120. “We have 3 kids, $1k saved, $0 invested. Is it too late for us?”

If you've recently discovered this podcast and you've wondered, how can I get Ramit to answer my specific money question, There are two ways to do it. Number one, you can apply to be on this podcast although we are already full for the rest of the year. Number two, you can join my Money Coaching membership in this program. We do a ton of cool stuff I want to make sure you know about it. We do a monthly live call with me where I cover some of my favorite money topics that I can't go into publicly in as much detail as and I break down our members conscious spending plans. Plus I answer your questions live. We also have tons of virtual events coming up that cover every aspect of living a rich life. For example, our new event Money for Aging Parents is coming up at the end of October that is included for all Money Coaching members. You get access to our library of all past calls like how to find an extra thousand dollars a month and how to do a Rich Life annual review. Plus we have a Money Coaching community group where you can see inspiration how other people are spending their money and get your own questions answered if you want to get help. If you want to meet amazing other people in money coaching and you want to build your rich life faster and bigger, you should check out Money Coaching today. Go to iwt.commoneycoaching to join right now. That's iwt.com moneycoaching have you ever admitted out loud that you were spoiled?

Yeah, they told me they spoiled that I was spoiled. I would talk like a little spoiled kid.

Do they still spoil you?

I would think in a way, yeah, probably.

Our first child was a sweet surprise. And so right off the bat we were like having kids and working full time. But then I started noticing like with our finances things are not adding up. Where is this money going? Where is it all being wasted? And there were a few times where, you know, I was like, you know, I'm not gonna come home. Like this is it, it's over. Like I don't want anything to do with it. And it's so funny because I graduated with a psychology degree and looking back now I'm like all the signs, all the flags were there but it's like when it's your family, you put the blinders on.

Lets meet Anna and Gabriel. Anna is 31 and Gabriel's 28. They've got three young children and they've been married almost 10 years now. They currently live in Gabriel's parents house. And Anna wants to move on. She wants to begin the next part of their lives. But there's a challenge when it comes to the way that they talk about money. And there is something in their history that we're going to dive into today. This is Anna and Gabriel.

The situation is just. I feel like we've been stuck doing the same patterns over and over again. And even though over the years our income has grown, it just seems like we can't get out of, you know, living with Gabriel's parents. Separate home, but same property or land. And even so, even after having three kiddos, we're still there.

And your children, how old are they?

So we have a two year old, a four year old, and a seven year old.

All right, congratulations. That's a great, beautiful family. You're living with Gabriel's parents in a separate. Like an ADU or some type of separate unit. Is that right?

Yeah, it's like a studio.

Yeah.

We started. We did have our own apartment, and Anna was going to school and I was the only one working. She was working a part time, so that was still tight. I mean, we made it work. My parents helped us out. We've been married for nine years. It'll be 10 years next, next year. So, yeah, we were. I was 20 years old, so they were helping us out with. Sometimes with groceries. They would go to Costco and help us out.

So it's been tight since you met. You could theoretically go the rest of your lives with money being tight. Why come here? Why decide to potentially make a change, Anna?

Because it's too tight. I. I want. Yeah. I want to be able to move out, to rent a house and just have more space where I'm not necessarily, like, with my kids in the same room all the time.

Gabriel, why do you think that we're here right now? Why do you think Anna filled out this application.

I'd made. I think I made bad decisions. To be honest, I feel guilt. I made some impulsive decisions, and I think it was my fault. We dug ourselves maybe into a hole, and I'm accepting my fault.

What was the impulsive decisions.

For example, I bought a quad during my times that I was my addiction.

What's a quad?

Like a four wheeler.

Oh, okay.

Like a ATV? Yeah.

All right. How much did that cost?

Like 8,000?

No, about 9,000 right now.

It has a flat tire and I haven't fixed it.

How many times you ride that thing?

Like five times.

Five times.

That's like $2,000 a ride. Cool.

Yeah.

And.

And I.

And I. I admit it was an impulsive. That's One of the impulsive purchases that I had because I did it on my own. And then I just told Anna, oh, I'm gonna go pick up the quad.

He leaves, and he comes back, and there's like, a trailer with a quad on it in front of our house. And I was like, what is this?

Wow. So, yeah, was this kind of during the full. Full blown addiction? It was impulsivity as well.

Yeah. Getting a car, maybe that was over our budget at the time.

Which car?

BMW X3. 2019.

How much did that cost?

What was it, Anna? I think it was 50, 60?

Yeah. Around 60. Yeah.

60,000. Okay.

All right. And the other big thing, obviously, was that I wasted a little over three years of just my addiction. I kind of did the math, and it was around, I would say, like 30,000 that I wasted with choice and alcohol. But I've been sober three years now, so I feel like there's a new me. So it's like a Gabriel 2.0. And so I want to work at it, and I do. I want to get out of my parents. It's. It's nice to have them, but sometimes I want to have my own space. I want the kids to have their own space. So I'm willing to work at it.

I love hearing it. Thanks for being honest. Thanks for taking responsibility. And I love your vision. Gabriel 2.0.

That's cool.

In fact, I'll tell you this. I've never heard someone who went through addiction look back and actually calculate how much they think it cost them.

I know it was a big chunk, and now it opened my eyes even more and made me want to change my. My mindset and my. Maybe my lifestyle as well, too. Now. I mean, it's not. It's not a small amount, so it's.

A lot of money. But I'll tell you something what's impressive to me, sometimes people come on and they're very concerned that they did the math wrong. I'm less concerned about that. What I always look for is what type of character traits do they show? Do they come prepared to. Do they care for their partner, and are they listening? And the fact that you calculated that is very impressive. You came prepared and ready to change. I appreciate that. I noticed that. And that means a lot, I think, to us and to you. I really love this. I never judge someone for not knowing some technicality about personal finance, and I'll never judge someone for being poor or not having enough money. Why would I? What really impresses me about Gabriel is how seriously he is Taking this entire conversation, he got help. He even looked back to calculate how much money he spent during his addiction. And he's acknowledging that he was impulsive. Personally, I would rather work with someone in $50,000 of credit card debt with this kind of attitude than someone who makes two $250,000 and has no desire to change. We'll be right back after this. Now, what I want to do is I want to hear from Anna. I'm not an addiction expert, so I'm going to ask for the broad strokes, and then I want to move on to the financial part of our conversation. But I do think it's important to know the backstory here. So, Anna, can you tell me, from your perspective, the brief version of what was it like as Gabriel went through addiction and seems to have gone through treatment and is now Gabriel 2.0? What's that like for you?

It was very hard. I started noticing just little things here and there, and I would kind of brush, brush them off. Our first child was a sweet surprise. And so right off the bat, we were, like, having kids and working full time. Of course, my attention wasn't always on him, and my concern wasn't on him. So, you know, I would let it slide. And so a couple months would go by, and. But then I started noticing, like, with our finances, things are not adding up. Like, where is this money going? Where is it all being wasted? And so again, I would question him, but we would always meet. Somehow ends meet. So then life would keep going. Yeah, I would start finding little things here and there, and I would question it, and he would always deny it. And it's so funny because I graduated with a psychology degree, and, like, looking back now, I'm like, all the signs, all the flags were there, but it's like, when it's your family, you put the blinders on. So, yeah, it was. It was hard. Just kind of, you know, praying about, like, what do I need to do? What's my next steps? Like, I obviously want my kids to be safe. I want them be protected. And there were a few times where, you know, I was like, you know, I'm not going to come home. Like, this is it. It's over. Like, I don't want anything to do with it. But sure enough, after months of, like, encouraging him to seek counseling and just to talk to people, he decided to take that big step and, you know, go to a facility center. And he was there for three months. And even during that time, like, my in laws were super sweet and so supportive, and they Helped me meet the ends meet that he obviously couldn't provide during those three months.

Wow.

Three months. That's a long time.

Yeah, it was hard. Yeah. I had two kids, and I was pregnant as well with our third.

Okay.

All right.

Thank you for sharing that with me, Gabriel. Hearing that anything surprise you from hearing that?

Well, it's just sometimes I. I feel guilt. That's why I'm. I'm here, to try to make it up and cover that ground that I lost. And I guess that's. That would be why I'm kind of nervous, because, like, I don't see of, like, if when the podcast airs and say the addiction part and then people will comment, I just don't know how I'm gonna react. But I do care. But I don't care if that makes sense.

I'll tell you what. I. I don't have a lot of experience with people who have gone through addiction and certainly gone to treatment centers, but you let me deal with the people online who say anything, okay?

Okay.

Of course there are people on the Internet who say things, but I can tell you right now, just from listening to both of your stories, there's nothing here that people would make fun of, that any reasonable person would. And if they do, I will handle them myself. Okay.

Thank you. Yeah.

What's it been like in those three years that you've been back?

Well, when I came back, there was some guidelines or parameters that I had to follow, so I couldn't have. I didn't have a cell phone. I didn't. I couldn't have money with me. I had to be with someone.

In other words, you were never alone in six months?

Yeah, never alone. Yeah, never alone. One was because obviously I could fall back, and two was also because I was taking medication. Now I'm off the medication, so now I'm more alert. More. I just slowly, like I said, like, been updating into a new version of myself, and I think it's. It's getting better talking about money, but we still need to work on it.

Well, that's why we're here.

Yeah.

Good. Okay. Anna, what. What's it been like for you? Three years. I understand that he wasn't allowed to have money for a while. Talk to me about that.

Yeah. So the first year was a big adjustment because. Yeah, like, you mentioned, like, the first six months. Gosh, I would even say it was even longer. There was, like, rules that they sent him home with, and of course, like, his parents and all of us made sacrifices to, like, be able to Help him through those rules. He could never be anywhere by himself. No money. And so, yeah. And so I would say definitely the last two years have been like a total turnaround. Just who he is, who his character is. Like. I would tell him at the beginning, I'm like, is this really you? Like, you know, is this guy here to stay? And now total, total difference. Because now he's totally active with the kids. He wants to do stuff with the kids. He wants to be there for the kids.

Okay, all right. Well, you know what, I just want to acknowledge Anna. Obviously you took on so much of the burden of helping and supporting, but also his parents. Sounds like you have a really strong family support system. We don't all have that. And so big kudos to your families as well.

Thank you.

Thank you.

You know, I want to acknowledge something really special about Anna and Gabriel. They've gone through Gabriel's addiction and listen to the way they talk. They are a team now. Whether you've had personal experience with addiction or not, you know that this can't have been easy. And we are only hearing a compressed version of what their entire family went through for years. What's really remarkable to me is how they are approaching this conversation. Do you notice the tone of voice? Do you notice their body language if you're watching this on YouTube, notice even how they're framing the challenge. They have kids and they live in a studio at his parents place. I've had people on this podcast who have a lot more money and they live in a much bigger place and they were screaming and catastrophizing about it. But to me, I noticed this sort of ease that Anna and Gabriel have that comes from being a teen. Of course they have problems, but what I really love is that they are approaching it with calmness and unity. That is something that I really admire. Real question for you. Do you know how often you're supposed to see your primary care physician? How about the dentist? How about a dermatologist? A lot of us just wait to get a text from the dental hygienist to know it's time to make an appointment or. But your health is important and we talk about going from defense to offense with your money. What about with your health? Why not make your life easier and book this year's appointments today with Zocdoc. Zocdoc is a free app and website where you can search and compare high quality in network doctors and click to instantly book an appointment. They have over a hundred thousand doctors across every specialty from mental health, dental, Primary care and more. Just filter for the doctors based on your insurance, your location, even ratings and find a doctor who's a good fit for your needs. Plus, Zoc Talk appointments happen fast, usually within 24 to 72 hours. Instantly. Click through your options, book the appointment and you are good to go. If I needed to find a new doctor today, this is what I would use. Stop putting off these doctor's appointments and go to Zocdoc.com ramit to find and instantly book a top rated doctor today. That's z o c-o c.com ramit zocdoc.com ramit there's this myth that if you rent, it means you haven't made it. I don't really believe that I rent and I want you to know that you are not a failure if you choose to rent. In fact, I want more freedom right now than buying a 30 year mortgage. But if I'm spending thousands of dollars a month, I want to get some of the perks that homeowners get. And that is where BILT comes in. BILT is a loyalty program for renters. You pay your rent through BILT and you can earn points for it. Think about it. You're earning points for your biggest expense every single month. And you can redeem those built points towards flights, hotels, Lyft rides or even future rent payments. BILT has evolved into a complete rewards ecosystem where you get rewarded for the first time as a renter. And it's easy. Almost any payment method is compatible. So you can start earning right now. I wish I had had this when I first started living in New York. Plus, BILT recently announced that homeowners will be able to get rewarded the same way on their mortgage in 2026. So stay tuned. Join the loyalty program for renters@joinbuilt.com Ramit that's J O I N B I L T.com Ramit and make sure you use our URL so they know that we sent you. So you mentioned that you have different money mindsets. How would you describe your money mindset? Gabriel?

I am more of a, a spender. Like kind of like spend now and think about it later. Like I'm an impulsive buyer. I guess sometimes I've been trying not to be.

And so you just stay away from those areas of temptation, right? Yeah.

Yeah.

Anna, what's your money mindset? How would you describe it?

I would say, like I'm okay with waiting to buy things. Like I could save up and then buy whatever we need later. Or. Yeah. Or like if we don't have the money for it, then we don't have the money for it type of thing.

And if you don't have the money for something, Gabriel, will you buy it on credit?

Yeah, if we don't have the money. I wish no credit. I mean, I tried not to get anything on credit now.

Okay.

All right.

But go ahead.

But we did just get a washer on Credit.

How much?

800.

And. And why? Just out of curiosity. I mean, your parents are being very generous. You can stay there, but is it your responsibility to replace the washer or did they offer to do it?

Gabriel Lawford?

Yeah, I offered.

Oh, you offered?

Yeah, I offered.

With what money?

Well, Anna did tell me that we had, because since I came back from the rehab, I've kind of just let her handle the money. And she did tell me that we did have the money to pay it off. And I guess it's. My mindset is still. Well, if we can get on credit and just pay it off slowly, like, not slowly, but like in a few, like two months, like pay it off.

Why not just get it just theoretically with cash or something like that. Like, why put it on a credit card? If you say credit card points.

No, no, no. Just zero interest. I don't. Listen, save zero interest.

Did you open up a Lowe's card? You did.

You did.

What do I say about those retailers cards?

They're not good.

They're horrible. What does that mean? 0% interest?

We don't get charged interest. That's.

I guess you also wouldn't get charged interest if you just handed over $800.

Yeah. And I guess that's, again, that's one of my spending patterns that I maybe have. And that's kind of the mindset that I want to change.

Yeah.

What do you think would be a healthy relationship for the two of you to have with money? What would it look like.

To be more on board, like on the decisions? I guess.

What does that mean, on board?

She told me at the store, like, let's pay. We can pay it off right now. And I'm like, yeah, but like, I guess, I don't know, it's just like in my. Like that's the way out my old thinking. And it just came out like, why if we have zero percent interest? So I'm. Maybe now I need to be like, yeah, you're right. Let's just pay it off.

Does she know more about money than you do?

Yeah, I think so.

Maybe I'm just imagining the two of you at Lowe's there's like a gigantic pallet with a washer and, and you're just about to check out and then you're like, you know what? I think we should open up a Lowe's card. And she's like, huh? Like, what, why, why did that come up for you that you wanted to advise her to open up a Lowe's card?

Well, now that you say. I think in a way it might have been the way that I was brought up. My dad, I think instead of. And he has the money, but he hoped, like he'll go to Home Depot and stuff like that and get, say he needs to build a fence and he'll get it on the credit card. Even though I know that he has the money.

But he'll question, is your dad debt free?

No. Well, no, no.

What? So that's like, let's charge it up on the card. But he's got credit card debt.

Yeah, he could be.

He could be. Yes.

So why isn't he?

I, I honestly we've. We the same way maybe that me and Anna can't like, I try to tell him like, well, if you have the cash, why don't you just. I try to give him the advice.

You told your dad that? How about you tell yourself that you're like, don't do what I do, just do what I say. It's better. Is this about to become a multi generational podcast? I'm gonna get your dad. Your parents are gonna come on here too. It's going to be amazing.

Awesome. That would be pretty cool.

So can I go out on a limb here and say that some of the dynamics in your marriage in terms of money, might they be mirrored like 30ft away in your parents house?

I would think yes. The problem is that I don't have the income that my dad has. So maybe that's not a good idea for me to mirror. That's kind of why I wanted to come on here and do the podcast, because I need to change that mindset.

Let's talk about it. Because I'll tell you something, if I had to go get a washer and God forbid I had to walk into one of these home repair shops and I saw a washer for 800 bucks, I would put it on my credit card. I would, I'll put it on my credit card knowing that I have my credit card set up to automatically pay off in full every single month. I don't even look at it. It just pays it off. I also know that I have the cash to do that. Make sense.

Yeah. Yeah.

Okay, so we probably need to adapt a little bit of the way you think about money. No problem. That's money mindset changes. I don't mind that. I'm also interested in the dynamic between the two of you, how you make money decisions.

He fully trusts me. Like every week he'll just give me, like, what he makes and I. I just stick it in the, in the bank and then from there I just took it. Like, I just pay off everything or whatever. I just make sure there's enough.

So you're handling the day to day, he's. Gabriel sounds like you're mostly on board with what Anna wants to do, but once in a while you're going to go out and get something of your own and then. And has got to figure out how to make it work, right?

Yeah, but it's not like I just go out and like, oh, I'm going to go get this. Like, I do ask her, like, oh, is there, like, is there a chance.

Have you ever said no?

I think so. Trying to think of the last time I said no. I don't know if I fully said no, but I think it's like, oh, well, can you wait for it or something? I don't know. It's probably the same thing as saying no.

Not the same thing at all. Oh, it's not at all. That's interesting.

I can't think of the last time I said no.

Okay, okay. So Anna, you're the kind of financial executive in the household, but also the operational person. The day to day, Gabriel is bringing his paycheck to you and saying, here you go. Once in a while he comes and asks, hey, I need to buy these shoes, et cetera. Is there money? To which you always reply, either yes or can you wait a couple of weeks? Fair.

Yeah.

All right. Is this system working for you?

No, because I would want for him to kind of. I would want for him to be the vision of, like, where I want our money to go. So I would like for him to kind of know that stuff so that way he wouldn't have to come to me and ask like, hey, can I get this? Or I need work boots or whatever.

Okay, fair enough. And Gabriel, same question for you. Is the system working for you?

Technically, yes. Because I feel the less I know, like, I know there's been situation, like in the past where I see that we have money in the, in the account and then it's easy for me that, oh, it's fine. I can just. I'll get it so sometimes that's. I think that's my struggle. Sometimes I don't even want to know how much money we have, because then I'll make those impulsive decisions. So I do want to get more involved.

Good answer. Good answer. I like that you said, yes, it is working because it's a great system for you. You just bring your paycheck, and then you're like, here you go. I'm out of here. P.S. give me some shoes. It is working for you. But I also like that you say, hey, I wanna. I wanna know a little bit more. However, when I see money in there, sometimes it makes me want to spend it. I get that. Before we continue, are you continuing to get treatment for the impulsive behavior?

Well, I'm meeting with my therapist every two weeks that you talk about this.

A little.

Yeah. Not too much, but maybe I can bring it up.

Great. Yeah, that would be awesome. Now back to the episode. That scene at Lowe's is so interesting to me. Just this idea that a couple would even be debating whether to open up a credit card while standing in line is absolutely wild to me. That would be like me standing in line for Chipotle and deciding to buy an alligator. It literally makes no sense to me. And then Gabriel telling Anna, Anna, who knows way more about money, that they should open up the card. And Anna, who's never said no and even sounded startled by my question, just quietly letting it happen. All the while, the ghost of Gabriel's dad is watching over them. This is like a movie scene. I'm actually curious what else Gabriel learned from his dad about money.

I was an only child for a long time. My dad has his own landscaping business. And, yeah, it just. I never really struggled with, like, anything around the house. Like, I was always had. I was, like, spoiled, I guess you can say.

Like, have you ever admitted out loud that you were spoiled?

Yeah. Okay.

Are your parents both alive?

Yes.

Okay. And if I asked them today, did you spoil Gabriel? What would they say?

They would say, yeah.

Yeah. Okay.

Then they told me. Yeah.

What do they say?

They told me they spoiled. I was spoiled. I would talk, like, a little spoiled the kid, and. And I would say, well, not anymore. I'm not like, yeah, okay.

Do they still spoil you?

I would think, in a way, yeah, probably.

How so?

I don't know. But I just feel like they do help us out a lot, and I don't know if that's spoiled or not. Like, I guess the only thing I could think of is, like, I work with my dad and well, he just gifted me a truck for. For us to have a second car. I don't know if that's falling or not.

Like, how much is that truck worth?

He paid 20,000 for it from one of our clients.

Oh, okay. He bought it for 20k and gave it to you?

Yeah.

And did you have to pay anything for that truck?

No.

Okay. All right, got it.

It's just the registration.

I guess my. My dad would be an impulsive. This is like, buyer too, as well. He'll show up with a pickup that a client offered him.

Okay. Anna, would you say that Gabriel's dad might be impulsive with money as well? Gabriel's word.

Yeah. So I definitely see a lot of similarities and if it's fair enough to say. And his dad shares his story, his testimony all the time. So his dad was also an alcoholic. And so I think the impulsiveness. I think they share that because I definitely see his dad, like, my father in law, is like, the most generous person I've ever met. And so, like, I don't know if it would. If this is, like, impulsive, but he will gladly, like, pay for everyone's meal, like, if we go out to dinner or do things like that. Yeah.

And Gabriel, are you the same way in terms of that generosity?

Yeah, I believe so.

He tries.

Yeah, I try. Yes. To my. To my. I guess you can say to my. My. My budget, I guess. Yeah. I do it to a smaller scale.

So, for example, like, if you were out with, let's just say, friends or family or something like that, might you offer to just pick up the check for everybody?

Yeah, if it's, like, not something like, say, if we go out with friends to in and out, I might pay for their meals, which is not super expensive. But if we go out to, like, a nice restaurant, then that's where I'm like, no. Well, I can't. Like, so.

Got it. All right, Anna, how about you? How were you raised with money? What do you remember about growing up as a kid and money in your family?

I remember, like, watching my dad scratch his head a few times just as he was, like, sitting with the mom in the bed, just taking out the money to pay rent. I remember we had to rent one of our rooms to, like, a roommate just to meet the rent for that month. Granted, we did live in, like, southern Orange county, so rent was, like, expensive. Yeah. And there was a season where that happened, like, part of my life growing up, like, maybe in the elementary school years, but then later we didn't need that Kind of help anymore. Like we didn't need a roommate anymore. And so. Yeah. And so I remember going to the store and my mom saying, no, we can't buy a Barbie. Or you know, things like that.

What changed for you to not have to have a tenant in your house?

My dad's income went up. He just started getting better at what he was doing, which was like poor cement, concrete or he started doing like the foundation of homes and stuff like that.

Got it. Did your mom work?

No, she was a full time stay at home mom.

Gabriel said that he was spoiled. Would you say that you were spoiled as a kid or.

No, no, no.

Do you learn about savings, investing, things like that before you.

No, no, no, no. We never talked about money. I was actually the one that like encouraged my mom to take me to the bank to open up my first checking and savings account.

Wow. Do you like money?

I. Yes.

When you think of money, what words come to mind for you, Anna?

Freedom came to mind. What other word would come? Money, Fun. And future.

Wow. Freedom, fun and future. They're all abundant. They're all future oriented. They're very positive. Do you know that that's really striking, Gabriel, what about for you? When you think of money, what words come to mind?

To me, it's like a right to have money. Obviously. I more picture like a house, like our own house. Like a home.

Okay, home. What else?

Yeah, not being so tight, like living, I guess, almost paycheck by paycheck.

It's really interesting to hear the way that you both think about money. And in a way it's funny because two of us can say the same words, freedom or fun, and we can see them totally differently. Because, Gabriel, I bet that quad that you bought was fun, right? Super fun.

Yeah.

But I bet you that's not the type of fun that Anna thinks about, is it? Anna?

Right.

It's very interesting that Gabriel had a positive upbringing with money, but he doesn't really have a cohesive philosophy about money today. If anything he mentions it would be not worrying about money. That's his dream, which is not a real philosophy because the absence of something is not enough to be a financial philosophy. And also, interestingly, Anna grew up with stress on her family finances, and now she talks about fun, freedom and future. It's very interesting how people can have a certain background and the way they react to that background can be completely unexpected. Now listen to how they divide up the financial responsibilities. What comes to mind when I share these specific moments? Renewing your passport, scheduling a dentist appointment. Replacing that light bulb that's been out for six months and you're not sure what's the right bulb. We all procrastinate on weird stuff and taxes are usually right at the top of that list. We wait until the last second, then we get overwhelmed, we got to pull all this paperwork and we're panicked because the deadline is approaching. That's why I recommend guilt. Now that tax season's over, this is actually the best time to get ahead. If you run a business or you filed for a tax extension, one small move right now could save you thousands later. Gilt is not just another CPA firm. They helped one of my colleagues rethink his entire tax setup. Now he's saving more than he spends on tax prep. With Gilt, you get a proactive year round strategy, not just a one time filing. Credits, deductions, business structure. It's handled and their tech platform makes it easy to stay organized. You'll also get access to Gilt's full tax library with guides on retirement plans, QBI and more. So if you've got a business or you filed for an extension, this is the window to take control of your tax plan. Head to joingelt.com ramit to book a consultation and as a member of my community, you get to skip the waitlist. Again, that's joingelt.com ramit join G-E-L-T.com ramit taxes don't have to be a task with Gelt. They can be a tool to build wealth. When I talk to new business owners, I hear a lot of the same motivations. I want to make extra money. I want more freedom. I want flexibility. But I will tell you something that I've never heard. I want to start a business so I can fill out a bunch of tax forms. That sounds like my hell. The good news is you don't need to be a tax expert to start your own business. Instead, you can use Gusto, this episode's sponsor. Gusto is online payroll and benefits software built for small businesses. It's all in one. It's remote, friendly and it's incredibly easy to use so you can pay, hire onboard and support your team from anywhere. They offer automatic payroll tax filing, simple direct deposits, health benefits, workers comp 401k matches, you name it, they can help. Plus, it's quick and easy to switch to Gusto. Just transfer your existing data and get up and running fast with no hidden fees and no surprises. Try gusto today@gusto.com ramit and get three months free. When you run your first payroll, that's three months of free payroll@gusto.com ramIT once more, gusto.com/ramit. It works in the short term. It actually works quite effectively because Anna seems quite capable. But there's two problems. One is it drives you apart because she's the one who has to be responsible all the time and, like, mind the numbers and you don't. So that's a huge wedge which drives people apart. And then two is what happens if something happens to Anna. Now we got an existential problem.

Yeah.

For someone who does not know how to deal with money. Yeah. So that's why I totally respect that in the past, you had to put blinders on when you came out of rehab and they gave you these rules. Of course you had to follow them. Right. And of course you had to give up control. And Anna and your family were there to support, and it. It was fantastic. But what I'm hearing is Anna wants to give back some of that control because, of course, you've proved it. I love that you have a support system now where you can talk to a therapist and we can do this gradually in terms of giving you more control. But I do want you to take the blinders off slowly.

Yeah.

How does that sound to you?

Sounds good.

Okay. Anna, how does that sound to you?

Good.

Why do you think she needs you for this process now?

Because she wants me to be more involved. To be aware of what. Where we're spending or where the money is going and what we're spending on and what she wants to pay off or.

Yeah. Why does she want you to be more involved? Why?

Why? Because she wants to not be responsible. Fully responsible for it, maybe.

What else? She works full time. Right. Anna, you have a full time job and you have. And you have three kids. Okay. All right. So you have a busy household. So that's number one. Gabriel. What is it? Can you say it for me out loud?

She just want me to be more involved.

Yeah. Like she needs a little help.

Yeah, sure. Yeah.

Right. Like, that's a lot of work for one person, Anna. Is that fair to say?

Yeah. Okay. I think that by you seeing the numbers and what can be done with the numbers will hopefully help us be united into sacrificing now so that we can have, like, a better future.

Okay. Okay.

Well done. That was really cool. Round of applause for the two of you. It's hard stuff to really communicate what actually you want and why. Boy, it's easy for us to jumble it up. With a lot of words. And sometimes we just need really simple, simple things. You have a four year old, right? Your four year old asks, I don't know why is there a moon or something? Like, we don't need to get into all the astronomy. It's just like the moon gives us light at night, clear. Sometimes we want to start there and be super clear. And then later we can get into the details. All right, let's get into the numbers. All right, let me walk you through their numbers very quickly. Their assets are zero. Their investments are zero. Their savings are $1,000. Their debt is $56,300. Anna's gross monthly income is $5,400. Gabriel's gross monthly income is 3,200. Their combined gross monthly income is 8,600 or $103,000 per year. And finally, their fixed costs are 61%, which is pretty good. However, they pay no rent. Total net worth.

Negative 55,368.

All right. What do you think about that?

It's scary to me.

Why?

Because if one of us were to lose our jobs, like, we don't know where the income would come from and. Or again, thinking in the future, like, there's no money in our retirement.

Yeah. Okay. And Gabriel, what do you think about that?

Honest. I feel guilt.

Regret. Because.

I wish I could have done things differently. But I'm hopeful that we can change it.

Powerful. Do you believe that you could change it?

Yeah. Yeah, I wish I could. I mean, the things that happen, happen. But now is to look forward. The only thing to do now is to look forward and to change my habits that I had before to better ones.

Okay, so negative 55, 000 net worth. Not great. Just going to be honest, you both are around the age of 30. You have three kids. Okay? In certain cases that would be disastrous. However, you have like a magic card, like a joker. And you know what that magic card is, is that you don't pay rent. That's a secret code you both have. So we're going to talk about that. We're going to talk about the rest of your spending. But just know that there's definitely a path forward. Okay? You're not going to be stuck here forever. Okay. And you have $1145 in car payment, including transportation and gas as well.

So the car payment is 745 and then gas is about 400 bucks a month. Yeah, because that can be 400 to 500. I commute. Yeah.

Okay.

What kind of car?

BMW X3.

BMW.

Oh, how long until that thing is paid off.

Oh, I think it said 20 months.

20 months. So less than two years?

Yeah.

Okay. And have you explored options to kind of turn that thing in, get something cheaper? Have you looked into that?

No, I wouldn't mind at all.

And I wouldn't either. Now that's good.

Okay, fine, let's. Let's put a pin in that. That's an option. Who knows? But. All right, your Debt payments are 641. What kind of debt is this? $56,000 in debt.

So we have two school loans. We have Gabriel's and mine. We have the city credit card. We have the quad. I think that's all.

How much is on the credit card?

8,000.

Okay. And the student loans?

Mine is closer to 12,000, so it's like 11,800. And I think Gabriel's is also 11,000.

Okay.

And that quad.

We have a little under 3,000 left.

I love so many things about this quad. First of all, the fact that I didn't even know what a quad was. Second of all, that it just shows up one day in the driveway, which is literally inconceivable to me. Third, that you have only used it five times, and it's. You're still paying it off years later. And then my favorite part of all is that is just sitting in the back with a flat tire. Like, absolutely. Like, couldn't script it better, ladies and gentlemen. I'm sorry, ATV association of America. Ramit Sethi is out here telling people, don't buy an atv. Okay? Just rent it. You want to go on a nice trip? Just rent it. 300 bucks a day. God bless. Okay. Do not buy an ATV with a flat tire.

All right? Yes. Okay. All right.

So your Debt payments are 640. Are you paying the minimum on that? Are you paying more.

On the quad? No, I'm paying way more on the quad. Like, so the quad, I'm paying, like, 300.

How about the credit card?

The credit card. I'm paying minimum on that. Yeah.

Why are you paying so much on the quad?

Because I want to get rid of it.

Because you hate it. Okay, fine.

We. So my. I want to, like, pay off all the debt. Like, I want to throw in, like, $1,000 a month on the debt. And Gabriel is not fully on board with that. He says no. Like, let's not do that much. Like, let's have some extra money to do other things.

Like.

Like maybe, like, vacation, maybe do more stuff with the kids. My example would be have the kids. I grow up, and then we are paying off the debt and then when we have the money, the kids don't even want to hang out with us anymore. That's kind of my thing.

I want us to have like the same goal as to what we want to do with our money.

Got it. Have you both ever articulated what your goal is with money?

No, not. I mean, we, we both are in agreement that we do want to move out of his parents house and that we do want to get out of debt. But there's no like roadmap to how we're gonna get there.

It's just like one day we'd like to do X that type of thing.

Right?

All right. Yeah. If you want to move out of your parents house, that's a pretty big lifestyle thing that affects everything. I say we make a couple of very specific plans around those areas so that they're not just pie in the sky ideas. That would be my approach with this. Gabriel, would you be on board with that?

Yeah.

All right. What I want is for you to tell me how you can dramatically change what's going on here. Because right now you're okay, but it's because you're subsidized. You have free housing. If you were to go out to the open market, meaning you were to pay the full price of what you should, quote, should be paying, you'd be broke.

Right.

Okay. So in the. Here's the way I look at it. I go, if. If I'm given the gift of free housing, phenomenal. I'm going to take that opportunity, save as much money as possible. I'm going to live lean and then I'm going to save up huge. And then when we go and get our place, we're going to be really mindful of how much we add. Because I want to keep saving money and never have to go backwards. That's the way I think about it. What do you both think about that philosophy?

Yeah, I mean, that was supposed to be the intention when we moved back home with his parents for us to like save the money that we would be paying in rent.

You have $1,000 in savings.

Yeah.

Yeah.

And you make $103,000. What happened? Sometimes you might be fortunate enough to be in a temporarily great financial position. Maybe you moved in with your parents or maybe you're getting a big tax refund or you've had your student loans paused for years. Listen closely. The key is to take advantage of these opportunities. They don't come around that often. Now, most of us don't do this. We simply go on our merry way, spending like usual, and then when the temporary situation ends, we are stuck. Anna and Gabriel live with their parents. This is the time to be saving thousands and thousands of dollars. I know that some of us think better when we write our thoughts out, but for a lot of us, including me, I'm better when I can think out loud. If that's you, I recommend you check out Whisper Flow to save you tons of time to bring your ideas to the page. Whisper Flow turns your voice into clean final draft writing inside whatever app you're already using, Email, Slack Docs, even text messages. And it works on Mac, Windows and iPhone. So instead of spending all of your time responding to messages, especially while sitting at a computer, you can hit a hotkey, speak and the text appears. It's accurate, it's fast, it's all formatted so you can get back to work. Here's what my friend said about it. Whisper is amazing because it learns the way you speak. So you can send this rambling note as a text message and it kills all the filler words and it perfectly formats it for you. They said it's much better than using the Apple voice to text feature. The spelling is way better. If you want to buy your time back and get back to what matters, check out Whisper Flow. Try it for free at whisperflow AI ramit. That's whisperflow AI/ramit w I s p r flow AI/ramit or click the link in the description below. Here's a DM I got from one of my listeners about this episode's sponsor, Element I love it. After my sauna cold plunge sessions, I do two rounds of sauna then cold plunge. I love drinking Element after my sessions. Another person said sometimes I use it the morning after I've had a few too many drinks. I appreciate the feedback. If you like to sweat it out in the sauna or you need to feel a little better after a night out, Element can be a great way to replace your electrolytes. Element is a zero sugar electrolyte mix that comes in easy to use packets in great flavors like citrus, salt and watermelon. When you're sweating like you're at the gym or hiking or just in the heat, you're losing more than water. Element helps you stay sharp, avoid cramps and feel better. It's used by Navy SEALs, Olympic athletes and pro sports teams. And now what started as a seasonal drop lemonade salt is officially a favorite. It's perfect with iced tea. For a salty Arnold Palmer, get a free 8 count sample pack of elements Most popular drink Mix flavors with any Purchase@drink lmnt.com Ramit that's Drink lmnt.com Ramit Find your favorite element, flavor or share with a friend and you can try it totally risk free. If you don't like it, they will give you your money back, no questions asked.

I mean, for me, the car payment is definitely, I think the one that's like, yes, Horrible.

Yes.

Oh yeah, the car payment would be. Yeah, super helpful. Yeah, I would be on board getting rid of the car.

How are you going to do that?

I know. How do you do that?

You could sell it. You can get a much cheaper one. Do you know if you sold it, how much you would get for it?

No, I researched a couple of years ago, but I don't know what we would get for it.

Okay, well, I would definitely look into that. You have to remember there's two things that are important when it comes to selling your car. First of all is how much would you get? Okay, well, most of the time you're surprised in a bad way. But the second thing that a lot of people forget is the monthly costs. It's really important. So if you're currently spending over a thousand dollars a month and you're able to cut that down dramatically over the course of a year, 18 months, two years, that savings is massive. Yeah, it could be 500 bucks a month. That's pretty impressive, right? You to get a, a nice safe used car, save a bunch of money every month. Let's just, let's take a look at what that would look like. Okay. What I'm keeping my eye on as I make these changes is this number right here, the 57%. I'm trying to get in the neighborhood of 40%. That's really what I'm trying to do. Just because I know then that if I were in your situation, I could then afford to eventually go out and get my own place, which is the goal you have. Okay, we don't have to get to 40%. Exactly. But just see that we're moving in the right direction. So let's take this number from 1145 to even 7. Well, you pay 500 a bucks a month for gas. Damn. Is it premium gas?

Yeah.

Yeah. See, this is the thing. When you get expensive stuff, it has all kinds of expensive accessories with it. So yeah, trust me when I say this, whatever car you get next should use the cheapest gas possible.

Yeah, right.

That alone save you tons of money every month. You see what I'm saying? All right, let's say that we're able to turn this number into. I don't know. I want to be a little conservative here. 800 bucks. So that's 345 bucks a month. Can I just point something out? So the minor changes we've made so far, they're really not that big. Would get you $675 a month in extra cash. What would you do with that money?

Use it to pay off the quad.

Oh. Oh, we didn't talk about that quad. Hold. Sorry. We got to talk about that. Why is that quad sitting in the backyard and not just sold? Someone explain that to me.

I. I don't. I didn't want to sell it, but I can sell it.

How much can you get if you sell that thing?

I don't know.

Whatever we owe on it.

Yeah. Or whatever. Just get rid of that thing.

Yeah, okay.

Just get. Get rid of it. Okay, listen. I want to acknowledge a personal philosophy that I have of money, which is if you made a bad purchase, get rid of it. Stop throwing good money after bad. This is why you sometimes hear me advising couples to sell their house, even at a loss, which is incredibly difficult for people to do because it means they actually have to face the decision they made. You know what most people do? They just keep on paying for something that is slowly causing their finances to sink, and they agonize and they worry, and they get in fights about finances for years. It almost never gets better. My suggestion. Rip that band aid off. Because, remember, it's hard to look forward when you are so busy looking backwards with your finances. That's going to save you quite a bit of money as well every month. All right, so you're basically like, you got, like, 800 bucks extra per month. What do you think about that?

I'm surprised, to be honest, because it seems like we, like, I didn't think we could get that much cut back, like, come back and have that much more money. I didn't. I don't. I didn't know where it would come. Like, where it would come from. I guess in my thinking, the fact.

Is, you, with a few minutes of work, cut 800 bucks a month off of this. What do you think about the exercise that we did with the conscious spending plan?

Well, I think it's a great. And personally, for me, it's like. It was foggy. Like, my vision was foggy, but now it's more. It's. I can see. Yeah, maybe not the finish line, but I can see that there might be a Finish line. So I feel a lot more motivated to actually start getting more involved. I'm excited.

I like that. I like that. Anna, what about for you?

I liked it. Like, I enjoyed seeing how we can play around with the numbers and just by moving a few things around, selling the quad or. Or even. Yeah, just thinking about the possibility of, like, looking into getting a different car. I think that's huge.

I didn't hear you kind of, like pushing back, fighting none of that. It was. I was like, all right, we got a problem. Well, could we do this? So I'll. I'll stop doing that. A lot of selflessness, which I think was really inspiring. How do you want to go forward? How do you want to manage your money together so it's not just one of you doing it and the other handing over a paycheck.

Well, I think I need to take more initiative in getting to know, I guess maybe even actually doing a few of the payments myself, just being more involved. And I need a sacrifice now so in the future we can have a better future.

Gabriel's in charge of the ATV sale. Can we set a timeline? Like how long a month? If you do it tomorrow, that would be amazing. Get some video. Okay. I want to see the video of them taking that thing away. Okay, let's check out a follow up video from Anna and Gabriel.

What I find surprising is that with a few minor tweaks that we did to. To our budget, which I didn't really think were possible, our financial future has cleared up. What I take from it is that now I'm more motivated than ever to go ahead with that plan and to get out of debt sooner.

I would say my biggest surprise is how much on board. Board he was during our call and how much he was just contributing and sharing. And I've seen still about a week or two out. He's still motivated and we're talking about the changes that we need to make. And then the second thing, my biggest takeaway is that it's not too late for us. Like, we can still retire, hopefully being millionaires. And so that was super encouraging to me because I thought we were kind of like, late and we kind of be struggling as we got older. But yeah, those are our takeaways. Thank you.

I want to thank Anna and Gabriel for coming on the podcast, being so candid. I also want to thank you for listening and taking away your key lessons. Do me a favor. If you enjoy this podcast, go to Apple Podcasts and leave a written review. It really helps the podcast grow and of course, of course. If you want to learn more about money psychology, go to iwt.com podcastnewsletter to get this Saturday's newsletter because once we send it out, we will not send it out again. Thanks for listening. Thanks for listening to I Will Teach youh To Be Rich. I'm Ramit Sethi. Please follow the show on Apple, Spotify, or wherever you listen to podcasts. If you you haven't read I will teach you to be Rich my book. Pick up a copy. You can get it at any bookstore or any library and it will show you the specific tactics for how to build the I will teach you to be rich system into your personal finances.