243. "She inherited $171K…but it’s already gone."

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We just kind of like get whatever we want whenever we want it.

I think it's been twice where I've had over $20,000 with the credit card debt.

I'm literally spending 150 to 2amonth on Glade plugins for our house.

Is this going to be the first time I violate my own rules?

Deep down what I want is security and I just haven't been able to find it. I've very much treated the money that I've made as mine. Truly. Like I've never considered it our money.

That's when I just kind of realized we're like, oh, we are super screwed.

You've mentioned a windfall.

It was $170,000.

How much of the money is left?

None of it.

You have no savings. You don't have enough to even get one day without an income.

My dreams are expensive.

What happens when you inherit $171,000 and blow through it in less than a year? Today I'm speaking with Mike and Noelle, both 34 years old. They're married. They earn six figures as a single income household and yet Even after inheriting 171k, they have a negative net worth. Their spending has caused a lot of tension in their marriage. Just listen to this line from Mike's application quote, My wife would appreciate if I stopped blaming her for our money problems. Fights are started almost every day and if we keep spending like this, we will have no future.

That's a tough line to read.

I'm going to look at Mike and Noel's conscious spending plan right now which breaks down their net worth, income and where they spend. If you want my help with your own conscious spending plan, you can join my money coaching program@iwt.com moneycoaching here's where they stand. Total assets 29,800 investments 28,200 savings 0 debt 244,000. That gives them a net worth of negative 200,000. But what's really worrying to me is their fixed costs which are 82% of their take home pay.

They've got debt, they've got high fixed costs.

It's not sustainable.

And if they don't change their relationship.

With money now, they will be stuck in this financial quicksand for forever. Not surprisingly, they both think a second income will fix everything. But they already have a high income, so I suspect that more money will not solve their problems. My question today is can they break out of this cycle of overspending and debt?

We're about to find out. Mike, in your application you wrote something that caught my eye. You said, I overly obsess about money and blame my wife. When we live paycheck to paycheck. Take me back to the exact day that you wrote this.

Where were you and what was happening?

That sentence came from me literally obsessing about money. When I wake up, until I go to bed, whether it's checking my bank account 20 times a day, whether it's checking my bank card account 20 times a day, my 401k. None of them are high, by the way. Just to make myself feel better and, and know that there's something in the bank. And it's. It's been a, it's been years for me. It's been years and Noelle has gotten the blunt end of it a lot of the time because we're a one income household. You know, I'm supporting her in graduate school, which I totally signed up for and want to do and love doing it. It just came to a point where I was just so sick of the, the feeling that I felt because I make a decent income and I know we shouldn't be living paycheck to paycheck.

And why do you blame your wife?

Well, I, I blame her. That's a great. But I blame. Because I think she overspends from time to time. But then I always Take it back. Because I. I do try to see where I'm wrong in the situation. And it turns out when I look at it, we both spend too much. But I just react to her in the moment. And then I had to go back and say, I'm so sorry, Noel. I. You're not the. You're not the problem. I'm the problem. And I just. I can only imagine how sick she gets of that.

Just so I understand a little bit more, Mike, when you mentioned logging into your Vanguard account and other accounts, how often are you logging into these accounts?

Literally 20 times a day turn up? Well, Vanguard, probably once or twice a day, but the bank account, several times.

Will you walk me through that experience for just a second? So multiple times a day?

Yeah.

Are you logging in on your phone?

Yes.

Okay. And right before you click that icon, what are you feeling?

Anxiety.

How does it show up? Is there a voice in your head? What does it say? Maybe it's a feeling.

It's more of a feeling. Comfort. I get a lot of comfort just clicking into it. It's almost like an addiction.

And you click into it and it opens up. And are you hoping to see a certain number or are you trying to treating it like, you know, like a baby treats a bottle or a blankie or something like that? Like you're looking for that sense of relief.

A baby treats a bottle? Yeah.

Okay. And then what do you do?

I log out.

That's it? It's like a five second thing?

Yes.

Okay. You know, I think a lot of people listening, they might go like, this sounds crazy, but I think a lot of us listening probably do the same thing with social media. And do you think that this is a healthy behavior?

No, no. It's one of the big reasons I wrote that I reached out.

Okay, I appreciate that. And have you ever gotten help, you know, logging in 20 times a day? Seems like maybe there's something deeper there. What do you think?

Not for this. No. But, yeah, I. Definitely something deeper. Absolutely. But not particularly like this, no.

Okay. Would you be open to, like, seeing a therapist or somebody else about it?

Very much, yeah.

Cool.

Great. All right. I appreciate that. Noel, any surprises in what Mike just shared?

No, not too much. I mean, I've. I see him. This is something that's like, consistently come up. So seeing him get a large amount of anxiety. We had a windfall happen about a year ago where we got 170,000 from a family member, and Mike has never been more nervous, and we've never had as many fights. He Was really stressed out about where the money was gonna go. We need this giant savings account. And like, I was maybe too. I saw it as a gift. And you know, I, looking back, I regret the way I treated the money. But like, I kind of saw it as like, oh, this is a gift. So like more than normal of this should be guilt free spending. And so I.

But let me make sure I understand Mike. In your opinion, Noel, you're saying Mike seems anxious about not having enough money, but when there was a surplus of money, he became even more nervous?

Yeah, he gets worse when he has more money. Like the months where he has when he makes the most because he's in sales, so he has a variable income. But the months when he makes the most money, it, it. The anxiety gets almost worse. So.

Yeah, but Mike, you were covering your face just now. What was that about?

Sorry, I. She's absolutely right. I've had, I've just had times where, you know, I've been in sales a couple years and I had the biggest paycheck ever and I was talking to my. A good friend of mine who got me into sales and he. And I was telling him how miserable I was with when I made that at one time I'd made the most amount of money in this paycheck. And it was just bizarre. I just don't get it when she's talking about the windfall. I was stressing more than ever before on his beautiful gift that we got. Okay.

Noel, what's it like to live with somebody who, as he describes it, obsesses over money?

I think it used to be worse. I think he's kind of suppressed it in a way, like tried to keep it away from me recently in the past. And by recently I mean like the past year. But like, I think earlier on it made me feel like a child, I guess is that's what I would. I. I felt small.

Why?

Because it would be because I have to ask permission for everything. Like if I want to get my nails done, I have to ask permission. If I want to go to the gas station and buy something, I have to ask permission. Like if I want to, you know, maybe change the thermostat more than I should. Like I have to ask permission, but he'll do things like, but he makes the money. So it's like I have no room. So I feel like a, like a second class citizen because like he could go and spend $200 on a Pokemon card on ebay, you know, he'll do something like that. Right? And then I didn't get asked permission, right. But it's because there's this quiet understanding that he makes the money and I don't. And so now it's kind of. I feel like I started fighting back by saying, well, I work just as hard as you, if not harder sometimes because law. Law school's hard.

So you will say, I work just as hard as you. And then what happens?

I work just as hard as him. I see myself as an investment sometimes. You know, I want to, like, stick up for myself a little bit. Like, I'm not. I don't want to live in a 1950s relationship where one person has all of the power and the other person is just deals with it, you know, so. And I think early in our relationship, we were just figuring that out, like, what that looks like. And he took it as, like, well, I'm just gonna stop telling her no. But I didn't really know our financial situation, so, like, I'm spending more willy nilly. And I would ask him for bigger things, and he would usually just let me buy whatever I wanted to buy. And, you know, like, we had a $60,000 wedding, which we are not $60,000 wedding people, to be honest.

Let's one. One step at a time. I want to understand. Mike, you wrote in your application, we agree to spend less, and then inevitably, we both spend more than we mean to and end up living on credit cards until I get paid. Can you walk me through typical payday to payday? What happens?

Typical payday to payday? So bi weekly is when it is my payday. What we usually do is. Or what I've been doing is just getting a decent amount of income and then telling her I got paid. And then I usually have enough to pay off at least enough of the credit cards not to accrue interest for that, you know, paying off a statement balance or something. So I get a rush of feeling good about that. But then we both end up spending too much because she. She doesn't know. I've never been transparent at all about our finances. She just thought I had it taken care of.

Why?

Because I never invited her in. I never told her I needed help with it.

Can I speak to that real quick?

Sure.

Like, last night, well, we were real when I was, like, realizing how bad we were financially, and I was like, I wanted to sign up to do to drive Uber, like, one night a week, because I was like, that could bring in a little bit of extra inc. And he got so upset, and I think he was like, he was Saying it was because of. It's dangerous. But, like, what it came down to was he. And at the end of the night, he admitted, like, he feels like he failed me, that I have to go drive with her.

Right.

But I don't have to. It's just like. I think it would free us up a bit.

Noel, do you see where that's coming from?

Yeah.

Where?

I don't know, like, maybe some old ideas about. I. I think it has to do with, like, maleness and being a provider, but.

Okay, Mike, what do you say about that? I think she's right.

I. I felt like I. I felt like I build her the fact that she thinks she has to go Uber.

Right. I totally agree. This is. This is a pretty interesting example. And I love how open everybody's being. I wish everybody were this open. What were your financial lives like before Noel went to law school?

A lot better. I'll say this.

I.

So I switched from an office job, a desk job to sales job, and it completely changed our lives financially. So rather than getting into a bunch of debt, I was able to pay off all of our just. I was just able to pay off a lot of debt. So I felt like we were getting a footing and.

Noel, what about from your perspective? What was it like before law school? I assume you were working.

I'm going to compare law school with undergrad because I literally did all of that just in one fell swoop in. Or like, during our relationship, I did it all too. So I've been in school, like, our whole relationship.

Got it.

But prior to that, I was a waitress at a diner, like, making minimal income, living very much, pay paycheck to paycheck. I think I avoided a lot of responsibility when it came to me. Historically, I've never, like, paid. I've never paid a bill other than, like, what does that mean? I've never, like, I've never, like, paid a phone bill. Everyone else would have. Like, I lived in someone's. I lived in a room in someone's house, so I would just give them money. Or I lived. My grandma, I'm on her plan, so I just give her money. Like, I never actually had my own bills, okay? So, like, I never really had that kind of responsibility. And so I think stepping into that relationship, I just gave him my income and he paid the bills. And that's, like, how we functioned. Like, immediately.

Hold on.

Sorry. Is that crazy?

It's not me. It's not my role to say what's crazy or not, but my antenna go up sometimes. And I have to follow them. You remember the first time it happened?

I don't. I feel like it was just natural because you made more money than me. You, you were the grownup. It felt like you had the nicer car. I had the junker. You had the 401k. I had a job at a diner.

Like so finish the sentence.

So what, what's the conclusion? How does that connect to handing over your paycheck?

It maybe felt like he was more equipped. I don't know. I just, I think maybe I put myself in a position to be a second class citizen, like right away. I think I developed self esteem over the course of our relationship and have kind of adjusted how I view myself. And some of that stuff has, has just changed.

What do you mean by that? You've changed the way you view yourself.

So I'll share something. I wasn't sure if I was going to share this, but. So I'm about 10 years sober. I'm like approaching that date. And so it took me time to kind of get to a place where I was like, like, I had to be pushed into getting a job, right? Like, my sponsor was like, go get a job. I had to be pushed to getting a job. I had to be pushed into getting a car and a driver's license. I had to be pushed into getting out of my grandma's house and getting into someone else's house. And so I was very, always very reluctant to like, think that I was capable of doing anything on my own. And I think in a relationship I was able to gain a lot of self esteem. But also just having time and sobriety and through our relationship and through just sobriety, like, I just kind of started to learn like, what I deserved and what I'm capable of. And that a lot of the stuff that went wrong before isn't because I'm not capable. It's because I was in a situation, meaning alcoholism. That was really just like making me incapable of doing certain things.

Wow, that's very powerful. And congratulations on your sobriety. That's incredible. I'm just processing that lesson myself. There's a lot. There's a lot there. I can see how that can affect every part of your life, relational, financial career, everything. It actually really provides a whole new lens for me to look at this through. Thank you.

I want you to notice the layers here. On one hand, Mike controls all of the finances, almost obsessively checking his bank account balance 20 times a day. But he admits he's not particularly skilled at managing money. On the other hand, Noelle has avoided any responsibility around managing money. She's never paid a bill herself. She literally handed over her paycheck because she didn't think she could manage it. And understanding her history with addiction is illuminating. Noelle doesn't trust herself, and as Mike mentioned earlier, he doesn't really trust her with money either. When you don't trust yourself or your partner with money, you've now set the stage for a vicious cycle. One person often takes on the role of a micromanager. The other willingly gives up control, almost feeling carefree. But this raises lots of problems if the couple ever separates. The non money person has no functional financial skills. But what's worse is this dynamic isn't even working and trying harder or or just earning more money will not fix anything. It will just make them more frustrated with each other. We're going to get into what happened with the inheritance right after this Think about the benefits that homeowners get simply for paying their mortgage. Sure, they build a little bit of equity, fine. They also get credit score increases and occasionally tax benefits. But what about renters? Renters pay. And besides the roof over their head, what are the structural perks or benefits that we get?

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You've mentioned a windfall. Noel. Can you explain what this windfall was?

So my dad passed away about a year and a half ago. I believe it was a year and a half ago. So he had been caught up in a a lawsuit because he was actually inheriting the money himself from his older brother. But there was a huge dispute. It lasted years and years and years. And then my dad died before, right before the payout came. So I actually got his share. So that's how we came into it. And it was $170,000. And then about a year later we got another 13,000. Just like right around tax season when we needed it too.

Wow.

How did you feel when you received the money?

I think there was a mix of emotions, right. Because it is like my dad died, right for me to have the money and I didn't have a great relationship with him. He was an alcoholic and addict and was really not in my life. And so I had a lot of guilt, like weird feelings where I'd like be mad at him but also feel guilty that I wasn't supporting or playing enough of a role within his life. And so I was afraid. Maybe a part of me is afraid, like, would he even want me to have this money?

Wow.

So I think I treated it like a gift. Like I really tried to just treat it. I didn't treat it like I should have, like, income. I treated it like, like, okay, well, we don't really deserve this anyway, so let's just spend this on, you know, different things. We spent. We, like, we obviously paid off our debt. But then I spent $30,000 at Crate Barrel to furnish our house. Like, I really went for vacation style. I wanted to come home after work and feel like my home was my vacation. I spent 10,000 on clothes and another 10,000 on Mexico. Mike spent, got 20,000 as well for his own stuff. I don't know if Mike, you want to share about that, but that's like your thing. And then we put like a good amount into savings, but that got depleted as soon as we wanted to do ivf. So, like, the money went away fast. Like, we were in this just was. We literally got the money a year and three months ago.

How much of the money is left?

None of it.

Mike, where were you in this, where were you in the spending of this?

You know, I did a, I, I spent a lot of money too.

What you spend it on?

I guess we're all, you know, we've been all honest here. I, I got a, a hair transplant. A hair transplant.

Oh, okay.

Yeah, yeah. We can't all have hair like you and did that. And then I, you know, I spent 10, I spent 10,000 on just some clothes. And I have this love for, you know, nostalgic Pokemon cards. Spent a lot of money on those.

Okay.

And I justified. Oh, this is an investment. No, so like, I, I, I had a huge part in this as well.

Like, honestly, so much of that should have just been invested. Like a, like more than 50% should have just been invested.

That's pretty powerful. I agree. If you had taken a hundred thousand dollars in your 30s and invested that money, that would turn into a TR. And just let it sit there, never touch it again. It would have turned into a tremendous amount of money. What I want is for both your monthly spending and any unexpected income to have clear rules. What am I going to do? Like, my wife and I have a set of rules. If we make unexpected income, this percent goes here, something like 50 or 70% goes to investments, guilt free spending, et cetera, et cetera, et cetera. I want everybody to have that because then you can just run your playbook and you don't have to make these arbitrary decisions. When you make arbitrary decisions in the heat of the moment, you sure, you might get some very nice furniture or a nice trip to Mexico, but you're not following your rich Life plan. Do you have a shared vision of what your rich life is like? A specific shared vision?

I think we have a tendency to like this, to like go and want the same things.

If you had no debt, what would you be doing?

I would be able to, I think to a reasonable degree, spend some money on my parents. We would have a large savings. I would like to, I would like to own a house, but not one in the US I would like to buy a house in Costa Rica and, you know, rent it out and one day go and retire in Costa Rica and like, maybe do like a little bit of remote legal work and part time and, and just enjoy our lives and set our kids up for success where they could do whatever they wanted and go to school wherever school they wanted to go to and.

Okay, Mike, what about you?

Raising kids, having fun raising kids. I mean, I love the idea of the Costa Rican house. And my rich life would be security, which is such a low bottom, as I'm saying it, that that's. It's hard for me to think of much more than that because I've just never felt like I've had it.

I love it when couples share their.

Rich life with me.

For Noel and Mike, it's Costa Rica, freedom and security. But I can guarantee that when we get to their csp, I will not see anything that points to that stuff in their spending. They haven't mentioned saving for a house. All they've mentioned so far is $30,000 worth of crate and Barrel furniture, cosmetic surgery, clothes, and Pokemon cards. And I'm not judging any of those purchases. But they are not aligned with what they claim is their rich life. In addition, when you inherit money from someone, especially someone you had a difficult relationship with, it can stir up a lot of conflicting emotions. It's very common to see people treat an inheritance in peculiar ways. Some people struggle to spend it. Others see it as a gift to be spent quickly, sometimes as a way to distance themselves from the emotions tied to the money and the grief. But what you choose to spend your money on leaves clues. And I can tell you right now that their rich life vision is completely out of alignment with the way that they spend money. The good news is we can change that. But first I need to understand a little bit more about how they got here.

How often do you fight about money?

Well, when he didn't include me, it was actually a lot less. Since we've gone on this, since we've gone on this podcast, he has. You've been, you've included me in It And I ran all the numbers and I kind of took over. We got Monarch money and I just kind of started budgeting things down and realized, like, what we can actually. What our actual income is if you average out the variable and what we've been spending. And I, like, realized we were. He had every reason to be worried and we were in a very bad position and I kind of panicked. And like, I. I yelled at him like two days ago for buying a twenty dollar pack of chicken when I said small pack of chicken. And he got the big pack of chicken and.

Oh, wait, like, I recreate this. I love a good chicken fight. Yeah. All right, so take me back. Where were you when this happened?

Okay, so I'm at home. I'm hungry. I've been trying to not buy any groceries at all. So I've been just like, living off of whatever's in the house. I tell Mike, go, I need you to go pick up some chicken. A couple of other things. And I say, specifically in there, small chicken. And he brings home a large chicken. It's $20. I see on the price label that it says, like, 17 something. And I'm immediately angry.

What do you say?

I yell, this is not a small chicken. I said small chicken. Did you not read my text message? Like, I immediately start accusing him, trying to back off, because I know that I'm being aggressive, but I like, I. I like, cannot help myself.

How do you do that? Like, what exactly did you say?

I'll apologize and then I'll bring it up again.

And then I'm like, well, I'm gonna eat the chicken. Like, it's not a big deal. I'm gonna eat the chicken. I'm gonna put in the freezer, and I'm gonna. And we're just gonna eat it.

Okay.

And that's.

But the one thing he doesn't remember is that we actually already had chicken in the fridge. I wanted chicken thighs. We already had chicken breasts. So, like, we have an overload of chicken.

But I actually did remember.

Yeah, I just like chicken and I'm just angry. It's so stupid. I know it's stupid, right? Like, I know it's stupid.

Why do you think that this fight came up? You know, you saying it's stupid, but it happened. Why? Why do you think that the fight actually happened?

Well, I keep getting irritated because I feel like he's not. He doesn't pay attention to, like, the details or he's not conscientious about little things. And I think that's part of what put us into this position? Sometimes, like, I think you just weren't conscientious of. Of just the list, but also, like, didn't think, like, okay, like, we are seriously budgeting. We've already spent more than our budget for the Munch on Growth groceries, so every bit of money we're spending right now is borrowed.

Can I ask a couple questions? Noel? Did Mike know that you had already exceeded your grocery spend for the month?

Well, I keep. Did you. Did you know? I actually don't. I assume you knew because it's on Monarch. Yeah.

Yeah, it's. It was. It's difficult. We still need to eat. And I know because we just combed through our finances two weeks ago. That's when we created this budget, and we were already $3,000 of our budget two weeks ago.

So is the conclusion, like, we're already over it, so, like, might as well just.

Totally. Absolutely. And I know I'm gonna eat the chicken, but also, I could be more conscientious. There's no doubt about it.

I was being crazy. I just want to put that out there. It's not normal to, like, freak out over $10 of chicken, but I grew up in a situation where, like, $10 made the difference. Like, I. I, like, have a vivid memory as a child of sitting at the. At our, like, little kitchen table and my mom doing the budgeting and saying we had an extra $20 and that we could go to the movie theater that month and thinking, oh, my God, that's so exciting. Like, and here we are just throwing away $20. You know what I mean?

So one of my favorite parts of my job is hearing people recreate tense conversations they have about money. I love being able to sit here and listen in, and this fight about chicken is incredibly revealing. Remember, until Mike applied for the podcast and they actually had to do a conscious spending plan, Noelle had no idea what their financial situation was. They had never had a substantive conversation with around money. You've got to understand that most couples have never had a truly deep conversation about money, even after being married for 25 years. That is why I wrote my book, Money for Couples. Because when you dive into these money conversations years into a marriage, it can be like opening up a Pandora's box of unspoken expectations and past decisions and differing money philosophies. Noelle vividly remembers that $10 meant something special to her as a kid. The ability to go see a movie with her mom. So it's no surprise that they're having a heated discussion about chicken, because they've never really talked about what money means to each of them without that foundation. There's very little curiosity, very little empathy in these discussions. It just goes straight to being defensive. Each partner in their own corner of the boxing ring listen as I show them a new approach.

Noelle, I don't love hearing people describe their own behavior as crazy, especially women. It's not good. It's like, got a long history of not so great origins. In addition, you called yourself crazy, and then you referred back to your mom having $20. I'm not sure that's a healthy relationship. With money as an example, here's what I think a healthy relationship might look like when it comes to this decision. Both partners would be involved in the key numbers. Both partners would understand the four key numbers. Fixed cost, savings, investment, guilt free spending. Each partner would own a certain number or numbers, like groceries. One person is the grocery person, and it is their job to own that number and to make sure you don't exceed it. Sometimes life gets in the way and the partner brings back some larger, whatever, chicken order. The question is like, is this going to destroy our financial future? And a healthy relationship with it is really about being able to ascertain the difference between a $3 problem and a $300,000 problem. Similarly, I would say that the person who's going grocery shopping should probably press for specifics. Hey, this is what I'm planning to do. Are you cool with it? And this is the number I understand we can spend. Are you cool with that? Okay, good. Otherwise, we can't police everybody's every decision in a. It just becomes laborious. How does that strike you?

It strikes me as healthy.

Okay, Noel, I think it sounds healthy. I think I need to work on control issues because my instinct is I don't want to let go of it.

But maybe both of you, interestingly, have different types of control issues. I would like to take a look at your numbers. I think it's going to help me understand what's going on. What was it like doing the conscious spending plan together?

It was eye opening for me. I'm going to be honest. It was very relieving for me to add her in to get some help. Even all of our financial conversations the last two weeks have been stressful and just not fun. But even with. With all that, it's like, I just feel like I got some relief.

I think it was just shocking initially. So, like, initially looking over the numbers, realizing, like, how much money he's making, how much money we're spending, and how much we'd gotten ourselves into debt. And, like, I just had no idea. I think. I think that was where I was really shocked. The conscious spending plan that, like, you had us do, like, right prior to that, like, we had kind of looked through some of our finances at that, like, and just realized, like, that's when I just kind of realized they're like, oh, we are super. We're super screwed. So.

So was it depressing or was it connective? How would you describe it, Noel?

It was scary, I think is the best word for me. Um, I think it was scary because I'm realizing, like, okay, we have this credit card debt specifically, and. And that was really mounting. And I wasn't expecting that to be so high. And then to look at the interest rate on it and then, you know, to really take a look at, like, our student loans even, like, recently and to see, like, oh, wow, these student loans, especially, like our graduate loans, like, have such a high. Some of them have such a high interest rate that I'm just like, great. Like, it just felt very overwhelming. I'm like, literally to the point where I feel like all my dreams gone and I have to start, like, as soon as I get a job, 70% of my income needs to go to debt. Like, that's how I feel.

Okay, let's take a look. Mike, I'd like to ask you to read the word in bold and then the number in full next to it for this entire box. Go ahead.

Assets, 15,534. Investments, 28,202. Savings, 0. Debt, 244,774. Total net worth. Negative 201,038.

What do you think about those numbers?

The net worth was embarrassing. I was embarrassed very much so.

Tell me more. Why embarrassed?

Well, I didn't think it was that bad. Living day to day was paying off everything. And the money I make, I didn't think it was that bad. But then when you essentially make us look at this, this number, specifically net worth, and it's like, no, there's. I always thought there was a gray error with student loans, and there's not. It's like, we owe that money. We're in debt. Like, this isn't. This is real.

So negative $201,000 of net worth. Let's take a look at the income. Noel, can you read off your combined gross monthly income, please?

Our gross monthly income is $13,000.

Okay, 13k a month, which means your household income is $156,000. And I want to note that this is a one income earner family for right now because Mike is working, Noelle.

Is in law school.

Presumably when you graduate, get a job, your income, Noel, will go up substantially from zero. Cool. Let's continue. So Your net is 10k a month.

All right.

Yeah.

And now we're going to look at the four key numbers of the conscious spending plan. First off, we have your fixed costs. Mike, what's this number here?

82%.

82%. It's pretty high. Like to see it between 50 to 60. We'll come back to that. Investments zero. I know you have a little 401 contribution. Yes, well, it's more than a little $780 a month. All right, so that's pretty good. We have savings of zero and you have zero dollars in savings and then guilt free spending at 18% or $1,844. Is that number accurate?

Yeah.

Okay. Mike says yes.

Noel, That's.

I mean that's the number of our ideal situation. Right. Like so in reality, this month alone, we've already spent over $3,000. So in that category, what do you.

Spend extra beyond 1844?

Doggy daycare, going out to water worlds, going out to eat. I bought shoes that were over a hundred dollars.

Keep going.

It turns out I. I'm on the road almost. I drive about 50 to 60,000 miles a year for my job. Turns out I was spending over $350 just at the gas station. Energy drinks and lottery tickets. When I looked at the numbers, I was like, this can't be right. But it was unfortunately a loss.

Okay, can I ask a little bit about the debt? So $244,000 of debt. Can you break that debt down for me?

Yeah, I think I could. I think right now we had about 180,000 in student loans. Uh, we have 22, $23,000 of credit card debt. We owe my mom 19,000. I. We took a loan from her.

I think you're short about 20k on this debt. Do you think that your student loans are 20k higher?

It's gotta be student loans.

So 200k of student loans.

I mean you've got 60.

Yep.

You've got 63 and then I've got the rest. I just pulled out 52,000 just for this year.

There's a lot of numbers. I just want to know how much you owe.

That should be right.

200K in student loans, 23k credit card debt and 19k. Mom. Now my question is, do you have a plan for this debt?

Yes. Now we do tell me. I wish we could pay it off faster, but right now we've been paying his mom $500 a month, and that's just standard. Every month we're, we're giving her that. We have an automatic transfer set up. And then now we've set up an automatic transfer for credit cards. We're paying $1,661 every month.

Okay.

Towards the credit cards.

When is the mom debt going to be paid off?

We do the math. It was like 33 years, I think. Yeah. Okay, cool. Ideally soon. Ideally sooner.

And what about credit card debt?

Credit card debt is like, I think 15 months is what I think I calculated.

Good.

Great.

And student loans?

Oh, look at the reaction, everybody.

Hold on, hold on.

I gotta describe this. They both just like visibly deflated at the same time.

Like they blew air out of their.

Mouths, you know, like a cartoon. And, and what is the. Is the idea like it's so big, like we can't even begin to fathom it. Is that the way you feel about it?

I mean, we can't. We've talked about it. Like, I know how we're going to do it. It just, it sucks.

Okay.

It's. When I get a job, I'm expected to make probably between, I mean, take home, maybe 80 is what I'm imagining. And then put 70% of that towards student loans. Literally every paycheck, just 70% of it, is going straight to student loans. Specifically, we're going to target the 8 and 9% numbers and then save the lower numbers, the 2, 3%, and just kind of make minimum payments on those while we do that.

How long will it take you to pay them off?

I think I'm looking at like two and a half years. I think that's right. I think I'm looking at for like two and a half years because I'm not. From my understanding, it's not smart to pay them all off when it will grow faster in investments than it will depreciate in. So the, the, the, the interest rates that are like 2, 3%, like those ones are getting minimum payments.

Where's the depressing part of all this? This sounds like a great plan to me. Where's the depressing part?

I. Well, the depressing parts comes in like, my dreams are expensive. I have expensive tastes. And I wish I, I wish we could have a different. You know, we've got IVF going. I like, this is. So what I'm specifically thinking about is I really want my kids to go to a really nice private School. I've literally already picked out the private school nearby here. It runs, like, $38,000 a year per kid. That is my dream, like, for my kids to be able to go to a school like that. That is just going to set them up for success for the rest of their lives. But I would literally be working for them to do that.

And.

And I'm literally to the point where I'm like, well, I wanted to have three kids. Now maybe I should just have one kid and.

Okay, can we. Can we. Let's take a step by step.

Okay?

200K of student loans, paying that off in approximately two years, maybe a little longer, but approximately. Do you think that that is above, like, faster than average, average or slower than average?

Very faster.

Very fast. I agree. Extremely fast.

I don't want to sit with it. I don't want to sit with it.

Okay, we can talk about strategies, but I just want to point out that you're making a choice to pay them off extremely aggressively.

Mike, where are you in this?

I've honestly just been grateful for Noel's help on everything, and I think it's a great plan. Okay. I feel like for the first time, I actually have some hope of getting out all this stuff. It's just so funny. I had to invite my spouse into. And I'm just surprised I never did it before.

Mike, you know how many men come on this show and we'll talk for, like, two, three hours? And then I finally realized something. I'll go, you ever ask your wife about money? And they'll be like, no. And I'll be like, you ever ask your wife anything? And they will literally say no. And I think you are showing us an example where that doesn't work, of envisioning yourself as the provider protector, especially when you need help, but by opening up that communication conduit and just by inviting them and saying, look, I need help. We got to do this together. Two people as a team. There's no way one person can pay off $200,000 of debt. It's not going to happen, especially if one person doesn't know and they're spending. What you did and what both of you have started to do is to start to talk about money openly. Now, sure, there are some things we need to iron out and we can work on that, but the fact that you're doing it together is way better than one person being in the dark and the other not really leading them in the right way. You see that?

Yes. All right.

I think you should both be recognized for how far you've already come.

I've got to give them credit. I am really impressed that Mike and Noel have created a debt payoff plan. That's a big deal, especially since Noel just got involved in their finances. But I'm a little concerned that their debt payoff plan is too aggressive, maybe even unrealistic. And it's interesting because the relationship we have with debt in America is often all or nothing. Many of us will ignore debt for a long time. We don't open up envelopes when the statement comes. We pay the minimum. We don't really understand how debt works, but we just know debt is bad. I have debt, therefore I am bad. In rare cases, I will see couples like Mike and Noel and they'll finally.

Go, oh, all right, all right, we.

Got to pay down this debt. And then what they will do is they will go all, all in. They will literally put every single dollar they have towards debt. They think they're doing the right thing, but really they are operating by the invisible script. It's all or nothing. But that all or nothing relationship with money is very unhealthy. Remember just a minute ago they said they've already spent $3,000 on guilt free spending this month. That's nearly double what they've accounted for in the csp. That alone tells me that unless they're able to drastically reduce their fixed costs, this plan's not going to work. I appreciate that they want to attack this debt. I wish more people felt that aggressive about paying off debt and about building their retirement instead of buying a freaking commodity that they don't even really want. But the question I have is are they actually prepared to make the choices that go along with this plan? Are they willing to make significant lifestyle changes or are they basically setting themselves up for failure? If you are looking at your own spending and you are realizing that something is not working. If your plan looks good on paper but for some reason it never sticks.

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Ramit can we look at the the fixed cost for a second?

Yeah.

Your fixed cost rate 82%. That's high. That explains a lot. Not all, but a lot of why you are stressed out about money.

Can I say that since we filled that out, we had to buy Mike a new car?

Oh good.

So that.

Oh good.

It's not.

I'm wait. I've been. Wait. I've been waiting to say that.

Tell me.

So like I said, I drive to do 60,000 miles and I've put I probably put in about 30 $500 into my 240,000 Chevy 2009 Cobalt.

How much did the car cost out the door?

Fourteen. Eight.

Okay. All right. I respect that used car. Great.

Love it.

Alrighty, let's take a look at the fixed costs.

Here we go. So we will update the car payment as necessary, but let's take a look. Your rent and all that is 22 or 23%. Not bad, not bad. And how about your car payment? Total gas? All of it.

So add 265 to that number.

Okay. We're going in a direction that usually we don't go on this show, but. All right, we're at 87% fixed cost. Let's take a look at the rest of it now. So we have car payments of $1,213 a month. Debt payments, $2,161 a month. Groceries, 800amonth. Clothes 100. Phone is 88.

Pets, 316.

Charity, 500 and subscriptions, 183 per month for a total fixed cost of 87%. What do you think about that?

I don't know what to think, but it seems high.

I did everything I could to try and like bring that down and make it reasonable, but it just seemed impossible. Like we were spending 600amonth on doggy daycare. It was like literally the same as childcare. And I'm. I've switched to going on Rover and getting a dog walker to come by our house during the day. And that saves a lot of money.

Do you guys think that this is sustainable, financially speaking?

What do you mean?

The fact that you are spending 87% on fixed costs, that you have zero in savings, roughly zero invested.

I mean, I think some of this is temporary because we are spending 20% on debt. Right. And like ideally in 15 months, once the credit cards go away, that number is going to go substantially down. Some of these are choices that we've made. Like the 5% of our income goes to charity. Like that's obviously something. And we've negotiated that because that I initially was really hard nosed on that being a 10 number. And we have negotiated that down to 5%.

Is this sustainable? Because it sounds like you're. You're like comforting me.

I think it's possible. I don't think it's fun.

What's not fun? You have a relatively new car. You have a place you rent looks like a nice place. You have a dog walker, you have food. What's not fun?

I don't know. I think the Way we lived before was so nice. I. I would love to, like, have a little bit more of that back, which is part of the reason I want an alternative income.

So, Mike, tell me a little bit about what you do for a living.

So I do in home sales, so I go to people's homes and I sell them on bathroom remodels and showers. Okay.

And is your salary. Is it commission based? How do you.

100%.

100% commission based? Yep.

The good news is, is the trajectory has just been. Has just gone up. But monthly is the bigger swing than yearly. I'd say right now, you know, our lowest month, I think in January was. I think I brought in 5 or 6,000 net.

It was like 4,500 was the lowest, and the highest was 27,000. So it's.

How do you plan around that?

I made a plan.

Hold on.

I want to come to you. Noel, one sec. But I know you only recently started getting involved in the finances. So, Mike, how do you previously plan around.

I never did. I never did. Which is one of the main. I wanted to ask you about it because I just didn't know. My buddy always told me to save, save, save, because he's been doing it for so long. And we just never did. Okay, so.

And Noel, what about when you started participating with the finances? What. What did you do regarding these swings?

So I'm made a separate savings account. We have a separate savings account. That's the rollover fund. Since the biggest swing we saw was 4500, I wanted enough to make up for that 4500 in a rollover account. So the way we're doing it is 10,000 goes into the main account, and then up to 5,000 goes into the rollover account. If the rollover account ever gets above $5,000, that goes into credit card debt. And on the second of every month, we make the transfers, but we don't make transfers any other times.

Okay, that's pretty good. I like that. I like. I like the. Conceptually what you're doing. Can I make a quick suggestion?

Yes, please.

So the fact that you are building the. You called it a rollover fund based on 4500 is a good start. I would encourage you to do six times 4,500. Because if Mike were to get laid off or business were to dry up or whatever, one month of the lowest income he ever made is not going to cut it. Like that will be destroyed very quickly consumed. I also want to say, I don't.

Know that I typically don't do the.

4,500, the lowest amount he made. I do the amount that we need to keep the lights on. That's a key difference. So the amount we need to keep the lights on means what we need to pay Our fixed costs 6 times your fixed cost, which would be considerably higher, would be six times $8,711. And that's separate from an emergency fund, by the way.

That's separate. An emergency fund is totally separate.

This is just for people who have big swings in their income, as somebody who makes 100% commission does. Please remember though, nobody fills up six months fast. It takes years.

So. But is that smart to have that when, like, you have debt that the percentage that it's growing in savings is not. Does not equate to the percentage that you're losing and the 27% credit card rate will just like destroy you?

This is an excellent question. And so, yes, if you have high interest credit card debt like you do, you should probably paying aggressively towards it. But at the same time, what if Mike loses his job like tomorrow? What would happen to you guys?

I have to find another job, borrow more money.

No, that's not really an acceptable answer. We'd have to borrow more money. You guys are up to your eyeballs in debt right now. Yeah, over $244,000 of debt. So that's not really great. You'd be in a bad spot. You don't have enough to even get one day without an income. You have no savings. And so that is why sometimes you have to make a trade off that says we need to put some money.

In savings even though it's going to.

Cost us more in the long term. Noel, you look like either confused or you disagree with me. Tell me you don't have to agree with everything I say.

I don't know. I guess maybe I'm just looking at it too much as a math problem. As a very simple like this is this percent. This is this percent. Just follow the money. But I don't. Yeah, but if that's okay, obviously do whatever you say.

But hold on. I don't want you to do whatever I say. I want you to take the principles that I talk about and adapt them for your own needs. I don't mind if the guests I have on my show, including both of you, disagree with 30% of what I have to say for I don't mind, but I want you to understand why.

So if this were just a math.

Problem, why come talk to me?

That's a great question. It's not just a math problem for me. I mean, it's what I. Deep down, what I want is security, and I just haven't been able to find it, grasp it, build a plan for it.

Okay, and Noel, if this were just a math problem, why come talk to me?

Because I'm very new, I guess, to finances, and maybe I'm just like, looking at it as a math problem, but I don't know the realities of, like, what it looks like if someone loses their job and what it looks, you know, I mean, like, I don't know, what if that's what makes sense, you know, not putting accruing more credit card debt in the event of a disaster happening, but instead just having a savings account, even if it isn't appreciating at the level that their credit card debt is.

I can give people the perfect freaking money plan, but if they just hate.

Debt, they just hate it.

They're gonna go, I just want to pay the debt off right now. Just get it off my back. Just get it off my back. And I have to account for that. I want you to account for that too. Noel, you could roll the dice and treat this like a math problem. Purely put all your money towards credit card debt and maybe you will pay it all off in two and a half years and. And that's great.

More likely.

Here's what I think happens. I think in the next two to five years, one of you has some type of career pause, interruption. It could be a layoff, downsizing, lateral.

Move, salary decrease, whatever that happens.

I'm not saying it's you two. It just happens. I think that the two of you.

May be debt free, but if you.

Were debt free tomorrow, would you have a healthy relationship with money? Probably not.

No.

So as soon as you were debt free and you're making a lot of money with the combined incomes, what would happen? You go right back into debt and then you're playing this game for the next 40 years of your life. That's why I'm not treating this only as a math problem. The math matters for sure, but there are so many other elements going on here. I want to talk about the fixed costs here you have $800 going towards groceries. Is that accurate?

Actually, what we've been historically doing is 1200. And that's not eating out because I'm the big spender when it comes to that. And I know I can change that. But like, I would get the most expensive. Like, if I'm going to make caprese, I'm going to Go. And I'm going to buy the fancy mozzarella buffalo cheese. How much is going to. What is that, like $20? I'm going to get probably like 10 to 15 for that one. Okay. So if I'm going to get. But I'm not looking at prices. I'm always getting exactly what I want and I'm just being honest. Like, that's kind of what it looks like.

And.

And then like, even like. Sorry, just to give you an idea, but this isn't part of our grocery budget. But I've. Since then we've talked about it and I've worked my way. But like, Glade plugins, I would get the most expensive plug in one where, like, I'm literally spending like 150 to $200 a month on Glade plugins for a house.

Did you grow up for.

Yeah, yeah, I did.

Glade plugins. Like, this is a big tip off. Okay. A lot of people are going to get really mad at me, right, Ramit? Are you saying I grew up poor? Because I have great plugins. Maybe if you have like seven of them in your house, odds are pretty good you grew up poor.

I think. I thought we have money and now I don't have to. I wanted to buy all the things I could never get. I get that when I was younger.

And then how much do you spend on these plugins? You said a hundred bucks a month.

Yeah. So I'm probably buying. They're like $30 for a pack of five. I'm probably going through about four months. I get the most expensive one. The vanilla one is like the most expensive one. We've since switched and I budgeted myself to using five every two weeks. And I've got the cheapest.

You know, Ramit, Satan doesn't like to judge. Okay, okay. Ramit Sethi wants to create a safe space. Is this going to be the first time I violate my own rules and just tell people no more buying $1,000 per year of Glade plugins when you have $244,000 of debt. How does that strike you?

I didn't know we had 200. I didn't know when I was doing that. I really had no idea. Like, I thought that we were making really good money and everything would always work out because it always has before. I think I used to be. I used to be what, like, you called, I want to say like a dreamer or what is it? It's the one that, like, tends to be the get rich quick quick schemes. That's the dream the dreamer, I think I used to be. I think more like that. But that's just because I would call him and I'd be like, hey, I want to get this. Does it fit in our budget? And then he would just basically look at and see how much income he made. Is it a good month or is it a bad month? And if it was a good month, I can get it. And if it's not a good month, I can't get it.

This, this is so fascinating. On your fixed costs, I have questions because we have $316 a month on pets. What's that?

So he has $180 a month dog food. I think that's not including. We mix two foods together. One is $100 a month. The other one is we get two bags of this green food that mixes in with it a month and that ends up being like another $200.

And is this a joke?

$600 on he is our child. I guess it's not for real. This is. Yeah. So we. Pet costs will include. I'll include in that. Like if we go to the dog beach, you have to spend 15 for parking. I'm like, that should go into a dog fund because this is a. For the dog. If every time I buy him a toy or. Or whatever. A toy. Probably a few times a month. Yeah.

Damn.

So a lot of money goes to the dog. A lot of money goes to our dog.

What's the minimum you could spend on your dog? I know this. I know this sounds callous to all.

The dog owners, but we have somebody in $244,000 of debt.

I have to ask the question, Noel.

How much was the Purina that we used to get?

$72.

So. And that would last how long?

Six weeks, I think, roughly.

Okay, so about $70 a month. We'll just say that to be Safe. And then $33 a week for the dog walker. So $105 a month total.

Yeah. Yeah.

That would be minimum. Bare minimum. Yeah.

I'm taking this number down because we got to get the number going in a different direction.

What'd you say?

1, 105. 105.

Love it.

Look at this number. 87%. 85%. That's what I'm talking about. You said you spent $3,000 on guilt free spending this month.

Yes, yes. Over that, what'd you spend going out? I bought shoes that were over $100. We went to go get like some board games and spent $80.

We had some friends in town, so we overextended ourselves. We wanted all of us to have a really good time at a theme park, so we bought certain things.

What does that mean, certain things you bought? Well, like.

Like, we bought a cabana so everyone to be there.

We had all the fast passes. We got a cabana. We just kind of, like, get whatever we want whenever we want it.

Do you want to keep doing this?

No, I want to be more thoughtful about it. I still want to be able to do nice things for myself, but I want to make a choice about it. But you know what? I do want to have a Glade budget. I don't know why I care so much about these Glade plugins, but I do want a Glade plug in budget. I do want. I do want to be able to get myself nice skin care.

All right, let's. Whatever. It's your money. And then charity.

We're coming.

That's hard. Yeah, that's. I already bent, like, 5%, and that's, like, a religious thing for me. It's like, the most important thing.

I'm jumping in here because this is frustrating to hear. And I know what you want from me. You want me to verbally eviscerate them for the choices that they are making, for spending money on things like theme parks and cabanas and refusing to give up Glade plugins, plus giving 5% to what she's calling religious charity, better known as tithing. There's a reason I'm not raising my voice and getting frustrated with them, even though it is frustrating.

Think about it.

If you were locked into something that became part of your identity, maybe it's going to this specific gym. Maybe it's treating yourself to a latte every Tuesday after you drop your kids off at daycare. If somebody like me came in and just berated you for the choices you're making, how would you feel? Really? Think about it for a sec. Think about something that is near and dear to you and your identity. Like, if somebody came to me and started yelling at me about my choices to stay in luxury hotels, I would feel angry, maybe even ashamed. Even if I was making a bad financial choice, I definitely would not want to listen to that person's advice.

Though.

A lot of you have gotten too used to seeing random financial personalities screaming at people on the Internet about their bad decisions. And you think that's how behavioral change works. A lot of you believe that money is just about making decisions on things like bagels and what potatoes to buy. Money is far more complicated than that. Money is about the systems and structures around you, like health care and your ability to attend higher education. It's also about identity, which is often passed on from your parents and grandparents. And yes, money. Money is also about personal responsibility. Everything that they're describing spending money on has become a part of their identity. Me sitting around and yelling at them about spending money on some commodity is not going to change their identity. It's just going to make them retrench, agree with me for five minutes, and then go right back to the thing they were doing. Think about their identity, showing their friends a good time when they visit. Having a house that smells good is part of Noel's identity and tithing is too. So now, instead of yelling at them, I'm going to get more curious about where all of these hidden scripts stem from. I want to talk to any parents listening right now. Are you putting the same amount of effort into protecting your kids future if.

Something were to happen to you? Accidents happen.

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Can I understand a little bit more, Noel, about how you grew up?

Sure, yeah.

Take me back to your childhood. If. If you think back to what your family said about money when you were young, what do you recall?

My mom was always really smart with money. She had me at 18, moved all the way across the country. It was just me and Her. We've at times lived in one bedroom apartments where we'd have to share a bed. We, you know, would live off like the cheapest food you can think of, like ramen and spaghetti noodles and like things that were very affordable. But I was, I was happy. I felt like my mom kept us feeling safe and, and, but we didn't have extras. Like I would, we would go out to eat once a year. I'd get to go to Red Lobster on my birthday.

Wow.

And that I thought was so fancy. And then eventually, you know, you get older and you're starting to see that other people have things that have like brand names or just like look nice and you realize you'll never have those things. I just feel like, lesser.

What was the brand that you first remember feeling envious of?

So I grew up in the Abercrombie age, you know, so like that was the thing for girls. Like the girls that were pretty and, you know, were all able to afford and wear Abercrombie and. And I'm over here in two year old Gap and thrift store clothes, you know. So.

Did you ever find yourself purchasing something from Abercrombie?

I have a large part. A large. Even though Abercrombie is not what it used to be, a large part of my wardrobe is Abercrombie today.

What does it feel like to buy stuff from Abercrombie now as an adult?

I feel good. Like, I feel like I made it. Like, it's that feeling of like I made it. Yeah, okay. Like everything's okay.

Is your mom still with us?

Yeah, my mom is a college professor now. She was going through school the whole time that I was growing up.

Wow.

So that's why we were so broke.

What did your mom tell you about money?

I don't know if she even told me anything. Like, I don't feel like it was ever spoken. I think she was a very stressed person when I was younger. Sometimes I feel like she might rain on my parade a little bit by telling me when things are unrealistic in my dreams. Like, like if I want to do certain. Like I told her that I really wanted for a retirement plan to like buy a house in Costa Rica and invest in that. And she was just like, that's not smart and that, you know, and she'll just tell me when she thinks something isn't realistic and like she's raining on my parade. Like I can't have nice things or I can't have. You know what I mean? Or when I do it, it's like an act of rebellion almost.

Talk more about that.

We are the. We're the opposite like my mom and me. Right. Like she had. I love her so much, but we are different. Like we. I guess I'll come back to this. Like I had a sixty thousand dollar wedding. Her wedding. She wanted to have as cheap as possible. She will get her wedding ring off Amazon. I got, you know, both of us, like between us. I got a. How much were our wedding rings? I don't even Remember. It's Mike, 10 grand for both of. Yeah. So she wouldn't even dream of doing something like that, you know. And so when I do things like that, I think she's kind of like, oh, you're bougie. I don't know where you get that from. But at the same time I, I think there is a slight bit of disappointment.

What is your reaction when she says that?

Well, I want to be. I want to defend it. I think part of me just wants to be like it's, you know, like if I'm allowed to, to want to be cute and I'm allowed to want to have a nice wedding and I'm allowed to have my values and you're allowed to have your values and they don't have to be the same thing. And neither of us is right.

Mike, I'd love to ask about how you grew up with money. What do you remember your family saying about money when you were young?

What I learned about money in the beginning, how I grew up is I got everything I wanted. I really did. I was in middle class family. I remember one year I got like a. A drum set and a PlayStation for Christmas or a Nintendo 64 or something like that. But that's just a lot for a kid. I was the youngest of three. I have two sisters and I, I truly was the youngest one. I just got everything I wanted from what I can remember. So when it came to like financial lessons, I just learned that I should be able to get what I want. My dad provided he. We were a one income household. My mom stayed home and my dad was, was working a lot. And then, you know, I was too young to really understand the dynamic, but the parents got divorced and then, you know, my dad, his business didn't work out. That was providing so well for us, but I still felt like I got what I wanted, you know, emotionally. It was a kind of a whirlwind. But it's in terms of financially, I always felt like, you know, I played lacrosse, a very expensive sport. Got all my Gear went in all the trips and I was in private school for six years. Yeah, I just seemed like I, I got what I wanted and then when I got my first credit card, it turns out there's fees associated with that. I remember I like bought like nothing fancy but like two 2500 worth of watches because I just wanted it because I had a, a credit card. And then I, then I remember going into debt 6 or just not almost not being able to pay my rent and my rent was like 500 bucks at the time. And I went and pawned all these watches that I spent 2, 500 on and they gave me like 200 bucks. And so that was my first lesson. Credit card debt.

What was the lesson?

That's, yeah, I, I think I'm just lying on my teeth because I didn't really learn anything because I got in credit card debt right after that. But the lesson should have been, you know, live within your means. But I didn't take that way.

How long have you been in credit card debt?

Since I was 20. Since I was 20.

That's 14 years ago.

Yeah, I think it's been twice where I've had over $20,000 worth of credit card debt. But I was able to get out of it being responsible, being, you know, paying up, just allocating everything to just credit card debt. And I was working a 60,000 year job and I got out of it in a year and you know, after Noel and I's wedding we, you know, we earned 40 but we were able to get out of that with my income plus the windfall we got, which.

Is, it all just feels a little frantic to me.

It is like frantic.

It's been frantic for decades, you know.

Yes.

Getting a credit card, going to buy a bunch of watches, pawning them debt, pay it off, do this, make this income, pay it off. That's not how I think about my money and that's not how I want anybody to think about their money. I actually want them to be calm and cool and sure, get a nice thing, get a couple nice things depending on your abilities and what you love. But calm and cool, simple, not rushing around and making one off decisions. Question for both of you. How do you think your experiences growing up with money show up in this relationship?

So I very much treated the money that I've made as mine and I've really, I've really never, as much as I've told her, as much as I've, you know, said you can get whatever, I've never subconsciously, truly like I've never considered get our money before.

That's honest. All right, thank you very much, Noel.

Money is scary, I think, is what I learned. So I avoided a lot of responsibility. I think it was very stressful for my mom. It was kind of a very serious thing that was maybe better if someone else dealt with it. And I think, you know, ever since then, I would let other people kind of deal with the financial situation and I would be a supporting player.

I do love hearing how people grew up with money. But if I'm being honest here, I'm not sure Mike and Noel fully understand the connection between their childhood and how they behave with money today. Here's what I noticed with Noelle. She grew up not having a lot, and everything she talks about screams, I don't want to go back there. I'll do anything to not go back there. And that shows up in how she chooses to spend her money. On expensive pet food, on upgraded Glade plugins, on Abercrombie. It's a quiet way of rebelling against that scarcity that she felt when she was young. And for Mike, who shared that his parents didn't leave him wanting for anything expensive game consoles, sports equipment, drum set. That created some compulsive behaviors. The same behavior that has had him in credit card debt since he was 20 and also has him checking his bank account 20 times a day now. I think, candidly, the fact is they will eventually earn more money and quite soon. But until they create a shared vision, these behaviors are just going to get amplified. Glade plugins and impulsive credit card purchases will probably escalate to buying expensive cars and $40,000 a year private school for their kids. Let's keep going to see what we can do here.

What will life look like when, Noel, when you start earning money, how's that going to change the dynamic in the house?

I think it'll free us up hugely when it comes to, like, our savings, our investments. Obviously, right now you saw we were spending $80,000 on fixed costs. That will change 82%.

Yeah.

Yeah. We'll get out of debt pretty quickly. I'm hoping the timing works out nicely because I'm with kids, you know, working on having that currently. We're still. We've been. Been working on that and, you know, hopefully that lines up so that when they are ready to go to school, my income is there to provide for that.

Cool.

So your income is. Is on the way. When do you start earning an income?

So I'm in my second year of law school. I've Got two more years left.

I love that things are going to change for the positive with an extra hundred thousand dollars a year. I agree it's going to be awesome. But we can't wait two years for that to happen. There's no way. So we need to make some changes. Right now. I'm going to put the CSP up on screen. I'm going to ask the two of you to help me figure out what to do. Our goal is to bring the fixed cost number down to 60% or lower. You're gonna have to make some tough decisions. The reason for this is that you do not want to have to be a couple making $250,000 a year and treading water. In my opinion, this is the time to make a change right now. Before kids, before the second income comes in.

Fix this problem, do it aggressively, and.

Set yourselves up for the rest of your life to be successful. That's my philosophy. Are you down?

Yes, absolutely.

All right, I'm putting it up on screen. I want you to help me figure out how to get this fixed cost down to 60%. Let's see what you can do. Right now we're at 85%. Noel, you first. Pick a number. Talk about it.

I could probably get groceries down.

It's currently 800. You mentioned it was 1200. You could get it down to 800. It's 800 already.

Yeah, I could probably get it down further.

Tell me what number I think it's possible to do.

600. How do you feel about that, Mike?

I'm pretty confident that, actually.

600Amonth for two people, that's pretty low. I'm gonna put 700, because even I'm like, yo, this is nuts. We can't do. Okay, 700, which means goodbye to those mozzarella balls. Are you down?

Yeah.

Glade, we're coming for you in a second. Glade, I know you're not part of the grocery store.

Glade plugins is $16 a month. That's it. Okay, well, it's on a subscription with Amazon, so it just automatically comes subscription for Glade.

This is insanity. It gets worse. And I can't even believe that I have zero things on subscription. This is crazy to me.

Will you save 15% if you do it that way?

No, that's not how you think about it. You know, you save 100% if you simply don't buy them.

True.

What else you want to cut? All right, Mike, your turn.

I can cut all clothes entirely.

Okay, that's 100 bucks a month. Is that you?

Yeah.

Okay, great. Zero. Done. We're down to 83%, Noel.

Okay, so we have pet insurance. We spend 110amonth on like health insurance for our dog.

110? No, no, 110. I think it's like oh no, no.

You'Re right because I'm just for. Because it comes out annually and we've got one coming up in a months. So I have us budgeted as 110 because that's what we need to save each month in order to afford it in a few months.

Can I point out what's happening here?

Yeah.

You're deep in the weeds. You are, you're looking at individual line items and you're like, is this worth it? This comes out every four months, etc. You are never going to make radical changes starting in the weeds. Never. You could eliminate the entire pet insurance.

You could eliminate your pet.

It won't change a thing. I need you looking at these numbers and I need you to focus with me. What's next?

Because of our situation just depends on how you feel. Noel, about the charity I know that was coming up.

I think I feel guilty or afraid. That like really scares me. I think like because the whole point of it is right that like it's about trusting. It's about trusting that God, trusting in God. And I feel like taking away that is like telling God I don't trust him. And by doing that I feel like yeah, I like I'm being self reliant and greedy and I don't know, it feels wrong.

Is self reliant and greedy like correlated? Like what if you're just self reliant but not greedy?

I think self reliant is still bad.

Why?

I guess just being like. I think you need to understand some of this. The background of like being sober but like you know, the working like 12 steps. Like the big thing is like that I'm, I can't handle things on my own and like trusting that God takes care of it. If I like you know, work towards reducing my defects, relying on God, being of service and like handing my money over is an act of like service.

Okay. And does the amount matter? Like what if it was.

I don't think 50, 50 bucks seems a little. Because then it's not really. I don't know.

You can I, can I ask a question? First of all, let me say if you choose to keep this, I won't fight you on it. It's your money. And anytime somebody comes on here and they go, I tithe or I give money. I go, are you sure you want to keep it? They go, yeah. I go, cool, we'll work around it. We can work around.

Okay. Okay. I think I've already. I've. I literally went from 10 to 5%, so I've already cut that in half.

Yeah, I wanna. This is a very good point because I want you to change something that I've noticed that you do, which is benchmark against where you were a couple of years ago. Can I just be really candid with you? You were putting yourself into debt. You were in debt. So that's like someone who spends like, a million dollars a month for a few months, and they're like, whoa, I'm only spending a hundred thousand dollars a month now. That's not the place to benchmark. You need to benchmark starting at zero.

I thought I already cut it down to the bare minimum. And cutting it down further, it feels like cutting off fingers.

Right now, you spend $6,000 a year on charity, and your income is $156,000. You're in $244,000 of debt. So if you tell me, ramit, I want to keep it at this amount, I will keep it. But if you tell me, ramit, I want to give of myself, I want to give some money. And I know that right now we're in a crisis. I can give 50 bucks.

And as we make more money, I.

Want that built in the plan that we are going to increase it to 100 to 500 to 1000, and eventually we will donate more than we ever would have donated. We can build that, too. You tell me.

I have a lot of empathy for how difficult this decision is for Noelle. Her relationship with Faith is deeply intertwined with her sobriety. So to her, tithing is deeper than simply being charitable. It represents something you and I probably don't appreciate. But the fact is, it's also hurting them financially, which is why I am making sure she knows she has several choices when it comes to tithing. With $244,000 in debt, the fact remains they are going to have to make some serious changes to how they spend their money and how they relate to money. Together, we're going to answer this question about tithing and dig into the rest in part two. Next week, we will finish the rest of this conversation, and I promise you're going to want to tune in, because I invited them five weeks later to come back and show me the changes they have made. You will not want to miss it. Next time on money for Couples.

This was not easy. There was a lot of fights with money.

That was my moping for the first couple of weeks. I was just not living in reality.

Kids will go wild if they don't have certain constraints. Well, guess what?

As adults, we're no different.

Debt for me is already a fire lit. I can't stand it. It drives me crazy.

It took you a while to get into debt. It's going to take you a while to get out.

The way that I was looking at that money before was so childish. It didn't mean anything to me.

We can't set up a financial system that requires us to be perfect because.

We would always fail.

Like, if we have kids, are we cool with our kids potentially feeling, like, fully abandoned and being just raised by nannies just so that I can have nice things?

I'm terrified of this, of our old situation not changing.

Make sure you hit subscribe so you don't miss part two of this episode.