50. “Maybe buying this condo was a mistake” (Part 2)

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 you're out of money two years from now. Do you want to have to make a decision with your back against the wall?

No, definitely not. What are we prioritizing? Are we prioritizing a mortgage? Are we going to prioritize the fact that we are young and we love to travel and we love to do these things? So I think, what is it going to take changing my perspective that this condo is the representation to everybody of what we have? The hard part is going backwards, or at least in society's point of view going backwards. There's going to be a lot of backlash.

Welcome to part two of my conversation with Eric and Elena. As a quick refresher, they came to me telling me, well, we look for financial advice, but most of it's for beginners. We're already doing pretty well. We're looking for the advanced stuff and they believed that their problem was they spend too much money going to music festivals. Well, I took a look at their finances and in the last episode it was revealed that they are living paycheck to paycheck and what's worse, they're actually losing money every Single month. And no amount of sushi or even festivals would really change that. And what's more, they don't want to give up the festivals. We discovered that their condo is costing them way more than they thought. They bought the condo using a big down payment with help from their parents. They didn't have enough for it. And it turns out that they are spending over $2,000 more than they were when they were renting. They are basically spending too much on their condo relative to what they thought, and this is causing them a lot of problems. So why'd they do it? They did it for the same reason that so many of us believe we have to buy a house. They believed that they were throwing money away on rent. They believed all the realtors and parents that told us, you have to buy a house, otherwise you're just a poor renter. And so today, in part two of this conversation, were starting to grapple with what would happen if they sold the condo. Turns out the condo is much more than just a place to live for them. It's something that they built together. Elena even admitted that they both agreed to keep the condo before they got on this call with me. So think about what this means for her. Think about what this means for them. The most important things in our lives typically transcend dollars. Yet here I am suggesting the very thing she loves, in particular, the very thing that represents their relationship to her, might not be the right decision for them. So today we're going to grapple with money psychology, money emotions, and peer pressure to keep a house. Because, of course, we are told over and over that you must buy a house. It's the greatest investment of all. Now, as we go through today's episode, I will be talking about some of their numbers. We used a conscious spending plan. If you'd like to get a template of the conscious spending plan yourself, go to iwt.com episode50. This is the I Will Teach youh to Be Rich podcast. Let's get into it.

I'm wondering if we have to sell their condo. Like, I'm wondering if we need to take this as, like, a lesson, as a lesson learned as we got taken by the wave and take it as like, you know, what happened and get out of it and then restart.

I don't think we're going to sell the condo as much as you don't want to hear. We honestly, we both went into this call being like, we support our condo decision. This was the right thing for us. And I think we've definitely realized some things. But I don't think the solution is necessarily to sell the condo. You really think we should try to sell this condo?

I mean, you heard what he said before, right? It's like, you can stop going to sushi. You can cut out 50% of your music festivals, which I doubt that we will. I just don't know if us cutting out all of our expense, like, all of these expenses, and I, and I, and I, and I hate, you know, I think I'd rather take the hit and take the embarrassment of running with this.

I mean, I'm a little speechless. I feel like this was something we were so confident about and it was a huge step we took together, you know, for our future. It's a little hard to hear, you know, I love this place. We just did so much for it.

I think that we could build something together. And I think we didn't build this condo in a way, like we didn't build to get to this condo. And I feel like we would minimize ourselves and we kind of would cocoon ourselves if we continued this way. And we would have to just take stuff out rather than add on to our life. And I think there is a chance that, you know, if we do come to the decision together to sell, that we could maybe build something, like, massive. Right. And be in a position where we can just buy. Buy like the right house for us.

Can I pause you both here? Can I just pause you. I just want to point something out. It feels like both of you are trying to convince the. The other person of your perspective. Have you noticed that dynamic? Yeah. And is there another dynamic we could use right now.

Talking about how we feel about it?

Let's try that.

So you feel we could build something?

Yes.

And I feel. I feel that I can help you and I can support you in all the conversations that we're going to be having with all different people.

I think that would be, like, essential.

Yeah.

Is that support at that time for me at least?

Yeah.

Eric, do you maybe want to ask Elena anything?

What's your biggest fear?

I think I have two fears. I think one of them is the fear that what if this was a good investment and it's going to increase so much in the next few years and we're stupid for selling it now? That's one of my fears, is we don't know how much it's going to go up by. My other fear is definitely, like, the people around us, what they're going to feel about it, how they're going to look at us because we did that. So it worries me a little bit. I don't think we'd hear the end of it ever, really. And I think it'd be. Once we do decide to purchase again, we'd have everybody breathing down our neck. And it'd be hard, honestly, because I feel like everybody we tell that we own a place, they're like, oh, my God, that's amazing. That's such a great step. That's such a great step towards your financial future. And I think for us to sell it, it would really be like, whoa, what happened? Why would you sell that? That's not a smart idea. When are you going to purchase again? The prices are going to go up. I think there's going to be a lot of backlash, at least for a short amount of time from friends, but I think from my parents. I never hear the end of it.

Okay, I get it. People listening are going to say, why would you care what other people think? Guys, all of us care what other people think. We are social animals. If you're listening to this, judging Elena right now, you would probably be in the same situation if you made a life altering decision that everyone around you could see and everyone around you felt strongly about. We're not talking about strangers on the street. We're talking about Elena's close friends and family. These are the people she sees at birthday parties, holidays all the time. How would you feel if you knew that every time you saw them they were going to ask you, why did you choose to rent again? What? What were you thinking? These barriers are significant. They're not frivolous. They actually prevent us from making big changes in our lives because we are concerned what other people will say. And that's real. It's not something to be shamed or judged. It's real. The best way to handle this is not to avoid it, in my opinion. It is to become knowledgeable and strong enough to have a confident answer if somebody asks us. But first we've got to be honest that this is actually something that affects us.

So I think that's going to kind of be the hard part, is going backwards, or at least in society's point of view, going backwards. So I think that's kind of what I'm struggling with. But I'm also very known to not give a shit about what people think. And I don't know why this area specifically bothers me so much, because in other areas, I don't really mind if my parents don't approve of it or our friends don't like it or whatever. It is. I think this is just such a big thing, and we're going against everybody's advice, and I think that is hard for me right now.

I don't think we're going against everyone's advice.

Hold on, Eric. Just want to point out you're about to try to convince her, but are you curious? I'm very curious.

Why?

Do you know she's mentioned in other parts of life. I don't give a shit. But for some reason, in this part of life, I do get. Are you curious why?

Yes.

So ask her. Okay.

Why is. Why. Why is. Why is it this particular thing? Like, why is it our condo?

I think it's because it's. That. It's because it's our condo because we. We didn't get married. We don't have kids. This is an indication of something that's ours. So I think that's why it's more hard and. And it's a little difficult.

Ask another question.

I'm trying.

I saw you. You did a great job. You're about to launch into some monologue. Nobody wants to hear it. She's saying something so important.

Do you think our finances are ours? Do you think that our bank accounts are ours?

Uh, it's a clumsy question from Eric, but I don't mind. At least he's trying. The real insight here is that most partners just don't ask enough questions. When I hear these conversations, I notice that most of you either explain to your partner. That's what you love to do, explain. Or you constantly complain and spin about all the things that worry you about money. These are toxic patterns. You got to stop that shit. You want to see how you stack up? Create a little document, and the next time you and your partner talk about money, make a little green check mark. Each time the other person asks a question, I guarantee you will be shocked at what you discover.

Yeah, I mean, we have our own accounts, but we also have our account. And we could definitely build on our account. And instead of looking at it as our condo, we could look at it as, like, our investments or our savings and still have that be a representation of our steps we're taking towards our future together. It doesn't have to be a condo itself.

Can I ask you a couple questions about that? Because it sounds like this is important to you, the people around you. And I understand that.

Yeah.

Are the people who would be the loudest, are they in a financial situation you admire?

Not particularly admire. I think they just do what they can.

So you have people who are not in a situation you admire who would be pressuring you to do something that they think is best but causes you to lose money every month. How would you want to regard their advice?

Honestly, I think I would still regard their advice pretty highly, even though I don't admire the position they're in. I think because I love them and they're such a huge part of my life, I would find it hard to believe they would steer me wrong. So if they believe it's a good idea, that I would still kind of listen to it. And that might be naive and not smart and not logical, but I really value the people in our lives.

Let's recap. In part one, Eric and Elena came on the call telling me they're looking for advanced advice. We walked through their love of music festivals and I told them, I'm not going to stop you going to festivals. I know you're not going to stop going anyway. I'm not going to take that away from you. It's your money. We got real by talking about the numbers that they filled out in the conscious spending plan and I pointed out that they are two years away from going broke. Then and only then did we start talking about the real issue, their condo. And that's caught them totally off guard. So now we have a lot of work to do to talk about all the issues surrounding the condo, including what other people would think if they sold it. And that's exactly where we are right now. Real question for you. Do you know how often you're supposed to see your primary care physician? How about the dentist? How about a dermatologist? A lot of us just wait to get a text from the dental hygienist to know it's time to make an appointment. But your health is important and we talk about going from defense to offense with your money. What about with your health? Why not make your life easier and book this year's appointments today with zocdoc. Zocdoc is a free app and website where you can search and compare high quality in network doctors and click to instantly book an appointment. They have over 100,000 doctors across every specialty from mental health, dental, primary care and more. Just filter for the doctors based on your insurance, your location, even ratings and find a doctor who's a good fit for your needs. Plus Zoc talk appointments happen fast, usually within 24 to 72 hours. Instantly click through your options, book the appointment and you are good to go. If I needed to find a new doctor today, this is what I would use. Stop putting off these doctor's appointments and go to Zocdoc.com ramit to find and instantly book a top rated doctor today. That's Z O c d o c.com ramit zocdoc.com ramit what comes to mind when I share these specific moments? Renewing your passport. Scheduling a dentist appointment. Replacing that light bulb that's been out for six months and you're not sure what's the right bulb. We all procrastinate on weird stuff and taxes are usually right at the top of that list. We wait until the last second, then we get overwhelmed. We got to pull all this paperwork and we're panicked because the deadline is approaching. That's why I recommend guilt. Now that tax season's over, this is actually the best time to get ahead. If you run a business or you filed for a tax extension, one small move right now could save you thousands later. G is not just another CPA firm. They helped one of my colleagues rethink his entire tax setup. Now he's saving more than he spends on tax prep. With G you get a proactive year round strategy, not just a one time filing. Credits, deductions, business structure. It's handled and their tech platform makes it easy to stay organized. You'll also get access to Gilt's full tax library with guides on retirement plans, QBI and more. So if you've got a business or you filed for an extension, this is the window to take control of your tax plan. Head to joingelt.com ramit to book a consultation and as a member of my community, you get to skip the waitlist. Again, that's joingelt.com ramit join G-E-L-T.com ramit taxes don't have to be a task with Gelt. They can be a tool to build wealth. It's almost like they came in to buy a sports car. But I gently pointed out that they need a minivan and they are reeling because it's not what they expected to talk about. Now we have to talk about everything around buying a minivan. How it'll affect their finances, what it will mean to drive a minivan, and what people will think. Now these ancillary concerns are really important. If we leave them unaddressed, people will not change. To help Eric and Elena make the right decision for them, I have to walk them through each step of their decision, even if it seems foolish or unimportant. I'm going to help Elena unpack some of her emotions around this decision to understand why she cares so much about what other people think. And you'll notice half of what I'm doing here is just asking questions and hopefully trying to figure out what she's really thinking and feeling about this decision. I think you can value the people in your life, but not necessarily agree with all of their advice. Do you understand why your parents believe so strongly in home ownership?

I think it's because they purchased their home such a long time ago and it's like five times its value. And for them it's really like, we sell this house and we're fine. And they are right. They'd be like, have a lot of money and be fine. So I think that's kind of why we're like, I kind of have the same idea. It's like, if shit really hits the fan, we sell this condo and we're going to be okay and we'll start over. And I just didn't think I'd be in a position where seven months into owning a condo, I'd even be thinking about selling it.

Can I point out a couple of things? When your parents were growing up and when they bought their house, do you know approximately how much they made?

I think probably just my salary and my mom didn't even work, so I think they're. Yeah.

So at 60k, they bought a house, sounds like on one income and they were able to make it work. Just out of curiosity, the two of you living in Toronto, could you buy an equivalent type of condo or house on one salary at 60k? No. No. You could. Of course not. And even corrected for inflation, could you? No, times are different. Housing is unaffordable. Toronto and Canada, it's insane. We know that. So they are telling you what worked for them, Operating off a playbook that's 40 years old.

Yes. It's worth it to talk about it now and look at it as a possibility, but I definitely think I would still need a few nights to really come to terms with it, to not think with my heart as much, to think more with my brain.

So.

So I very much get emotionally charged and I'm like, we'll come back to it. We'll come back to it. Because I feel like I don't say the right things when I'm emotionally charged or I don't think logically when I'm very emotional. So I'm very open to your action or what you think we should do or what you think would be best for us.

Let me highlight a few things that caught my attention in this last conversation. With Elena first, her idea that logical conversations are diametrically opposed to emotional conversations. And in her words, that logic is better. I disagree. I think we glamorize logic and we stigmatize emotions, but we actually all use emotions with money. Why not acknowledge it? This is why I get so mad at those guys who buy a $75,000 truck they can't afford, drive on flat roads to their job in an office building, yet those same guys scoff at someone buying a Louis Vuitton handbag. We almost weaponize emotions in our culture, like they're a sign of weakness. But emotions are real, and emotions are valuable. Of course, logic matters, too. Math matters. For the biggest purchase of your life, you better understand how those numbers work. Otherwise, you're just hoping and praying things will work out. Home ownership is not a religion. It's a fucking financial purchase. Treat it accordingly. In other words, it's okay to feel like you want a house. That's totally fine, but you also need to pair it with numbers. It's also fine to start with logic. Here's what the numbers tell us. But you also have to acknowledge how you feel about a purchase or a decision. Second, let me emphasize that the advice from your parents might make sense today. It might have made sense back then, but it also might not make sense today. A lot of you have parents who are pressuring you to buy a house. You want to have a little fun? Go ask them what it cost to buy that house back. Then ask them how much they were making. Ask them how'd they do it on that kind of income. And how did they pay for kids go to school and activities and saving money in their 401k. Oh, they didn't have a 401k. They only had a pension. Oh, how interesting. The reactions will be hilarious. First, they'll start off with an enthusiastic yes, they're proud they could buy a house on a modest income. And then as you start to probe a little bit more, it might get a little quieter. Like if you ask them, hey, mom, hey, dad. If a house in our neighborhood costs $600,000 and I make $75,000, how would you suggest I pay for it on one income? I don't know. Maybe you shouldn't use this podcast to launch a verbal trap on your parents, but I'm sharing this to show you to put people's advice in context. Your parents lived in a different time with different financial circumstances. Evaluate their advice accordingly. Same for all these dumb billboards you see on the side of the road telling you, you must buy. And if you don't, you're a loser. Put the advice in context. Understand the numbers. Now let me help Elena start to focus on their future. There's this myth that if you rent, it means you haven't made it. I don't really believe that I rent and I want you to know that you are not a failure if you choose to rent. In fact, I want more freedom right now than buying a 30 year mortgage. But if I'm spending thousands of dollars a month, I want to get some of the perks that homeowners get. And that is where BILT comes in. BILT is a loyalty program for renters. You pay your rent through BILT and you can earn points for it. Think about it. You're earning points for your biggest expense every single month and you can redeem those built points towards flights, hotels, Lyft rides, or even future rent payments. BILT has evolved into a complete rewards ecosystem where you get rewarded for the first time as a renter. And it's easy. Almost any payment method is compatible so you can start earning right now. I wish I had had this when I first started living in New York. Plus, BILT recently announced that homeowners be able to get rewarded the same way on their mortgage in 2026. So stay tuned. Join the loyalty program for renters@joinbuilt.com ramit that's J-O I N B I L T.comit and make sure you use our URL so they know that we sent you. I know that some of us think better when we write our thoughts out but but for a lot of us, including me, I'm better when I can think out loud. If that's you, I recommend you check out Whisper Flow to save you tons of time to bring your ideas to the page. Whisper Flow turns your voice into clean final draft writing inside whatever app you're already using. Email, Slack Docs, even text messages. And it works on Mac, Windows and iPhone. So instead of spending all of your time responding to messages, and especially while sitting at a computer, you can hit a hotkey, speak and the text appears. It's accurate, it's fast, it's all formatted so you can get back to work. Here's what my friend said about it. Whisper is amazing because it learns the way you speak. So you can send this rambling note as a text message and it kills all the filler words and it perfectly formats it for you. They said it's much better than using the Apple voice to text feature. The spelling is way better. If you want to buy your time back and get back to what matters, check out Whisper Flow. Try it for free at whisperflow AI/ramit. That's whisperflow AI/ramit w, I, s p r flow AI ramit or click the link in the description below. So would it help if we kind of paint the picture of what the future looks like? Let's kind of go through a couple of different scenarios and you paint it for me. I'd like to hear what you think. Elena, let's go through an amazing scenario. You keep the condo and things work out great within two years. What would that look like?

If things worked out great and we still had the condo, that would mean that we'd be saving something. So managing to put something into savings and I mean hopefully still traveling as much as we can. But I know then if we're putting stuff into savings, that means that we are definitely cutting out of other areas of our life that we both don't want to cut out of. So I'm not sure, honestly I'm still a little speechless of the fact of like the thought of selling it. So I'm not sure how to, how to properly answer your question right now.

Let's take it step by step. So two years from now you have the condo, you're able to put more money into savings and investments, Right? How would it work? How would you do that?

I think we would need to be very firm with ourselves. I think the only way we're going to put money aside is by cutting things out. It has to be one trip a year and pick whatever trip batters most twist that year and that would save us like shit ton of money.

Okay.

That we could put aside.

Out of curiosity, how many trips do you have booked for the rest of this year?

This year we have about so July, June, August, September, November. Five trips and we already had one earlier.

Okay. Oh, sorry. When will you cancel all five of those?

We wouldn't be able to cancel it. A lot of it is non refundable. It would really be one of those things like I'll start my diet on Monday where it's like you need to do something now about it.

Do you believe that? Do you believe that you will start your diet next year?

I think it'd be really hard and definitely not something we want to do. But you're gonna have to do things you don't wanna do in life sometimes.

Notice that subtle psychological tell she shifted from talking about herself using I to you're going to have to do things you don't wanna do sometimes. In other words, talking about someone else. Deep down, Elena knows that she won't start any kind of financial diet next year. You have five festivals for the rest of the year. You already locked in some prices, but you can still cancel them. You'll still save money. You'll save money on Uber, save money on flights. So you got to cancel five of them. Are you ready to do that?

Maybe not five, maybe three.

But you said, you told me in your own vision that you can go to one festival per year. You already went to one, so it's time to cancel all five according to your vision.

Yeah.

So should we just cancel them right now?

If canceling them means we keep the condo, I'd be open to it. I love this condo so much that I'd be okay putting aside some of my. Some of these interests. But it's also hard. Like I'm saying this from a very emotionally charged moment, right? So I don't know. I don't know. If push came to shove and right now you're like, cancel the five festivals or sell your condo, I would cancel the five festivals. But I don't know. It's a very hard thing for me to think about.

Eric, you want to weigh in here?

I want to talk to Elena and I want to have a serious discussion about what our next steps should be here. It's becoming more and more clear to me. I wouldn't want to cancel festivals. I'd tell the condo first before canceling the festivals personally.

You two don't need to quote, get serious. That's just words. What does it really mean? We got to get serious. Nothing. It's just words. You know what you two need? You need a system. You need a rich life vision. What are we working towards? What do we want? We want five festivals a year. Awesome. Let's write it down. And we will commit to going to five festivals. And when we go, we already planned for it, so we are guilt free. Oh, we want the extra drinks or whatever. I don't know. I don't go to this EDM shit. Get whatever. Okay, great. Guilt free. And also, where else do you want your money to be going? Besides rent and festivals, where else?

Investments.

Yes. And you have a number, a percentage. The conscious spending plan. What does it recommend?

10?

Yeah. 10% of take home pay. You can adjust it. You could make it nine at your age. Boy, if you walk away with $30,000 or so after all the fees and transactions and all that stuff, maybe you could put. Put that in your investment account. Put 20k. Maybe put 25k, take 5k, go have a great time. Okay. Wow, that would really boost some stuff up. Catch up for not investing for a while. So you don't need to just quote get serious. That's just a word. You need to build in a system so your money is automatically going to the places it needs to go. That's how you build wealth. Less effort, less guilt, more results. You guys, stop it with this. Get serious. Stop it with this. We need to have a conversation. Those are just words. You need a system. Anything else is a waste of time and doomed to failure. This is one of the core tenets of I will teach you to be rich. Systems over intentions. That's why I have the rich life system. Get it@iwt.com rich it shows you exactly what to do with your money. How to afford the dream vacation you want to take at the end of this year. How to see if you can afford a house when you can buy a car. It helps you put your system together. Now this was a big breakthrough for both of them. Elena is starting to think in terms of trade offs now, which is very good. I'm going to invite them to imagine a rich life that better fits the season of life they are currently in. Listen in. How old are you both?

25.

25 years old. You know, I believe there are seasons in life. There are seasons in life. When I was 25, I was out, you know, Taco Tuesdays. I was just out with my friends. That's what I wanted to do. If somebody came in here and told me, you shouldn't go out with your friends, I'd be like, fuck off. This is what I want to do and I want to do it a lot.

Okay?

30S in New York, going out, having fun, traveling more. That was my season of life. If somebody told me again, I would have told them, I don't want to listen to your advice. I like going out. What season of life are you both in right now?

Now going out?

Yeah.

Significantly amplified by the fact that we didn't go out for two years.

Completely agree. We're constantly in between this. We're young now and we should live life and we should save. That's always the debate for us.

But you're not saving.

Like we're 25 and we have the rest of our lives, but you're not saving. It got us to this point. We're not. Because we're going out because we're young and 25 and ready to take on three days of standing and listening to a DJ at once.

Hold on, hold on. You could do that. You could do that. You can go out, you make $160,000 a year. You can go out and save and invest. You can do all of that. Set yourself up to get married and have kids, but you can't do it with these condo expenses. Yeah, the two of you can be millionaires if you want to. It's not hard. Just takes discipline and time and automation. But if you're losing over $1,000 a month, you can't do it. In fact, two, you're going broke. There's a phrase we use at IWT. Sometimes we try to be 40 before we're 40, and I like thinking long term. I like planning ahead. Yes. But sometimes we try to be 40 before we're 40. In business, we try to set up all these fancy legal structures. It's like you just need to find some people who want to pay you money. Okay? You don't need the expensive lawyer right now. And in personal finance, sometimes we try to do all these complicated things when it just doesn't fit our lifestyle yet. It's up to you two to decide. But I can tell you that that's the vibe I'm getting. I mean, the time that you two get happy is when you talk about going to festivals. That was in the first one minute of us talking. I said, great, if you love festivals, then we're going to keep festivals. That's okay with me. But we got to be honest about what we are really willing to do and what type of lifestyle we want to lead. You're out of money two years from now. I never want people to have to make money decisions with their back against the wall. Sometimes it happens, you know, you lose a job, ill parent, whatever. But I really hate it. It provides very bad outcomes. So a decision like this, it's better preventatively than to have to do it when things are dire. Okay, now play it out for me. If you don't own the condo and things go well, what does it mean to you? What does life look like?

If we don't own the condo and things go well, that means we're renting, we're traveling probably more than five times a year. We have some kind of steady flow of income that's aside from our savings. We still have something left over. It seems nice and more like the lifestyle that we're living now in the sense of like being 25, wanting to go out and, and living life, I guess.

How often are you Checking your accounts because you're saving thousands and investing thousands every single month. How often are you checking your accounts at that situation? Alaina?

Ideally, I don't even think we'd be really checking. I think it would all be automated and our credit cards would be paid directly from our checkings. And I check it like once a month to make sure everything was done properly.

Very good. That sounds pretty good to me. Everything Elena just said sounds like the kind of rich life she actually wants to be living. So let's talk next steps. Is it possible for them to make this a reality? This is the key. What do you say to them? You can't go in there like this. We ran our numbers and anyway, I hope. I think it's a good decision for us. What do you think? None of that shit. Elena, how would you say it if somebody asked you, why are you selling this place and renting? What would your body language and tone be?

For us, the best decision was to rent. I don't feel like I would need to justify more than that.

Love it.

It's a decision between the both of us. And are you living with us? No.

Where did this confidence come from? It's so good. I love that. Again, go through the process. Make sure that you both feel it and you know it because you ran the numbers. Nobody can argue. And of course, no one even has the right to argue with you. Because if you want to make a decision that's different, then who really gives a shit? It's your decision. It's your money. What I'm doing here is something called inoculation. Remember in the 80s, they would ask kids, if your friend tells you to smoke, what would you say? What they were doing was teaching those kids how to come up with counter arguments against something that they would one day face. That's inoculation. In part one of this conversation, we learned that Eric and Elena are actually petrified of what everyone around them will say. And I actually love their candor. Most of us are nervous or even deeply fearful of what other people will say about our unconventional money decisions. Well, at least Eric and Elena are honest about that. When I teach people to start a business through earnible, we spend a lot of time talking about how to handle the pressures of people around them, saying, why are you starting a business? You should just be lucky to have a job. And when I help people make an unconventional money decision, inevitably they finally admit that they are worried about what people will say. This is a normal reaction to us being human and being able to plan how you're going to react well. That's a skill you can learn. When I talk to new business owners, I hear a lot of the same motivations. I want to make extra money. I want more freedom. I want flexibility. But I will tell you something that I've never heard. I want to start a business so I can fill out a bunch of tax forms. That sounds like my hell. The good news is you don't need to be a tax expert to start your own business. Instead, you can use Gusto, this episode's sponsor. Gusto is online payroll and benefits software built for small businesses. It's all in one. It's remote, friendly and it's incredibly easy to use so you can pay, hire onboard and support your team from anywhere. They offer automatic payroll tax filing, simple direct deposits and health benefits workers comp 401k matches. You name it, they can help. Plus, it's quick and easy to switch to Gusto. Just transfer your existing data and get up and running fast with no hidden fees and no surprises. Try gusto today@gusto.com ramit and get three months free when you run your first payroll. That's three months of free payroll@gusto.com ramIt Once more go gusto.com ramit Here's a DM I got from one of my listeners about this episode's sponsor, Element. I love it. After my sauna cold plunge sessions. I do two rounds of sauna, then cold plunge. I love drinking Element after my sessions, another person said. Sometimes I use it the morning after I've had a few too many drinks. I appreciate the feedback. If you like to sweat it out in the sauna or you need to feel a little better after a night out, Element can be a great way to replace your electrolytes. Element is a zero sugar electrolyte mix that comes in easy to use packets in great flavors like citrus, salt and watermelon. When you're sweating like you're at the gym or hiking or just in the heat, you're losing more than water. Element helps you stay sharp, avoid cramps and feel better. It's used by Navy SEALs, Olympic athletes and pro sports teams. And now what started as a seasonal drop Lemonade salt is officially a favorite. It's perfect with iced tea. For a salty Arnold Palmer, get a free 8 count sample pack of Elements Most popular drink mix flavors with any purchase@drinklmnt.com that's drinklmnt.com Ramit find your favorite element flavor or share with a friend and you can try it. Totally risk Free. If you don't like it, they will give you your money back, no questions asked. If you had run the numbers, Elena, and realized what this condo would actually cost you, would you have bought it?

The logical answer is no. But I think when we did run the numbers, which we did, I mean, kind of, but when we did write it all down on paper, we saw that if, like, the maintenance fee was this much and this was the much for rent, like, we saw that we weren't going to be saving. And knowing the fact that we weren't going to be saving, we still went ahead and purchased the condo. So I think now kind of seeing it from this perspective of, you know, this condo is just sucking even more money out of us than we thought it would. Looking back at it, if I was in that specific moment, probably not. And it sucks. And it's embarrassing to kind of think about that like, we just made a $770,000 mistake.

Okay, you did incorrectly run the numbers. Fine. You had good intentions, also fine. But if you walk out of here with, what, 30k in profit? I don't know. I'm not crying tears for the two of you. Oh, Boo hoo. These mid-20s festival lovers walked out with 30K after a year. No, you need to flip the entire concept here. If you walk in and you're like, huh, how do I explain this really bad decision? You're playing defense. You're playing as if you lost. But you could just as easily say, okay, we learned something really valuable. And by the way, we were fortunate enough to make a profit from this lesson. Wow. So here's another thing you could say. You could say, you know what? We really loved the condo, but we realized when we ran the numbers after accounting for all of our expenses, that it actually makes better financial sense for us to rent and to invest our money elsewhere. Now the only people are going to argue with. They're going to say, oh, real estate's the best investment ever. Those fucking realtors are going to be telling you, oh, what do you mean real estate only goes up? Real estate does not only go up, okay? Real estate goes down. Things don't just go up. So let them say what they're going to say. They believe real estate is the greatest. Do you know how many people have told me over the last 15 years that renting is stupid? I'm throwing money away on rent. What about equity? And guess what? I made more money renting and investing the difference than I ever would have made owning in San Francisco, Louisiana or New York. Let them Say what they're going to say. Elena finally understands the severity of the situation they are in. Listen to her gradual change in tone as she finally connects all the dots from her past, present and future. What has surprised you most on today's call?

I think what surprised me most was just how, I guess in like two hours, just how quickly my mind could change as much as at the beginning. I'm like, I love this content. We're not getting rid of it. It's a great investment. My mind's kind of changing about it. Of what are we prioritizing? Are we prioritizing a mortgage? Are we going to prioritize the fact that we are young and we love to travel and we love to do these things? Just realizing that, I don't feel like we are rock bottom. I feel like we still have quite a bit of room to make the changes. We're still 25 when we own a condo and we can sell it and start over. And I think that's kind of what surprised me most is I don't feel like this is detrimental. I think we're getting there. I think like even this conversation is such an indication of that. Why do we need to put ourselves in an uncomfortable financial position now when now should be the time that we're making 160k and living life like we're making 160k. So I think what is it going to take? Changing my perspective that this condo is the representation to everybody of what we have. Maybe it wasn't a smart investment and maybe we are a little embarrassed, but that doesn't mean that it's the end of the world right now. And it could be right for some people. But I think for us, unfortunately now it's not the best.

We're realizing this together and that we're sort of coming to this point of like, damn, like it did happen. I feel like this is almost like one of the best case scenario, like best case scenarios to be bimboozled like, damn, we bought a buy a 600,000 condo, now it's 700,000. We even made a little money out of a mistake.

Outstanding. Okay, first off, don't want you to make any rapid decisions. Rapid decisions are what got you here. I want you to slow everything down. I want you both to feel totally comfortable. Whatever decision you both make, if it's your decision, you two have to really be thoughtful before you make it. Run your numbers carefully, okay? And you have to be rock solid with each other. You two are a team right now. You're Living together, you own something together. Eventually you'll be married. It's going to be you against the world sometimes. Maybe your parenting style. Maybe where you choose to send your kids to school, maybe where you vacation or the way you dress. Dress or decorate, whatever. You're going to start doing something unconventional. Well, you already do this festival thing. It's unconventional. I'm sure some people like that's so foolish. So you have to find a way for the two of you to get united. This is us. We're confident about this. You probably want to find some renter friends who are like, oh, yeah, we run on purpose because it makes no fucking sense for us. I really enjoyed speaking with Eric and Elena. You know, for years I've been telling people that real estate is not always the greatest investment and to run the numbers before you buy a house, particularly as your primary residence. But it's rare that I get a chance to speak with a couple that perfectly exemplifies this. Eric and Elena are young. They have things that they want to do right now in this season of life. They want to go to music festivals. I don't find that frivolous. I think it's awesome. They have something they love. But where they have chosen to spend their money does not line up with their core values. They are not living a rich life based on where they are spending their time and money. So it's important to recognize the season of life you're in and to use your money to support that lifestyle, even use it extravagantly. That's how you use money to create joy. Now, I received a follow up from Eric and Elena after I spoke with them. You can read the full letters@iwt.com followups and I highly encourage you to read these letters because they are absolutely amazing. Here's an excerpt from what Elena said. It's one of my favorite excerpts I have ever read on this show. She said this idea that was engraved in my mind before was that we need to make lifestyle changes to afford our condo. My perspective now is we need to make changes to our living arrangements to afford our lifestyle. Did you hear that? Instead of letting the tail wag the dog and deciding we need to buy a house and then whatever's left over, we'll use it to live our life. She flipped it. We're going to use our money to live the rich life we want. And if a house happens to fit in there, great. If not also great. Our rich life comes first. A few days later, she emailed me again and said that they'd scheduled a meeting with their realtor to discuss selling the condo. You can read the full letters from Eric and elena@iwt.com follow ups and and to get a copy of the conscious spending plan that they used, go to iwt.com Episode 50 thanks for listening to I Will Teach youh to Be Rich. I'm Ramit Sethi. Please follow the show on Apple, Spotify, or wherever you listen to podcasts. If you haven't read I Will Teach youh to Be Rich my book. Pick up a copy. You can get it at any bookstore or any library and it will show you the specific tactics for how to build the I will teach you to be rich system into your personal finances.