58. “If we want to retire, we’d have to live on $36k”

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.

I don't feel safe and secure with my financial life.

We're both 50 and 52 years old. I feel like we've kind of fucked up over the years.

Just the whole thing about money's triggering. I was supposed to get married and have a husband who took care of me, who took care of my finances, who invested for us. I'm angry at him for not being responsible for not taking care of me. My parents helping me didn't really help me. I wanted this. Mommy gave me money. So it was a pattern. And why not? Mommy gave me money. I needed it, I wanted it, so I took it. I don't think it helped me grow up or be responsible with money. We live like we're 25 years old.

We sat down with the guy from Fidelity and when we, you know, set up our accounts.

And what did you walk away remembering from that?

That we're fucked. No, I mean that we had. I mean that we wouldn't be able to retire probably till we're like in our 70s.

Michelle grew up wealthy and to this day she expects her husband to provide for her. Eric makes $55,000 and feels like he can't provide the lifestyle she wants. This dynamic has been causing conflict for the past 20 years. And now, in their 50s, the stakes are even higher. They both feel that they've missed their time to invest and retire comfortably and that they might have to keep working until they die. You can get a free copy of the Conscious spending plan@iwt.com Episode 58. I'm Ramit Sethi, and this is I Will Teach youh to Be Rich. So, Eric and Michelle, you made a comment that I should have seen you as you were filling out your conscious spending plan. What happened when you were filling out your conscious spending plan before you got on this call?

What always happens? We always start bickering about stuff.

Yeah, we basically. I mean, it's. It's almost comical. If you ever saw Seinfeld, that's like Georgia's parents, like the Costanzas going back and forth, like, bickering like two little kids at each other. Like, no, we have.

How much do you have in your Roth IRA? I don't know.

It might be 60.

It might be 80.

Well, how much exactly is it?

I don't know. I think so.

It's always like. I think. I feel maybe it's just, you know. So we go back and forth. It was actually quite hilarious.

It sounds like you guys enjoyed it.

Well, you know, it's hard.

I don't enjoy it.

It's.

No, I mean, it's very triggering. Yeah, it is triggering for. For both of us, actually.

It's just like 25 years, 27 years of, you know, we try to do something with our finances, and then I'm the one that basically takes care of everything, and I know everything. And then when Eric starts to try to get involved, it's like, no, I. I have it handled, but it might not be exactly the way he wants it handled, but he's never been a part of it for 25 years. So then I'm like, leave me alone. I know what I'm doing. Don't try to change my systems.

We're both, you know, 50 and 52 years old. I feel like we've kind of fucked up over the years, and we haven't really been. I mean, at least I haven't been adult, like, about money. When it comes to money, I don't.

Feel safe and secure with my financial life. I mean, over the. Since COVID we know we've actually started saving money and we both put money in our IRA for two years in a row. But, like, we should have been. We live like we're 25 years old. Just the whole thing about money is triggering. I was supposed to get married and have a husband who took care of me, who took care of my finances, who invested for us. I didn't think I'd be 52 years old with like, very little savings living like 25. Like when something happens like, oh, my God, how are we going to pay for that?

You know, Where'd that story come from? That. That was how it was supposed to be. When did you start telling yourself that story?

My parents helping me didn't really help me.

Tell me more about that.

Yeah, so they always helped me. Even when I moved away for a little bit. I lived in North Carolina and I wanted to get a one bedroom apartment, but my mom's like, nope, you need a two bedroom apartment. So she paid for the two bedroom apartment. She just always like, you know, I wanted to go on a trip. Mommy gave me money, I wanted this. Mommy gave me money. So it was a pattern. And why not? Mommy gave me money, I needed it, I wanted it, so I took it.

And looking back, what lessons do you think you took away from your parents always helping you?

Maybe gratitude and generosity. How people are generous with money and grateful for their financial support.

Anything else?

I mean, I don't think it helped me grow up or be responsible with money. I never had to budget my whole life. I never. I mean, I never knew anything about money. We never talked about it in my house either. I mean, it was my upbringing. I'm Jewish. So you marry a doctor, the doctor takes care of you. My dad took care of my mom. I mean, it was. It's generational, I think, for us.

And when you were meeting Eric, do you have those conversations?

No, I don't think so. It was a lot of assumptions. I don't think we ever talked about money. I mean, I assumed we both grew up in the same town. We both grew up, you know, middle, upper middle class. No, we never discussed money when we. Before we got married, ever.

And how does money come up in your relationship?

It comes up with a lot of feelings and anger.

Oh, like what?

Like anger. I'm angry at him for not being responsible for not taking care of me, for not talking about it, for not being involved in the savings or any bills, all of that.

Okay, Eric, when's the last time you remember talking about money with Michelle?

It comes up occasionally, but it's very surface. We don't go deep. Every time I tried to do that with Michelle, she's just Pushes me away. She's like, I've got this. Stop messing everything up.

That is so not true. You never verbally said to me, let's sit down and do this, or else you do it for like, 30 seconds, one month, and then it doesn't come up for, like, three more years. It's not true. You never asked me to do that.

So you see what I'm dealing with now.

So when we first started, you mentioned that you are like a bickering old couple, the Costanza's parents. I mean, look at your face. You're laughing right now. Just immediately a smile comes to your face. I can tell it's kind of funny. But it's less funny when the two of you are pointing fingers and almost antagonizing each other.

I think we're just comfortable bickering. For me, this is where I'm coming. Like, it makes me feel not as bad about what happened in the past. Maybe. Or it makes me feel right. I don't know.

Makes you feel right. Okay, tell me more about that. So.

As. That's a good one. So for me, it's more like I want to do things differently because what we're doing isn't working. I mean, it's kind of gotten us by up until the last two years. And, like, you know, the last two years have been great, but, I mean, it's the same thing. Like, I didn't grow up upper middle class. I grew up very middle. Middle class. We didn't. I mean, we didn't go on extravagant vacations like Michelle's parents took them on. We didn't get expensive cars in Florida.

We didn't go on extravagant vacations. Eric.

Ski trips out West.

Oh, I forgot about that.

Yeah. What do you get out of the bickering with each other?

I don't know.

Two of you curious about your own patterns. Yeah.

I've never really dealt. I mean, like, I've never really dealt this deep with, you know, like, the psychology.

We're not even. We're not even below the surface yet. We're not. Oh, shit. No. Oh, man. How long have we got? We're in the kiddie pool right now. We haven't even. We haven't even gotten ready to get into the deep end. Okay.

You know, like, I feel like I'm getting just justification. I'm getting acknowledgement.

You're not getting acknowledgment, but you are getting justification, your own justification. When you poke and prod. And you might be right, you might be wrong. I don't know, it's sort of irrelevant because it doesn't get you anywhere, does it? In fact, if anything, it causes Michelle to put up her defenses, which I would if I were in her position, because I don't want someone saying, you knew and just poking at me. And then Michelle turns around and seems to say other words, but with the same goal. You never do this. You always do this. Which allows Michelle, Allows you to affirm your story about what has happened with your money.

I think he's just legitimately asking to sit down and do it together. But he never follows through with stuff. He'll start one thing and then change and then start another thing. It's like a pattern.

Notice that pivot. Michelle immediately jumps into her grievance without even letting the point settle. The point that they both feel right and justified when they bicker with each other. Just so I understand, your husband never follows through with anything. Is that what you're saying?

Not never, ever. But when he starts something new, it's very hard to be create a new habit with it.

Okay. I think that's probably true for a lot of us. It's hard for me to create a new habit. So sometimes when I ask, hey, will you do this with me? I would like your help sometimes. If I were to say that to my wife, what do you think? That I would be hoping she would respond with?

Sure. Okay.

Do you think that that might apply to your relationship?

Probably.

But it's hard for you?

Yeah, it's hard.

Why?

Because it just never changes. Nothing ever changes. 25 years later, nothing ever changes. So it's frustrating.

So then why are you on the call today?

Because he asked me to be on the call. And there's always hope.

There's something so sad and yet beautiful about what Michelle just said. Sad because it doesn't actually sound like she believes anything can change, and beautiful because that's what a loving spouse does. She's saying, I don't really think this will work, but you asked me to be here, so I'll come because I love you. There's a lifetime of work for a therapist to work through. But I'm not a therapist. I want to shift our conversation to talk about money. So I asked them if they've ever worked with anyone like me to talk about money before. 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 or 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 a hundred thousand 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, Zocdoc 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-O C.com Ramit Zocdoc.com Ramit 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 will 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.com Ramit and make sure you use our URL so they know that we sent you.

We sat down with the guy from Fidelity and when we, you know, set up our accounts about was about three years ago, Michelle, before. And he basically, you know, did all this.

And what did you walk away remembering from that?

That were fucked. No, I mean that we had. I mean that we wouldn't be able to retire probably till we're like in our 70s.

Okay. And Michelle, you mentioned that you track the family's finances, but you also mentioned that you're frustrated with the family's finances. I'm curious about that.

I track them, I try to save money, and then there's always like a emergency that comes up. So the savings stuff that I have in savings never really goes to savings. It goes to like the emergency.

And how do you think that other families do that?

I have no idea.

So it's been 25 years. I'm sure you've thought like, ah, it feels like one step forward, two steps back over 25 years. Have you asked other people? Have you looked into how others manage their money?

No.

What do you think about that now that you're talking about it?

I think I grew up in a house where you didn't talk about money. So I don't feel like comfortable going up to someone and asking them about how they talk about money. I mean, I do think it's something between the husband and wife and they. I don't know. I just never asked anybody.

What might be the other ways to learn about how to manage money?

Programs online.

What else?

Reading articles. I don't know.

Books, Events.

Yes.

Financial advisor. There's a million different things. I don't mind that you haven't done it. We all start from someplace. Okay. There are a lot of things I should have been doing 20 years ago. Fine, I wish I had. But all I can do is deal with where I am today. What I want to understand is your frustration around money. Because, Michelle, you are frustrated with money. I can hear you told me. But you're also the one who has been managing the family finances for 25 years. So help me understand that.

Well, I think it started because I was doing it alone. Right. And then, I don't know, it's just frustrating. I don't want to have to do it. I didn't grow up in a house where they budgeted. They just had like magical amount of money and spent it on whatever. And it's a lot of work and a lot of mindset shift to have to budget every month.

Yeah, I can see that. I don't like budgeting myself. Did you know that?

I don't know much about you, so I didn't know that.

Okay, what do you expect coming into this call? I'm curious. What do you expect me to tell you on today's call?

I don't know. Eric asked me to be on this call with you. I agreed, and here I am. I have no expectations.

Okay, well, you're playing along, which I appreciate. The way for this to go well is both partners have to be engaged, and I'm happy to see that both of you are doing it. Even though you know, Michelle, some of the questions I'm asking you, it might seem a little tough. I appreciate that you are playing ball. My antenna are going up right now. You can hear that Michelle is getting defensive about some of my questions. So when I ask her what she expected, she tells me she doesn't know much about me and that she doesn't really have any expectations. Now, that can be okay. I don't mind talking to someone with no expectations. But you can also understand why Michelle might be caught off guard by some of what I'm asking her. She shows up to have a conversation about money, and suddenly she's getting questions about why she's been managing money that way for 25 years. I don't mean to ambush her. I'm just trying to understand the situation here. The one Eric called me about and Michelle agreed to talk about. Again, I can understand their defensiveness, but with that said, it's not giving me a lot to work with. When we start honing in on something, Michelle turns the attention right back to Eric.

There has been a lot of baggage with money on Eric's part, so you can ask him about that and why I'm so angry about it.

I had a lot of credit card debt that I racked up, which I knocked out over the last five years.

How much debt?

Like, 60.

60,000.

50 to 60. Yeah.

What was the. What'd you spend it on?

Just, like, off, like, business programs, business development things, Equipment for the office, medical equipment, things like that.

Okay. And you. So you wrecked up 50, 60k of debt. You paid it off?

Yes.

All right, Michelle, how did you feel when you saw him paying that debt off?

Well, it's his business, so I didn't know how much.

You didn't know about it?

Not really. I mean, I did. I knew about the debt. I didn't know how much it was, and I didn't know how he's working on paying it off.

Eric?

Yeah, I mean, there's been a lot of. I've made a lot of business mistakes over the years, and it caused bankruptcy in 2008, 2009. When the economy went down. I mean, there is a lot of stuff in the past, but, like, my philosophy right now is we don't, like, why go back there and why still be angry about it? Like, get over it. Let's move forward and be a team. Like, Michelle has every right to be, you know, have had. Be angry what happened in the past. But that was, you know, situation that happened 20 years ago and another one that happened about 12 years ago. And it's like she still hasn't gotten over that. And it. It's affecting our, you know, where we're going. That's why every, you know, like she says, always, never. I mean that to me, that gets me so frustrated because I'm not. I never do this. You always do that. And so for me, like, it. That doesn't work. And it gets, you know, it gets us. That's why we go into that spiral and just get frustrated.

Eric, I mean, if you declared bankruptcy, which you never mentioned in any of the documents you sent over, I can understand why she would be upset. That's a serious thing. Right. And that doesn't just heal over time. That doesn't even heal over 12 years later. It takes talking and it takes changing the way you deal with money. The more I try to understand Michelle and Eric, the more I get lost in their history of resentments. Each of them has valid reasons to be angry and defensive, but nobody can solve this on a single call. That's not what I'm here for either. I'm going to try to zoom up and recalibrate. What do you think is the real problem here? Us.

Communication.

Yeah.

Lack of having a plan.

Trust.

You don't trust each other. Yes. Keep going. You're nailing all these. What else?

Expectations.

Yes. Anything else?

Strategy. Know how to.

What am I doing here? You. So you. You're actually quite savvy at knowing the problems here, but putting them all together eludes you.

Well, fixing them eludes us.

Yeah, in part because I'm not sure you actually want to fix them. I think you actually enjoy the bickering. I think it gets you to feel a temporary sugar high where you go, I'm right, you're wrong. No, I'm right, you're wrong. And what about that thing that happened two years ago? Two months ago, 10 years ago. And then you get back into this comfortable relationship, and then you both get mad and come back the next day and pretend it didn't happen until the next time.

That's true. I feel like we have the daily spending under Control. I think we need more money to generate more income so we can invest more. And no investment strategies because neither of us know how to do anything like that.

Okay, okay, now we're talking. So you need a higher income. You want to invest more. I'm with you so far. And what else?

Yeah, those two things. Strategy, know how, what to do, how to invest.

So let's say that we accomplished that and you start investing $25,000 a year. Okay, great. What then?

Just growing, I guess. I don't know.

And then what?

Growing so that we can buy our house up north so we can travel. I don't know.

Seems a little vague.

No, I don't have a big rich life. We want to buy a house up north Michigan and move up north to northern Michigan. I personally want to have real health insurance and long term care insurance because we had a tragedy in our family and it scares the bejeebies out of me that if I had to go to a group home, like, how would that get paid for? I don't want to burden my family or my kids. So I need that security to know that I'll be safe. Really, for me, it's all about security and not burdening my kids. I really don't have these crazy dreams of things I want. I mean, I'll travel, I love to travel, and I want a house up north. But besides that, pretty simple.

Michelle, one of the reasons that people don't enjoy managing their money and they don't aggressively save and invest is that they never take the time to create a vision of what their rich life is. So of course you want insurance. Okay, great. You should definitely get insurance. But I'm not excited by hearing you talk about long term care insurance. Are you either.

Was Eric, are you really? Yes, I really am.

You wake up in the morning and you go, yes, long term care insurance.

No, it's. To me, it's like, okay, you're being a responsible adult.

The problem is that the idea of being a responsible adult is not inspiring. Nobody wakes up and says, yes, I want to change my entire way of thinking about money and managing money because I want to be a responsible adult. It never happens. And if it would have worked, they would have been doing it for the last 25 years. So my opinion is, if it hasn't worked your way, why don't we try it my way? My way involves starting with a vision of a rich life. It involves being honest about what excites you with money. And if you can't find that excitement, that's okay, Some people have lost it over the decades. Let's go through my process and I want to watch both Michelle and Eric build this vision together. Unfortunately, many of us have lost the ability to dream. So we go back to these seemingly logical things we want. When I talk to people and ask them, what's your rich life? And there's a very small minority of people who say, I want health insurance. I want to make sure that I can take care of myself. I know two things. Number one, there's probably something that happened in their family that makes them prioritize that above everything else. And, and number two, they have no real vision of a rich life because wanting health insurance is not a rich life. It's something you should have, but it's not going to inspire you to change the way you treat money. And that, among other reasons, is why Michelle has not made a change in the last 25 years.

What I want for my rich life or is to have a cottage up north, a three bedroom cottage on a lake or near the lake. I want to have the ability to travel and go away for, let's say, two weeks twice a year or one, you know, a, one week, four times a year, to like really cool places and be able to, you know, see amazing things and eat in great restaurants and to be able to like, take our kids with us if they want to come with us. I want to leave them a legacy so that you know that and teach them strategies as far as so they can live their rich life and not fight with their spouses so that they can have great times with their families too. Like to be able to afford. Even though, like, cars aren't that important, I want to be able to drive a car that I feel proud of. I mean, I, my car's fine. It gets me from A to B, but it's a 12 year old, you know, SUV. Like, I'd like to have like a newer car that's reliable, you know, like a new 20, you know, 2012, 2017 Ford Explorer. I'd be happy with that. But, you know, like, doesn't have to be fancy, but like a, you know, a good, reliable newer car. So those are just some of the things off the top of my head.

I know all that. So I don't, I don't know. I'm like, very worked up right now. I know those things. He's told me those things before.

Wow. So how do you think he, he feels when he just opened up about the things he wants and your answer is, yeah, I already know those Things.

I'm sure not Good.

So do you want to change it or do you want to just repeat the same pattern for the last 25 years?

I do want to change it.

When you talk to your partner about money, it is inevitable that you're going to have disagreements. Remember, most of us are not even confident about money with ourselves, much less having a conversation with our partner. There's baggage, there's history, there's invisible scripts in the way that we grew up with money. So here are a few suggestions. Start with curiosity. You can even create simple rules for yourself. Like each person has to ask at least one probing question. Oh, you want to travel more? Wow, that sounds interesting. Where would you want to go if we could travel anywhere? Another rule you don't have to solve the how today. What is the goal of your first conversation with money? It's literally just to get excited about money. That's it. And finally another rule. There's something new to learn. Always. Here we have a couple that's been together over 20 years and I think they still have more to learn about each other. I find that exciting. 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 gotta 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 or one small move right now could save you thousands later. Gelt 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 link 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 guilt. They can be a tool to build wealth. 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. You 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, health benefits, workers comp 401k matches, you name it, they 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, gusto.com ramIT how savvy would you say you are with Money? Scale of 1 to 10?

3 to 5?

Not. Not especially savvy, I'm guessing. Is that fair?

Yeah.

Okay, so I can understand why it must be stressful to talk about this. Not only is it the money part of it, it's the fact that you're in your 50s, it's the fact that he asked you to be here and you've got a history with bankruptcies and debt and earning and expectation and parents. Are all those fair?

True? Yes.

So all of those can be true. I'm not going to change all that today on one call. You know that. And I know that you can do a lot more with your money. But yeah, I'll show you some investment stuff you can do. And yeah, I'll show you how to allocate your money. I'll talk about that. But if the two of you can't have a conversation where one of you is sharing his rich life and your answer is, okay, yeah, I already know that, then none of the numbers are going to matter at all. I heard a lot of pride from both of you over what you have accomplished financially in the last two years.

We had someone in the house, staying with, you know, who, you know, gave us whatever 600 bucks a month, and we just put that right into savings. And he was with us for about a year. So there was that. You know, we don't really. We're not like, extravagant. Like, I love Michelle because she's not like, she doesn't want jewelry, she doesn't want a fancy car. She just wants security. Like, one of her things was like, I want long term care insurance because I want to make sure that, God forbid something happens, that our kids aren't burdened by us. But like the last years, we didn't go out for quite a long period of time when we saved a lot of that money and we just kept it really lean and mean.

Michelle, what's your perspective on the last two years?

Well, I got excited when I saw that the money kept building up, and then I set kind of goals, like, all right, by the end of this year, I want to have this much money. I want to, you know.

So tell me the numbers. I want to hear them.

How much we've saved?

Yeah, how much have you saved?

We went from zero to zero to 42,000 in two years.

Great. And what was the goal by the end of the year?

Well, the goal by the end of this year is 50.

Okay. And what does that mean to you? If you were to have $50,000 in savings, what does that mean to you?

I don't know. It's just a little like, okay, I can do this, I can do it.

And if you were to get to 50, what would you do next?

Make a higher goal for the next year.

Like what.

Maybe 70.

Okay. So I could see you incrementally move that number up 70 soon. 100, maybe 120. Okay. All great. And when would you get to feel good about money, Michelle?

When would I get to feel good? Well, I'm starting to feel good about it now. I want to feel good now about it. I don't want to wait.

Okay, I like that. So can we just flip a switch and you start feeling good about money today?

Sure.

Really?

Yeah.

I don't know if I believe that. I mean, this is the first time I see you smile on our entire call. I love it. What is that? It seems like you've felt bad about money for a very long time.

I have. I have. Yep. So it feels good to be responsible about it. I mean, it didn't feel good for 30 something years to be given everything even though I took it. And then it feels good to. To like, create your own Money.

Yes, it does. Thank you for saying that. I think that's very powerful. You said it doesn't feel good to have been given everything, even though I took it. Being given everything. You're referring to your parents?

Yes.

When did they stop giving you money?

Probably when they. I mean, they still buy things for my kids, but they don't give me money monthly anymore. I mean, a birthday present.

When did it stop?

Maybe five years ago.

So in your mid-40s?

Maybe 40s. 10 years ago.

Maybe 40 years old. Okay. Do you see how you ended up frustrated with money? In part because it was being given to you and you weren't taking your own responsibility?

Yep.

And the minute you started really taking responsibility with Eric during COVID what happened?

It grew. We have. Yeah, we have money in our account.

And how do you both feel about money from those last two years?

Feel like an adult now. More like we're actually acting our age, not like we're 25 years old or 20 years old again.

Yeah. So what does it tell you about the next 10 years? You two did it for two years. What does it tell you for the next 10 years?

Yeah, that we just got to stay on the plan.

Yeah. Well, also, you don't even really have a plan. Right. You accumulated $42,000 not even knowing what you're doing.

Just think if we actually had some strategy from you or me.

Yeah. I mean, it's like you started. You got in a car and you just started driving, and you finally put on cruise control, and you're like, oh, my God, we drove 1500 miles. And now we're actually going to look at a map, and we're going to go the right direction. Imagine where we could be in another two years, much less 10 years. I don't know. Does it get either of you excited about where you could be in 10 years?

Oh, yeah.

Okay. That's what I'm talking about. This money has all been sitting in savings. It wasn't even invested. So imagine if you could start to really grow your money, if you could start to do it together, and if you could be on the same page and not fight about money. This is a win. But I think it's just a start. That money right now is just sitting there. And this is where I invited them to open up their conscious spending plan and lay the groundwork for their numbers. Unfortunately, it just turned into more bickering. But if you want to do this for yourself, you can get the csp@iwt.com episode 58. Now I'm looking at the conscious spending plan, which is very helpful to get a bird's eye view on how your spending stacks up. I recommend fixed costs be 50 to 60% of take home. Yours are 62% right in that parameter. So that part I would say generally well done. Okay. Your investments should be roughly 10% of take home. Roughly how much do you each Invest per month?

500.

Okay. It says that you are each, that you're spending $1,000 a month on guilt free spending. Is that true?

I don't think so.

I mean, that includes like dining out, right? Clothes, pets, pets, pet stuff, travel, traveling.

Right now Michelle is shaking her head vigorously saying no. Michelle, do you think that number is too low or too high?

I honestly don't know the answer to that. It's like I do all the bills and I know when they come out, but I don't know the answer to that other question without looking at it. I never added it up.

It was really enlightening for me to pull up the last three months of their credit cards and actually look at what we actually spend.

What it tell you a lot.

I didn't realize. We spend more than I anticipated on traveling and going out. I mean, we don't go out for extravagant dinners, but we do go out and, you know, buy clothes for the kids. Gets, you know, we, we give our son 600 bucks a month for, you know, college, like, you know, spending money for him to buy food and stuff. So, I mean, it adds up quickly.

That's good. Yeah. That's what most people find out when they actually track their spending for one month. They discover that they were dramatically overspending compared to what they thought. And they also forget to include all those things they do only once or twice a year. Oh, we went to Disneyland. Oh, we went for this holiday trip. We did this quick vacation. They forget you actually have to spread that expense out over the entire year. Michelle, what do you think?

So I don't understand how a conscious spending plan is not the same as a budget. I mean, in my mind, it's exactly the same thing.

This is a common question I get from people on the Internet. Let me explain. With a budget, you track every last line item. How much do we spend eating out? How much should we spend on Airbnb? How much did we spend on Netflix and Kiwis at the grocery store? Everything. And then at the end of the month you go, okay, I have all this information. What am I supposed to do with it? A conscious spending plan is different. It looks forward. It says, of the money we make next month, how do we want to allocate it? Some of it should go to our fixed costs. Some of it should go to our savings automatically. Some of it should automatically go to our investments, and the rest should be left for us to spend guilt free.

Know what this reminds me of? We did Imago relationship therapy, which is really like, about kind of like what you're saying. It's like, let's move forward. Like, we're not going to talk about all the shit from the past. Like, we're going to talk about moving forward and develop a new strategy of communication. It's like having a new language.

A CSP is definitely a new language, a conscious spending plan. I do think that the way that the two of you communicate. I'm glad you took some therapy sessions and I would encourage you to do more. I think it's amazing. I'm not making a joke. It's not.

I know, I know. No, I completely agree.

I, I, I try to destigmatize therapy for everybody and there's only so much that I can do on one call. And a therapist has other tools and skills that they can bring. I, I don't need to tell you that. I think it would be very helpful. But few therapists can talk about money like we are talking about right now. I think you both tell yourself a story. I've heard both of you say it, that you're not fancy, you don't need fancy things, you're not spending on a lot of stuff, but actually you are spending on a lot of stuff and you're not saving or investing nearly as aggressively as you need to. How does that strike you?

Well, I don't think we're spending on a lot of stuff. I mean, I buy the dogs. I mean, I don't think we're spending on a lot of stuff, but I do think we need to be more aggressive.

You two, in your 50s, with not as much investments as you could have had, are spending $1,300 a month on your son's college expenses and other services for your children, not to mention car repairs, et cetera, for them.

It's been a bone of contention for me, and I've not really expressed it, but I really feel that our kids need to have more skin in the game again. It's like that pattern of buying them everything, paying for everything. And Michelle goes to me like, why are you so selfish? Don't you want to support your kids? I'm like, absolutely, I want to support them, but I want to I want them to learn. I want them to have skin in the game. I don't want them ending up like this.

Do you see any connection between how your parents treated you with money and how you treat your children?

A little. But when I was growing up, if I wanted to go on an extravagant trip, I was always, like, given a check. I want to be generous, but I'm not overly generous because we don't have the money to be overly generous.

I'm not here to tell you how to raise your kids or what to spend on them. That's up to the two of you. It's your rich life. It's your money. I will say right now you don't have enough to invest and save at the rate you need to. For 25 years, you've been managing the money, making sure the bills get paid. And that's amazing. That needs to happen. That's table stakes. But we also now need to add on a way to grow your money. That's investments. That's automatic saving. That's where real wealth is created. You've got $200,000 invested. Okay, how much are you contributing total per year to your investments?

Thirteen. Five.

Great. Okay. And what age do we want to do this until you want to see what happens in 10 years?

65.

65. Okay, great. 15 years. And what interest rate should we assume that you're going to get on your investments?

I don't know. You tell us. I don't know.

Eight? Ten? Michelle, what do you guess?

Eight.

Okay, at least you're in the ballpark. Some people say 8,000. I go, Ah, shit. I use 7% because I like to be conservative. There's a whole section in my book talking about where does this number come from and how do you derive it and all that stuff. But let's just say seven to be conservative. Okay, Maybe you get a great. So by the age of 65, you've turned that into $914,000. Okay, here's my question for you. Does this number mean anything to you?

I don't think it seems like enough money.

It's just a number, and it doesn't feel like enough. That's most people. Eric, what does this number mean to you?

To me, I always thought, like, okay, I want to be. I don't know why that number is so significant, but a million dollars just seems significant to me.

First of all, if you have $914,000, you are millionaires. Cause you have like $75,000 in savings. Big whoop dee doo you. It's Just a number. It doesn't mean anything. I'm going to show you an example of how to figure out what to do with it. There's a simple rule called the 4% rule. Some people can debate it whether it's 3% or whatever. We're going to use 4% for this calculation. And what this means is you can safely withdraw 4% of that amount every year for 30 years. There's more complexity to the 4% rule, which you can research online, but it's a really beautiful back of the napkin calculation you can make that tells you how much income you can eventually get from your investments. So if you live from 65 to 95, you could safely take 4% of that. So why don't we figure out what that is? 4% means you could withdraw $36,000 per year. What do you think of that?

That sucks.

Correct?

Yeah.

That's a number that you can more easily grasp because you can compare it to your current income, which is what, 100? This is a very stark moment for people, especially people in their 40s and especially 50s and 60s. For many people in this situation, they suddenly realize that the money they've saved is not enough. And now the dreams they have of their future life, their retired life, might not be possible now. Eric and Michelle still have a chance to make a change, but I want them to understand how serious this is. I asked if they wanted to go from $100,000 in income to $36,000 in income. In our culture, it is excruciating to imagine taking a forced downward socioeconomic step. I know that some of us think better when we write our thoughts out, but for a lot of us, including me, I'm better when I can think out loud. If that's you, I recommend you check out Whisper Flow to save you tons of time to bring your ideas to to the page. Whisper Flow turns your voice into clean final draft writing inside whatever app you're already using. Email, Slack, Docs, even text messages. And it works on Mac, Windows, and iPhone. So instead of spending all of your time responding to messages, especially while sitting at a computer, you can hit a hotkey, speak, and the text appears. It's accurate, it's fast, it's all formatted so you can get back to work. Here's what my friend said about it. Whisper is amazing because it learns the way you speak. So you can send this rambling note as a text message and it kills all the filler words and it perfectly formats it for you. They said it's much better than using the Apple Voice to text feature. The spelling is way better. If you want to buy your time back and get back to what matters, check out Whisper Flow. Try it for free at whisperflow AI Ramit. That's Whisperflow AI slash Ramit W, I, S P R Flow AI Ramit. Or click the link in the description below. Okay, let's try to guess what you got your mom for Mother's Day. Was it a gift card to Starbucks? Was it random chocolates from See's Candy or a pair of slippers? And you said, here mom, keep your feet warm. They cost $3 at Target. Guys, don't you think generosity is a core value to have, especially for Mother's Day? Well, if it is for you. If giving great gifts is a part of your rich life, especially to your mom, I recommend checking out Aura Frames, this episode's sponsor. Aura is a wifi connected digital picture frame that beautifully showcases your photos. You can add unlimited photos and videos straight from your smartphone using their app. Aura Frame was named the best digital photo frame by Wirecutter and featured in 495 gift guides. And because they only take two minutes to set up, it's easy. You can even send her photos straight from your phone no matter where you are in the world. My co worker gave an Aura frame to her in laws and this is what she had to say. They absolutely love it. Now that they spend the winter in Florida, they don't get to see their grandkids as often. So we fill it with photos of the kids so they can see what they've been up to. As the year goes on, the photos look like framed photos. Highly recommended. Aura has a great deal for Mother's Day. For a limited time, listeners can save on the perfect gift by visiting auraframes.com to get $35 off plus free shipping on their best selling Carver Mat frame. That's a U R A frames frames.com promo code ramit Support the show by mentioning promo code RAMIT at checkout. Terms and conditions apply. Yeah. So you want to go from 100k to 36,000?

Nope.

How do we triple that?

Okay, so what do you want to do now? We have some decisions to make. What are your levers here?

Well, the annual addition.

What number would you like to Change it to?

25.

25. Okay, so from $13,500 to $25,000. And just give me a sense, where would that money come from?

More earnings.

More earnings is one way. What else?

I mean, like you said, we were 1300amonth for, like, kids stuff. I think we just cut the kids off.

Okay. Cutting kids off always going to be one of my favorite levers to pull. Don't come for me, parents. I don't need to hear from you right now. Just save it. Send your emails to Ramit will never read this at I will teach you rich dot com. But in all actuality, they do need to take a very conscious look at their expenses, and this is a lot of money that they're spending on their children. I do recognize that making big decisions about expenses, especially family expenses, takes time. Nobody decides on a call like this, we're not going to spend any more money on our kids. But my job here is to simply raise the question for them so that they can start thinking about all their options. I also want to pull on another lever here. Time. Let's just even see if this is exciting. So we're raising it from $13,500 a year investments to $25,000 a year, and suddenly, instead of $914,000, you have 1.2 million. If we take 4% of that 48,000 a year, how do you feel about that?

It's better, but it still doesn't seem like a lot.

Okay, what else.

Made more years to grow?

Okay, so instead of 65, what number would you like to put?

70.

So 20 years.

Okay, now we're talking. Instead of $1,200,000, we have 1,087,000,000. Whoa, that's a big jump. What does that tell you?

Compounding it. I mean, it just the more I hate to. Like, my first thought was like, we should have started doing this 10 years ago. But, like, that extra five years, that grows significantly.

Yes. And now you have 74,000. Almost $75,000 a year. That's impressive.

I think we could do that.

I am loving this. Suddenly I'm showing them different scenarios with their money, and they're starting to connect what they do today with what they will have tomorrow. Honestly, this is pretty advanced for most people. Most of us cannot make the connection between what we spend on our rent or mortgage today and what our income is going to be at retirement. But there is a direct connection. This is how tools like my conscious spending plan can help you. That is why I mention it so often on the podcast. Buying a truck can directly affect how much you have later. How much you spend on maintenance for your house can directly affect how much you have later. And on and on and on. Now I want to direct them to the money sitting in their savings account. You got the 42,000, that's sitting in savings. You're in a great position having that, but we might be able to put 20,000 of that to work. Let's just take a look. 200 instead of 200,000. 220,000. We turn that into 1.9 million so that money would grow, grow, grow. But you have, you know where your. One of your biggest levers is. It's really this number. It's the annual addition, and it's your time. Earlier you start investing, the better. You're 50 years old. You don't have time to wait. Even one year costs you dearly. And the second thing is the amount that you contribute every single month. What do you take away from those examples that I just gave you, Michelle?

Let's do it. Shelton. Tell me how. Where do I put the money?

Okay.

Amen.

You seem, like, very motivated right now. Tell me about that.

Well, I think I can see the numbers and I can see what we have to do. So having, like, the math, it takes the emotion out of it and just math.

Wow. But are emotions bad?

Of course they're not bad. But if you had just have the numbers, then Eric and I follow the numbers and don't get involved with the emotions and the.

I'm very confused by Michelle right now. She's been defensive for most of the call, but suddenly she's lit up and she's saying, okay, I'm in. Tell me what to do. I don't know if I buy it. I honestly think this call would go a lot better if I just shared some basic investing tips and. And gave them some handy rules to follow and sent them on their way. But that's not really what I do. And if that's what they really wanted, why haven't they just read my book or anyone's book? I think money, psychology, and emotions are the thing in this relationship. Their investing situation is not that complicated. But why they haven't talked about money and invested money and been aligned for 25 years, that is incredibly complicated. I guess my perspective would be that I'm going to show you how to do this. I will show you. You will walk away with a plan. I will also suggest to you that emotions, expectations, communication are part of the reason you didn't do this 25 years ago.

To see that number, like, you know, from 1.2 up to, like, you know, 1.9 mil, just by increasing the amount that we're putting away and adding five years to it, it's just. To me, that's amazing. And I wish we would have done this 25 years ago.

Everybody wishes they would have done it 25 years ago. The only thing they can do is do it today and do it aggressively. The two of you rowing in the same direction will get you there. You cannot achieve this with how short your time frame is. If one of you is not on board, that is the bottom line. The only way the two of you get to have enough for retirement is by investing aggressive. That's the truth. And I mean aggressively. Now, how aggressive you want to be is up to you. But that's just the matter. There's a lot left unsaid in today's call. First, Eric and Michelle realized it is possible for them to change the way they treat their money. Once we focused specifically on their conscious spending plan and on their investments, they really took to it. They seem on board making these changes, but what I think is missing is a deeper analysis of what why they haven't been able to connect about money for 25 years. I don't expect to be able to get to everyone in one phone call, but when it doesn't happen, I am frustrated. And I know this is just one call can't change everything overnight, but I wish we had been able to go a little deeper. I hope Eric and Michelle continue to focus on aggressive investments. They're 50 and 52 years old. They do not have time. And I also hope that they find other tools and resources, whether it be a therapist, a coach, or whoever, so that they can connect more deeply and talk about money regularly. To understand what your numbers really mean, you can plug them into my free conscious spending plan template. You can Download that@iwt.com Episode 5 58. Thanks for listening to I Will Teach youh to Be Rich. I'm Ramit Seti. Please follow the show on Apple, Spotify or wherever you listen to podcasts. If you haven't read I will Teach you 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.