124. “We make $113,500. Why do we feel poor?”

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It feels more like a rut, you know, that we just can't get out of because climbing out of it is harder than trying to keep going. We have struggled for as long as we've known each other. It's just been one of those things that we've always done.

What percentage are your fixed costs combined?

82%.

It's worse.

It's actually 94%. How do you pay your rent if you don't have the money for it?

It's late every month.

Never more than 10 or so days, but it's always until the next paycheck.

It's the whole paycheck.

Yeah. And so we just keep going further, further.

And then my paychecks get us through to the next week. That's the cycle we're in. It's horrible and it doesn't make any sense. We make decent money. It shouldn't be this way. We just want to do better.

Wanting to do better is awesome. It's an awesome vision. It's an awesome goal. It's not enough.

Meet Bibi and Paul Bibi is 37, Paul is 40 and they have two young children in the last few years. They have moved about 10 times for.

Various family reasons that you're going to.

Hear in today's conversation. I have to tell you that I found today's conversation pretty confusing at times. I wasn't sure why they were stuck in this financial situation. But as I started to peel the onion, I asked a lot of questions. Some things became more clear. So stick with me as we go through today's conversation with Bibi and Paul.

We need a new mattress. So we went to mattress firm, got approved for a credit card, got like a midline mattress. I think Paul kind of just ran with it like a Lowe's credit card and a Home Depot credit card. But it was all things that had been piling up that needed to be addressed. But he can say the same for the credit cards that I have.

How much did that mattress cost?

$2,200. Okay.

Is that a lot or a little? What do you think about that number?

I think it's very midline for someone who has to take out a line of credit to get a decent mattress that's going to last, what, eight years? The recommended eight years. We've never had a new mattress in our lives. Knowing that we couldn't pay cash for it and being approved for a line of credit.

You couldn't pay cash because you didn't have enough to pay, Correct? Okay.

Absolutely not.

All right.

Yeah.

Would you say that there are any other examples of that in your life, making short term decisions that end up costing you a lot more?

Oh, yeah. Everything is now. Everything is in the now for us.

Good. Do you want to change that?

I do. But at the same time, I don't want to be those people who don't enjoy life now because they're saving for something that may or may not happen in the future.

Paul, what about you? What's a time recently where you were not on the same page, financially speaking?

I recently got a new job, started traveling just a little bit, making a little bit more money. But times were still really hard. It was still kind of new. I was away and they were home and we had $0. I just felt so bad, you know, just because I was. I couldn't do anything about it. So I got like Googled. I don't even remember what it was, but it was like in five minutes, like a loan. How much money can I get right now? Signed up for some like $750. I didn't think it was much. Got us through the week. I knew the payments were $200. And it was bi weekly. And after about the sixth one, I was like, wait a minute, that $750 was paid off. Let me go back and look at that. And I looked at the interest rate, and I want to say it was something like 650%, 680. And yeah, the total amount that we end up paying off, which our last payment gets made two days from now, the total amount will be $3,500.

So you borrowed 750, you paid off 3,500? Yes.

To like, yes, that was detrimental. And we didn't even talk about it until like two months ago or something. But in his defense, I didn't notice it. And we have one bank account, so that's on me too.

It was getting paid every two weeks, just like clockwork. And then other bills, you know, other things were not getting paid because they're getting neglected. We got behind in credit card payments. We got behind with pretty much everything. And it didn't seem to help us. Like, we're exactly where we were whenever I needed to get that loan. So all it did was push us further down the road in the wrong direction.

I felt bad for him because I knew how guilty he felt. I also blame myself because I didn't catch it. I should have caught it on the bank account. Like, we both need to be more vigilant on so many levels. And it's so simple. There are people with such more complicated situations with multiple bank accounts, with investments that they keep up with and everything. And like, we have one bank account and if we can't keep up with that, then that's on us. But we make enough money. Like, we make decent money for a middle class family. And it shouldn't be this way. And it's detrimental to our kids.

How old are your kids?

Our son Liam is 11. He just started sixth grade. He has autism. It comes across as like, he's very academically brilliant socially and emotionally. It's where it hits him the hardest. Our daughter Pearl, she's eight. She's a jock. She's not our academic, but she's anything sporty or socially, like, she's got it.

Got it.

So we kind of have the yin and yang happening.

Why are you deciding to try to change something now?

Because their lives have been fraught with change. We have moved probably 10 times in Liam's life.

Why?

For many different circumstances. He was a surprise. When Paul and I met, I was a flight attendant for JetBlue. He was a touring musician. We saw each other in Austin. I don't know, two to four days a month or something like that. And Liam happened, and obviously that changed things, like, our way of life, our. Like, somebody had to come off the road. We moved to be closer to his mom in hopes that she could help, which was in the middle of nowhere. And then after he was born, we ended up moving back to Austin. Shortly after, my dad in Alabama, who was, like, my person, he was diagnosed with terminal brain cancer. And I stood up, and I quit my job, and I came home and I said, paul, we're moving to Alabama. My dad has terminal cancer. We need this time with him. So we moved to Alabama for nine months, but it was difficult. We were on food stamps. We had our electricity turned off, like. Like, all of that, but it was worth the time with my dad. But the reason we moved back to Texas is because his dad got diagnosed with lung cancer.

Wow.

So we moved back to, like, be closer to him, and we moved in with him, and they both ended up dying in the same year in 2017.

So sorry to hear that.

So it's been a lot of things that have made us move, but looking back, it's always been for good reasons. There's never been, like, any, you know, evictions or anything dramatic like that.

There are so many clues in just the first few minutes of our conversation. Now, first, I have to acknowledge how much Bibi and Paul have been through. To move 10 times, to have both their dads pass away, to have two children, including an autistic son, that is a lot. And I don't think any of us know how we would react in a similar situation. I also noticed that they tell themselves certain stories. Did you catch it? When I asked what they think of buying a $2,000 plus mattress, which I consider expensive, she said she considered it midline, even though they had to take a line of credit out to afford it. We're talking about a mattress. Later, Bebe said they were on food stamps and had their power turned off, but there wasn't anything dramatic like evictions.

Bibi, what made you decide to fill out the application so that we could have this conversation?

I think because I know we can do better, and I know that with just even the most basic training, we can make things happen. It's just that we don't know, like, we have no clue how to invest, how, like, how to handle our money. Like, our neighbor across the street printed out our tax or tax documents one year, and it was, like, 40,000 for the year, and, like, we were okay. And I don't know how because I wasn't really working. I was, like, teaching Pilates a little bit, but nothing substantial. It just seems like we keep getting to the same level no matter how much money we make. And we just, like, we were happy then. And then we were happy when he got another raise. And then when I started teaching at the schools here, we had more money coming in. And now we're at a point where, like, we make decent money, but every time we get paid, it's all gone already. We just don't know how to handle it. We just have this ourselves in a vicious cycle that is just. It's never ending.

I was gonna say it feels more like a rut, you know, that we just can't get out of, because if we feel like climbing out of it is harder than trying to keep going.

In, it sounds pretty reasonable. That's true for most people, I'm sure.

Yeah.

It's easier to keep doing what you've been doing than to make a complete change of your lifestyle.

But we've been in this cycle of conversation. We do it every few months. Like, we. We have this cyclical conversation. We've got to change. We've got to figure out our budget. We've got to learn some investing strategies. But life, like, is just so moment to moment, slammed, busy, that we don't have time to dig in. And we need someone, something to, like, spark it and make us move.

Well, I can't make you do anything. That's the fact.

Encourage.

I mean, I can encourage you, but.

We just don't know where to start. We've tried creating a budget, and then we're like, I don't even know what is coming in or going out. Like, I.

Okay, so you tried creating a budget. How long did it last?

Like, never. Yeah, no days.

I created a budget, but that budget was more of a expense tracker. That's why it didn't really work, because there was just so. So many small things. You know, a day goes by, you're like, oh, I've spent a hundred dollars. And if you do that five, six times a week, that's, you know, $600. On what? I don't.

I don't know.

We just want to live. I don't want to think about buying my kid a candy bar at CVS when I'm picking up a prescription and thinking about where I need to put that on my list or whatever. I just want to buy her the candy bar. Buy him the candy bar, buy him the donuts. Because they didn't get to go on a vacation this summer like everyone else. And they're gonna go to school the first day, and everyone's gonna be like, I went to Hawaii. I went to do this. And they're gonna be like, oh, I stayed home. We got Covid.

Maybe you don't need to track the price of a candy bar. Is that possible?

I don't think that I need to, like, write things down in my freaking checkbook. I think that I want to not have to think about it.

So how should it work then, if you don't think about it?

Because we're not extravagant people and we don't spend on frivolous things, it should be okay for us to go to the Mexican restaurant down the street for happy hour night when the a dish is $6.99.

Like, so is it.

It's not right now? No.

So what's going on?

I don't. We don't know. I mean, we do know. We know that it's like us both nickel and diming our bank account to death and not collaborating with each other about what we're doing.

What does that mean? Nickel and diming ourselves to death?

Klarna and after pay. Oh, hey, I bought these Lululemon pants for work. That's him, not me on after pay. So we're going to pay monthly for that. All these tiny things building up, all these credit cards that he has and that I have building up. And before we realize it, all of these monthly payments are his entire paycheck, and we can't afford rent. But in the moment, our son had a great birthday party. He got what was on his list, which was simple things. And then our daughter, she had her birthday and she got what she wanted, which was simple.

You think that that would be considered the same as spending extravagantly on stuff?

Yeah. Yeah.

Kind of. Interesting.

I mean, I, I. In your book, you said if you can't afford to pay off a credit card in the same month that you rack up the charges, you can't afford a credit card. And that was eye opening for me. Like, really? No one ever told me that. Yeah.

Who?

I am telling you, we are so, like, bottom line, basic when it comes to finances that you have to talk to us like toddlers.

What does that mean, bottom line, basic?

We just, we have no clue. We've never invested. We don't know what that looks like. We don't know what that means. We don't know the terms. We don't know any of the anything. We don't know the first Thing about.

Investing, we have struggled for as long as we've known each other. It's just been one of those things that we've always done. The solution for someone who, like she says, doesn't know any better seems to be spend less.

What if you did that?

Right. And that seems to be easy. That should be easy to do.

Yeah.

But for some reason we get back in that rut of, oh, well, we. We do the things we want to do and then before the things that we have to do, and then we get to the things that we have to do and we don't have the money to do those things.

What's an example? Something you have to do.

Rent bills.

Rent bills? Yes.

Wait, how do you pay your rent if you don't have the money for it?

It's late every month.

Oh, that's not good.

No. Luckily, like, our neighbor is the owner's son and the property management company is very lenient with us, but we pay late fees every month, so yeah, it's never more money down the drain, never.

More than 10 or so days, but it's. It's always until the next paycheck.

Drains the whole paycheck.

Yeah. And so we just keep going further.

And further and then my paychecks get us through to the next week and then the cycle we're in. It's horrible and it doesn't make any sense. Like, we make decent money. It shouldn't be this way.

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My dad carried cash and wrote checks until the day he died.

What year was your dad born in?

1947.

I wonder if anything's changed since then.

Yeah, things have. My parents actually owned roller skating centers most of my life, which when they divorced my mom took them over and she had this like roller skating empire across Alabama and Georgia. For my whole life basically Until I was 18, it was how good of.

A roller skater are you?

I'm pretty damn good. I grew up very wealthy. We had a penthouse on the beach in Destin. We had a lake house on Lake Martin in Alabama. We had a huge house, multiple skate centers. We were well known in society in our hometown like country clubbers. All that Stuff. Fast forward till I was 16 or 17. Massive spiral. My parents divorced when I was 6.

6.

My mom had multiple husbands, multiple step siblings that involved it just uncomfortable things. And then she hit an ultimate spiral, and she is now homeless.

Oh, my gosh.

Despite everything. And when my dad died in their divorce decree in 1992, he said she could remain the beneficiary on his life insurance policy. She should anything happen to him, that his money would get paid out to his minor children. So she discovered that because we were no longer minors at the time, she could keep it, which she did.

Wow.

Almost $700,000. That was 2017, and we're here now. And the last I heard, she was arrested at Walmart for shoplifting and she's homeless, so.

Wow.

So quite the financial journey for me personally.

So she took the $700,000 from the Life Ins in 2017.

Yes.

And it's gone.

My stepmom got nothing, and she went through breast cancer, like, right after as well, after my dad died.

Sorry. That's extremely tragic.

It is. But you know what? She. She was who she was my whole life. So when people apologize, I'm like, you know what? It tracks.

Yeah.

Like, she is who she was. So.

And I assume you do not have a relationship with her anymore. Is that.

Oh, no. I told. Actually, I told her in 2014, when she sued him for back child support after his first brain surgery, that I would never speak to her again if she went through with it. And I figured out how to, like, file pro se to fight her. Whatever. She won, he lost his house. He and my stepmom had to move. It was. It was a whole thing.

So you filed pro se and you went through with that?

I did.

I. I learned how.

Wow.

But. And then she threatened to throw me in jail for practicing law without a license. That was great.

That's very impressive that you learned how to file for yourself. That's not easy.

He couldn't do it, so somebody had to. She's vicious, and she's still one.

Okay, and when you said you grew up wealthy, sounds like you grew up extremely wealthy. What were some of the messages that you remember about money as a child? What did you learn from your family?

So that's the conflicting thing is I never cared about any of it. I just wanted to, like, be with my friends and have a normal family, and I never did. It was always, like, constant drama and not being comfortable in my own home. She would send us to our penthouse in Destin with our nanny, and I just wanted to Be home. Like, I hated all of it, but I also. I also like the bragging rights back then.

Ah, like bragging about what? Give me an example.

Like, I got to go to the beach in the summer or just being able to stand up to comparisons. I don't know. I guess I don't want my kids to be the have nots. And for them to feel less than because of. Because of that. And the school that my daughter goes to is in an area that's just not even real. It's very. Everyone has.

Do you feel like the two of you are have nots?

Yeah. Yeah, for sure.

How about for your kids? Do you feel like they're have nots?

No, because they don't know that. But I think it's unfair to them if we don't build something for them. Oh, I didn't even say this. I lived in the back of the roller skating center, the original roller skating center, until I was like five.

What? Really?

They made an apartment in the back of it in Auburn, Alabama, and that's where we live. So I'd like walk out onto the skate floor is like my playground.

Whoa. That's cool.

It was really cool.

That's amazing.

It was a. It was a cool life.

I have to tell you, this is one of the reasons that I love these conversations, because it would be easy to be listening to this and screaming, how could you take a loan out to buy a mattress? But on this show, we have the luxury of time. I get to spend hours with couples like this to understand how they grew up, and suddenly you start to see a different side of BB spending. She grew up extremely wealthy, yes, but she also suffered many tragedies. One of my goals with this show is to help us all understand the peculiar ways in which we behave with money. Hearing Bibi's history isn't meant to justify her actions, but I think it helps all of us understand them just a little better. Now let's talk to Paul about how he grew up with money.

We never had the money to do whatever I asked for if I wanted a drum set. Oh, it's too expensive. Or wanted. Wanted to play football. Oh, we don't have the money for pads. I didn't go without food, clothes, that sort of thing. The basic necessities. I wasn't deprived, I wasn't unhappy, but we just didn't have money. Money was. Was never even. It was. Money was always short comings, I guess.

When you look back, would you recall the way you grew up? Middle class, lower middle class, working Class poor.

I would say lower middle class.

What do you remember about your mom and stepdad talking about money?

It was always a. Not taboo, but it wasn't discussed with. I was with the child, like it was off limits.

Okay, so let's, let's skip through your adolescence and you become a young adult in your 20s. What changes with money for you?

I went to college, got into some trouble, had to move back home after the first year, stayed for a bit, then moved back away to all my friends in college and got some student loans with the help of my mom and kind of lived on that. Got into in a band and used my student loan money to buy a guitar.

Hold on. How much did you have in student loans?

I think total was $32,000.

And did you end up ever graduating?

No.

Okay, 32,000. Do you still have those loans? Did you pay them back?

No, we still. There's still about $4,000 left.

Like his mom and his stepdad got in this huge fight about the student loans.

Tell me.

Yeah, my mom signed up for the student loan as a co signer for me. I didn't even know she was doing it. She wanted me to go to college with my friends. That was her way to do it because they didn't have the money to send me down there. And so I think she did it without my stepdad knowing. And then he found out a little bit later and just exploded.

And 20 years later, she's still paying it off. Yeah. Paul, do you see any similarities with the action that your mom took and the action that you took when you were traveling? What connection, if any, do you see between those two behaviors?

An emotional decision without thinking about an impulse.

Yeah.

Trying to fix a situation without thinking about it.

And what was the emotion behind each of those decisions? Love. I want to help the person I love.

Yeah.

I feel bad for them. I want to give them something. Yeah. And what was the consequence of that decision? The long term consequence?

Oh, the consequence. I don't even want to begin. How. How much is that? $100 a month for 20 years.

It's a lot.

Yeah.

And what about for you making that decision to take out $750 of loan?

I feel shame.

Yeah. Yeah.

It's very shameful to admit that. Like, oh my gosh, I can't believe I did that. Because you hear somebody on a podcast like this talking about that, like, oh my gosh, why, why would you do that? But you get in that situation and it's like, oh my gosh, I did exactly what I Shouldn't have done.

So you articulated that you and your mom both made an impulsive decision out of a seemingly positive emotion. I want to. I love them, I want to help them. Probably didn't understand what co signing means or what that, you know, highly damn near extortionate interest rate meant. And then finally, the consequence was you both ended up spending thousands and thousands of dollars on something you never imagined you would. Can you foresee a future roughly seven years from now where both of you see your son going off to college, you don't have the money saved, and what do you do?

Repeat the cycle?

Yeah. Yeah. We'd start figuring out a way to get a loan.

Yeah, the pattern will repeat.

It will.

You will do it out of love, but ultimately it will not be a loving action.

So this is interesting because I have been focused, really highly focused on breaking the cycle. As far as growing up under a narcissistic mother. Her mother was a narcissist. And they're very much alike. And the catastrophic damage they caused to anyone they touched in their path was just astronomical. I mean, I've been focused on that aspect of it and not the financial aspect of it, which is awakening for me because I've been so hyper focused on that for myself, that we've never addressed it.

Are you ready to.

Absolutely. Okay, perfect.

How about we take a look at.

The numbers and then I want to come back to you and want to hear what you think. What do you say?

Oh, this is going to get real interesting real fast.

So let's keep in mind that you have mentioned you're late on rent, essentially most months. And I want to. I want to contextualize that as we go through this. By the way, did you two do the conscious spending plan together?

Yes.

What was that like?

It was pretty easy.

Anybody listening? Go to the link in my show notes. That's how a CSP works.

I really think that we both needed a common task, common goal, which is this, what we're doing right here, the pressure. Right.

Oh, you needed me to be like, I'm gonna show up and talk to Ramit and we better have our shit on paper.

Last night I literally said to Paul, I hope he rips us a new one. So whatever you need to do, like we need to be scolded.

No, wrong. I'm going to tell you right now, like, okay, let's take your daughter. You want what? What? Does she ride a bike? Do you scold her if she's not riding the bike correctly?

No.

Oh, that's so Weird. And. And she loves it, right?

Yes.

But why don't you scold her? Because that's what you want me to do to you.

Okay, fair comparison. Because we're adults. It's embarrassing. Like, he's 40, I'm 37. Like we shouldn't be where we are. It's embarrassing. It's embarrassing.

Okay, I understand that. But you are here. And the same principles of getting you to actually love talking about money and to actually have a joint vision, that's exciting to you, that doesn't come from scolding.

Yeah.

And you intuitively know this because that's.

How you raise your kids.

Yeah. That's fair.

Don't turn it around and ask me to scold you because I don't do it and it doesn't work. All right.

Fair. See, that's how pathetic we are.

No, it's not pathetic. It's that you. There hasn't been a compelling reason for you to do this yet.

Or we're just terrified to address it.

This is a very childlike approach to behavior change. The idea that they need someone to scold them, to call them on their shit. That's the kind of thing children believe. What's really going on here is that they are trying to delegate authority to someone else, in this case, me. And they're pulling the innocent DOE technique, saying, us. Little old us, Paul and Bibi, just simple people. We don't know what we're doing wrong. We need a big, strong adult to come in here and tell us what to do. That's not my approach. And when you start trying to change with the wrong expectations, you're doomed to fail. This is like someone who hires a coach and says, I want to make a million dollars next month. You are not going to succeed. Or you want to lose 50 pounds in two months.

Not going to happen.

I have to tell you, I'm honestly puzzled by BB And Paul. They are unlike any couple I've met before. I'm hoping that looking through their numbers is going to shed a little light on what's going on here. Their assets, 12,000 investments, 6,000 savings, 0 debt, 10,000. And their total net worth is $8,000. 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.

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So Together you make. Can you read that number out?

113,445.

What do you think about that number?

It feels good.

It's a lot of money.

I think it should be adequate.

Are you actually proud that you have.

A household income of $113,000?

Yes.

What does it mean to you?

It's always kind of been. $100,000 was kind of a mark for so long. I think it's probably a dated, you know, I'm showing my age. I remember I never would have dreamed of paying $2,000 a month in rent because I remember in 1997, my dad had a $3,500 square foot house with a pool and everything and he paid $1,500 a month. And so I kind of kept that mentality of, oh, once I'm making. Once I'm able to pay fifteen hundred.

Dollars a month, I made it.

I made it exactly. Once you make $100,000 a year. Yeah, life is easy. But I'm learning that it's not quite okay.

I agree. I agree. Times have definitely changed. Housing is very expensive. But I am struck that we started that Q A just now with me asking you, what is it? What does it feel like? And you said proud, and then it ended with you basically being depressed.

Sure.

You notice that? Yeah, potentially. Is that a recurring pattern when you talk about money?

Yeah, absolutely.

Bibi's over there nodding her head. If you both cannot feel good about money, then you will never want to actually work on it.

I think the reason, I think that we don't feel good about it, despite this being an astronomical amount to us that we never thought we would really reach, is the reason that we have reached out and the reason that we're here.

I'm glad you did. I'm really glad you did. And you could see this, this desire to almost escape from money in several different ways. Would you, would you say escape would be a word that characterizes the way you treat money?

Absolutely. Like I said before, we're very like simple. We don't require much.

You're not that simple. You have a two thousand dollar mattress. You have stuff you spend on lululemon, etc, it's. That's a nice brand. I think that's a narrative you tell yourself. We're. We're not extra. Yeah. You don't live in a country club like you used to, but you're not that simple. Maybe it's time to turn the page on that. All right. The rent you're, you're renting is $2,250. I added up your utilities as well, so that's about 24% of your gross income. What do you think about that number?

I think it's astronomical. But we have been in this house for four and a half years, and they should have raised our rent several hundred dollars by now. We shouldn't still be here.

Why do you think it's astronomical?

I don't have friends from back home, but that's in Auburn, Alabama. They're like, holy crap, my mortgage is $800.

Can I just say something? If you want to turn a new page in your financial book in your life, it might be time to stop listening to people who have no idea.

What they're talking about.

That's fair, because you're literally being guided by ghosts and also people who live in a completely different place.

Yeah.

You're actually doing a very good job with your housing costs.

It's shocking because these days, almost everybody.

Is exceeding that number.

You're doing great.

So I'm going to take the win.

I'll give you a round of applause on that.

24%.

Very good.

Don't move. You got a great thing going. And then. What is this Money lion thing? What is it?

Money Lion? It's. It's like a credit card that you have to pay back because you connect it to an autopay account so you can pull out, like, 50, $120 at a time with pretty much little to no interest unless you need it quick, which we usually do. So my line of credit with moneylion right now is $875. And I don't remember the last month that we haven't had to use it. So for every $100, it's $8 to deposit it.

What the fuck?

What?

Say that again.

I know, I know.

Say it again.

For every $100, it's $8. So if I take out $870. Yeah, it's a lot.

Do you understand what that means? Like, does that seem like a lot to you?

But this is the cycle. Yes, absolutely. Like, we have talked about this every month. Like, we've got to get out of the cycle of the money line. We've got to stop using this. But when it comes down to, like, buying groceries and milk, like, we don't have a choice.

I understand that it feels like that, and I understand that you're making a choice and simply kicking the can down the road, but you need to buy groceries. I get that you said a second ago that this is like a credit card, but it has no interest.

Well, no. Set interest rate.

There's definitely interest.

I know, like, crazy interest for people like us. And that's how they get you.

Exactly. If.

Yeah, I know.

Money fast. You're gonna get.

I know, I know. And it's a cycle that we're in that we need to get out of. And we can't find our way out.

All right, let's get out of it. I'm going to help you get out of it. This is driving me insane.

What the hell is Money Lion? I'd never even heard of it before. And if you look at the pricing page, even for a guy like me who does this for a living, it all seems so simple, so friendly. It's only when you go deeper that you realize this is a financial trap. Do not use moneylion or anything like it.

And can you read me the number? What percentage are your fixed costs.

Combined? 82%.

82%. What number should that be?

I have no idea.

Well, the number is 50 to 60%.

Okay.

Okay.

So you're at 82. So if you want to know why you feel anxious over a candy bar, if you want to know why you're late on rent, if you want to know all of it, it tracks to this category right here. That's it. That's a simple answer right there. Excuse me. I just realized there's a mistake in this. I don't know why this isn't translating, but it's not 82%. Because watch, we need to add a thousand dollars here. It's actually 94%.

Yep.

So you are losing money every single month.

Yes, that's right. Like, I don't know. I can't imagine spending 750 at the for on groceries versus a thousand. You know what I mean? Like, I can't imagine taking, you know, some cell phone lines away or that sort of thing. I already kind of feel like with certain things, we're at the bare minimum.

You're not. You're not at the bare minimum. Like, not even close. You're wearing an apple watch. Every single person in your family has a phone. You're not even close to the bare minimum, not on the income you currently have. So I would like for you to ask deeper questions rather than just how do we quickly get rid of this, which is impulsive and is going to end you back up in the same situation. The question I would love to hear is, how did we end up getting into this situation with 82% fixed costs? What choices did we make that brought us here and what, if anything, are we willing to change if we want to get out of it? What do you notice about the difference of questions?

I mean, a lot.

Tell me.

But I also feel like we're already living.

Are we going back into your story right now? Can, can you stick with my question? What do you notice?

No, I am, I, I, I understand the question. I just feel like we're already living below. I don't know. I, I, I don't know what we would want to get rid of.

Just a quick reminder that the reason I'm such a stickler for 50 to 60% fixed costs is that once you elevate something to a fixed cost, like a nice house or a car or even your grocery spend, it is extremely difficult to cut back. You hear it every single week on this podcast. Couples will come on here spending literally 70 or 80% of their take home pay on fixed costs. And then they'll be completely bewildered at how to reduce it. That's because people cannot imagine having to sell a car or cut back on groceries or, or even downsize their house. Now, the ideal situation is to never get into this scenario in the first place. But sometimes that can't be avoided. So we have to understand why, why did they get into this situation in the first place? So that they don't get back into it again.

Paul's question and yours was what do we get rid of? What I'm saying is, what I wish you ask is how did we get here? What choices did we make? And what, if anything, are we willing to change? What is the difference in those two questions?

That's super hard to answer. They feel like they're intertwined. We got here because of the decisions that we made.

The difference is that you're looking for simple, easy answer to strip something away.

And, and you're already telling me all.

The reasons you can't do it. Like, oh, I feel like we're already cut to the bone and we don't do anything, et cetera. We're not, we're simple people. That's getting you nowhere. You're putting yourself into a, like a cul de sac where you can never get out of it.

Yeah.

And what I'm asking you to answer.

Are some really deep questions. They go way beyond some.

Can we cut off $100 off our groceries?

Yeah. And that's why we're here.

Paul, what do you notice about the difference? I can see you nodding over there.

I understand, I guess, both sides, but I don't know what the answer. I don't I don't. I don't even know where to be to start.

But I'm not even asking you to answer them. I'm just asking you what's the difference between the two sets of question.

Yeah, I mean, it's a quick, easy fix versus taking out the long term.

I think you two have been thinking short term for so long that you have lost the ability to even think beyond the next week.

No, that's absolutely true.

And each time I try to gently get you to stretch, to look just 10ft further, it's so much more comfortable for you to go right back into your story.

It's just because we. That's what we've done and what we've known for so long.

And is it working?

No. And that's why I applied is it's not working at all. I'm tired of surviving. I want to live. I want to build. I want to grow. I want to leave something for my kids and I want to learn how. And I don't know how.

You can notice that BB and Paul are problem oriented right now, but not solution oriented. As I've always said, people with problems love to talk about their problems. But until they're ready to talk solutions, nothing will change. I spent a lot more time working through their fixed costs. So let me just summarize. In two months, their debt payment goes down by 400 bucks. We temporarily removed that money Lion BS. We factored in that their AC bill is going to go down after summer. Now their fixed costs went down to 77%. You're going to hear me. Really push them to come up with solutions. And deep down, what they want is for me to fix their finances for them. But that's not what I do. The key is for them to take the responsibility to make the changes on their own.

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Ramit it's high, but it's not in the 80s.

I'll take that as a win.

I feel good just narrowing it down and focusing in on every little nuance instead of being paralyzed by all of it. Yeah, in your face at one time.

We need to get this down to 60%. Okay, so you tell me how you want to do it.

I made a list recently of charges that we were being charged for an embarrassing amount of time for things that we're not even using, like reoccurring charges like ESPN through Roku or something like that. And that I've just, I made a list and I disputed most of them either through the bank or I canceled them. Or figured out how the hell we were subscribed. Subscribe to them, which is half the battle. Like, I got through that list pretty well. I think I recovered, like, 450 bucks just doing that. Just looking back at how long we've been paying them was, like, shocking.

They're on your iPhone, they're on your.

Cable, they're everywhere, and they just stay with you forever.

All right, what else?

I can cancel my gem membership. That's $79.

All right, what's next?

Figure out the phone thing. There's a better option somewhere. I've heard your ads.

Yeah. Why don't you just do that?

Was it mint?

Yeah.

So it's supposed to be $15 per line, right?

Yeah.

So if we have. If we get rid of Liam's watch. We have three phones, three watches.

You guys are broke. You can't have three Apple watches. It's just not going to happen.

Yeah, I can give mine up, sell it.

Can you do that?

Yeah.

All right, great. Love that. Great answer. So you're going to sell a watch? Maybe two. You're going to save. First of all, you're going to make a little bit of money. Second, you're going to save on the monthly recurring. That's great. So let's take this number down. To what? Pick a number.

Go for it, babe.

I don't know. Like, I don't even know what's. What's ridiculous. Is a hundred dollars ridiculous.

Why. Why don't we switch it. Let's make it a hundred bucks, and then you two can see if you can get around there. I think you could. You may have to cut some stuff. You're gonna have to search. Use the ad that you mentioned. Mint Mobile sponsor here on the show. See?

A hundred bucks.

And it may turn out that somebody who had certain access may not be able to have that anymore. Or somebody had a watch. Definitely does not have a watch anymore. That's life. Okay. There's a vision behind this, by the way. You're not just taking things away arbitrarily.

Yeah. We just want to do better.

Wanting to do better is awesome. It's an awesome vision. It's an awesome goal. It's not enough.

Oh, no. That's why we're here. We need help.

Okay, well, I'm helping you by asking you what changes you're willing to make. I'm gonna put these numbers back up on screen. You're at 76%. Get me down to 60%.

$870 is getting paid to Money Lion.

What okay. And then what happens to that money?

It gets. It's just refreshed, like, oh, it's back. You can borrow it again if you need to.

I'm so confused.

It's a payday loan, right?

Technically, pretty much.

You get the advance money from your paycheck, and then when your paycheck gets deposited, it takes it from your paycheck. It comes in and takes it out. Takes out what you borrowed. Well, with an interest rate, I guess. Yeah.

Yes, definitely an interest rate.

Yes.

So you're using that money for like day to day expenses. Paying rent, paying bills. You're making zero progress on the credit card, Correct?

Right.

Okay. So that debt is going. Another example of making short term decisions and actually incurring way bigger costs that you may never get out of.

Yes.

Can I just point out something like, really? Honestly?

Yeah.

I mean, hold on. You got $10,000 in credit card debt that's going up. You got a mattress that's more expensive than the mattress I sleep on. You have how many cell phones? Four in the house that are all brand new?

Three.

Three. Three.

They're not all brand new. Mine's a year old.

Oh, okay.

But yeah, we. We stay. We stay on top of the technology when we can.

That's one way to put it. Remember when you told me that we're simple people? You still believe that? Bb?

No.

What are you.

I. Yeah, we. We like nice technology, I guess, but keep going, I guess when it comes to.

Hold on. You like nice technology. I agree. What else do you like? Nice things. Of.

Streaming services.

Yep. What else?

Groceries.

Yes.

Like a lot, actually.

I might restate my story if I were being really honest and. Or in your situation, I might just say we spend way above our means and we don't know how to say no.

No, that's absolutely fair.

Yeah. That's 100%.

Well, okay.

But that's a totally.

That's a 180 degree difference then. We're simple people and we don't understand where the money's going.

We don't understand where the money's going. And in comparison to everyone else around us and our peers and our children's friends, we are the poor people.

Maybe you are. And I hate to hear that. And I would like for you to get out of that. The reason that you are stuck and every month it's getting worse and worse is the debt payments. The reason you have the debt payments is what?

Because of us? Because of our dumb decisions?

Impulsive decisions.

Yes.

Inability to say no.

Big and small candy Bars to credit.

Cards and telling yourself a story that it's actually not that bad.

Oh, no, we know it's bad.

No, you don't. In fact, you're doing it right now. You don't. Because when. When you come and you say, like, we're simple and like, we don't know where the money's going and we just need to, like, sit down and make a budget, that's actually not being honest with yourselves.

Yeah. And that's fair. I think it also shows how clueless we are financially.

You love to live there in that story and that narrative.

That's 100% true. For sure.

Paul, did you catch that?

I did. I don't know if I've ever really noticed it.

Okay, well.

I want you to know.

How to manage money. You've read my book, right?

Yes.

Talk to me about what that was like. I'm impressed that you read it. That's awesome. A lot of people come on this. They've never read the book. So I give you major props for that.

Thanks.

Did you make any changes after reading it?

No, I did make notes.

BB Is playing the innocent dough technique. When I point something out, she immediately agrees. I know we're clueless. We just don't know anything. We make dumb decisions. It's her unconscious way of escaping from having to actually change. But innocent doe doesn't work on me. It would be a disservice for me to allow her to use that technique, which, by the way, she doesn't even realize she's employing, to squirm away from making changes. And change is what she actually wants to make.

I guess we're so aloof to the whole thing, we don't even realize when we are. And it takes someone like you that's like, wait, got you're doing it again? And we had no idea.

Well, one way to know is, like, when you talk about money, do you ever get anywhere?

No.

Okay, so why?

I think we just give up.

Yeah.

And we do this. We do this, like, every few months. We'll sit down and we're like, okay, we're going to figure this out. And then we get to a point where I don't even know. We just give up.

The groceries is the outlier.

Tell me.

We need to focus. We need to make. Be more focused and make a list and buy a bunch of, like, what we know we're going to need, especially with the kids with us. Be like, mom, dad, can I have this? Bottom line, we gotta tell our daughter because she goes with whoever's going. And then if you say no, she begs. And then most of the time it's like just to get her to shut up. It's like fine.

And can you just like play that out for me? You tell her no, she begs, you give in, and then what happens as she becomes 16, 18, 20 years old?

No. I know a thing that we've discussed at length that we're creating a monster.

Okay. Do you do anything about it?

We try. And then we're just suckers. I'm meaner than you are, I think.

Yeah. 100%.

You're literally late with rent every single month.

Yeah.

And you're worried about being mean to your 8 year old daughter by telling her no and teaching her the importance of you have an amount you can spend at the grocery store. It just doesn't add up for me.

Yeah. Well, I think for me I am really paranoid about them developing any kind of. I don't know, I feel like we talk about money in front of them too much and they are way too aware or like nervous that we don't have enough of things. And I don't want that to be something on their minds.

Oh, you want to shield them from it?

Yeah.

So like don't talk about money because money is always negative.

Yeah, pretty much.

And then like, we'll take care of stuff like you go to college and be a kid. Am I getting this right so far?

But I think for me, yes, I was really smiling because I never had that. Everything was always like fraught with like holding it over your head or like you owe me something or.

Okay. And then as they go to college, if they do and they become in their early 20s, how do they figure out how to navigate the world of money?

I hope that we're better equipped to teach them than either of us were taught. I just don't want them to ever think that we don't have enough or.

That we're less than you don't have enough. You're losing money every single month.

Yeah. And that's on us and that's our fault. But that it's not fair to them to take that on their shoulders. But that brings me back to the fact there's so many lessons that we need to learn. We can't lead by example without knowing what we're doing. Yeah.

So I hope you can see that if you want to change the way that your money is behaving, you're going to have to dramatically change so many parts of the way that you live. It's the grocery Shopping. It's the phones. It's the idea that kids get to dictate what they get at age 8 or 11 versus parents. Setting a vision for the family and.

Leading it is A vision is something that we do not do. We've always been very. Now, now, now.

All right, so now we're going back to the numbers. And now you're going to tell me what you want to do. I'm not going to drag it out of you. You tell me.

No, at that rate, I mean, I. That's extremely eye opening. And it's worth canceling pretty much anything.

Tell me.

And there's nothing that we can cancel besides subscriptions.

I just. I'm not sure you have a powerful enough vision for wanting to get out of this. You know, the way you talk about is like, oh, we got to do better. That's going to last about two days.

No, that's for sure. I don't think that we've ever allowed ourselves to have a vision of where we want to be and how we're going to do it.

What is the vision then? Tell me. I'd love to hear it. I want to hear. What is the rich life for you?

I don't think we know that yet.

Want to do it right now?

Sure. To take our kids on a vacation.

Okay. Where do you want to take them?

Legoland.

Perfect.

Right by you.

Perfect. You want to take them to Legoland? Great. And when do you want to do this?

I don't know. I mean, tomorrow, if we could. But setting an actual goal.

Can we start with something a little more modest? Because a Legoland trip to California probably costs like, thousands of dollars. Yeah, I don't mind it, but. And I love that dream.

But what?

I love Galveston. Just Galveston.

And how long is this trip?

I say three days, four days.

Some time to be away from home. Some time to surround yourself in a different environment, see some different things, relax a little bit, have some dinners out like that. Bibi, what do you think, hearing this vision?

I don't know. I'm trying not to cry.

Tell me why.

Just been so far fetched for us and it's not fair to the kids.

Far fetched to dream about something like this?

No, not to dream about it, but not to be able to, like, do anything.

Yeah. So when you start thinking about a trip to Galveston, what comes up for you?

Honestly? Jealousy of other people. Everyone else just seems like it. It's just so easy. Or like they have parents that are footing the bill or. I don't know.

So that Feeling is like, what are we doing wrong? Are we the only ones?

Yeah.

We're not giving our kids the kind of childhood we want to give them.

Yeah. Like, even the ones that we think are like us, they're like, send their kid to camp. It's like $2,000. I don't know, but I don't know, like, what their finances are. It's all, like, left to my brain to run away with it and just be jealous and.

And is that what your brain does?

Yeah.

Yeah.

That can't feel good after a while.

No. I'm tired of it. It's exhausting.

What do you want to feel instead?

Equal.

I love that. Keep going.

I just want to not worry anymore.

Paul, what about you? What do you want to feel.

Confident in the decisions. Financial decisions and future. Yeah. Some security. Yeah.

Don't feel that right now, right?

No, not even close. I haven't really ever.

Yep. You know what I'd like for the two of you to feel when it comes to money? Pride.

Yeah, that'd be nice.

Proud of what you have accomplished. Proud that you make six figures. That's very impressive. I'd like to see you feeling proud of making a plan with your fixed costs and actually executing on it. I'd like you to feel proud of making some difficult decisions when it comes to grocery shopping and Apple watches and subscriptions. I'd like you to feel pride when it comes to paying off your debt. A plan that you've never made before because it's further away than one month. This plan is going to take you over a year, but you made a plan, you set it in motion, and you trusted the process and you didn't deviate. That's what I'd like you to feel pride about. Bibi, what would it feel like if you felt pride around money like that?

I think investing and putting money somewhere instead of every dollar that comes in, being all that we have. I want to learn how to invest. And I am tired of feeling like an idiot whenever people talk about investments or flipping houses and making money. Like, it seems like everybody else has this, like, innate understanding of investing and. Or has a leg up with, like, someone giving them this thing that allows them to build on that we have never had.

Yeah.

Yeah. Okay. I want you to feel pride about your investments, too. You can start investing. We.

We just don't know how. We don't know anything about that world.

You know about it? It's in chapter three and chapter seven of my book. It's not that you don't know about investing, you know, more than 90% of the American public. If you've read those two chapters, what is it really?

Fear of losing.

Yes. What else?

That's the biggest one for me is the fear of just failing.

Remember we talked about your daughter riding her bike?

Yeah.

Did you tell her, don't get on the bike because I'm afraid you might fall off once? No. And even if you start investing and you do something boneheaded with the hundred bucks. Okay, I wish you hadn't, but it's a hundred bucks better to learn now than with $500,000 in a portfolio, don't you think?

Yeah.

All right, so it's a reframing. It's not that you don't know how to invest. You know, it's right in front of you in that book. That's actually one of the key lessons of today, is that you've both been telling yourself a story. We just don't know what to do. I don't know where's the money going? You know, it's right in front of you. There's something deeper. My take is you've never had a vision for what you actually want to do with money. Money only feels bad to you. So of course you want to hide it away and avoid it and certainly not talk about it in front of your kids. You feel like you talk about it too much. I feel like you don't probably don't talk about it enough. How can you talk about it in a healthy way when you yourself don't have a healthy relationship with it? And if you decide to go forward with this aggressive plan, you will get to that future a lot faster and more certainly than if you just like, mosey along and make like 1% changes here and there.

Yeah. No, I knew it was going to take some aggressive changes for sure, but I think we just need to wake up.

No.

Okay. If you just needed to wake up, you would have done it over the last 10 plus years. Trust me that this is not a wake up thing.

Yeah.

You've been living with the stress of money every day of your life for the last 10 years.

Like 13.

Wouldn't you. Wouldn't you have woken up? Are you hearing what I'm saying right now? I feel like you're in your own story.

No, I am. I. I hear you.

So what is it that needs to change? Because it's not waking up. That has nothing to do with this at all.

Well, we've never had anybody lay it out in front of us like this.

Okay.

But you Guys could have hired a financial advisor or anybody.

We could have, but we never have.

There's no reason.

I guess we're just so used to being small fish that like, well, we need a financial advisor with our tiny amount of money. And now that we make a significant amount of money, we don't know how to manage it.

You're still thinking like you are poor.

Yeah.

Your kids are old enough. They can learn. Oh, you know, mom and dad have made some mistakes with our money. That's okay. We learned a lot. We talked to this guy.

We're working through this book.

Let us know if you want to read it. We're going to be talking about it on Sunday. If you want to come join and listen in, we'd love to have you too.

Yeah. That's a really big perspective change for me is because every time we talk about money in front of them, I'm like, they don't need to know that we're struggling ever. But I don't know why I have that opinion. I guess because I don't want them to be stressed about it, but I don't think they are.

I'll tell you something. Kids and adults are stressed when there's a problem but no solution.

Yeah.

So it's like, hey, right now, you know what? We, we were a little irresponsible with our spending. We got a little loose. And one thing we are going to do as adults is we're going to make some changes because we want to have a healthy relationship with money.

We want to set a good example.

For ourselves and for you. And we're going to need your help from now on. We're going to do grocery shopping on this day. You might say to your son, we're going to need your help to do this to your daughter. We're going to need your help to do that. But we're going to need your help because we can't do this alone. Are you on board with us? That's what being a family is about.

In my conversation with Bibi and Paul, I heard them telling themselves a lot of stories, stories to explain and rationalize how they had gotten into this situation. One of them happened towards the end of our conversation where I pointed out that BB is working a full time job and she's being dramatically underpaid to the tune of tens of thousands of dollars. She could make more working in fast food. And when I suggested that she go out and find a different job, especially in a fantastic job market like right now, she gave me a tepid response. That $30,000 that she could relatively easily add to their household would make a huge difference. So I have to say that I'm puzzled by our conversation today. I started off being puzzled. I think I'm equally puzzled at the end of our conversation. There's a lot that has gone into Bibi and Paul making the decisions they made. But it's unclear to me if there are stakes here that will make them actually want to change. Let's take a look at Paul's follow up video to see what happened.

What surprised me the most, to really put it put down paper, doing that conscious spending plan and seeing just where all of our money was going. That was pretty, pretty eye opening. Key takeaways, I'll tell you a big one for me was just how the emotional financial decisions that you make whenever you know you're trying to mean, well, trying to help those $750 loans, not realizing that it's a 650% interest rate, that was a big one for me. I will definitely think twice before doing anything like that again. Changes. We've made a few, I think, I mean we're not done, but we're going in the right direction. We have paid off that terrible loan that I got us in that with the 600% interest. So that's $200 BI weekly that is no longer going out.

And now let's hear from Bibi.

What surprised me that 92%, when we were done with it, 92% of our money was going to fixed costs and how simple and straightforward it was to put all of our numbers into the CSP and to finally have a visual of and an answer to where does our money go? Where does all of our money go every month? Like bam. It's right there for you. That was beautiful and shocking. Key takeaways. We are not simple people as we claim to be. And that taking away these little things that aren't conducive to building the life that we see or consider our rich life, taking those away and then putting that time, that money, that energy into what does contribute to that even time with each other. That's a big one. First I canceled my class pass. That's 80 bucks right there. The two Apple watches, my son's Apple watch and my Apple watch, huge savings right there. Oh, and the payday loans, the money lion, those are no more. Don't even have the account anymore. We're committing to opening an HSA for my medical expenses. So we'll save some money there and I'll be able to use that instead of paying double taxes. Anyway, we just really appreciate you so much and this is to going going to be life changing for us if we continue moving forward with the advice that you gave us. And I know we can do it and make even bigger changes moving forward.

Okay, I have to say I'm impressed at the follow ups. My favorite part of that follow up is when BB said wow, I think we've realized we're not actually the simple people that we have thought ourselves to be. To realize that the identity you've created for yourself might not actually actually line up with reality is a huge realization. And on that count, I will take the win. Paul and BB thank you so much for coming and sharing your story with all of our listeners. And for everyone watching. Make sure if you're interested in the episode today, go on Apple, Leave us a written review and join our podcast newsletter@iwt.com podcast newsletter where I talk about money psychology every Saturday. That's iwt.com podcastnewsletter. 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 haven't read I Will Teach youh to Be Rich my book.

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