195. “Her socks have holes but she's too cheap to buy new ones”

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 yes yes yes. Spoiler alert. This is a wealthy couple you're about to hear from, and I'm going to tell you right up front you might get frustrated while listening to today's episode. I know that I did, and honestly at times I wish that I would have handled things differently. You'll be able to spot these moments very, very easily, but I think this conversation is important to highlight for a few reasons. First, how you feel about money is highly uncorrelated to the amount in your bank account, meaning many people think that when they finally get more money, they're going to feel good about it. That rarely happens. More money alone doesn't change your feelings. Next, whether you want to change the way you behave with money, or you want to get in shape or you want to start a business, this is a fascinating look today into what it really takes to make a change. So I'm going to help this couple, but I want to take this opportunity to remind anyone listening that if you are truly struggling with money, for example, if you make 50 to $75,000 in your household and you are feeling stuck, I want to help I'm not here to judge you. I'm not going to yell at anyone. I'm going to give you my honest thoughts and we'll work through it together. It's really important that I have the opportunity to work with couples from all, all parts of life. So if you are struggling financially, if you make less than $75,000, please apply@iwt.com apply on today's episode. Why don't you spend money on discretionary things, guys?

We're both cheap.

Meet Matt and Eliza.

Spending money doesn't generally bring me joy if it's extraneous.

I myself am afraid to spend money.

Matt is 34 years old. A Eliza is 32. They've prioritized investments for years, which has put them on a comfortable path towards retirement. But now they struggle to spend money.

I'm very much in the dollar saved as a dollar earned category, regardless of how many dollars you already have.

Matt deprives himself when they go out to eat.

I did it last week. I wanted a can of soda at the restaurant. I decided not to do it.

Eliza would rather spend almost nothing so she can work towards her ultimate goal.

I'm constantly thinking, oh, how am I going to get there? If I cut and I put a little bit there, I'm one step closer to that horse one day.

All right, so all you need is 8333 sprites per year. Sounds reasonable. Their penny pinching is causing them to live a smaller life than they have to, and that frustrates Matt.

We're missing out on experiences in life and experiences that are going to be harder to come by later because we are too afraid to spend. Part of me puts the blame on me and part of me puts it on Eliza.

Now, with their first baby on the way, can they get on financial page and change their money mindsets so they can actually enjoy spending money?

In my mind, it's like, okay, maybe I could push past my own frugality, but to push past mine and her is like, that's just. That's just an uphill battle That's a pain in the butt.

Let's meet Matt and Eliza. Before I talk to them. I'm going to open up Matt and Eliza's conscious spending plan which breaks down their net worth income and where they spend. You can download this free conscious spending plan template or csp@iwt.com CSP let's take a look. Eliza and Matt, 32 and 34 years old. Let's take a look. Assets, 683,000 Investments 536,000. At 32. Very impressive savings, 21,000. A little bit low relative to the investments, but we'll find out what that's about. Debt? 386. For a total net worth of $854,000. What am I doing here? All right, let me guess. Are they going to be complaining we can't spend money on a candy bar? Let's find out. Income is similar to each other. One is earning $6,250 a month. The other is earning $7,900 a month. Total income is $170,000 a year combined. It's a very good income. But, wow, their investments are even higher than I would have thought. Based on that, fixed costs at what, 78%. What the hell? How do you have 170k income, 78% fixed costs, and then over half a million dollars in investments in your early 30s. What's going on here? Hold on. Are they overpaying on their mortgage? No, it's not their mortgage, which is very reasonable. They have generic home maintenance. I like that. Ah, okay. IVF loan payment, $500 a month. Okay. Groceries are only 425.

Okay.

Why do they have, like, 50 lines? What's going on here? I'm literally down to line 29. You should not be in line 29 on your fixed costs. They have flood insurance, homeowners insurance. Why are they breaking all this stuff out? Just use the CSP the way I designed it, all right? They have health insurance. Health care parentheses. Not insurance premiums. Their health care costs $1,000 a month. Okay. That's where some of it's coming from. Disability insurance. I don't even know what to make of this freaking csp. What am I doing on this video? Oh, hey, there's a bunch of numbers. I don't know what any of this is. And then childcare is $1,500 a month. Okay. It says starting in roughly two months. Investments are at 15% of net. Pretty aggressive. That's good. That's nice. Savings are at zero. Okay, that explains why they don't have much in savings. Fine. And then everything else is at 7%. And they actually broke it out. They have bedding, $83 a month. Betting. Okay. Horses, $150 a month. Is this like, some rich white family from the 1880s, like, going to the horse track? And we're going to bet what's happening right now? Vacation, $208 a month. Family travel, 133. Eating out, 120. Hair and beauty, $10 per month. Can anyone tell me what hair and beauty you're doing for $10 per month? And then clothing is $62.50 per month. I mean, I actually believe these numbers because they're so, like, type A control freak. I'm a little confused on what's going on. Oh, let's look at their application. We do not know how to grapple with having a healthy savings and investment account, but less ideal cash flow to expense ratio. First of all, if you're using the word ratio in your application, I can guarantee at least one person in this relationship is an optimizer. We struggle with small and large purchases. Well, I struggle reading your csp. We would love to understand how much flexibility we have in our spending saving ratio and how we should emotionally approach spending since we are probably both naturally geared towards savings. For example, we do not have Netflix, even though we make a combined income of $175,000. All right, let's see what happens in this conversation.

We tend to get very lost in the weeds on both big picture decisions and then also on some smaller decisions. There are a lot of questions that, you know, we kind of. We need help thinking through.

Okay, Eliza, can you think of a time in the last month or two where you were not on the same financial page with Matt?

We're in the midst of figuring out what we want to do for childcare because we're expecting our first child in about a month. So right now we're deciding between, you know, part time nanny and daycare and the amount of hour coverages that we would get with each option and the financial implications if we take, like, part time coverage for a nanny, it's only a few thousand more dollars per year than daycare, and hopefully we get somebody to help in the house, but it is still a few thousand more dollars and we don't have an amazingly strong cash flow. So that's definitely one item we're discussing.

How do you go about making that decision?

We discuss things probably ad nauseam. We probably go back and forth, back and forth, and we'll say we don't know what we're going to do. Three days later, we'll repeat the same conversation. We'll say we'll figure it out later, and then two days later, we're back in the same place.

Do you like that?

I think it has a certain comfort, but no, I don't like it, Eliza.

No. Definitely easier to move on with life.

But you also tend to spin around decisions like that.

Probably.

How long do you think that you will be discussing the childcare option before you make a decision.

Until he really needs to be in a childcare situation.

Okay. So basically until the decision needs to be made. Yeah.

So this is our first child. Both of us work from home. We've been told that they sleep a lot, but we are not experienced child caregivers. So if we find that he's sleeping a lot and we can both work from home comfortably, then we'll let the system keep going, I think. And if we find that he's disrupting our workday a lot, then we will figure out a solution. So figure we're probably about one to three months away from needing to really make that decision.

And how long have you been talking about this decision already?

At least two, three months at least.

So we're talking about, like, six months for a decision. And what's the dollar value for this daycare?

Could be between 19 and 22 for the year 1920 2000. And the nanny could probably be between 20 and 30.

Okay, so let's say it's an $8,000 difference and discussing it for six months. What do you think about that?

$8,000 to me is like, a decent amount. Like, it shouldn't take six to eight months. That's crazy. To me. The more crazy part is that we're not getting any new information. It's more like Albert Einstein. Insanity is doing the same thing over and over again, like, not getting anywhere.

So what are you getting out of it?

I think it makes us feel like hopefully when we do make a decision, it's been the right one.

Okay, and does that mean that the longer you spend deciding in your mind, the more correct of a decision you're making?

Not necessarily.

But he's nodding and you're saying, no, go ahead, tell me.

Yeah, I mean, I think we're both, like. We view ourselves as analytical people, and I think part of that is, like, we do research and we learn things and we figure out what's best. And so in our minds, like, oh, if I thought about it for so long and talked about it for so long, I'm more likely to come to the right conclusion, which, like, might be true on some basic level, but we're right past any practical value here.

I think it does give us confidence in knowing that we've really thought about it and put together both, like, the qualitative and the quantitative components of a decision.

Okay, well, it's pretty clear Matt and Eliza are not decisive. They're stuck in this cycle of agonizing over small Decisions which adds tons of unnecessary stress to their life. For example, yes, childcare is a massive decision. It's worth deliberating over. But this isn't the only money issue that they struggle with. There's also an issue concerning how much they're comfortable spending on household items.

We got married about six years ago. We got a fancy coffee maker off the registry. It broke, and so we're debating what to do next. And Eliza bought a Mr. Coffee, you know, something you might see, you know, in like, a Motel 6, for example, to which I said, you know, we have coffee every day, and we could do a little better. And so I went out and got nothing too crazy, but not super cheap either. About $100 on an espresso machine to make lattes.

That sounds pretty decisive. You saw the thing, you didn't like it, so you went out and bought something else. Right.

I think he feels frustrated that I would have been completely satisfied with the $20 Mr. Coffee, even though, you know, upping it to a $50 other coffee maker might have felt more in line with what we could theoretically spend on something we use every day. But I like the value of Mr. Coffee.

So is that the primary disagreement between the two of you, is that, Matt, you prefer to spend a little bit more on things, and, Eliza, you prefer to be economical or spend less on most things? Would that be a fair characterization?

I'm probably very much in the dollar saved as a dollar earned category, regardless of how many dollars you already have. And I think Matt feels like we have enough dollars sometimes, or maybe we have enough dollars, and if we spend a few extra dollars to get something that we'll enjoy a little bit more, maybe that's worth it. Whereas I look at it and say, no, we could put all of that away.

Matt, is that fair?

Yeah, I think in a generic sense, that that is the main issue. I think there are also times when I myself am afraid to spend money, and I think I'm too cheap or frugal. So I don't think it's just on Eliza. I think it's on both of us some of the time, and other times I think it's more on her end that I get frustrated.

But what's the problem today? Why are we here?

My big hobby that I like to do is sports gambling. And we have an agreement that every year I get a thousand dollars to gamble on sports. If it grows, it grows, and if I lose it, I lose it. And so we've had that since we got married. And overall, I've Done pretty well and I've about doubled the money that I've had. And so comes football season and I want to take some stuff out of the bank. And Eliza says, whoa, whoa, whoa, you can't do that. You didn't have a job for a few months. Which was true. Our cash flow isn't where it needs to be. Our savings are high yield. Savings aren't where they need to be. And I say, well, what do you mean? Like, a, we have this agreement, B, you know, this is like something that I really enjoy and, like, has a time component. Like, if I don't do it now, then, like, I kind of miss out on what I want to do. And I also look at her and say, it's only a few thousand dollars we know we have in the bank. It's not even 1% of what we have. It's totally fine. At that point, I just started a job, but was starting to bring in income and said, it's very obvious it's going to replenish itself in our bank accounts over the next few months. And I would say it took a long time of bothering her and pestering her and kind of making compromises and figuring out where to get a few hundred here and a few hundred there to kind of get her to allow me to do some of it. And, you know, I think it was frustrating for her not to recognize the big picture that we were going to be fine. I characterized it as the circumstances changed somewhat and so she didn't think the agreement applied in the same sense.

And do you see her perspective?

I see it. I just think it's shortsighted. She's thinking way too much about our literal cash flow right now.

Okay, Eliza, what's your take on that scenario?

We shouldn't have to touch our savings to make it month to month. That's my perspective. And with him not having had a job for a few months, it was getting dangerously close. And I didn't think we needed to be taking money out of savings vehicles to go to gambling.

Okay, this is actually quite interesting. I can see both perspectives. Right. What would you two do? If you were listening to my wife and me and we were in this same scenario and I like to gamble and same thing. What would you tell us?

I would tell you that if gambling is your preset guilt free spending and it's not going to kill the budget, it's okay.

Okay, Eliza, I would have said we're not doing so much guilt free spending period, this last period of time. So why is this so Different. Ah.

Matt, when you lost your job, did you all have a discussion about how that was going to affect the family finances?

Yeah, we talked about that. We were going to cut back in a lot of areas or certain areas.

Okay. Did you?

I think so.

We basically cut all discretionary spending. Part of I think our issue is that we look at what we spend on and we don't see a lot of fat. We don't see lots of extraneous purchases, so we have trouble figuring out, like, where else to cut.

Okay, why is that? Why don't you spend money on discretionary things? Because we're both cheap, and I don't.

Think we feel like we have a ton of extra cash flow to just go spending extra.

Can we go to the cheap thing for a second, Matt? You're cheap, both of you.

Yeah. To different degrees. Yeah.

What does that mean?

Classic examples. Ever since I was little, I can remember looking at a menu and, like, being like, oh, you know, the burger is, like, 16.99, but, like, the chicken burger is only 13.99. So I'm just gonna get that, even though I wasn't even paying.

And you still do that today?

Yeah, I mean, I did it last week. I wanted a can of soda at the restaurant, and I decided not to do it.

What do you feel when you make that decision not to get the thing that you want? What do you feel?

A little sad.

What else?

Sometimes I feel good about it. Like, I'm strong, and I now save $3. That could go to something else that I really care more about. For me, it's not the can of soda, but whatever my equivalent is.

Right. That's common. The idea that I am strong enough to stand up to the worldly consumer engineering that has been levied against me. I don't need it. I'm strong. Right. Almost feel a little righteous. I did it. I don't need that Coke. Sure, I could have it, but I don't need it. And what do you end up doing with the money, Eliza? You said you could save the money for something you'd rather spend it on. What do you spend it on?

Hopefully the Amex savings account.

Wow, that's romantic.

I think part of it is that the things that I really want that would, like, really bring me the most joy are more expensive than a hundred dollars. It's not a $100 purchase that I'm interested in. I love riding horses, but we go from a $3 purchase to, like, a $25,000 purchase really quickly.

Yeah.

So that would be where, you know, I'm constantly thinking, oh, how am I going to get there? If I cut a little bit here and I cut a little bit there, I. I'm one step closer to that horse one day.

Okay, is that true that you can cut $3 here and there to a horse?

Probably. It would take a very long time to get there.

Okay. You know horse owners?

Yeah.

Okay. Do they uniformly cut back on Sprite?

I don't know.

Okay.

What's more common about horse owners?

They're high net worth individuals to begin with.

Yeah. What do y' all think about this?

Yeah, I mean, I think that the amount of money or amount of sprites it would take to save for a horse would be tremendous. Like, maybe you have like one shoe on one horse so far saved up.

Did you say a horse costs $25,000? Is that true?

So it's the horse maintenance that's really the issue. The horse you could get for like somewhere between free and a million dollars depending on what you're looking for, but they all cost the same amount to.

Maintain 25,000 per year.

Yeah, roughly.

All right, so all you need is 8333 sprites per year. Sounds reasonable. Every couple of days I get a bunch of emails from people with the subject line cheap person story. I think in one of my books years ago I must have written, hey, I love cheap people's stories. So if you have one, just email it to me. I don't even remember doing this, but every couple of days I get these emails from people sending me the most insane stories about cheap people, which I love. So if you have cheap people stories, send them my way. Just know that I'm going to share them publicly because I love them anyway. The reason I bring this up is I can help a lot of people change a lot of things, but I can't fix cheap. And I am curious with Matt and Eliza to know how they fix feel about being. We'll find out after this short break. You know, my rich life really is. It's not sweating everywhere I go where it's above 68 degrees. Look at my arms. I can't stop sweating. Of course I told my wife this. She just looked at me like I'm crazy. She goes, why don't you just inject Botox? I was like, I'm so uncomfortable. Anyway, when it comes to being outside, especially in the summer, I find not only am I sweating all over my body, but also on my neck. That's right. My sunglasses are slipping down and it's hard to find sunglasses. I don't mind getting sweaty that actually stay on when I'm outside. Now listen, I don't want to wear those sports sunglasses that look like I'm an insurrectionist on January 6th. However, enter Goodr sunglasses that are stylish and you would wear them outside. And they are made of a lightweight material that doesn't slip or bounce around. My co worker discovered them a few years ago and she told me I got a pair to play tennis in. I loved them. They are super affordable at $25 a pair. So I got a bunch to have everywhere. I would need my workout bag, my pool bag, my car, kitchen drawer and more. Goodr sunglasses come in a bunch of cool colors and different styles and you can use them whenever you need to move around and be outside and not worry about your sunglasses falling out. Look at all these different sunglasses. They have different colors, different shades, different styles. Get one for your spouse, get two for your kids. The name Unicorns Calamity. I think I saw one called Vanguard something. That's always a good sign for me. Goodr sunglasses are lightweight, comfortable and they're made not to slip or bounce when you're hiking, running or traveling. Plus they offer a 30 day money back guarantee on all orders and a one year warranty on every pair of if you're looking for new sunglasses, Goodr is giving money for couples listeners. Free shipping. Go to goodr.com ramit and use code ramit for free shipping on your first pair of Goodr sunglasses. That's goodr.com ramit G-O-O-R.com ramit and use Code ramit for free shipping. As you know, I'm in the education business. Not only do I teach, but I also learn. And I like to spend money to keep learning in different ways. Courses, coaches, tutors, all of it. In fact, I believe that so much that one of my 10 personal money rules is I don't limit myself when spending on education. And I gotta tell you, I love finding new ways to learn from people who are at the top of the game. Which is exactly why I love using Masterclass, the sponsor of this week's episode. With Masterclass, you can learn from the best to become your best. Masterclass is the only streaming platform where you can learn and grow with 200 plus of the world's best for just $10 a month. An annual subscription with Masterclass gets you unlimited access to every instructor. For example, one Masterclass that I loved was a screenwriting class from Aaron Sorkin, who created One of my favorite shows, West Wing, and every membership comes with a 30 day money back guarantee. One of my favorite parts of Masterclass is all the variety. They have chefs, screenwriters, designers, everything you can imagine in Masterclass. Right now, our listeners get an additional 15% off any annual membership@masterclass.comit. that's 15% off@masterclass.com Ramit masterclass.com Ramit okay, welcome back. Let's keep going. Okay, so, Matt, you said you're cheap. Do you like being cheap?

No. When I, like, pass on the $3 item, I feel like it's more like I have a rule in my head, but I'm not a rule breaker, so, like, I'm not going to do that.

Okay, and then, Eliza, are you cheap?

Probably.

What does it mean to you, by the way? Matt's nodding, like, a lot.

If I. If I'm cheap, she's definitely.

Oh, wow. Okay, tell me, Eliza, spending money doesn't.

Generally bring me joy. If it's extraneous.

What does that mean? Extraneous? I'm learning new words today like clothing.

Like, why do we need to spend a lot of money on clothing? We need to look professional and good, and then that's sort of it.

Eliza, some socks that have, like, holes, like, the size of, like, a mouse.

Hold on. Can we see these? Eliza, get the socks. Let's see.

No, I can't have to go digging. He made me throw out a bunch of them already.

All right. I do love seeing, like, like a old, big old hole in them, you know? And you're just like, yeah, I still wear it. Okay, so you don't care about clothes too much. Fine. What else is extraneous for you?

Close is definitely the big example where there's, like, a sense potentially in society of, like, keeping up with the Joneses that we just don't care about. But I think that's, like, the biggest example. Or like, Netflix. Right now. We both enjoy watching TV at the end of the workday and hanging out together. And we've gotten kicked off of the family Netflix plans by Netflix.

Okay.

But the $8 a month that Netflix costs we've decided is not in our budget. And so we've been going without and continuing on with whatever we have access to.

If you don't think it's valuable enough, what's the big deal?

I think we both enjoy Netflix.

If you enjoyed it, then wouldn't you sign up? People often display what they value by what they purchase or what they do. Maybe it's just not that Important to you?

I would say if it was just me making the decision, we'd probably have Netflix.

Okay, how did you have that discussion about not paying?

I think at first it was like, whatever, like we have other streaming services. And then as time went and we kind of running low on things interesting us on those services. We were in our spending freeze when I didn't have a job and therefore I wasn't going to bring it up because didn't feel comfortable in that scenario. Obviously I knew that our cash flow issue was more on my side, so just kind of let it ride. And now we're here today.

And when you got a job, did you have another subsequent conversation about changing your spending the same way you had had that discussion when you lost your job?

Yeah. Not as in depth, but yeah, we did.

Okay, what did you decide in that.

Second conversation we would loosen up a little bit? Like there's one or two items around the house that we put off purchasing that we've since decided we could purchase. But also, by the time he got a job, I was seven months pregnant. So now we're focused on future child expenses and needing to save for that again. Whereas when he lost his job, I was not even pregnant, so it was not as much of a concern.

Okay, so what happens if like nothing changes? Like, you have a high net worth, you're about to have a kid. It sounds like it's going to be fine.

Honestly, I think we'll feel stressed. I think that this child will inherit probably some money scripts. I think that there's certain things in our life that we think think maybe could change, but like, don't know how to change and don't know how to approach thinking about changing. One other example is like a second car or trading in our current car. Because this year with Matt having not had a job, we qualify for the used EV tax credit. And I've always wanted an ev and we have until the end of the calendar year to make that decision. But we look at that and go, eh, you know, like 20, $21,000, $18,000 plus having to install a charger. Is that worth it? Like we don't have the cash flow, but we have the savings. And so we've been. This is another item where we've been circling for months, like, do we buy this EV or not?

I guess it doesn't really answer my question. Like nothing changes. You're just going to circle the same way. You circled about this and that and it actually doesn't seem like it's harming you that much. It seems like you actually like the stress. Like, it feels comfortable, as Matt put it. So what's the problem?

Yeah, I think that it is comfortable on some levels, especially to Eliza. I think it makes her feel like she is doing what she is supposed.

To do, which is making sure she.

Crosses every T and dots every I.

And saves every dollar.

Right? And saves every dollar.

Okay.

Yeah. And we'll probably go in a lot of circles and have a lot of similar conversations and probably at times get a little more frustrated than others and probably, honestly, on some level, just not enjoy ourselves. Just be one of those people who can never get over, you know, buying the soda or can never get over getting the Netflix, even if they understand that.

Why are you talking in third person? You yourself don't order the soda or the hamburger. I don't understand.

I guess part of me puts the blame on me and part of me puts it on Eliza. In my mind, it's like, okay, maybe I could push past my own frugality, but to push back mine and hers, like, that's just. That's just an uphill battle. That's a pain in the butt.

Do you notice that when they talk about saving money on small things like foregoing netflix for 8 bucks a month or having water with lunch instead of soda, do you notice how they take a lot of pride in their frugality? It almost seems like they came on this podcast to brag about it or to get my approval and a high five for their frugal choices, which I'm not going to do. I think being frugal can be beneficial, but I think that often people who are cheap, and they have admitted they are cheap, they take pride in living a smaller life than they have to. I don't find that impressive. If anything, I find it depressing and uncreative. And this is a red flag for me because it tells me that they've gotten comfortable living this way. They actually enjoy it and take pride in it. But if that were really true, why would they be here? The real question is, do they want to change? Let's find out. Listening to the two of you, I am looking for a reason that the two of you would want to change. I'm not sure I hear it. I'm open to it. Maybe I'm missing something, but both of you take a sort of pleasure or comfort in not spending money. It's become part of your identity. I can't change that. If you want to, I could help you, but it's not really clear what you're looking for from me, at least to me. The two of you have a lot of money. You have these questions about cash flow, but really, that's not the real question here. It's not that you know that because you know how to read the numbers. So what is it that you really want?

I mean, permission to spend money sounds so simplistic, but. But maybe it's like, help understanding our money psychology and how we could get over our frugality.

You'll never get over it. I'll give you an example. What's the type of food you like to eat?

Pizza.

Okay, me too. What if I told you you need to get over liking pizza? What would you say to that?

Well, that's impossible.

Yeah. You legitimately believe that not only would you not get over it, it's part of you. You actually don't want to get over it. You like it. So why would I tell you that you can get over frugality? It's part of you. You actually like it. How am I going to come and tell you? Time to get over the very thing that makes you who you are and you actually like it. Can't do it.

Well, to go with the pizza analogy, if somebody likes pizza and they eat it every day, my guess is a dietitian would be like, it's great that you like pizza. You probably shouldn't have it every day.

Okay, and then what would they say?

They would say, okay, how do we moderate you so that you can have what you enjoy but still keep your body in shape?

How would they do that with food?

Maybe they set a plan. You could have pizza every Tuesday.

Great. And what would you be eating the other days?

Salads and vegetables.

Great. Veggies, bread, whatever. Lots of other stuff. Right. I can't make you get over a taste that you love. I can certainly introduce you to a new way of thinking, but I can't make you get over something that is who you are and what you like. So you tell me, what would it look like if you were to add a new taste to your palette? What would it look like, Eliza?

Maybe being more comfortable going out to, like, dinners. Our Sunday afternoons have become Matt's. He said he's a very big football person, so we gotta watch some football. But then after some football time, we'll go out for ice cream and call it a day and come back. But maybe we could elevate that to a dinner instead of just an ice cream.

Would be. Is that what the two of you would want to do?

Well, I think that There are times when I feel like we pass up doing things like going to concerts, going to sporting events. And I think that right now we're missing out on experiences in life and experiences that are gonna be harder to come by later because we are too afraid to spend.

What do you tell yourself when you pass those experiences by?

I can't afford that right now.

Do you believe that sometimes?

Depends on how much it was.

And what about the other times?

Maybe that particular experience doesn't mean enough to me. Like, for example, I think Wicked was in town, and Matt's always wanted to see Wicked, but tickets were like $100 each, and that felt like a steep price to pay, so we didn't do it.

Okay, so what?

He still wants to see Wicked.

What's going on right now? You guys are adults. You earn a lot of money. You have a lot of money in savings. Like, what is this? Is it that you want me to come here and say? Like, you can spend money? Because truthfully, that's not going to change a single thing for you. It's not.

I guess we want you to work your magic because I've heard you do it with other people.

I can't change you. I'm not even sure what you really are looking for. I'm not sure you know what you're looking for. Here's what I suspect. I suspect that the two of you, your identity is forged in not spending money. I suspect it's from your families. I think that it's become comfortable and it's become part of your identity to not spend money. I think that you fear, if you spent a little bit more money, who would you be? You would trip and fall and suddenly be spending $500 a day eating at the fanciest places. You wouldn't be able to go back. Look at the smiles on your faces. And I think that you have a tiny glimmer of, are we missing out on things? But that glimmer is quickly covered up by, let's not think about that, because we don't have enough money. Whether it be net worth, cash flow, somebody lost their job. How can we spend this much? It's one thing after another. And truthfully, you'll probably just persist in moving the goalpost for the rest of your life. How does that strike you?

Accurate.

Pretty sad.

Yeah.

Limiting, I would say, I think.

So you know how much you're going to have if you just leave your investments growing, right?

About $4.5 million without adding another dollar, which you will.

What happens if you do add Another dollar. The way you currently invest. How much will you have?

About eight.

What are you going to do with $8 million?

Hopefully buy a horse.

You need $8 million to buy a horse? Why don't you go on a pony ride?

Not quite.

Costs like a hundred bucks. Oh, beautiful pony. Oh. I guess adults ride horses. Nice horse ride. Bye. What about that?

That wouldn't feel as satisfying. But you're right that I don't need $8 million to do that.

That's also. You don't need 40 years to wait to. To enjoy the things you love, right?

I hope.

Who needs 40 years?

Yeah, it's a long time to wait to get. To get your horse also.

Is a horse the only thing that would be like a rich life? Surely there's gotta be more than that.

We purchased what we think of as like a very adequate house for where we are right now with a nice plot of land. And the idea being that like, right now it's meeting our needs. But maybe one day we'd really like to expand onto the house because there's more that we could see doing with our home. And that would be another thing that we would both like to feel comfortable doing and get to one day well before 40 years.

That sounds cool. Are you on track to do that?

I mean, we could take all the money out of our investment account and do it very easily, but that sounds like a stupid idea.

Yeah, I don't think I would do that. But in general, are you on track to at some point make an addition to your house?

Ish. Hard to say. Maybe yes, but not in the timeframe that we might want.

Maybe you guys need to save more money.

We think so. Or sorry, I think so.

Maybe you should stop eating out ice cream. Maybe you should cancel all the other streaming services too. Do you see how by setting these two goals, you have now created an umbrella under which you can justify cutting back on everything? In fact, it actually makes you mission driven. Like, we don't need that pizza. We have a mission. Do you see that? You've almost perverted the way people think about living a rich life. You're now effectively hoarding money for this goal, which you don't even know when it's not really clear what it's like, maybe we should expand our house, but we don't know. But it's going to cost a lot of money. So therefore we need to save every last penny. Do you see that?

Yeah, we know we do that.

Okay. That's good self perception. Realizing what's happening is actually A big part of it. The question is, do you want to change?

We do want to change, and I think we, like, just don't even know how.

Sure you do.

I have an idea. We can spend more money now for things we want and worry less about what's going to happen in 30 years.

What do you think, Eliza?

He's right. But, like, the cash flow situation feels scary. Like, it doesn't feel like we could both save and spend a little bit more on things that we enjoy in the moment.

First of all, anyone who uses the word cash flow, it's usually a red flag. Okay? Two kinds of categories of people use the word cash flow. One is real estate fraudsters, and the second is people who overcomplicate their finances. Now, I'm glad you use cash flow. It's a technical term, whatever. But I can tell by looking at your CSP there's a lot of fingerprints of the way the two of you think about money. As you heard me rant at the beginning of this episode, Matt and Eliza really took a turn when they filled out their conscious spending plan. They added a ton of extra lines, which you can probably tell by now, drives me insane. Guys, the conscious spending plan is designed to be simple. When you start adding 5,000 lines to it to articulate how much you spent on turnips last month, you're actually destroying the entire point of it. The point of the CSP is to structurally focus you on on the key numbers, not to focus on these tiny minute parts of your financial life that actually make no material difference. So basically, stop messing with my format. If you're going to use my stuff, use it. Otherwise, go get a budget from somewhere else. That's not going to work. I'll see you back in six months when you decide to make a real change. Okay, okay, calm down. I'm here to help people. All right? What's really happening here is a clue about their money dynamic. It says a lot about the way they view money, the way they feel about money. The idea that we need to get every single line item out on paper really illustrates playing small. You see, it's very difficult to think about key numbers, 40 year investment strategy, guilt free spending when you are tracking tiny minute expenses. That is why I designed the CSP the way I did, and that is why I encourage you to live your rich life while saving and investing. We're going to dig into the CSP after this break. This episode of Money for Couples is brought to you by Wild Grain. Now, you all know that I love great food. If you follow me on Instagram, you will see the food I eat whether I'm in New York, Louisiana or traveling around the world. Sushi bars, my list of pizza places in New York, taking cooking classes with my friends and family. Quality food is a part of my rich life and that's why I was excited to learn about Wild Grain, the sponsor of this week's episode. Wild Grain is the first ever bake from frozen subscription box for sourdough breads, fresh pastas and artisanal pastries. Wild Grains boxes are fully customizable to your tastes and your dietary restrictions. In addition to their classic variety box, they recently launched a new gluten free box and a plant based box that is 100% vegan. The team at Wild Grain sent my team a box with croissants, sourdough bread, Belgian waffles, cookies, ciabatta rolls and more. 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Facet is waiving their $250 enrollment fee for new annual members. And for my audience, Fastt is offering $300 into your brokerage account if you invest and maintain $5,000 within your first 90 days. Check out their membership options at facet.com ramit Again facet.com ramit F A C E T Sponsored by Facet Facet Wealth Inc. Facet is an SEC registered investment advisor headquartered in Baltimore, Maryland. This is not an offer to sell securities or investment financial, legal or tax advice. Past performance is not a guarantee of future performance. Terms and conditions apply. All right, let's get back to our conversation with Matt and Eliza. How do you feel when you look at your csp?

I feel like it reflects where we are right now in life and that we probably need to earn more money.

No, when I look at your csp I feel overwhelmed. There's no clear focus. There's so many expenses. It's not really clear to me what's going on. The point of the CSP is that at a glance you can instantly tell what the key drivers are and it's not clear to me on this. What I can see is that health care is expensive, but health care is what it is. You know, if you tell me you can't change it, I believe you. I see that child care is expensive. It will be starting in two months. I see that you're investing quite aggressively post tax. Are you doing some pre tax as well?

No, neither one of us have the option.

Okay, so you're putting away about 1100 bucks. I see that you have whole life insurance for 583. I was a little alarmed at that. I see zero savings, which surprises me considering you only have two months of savings. Two and a half months. That surprised me. And then I see that your guilt free spending is quite low. Why do you have no savings?

We had savings and then when we purchased this house about 2ish years ago at the same time we started IVF and the house needed a new roof which was about $30,000. IVF is about $50,000. We were able to get an interest free loan to cover a portion of ivf, but to cover the drugs, which ended up being, you know, recurring expenses that are in the several thousand dollar range. Just for people who don't know, it's a lot. And so the combination of the roof and IVF drained our savings.

Gotcha. Okay, got it. That helps me understand. Before we move on, I just want to acknowledge how difficult their IVF journey has been. And for any couple listening who has had any sort of fertility challenges, that is emotionally draining, financially draining, and very few people talk about that. So I love that we can start to shine a light on these topics that are hidden behind closed doors. We can start to reduce the stigma around fertility treatment and mental health. This is really one of the big reasons that I started this podcast. So I appreciate Matt and Eliza for sharing. And from a financial perspective, hearing that Matt and Eliza went through their savings for IVF helps me get a clear picture of why their health care costs were so high. So I'm doubly glad why they shared that with me. I still have questions now why they are prioritizing investments over savings. Let me ask Matt what he has to say about their current savings strategy.

My viewpoint a little bit on the savings thing is that it's very easy to move money in and out of like a Charles Schwab account. So to me, if I think the Charles Schwab account is going to benefit me more than a savings account, a high yield savings or whatever bank account, may as well just put it in and then I can take it out when I need.

I don't think like that. And I'll tell you why it's sloppy. Because what you're doing is you're basically commingling different funds for different things. And not only are you commingling funds, you're commingling different types of assets. Cash is for savings. Most of the time you don't need savings, like, especially an emergency fund. But when you need it, you need it right now. And often the times you need it right now are when there's a recession. So you lose your job, the market's down, you're in double trouble. This is why what we want to do with money is we just want to create some simple rules and never violate the process. It's like really simple, black or white, right? You need more than two months of savings, especially if you're going to have kids, which you are. So, okay, I understand why. Work your way up. But investments are separate. Those are long term. That's how I think about it. And I think it's A pretty good guideline. Why are you paying $583 a month for whole life insurance?

I've had it since I was 18. I look at it as another tax advantaged savings vehicle.

Okay, that's not a good idea. Do you ever look at the fees of that?

No.

How can you be worrying about $3 expenses and not look at the fees on this larded up whole life insurance policy like you're paying thousands.

I think that when I signed up for it, I learned about the growth potential over the years and the tax savings and the dividend and so I got it.

Yeah, but okay, maybe when you were 18, you didn't know that much, but you're pretty smart now.

But now I feel like if I stop paying the premiums, I'm going to lose what I put in.

Sunk cost fallacy. Did you ever hear that fair?

Yes.

And you're going to pay 583amonth for how long?

Ever.

You know what I think about whole life insurance policies, right?

It wasn't in the book that I got from the library, but I've heard you talk about it on the show before.

They're like one of the worst products out there. Your insurance salesman made a ton of money off you. You've been paying tons of money for like 20 years. And if you just simply calculate how much you would have made if you just put in an S and P fund or a target date fund, it would be like tens of thousands of dollars more.

Right?

Again, I'm not here to beat anybody up for one off decisions. Things happen. You make decisions. Okay. What I'm trying to help you understand is part of developing that new taste is starting to focus on what's important and what's not. A $5 Coke not going to be material to you. Fixing your whole life insurance policy worth tens of thousands of dollars to you. Maybe more over the course of your life. So that's important to know. I think right now you probably treat every expense roughly the same, whether it's $3 or $30,000. Would that be fair?

Yes and no. When we went out to dinner and he decided not to get a Coke, I decided to upgrade my soup from a cup to a bowl.

Wow.

But. But like we're stuck on this EV decision. No traction there.

What do you want to make the decision right now? Yeah. Okay, go ahead.

The EV would end up costing to purchase roughly 20,000 to $21,000. We then have to install a charger which is somewhere between 600 and $3,000, depending on if we change our electric panel at the same time, and then the six month insurance rate on an EV is about $1,700. So that seems like a lot of cash coming out of our pocket, A, upfront and then B, on an ongoing basis. And like, we haven't been saving as much as we should over the past year. So maybe we don't deserve this now, even though we'll benefit from the $4,000 tax credit, which we can't use any other year.

Eliza, if you said that we don't necessarily need the second car now, there are certain expenses, insurance and whatnot. Fine. I think that there are other places we should be looking to open up. I don't feel the need for it right now, but I don't want this to just be another thing that we say we don't need and then just keep on saying we don't need things. I guess.

Does anybody feel like they made a decision?

No.

Oh, I thought we did.

Do you see how you two don't actually make decisions?

Yes.

So make it.

Maybe right now we should be focusing on building up towards the savings goals and one of the savings goals down the line.

Notice that you're still not making a decision. You've already pivoted to something. In the future, make the decision.

Matt, I think now might not be the time to get the ev. Do you agree?

Yeah, I think that's totally fine right now.

Done. Take a round of applause. That's how you make a decision. What changed right there?

Just say it and move on.

Yeah, it's easy when you understand the dynamics, the dynamics of the two of you. The way you talk is what, talking around it? Yep, talking around it. What else?

I don't think either one of us wants to push the other, and so we feel like we're being respectful by not telling the other one what to do.

You're all about to have a baby. Like having a conversation where you clearly can't afford an EV anyway. It's so obvious on the numbers that if you can't have this type of discussion, how are you going to have discussions about, like, who's picking up the baby and all that kind of stuff. Right. This is like training. That's the way to look at it. Okay, so you, you are dancing around each other. You don't want to be definitive because it feels like you're hurting the other's feelings or being too specific. No one actually says what they think directly. I think this. And then no one asks the other person. It's a lot of statements. There's no ball tossing. I often say toss the ball. Toss the ball back. What do you think? I'm not sure. What do you think? Here's how I think about it. But I could be wrong. What's your opinion? That's tossing the ball back and forth. Right. And then finally, one thing you both do to avoid making a decision is you simply pivot to talking about some other financial thing you need to do. It's really depressing because it's. It's never fun. Right. It's always like, all right, well, we need to save for this and that, and it's just never fun. So not only did you not make a decision here, you're now talking about a depressing thing like 10 years in the future. What do you guys think?

There's a lot of accuracy there.

Yeah. The talking around, I think I knew. I guess it just like the lack of, like, interest in confrontation, which I think for me is more natural than. Eliza, you avoid.

You avoid confrontation.

Yeah. Like always. Yeah.

Do you guys see a couple's therapist.

In the context of fertility? We did.

Okay, that's good. Would you ever see one going forward?

Honestly, I don't think it's so necessary.

Okay, Eliza, I don't think it's so necessary.

Of course, it's your choice and stuff like that. But considering there's a baby coming, considering a lot of stuff is going to change. Sometimes the best thing you do is get ahead of it. And it's like, hey, we're coming in here because we know life is about to change in many ways we can't even predict. We also know that we have these little inklings that maybe we're not communicating effectively. And we sure would love to get some tools to communicate because soon there's going to be a lot of stuff about childcare and waking up at night. Whatever. It may be something to consider. And remember how you're all talking about wanting to spend money more effectively. What could be more important than spending it on the two of you?

That's fair.

See, for me, when I look at money, I don't simply look at how much it adds up to in a savings account. I know my numbers. I know compounding, Yes, I know all that stuff. But I look at it and I go, that's a night nurse. That's therapy. So that the two of us can be really effective. That is a date night every two weeks, every week, every month. That's what I look at it as. And I start to say, like, what's my rich life, vivid, specific details. And then how is my money going to help me get there? Some of it I can do today. Ice cream cone I can do today. I don't need to think twice. Horse. Okay, I can't do it today, but I want to know what it's going to take in order to get there. And though it may take many years to get a horse, certainly at the very least I can go rent a horse or I can go work at a stable, whatever, because I'm not going to wait 40 years to have this thing. I'm going to start to touch it today even though it may not be the full vision until tomorrow. We'll get back to to Matt and Eliza's rich life vision after this quick pause to hear from our sponsors. 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 Delete Me, 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 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 join delete me.com/ramit R A M I T. Let's get back to the conversation now.

When I'm not pregnant, I ride pretty regularly. But some of that really resonates, like maybe we need to figure out how to work in more concerts into our life or shows or whatever it is, or upgrade a little bit on our travel because we both enjoy that without getting bogged down by the 10, 20 years from now question.

Yeah, I think what resonated with me from that is you're presenting money as how do I utilize it to do things that make me happy. We don't look at money like that. We look at money as like, what do I need to spend in order to get what I want? It's like, it's, it's not so different. But you're using it in positive, how do I use this to be happy? And we're like, how do I use this to get by? It's kind of the difference.

It's almost like the difference between a subsistence farmer and somebody who has money very much like YouTube. But the, the difference is that you treat your money like a subsistence farmer. Like, what do I need? And that's it. And the thing is, you have half a million dollars and you make $170,000 a year. You are far from subsistence. Yet the way you think about money is equivalent to somebody making $40,000 a year.

Yeah, I would say that's accurate. When we got married, Eliza was in school, she got a stipend and I had a much lower paying job. We probably made about half of what we did now, maybe even less. And I don't think we've changed anything.

Some of our fixed costs have gone up, but our mindset hasn't changed.

But the thing is, you don't see it as a problem?

I think I do see it as a problem, yeah. I think there are things I would like to do, like more travel, more experiences. Like we should have seen Wicked. Like, I want to be able to. Also, I want to be able to go to the super bowl one day. I know that's going to cost $10,000.

We probably need a housekeeper.

A housekeeper would probably alleviate the main thing that we, we fight about, which is my lack of cleanliness for me experiences. And for Eliza, I would say having somebody to help around the house and then putting money in savings for building out our house would probably the things that make us happy.

So what are you going to do for the next two years? New baby, new things. What are you going to do as it relates to money?

I think that we probably realize we need help in the house in some fashion to cope with us both working full time and having a child. Otherwise we will definitely need the therapist then. So that's probably one thing. And then the other thing is we probably need to find time to make sure that we maintain our relationship even with having a child and time meaning experiences, whether that's going out to dinner or traveling.

Do you think it's surprising to talk about that when even when you had no kids, you struggled to maintain the Relationship with travel and experiences.

I don't think we've struggled. We've taken a lot of trips. We're very into the credit card points and we'll utilize those points to get like airfare or hotels. But we definitely don't do things locally. Okay, we'll do things when we're traveling.

If I look at this and I, I think to myself, here I am, a couple who has $536,000 invested, 170k annual household income and a baby a couple months away. The things I think about are, I'm not going to wait to get childcare. We're going to get it. In fact, let's start looking right now. Let's start interviewing right now before things get busy. Because the day that baby comes home, I want childcare here. Like, why would you not get ahead of the game? Why wait until your back is against the wall?

We're hoping that those who told us that we can have the baby around and need minimal care, minimal help will be right and therefore we know we need help or we're hoping that we'll be able to just pay for less help.

That's the truth. But do you see how that is the sort of approach that you take with all of your money? We hope we can get it cheaper. A cheaper hamburger, a cheaper coffee machine, cheaper childcare. I can't help you fix that because you don't actually want to fix it.

I feel like I do, but I get where your skepticism comes from.

If you did, I would see evidence of it. I don't hear any real stakes here. It sounds like you slightly differ on money, but not really. Both of you call yourself cheap. So if both of you are cheap, that's a self reinforcing cycle. It's like tying a knot and pulling it tighter. That's who you are. At least that is who you have defined each of yourselves to be. Plus the relationship together. I don't hear anybody expressing any real frustration about, oh, like I'm sick of this, I want more for us, I want more for our kid. None of it. It's like minor inconveniences. And in order to change, you would have to change a lot. You'd have to change who you are from the inside out. And that's really hard. It's much easier to go back to maintaining a spreadsheet with 50 different cells and then tell yourself we are doing this because one day we want a horse and a house. I just want to cut in right here because this is a moment that I Would love to go back and redo. I'm not loving the way I'm showing up in this conversation. I got frustrated because it seemed to me that no matter what we talked about, we were spinning in circles and they weren't really willing to make a change. So at a certain point, I just mentally switched off and said, this is not going to actually change, so I'm not going to really try that hard. That sucks. That sucks for Matt and Eliza, who put a lot of work into coming here. It sucks for me because I'm just coasting on autopilot here. I'm not showing up in the best way, and they're not getting the best version of me, which is what they expected. If I could go back in time instead of being such a naysayer, I would have been more encouraging. I would have gotten more curious about what drives their need to be so frugal, because if I actually understood that, then it would have been clearer what to do next. I would tell Matt and Eliza that, yeah, change is incredibly hard, but with the right tools and mindset, they can do it. I try to do that as much as I can on these podcast episodes, but I didn't live up to that with them, and I got really frustrated. And I wish, looking back, that I could have changed that. I wish I would have taken a five minute break and said, look, I'm not feeling this energy. Do you all want to change? Do you want to make a difference today? And really recalibrated it. That's what I wish I would have done. Now let's hear from Eliza on how she wishes she felt about money.

We could probably be more relaxed now, and I think that that's the impetus for this conversation.

Okay, so be relaxed. Tell me what it looks like getting.

A massage once a month.

Okay.

Having a housekeeper so that we have those minute details taken care of. It means being able to pick a restaurant and just go to dinner. Those are probably, like, the daily slash monthly items. And then like, having a vision and saying, you know, when we accumulate X number of dollars, like, we're gonna just build out on our house, like, we're gonna do it, and we're not gonna wait till we're, you know, have $8 million in the bank to do that.

Okay, can we. Can we zoom in on the housekeeper? Can the two of you talk about it and make a decision?

Yeah, I think that we can afford a housekeeper. I don't think we can afford them to come twice a week. How much, Elijah, do you think it is?

Per day, no more than $150. And that's if you go through like a service as opposed to just finding somebody directly. And maybe we could do that once a month to start.

Would that alleviate the things that you find annoying? I feel like the things that you find irksome are not once a month things.

I mean, it would at least alleviate them on a once a month basis and get the ball rolling. And then we would have a baseline of cleanliness that we could maintain easier.

Sure, it would help with certain things, but would knowing that the shower got cleaned out help you be less annoyed if there's a little pause?

Yeah, pause. So notice what's going on here. This is a great conversation, Matt. Why don't you just propose what you want instead of asking these open ended questions? She already proposed once a month, which I think is a great place to start. Move the conversation forward by saying, hey, I hear you. Instead, I want to propose X. Go ahead.

I think you're right. We should do it once a month and let's see where it gets us. And if it's not enough, let's revisit this and see if we want twice a month.

That sounds great, Matt.

Great. Love that you all see the little intervention right there.

Yes.

Matt, you're so avoidant. You're so afraid of confrontation that you will, like, open up actually 10 cans of worms instead of just making a proposal. This is where a therapist can come in. Helpful. Eliza, one tool for you is to simply say, matt, my proposal is once a month. Do you have a different proposal? Okay, but really, Matt, this is your responsibility, not hers.

Okay?

Okay. I can almost guarantee that right there, that dynamic is the source of, like so much conflict. Because, Matt, you want to avoid just saying what you really want. And in fact, even in that case, you just agreed to hers when I think you were making a very good case. Hey, once a month isn't enough. Let's do it twice a month. But I think the way you compromise on it was great. I do think that's an area of opportunity for you to work on. Next question. Where does the money come from?

I think realistically, and Eliza's probably gonna have a heart attack. It's gotta come from that savings or investment bucket. I don't see where else it would come from.

Matt is probably right, given the current situation. And probably if we don't save $19,000 a year and we save like 18, it'll probably be fine in the long run.

What? Okay, first of all, do you all realize that Savings and investing are different things.

Yeah.

Yes.

Okay. You're not saving a thousand dollars a month, you're saving zero. So let's use our terms correctly. Second of all, you're both saying we have to take from our savings account. Your savings account has two months of emergency fund. You're about to have a baby and you're saying there's no other place you can see to take the money from. I don't believe that.

Probably that whole life insurance, that's for.

Sure, that needs to be figured out right away as to what would happen if you stopped cancel that policy. That's one. But what else? I see so many other places. What's everything under guilt free spending?

There's my current horse budget.

Yeah.

There's a vacation budget.

There's a lot of things that in my opinion, if you're about to have a baby are going to change. One of the benefits of having a baby is you really get to get realistic about expenses changing. Like for me, if I'm having a baby, I'm probably traveling less, at least for the time being. I'm certainly going on horses less and I probably need more help around the house. Why not just admit that that's a given? Why not make your life easy? Here's my philosophy. You ask about how to change your money psychology. If I'm going through a major life event, marriage, kids, illness, whatever, I immediately go. How can I use money to make this easier for me? I worked hard. We continue to work hard. What do I get? And Eliza, you've said cleaning the house is important to you. Why would you not pay for a house cleaner? Especially because you have the money.

I guess it doesn't always feel like we have the money. And looking at the guilt free spending, current allocation, it doesn't feel like there's so much wiggle room there to take something away.

What are you talking about? $150 for the horse, Just take it away.

That sounds crazy to me.

I don't know exactly the comparison to make, but whatever is right under necessities. I need a car to get to work, need food.

It's like taking away therapy.

I'm not sure I agree. I understand that a horse is really important to you and that you rode before and I'm sure you will ride again. You're probably not going to ride for the next six to eight months. Would that be fair?

No, not fair.

Okay. When are you going to start riding again?

I don't know. A month postpartum, Six weeks postpartum.

All right, You Want to keep it? Fine. What else?

Probably vacation is the bucket that could change. Realistically with a child, even though we've talked about, my parents are very happy to hopefully watch the child and let us travel, it's going to be harder.

Okay, so acknowledge that. Simply take the money and use it for the house cleaner.

Honestly, for me that feels like a lot to give up. Like for me, travel and like seeing new things is important. How much do we have there?

$208 a month.

So 208. Not that much room for fat, but you could probably cut it in half and do a domestic travel instead of international. Hypothetically.

That's a realistic option.

Obviously I'm not living your life, so things are naturally easier for me to make decisions. But do you see the way that I talk about this? So different than you? You literally could not see any options. I'm looking at the same page as you and I see $767 of options per month. One of the peculiarities of my conversations with couples is that they come on here and they tell me this, you know, this really serious challenge they're having. Like in your case, we're cheap and I go, cool, like, let's look at the numbers. And then immediately when we try to change to something they themselves claim that they want to do, they fight tooth and nail to change nothing. I can't change that for you. It's your money. If you wanted me to run your life, I could, but you probably wouldn't like how it ended up. You set your life up this way. You control your money. You two are very intelligent, able bodied people. If you wanted to, you could change your life to be focused on health or childcare or a clean house. Like you could do any of that stuff. It's not that you have a lack of money, but you don't have the ability to be decisive. You have a cloud that's in front of both of you. And it's not just a cloud in front of you, it's actually all around you. It's your identity. We don't have enough. We need to scrimp and pinch forever scarcity. We need to save $3 here and there and $5 here and there so that 40 years from now we can actually enjoy life. That's that cloud. It's a ghost. The only way people clear the ghost is if something big enough happens to make them want to change. Otherwise it's too hard. What do you think you're saying that.

You think people in the middle, it just is for them.

I'M saying that people don't change their identities unless there's a pressing reason to. What that looks like for you is perhaps you have the baby. Maybe one or both of you realize you can't work as much as you used to. You realize your job's kind of at risk. You realize your house is a mess. You start fighting more. And then finally, after all of that months of agony of not sleeping, of all this stuff, you go, we should get a housekeeper for $150 a month. You spent four months fighting and not sleeping, all for that when you could just make the decision right now. Now extrapolate that to the rest of your Life. You spend 40 years fighting and arguing and waiting when you could have just made a few key decisions and actually enjoyed your entire journey. Y' all enjoy money?

Definitely not.

Sometimes I felt very proud when we bought the house.

Cool. But.

No buts. Sometimes the smaller things, like my Mr. Coffee seems totally sufficient.

That's fine. I don't mind that in a couple, one person might not care as much about certain things, like hotels or coffee makers or whatever. That's normal. That's not a huge deal. There's lots of ways around that. It's the big things, like, do we want to spend money to make our life easier? Do we love to travel? Do we care about seeing our family? Those kinds of things. Those are important. Matt, your answer was pretty interesting. You said, definitely, I don't enjoy spending money. See, I can't make these changes effectively with you because the end goal of where we're going is something you actually don't like. It's like me feeding you rotten meat. I'm like, let's do all these life changes which are going to be really difficult, and change your entire inside out, all so that you can eat rotten meat every day. And you're like, I don't even want rotten meat.

I view it as something I don't like, but I view it as a means to an end. Like, I don't like working out, but I know I should do it in order to get in shape. So it's like, I might not enjoy the process, but that doesn't mean I don't think the goal in the end is worth it.

Okay, I respect that and I. I resonate with that because I felt the same way when I started working out. I felt that way for about four years, and then I realized I got frustrated because I was working out and I. I was working out. I thought pretty hard. I didn't look the way I wanted to. And I got really frustrated. This was kind of when Instagram was starting to come up, and I would see all these guys on there, and I'm like, why don't I look like them, truthfully? And I took a hard, honest look at myself, like, a very deep, hard look. And my honest assessment was, I work out, but I don't work out particularly hard. And I eat. Like, I was ordering Seamless three times a day, and I had to sit down for, like, days and days and days, and then look inside and be like, wait a second, this is my fault. I'm not actually taking this as seriously as I could. Now, the thing is, I did that only because I realized I'm never going to get really good at this unless I find a way to enjoy it. And I think that's the same for you. You can go through the rest of your life saying, like, it's a means to an end. I don't really enjoy spending it, et cetera. It's fine. But you'll never actually truly enjoy it. That is why you will continue looking for points for trips, which is fine, but you'll never simply say, let's go to Paris. We can afford it. We should do this. Let's create some memories. It will always be, like holding your nose. Oh, I got this Chase Sapphire. You know, you can't get good at something that you don't actually enjoy. Like, really good. And in my opinion, money so important, like, the equivalent of parenting, that you've got to find a way to get good at it. You all want to be good parents.

Yeah.

Yeah.

All right. What if one of you was like, I don't really like parenting. I mean, I do it. It's the end result. So this freaking little kid can get off on his or her own. Everyone would be like, that's kind of weird, right?

Yeah, that'd be pretty weird.

That would not set us up for success.

Bingo. And isn't that exactly what's happening with money? Yeah.

I think that part of what's, like, a little bit sinking in slowly is instead of thinking about money as, like, what you said, a means to an end, is thinking about it like a tool. What can I get that makes me happier or makes life easier, which makes me happier? And I think that the housekeeper is, like, a really good, practical, achievable example in the here and now that would make a difference in our day to day.

I like that you said, somebody needs to enjoy it to get better at it, which makes sense. What does that mean, to enjoy it? To you, what does that mean, like on a deeper level or like more specifically?

That's a great question. And for me it's profound. It is. What is my rich life individually and with my wife? What is our rich life? And that is as deep as it gets. What are we here for? What would make the next 10 years profoundly impactful, fun? And we create this vision together. And I also have my own. Because one thing in a couple, especially with a new baby on the way, is it's very easy to lose yourself and you have to fight to maintain your own interest. That's why I like hearing about the horses and the bedding. I think that's cool. I want to paint this beautiful tapestry of what our life can be and some of it is immediately achievable today. And I should do it right away. There's no virtue in living a smaller life than you have to. It's actually tragedy. Some of it is medium term. It is going to take consistent saving. Maybe it'll take five years, no problem. I actually love that every month I check in. Some of it is really big. It's going to take decade at least. I know it's coming. So I create this beautiful, detailed vision. It's always changing. It's not set in stone. And then I start to figure out how I can use money to live a rich life today and a richer life tomorrow. In your case, like a housekeeper to me is a complete no brainer. If I were about to have a baby, I would completely reorient our family finances and I would say, look, we're about to have this baby. What is going to make this a magical experience for us in the next 12 months? Magical. Not like we're treading water. No, I want this to be an incredible experience. What's it going to take? Well, we probably want to get the house clean because we fight about that and this is just a no brainer. Let's do that. Let's get childcare, let's carve out a date night once every two weeks. That's our baseline. How do you feel about that? To me, that would allow us time to connect and to have a nice meal out, etc. Right now. In exchange, what are we going to trade off? Well, let's take a hard look at our csp. We're not going to be taking vacations, not for the next year. We're not going to be going on a horse maybe for six months. Who knows? Hair and beauty, et cetera, et cetera. And certainly that whole life insurance. Let's make this magical. And then at the end of a year, let's put a time in the calendar and we will re review see what what it's like with this baby and we can make changes. That's how I would do it. What do you think about that?

I think that sounds inspiring.

Yeah, that makes sense. I think I have to shift. What do I want? Not what is it taking out.

Yeah, yeah.

Eliza, you've mentioned a few times, guys, you kind of are rich. Maybe we have a lot of investments that should translate down the line to not having to worry so much. But our fixed costs right now are high and a lot of that is health related, like health insurance and then healthcare. And so that doesn't leave us with a lot of guilt free spending money. So I think I really struggle to find the balance between juggling higher fixed costs when they really don't seem like luxuries. It's not like we're buying stuff on Amazon with also building out a vision for a rich life and acting on it.

Okay, so what do you think the answer is?

Maybe identifying opportunities to build out a rich life that are achievable now. Like the housekeeper.

Yep.

I mean, I know making more money isn't always the answer, but part of it is probably making more money. Matt's current job doesn't offer health care, which is part of why health insurance is a hefty line item on the csp. But hopefully a future job will or they could compensate him accordingly, which is a current conversation. And that would go a good amount of ways to defraying some of the imbalance.

So for me, the thing that I would do is I took out your childcare out of fixed costs just to see what would happen. It dropped your fixed cost to 65%, which is not bad. Not bad for a couple with new baby and some health costs. I then put that number down into guilt free spending just to see what would happen. Your guilt free spending jumped to 20%, which is not bad. It's the lower end of the recommended 20 to 35%. So you have 65% up top. You have 15% in investments and you have 20% in guilt free spending. What do you think about that?

I guess I don't think of childcare as guilt free spending.

But why not? Isn't it a luxury?

It's an investment in our careers.

It's not an investment, it's a luxury. If it was an investment, it would be in investments. Investments provide financial roi. That's why I would put it theoretically in guilt free spending. And again, we're just moving money around here and there. But it actually is quite instructive. It tells you that child care is important to us. If one of you got laid off, what's the first thing you do? You cut all guilt free spending. Right. Including childcare. So it kind of makes sense now. You could make the argument that it's in fixed costs. Doesn't really matter. It's all, you know, technically coming from your paycheck. But when I look at it, it sends a signal. It sends a signal that we're spending 1500 bucks a month on child care because that's important to us as a family. You two don't talk about money like that. It's all like, oh, what's the minimum we can get away with? I like spending money. When I spend money. Nobody's tricking me into spending money. I'm spending $1,000 on this or 500 bucks on that. I like it. It means it's important to me. Why? Because I respect my own decision making. If I go to a hotel that's very expensive, which for me is the thing I like. I like every dollar I spend there because I chose it and I can afford it. Same for you. I saw that look in your eyes, Eliza, when you talked about the horse. You're like, I like to ride. In fact, I'm going back in six weeks. Why don't you have that with everything you spend money on?

I don't know. I've loved horses since I was little, and it's so ingrained in me. It's so apart.

Love that. Well, can you love a housekeeper because they give you a clean bathtub and a clean shower and a clean window?

I think I would love it. But I think it hasn't been something that I've felt like we're up to yet or that I've wanted to push Matt on. Because, like, maybe we love Netflix and we've decided Netflix isn't part of our rich life, But I think Netflix would matter more to Matt than a housekeeper. Matters to him. And so I think part of not pushing the housekeeper is feeling like a compromise, but maybe it's building our relationship because then it's just one less thing we have to worry about.

Do you see the way you talk about spending money versus the way I talk about it? Use words like pushing it with Matt, convincing him. Do you notice that?

Yes.

You see how deep the changes you'll have to make really are?

Yeah. That doesn't surprise me.

So some thoughts, some Further final thoughts. Your fixed costs at 65%. It's not bad that it's a little high, but it's not a killer. Investments at 15%. Well, first of all, that whole life insurance is dragging you in a huge way. That's 5% which could be better allocated elsewhere. And you kind of could use the money, 583 bucks a month. If it were me, I would look into the whole life insurance policy. Chances are you're going to lose some. But the amount you could get over the next 30 years is way more. So you need to do that, diligence that 583 bucks. In my opinion, if it were me, I would put it into savings. Okay. Most of it. You're already investing like 12,000 bucks a year. I'm sure you've already calculated how much it's going to make. 4 to 8 million dollars. So in many ways you don't need to invest more. Right. You've already set yourself up quite advantageously with investing. Sure, if you want more you can, but it's cooking. Just let it cook. Meanwhile, that 583 bucks or so could be better utilized. Now, things like building up an emergency fund which you do not have. And I would recommend, understandably you spent it on things that were important to you. I totally respect that. Let's go ahead and rebuild it. And that's pretty solid. That would be 10% investing, 5% savings, 20% guilt free spending and 65 fixed cost is not bad. It's not bad. What do you think of that?

I think that that makes sense. I think I have to rip the band aid off probably with that whole life and figure out what that results in and then just get term. But that makes sense. And I think that thinking about like how you put childcare into the guilt free spending while we put it into the fixed costs, that like mentality shift is also helpful to think about because realizing that it's something we're prioritizing and care about as opposed to like, oh, it's something we just have to is helpful to realize like how we're just approaching where we're spending.

That's really the crux of it. Your money is not something that's begrudgingly taken from you. It is something you spend joyfully, you spend it willingly and you spend it to build your rich life. So why wouldn't you feel happy about it? Even taxes, even health insurance. I don't particularly find like a joy in paying for health insurance. Okay, but, but I also know that it is part of my rich life to be able to go to the doctor. And that part feels really good. So I am appreciative when we talk about gratitude. I am appreciative that I can pull out my insurance card and go somewhere and I honor that, which is like leaning forward and saying yes. In our family we have health insurance. In our family we have somebody to help around the house. That's it. You're creating that culture. I want to thank Matt and Eliza for sitting down with me today. As you heard in this conversation, breaking out of that frugality mentality is incredibly challenging. And my wish for them is to get rid of the idea that being cheap is a virtue. It's not. It's actually playing smaller than you have to. You don't get any points in heaven for being the cheapest person on earth. So I really hope that they can find joy in spending money meaningful. And I think with some substantial changes they can do it, but it will be up to them to do the work. Fortunately, we have some follow ups. Let's listen first from Eliza.

One of the things that I think most surprised me was that Matt's tiptoeing around some of the financial conversations is probably holding us back from making decisions together and succeeding in our financial communication. And so following our conversation with Ramit, we realized that we needed to rethink a little bit about how we're like mentally categorizing some of our spending to focus on the things that bring us joy and to prioritize things that really advance us as a family and that make us happier. So one of the changes that we've immediately decided to make is that we're going to hire a housekeeper and the first person is hopefully coming this week. And we're also looking into cutting that whole life insurance, reallocating that into just our long term savings bucket so that we could get back more three to six month cushion. And those are probably some of the biggest high level changes in addition to just thinking more about bringing joy with our spending.

And some amazing news. Before Matt had a chance to send his follow up video, their baby arrived. Now, obviously Matt and Eliza are busy, as all new parents are, but Matt still found a few minutes to send me an update. In it he wrote, we are in the midst of hiring a nanny to help take care of our newborn. Although this is somewhat more expensive than daycare, we love having our son around and want to balance work with seeing him as much as possible during these early days. He also wrote, our takeaway I had was that if I wanted something but was uncomfortable to pay for it, I would use Eliza as a crutch, telling myself and maybe others she wouldn't go for it. This is unfair to put on her. If I want something, I need to voice it and push myself to make the right choices, not just hide behind an excuse. I have to tell you, I'm very happy to hear these updates. I'm so happy that their new baby was born and I'm really happy to hear that they are willing to spend on a nanny so they can prioritize their time together as a family. That is a beautiful piece of a rich life vision. Honestly, I'm very impressed with the changes they made in such a short time. Great job and congratulations on the new baby.