what.

I mean wasn't it her money it was so what does your opinion really matter about her money anyway it sure.

Don'T you're right that's that's correct but.

Do you do you all understand the dynamic that's at play right here i.

Asked him first of all i even brought it to him and asked him what he thought about it instead of.

Just doing it correct like a child yep and then james thrust into this role which he shouldn't be in james has twenty six thousand dollars of debt and zero savings too what's he talking about and then he naturally just assumes the role oh i think you should wait what do you have to do with this decision it's your money lakeisha you don't even live together at that point but both of you are playing this dynamic parent child makes no sense it's keeping you in a poor financial situation do you understand this yes yes.

Let me break down why the parent child money dynamic is absolutely toxic to relationships first your partner's not a child and you're not going to get them to act like an adult by treating them like a child number two this dynamic is sexual kryptonite often the parent figure feels repulsed as a result of taking on the authority role and this is not good for any relationship the.

Good news is there's a way to.

Change the dynamic when you treat an adult like an adult you tell them what you expect and you set clear boundaries you may be surprised how often they rise to the expectation more on this in my new book money for couples we'll be right back after a short break hosting this podcast and hosting a netflix show i have noticed a lot of patterns with couples and money fifty percent of couples don't know their income ninety percent of couples do not know how much debt they actually have and most couples are not aware of how much they spend every month on subscriptions subscription creep is real and if you are not monitoring your spending it's really easy to pay for things you don't even use if you're spending money on subscriptions that you don't even remember signing up for you can take that money and redirect it to parts you really care about which is why i've partnered with this episode sponsor rocket money to help rocket money is a personal finance app that helps find and cancel your unwanted subscriptions monitors your spending and helps lower your bills so you can grow your savings rocket money allows you to see all of your subscriptions in one place so you know exactly where your money is going and rocket money has over five million users and has.

Saved a total of five hundred million.

Dollars in canceled subscriptions saving members up to dollar seven hundred forty a year when using all of the app's premium features cancel your unwanted subscriptions and reach your financial goals faster with rocket money go to rocketmoney dot com ramit today that's rocketmoney dot com ramit rocketmoney dot com ramit in my company we have a saying when we are trying to dream bigger about designing a new program and we say if we could wave a magic wand what would we want to see and the magic wand is a tool to help you think about the best case scenario like helping you hit your goals faster more clearly feeling good about it so if you're a business owner you might want the magic wand to get better insights into the future of your company and if that.

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Their csp let's continue moving along here let's look at your fixed costs so what number do i typically recommend your fixed costs be between fifty thousand dollars and sixty thousand dollars correct james did you know that she did tell me yes okay great so at sixty eight it's higher than it i would like to see it but it's not like eighty nine all right we got some stuff we can play with let's just work our way down and then we'll go into the line items investments zero so you know you all know the way you're going if you currently change nothing you will be living on like social security you guys want to do that no it's not good savings are at zero not good and then this is really interesting your guilt free spending is thirty three percent now i don't believe these numbers but i do believe they are a lot do you track your guilt free spending carefully yes or.

No no no no tonight at the.

End of the month is there any extra money no no okay so it's going it's going somewhere what's it going towards amazon stuff what else eating out eating out where you guys eat out.

It depended on a week we have.

Pizza every friday please don't say dominoes.

I no no no no no no there's a a local place bob's pizza we try like to try different pizza places every friday so all right when it's like we're in between paychecks we'll we'll go get a large pizza at.

Whole foods hold on was that supposed to be like we're so frugal we got a pizza from whole foods the.

Hell'S happening right now okay this is.

Amazing let me just tell you my.

Family when we were eating out which.

Was not that often once every six weeks we're going to the pizza place with a coupon and whole foods i never walked into whole foods until i went to college and i walked right back out i'm like this place isn't for me bye bye i'll come back here in about fifteen years all right.

Wow we only get our pizza at.

Whole foods amazing where else do you eat out pizza what else we said.

We were going to start going to.

Longhorn once a month that's interesting so the two of you talked about it and said we want to do this once a month that's the first time i've heard of planning i like that.

On a wednesday we might go to culver's you know what i mean what's.

That burger place okay how much total bill bill tip tax delivery everything we.

Get the kids meal so it's about.

Twenty four dollars she's laughing and covering her mouth hold on there's definitely a lie happening right now lakeisha no i.

Just laugh because we we definitely do get the kids meal like all three of us will get a kid's meal okay because it comes with a free custard we try to think about money.

Please don't do this right now please don't try to justify the financial part.

Of it we've gotten two days out.

Of a seven day week and i'm getting your life history about longhorns and the custard just tell me where you eat out that's all i want to.

Know okay c's chicken if it's all of us man we spending a good dollar forty to dollar fifty you know.

This is for how many people you.

Know if my daughter's here four and.

If she's not three that seems like how are you only spending forty dollars for four people eating out tax tip there's no way can we just reset because something is not right i don't mind if you're overspending i can help you with that but i can't help if you guys are lying to me or if you're lying to yourself if.

We'Re going to the restaurant for pizza last week i spent one hundred forty.

Something dollars okay that's reasonable on a.

Weekly basis i would say we probably spent at least two hundred fifty dollars.

On eating out how many times a week do you eat out three or four times a week i was going.

To say the exact same number three to four times a week do it.

Do a little exercise with me okay it's sunday morning we're going to go through the entire week anybody eating out sunday i'm talking coffee lunch brunch sunday.

We eat breakfast at home how many.

Times you eat out on sunday give me a number probably once right once.

Or twice because he always brings lunch home and then dinner depending on if we have groceries or not we will eat out again on sunday great so.

Is that two or three times on sunday at least two two times great monday what do we got oh monday.

We don't usually eat out on mondays.

No no none no coffee croissant whatever none of it okay great tuesday tuesday.

If we have leftovers we eat that how about if you don't if we probably if we don't have leftovers at.

Least once let's say once all right wednesday i would say once okay great thursday breakfast lunch dinner snack i would.

Say zero i would say zero friday.

Probably twice twice all right saturday saturday how saturday probably twice twice anybody want to say three times lakisha what's that big smile on your face just to.

Pay a week maybe three times let's.

Say three all right now i don't know if you've ever heard of ramit sethi's magic number of eating out have you ever heard this number no the number goes like this take whatever a couple tells you and triple it and you will get the real number and guess what your number happens to be six or nine nine exactly three times what you told me what do you make of that first of all am i getting a round of applause for this i freaking invented this okay i'll take the win for myself it's my podcast that's pretty amazing don't you think yeah it is it is and are you a little surprised you thought it was three times and it's nine times a week i'm shocked i am so whatever number you told me we spent two hundred fifty a week you better triple that right away what does this tell you if we zoom out about your entire financial picture we don't know where our money is going that's correct what else we need to plan yes love that but james i love your answer but i notice again you go towards the future we need to change we james you're not going to change unless you actually can diagnose and analyze what is happening today you cannot move.

Forward unless you stick with the present.

And understand it so give me that answer we don't plan we don't plan agreed would you say that you are impulsive with your spending yes okay good and do you have like some good stories that you tell yourselves about why we need to go out tonight of course we're busy yes we went into this whole thing about time management i don't believe it so do you see that if we ended the call right now what do you think would happen with your money it will continue to.

Be the same old same old i.

Agree lakisha we would continue to live.

In the way that we are and feel like we don't know where it's going or why we don't have enough for our future selves yeah when the.

Answer is there what is the answer.

We'Re spending it now yeah what are.

You spending it on things we don't.

Need to yes that's true but i don't love that answer i would say you're spending your money unconsciously you're not spending it on your rich life if i asked the two of you what is your rich life would you have told me eating out nine times a week is in our rich life no.

No absolutely not what would you have.

Said instead as it relates to eating.

Out getting a chef once a month.

Okay that would be nice probably not in the financial position to do that today so what is your rich life today as it relates to eating out.

Keeping it to maybe once or twice.

A month if we could hold on to a specific place that we know we want to eat out at yeah then i think that would make it.

More meaningful i like that i like the idea of a meaningful meal together if i were in your situation i might say our rich life is having one day each month where we all go out as a family and have a great meal and we all share a dessert together and we appreciate it what do you notice about that it's.

Goal oriented if we try to go outside of that one time it would make us go back to that like this isn't the one time that we're supposed to go it would give us something to hold ourselves accountable to if we're waiting for that yeah it's it's.

Slowing down and creating the life you want it's not life happening to you oh we're busy so we stopped at this place and oh we got that thing and it's around the family so the whole thing about we're going to do one time with our family that's so beautiful because it allows the family to talk about it maybe one of your kids gets to choose this month and the other gets to choose the next month it becomes a whole thing and the thing about sharing a dessert like when i was a kid we never got dessert so forget about that but okay it's hard to go from thirty six times to one time we're going to have to talk about that but the fact of being able to share this and appreciate it this is what we can do right now i hope that in the future we can each have our own dessert we can each do more basically there's a way to create meaning out of restraint you see that yeah yes do you ever say no to spending money i feel.

Guilty about it sometimes so okay i.

Absolutely do you know okay you say no and then what do you do with the money that you didn't spend.

Find something else to spend that's not.

Great i know right you feel guilty about spending it but then you just spend it anyway what's that about i'll.

Probably spend on something that i say i need if we don't have nothing to eat in the house i go get something to eat or something like that or put gas in the car.

Lakisha what about you if i say.

No to spending it's because it's not there so you know how parents say no we don't have money for that or whatever it will a legit like no we we really don't have it so if i say no it's because it's not there usually as opposed to i don't want to spend it on.

Whatever that thing is okay so can i ask again like when was the last time you told your daughter no when it came to spending money she.

Doesn'T ask for things a lot like yesterday when we went to target i feel like that's why i was more compelled to say okay it was an eleven dollars sweatshirt it was cute she doesn't ask for things a lot so.

I said yes okay what do you spend your money on like you said eighty eight thousand bucks a year stuff.

That'S the best word i can think of to describe what i spend my money on stuff like what are we talking about i like buying things for the home a lot so decor and i love to diy stuff stuff like make t shirts or sew things so i i get i have a lot of craft items as well that's what.

I like spending on all right shall we look at the fixed costs and go through the line items let's do it all right let's take a look so your rent is sixteen percent if we combine it how are you splitting your money now that you are living.

Together so i i give her the thousand dollars is what i give her towards your rent okay and why is that well there's a number she came up with well came up with together since she does make a little bit more than me we thought that would.

Be a fair amount wait she makes more than you but you're paying more for rent how does that make sense.

Let me tell you how this conversation went i'm going to tell you exactly how it went he asked what number would i like for him to contribute and i said how much can you and he said i don't know i was thinking of what if i give you five five hundred each paycheck and that could go towards rent or you know part on utilities or whatever and then like everything else will kind of figure out as time goes like stuff like groceries and gas and stuff like that so that's how that conversation went like almost verbatim and do you all.

Feel good about this no i'm good.

With the number i don't feel good about how it happened because i feel like there was nothing we like did or looked at in order to come to that conclusion it was just an.

Abstract number but that's like that's the way that both of you are living your financial lives we don't want to oh i agree i don't want that either i want to show you how to start using numbers effectively but what you just did was such a common conversation that couples have it's like what do you want to do here's what i feel comfortable with i'm like feelings why the hell are we why are we talking about feelings right now i want to talk about cold hard numbers talk to me about ratios talk to me about percentages this is the stuff i need right now and it's a lot of like i don't know how about you this is so common so let me show you a different way.

Okay i get it when you move in with a partner and you try to divide costs for the first time it can feel overwhelming but it doesn't have to be up next i'm going to show lakeisha and james what to consider when making this decision before we.

Do that i need a quick favor.

From you if you're enjoying this show please hit the subscribe button it really helps my team and me we'll be back after a short break in my.

Twenties i wasn't really thinking about the.

Food that i was eating i didn't.

Know about nutrition it wasn't something on.

The top of my mind i used to order through this thing in new york called seamless they would deliver food i would order three times a day.

And now i realize i'm not trying.

To do that anymore i need to feel good i'm on tour for my new book i'm traveling i'm doing multiple interviews a day i need to be on my a game and so the food i eat needs to give me energy and so i've learned about things like macros and protein and i'm intentional about what i put in my mouth if you want to feel better in twenty twenty five with better food choices i recommend thrive market this episode's sponsor thrive market makes it simple to find trusted one hundred percent non gmo brands without spending hours in the grocery store using their on site filters you can shop based on what matters to you low sugar gluten free organic or high protein options all just a click away plus thrive market's smart cart feature is.

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A lot of things people tell you you should do and you don't i'm not going to sit here and lecture you about flossing your teeth but there are important things that we ignore and i want you to get these right imagine if you will that you have just suffered your premature death and now your husband or wife they're grieving sitting at the dining room table trying to figure out how to log into your e trade account while the tears fall down and soak your keyboard if you don't set up a will before you die you're definitely going to be seeing this scene happen from hell and that's why i'm so happy to announce that trust and will makes creating your will easy you can actually get ten percent off at trustandwill dot com ramit my coworker recently created a will for her family on trust and will and here's what she told me it was incredibly easy very straightforward i followed very simple prompts to fill out all of my personal info my family my beneficiaries assets et cetera in less than an hour i had a will power of attorney documents last will and testament and hipaa authorizations i can download these docs have them executed or even hire an attorney to look over them for me now i personally used an attorney for my own estate plan but i recognize that not everyone has access to an estate attorney if that's you trust and will is a great option it makes estate planning accessible and a forum you can save loved ones time and stress by having all of your documents in one place and they are safe and encrypted they also have live customer support available through phone chat and email let trust and will uncomplicate the process for you protect what matters most in minutes at trustandwill dot com ramit and get ten percent off plus free shipping that's ten percent off and free shipping at trustandwill dot com ramit let's get back to.

The conversation now right now if you break down your money you have lots of ways to do it you could just combine everything which married couples often do and i think in general it's a good idea you could split it fifty fifty which would make no sense but some people just think that fifty fifty is fair or you could do it proportionally now proportionally actually works out really well because lakisha you make sixty percent and he makes forty percent if you break down the numbers so the way that that works is basically for any joint expenses james pays forty percent and lakeisha pays sixty percent how does.

Everybody feel about that yes i feel.

Great about that okay let's make a couple changes here so let's take your rent and that would mean you lakisha paid ten fifty and let's just watch what happens here that means james you pay seven hundred wow big changes happening already so already what we can see is that the look at the fixed cost for each person they went sixty seven percent for james but now lakisha's at seventy five percent lakisha what were you doing before james was contributing to the rent drowning yeah i filled this.

Out alone months ago yeah and sent it to him my csp i think my number for fixed costs was in.

The nineties you're spending too much we're about to see that are you only spending four hundred dollars a month on groceries this is way lower than i normally see especially for a family with kids right okay normally i would see like eight hundred to twelve hundred bucks.

Oh no we're definitely not spending that much i am a coupon shopper our total at the grocery store yesterday went from two thirty one to one hundred and ninety after coupon i don't think.

That groceries are going to stay at four hundred i don't think it's possible okay candidly i'd like to adjust up because i hear a couple of times the two of you mentioned like we didn't have food so we went out like that's just not acceptable it's not when you have high fixed costs there will never be a day where you quote run out of food and go and have to get restaurant food it just makes no sense especially not making one hundred fifty thousand dollars joint okay so one of the things i talk about in my book money for couples i want to show you it's coming out is creating a family culture in our family we dot dot dot for example in our family we have a no debt policy that's part of our culture what would it be for you.

Our family only eats out once a.

Month i love that but give it to me with a little bit more meaning behind it because right now it feels like a little bit dreary give it to me that in a way that's meaningful for your family our family.

Only eats out once a month i.

Like it it was theatrical but give me something else lakeisha you want to.

Help them out in our family if we can't pay for it outright we don't buy it that's true and that's not something we're doing okay can we.

Stick with the dining thing i just want to show you an example of actually making something fun and not dreary so it'd be like in our family a special family dinner once a month we rotate who chooses and we all share one dessert which we appreciate that's how i would say it but your family's got your own culture so you'd say something a little different yeah i.

Got it in our family we have one evening that we are all together and we share a meal and a dessert and conversation love it beautiful that's.

A rich life i love that let's keep going i'm moving your groceries up to eight hundred because you're going to need groceries there's a line on here row twenty now i believe i invented the conscious vending plan and i don't recall putting in a line row twenty called cigars and alcohol what the is.

This that was the kia the kia.

Did that two hundred bucks from one person and two hundred fifty from another is this a joke i think that's.

A roundabout amount oh is it higher no no i definitely have not spent as much as i usually would spend.

On cigars how much do you usually.

Spend six months ago i was at probably at least three hundred dollars a month for cigars but there's just cigars with alcohol i would say probably about five hundred dollars a month okay what.

Are you drinking bourbon all right and lakeisha's over here smiling like i'm not going to call on her next lakeisha.

What about you i like wine are.

You in the cigars thing too nope that's all him so what do y' all think i mean i know what you think is like ramit's about to come down and drop the hammer if you want to do it you could do it can i be very honest with both of you right now yeah i think you came to me because you want help and i respect you i respect your time and i am going to raise my expectations for both of you all right okay you have zero dollars in savings you have kids you have zero dollars in investments right now you're at seventy three percent on your fixed costs there's just no world where where it's okay and where i'm going to buy any of these stories about we're actually doing better i just need to be more conscious this is all bs and you know it the thing is you want me to make the change for you you want me.

To come in here and be like.

Stop it guys and then you can be like i know we should try better we have been trying better we should i'm not going to play that game that's what both of you want i'm not going to do it if you want to keep doing it you could do it it's your money it's your rich life the fact is you have no savings and no investment one illness one problem with your kids one car accident and you are out of the game and at thirty eight and forty five there's very hard to get back in it so i guess what i'm asking you is are you ready to take this seriously what do you want to do i want to do.

The best and we're not doing our.

Best all right let's do it then but it's going to be you doing it not me so here's what i'm doing i'm turning over control of the cspdu your goal is to get this number down to sixty percent tell me how you want to do it i'll make any changes you tell me i'm just the executor but the only rule.

Is you have to each do one.

Thing and toss the ball back to each other go ahead i guess the.

Line for cigars and alcohol we can change it to dollar one hundred each.

Okay can i ask you a question yes james do you think you should be spending money on alcohol and cigars when you are in twenty six thousand.

Dollars of debt no so okay so.

No okay what's happening right now you're a grown man why do i have to tell you this you already know it is it that you are waiting like your dad looked over your shoulder and he was like are you sure you need that and you allowed yourself to be put in that child position that you're now waiting for me to.

Do that when we talked you said that you know sometimes you you feel like that if i work hard if i do this i deserve at least one cigar every other day or something like that so that's what's in my.

Mind and has that approach worked for.

You it has not no so do.

You want to keep the same approach and hope that it magically changes no i think before we go into all these numbers you all need to decide like how do we want to show up right now like imagine here i am like trying to run track or something i'm running the four hundred and every time i go out there i'm like oh i'm so tired like life sucks it's so hot with my shoelaces and i just keep losing then my coach pulls me aside and says listen you actually have pretty good skills but how have you been showing up i'm like i'm kind of a downer i'm always like complaining and he goes how do you want to show up how would i answer him you want to show up to win show up to win what's my attitude going to be.

Like let's do this let's do this.

That'S right exactly and all the stories i used to tell myself if only this one guy wasn't here i those stories are gone i got a new story for myself i deserve to win so how do you guys want to show up as we're about to get into this csp motivated motivated love it let's do it here we go james first what do you want to do.

Took out the alcohol and cigars all.

Right take it out i'm zeroing out alcohol and cigars i want you to look at this number as i go down the list this is your fixed cost number it's a seventy three percent our goal is to get it to sixty here we go cigars zero what do we see that number change to sixty seven percent sixty seven percent all right we're going in the right direction.

What else i would like to change the child support college students to zero.

For right now explain this to me what is this category i was sending.

My niece and my daughter dollar fifty every two weeks but they're both employed they don't necessarily need it they never asked for it i just wanted to do something love it so that's what.

I was doing i love i love your niece and kids and everything give them a big hug next time you see him but the checks have stopped all right two hundred bucks that's zero and what's this child support for six hundred that's james right yeah that's legal.

I have to pay that legal we're.

Keeping that okay great let's keep it the number is sixty five percent oh my god we're making better progress than i thought toss the ball back lakeisha.

Toss it to him i guess miscellaneous can change to one hundred dollars for.

Each i like that can i tell you what is in that category so i include miscellaneous it's fifteen percent of all your other stuff i found another magic number which is fifteen percent is typically how much people don't think about for their fixed costs that would be things like something breaks in your house or a car repaired you didn't plan for so i add in fifteen percent now here's the thing when you have a very financially healthy position you should actually be putting that money aside and then at the end of the year you can make a little rule oh we didn't spend it let's invest most of it spend it whatever the fact is you can't have dollar seven hundred ninety three a month in miscellaneous costs.

It'S just out of control for your.

Abilities right now that means you've got to be tighter more intentional okay so we're going to reduce it but what are the implications for the two of.

You if we reduce it then to your point we need to when you scroll down then we need to plan for those miscellaneous things happening and being more proactive instead of reactive that's exactly.

Right boom you nailed it so let's do it watch what happens to the number it's going to be quite amazing we're changing the three hundred dollars to one hundred dollars miscellaneous and we're changing the four hundred and ninety three to one hundred what's that number wow fifty nine fifty nine percent fifty nine percent give yourselves a round of applause that's really good well done honestly i'm amazed this is incredible keep in mind we have increased your grocery spend wow by a lot by double that's amazing now let me ask you this who cooks.

At home if food gets cooked i.

Usually cook it wow okay how how often does food get cooked probably three.

To four times a week that actually.

Seems to me like a pretty big deal because let's just say let's round down on this one let's say it gets cooked twice a week so let's say one night everybody comes home they're tired and there's no food cooked what's everybody going to end up doing immediately.

If we're spending this much on groceries there's going to always be food here and me personally if there's food here i'm going to make something i'm not going to buy something it's going to be by the time i place an order and go pick up or before it's delivered i could have made something already so if there's food here then i'm going to go to see what i could throw together i kind of.

Love your answer and i love the attitude you had when you answered that just like i'm gonna make it when there's food here i'm known for it that's amazing i am that's the attitude that i want to bring to the money i'll tell you my example when there's extra money i'm going to invest it i'm known for investing extra money that's like we can bring that same attitude to different parts of our life so i i just wanted to point out i'm struck by how awesome that attitude was right there and that energy so you have it in you i just want to see us bring it to other parts of life anything else on fixed costs we got this phone bill who's y' all paying for your kids phone bills here i am yeah.

So there's four lines my line my two daughters and my niece so i raised my niece from like seventh grade.

Through high school that's awesome do you want to keep paying for her phone yes i do okay fine james what about you one hundred twenty five a month what's that there's just me i.

Got this phone on air right now.

And on his phone subscriptions are at one hundred ten any duplicates you all can cancel since you're living together absolutely.

We could definitely do that let's make.

A change right now how much what's your gym membership thirty three a month.

And so i have like peacock and things like that but i can get rid of that so for mine you probably can just change that to thirty three for my gym membership thirty three.

Love it and for you lakisha i.

Think you should leave it at sixty.

All right fine so you're at fifty eight percent which is within the fifty to sixty percent for fixed costs i think that part is good but now we need to get pretty aggressive because you are thirty eight and forty five you have zero savings and zero investments you all can live a rich life but it's up to you how hard you want to push it and i want to show you an example so you really start to understand the numbers.

Here lakeisha and james have said they want a plan to move forward which.

I love to hear and that's what.

I'M about to give them but as you heard james say earlier he's scared when it comes to investing and this is common for people who don't understand how investing works i'm about to show them how easy investing can be and how impactful it can be we'll get to that after a quick pause to.

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Conversation pick a number how much do y' all think that you should invest.

Every month twenty percent of our income.

Okay cool so twenty percent of your shall we say gross income or net income gross gross okay love it wow aggressive so that's fourteen seventy eight dollars a month for you lakeisha so let's just put it right here okay wow good that's twenty seven percent of net or twenty percent of gross cool what about for you james pick a number.

I guess i match hers to twenty percent of of gross all right let's.

Go ahead and do the same thing just to see what happens that's going to be about one thousand bucks a month all right so right now you basically dropped your amount that you can spend a lot every month your guilt free spending you actually don't have that much money left over so the more we put here in your savings you know where that money's coming from money we spend now the money you spend eating out and what else shopping yeah you all can save money i'll show you how much you're going to have but that money comes from somewhere and it would come from eating out and shopping is that a surprise to you or is that something you expected i.

Know that it's going to take some type of sacrifice to get to where we need to get to i like.

That how come you haven't done it.

Before it goes back to a lot of the things like you said we wasn't thinking about our future selves not only that but since we've met each other i think we want to be better for each other so we can have a better future i like that.

What do you think akisha it just.

Feels different to be doing this with someone else that has the same goal in mind that's what makes this feel different so you don't feel like you're sacrificing alone it's really difficult to be.

The only person in a relationship who's carrying the weight and sometimes your partner is unengaged or sometimes they're actively working against you you know it's like we're i'm trying to save money and then my partner's like hey come on it's friday let's go out how are you supposed to deal with that it's like constant temptation in the house but on the other hand if the two of you have a bigger vision then what are we doing this week becomes very powerful so let's take a look at the compound interest how much you're going to have right now you have zero your annual addition if we were to do just the number we picked out it's an aggressive goal but let's just see what happens twenty nine thousand seven hundred and thirty six dollars a year years to grow how many years should we say twenty five james you're you're forty five right yes let's say twenty first and then we can see what happens if we wait five more years okay interest rate of seven percent let's just go ahead anybody want to guess how much you're going to have one million three hundred thousand dollars okay james.

Let'S go with one million one point.

Three million damn lakeisha that was an excellent guess okay so what does one point three million mean to you i.

Won'T be broke when i retire and not only won't be broke i just will be able to enjoy retiring how.

Much will you be able to enjoy retirement like give me a number how.

Much will you be living on maybe seven sixty five k maybe all right.

Not not a bad guess so we're going to use something called the four percent rule it's not perfect it's good back of the napkin we're going to take that number multiply it by zero point zero four that means you'll have about fifty two thousand dollars per year there might be some benefits you might have some social security i think that's for sure and do y' all own or rent rent rent okay so you're going to have housing costs at that time and they will likely continue going up we'll see so how do you all feel about living on fifty two thousand dollars a year no that's not going to get it that's not going to do it oh what about longhorns you see the choices we make today directly affect what we do tomorrow so if you really consider it and you break it down the nine meals a week out literally costing tens and tens of thousands of dollars now if you can afford it i got no problem you love good food i love it too but the problem is right now you're not on a sustainable path and this assumes nothing bad happens no layoffs no injuries not everything's perfect let's keep looking there's another thing i want to point out if we wait twenty five years because something really powerful happens then well james might have to work longer i would hate to put that james in that position but let's just take a look at twenty five years instead of one point three million you're at two million what that's crazy right i.

Understand compound interest but i did not think it would go up that much just from five years oh you don't.

Think so you want to see what happens at thirty watch this it's just five more years three million do you understand that it took roughly eighteen or so years to get to a million then it took a few more years to get to two million and then five years to get to three million what does this tell you we can't.

Do anything about the past the time site but we should have started years.

Ago yes and what should we talk about right now what is we need.

To start today exactly do you see.

Why i was so alarmed at this nine hundred dollars like oh let's talk about it let me ask for permission why put yourself in that role asking somebody who candidly does not know about investing you got to decide each of you for yourself what kind of life you're going to live we could talk about the marriage and like marriage staying together living together all that stuff but regardless each of you is getting older you have to take action regardless of what the other person does do you see that directly in the math yes lakeisha you see it james what's going on with you what are you feeling right now i just want to check.

In with you the numbers are most shocking we have to do something that's.

A good answer we have to do something i love that we have to make a change now i want to point out i want to caveat some of this because if you all were investing twenty nine thousand dollars a year for twenty five years you could get to two million dollars and if we take that number and run the four percent on that that's eighty thousand five hundred dollars a year that's good that's nice solid that's accounting for inflation by the way plus we add on however much for social security that's nice okay cool the problem is you really can't afford to invest thirty thousand dollars a year do you know why why anybody tell me what's completely blank on the csp savings yeah what's savings for emergencies and right now you have no emergency fund yeah you also have no money set aside for a new car a vacation somebody graduating none of it so we need to build that money up and we need to do it fast because if one of you gets in financial trouble you are in really really bad trouble so we have a limited amount of money here how do we want to allocate it maybe if we.

Did twenty percent net as opposed to.

Gross what's my recommendation for the conscious spending plan for savings it's five to ten percent okay why don't we start there notice i just typed in five hundred just to see that's thirteen percent of james's net income so that's too high so james can afford to do like two hundred bucks a month do you all see why i was so alarmed with the cigars and alcohol and like the negotiation yeah it's like what are we even talking about we have nothing in savings we can't be talking about cigars what this shows is that james you currently have dollar five hundred seventeen per month to spend guilt free spending and lakeisha you have dollar three hundred eighty five per month to spend guilt free spending now what do you.

Think of these numbers that's better than probably what we were doing no you.

Were spending thousands per month right so that's way better let's stop using better and worse okay let's stop putting moral judgments on spending money that's an old way of thinking because think about it what you're saying james and lakeisha you've also said this you've you've both kind of said like i've been bad have you noticed that as in spending money is bad that's something that like people tell their kids that's bad don't put put that back the thing is you both have said like i've been bad but that you're spending all your money you're literally spending more than you make you're spending thousands eating out so it's not even working by telling yourselves i've been bad let's stop talking about money like that and let's instead start talking about what is our rich life so no more good and bad spending more or less has nothing to do with that it's all about here are the numbers how do we want to allocate our money within those numbers lakisha what does it feel like to see that you have three hundred eighty five dollars a month to spend guilt free while.

The amount doesn't feel good it feels good to know that that's what i'm working with and that's what i can work out of it's almost like an allowance when you were a child and you had an allowance once you spent it that was it you didn't have a credit card or anything to fall back on once it was gone it was gone so if i feel like that's my allowance then i know that i have a number that i can go back to as opposed to thinking that this whole check is at my disposal i could do with it what.

I want i think it's good to set boundaries for yourself and i think at this stage it's good to have these bumper lanes you need some guidance right now because obviously just having that entire check just sit in your checking account is not working for you how are you going to deal with the eating out if the two of you only have five hundred and three hundred.

Bucks a month we definitely got to.

Reduce that do you all see how it works together you can't actually go out to eat nine times a week anymore or thirty six times a month it's kind of funny when you put it that way right it's like you were eating out more than once per day so there's just no money for it you don't have to try there's just no money for it that's it the money's gone it's moved to a savings account it's gone to an investment account it's just not there anymore so now what happens if somebody's tired on a thursday night and they're like i don't want to eat this raw celery let's go to ben's pizza what are you going to say no no and then what if one person goes i'll.

Pick it up if i don't have room out of my three hundred eighty seven then i'm not going to do.

It yeah all right i like it that was a pretty good answer i like that i think probably just watch out for becoming the police of the other person's finances right you don't want that i think you probably need to recalibrate your relationship you know i talk a lot about money dynamics in money for couples and parent child is one that we notice here and that's going to have to be changed like even asking for permission for your own four hundred one k it just like makes no sense looking over someone's shoulder and saying like do you need that that also makes no sense it also strips the other person of their own individuality we don't want that we need each of you to stand up on your own before you can effectively be a team so have you thought about that have you thought about the role of money in in your relationship moving forward.

That'S one of the biggest reasons we wanted to get on with you i'm.

So inexperienced with dealing with or even having a roll of money in a relationship and he has had some bad experience and so i feel like given those perspectives we knew that we needed help outside of ourselves i'm so glad.

You reached out here's my observation i think that because i look at the two of you at thirty eight and forty five with no savings and no investments it's clear that there's a lot of love and i love the compromises that the two of you are talking about i love that i'm challenging i'm pushing you on the eating out and the cigars and the rolls and and.

You'Re with me you're staying with this.

Is hard stuff you're staying with me i appreciate that if i were in your shoes what i would want to see for both of you would be for each of you to become financially skilled before you were to move forward and combine anything that would be my own personal opinion why do i say that because right now your finances are not in great shape you've started hopefully this proportional combination which i think will be much more fair for joint expenses but if you were to get married and combine everything i think it would probably be a bad situation right now.

Do you agree i would agree one.

Hundred percent and james yes oh amazing okay we're all on the same page that is because each of you doesn't yet individually have the skills to manage money as you start this journey you're going to realize some things are going to come up like oh my gosh like one of us is sticking to the plan and the other one is looser how are we going to navigate that one of us can't get things paid on time the other can et cetera et cetera and that's okay not everyone's going to be perfect the first time but you've got to get on solid foundation and i would be specific i would say look before we get married i want each of us to have x thousand dollars in our savings account i want x thousand dollars in our investment account pick a number that's reasonable based on what we have decided here it shows a commitment to excellence and i don't know about you like i i want excellence for myself my wife wants it we want it for each other to have savings and investments seems pretty straightforward it doesn't seem too crazy to me what do you all.

Think i agree what's up yeah i.

Want to revisit something lakeisha said in the previous episode which is important to acknowledge now knowing that the two of them are creating a new path lakeisha.

Said that she has wanted to fire.

Her therapist for over a year but she hasn't done it i want to know why she's dragged out this decision that is seemingly straightforward can we talk.

About this therapist for a second lakeisha is this a different therapist than james yes different therapist and you you want to fire them how come you haven't.

I don't know i've been working with her for a while and so i.

I just feel weird okay so it's just like an uncomfortable conversation it is.

It'S uncomfortable conversation to be honest with you until you said it i never thought about just sending an email saying like hey i don't want to do this anymore or i'm firing you i don't even know how to begin having that conversation to be honest i don't.

Mind that but can i ask you like how do you think your inability to switch therapists is affecting your finances.

I have no idea i never even thought of it i never made a connection between the two at all what.

Do you think it means that you cannot fire a free therapist free to you what does it mean what does it say about you i avoid conflict yes you avoid conflict and so how do you avoid conflict with your money.

File for bankruptcy yeah which i've done.

Which you've done didn't change anything with your spending did it no you avoid being decisive with your money instead you try to get buy in from everybody and ask people who should have no business telling you what to do with your money you ask them for their advice right yeah conflict avoid it at all costs and when i say all costs i mean literally it's costing you hundreds of thousands of dollars same thing inability to be decisive to make a.

Decision for your own well being for.

Your own mental health is the same way you are not prioritizing your own financial well being this is why having uncomfortable conversations is not an optional skill it is required in this world required you can't get by you can't be successful if you can't have uncomfortable conversations you can try to say can i get out of it which you have any surprises about that conversation we just had about your therapist never made a.

Connection between the avoidant behavior there and.

Here yeah a lot and i actually think a really good therapist will help you make those connections i don't know this therapist it's i'm not qualified to make a judgment about them but sometimes people are great they're just not a good fit for you i've had that i probably had people who said like ramit seems like he knows what he's talking about but i just don't like the guy that's okay lots of other likable people out there but i want you to put yourself first your financial health mental health relationship health you can kind of see that it's not all firing on all cylinders because i can see it on the csp now we got to talk about the bankruptcy we've.

Mentioned lakisha's bankruptcy a few times now but we haven't gotten into detail now that we've identified that lakisha avoids conflict i want to talk about how she made the decision to file for bankruptcy.

What happened you charged a bunch of.

Stuff up yes basically had a lot of different debt credit cards loans all of it and i did this money.

Coaching program hold on it wasn't iwt dot com moneycoaching no no money coaching by ramit sethi no who is it.

By i hate to put them out there like this it's called thrive in.

It let's just look at their website together wow that's a friendly looking man on there financial advice with purpose we believe everyone deserves a financial plan off all right hold on first thing we want to look at is our solutions uh oh uh oh i see a word that's a big red flag on the right it says explore multi year guarantee annuities oh let's just click over to annuities which are kryptonite for most people not all but most what is an annuity blah blah variable annuity you're right here i would be like i'm out i don't want to talk to somebody who's selling a variable annuity because it's a investment it's horrible the only person that benefits from this is the salesperson all right i'm going to look at this later okay so what this per this was offered for free through.

Your workplace not through my workplace i think it was something that maybe was like an ad or something that popped up when i was scrolling on instagram.

Or something did you get taken to this page which is the biggest red flag of all look at the insurance page no all life universal and variable there's so many red flags on this page but again how would the average person know they don't know what these red flags are they go sounds good to me all right so you signed up with them and they told you.

What declare bankruptcy and talking about debt and where where my money was going i feel like in a lot of ways it was like okay so what can you do to change this basically like what can you do to get out of this situation hold on who.

Said that they said that to you or you said that to them no.

They said that to me and i said i don't know that's pretty much like why i'm here i'm trying to figure it out and i did not see a path forward as a result of that conversation to pay off the debt when i said bankruptcy the person said well i don't see what other choices you have and shortly after that conversation i filed do you remember how.

Much debt you had at the time.

Somewhere between twenty and thirty thousand you.

Had thirty thousand dollars in debt and you declared bankruptcy and was it accepted.

Yes thirty k we could knock that.

Out so fast do you realize that.

Now yes i realized that while we were going through it i even said to james like i was like i don't even know why i did this from the moment i filed and started the process to it actually being discharged it was months in between and so at multiple times i felt silly about.

Doing it why didn't you speak up do you know why i had already.

Started it i i avoiding conflict didn't.

Want to yes yes wait stay there with me avoiding conflict putting some sales rep ahead of your own self do you see that i do do you see how that has affected you to the tune of hundreds of thousands of dollars and it is intertwined with the inability to get rid of this therapist which could be knocked out by tonight which has affected so many other things including your own investments do you see that yes what is your conclusion from.

That i need to face conflict and learn how to have difficult conversations yes.

And what about yourself and your finances.

That i have to face it i can't avoid it i can't run from it i have to deal with my finances head on yeah i agree if.

I asked your kids what they have learned about money from their mom what would they say two things come to.

Mind which are both not great how to spend it or nothing and let's.

Say i asked them what do you mean how to spend it what would.

They say they both think that i shop a lot so if you want something buy it i do think that they think and feel like i work hard so work hard get money and then spend it on the things you like and want to do i think that they feel like that's how i live and treat money do they know.

That you have no savings and no investments no what do you think they're going to think when they hear this.

They'Re probably going to be surprised fortunately and unfortunately i do feel like for my youngest daughter she might feel a sense of urgency as it relates to having to rely on like a scholarship or something to go to college luckily my oldest daughter she was able to get a full ride so i think in a lot of ways they will feel like there's no safety net they gotta figure it out i think that's.

True do you accept that there is no safety net for them no i.

Don'T want it to be like that i didn't have one i don't want.

That for them but that is the case that is reality right now and if we're talking about investing aggressively and saving there is not a safety net for your fourteen year old or eleven year old in the near future it's just not there i'm sharing this because i often say order to live a rich life you have to be honest honest with yourself and honest with the people around you this is avoiding the tough conversations in your case with yourself can you accept that there will be no safety net for them no okay then what are you willing to do.

About it whatever i need to just like i would do whatever i need to do right now today for them i have to do that for for the future for them in the future as opposed to just today twenty four.

Hours ago you spent fifty unnecessary dollars at target so i hear you saying it but i don't see the behavior matching it what could you do to have your behavior match the very powerful message you just shared with me about willing to do anything for your kids.

Change my behavior and be transparent about those changes love it with them what.

About the shopping stop i don't need.

Any more clothes like even what i bought yesterday i don't need that what.

Are you going to do with those i could return it are you well this is interesting why the hesitation i.

Guess because i in my mind i thought if i returned it i would get what twenty five bucks back where would i put that in the grand scheme of things what would that help and i don't know the answer to.

That question how would i approach it.

Put it in your investment account yeah.

I would have a rule when i have unexpected money here's how the money flows and because i'm behind on investing i would put the majority of it towards investing i would put the second part of it towards savings and i might keep you know five percent for guilt free spending but i don't have time for uncertainty i don't have time to be indecisive and twenty five bucks actually starts to add up to a lot considering the amount of clothes you've talked about i'm candidly shocked that you're not willing to be decisive about returning clothes that you bought last night james.

Any thoughts i totally agree with you.

This is where a partner can be really strong where a partner can say you know what i see you i know that's hard for you i think dollar twenty five goes a long way and i'm inspired by seeing you take these small steps gosh you're getting me to think about taking small steps with my money maybe i can return something from my closet yeah do you see how partners can make each other bigger and better yeah that's pretty cool it's a cool opportunity one partner struggling the other steps up hey i love you you could do this we got a.

Vision together absolutely what do you think.

Lakeisha honestly i now i do want to return it like tonight i go.

Back to target maybe send jameson yeah.

I'Ll send him a three seat but.

Yeah i can feel that james what what would your kids say about you as it relates to money what lessons.

Have they learned maybe since she doesn't live with me she sees me spend on her you know what i mean when she's with me and when she asks me for things so maybe maybe i need to change and tell her.

No when was the last time you.

Told her no i told her no last week matter of fact this year maybe friday she had called me and asked me for some money it was more of i just sent your mom some child support so i'm not giving.

You money so can i make a suggestion yes maybe there's a better way of talking to her about money because you know i just sent your mom child support so the answer is no i mean i think there's probably a better way what do you say absolutely okay absolutely like we're talking about an eleven year old right she's pretty old she's pretty smart she's picking up on that let's say she keeps going she ends up talking to me in twenty years and what's she going to tell me what's her relationship with money going.

To be oh wow spend really definitely yes and then that would be my fault she'll be talking about just like we talked about some of the things that happened with us our parents she's going to be talking about it with.

Us that's right absolutely she's going to.

Be talking about you i can't wait.

Till i speak to one of the kids of one of my guests okay that's going to be the day that i really i feel proud but i'll tell you something you have the chance to change that yes right now though don't treat her like eleven year old is little they're not eleven years old is really smart how do you want to show up when it comes to money and your daughter like she calls you she asked for something and you say what you previously said i think there's a better way how do you want to show up with her one.

Ask her what if she needed for nice and then just try to get her to think about you know do you really need that not only that but teach her how to save some money and i think that's one of the biggest parts how are you going.

To do that do i need to pop up the csp on the screen right now again no because what am i going to see if i look at your savings zero right so i have to show her yes how are you going to show her master i'll save it money hell yes and tell her so this is how it goes next time she calls you what is eleven year old ask for anyway i.

Don'T even know everything roblox card all right all type of things first of.

All i wish i hadn't asked that question because i'm going to get like five thousand people commenting and telling me oh my god ramit so out of touch i don't want to know what.

Eleven year olds want don't email me.

Don'T comment don't message i wish i never said this anyway here we are she texts you she calls you dad give me this gift certificate for whatever you say you know what i'm so glad you asked because i had this conversation the other day that i've been wanting to tell you about right there i'm going to pause what have you already seen in my response to her.

Take an opportunity to teach her the value of money and yeah yeah and.

Actually just like excitement right i'm so glad you asked yeah because i had this thing that happened and i've been wanting to talk to you about it oh my god amazing okay great so then you say you know i realized i haven't been as responsible as i could be with my money and here i am i want to teach you lessons but i'm learning my own lessons i took an honest look in the mirror and i realized what finish the.

Sentence for me i need to do.

Better with my money i haven't saved as much as i want so i'm going to be.