192. “We spend 98% of what we make—Where is it all going?”

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 on today's episode. Meet Justin and Deepika I'm thinking more.

About the future and I think Justin is very much thinking about now.

Justin is 40, Deepika is 32, and they're caught in a cycle of credit card debt. Even though they have a high income.

It feels like we are living paycheck to paycheck. And it stresses me because we just have the money we have and then we wait for payday and we do it all over again.

Justin has a side hustle that he wants to take to the next level, but his business partners are not as invested as he is.

Me, my brother and my family bought this building and then finally when we finally did pay it off, all of us kind of like went our separate ways.

Deepika wants to eventually buy a house, but she can't figure out where they're overspending.

We've looked at our credit card statements time and time again. We cannot figure out what is causing the revolving cycle of debt.

They both struggle with their money psychology.

It's like the second you get a dollar, it's oh my God, it's a dollar. Oh what can we do with this dollar? And it's that one dollar brought us joy. But then it was this fleeting joy.

Money is for rich people, and you have to work super hard to get it.

And they don't have a shared vision for their money, which is preventing them from living their rich life.

Have to understand that for the first few years of our marriage, we weren't allowed to have dreams.

Can they kick their old money habits to the curb and adopt a different strategy for managing their money?

It seems like the folks around us have been able to figure this out and we just haven't. And maybe the answer is so obvious it's right in front of me. But have not been able to figure out what the change is that we need to make.

Now let's meet Justin and Deepika. All right, I've got Justin and Deepika CSP in front of me getting ready for our conversation.

Let's take a look at what I find. Let's take a look. Assets, 5,000 bucks. Investments, $111,000. They mentioned that Justin's income goes towards savings. Maybe that counts investments, too. Savings at $38,000 and debt at 43k. Okay, it's all about the income here. What the hell? $21,000 per month. Okay, so they make $260,000 a year. All right, what's the problem? First off, okay, they're taking home 13,000. So they're at least, presumably maxing out 401k.

How?

They have 98% fixed costs at that income. Oh, especially when their mortgage or rent is $1,650 a month. Whoa. All right, where's the money going? Utilities at 700 bucks a month. That's high, but okay. Insurance at $3800. Why? How can insurance be $4000 a month? Okay, well, we'll find out. Car payment, 1800 bucks a month. No. Hell, no. Debt payments at 4000. Groceries at 800. I told you. It's always 800 to 1200 bucks. Clothes, 200 bucks a month. You can't spend 200 bucks a month on clothes when you have 98% fixed cost. Investments are at zero. Okay, savings are at zero. That's a problem. We got a spending problem here. That's it. I mean, it's all in the fixed costs. And we can already narrow it down to a few different areas. All right, I'm going to find out.

What'S going on here.

Especially with a salary this high. There's something going on here.

When I saw the different prompts on your Instagram the one that stuck up to me was the one about having the business idea and not having it pick up off the ground. I saw this and I thought of Justin. Justin and his business really is this incredibly untapped financial resource that we could. We could be benefiting from. It's something that he's been wanting to do for a few years now. He had the LLC created after our son was born, so he has done a lot of the groundwork. So typically, when it comes to all things finances and larger decisions, because I take on weight of the world on my shoulders at all times for all the people in my life, I'm stressed about the untapped financial stream that could be coming from his business. If we want to do something like buy a home or try to do something for our son's future, we don't have the resources to do things like that. And I think, like, that's what my concern is. So I'm thinking more about the future, and I think Justin is very much thinking about now.

Justin.

I never focused on feature stuff. I've always focused on what happens now. So she's absolutely correct. There is money to be made in what I'm trying to do, but I always feel like there's always some sort of block. My biggest problem right now is I'm trying to renovate the space and I either don't have time or I'm trying to do other projects and so many other things jump on top of it that when I try to focus on the business, it never really goes anywhere.

Is your full time business?

No.

So I have a full time job and this business is more of like a side hustle.

Okay. How long has it been a side hustle?

For 15 years.

What? You serious?

Yeah. So me, my brother and my family bought this building, and me and my brother were in the mindset of we can turn this place into a recording studio slash venue because it has multiple levels. We all pulled our money together and we never had enough money to actually put into the building. It was just a matter of paying it, paying it, paying it, making the bills or meeting the bills. And then finally, when we finally did pay it off, all of us kind of like went our separate ways. So it's just me thinking like, hey, this is a great opportunity to do what we originally wanted to do.

What about the family members who put money into it?

My brother is now in Miami. My older brother is here, but he's not very much interested in doing this anymore.

Did you buy him out?

No. When I got the Building. He didn't have a place to stay, so I renovated the top into an apartment. The main floor is a venue, and the lower level is the studio. So he still lives up here.

This doesn't sound like a. Like a structured business. Right. They don't really care about the money, but legally they would be entitled to it. There's, like, somebody living upstairs not paying rent. Does it sound unusual to you? As I say it, yeah.

So that. That's. I. I went through this in therapy as well.

And what happened?

She was basically like, you do realize, like, this is toxic. Things should be.

Oh, okay. She said it, not me.

Yeah.

Thank you, therapist.

Don't worry.

Okay, and then what did you do?

I tried to talk to him, but he doesn't want to pay, so he just wants to, like, you know, stay for free.

Okay, so you told all the details to your therapist, presumably over multiple sessions. Your therapist was like, this is super toxic.

And then you went to your brother.

You'Re like, hey, not sure if you should stay here for free. And then he was like, oh, I'm not trying to pay rent. And you were like, okay, yeah, basically.

Okay.

It's like a family thing. Like. Yeah. You get involved in family, and then, you know, this kind of stuff happens.

Are you Indian?

Of course.

Yeah.

Okay. All right, so this explains a lot. Okay, you want me to. You want me to set up the call right now and get all the.

Family members on zoom?

I'm not part of the family. I'll. I'll wrap this up in 15 minutes. All right, maybe not. So. All right, now that I understand a little bit more about the family business, Deepika, what's your take?

I think it's a fantastic opportunity for Justin because he's actually been doing a majority of the manual labor. He's the only one that has the vision and wants to execute on it. So I'm in full support of him actually moving forward with his business. I think it's just a matter of prioritizing and finding the resources to actually execute.

All right, so we have this side business has a lot of family embroiled in it. And Deepika, you're managing your family finances on a day to day basis. Things like tracking things, planning where the money's coming from for vacation, those kinds of things, right?

Yep.

And, Justin, do you ever feel stressed about money?

It's not something that I stress over only because I feel like we have a safety net when we have it. It's great. It makes me happy because you can get what you want. In terms of, like, you know, gifts, vacations. You don't have the stress of, oh, no, I can't do this or I can't afford that. So, yeah, when money is there, the levels of stress are down, which to me makes me happy.

It doesn't really surprise me that you are stressed out, Deepika. And Justin is happy because he's like, yeah, whatever. The roof is here and we're eating well, and it's good to go. Right. You've seen this pattern on the show before many times, right?

Yeah, yeah.

We have the Worrier. We have the Avoider. The Avoider's, like, very happy, and the Warrior's like one. Sometimes they try to get them. They get into this chaser avoider dynamic. But in general, it's just like, it is what it is. And in fact, you said, Deepika, that you tend to take on the world in lots of parts of your life. Well, I think we should start with looking at your numbers, because I understand the general Dynamics, but I don't really understand what's going on with your finances. Let's take a look at the numbers, shall we?

Yes.

Justin, can you read off the words in bold and then the number in full next to it?

Assets, 5,328. Investments, $111,793. Savings, 38,000. And then debt, 43,251. Total net worth, $111,870.

Great. What do you think about those numbers?

It's scary. There's really not much there.

Deepika, you want to add anything on those net worth numbers?

Yeah, now that I'm looking at the numbers, I don't know if we did the assets part right because we have four cars.

You have four cars with two people?

Yeah, it's a long story.

So you have these cars, but your assets read only 5,000 bucks.

We were confused. I was like, how do you value it?

Just plug it into Kelly blue book or whatever. Yeah, let's just approximate it right now. Who cares? It doesn't matter. You know, get Right within 10,000, it's fine.

It's probably worth 40,000.

Okay, we'll put 40,000. All right, so your net worth is 151,000. Okay, that's cool. Again, you can tidy up the numbers later. This is just. At this point, it doesn't really matter. It's just directional. Moving on, let's talk about income. Deepika, can you read off this combined gross monthly income, please?

Sure. $21,684 per month.

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

It doesn't feel like a lot.

I just feel like we're middle class. You guys want to say it? Go ahead, get it out.

It really feels like we are the epitome of middle class.

By the end of the month, we just don't know where it all went. Right. Okay.

You got it?

Yeah.

All right.

All right, all right. Your net income, I found this interesting. Is 13577. Why is the difference so big?

Justin pays, I think it was 1900amonth for health benefits. It's mind blowing. He's part of a union and I think maybe the health benefits of are included in the union dues and maybe that's why the number looks so inflated. But that was a very eye opening moment for us because I don't think either of us realized how much was going towards health benefits and union dues until we completed this.

Is there a pension involved as well, Justin?

Yes.

Yep.

And is it a pretty good pension?

Yeah. So once you finish the years, I think we get around 27. $2800 a month.

$2800 a month. Okay.

Are either of you contributing any pre.

Tax money to a thing like a 401k?

Yeah.

Yep.

How much?

I think mine was 2% or 4%.

Mine was about the same.

So like about 650 bucks a month towards a 401k total. So about 7,800 bucks a year. All right. But what really concerns me is the next number. What's this number? Deepika, the fixed cost number.

98%.

Okay. Justin, you see that number?

Yeah.

What do you make of this number? What number should it be? Theoretically?

50%.

At least 50 to 60.

Yeah.

And for a couple with an income like yours, probably towards the low end, if not even lower because your fixed costs don't tend to often scale as much with high incomes. So we got to figure out what's going on here. I'm going to dive into those fixed cost numbers in just a second. But let's keep going down the list just so we see the rest of the csp. Your investments are at zero. So you're basically not contributing anything more beyond your 401k. Which explains how the investments which theoretically should be higher with an income like yours are not higher. Your savings are at zero. You have about three months of savings and that's it. And then finally your guilt free spending. You put childcare for 1200 and then you put everything else. 500 bucks a month. Do we all agree that fixed Costs is a problem area.

Huge problem area. Yeah.

Okay. And Justin, do you agree as well?

Yeah, absolutely.

All right, we're narrowing it down already. Let's try to figure out what's going on here. Do you rent or own the rent? Okay, Your rent is $1650. That's good. That's 10.83% for housing. Whoa, whoa. And that includes your utilities, which are 700 bucks a month. What's up with that, by the way?

We have done a lot of investigating over the last couple of years. For some reason, our gas and electric combination bill is sometimes north of 8, $900, which is unheard of. We've asked the gas company to. What's going on? We've had them check for gas leaks. We've had them come and look to see what's going on.

How could it take a couple of years to figure this out?

We can't get anyone on the phone. We've just been in this cycle for the last two or three years, and we can't figure it out.

There's something going on there. Maybe it's right, maybe not. But let's keep going because we got a lot more insurance. You're paying $3,835 for per month for insurance. What is up with that?

It's the union. That's how much they take out of the paycheck. It's almost like half per paycheck.

Well, have you asked your friends at work, like, hey, do you pay this much?

So when I talked to them, they said it's a pretty high amount. I just left it at that because I'm not very good at this stuff.

I don't mind not being good at money. None of us is born being good at money, but it's a skill we learn, right? Like, what do you do for your union job?

I work in event services.

If you asked me how to do that, I'd be like, I don't know. I'm not good at this stuff. Which is true. But if I wanted to get good or it was something important to my life, I would get good. Right? It's just like, it has to happen. So already we're going down this list and we're three things in. And I've heard. I don't know why we're paying that much, but we just can't figure it out. And I'm a little confused. I don't hear this from almost any other couple. I can understand one month, three months, six months, but like, two, three, four years doesn't make sense. To me, I'm going to be honest.

Deepika and Justin have me a little bit confused. Their fixed costs are at 98%, which is very high. It means that they are essentially spending every single dollar they make. But that's especially confusing at their income level. They're high earners and their rent is extremely low. And when I ask them specific questions like, hey, why are you paying so much for insurance? Or why is your electric bill so high? They give me a very casual I don't know, I don't know. It's like when I'm seven years old, I come home, a big old stain on my shirt. My mom goes, how did you get that stain? I don't know.

Which, by the way, does not work.

The world has a way of making you tell the truth whether you want to or not. So you might as well do it early on. Now. He uses the excuse, I'm not good at this stuff. And then happily continues avoiding money. Meanwhile, Deepika is on a different end of the spectrum, worrying, stressing about their future. It's not a healthy way to approach money. We'll continue going through their conscious spending plan after this quick break. This episode of Money for Couples is brought to you by Wildgreen. If you follow me on other channels like Instagram, you know that I take my diet, my health pretty seriously. I count my macros, I prioritize my protein, and I eat a lot of simple meals. This is a system that works for me and I have to tell you, it's made a huge impact on my overall health. So if I want to have a little treat or I want to go out for a nice meal with my friends, I want it to be worth it. Which is why I was happy to find Wild Grain, the sponsor of today's episode. Wild Grain is the first ever bake from frozen subscription box for sourdough breads, fresh pastas, and artisanal pastries. And best of all, they take the hassle out of baking since all the items bake from frozen in 25 minutes or less. No mess, no cleanup. The team at Wild Grains sent my team a box of croissants, sourdough bread, Belgian waffles, cookies, ciabatta rolls and more. It's amazing how they came out of the oven tasting like they are fresh from the bakery. Are you ready to bring all your favorite foods right to your doorstep? Be sure to check out Wild Grain so you can begin building your own box of artisanal breads, pastas and pastries. For a limited time, Wild Grain is offering our listeners $30 off the first box, plus free croissants in every box when you go to wildgrain.com ramit to start your subscription. That's right. You heard me. Free croissants in every box, plus $30 off your first box when you go to wildgrain.com ramit that's wildgrain.com ramit. Or you can use the promo code ramit at checkout. You remember yellow pages? It's kind of wild to think that just recently there was a book with everyone's phone number and address dropped in front of your house. We don't have yellow pages really anymore, but people's personal information is still out there online. And that means you have to develop different ways to protect yourself. That is why I've partnered with deleteme, the sponsor of this week's episode. I'm going to tell you what delete me does, but I want you to know I personally pay for this service. I recommend it. Delete me will remove your name, age, address, phone number, relatives, names, all of it. Here's how it works. You sign up. You submit your information for removal. Delete me experts search for and start removing your personal information within seven days. You'll receive a detailed delete me report with what they found so far. And then they continue to scan and remove your personal information regularly and automatically. This is a service I personally use and I recommend it to all all my friends and family. So if you want to get your personal information removed from search results on the web, go to joindeleteme.com ramit for 20% off a plan for you or your entire family. Again, that's joindeleteme.com Ramit R A M I T. Welcome back. Let's keep going.

All right, let's keep moving. There's two people paying $1,900 a month for insurance totaling 3,800. Deepika, why are you paying $1,900 a month?

So the two columns are broken down by what's coming out of my paycheck and what's coming out of Justin's. A hundred percent of Justin's paycheck goes into our savings account.

Why does 100% of his paycheck go to savings?

We thought it might be a good way to boost our savings.

You guys didn't read my book, right?

Oh, I have the book. It's actually sitting right there. I read.

Pull it out. Pull it out. Show us. Okay, hold that book up close to the camera. Everybody look at this book. It's so pristine. There's not one mark. It's never been open. There's never been oxygen between those pages. That thing is still from the factory.

Look at that.

It's open for the first time. She just flipped through the pages. Wow. Wow, wow. That thing is perfect. That thing probably came right off my desk. I finished writing it. It shipped directly to you. Wow.

All right.

So I have to say, all jokes aside, you know, Deepika, you mentioned you worry. You take a lot of things on yourself. You have a book within arm's reach, but you haven't read it. I'm curious why I don't think we.

Realize the scope of our money troubles till we had our son and we can't seem to find the time.

Okay, that's an honest answer. All right, let's keep moving along the CSP here. Still don't understand why you're paying almost $4,000 a month in insurance.

So the insurance coming out of my paycheck is my health insurance. We have auto insurance, renters insurance, life insurance. That's the big one. We have two custom whole life policies and term insurance. Oh, man.

I'm just kidding. I'm trying to control my rage. I'm trying. I'm not a very good poker player. I'm.

I'm trying.

Like in my head, I'm like, oh, Ramit, so calm. Rico Suave over here. But apparently on camera, I'm like, God, there's no reason to buy whole life insurance. I have not found a single reason to. It's not an investment, it's insurance. And in fact, the best way to buy insurance, especially if you're a little one, is term life insurance. It's way cheaper. You're not paying all these stupid fees. And so like, the amount of money you're paying is like insane for me. Insane. All right, we're going to fix that too. Let's keep going. Your car payment is $1,863 per month. What is that?

It's 888 for the AMG.

What the hell? For all of you non car people like me wondering what an AMG is.

An AMG is a Mercedes.

And Justin bought it for $65,000. And as Deepika just said, their monthly payment is $888.

All other cars have no payments attached to them.

What's the thousand dollars then?

The EasyPass. The parking the car in Times Square every day.

Who goes to Times Square every day?

I do. I work there.

Just tell everyone how much it costs to park in Times Square every day.

It costs $30 a day to park there with toll and gas that you can add on $10 on top of that, and then, I don't know, $10 per day on gas.

So 50 bucks a day to drive?

Yeah.

You guys live where we live, in Queens.

Come on.

Is this a. Am I being punked right now? You drive from Queens to Times Square. Come on. That's a straight train.

I start so early, so my day starts at like 4:30. So the problem is getting a train from there at that time will either make me too early at work or too late. So I decided driving gets me there quicker.

Do you think it's a good financial decision?

No, but combined it's like 500 or $600 a month towards transportation. And I just felt like, hey, on top of everything else, I didn't think that that was the most expensive.

Do you understand the severity of the situation you are in with your finances?

Yes and no.

If you were an ER doc looking at somebody who came in the door and this is their, you know, their numbers. What do you see here?

Oh, yeah, this is like a trauma patient. Like, you're just bleeding and denying the fact that you're bleeding, eventually you will, you know, die. But at the same time, I think my brain is like, yeah, but life is still fairly good.

Okay, Deepika, what about you?

The parking situation is a perfect example of Justin living his rich life. I see this, and this is what stresses me. It feels like we are living paycheck to paycheck. And it stresses me because we just have the money we have, and then we wait for payday and we do it all over again.

The way that you approach money is not commensurate with the income you are making. You're not talking like a couple that makes $260,000 a year. And it's not commensurate with a couple that wants to grow their money for a specific purpose. The way that I hear it is like, oh, the lights are on and we still can eat out every so often. And like, that's great. That makes me happy. And Deepika's like, it's occasionally stressful, but we get through it. And I really just want him to get his business off the ground. Can we finish going through the fixed costs? And then I'm going to tell you what I see here.

Sure. Okay.

Your debt payments every month are $4,000. How can that be?

So we added our student loan payments of 250 and 250amonth to whatever we pay for Credit cards, which on average is about $3,500 a month.

Let's clarify something. When we talk about credit card debt, that would be debt that is revolving that you didn't pay off the first month. So maybe that changes things here.

Yeah, so then it would only be 500, because the only debt that we have is the student loan debt.

Okay, great.

Okay.

That considerably changes things. Oh, guys, this is like a big difference. It went from 98% to 72%.

Wow.

All right, well, that's positive. I'm never going to be mad at that. 98 to 72 is good.

Yeah.

All right, so you're paying 500 bucks a month in debt, but now we got to talk about some other stuff. So Your groceries are 800 bucks a month. That's fine. Clothes are 200 bucks a month. Whatever. That's fine. So all the money that you just mentioned, the $4,000 a month on credit cards, where did that go in this csp?

It's a combination of that last line item with the everything else and 500.

Bucks for everything else and guilt free. And.

And then that's what we were trying to figure out is we don't know what the. What the bleed is. We've looked at our credit card statements time and time again. We cannot figure out what is causing the revolving cycle of debt.

It's just hard for us, once we go line by line, to figure out am I doing too much Amazon spending or am I doing too much gas or a toll? And that's what we get lost. Where exactly are we spending too much?

So what I'm hearing from the two of you is, first off, I hear no vision for what to do with your money. It's like when we talk about money, we talk about, should I park in Times Square? It's like you're already jumping down into the weeds, and then that's where you both stay, right? And I bet you've been talking about that kind of stuff for a long time. It's almost like each person goes to their corner. Look, they're both nodding and smiling.

Sounds about right. For the first couple years of our marriage, his entire paycheck went to his family, so there was no finances. Justin actually didn't have credit until we got married. So his entire financial history comes after being married with me. And I'm not the most brilliant person when it comes to finances. I'm a business major. I've taken a few finance classes. I know just enough to make sure that the bills are paid every month. But we've reached this point in life where we're now thinking about it a lot, like, what happens now that we have a son, if we want to have another baby, we don't have the space in this home. We want to buy a house. So I'm trying to look at how do we maximize our income, And I think that's where our divide is happening, is I'm thinking about what's next now, and Justin is thinking about what's next, but from a very different lens.

You mentioned that he used to give his money to his family, which I understand culturally. And what about you, Deepika?

A lot of my money was also in the possession of his family. For a while there, we didn't really have any money to ourselves. It was only after a year and a half that we finally moved out of living with his family. And I had my own income then, but a lot of his income was still going to his family despite being moved out. His family is church. His father is a pastor, and they don't have many members. So a lot of the foundation expenses and all of those things come from within the family.

Whoa. Holy wow. Okay.

All right.

So along with that, I'm going to go out on a limb. There's a lot of religious things in the household, Control issues, those kinds of things as well.

Okay.

Are you still in touch with your family, Justin?

Not really. I mean, I'm in touch with my brothers, both my younger brother and my older brother.

And how about you, Deepika?

My parents aren't really around. Distant family also. Not really an active part of our lives either.

It's gotta be tough just for the two of you and your son to be kind of alone, trying to make this happen on your own.

That's what we struggle with a lot, is trying to create a better future for our son, but not really understanding how to do that. We live in Queens, New York, right on the border of Nassau county and Queens County. And Justin and I have always agreed that if we wanted to take our money and do something with it, we'd really want to buy a home, have stuff, space for our son. I want to be able to, you know, have pride in saying that. My husband owns his own business and is successful with it, and I can support him with, like, my own physical contribution of helping him lay the groundwork for that.

What about for you, Justin? What's the vision with money?

Kind of the same me and Deepika kind of agree on in terms of future goals and stuff, in terms of buying a home, having things saved up. For our son, whether it's for college funds or whether it's for him to have the things we didn't have, education wise. And then like she said, being able to have this business grow where we're bringing in a decent amount of income where we're not. Constantly, I work a lot of hours to make my income. I don't want to have to do that where I'm just a slave to the punch clock.

So you make $260,000 a year. It's a lot of money. Your housing costs are very low. And for a couple that has this income, it doesn't seem like you're really getting ahead. I can see that because you don't have any dedicated savings per month, you don't have any dedicated investments per month. And you have told me that you are constantly in a cycle of getting into credit card debt and then paying it off. But I can also hear it just from the way you talk about money. There's several clues. The clue about how Deepika is the one who manages the money, but even she admits she's not particularly good at it. Justin is happy. He talks about money, but he's not in the day to day. And when you do talk about money, from what you've told me, it sounds like you go down into the weeds, both of you, quite frequently and stay there. When I ask about what the vision is, the vision is quite typical, but there's no plans on how to get there. Okay. And what is, I think kind of a big red flag for me is the certain expenses which you haven't been able to find out for like three years. The insurance, the car payment, these are red flags that if you can't get the basic blocking and tackling of your money done, then it'll be very difficult, especially in today's time, to buy a house. So I'm glad that it's not 98% fixed costs, but there's a lot of layers here. Can we just kind of like reset the whole thing?

We'll be right back after this short break.

As part of my rich life, I.

Have 10 money rules. And one of those rules is I can spend guilt free on anything relating to my health. That means healthier foods, working with a personal trainer and buying books or courses on improving health and wellness. But it also means that I stay on top of regular health checkups. And finding a good doctor in network is incredibly difficult. That's why if I were looking for a new doctor or a specialist, I.

Would use the sponsor of this week's.

Episode 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. Book in network appointments with more than 100,000 doctors across every specialty including mental health, dental health, primary care, urgent care and more and you can use the app filter for doctors who take your insurance and are located nearby. Appointments made through Zocdoc also happen fast, typically within 24 to 72 hours of booking. Sometimes they even offer same day appointments. If I needed to find a doctor today, this is what I would use. So stop putting off those doctor's appointments. Go to zocdoc.com ramit to find an instantly book a top rated doctor today. That's z o c-o c.com ramit zocdoc.com/ramit I really want to help you get in control of your email and I'm going to share a tool I use and I personally pay for it. Is that good? If you open up your email right now, you have tens or hundreds or even thousands of emails. I'm not going to judge you. It's easy to get overwhelmed with emails. I know I do because I get thousands of emails. But I'm able to stay on top of them because I use a tool called Superhuman and this is some of the best money that I've spent on technology. That's because their tool lets me reply to emails incredibly fast and they've built in all kinds of features that makes it almost automatic. As an example, I was on safari in Tanzania. Limited Internet access. Once in a while I needed to respond to an email even if I was offline. I could write it and then it would automatically handle sending it once it reconnected. Superhuman easily saves me over 10 hours a week by making my email less cluttered. I use their keyboard shortcuts which are built into everything, and I can easily go through 50 emails in minutes this way. To me this is a complete no brainer. You use email every single day. Use it from your desktop, from your mobile. Get the best tool. It is absolutely worth it. Right now all IWT listeners get a free month of Superhuman and you can get started@superhuman.com ramit that is superhuman.com ramit R A M I T.

Let'S get back to the conversation. If you had a blank slate, where would your money be going? What is your rich life?

Going on vacation twice a year and not having to worry about credit card debt when we come back.

Okay, what else?

I would love to Have a large home where my son can bring all his friends. I can have another child and not have to worry about where I'm going to put this child and be able to entertain all of our friends and family and not have to worry about space.

How about with Justin?

I would love for him to continue driving to Times Square every day if that's what makes him happy. But aside from that, I think if he had the resources to be able to invest into his own business and have his vision come true with what he wants to do, nothing would make me happier.

All right, I like it. Justin, what about you? What's your rich life?

Being able to provide for my son without worrying about where that money is going to come from. Owning a nice home, entertaining, and then being able to put money into the business where it brings more money back.

Vermeet, you also have to understand that for the first few years of our marriage, we weren't allowed to have dreams. We were brought up in a culture where it was all about the church and the family, and that was it. You weren't allowed to have dreams outside. You weren't allowed to go anywhere. You weren't allowed to travel. You weren't allowed to think of leaving. So what? Sounds like basic small dreams. It's everything we've dreamed of for our entire life, and we're content with that. But the fact that we are in a place of our own right now and, you know, our son isn't subject to that kind of life, that's. That's a miracle in itself.

Listen, I love it, and I totally appreciate you giving me the context of where you both came from. So one of the things that I love is hearing what people's rich life is. And it's a good reminder, because sometimes I hear their rich life and I'll tell them, I'm like, that's too small in your case. I saw it on your face, Both of you nodding and smiling and like, this is what we want.

Okay.

Love it. We can totally work with this. And I think that as we start to take the dream, the vision of a rich life, and then look at how your numbers are or are not serving that vision, it's going to become a lot easier to decide what to do and what not to do. Okay, so hearing your rich life vision, do you think that you are currently spending your money to live it?

Absolutely not.

What we end up doing is tapping into the savings to pay the credit card bill, which it. It. Essentially, we're just taking Justin's paycheck and Using it to pay the expenses that we have. So we just let it accrue and then use what we could have been using the entire time to pay the credit card.

How many years has that been going on?

It's been about two, two and a half years.

To me, this is what is indicative of one of the challenges here, which is like, you tried an approach and it didn't work. Now that's normal. Like, we're all going to try stuff at life and it's not going to work.

That's totally normal.

But it went on for two years. That's a long time to basically have one of the major pillars of your strategy for your rich life.

Not work.

One month. Fine. Even six months. Fine. Two years. Too long. Three years to figure out this utility thing. Too long. There's no real incentive to change. Right?

True. Yeah.

And in fact, what was the real singular moment in the last five years of your relationship when you actually changed around? Money.

I think it was once we had our son.

Exactly.

This is how most people are with money. They pretty much ignore it. As long as it's running and they can swipe their card, they're fine. Until two things happen. They have kids and they turn 40, and that's the only time most people wake up until roughly around the age of 60 or so. Imagine that we work our entire lives and we pay attention in real urgent terms maybe three to five times in our entire life. If it's me, I go, okay, I accept. Human nature. But I better make those times count. If I'm paying attention when my son is born, then I better set up my system so that it works for the next 25 years. Because odds are I'm not going to pay attention much at all. You've told me that your money is not being spent towards your rich life vision. What do you think's the solution here?

It seems like the folks around us have been able to figure this out and we just haven't. And maybe the answer is so obvious it's right in front of me, but we have not been able to figure out what the change is that we need to make.

Take your right hand. Hold it up. Now reach over and grab that book that you put on your desk for a second. Maybe the answer's right in front of me. I couldn't have scripted it better myself. It's not about me. All jokes aside, it's not about me forcing you to read my book or anything like that. It's not about that. What it is about is your very astute observation that everybody around you seems to have figured it out. And candidly, at $260,000, you could actually be doing all of those things. And yet you designed a byzantine process which doesn't work and hasn't worked for years. Instead of reading a book that you have literally at your desk. What you told me is achievable, but it would require a lot of changes.

We're willing to make them right now. The only solutions that I can see in front of me and the ones that we just keep discussing are, you know, how do we get Justin to stop driving or how do we decrease this particular cost? We know what the bigger picture is. We just don't know how to get there.

I think we need to appreciate that.

Deepika and Justin are really just starting their journey around money.

And when we hear the details about.

Their past, like how they didn't have control of their own money because of their ties to their former church, we can start to develop a little bit of compassion for where they are today. Neither of them had positive role models when it comes to money. So the first step is to help them, making some foundational habits and then to build some accountability around their spending.

One helpful strategy is to focus on the biggest red flags. First for me, when I look at.

Their csp, I'm really curious about their housing situation. They live in a high cost area, but they have low housing costs. So I want to know what's going on here.

Is there anything about your house, the rent that you were concerned about?

My mother moved into this house in 1996 and the rent was less than $1,000 and has gone up with inflation over the last 26 years. The rent is so low that we can't justify leaving, but we're in a position where the landlord has also gotten 26, 28 years older. He's no spring chicken. We're in this very worried situation that if, God forbid, anything were to happen to him either, we don't know if whoever will take it after that is going to up our rent. Are they going to kick us out? Are they going to sell the house? What do we do at that point? And I feel like that's what's also putting us in this hot water to say, what? What are we going to do next?

What would you do if it happened tomorrow?

I would probably start looking on Zillow for other places to rent because we just don't have the down payment to buy a home, especially not in Nassau County, New York.

Renting to U.S. makes sense only because the high cost of down payment plus taxes, plus the mortgage, it's just way too much. So the next step would be like, how can we allocate money towards a new rent payment?

Yeah, but where's the money coming from?

Whatever I was putting into savings now would go directly to pay for.

The money's not really going into savings. It's getting spent anyway. So where would it come from?

More hours at work.

You grew up poor.

Actually, yes.

It's a common thing for people who grew up poor. Their answer is, if something doesn't work with my money, just grind it out. Especially for men.

Before we had. That's all I used to do. I used to be the breadwinner in the family and. But I would never be home. When we got married, I saw my wife for like four hours per day, and that was because she was sleeping. And I come home, take a shower, and go right back to work.

I understand that sometimes we have to. I don't understand keeping that same mindset when you have a household income of $260,000 and housing costs of 10%. It just doesn't make any sense. You don't have to keep grinding when there are so many other ways to put your money to work for you. And one of the reasons I started this podcast and started my entire body of work is that money isn't this mystical thing that only wealthy people have knowledge about. I want people to know this stuff because when you finally understand it, you're like, oh, wait a minute, it's totally achievable. And it's actually not that hard right now. That's not what I'm hearing from you. Like, you could make a million dollars tomorrow and you would not invest that money. It would get sucked up into your finances and you still wouldn't be living the rich life until you change this and until you change your numbers. Okay, let me tell you what I would do if it were me. I would, first off, crystallize the vision.

Of what we both want.

I think the house is a nice thing to put down on paper, but it's probably not going to happen today or tomorrow. It's a very long term aspiration. But you want to have a rich life vision that includes what you're doing to live a rich life today and what you're doing to live a rich life tomorrow. So it might be, you know, we want to. We want to have date night twice a month. Great. Fantastic. I would next up talk about how we want to get there, and I would recalibrate the Workload Right now you have a very unhealthy dynamic where Deepika does all the work and Justin, you're not involved in the day to day finances. So that actually puts the two of you at odds. You've got to get together and start going through from your vision to the numbers. That means that you've got to both have skin in the game. How would I do that? I would next decide. We're going to get educated about money. Right now. The two of you are not educated about money, Right. You have the book there. I would say once a week we're going to spend an hour talking about this book and start to change your financial system to be more aligned, more together. Finally, on the more directive side, immediately, I would fix the utilities thing. If you are stuck and at the end of your rope, I would either go into your employer and ask if they have somebody who can help. If necessary, hire a lawyer. That's it. Have them deal with it, pay them.

A little bit of money, but get.

That fixed right away. Okay, Next, insurance. I would cancel the whole life immediately. I would take that money and redirect it. Where would that money go?

It would probably go towards one of the investments that we should be making.

Correct?

I agree. I think that's right on. And certainly if I knew that my housing is at the whim of elderly landlord, I would be putting aside money because I know that I'm going to be either evicted or my rent is going to go up spectacularly. Couple of other things. I would sell every vehicle except maybe one. Furthermore, I don't understand driving to Times Square. That just doesn't make any sense to me at all. How long, how long have you two been debating this times square thing?

11 years.

11 years. The reason you're debating it for so long is it's become part of your identity and it's become part of your identity because you have no vision to look towards and make the decision. A vision helps you make these decisions so easily. You don't even almost have to think about it. After a while, your vision makes the decision for you. So if your vision is, we want to buy a house one day, then spending 1500 bucks a month on parking does not contribute to that vision. Okay, one last thing. This event space, it just seems like such a mess to me. Like there's no good that can come out of it. Because even if you win with all the work you've put in, even if you start to generate a ton of money, it's tied in with other people who Are not contributing as much. But if I'm looking for a fresh start where we are hyper focused on the rich life, I would not be doing that. It's a distraction. Sometimes there's no shame in saying, hey, this isn't the right thing for me. I'm gonna scrap it and start something else later. But first things first. I wanna get financially stable. I wanna start building and living our rich life. Lot to take in there. What's your initial reaction?

You are absolutely correct. But making those steps, I feel like, is gonna be the hardest.

How old is your son?

Two and a half.

What do you think he's gonna learn about money as he gets a little bit older?

I don't know, but I would want him to learn that it's not something that he should be stressed about.

Really? His mom, the one who's stressed, wants him to learn that?

Yeah, I want him to not be stressed like I am.

If nothing changes for the two of you when it comes to your money, business, et cetera, and let's just fast forward three years. What would he learn about money from his parents?

He would just think like, money is such a hot topic, meaning in terms of it creates problems. He would not want to talk about it. He'd try to shy away from it. I think he would grow up the same way we grew up thinking about money, which was, money is for rich people and you have to work super hard to get it.

A lot of the arguments that we have, if it's not money time, it's either Justin's working too much or I'm working too much. And there's very little time it feels that we can spend together as a family, just doing family things. When it comes to money. I just feel like it's one less thing on his plate. And I'm realizing maybe it does need to be on his plate. It needs to be on our plate. And all of those things that we've been tabling in terms of the investments and all the high yield savings accounts that we've talked about, like, maybe we should just pull the trigger and do it.

Both of you have created this kind of vortex where you're both totally indecisive about making decisions which to me are so minor in a grand scheme of what you're trying to accomplish. And you've totally missed the big picture, the stuff that's important. Like, what's your son gonna pick up on with money? He's gonna pick up that moms are the ones who are supposed to be stressed about money. And dads are carefree, then it passes down generation to generation. What a tragedy, especially coming from a family that makes $260,000 a year to be stressed out about money with 10% housing costs. All because you have this narrative that you tell about we don't have time. That's not true. So, I mean, you can make a change. I'm not sure how serious you are about it, because you'd have to change a lot.

This is the first time I think we've gotten guidance that is giving us a roadmap.

Here's what I want to do. I will speak to you again, but not before you finish the book. And I would like to see what specific changes you have made. And if you'd like to speak again, we can actually get into so much more. You have everything you need in front of you with the book, et cetera. I'd like for you to solve the question of the insurance, the utilities, the car payment. All that stuff needs to go way down. And from looking at your numbers, you actually probably would be able to bring your fixed cost down, I don't know, 48 to 55%. That's, like, really good. That's a lot of money. That's thousands of dollars every month that you could be using for investments and savings. And finally, I'd like for you to make a definitive decision about this business. To me, I'd rather have you just literally close the whole thing up. And even if a year or two later, you're like, oh, my God, I want to buy that place again, because now I'm in a better place. I took some business classes, et cetera. It's going to cost me more. Fine. At least you started to get decisive. But you can't go through the rest of your life just like, waiting for somebody to come and tell you what to do. It's not going to happen. It's the two of you. Would you both like to talk again?

Oh, yeah, absolutely.

All right.

I love it when my guests accept a big challenge. We made some good progress today, but Justin and Deepika have a lot of work ahead of them, and they don't really have a concept of spending money in a meaningful way, which is why I challenge them to work through my entire book one chapter at a time. We only really scratched the surface in today's conversation, and I think we can go a lot deeper once they understand the basics so that they can actually develop a rich life vision. And I have very good news. I'm delighted to share that Justin and Deepika were up to the challenge. They sent several updates along the way, keeping us updated with their progress. And let me tell you, they accomplished a lot. Listen as they share what they learned and the big changes they made.

So we're on week three and I actually feel like we've been making some pretty good progress. The financial conversations have been almost daily now. We've made some major decisions that we are acting on right now. The first one is we've decided to cancel our custom whole life policy that is currently accounting for close to 1400amonth in our budget. We do have other term life and whole life policies that are currently in effect. So it's not like we're foregoing life insurance completely. We also spoke to a lawyer about our conison case. Unfortunately, it doesn't seem like there is anything that we can do unless there's a class action. But we did flag down an actual conison guy yesterday to take a look at our bill. Look at our meters. This month's bill wasn't too bad. It was still pretty egregious at 365. But he told us that when the bill gets crazy, have someone come in to do the audit then and they'll be able to tell us in comparison to our neighbors, where we stand and all that we are chugging along. I've also opened a high yield savings account based on the book we went with Marcus by Goldman Sachs. Justin is also transitioning his paycheck back to our checking account. And we have put together a spreadsheet that helps us figure out what the monthly costs are, what account they're coming from, the date that they're coming out Just to help us budget a little bit better. I think we're making some pretty good progress. This is the end of week three.

Hey guys, Just an update on this week and what we've done so far. So we've sold one of two cars. We also put my paycheck into the checking account so that we can manage it. And we created envelopes so that we can put money towards our savings goals. We also created a to do list. We did it individually. So on mine created some to do list. One of which is change car payment to the first of the month so that this way when the paycheck comes, it can slowly start taking it out in the first of the month as well as some other payments. Also need to inquire about health insurance and why it's so much money coming out of my paycheck. Canceled one of my credit cards. It's not really doing much in terms of points and benefits. So gonna get rid of that one. And that's about it so far.

What we've done as promised, I agreed.

To meet up with Deepika and Justin after they finished my book. About six weeks have passed since the time we filmed our initial session and the follow up interview, which we'll dig into right after this short break from our sponsors. Okay, look, there are a lot of things people tell you you should do and you don't.

I'm not going to sit here and.

Lecture you about flossing your teeth. But there are important things that we ignore and I want you to get these right. Imagine if you will, that you have just suffered your premature death and now your husband or wife, they're grieving, sitting at the dining room table trying to figure out how to log into your E Trade account while the tears are fall down and soak your keyboard. If you don't set up a will before you die, you're definitely going to be seeing this scene happen from hell. And that's why I'm so happy to announce that Trust and will makes creating your will easy. You can actually get 10% off@trustandwill.com Ramit my coworker recently created a will for her family on trust and will and here's what she told me. It was incredibly easy. Very straightforward. I followed very simple prompts to fill out all of my personal info, my family, beneficiaries, assets, et cetera. In less than an hour I had a will, power of attorney documents, last will and testament, and HIPAA authorizations. I can download these docs, have them executed, or even hire an attorney to look over them for me. Now, I personally used an attorney for my own estate plan, but I recognize that not everyone has access to an estate attorney. If that's you, trust and will is a great option. It makes estate planning accessible and affordable. You can save loved ones time and stress by having all of your documents in one place and they are safe and encrypted. They also have live customer support available through phone, chat and email. Let trust and will uncomplicate the process for you. Protect what matters most in minutes@trustandwill.com ramit and get 10% off plus free shipping. That's 10% off and free shipping@trustandwill.com ramIT all right, back to Justin and Deepika. Welcome back. It's so good to see you in person. From what I understand, you read the book. You sent in videos documenting your progress and I'm told You've made some changes to your finances, which we're gonna go through today. What happened? Right after our conversation, we set aside.

Weekend time, and we said, okay, after our son goes to bed. Like, we have our assignments for the week. So I created, like, a little shared note on our phones, and it was, here are our financial to do's for the week. So I think we came to the conclusion that I still need to lead the charge just because I have a little bit more flexibility. But as long as we know what.

We need to do and we're keeping.

On track, we'll be okay.

Amazing. How long did it take before you felt like you were making specific, concrete progress with your numbers?

Like, literally one week?

Yeah, one week.

What happened?

The first thing we did was the life insurance policies.

How much were you spending again?

Combined? Almost 1400amonth. So that right there saved us 1400amonth.

That's a lot of money. And then what'd you do when you had that extra 1400 per month?

We made sure. It's not extra money. It's just money that we need to reallocate.

Whoa. Okay.

Yeah.

I think I feel something. For the first time in my life. It's my heart.

Oh, my God.

Okay. That's amazing. And you did that together?

Yeah.

Yeah.

What did it feel like to go through this process and decide what to do with this extra money?

We felt like adults. Once you start being like, hey, no, you need to reallocate money. You need to put stuff away. You just feel like, I'm doing things properly in life, and it kind of.

Scares you because you're like, this is.

What order feels like.

That's scary.

Good scary in the sense of, like, you're getting your life together.

Some people, at least in our circle, their parents have set a very good financial example for them on, like, this is what your money should do for you. This is how you should be allocating your expenses. This is how you should be wisely spending. And I don't really think either of us had that. So for us, it's like, the second you get a dollar, it's, oh, my God, it's a dollar. Oh, what can we do with this dollar? And it's that one dollar brought us joy, but then it was this fleeting joy. So now it's like, now the dollar can work for us, and we know where to put our dollars.

That's kind of an amazing transformation. Just that part alone of going, from the minute we make money, we're going to spend it. That's a very Childlike approach.

Right.

But the magical part is that you switched it. Allocation. It sounds like such a boring word, but it's. For me, it's going from passively going through life to leaning forward and saying, like, we have this pot of money. How do we want to use it in our rich life? Could be vacations, could be eating out, could be cutting back on xyz, but you get to decide.

Okay.

What surprised you about going through the book?

There's so much bad financial advice out there that I think it's sometimes easy to get swept up in that. But to have everything in an easy to understand format just made our life a whole lot easier.

Well, thank you. I'm happy to hear that. Because my hope is that when you start to internalize that, you go, oh, my God. It's supposed to be simple. It's supposed to be boring and pretty straightforward. And then you start to see your savings account build up and all this debt get paid off. You go, wait a second. Maybe that's how a lot of things in life are supposed to be.

Right?

Yeah.

Awesome. Okay.

You go through the book, you reallocate your money. What happened next?

You flagged down the Con Edison guy on the street?

Freaking AC thing or whatever. Tell me. I've been waiting.

Unfortunately, he went through. He looked at our bills. He came into the house, and he was like, what do you have? What's going on here? He saw that all of our stuff is, you know, up to date. He's like, unfortunately, you're spending the same amount of money that a lot of people are spending. You're paying the normal amount, which happens to be exuberant.

He gave us actual steps about what to do if the bill gets exuberantly high. So we know what we have to do if we see that bill go beyond, like, 6, 700.

Now, what's striking to me is that when we talked, this bill had been around for years, and nobody got around to talking about it. And I was like, what is going on? How can you not find an answer to this? Now you went out and grabbed that Con Ed guy with, like, a freaking. One of those stage things. You're like, get in here. Like, that is another amazing change. Where did that come from?

Well, I just saw him on the.

Street, and I was just like, hey, can you come here? And he was like, I got nothing better to do.

Okay.

Yeah, but that never happened, like, for.

The last four years after talking with you. And then we started making actionable steps. Something in your brain's like, I'm on the verge of saving money. I want to talk to this guy to save more money.

Bingo.

I might have never noticed him.

This is what people mean when they say, you know, you create your own luck. When I hear that phrase, what it says to me is, it's almost like I put on a new set of lenses and I'm looking at the same world, but I'm seeing opportunities now that I would have missed before. I think that's exactly what's happening. Okay, amazing. My next question is about driving. Did you drive here today?

Yes.

Love this reaction already. Who drove?

I drove, man.

Where'd you park?

Times Square.

How much was it today again? Just remind us all $30. And you were paying like 30 times 24 or whatever when we last talked, right?

Yes.

What are you paying now?

I'm paying the same thing.

Okay, well, not everything's gonna be solved, all right? I guess it all comes down to can you afford it like it is obviously a pure luxury if you can afford it.

There were a.

There was a day or two between when we spoke, and now that he did try to take the bus and the train, it was a time versus money situation. It took him two hours in the morning to get to work, and then two hours to come back.

Well, we're going to look at the numbers and we'll see how it plays out. But what I will say is, I like that the two of you have talked about it. I like that you are making decisions by thinking about the trade offs. Not sure I agree with this decision, but it's not my money. It's not my rich life. So as long as the numbers work out, it's not my place to pass judgment. What else happened with your conversation since we last talked?

He did sell one of the cars, I think, two weeks after we had a conversation, which was amazing. Whoa, don't clop yet. Two weeks ago, a new car showed up in the driveway. It was an ice cream van from London.

What?

It was supposed to be his work hauling vehicle, which he purchased before we even spoke to you the first time.

Did you ever consider renting? Yeah. You did?

Yeah.

But you bought an ice cream vehicle instead.

If you rent the same size vehicle from a U Haul because they charge you by mile, it adds up to a lease payment.

The good part that I wanted to share despite all this was when this ice cream van shows up, I was like, you've got to be kidding me. We just spoke to Ramit about this. We said we weren't gonna be doing any more of these crazy Car purchases. And he's like, well, I got the car before the conversation, and it just took over a month to ship. It took only one argument, but then he agreed. He was like, no, you're right. I think we need to sell this car.

Wow.

So you basically are one car down and one truck up. Yeah.

Right.

Some of the logic doesn't make any sense to me, but I appreciate that you recognize, hey, you got to sell one of these vehicles.

That's cool.

And again, people make decisions, certainly before you talk to me and before you got, you know, really educated about money. The goal with a rich life is not to avoid any bad decisions. The goal is to make educated decisions as much as possible and to know that, hey, we're going to make mistakes once in a while, that's okay. As long as they are recoverable and as long as we catch them, we can almost always correct them.

Right?

Honestly, speaking with Deepika and Justin this time around almost feels like I'm talking to an entirely different couple. Remember, just a short time ago, they could not answer simple questions about where their money was going. They had no idea why they were in the red every month, and they weren't taking any accountability for their choices. They now they are proactive instead of reactive. They are living proof of how much you can change when you make it a priority. This is why I do what I do. To be able to help a couple or an individual get out of a rut and change the entire way they look at money is magic. In our first conversation, we spent a lot of time talking about Justin's side hustle with this building. Now, considering the messy family dynamic, I suggested that Justin cut his losses. I'm pretty interested to hear what he decided to do. What happened to the family dynamics around the space?

Put it all to the side.

I don't get involved.

I don't do anything anymore.

What'd they say?

If the money's not making sense, I don't want to be a part of this. The LLC is there, but no money's going into venue, family, or anything like that.

Well, I have to say, I commend you. That's quite amazing. You were doing that for a long time.

After understanding the system, you're just like, stop. Why? Yeah, just like, kind of need to, like, pull that band aid and be like, stop.

Cool. What do you say we look at your csp? How did it feel to do the next csp, the second one that we're about to look at?

That was really exciting, actually, because the end number was Within a hundred bucks, I think, of our total income every month.

Meaning you made a bunch of changes, and then the number that you ended up seeing was almost identical to how much you're making.

Yeah.

So you knew that you basically got it like the puzzle pieces fit.

It made sense.

Yeah. Right.

Is that the first time that your money made sense to you?

Yeah, yeah, yeah, yeah.

That's amazing.

Half the time we were like, where's my money?

We were like, here's the money, and this is where it's going. And it was a phenomenal feeling.

Yes. That's what I describe as a simple, beautiful system that you deeply understand. We're going to take a look at the numbers now. So here we have your net worth before the book, $111,000. And your net worth afterwards. How the hell did you get $70,000 more in a few months?

In the original CSP, we did not properly calculate our assets.

What does that tell you?

Meaning the fact that you before counted $5,000 in assets. Now you have $72,000 in assets.

I don't think we realize just how much we are worth.

Right.

And if you needed to, what could you do with those assets?

You could liquidate.

Yes.

Their actual value.

Right, Right.

Maybe you would take a haircut.

Fine.

But that's real value. Meaning if you need more money, they're there.

Yeah.

Good to know. Really important. All right, cool. I noticed that your Savings went up $2,000.

Great.

Okay. Very good. How come your investments are at exactly the same amount?

Oh, admittedly, we actually didn't go in to take a look at our updated 401k numbers.

What?

That's like, the first thing. That's for me. That's what I do on my birthday.

Okay.

It's probably actually a little bit higher now.

I don't mind.

At least it's going in the correct direction.

Yeah.

Fine.

Let's look at the income.

So the income has not changed. I don't expect it to. Fine. But you know what has changed is your fixed cost number.

Whoa.

Okay, so before it was 98%, which means you're broke. You're spending more than you make every month here. Today your fixed costs are 63% now. That is amazing. What happened?

The main thing that probably accounted for that was the insurance. Once we killed the whole life.

So take a look at this. You went from paying $3,800 a month in insurance to $2,500 a month. Why is it still 2,500 bucks for insurance?

It's the 1900, which is still coming from his paycheck, his health insurance, and union dues and all lumped into one category.

Okay, okay, okay.

All right.

That seems really high to me. How much are your union dues?

600.

600Amonth.

Okay.

And then on top of that, the company takes out, like, 12, 1600 or something like that.

For health insurance?

For health insurance?

No, it's like 1300.

Yeah, 13.

But altogether, it was, like, a ridiculous amount of money, and it feels like it's something that we can't get rid of. It's like one of those fixed costs that you have to pay unless you quit your job.

Something's not right here. Because really, if you really look at it, look at these numbers here. Justin, you're making 7,600. You're taking home 4,600. But if we subtract out another roughly 2,000, you're basically making no money.

Right. 25.

Like, why would you work here? Okay, yes, withholding can be a confusing part of your conscious spending plan, but it is worth your time to really examine what is happening. What is being deducted?

And.

And just considering, does it all make sense? According to their conscious spending plan, over 65% of Justin's gross income is being withheld for taxes, union dues, and health insurance, which is insanely high. That doesn't make any sense. Why would anyone want to work somewhere that was withholding 65% of their income? So I pressed them to think a little bit harder about this, and I'm glad they did, because listen to the realization that Deepika had.

So, yeah, the 1900 is coming out from the 7600. So I double counted it.

Okay, let's fix it right now.

Okay.

How much should this be? This just should be zeroed out.

Right?

So literally, just remove that and then it's accurate.

Yeah.

Okay, watch this. Okay, look at this. Watch what happens. Your number is 63% right now. Right. Okay, I'm going to zero it out. What'd that number drop down to right there?

Oh, wow.

49.

49%. This is one of the lowest numbers I've seen on this podcast. What does it tell you?

Our fixed costs are very low, which means there's a lot of room for opportunity.

Yes. And really important to get your numbers right.

Yeah.

Right, right, right.

I just want to take a second and just really compliment you.

Look at this. That's insane.

You went from 98%, and you are now at 49%. What's going through your head right now?

There's a lot more to Reallocate.

Wow.

I don't even have words right now.

What I notice is that first off, when you take gross net, all these exemptions and insurance and all that stuff, it's complicated. Especially if you never learned about this stuff. What was happening is you were double counting insurance. But when we took out the double count, the extra 16 or 1,900, we're now at fixed costs of 49%. What this means to me is your fixed costs are well under control, meaning your rent, mortgage is well under control. Your additional expenses are fairly minor. There are a few things that jump out of the page for me, but candidly, at 49%, it's up to you. You can do whatever you want. You want to buy the ice cream truck? If you can afford it, which you can here, at least. Fantastic. At 49%, it gives you room to allocate for your future. Okay. It should make you feel a little bit more at ease. Yeah, it's kind of interesting, right? The minute we start leaning forward with our finances, we start to see more and more opportunities. How long would you have gone on worrying about money if we didn't talk to you?

Probably till the end of eternity.

I agree.

But more importantly, we got the chance to talk right now only because you followed up and you did your homework. So I'm thankful that you did that. Okay, let's keep going. Car payment is 1800 bucks. That includes all transportation. Now this is where we realize, like, you can afford it. From a day to day perspective, you're at 49%. If it were me, I might recategorize it slightly just to see. I might put parking in guilt free spending and I might have parking come out of your individual guilt free spending because it is a personal luxury for you, not for the two of you. It's you again. If you can afford it, fine. I like to categorize things properly because it sets the right incentives. Okay, cool. Debt payments at 500. What's that for student loans?

250 for each of us.

Uhhuh. And. But your debt is $43,000.

Okay.

Which is the total combined student loan debt.

It's not enough. Not in my mind can help it.

Look at this.

When we talked the first time, it was a lot of I don't know what's happening. Like I don't know that. And now we can up it. Just simple, Give me my phone, I'll.

Do it right now.

Oh my God. Hang on to that thought. So if you were to add an extra a hundred bucks a month, 200 bucks a month. You would quickly see how fast that debt would be paid off. It would come down by years. You should run the debt payoff calculation and decide. The fact is you have extra money. That's one place that you probably should redirect it. Okay, let's look at the risk. Investments are at 8%.

Okay.

So you have pre tax investments as well.

Yeah, that's my 401. We both have accounts that we've opened up post meeting with you to do additional investments. So we thought 250 was a good starting point. And apparently we have more money, so maybe that number will change.

Love what you did. You said, look, let's just get started. That's the hardest part is just getting from that first dollar going in every month. You did that and now I love your reaction. Oh my God. Looks like we can invest more. That's the way. Now what's interesting is your savings goals are at 18% of net. That's really high. That's higher than most.

I see.

It's also considerably higher than your investments, which is kind of interesting to me. Let's look at what you have. Vacations at 250amonth. Okay. Gifts at 250amonth. Emergency fund at 250amonth, which is interesting because you already have $40,000 in savings.

We took 30,000 and we put it in a high yield savings account and we left 10,000 in our normal savings savings account. The high yield savings account is the safety blanket. The emergency fund is if we actually have an emergency where we need cash. I think we often run into times where we're like, we need money quick. Let's say the brakes on the car cost $1,500 a pop. We need money for this. I'm not taking it out of the high yield savings account.

I just want to cut in here because we're now talking about multiple savings accounts and it's getting confusing. The important thing to remember is that they are currently saving 18% of their net inc. And investing only 8%. Now with the goals of saving for a home, it makes sense that they.

Have increased their savings goal.

But their system is still overly complicated and they are prioritizing short term savings over long term investments. Everybody, please remember, saving money is not enough. The only way to truly grow your money is through investing. So listen as I challenge them to rethink their approach. All right, first of all, I like that you are planning ahead. That's super sophisticated. That's what differentiates people living a rich life and many other People is people living a rich life. Plan for things before they need to. Okay, so amazing. You have $250 a month going to an emergency fund and $500 a month going to what you call a high yield savings account. Okay. You also have $30,000 in your emergency fund.

Yeah.

So there's like a lot of cash flowing around here. If it were me first, I would never call something a high yield savings account. You want to name it? Vividly. Don't even call something vacation. Call it Santorini Dreamtrip.

Interesting.

Okay. Because every time you look at it, you know exactly what it's for. And even emergency fund, it might be, you know, break in case of emergency. And you just look at it, you feel safe.

Yeah.

Okay.

For so long, we would pay off credit cards from our savings account.

Yeah.

Because his paycheck was going into savings.

I get it. It's like evolution. So, like, you ever see, like, the ugliest fish in the ocean? It's like a blob fish. Have you ever seen what this thing looks like? It looks horrific. Okay. I don't know what freaking animal that evolved from, but whatever animal was probably even uglier. And then it evolved into what it is today, a blobfish. I'm kind of like, if I were going to create an animal, I would just create a brand new animal. I wouldn't have it evolved from something ugly. I know you're wondering what the is this guy talking about? Stick with me. You went from this system that you used to have, which was very confusing, and you evolved it to this. But maybe we can just erase all that legacy and come up with a better system altogether.

Yeah.

Okay.

Okay. How much do you keep in your.

Checking account after all the money comes out? I like to leave a little safety net of 2000.

I find this with people who make a lot of money and they had like a past where they didn't make a lot of money. They in many ways still have these feelings of scarcity. So, like, when you didn't make a lot of money, they didn't have extra money to sit around and keep it in there checking. But now you make 260k and, you know, you have these different expenses and money outflowing. And sometimes I go, you know, one of the reasons you feel scarce about money is you just don't have a lot and you're checking. And a lot of people derive their feelings about money purely from their checking account. So I go, why don't you just increase your checking account by 5000 bucks? And often you'll find one person in the relationship who's in. Look at that. That's you, the optimizer. Who says.

Say it.

Oh, my God. That's so scary.

Why?

It just feels like that's too much.

Okay. Why?

I see the money in the checking account. That is spendable money.

That was in the past, Right. What about today?

I do feel less stressed now that his money is going into checking. Yeah.

Funny how that works. In your monthly money meeting, I would write down the definition. What is an emergency? Here's specifically, what is an emergency and what is not. And then secondly, okay, we want to have a blanket. How much do we need in this blanket account? Let's pick a number. And what counts as being used for the blanket, such as brakes need to get repaired, et cetera, et cetera. What does not count. And when you look at the two of them, they should make sense. The blanket should be kind of like petty cash, specific things. And your emergency fund should be true emergencies. Okay. The best part about that is you're going to know how much you need. That's also going to free up some money, because I don't think you need to be continuing to fund your emergency fund. And what's this expense that did not exist last time? Tithing.

Oh, yes. That was one that I realized I had left off. We do $150 every week to church in tithe.

So you were doing this last time we talked, but it didn't show up on the csp.

I didn't think about the tithing.

Yeah, because it's just like. It's like breathing air.

Yeah.

Okay. And you're doing 600 bucks a month. And how important is this to you on a scale of 1 to 10? A 10?

I'd say a 10.

Wow. If it's a 10 most of the time, we can find a way to make it work. You just have to make other choices. Fine.

All right.

Amazon, et cetera, is 500 bucks. Okay. You're in pretty good shape in terms of just cash flow on a monthly basis. And the primary reason for that is your fixed costs are so low. That allows you to. To tithe. It allows you to pay daycare, even though you cut that in half, which is great. And it allows you to save and invest money. Fantastic. Can we talk about what the future looks like?

Yeah.

Yeah.

So I looked at some of your investments, and, Justin, you're about 40, right? Okay. So right now, let's say that you invest $1,000 a month. If you invest $1,000aMonth. You will have $56,000 a year in income.

What do you think about that marginal living?

How do you go from 260 to 56k? That sucks.

It's higher than I was expecting.

Really?

Yeah.

Why?

Because I just feel like the last two months is the first time we've ever put any thought to any kind of retirement plan. The fact that we're at 56,000 is like mind blowing to me.

Okay, I kind of like this. I have to say, I did not expect your reaction. It's like genuine gratefulness for me. I'm like, 56,000.

Oh my God.

And you're like 56,000. That's way more than we thought. The fact that that's more than you thought, it's very likable. Like, I appreciate that. And you're right. It's been only recently that you're starting to focus on this. However, what this tells me is two things. Number one, 56k is not enough. Especially considering the lifestyle that you live now. It will be very, very difficult for a couple to go from 260 and your income will probably go up because you're still young to making 56k forever. That's difficult. But second, a lot of the amazing changes you've seen in the last couple months are possible because of one thing.

What is it?

Our paychecks.

Yes.

You both make a lot of money. So that to me says, look, if you're getting $56,000 in safe withdrawal income, you could get a lot more if you were to focus your efforts. Just to give you another example, if you invested $1,500 a month, your safe income would be 72,000. What does that tell you?

Start investing more.

Start investing a lot more. So all this money that's kind of just floating around and the minute it comes in, like a kid buying candy, you go, wait a minute, I want to buy my future self an amazing life. And that's just 1,500.

Right.

You have a lot of money that you could redirect. Can we just look at it for a second?

I mean, we have 1900 that just came off of this.

That's right.

We have 1900 right there.

Yeah.

Well, let's start at the easy stuff. Let's start at your savings goals.

Yes.

The high yield savings account and the emergency fund are two that we should probably look at what the cap is for.

Right.

Of these.

Right. Because it's not a long term savings goal.

Correct.

Always have a cap. How much until it's filled it's like you would never just fill a glass with water forever. You go, how much is enough? Eight ounces. Okay. Do the same with an emergency fund and etc. 500 bucks a month. That's a lot of extra money towards investments. That's huge.

What else?

Well, definitely hysa.

We could probably repurpose that money or at least decrease it. Since we're already at 30,000, I would.

Take that whole thing and put it into investments.

What else?

If we already have $30,000 in the bank, that would be our emergency fund, technically. Could put that towards another investment, other investments.

So maybe we just get rid of the emergency fund, slice the High Yield savings account in half.

That's nice. That's 500 bucks a month towards investments.

Yeah, great.

That's 6,000 bucks a year right there.

Keep going.

What else?

I don't know if I want to compromise on anything else. Vacations, gifts, and buy a house fund are three.

Those are three main important things.

As we started to discuss how they might go about funding some of these accounts, Deepika remembered that she has additional sources of income that she forgot to include in their csp.

And I've noticed that a lot of.

People do this exact same thing. They leave out additional sources of income, things that don't neatly fit into buckets. It's almost as if they've convinced themselves that if it's not included, then it won't be spent. But this is not a good strategy because you need to plan for the income you know about. You also need to plan for the income you don't know about, because if you don't plan for it, it's just going to get spent.

Listen in, I get a bonus once a year. I also do consulting on the side.

What, does that show up here?

No.

What's the problem?

I forgot consulting on the side.

Okay, can we talk about unexpected income for a second? Because that makes a profound difference on where you end up. How much money. Ballpark it for me. Do you make extra per year? That's not reflected in here.

Including bonuses and consulting.

All of it.

An extra 50,000.

First of all, you're going to get roasted in the comments. And I'm not defending you on this one. I tried so many times to get you to put your numbers 50k.

Get them. Just get them.

I have a feeling like K extra. You ever watch the hgtv things like, oh, I'm, I'm a teacher.

Yeah, that's you.

And I make a million dollars.

Well, I'm literally talking to them.

I feel like it's certain things that, like, you know when you're tasked with something and you just don't remember everything.

Yeah, that's why it's a spreadsheet.

I know, but it's, I think there's.

Also the fear of like, it's like random. It's not like guaranteed.

A lot of us, we are very fearful of writing down a number, especially when it's variable. Your current stable income more than covers your day to day. So we're now talking about icing on the cake. And whether you make 30k extra or 50k extra, it actually does not affect your day to day at all. So I'm not going to say, hey, I need you to build a model based around $50,000 in extra income. But we need to be honest that, hey, we're actually going to make between 30 to 50k. Let's just conservatively assume 35 and let's build a life around that and any extra will even make a plan for that. I really want you to do is to put everything down accurately on paper because I don't want you to play games with yourselves anymore. You've played games for too long.

Yeah.

Okay, so let's just make a rule, let's say of any additional extra income you make, it could be $10 more than what you put here, it could be $50,000 more. How do you want to allocate that money? Have the two of you talked about it?

Yeah, I think most of any extra that we are after all, this literally goes into investments which would be long term.

And is that the same place you would then draw from for a house?

That was the plan. To see how much the money can grow and use that towards our house.

Wow.

I like this.

I really like this. I will say, if you're putting money in the market, it sort of assumes you're not going to buy a house for at least five years and probably 10 plus years. Are you okay with that?

Yeah, we've gotten used to the fact that, hey, we'll never save enough to have a home. If this works out in 10 years, it works out in 10 years.

Okay, I'm with you. I will tell you that in my own case, my wife and I talked about it. We're like, are we going to buy a house in the next 10 years? It's like, no, we have no interest in it. So took the money that was saved, was just sitting in a savings account, invested it in the market, and over time it's grown a lot and it will Continue to grow. And if and when one day we decide to, we will pull it out, it's already earmarked and use it for the house. That's exactly what you two are saying?

Yeah.

Fantastic.

Wow.

This changes things and I think in a good way. So you told me that first of all, you got 500 bucks a month. You're going to put that instead of towards a savings account, you're going to put it towards investment. I mean, we're now talking about you potentially investing 4,000 something per month. That's powerful. That's amazing. You can calculate it on your own. You'll realize how much you're going to have at retirement, which is awesome. You're also going to be like, wait a second. If we decide to buy a house in X years, this is how much we'll have.

Great.

And at that point you can decide if it makes sense to buy a house or not. I'm all for it. Give yourself options. Furthermore, we decided that any additional income, you're going to put 100% of it towards the investment account which would be earmarked for a house. Okay. Can I make one suggestion?

Yeah.

I like to give myself a reason to keep earning extra income. So for me, I will do something like 70% of unexpected income goes towards investments, 20% goes towards something I've been saving for, and 10% is just guilt free money. It has to be used. Is there anything that you might want in your own life? Like if you're making $50,000 extra per year, might you take X dollars and go to a special restaurant? Maybe something that keeps you looking forward to the work that you're doing on the side.

I think for us that's the vacation piece. We work a lot and the only time we really get to spend together as a family is when we're not here.

Right.

Okay. As long as the two of you agree that's important. And as long as you each December do your annual Rich Life review and you sit down and you say, hey, do we still agree about this? Do one of us want to make a change? Very sophisticated.

I think our mindset also was, does give us the opportunity to buy that home quicker.

We can only afford the life we have now because our fixed costs are so low. And we know that and we want to get to a position where when we buy a house, we can continue having the lifestyle that we have.

Whoa.

Yeah.

The first time we talked there was just basic confusion about basic concepts. Right. And yes, today, sure, we've had a couple of corrections and mistakes. But I'm also hearing you bring up extremely sophisticated concepts. We're talking about giving yourselves optionality, creating multiple layers of safety. I hope you see how far you've come. It's quite amazing.

We've literally spent the last two months since we last spoke just really like that session really was couples therapy. It really was. And I think it kind of opened our eyes to how simple it is.

I appreciate that you two received it. One last thing to tighten up your csp I would really like to see is his guilt free spending, her guilt free spending, and then your guilt free spending collectively. Just to give you a simple example, out of $100, just easy math, you might say 20 goes to him, 20 goes to her, and 60 goes to us, which would include vacations, dining out, et cetera.

The guilt free spending part, I think, is what hasn't clicked for me, because.

I feel guilty about spending anything. I don't know what I would do.

With a guilt free spending budget, if I'm being honest. I love Russian manicures, but a Russian manicure and a Russian pedicure will often run you about 200, and that's without tip. So I do not do Russian manicures and pedicures.

How often does one get a manicure?

Every three to four weeks.

So let's just say once a month for easy math. 200 bucks plus tip. 250. Is that possible?

It just feels like that's a savings goal right there. 250amonth I could be putting towards vacation.

Okay, you could. I'm not telling you not to. And in fact, you don't have to get the full manicure pedicure. It's up to you. Maybe even get it once a quarter. But my point is, it's actually healthy for each of you to exercise your spending muscle individually. How old is your son?

He's going to be three in December.

If you changed nothing, what would he observe? His mom spending money on him. And what's the message that a young boy takes as he gets older? Women and money they're meant to spend.

On everybody else, but never themselves.

Where do you think he gets that message?

He's probably getting it right now from me.

One of the reasons I started this podcast was you see these generational patterns of money. I mean, you two can see it in yourself, right? You didn't learn about money. And I'm so impressed and grateful at how far you've come, even in two months. It's truly incredible. You have earned the right to now think about your son. And what messages he's going to pick up. And you've also got to show him other parts of money, including mom spending money on herself and dad spending money on his self. So I'll ask again, what would be your guilt free spending?

A Russian manicure and pedicure once a month? A nice handbag once a year.

Might that handbag money come from any unexpected income you earn?

It would probably be from my bonus or consulting.

You might make a decision together that each of you takes 10% of the unexpected income and you spend it on guilt free, whatever, individually. And you might make 50k one year unexpected. You might make 100k one year. You still take that money and you still use it. You're building the skill of spending money. Final point, if you look at your savings goals, things like vacations, dining out, those should likely be coming from your joint guilt free spending. Okay, okay. So work all that stuff in and your number should technically be between 20 to 35%. In your case, it might be right around there because your fixed costs are so low.

That makes sense.

I'm actually really thankful that you followed up because it shows me that you two are 10 out of 10 serious about living a rich life.

We're grateful for your help. We've been looking for someone to help us for a really long time and the fact that it was sitting on our bookshelf for the last two years made a lot of difference.

Looking back on your finances, before we talked, what stories did you use to tell yourself? We're poor. What was the answer to that?

Make more money.

Right.

Okay. And what other stories did you tell yourself?

We can't afford to do it.

Could you?

No.

But you haven't changed your income.

So what changed?

You had said something like if you want money, why aren't you educating yourself on it? Once you start educating yourself on how money works, you start making drastic changes to better yourself.

And you don't need the crazy spreadsheet of 200 line items. It's just keep the budget, stick to it and it's as simple as that.

Yes.

I love that last closing thought from Deepika. With a little bit of effort, your money system can be simple and highly effective. That is exactly how it should be. Thank you Justin and Deepika for sharing your story and for really digging in and doing the work. I can't say it enough. They made huge changes in their finances in a very short amount of time. I was so impressed with their progress after reading I Will Teach youh to Be Rich that I gave them Another challenge. This time I gifted them my new book, Money for Couples. And I asked them to report back after reading it, check out their follow ups and what they have to say about their progress.

Hi guys.

We just finished the Money for Couples.

Book and overall, I think the biggest thing thing that we were surprised to learn that we've been overspending on this whole time is custom whole life policies. When we looked at our fixed costs.

We were surprised that we were paying a crazy amount, like almost $2,500 a month in all of our insurances combined. And when we tried to get to the root of what the problem was.

We found that a whole life policy.

Is not the best investment we get. So in the weeds about the small.

Details of what we're spending on that I think we find forgot to look at the larger fixed cost. So this conscious spending plan was a great opportunity for us to figure out what the actual root of the problem is.

And I think one thing we realized that we can actually afford to do is invest. This entire time we were like genuinely thinking that we were living paycheck to paycheck. We couldn't afford anything. But once we did the conscious spending plan and we were able to like figure out the numbers, it's just a weird thing that now we actually have money to invest and that we can actually put money towards the future. That's pretty cool.

My favorite thing about our monthly money meeting is first of all, we have.

A monthly money meeting and it's not.

Something that I'm scared of anymore.

We have a plan, we're both on.

The same page and none of what.

We'Re discussing is coming as a surprise.

To either them of of us.

After reading this book, I think what we're most excited about is the actual future. Like now we have plans to make our dreams actual goals. Before we were just like dreaming about like, oh, we can do this or we could save up for that. And they were just dreams. But now we're actually making our dreams goals like they're actually about to happen, which is pretty cool.

Yeah.

And we're being transparent about where the money is going. We're to trying talking about it.

It's not like it's a surprise like.

A few months down the road to say, oh my goodness, like we're not meeting these goals. So it's been a literally life changing experience to go through this book together.

So if you want to get on the same page with your partner about money, get your copy of Money for Couples. My new book@iwt.com Money for Couples. And thank you, Justin and Deepika, for going on this journey. It has been a thrill to watch.