84. “We spend 98% of what we make—but we refuse to change our lifestyle”

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We both enjoy and like our jobs. Our three kids aren't going anywhere. We want them to have a nice childhood. We want to live the way we're still living without the burden of knowing every single dollar that we make is allocated to someone.

We don't want to move. I don't care about cars. Like we can buy drive less expensive cars and that's fine with me. This is our forever home. I mean I. We don't.

Yeah, we don't ever want to move again. Our jobs are our jobs and our income is what our income is.

But I think you two are living above your means.

Yeah. Yeah.

Have you ever acknowledged that to each other?

No, I don't think so. I knew, you know, all these things were coming up and just got really scared.

Scared of what?

Going into debt and not having a way out.

Meet Christine and Thomas. Christine's 32, Thomas is 35 and they have three young children. They are based in the Midwest and they have been in their latest house, which is their third for about two years now. Christine and Thomas are drowning with their money, but they don't know it all. They know is that they're stressed out and they describe it as treading water. But when I look at their numbers, I am alarmed. They genuinely believe that they just need to make a few small changes to fix things, but that won't cut it. I'd like to invite you to watch this episode on YouTube where you can see the full thing. Just go to YouTube and search for my name, Ramit Sethi, and you'll be able to follow along. This is I Will Teach youh to Be Rich.

Let's begin.

My relationship with money is stressful. Like it's, it's a cause of stress for me pretty consistently.

How consistently?

Daily. It feels stressful daily.

When do you think about it first?

In the morning. When I wake up in the morning we use the Ynab app. And so in the morning I see like, oh, you have this many transactions to import or I look at our checking account just like, you know, I have this like mental idea of like, you know, beginning of the month is when most of our bills come out. So I'm just like, okay. I just like want to just for a little bit of peace of mind check that like we have. I know, you know, I know approximately how much we need to have in our checking account throughout the month and you know, based on when our bills come out. So I just want to make sure that like something isn't a surprise to me and going to, you know, impact our checking account unexpectedly. Getting my kids ready.

As you're getting your kids ready, you're checking into Ynab and the accounts.

Yeah, so like I, we have a three month old daughter. So like when I'm feeding her in the morning, I won't be, you know, scrolling through my phone and it's kind of just like on the rotation, I check my social media, I check my, I check our checking account. I, you know, just kind of the rotation of the apps that I check.

We use Google sheets so we have everything shared on our budget. And so Christine, you know, like she said is monitoring this stuff multiple times a day. And so then she'll message me or text me and be like, we have this coming up or gymnastics payments coming up. And so I'd say a lot of it is during the day instant messaging as well.

And what does it feel like when you see the numbers in Ynab in.

Your accounts in Ynab, it feels like I'm kind of like, like I have to go through and like check what all of these are and then like how they impact the amount that we have budgeted for that for the month. And then when I look at my checking account, it's a little bit less stressful because I don't see, like, the details and how they relate to what we have budgeted for the month. Like, I'm just looking at a number there. I'm like, oh, okay. Like, nothing happened overnight that I. That is a fire.

Oh, that's interesting. So are you looking for fires when you log in?

Yeah.

And if you find them, what do you do?

I try to just, like, store that away for a while until I have a chance to, like, go back in and handle it. Like, you know, speak. Speaking of details, like, for example, this morning I logged into our checking account and I saw, like, oh, a check was cash that we had written, and we were both like, shoot. Like, I didn't know what the check was for because I couldn't see, like, the image of the check. And I asked for Thomas, and he didn't remember what the check was for either. And so that was stressful for me this morning because it was a couple hundred dollars and I was like this. I don't remember this. Where'd this come from? So that was something that was on my mind for a couple hours until I could find out what it was.

It sounds stressful.

Yeah.

Like, before 10:00 o'clock in the morning, you're just inundated with all these numbers and worst of all, missing data. There's nothing worse than missing data. It drives me insane. Okay. And then you're looking for fires. It sounds like you're the firefighter, the financial firefighter in the relationship. Is that true?

Yes.

Okay.

Is that what you want to be?

No.

All right, so our mornings are very different. But. But putting the kids aside, if that's even possible, for just a second, the last thing I want to do in the morning is wake up and look at a bunch of rows of numbers, and I don't. So do you think that there's a possibility, a world that exists where you don't have to check your accounts every morning?

Yeah, I think that's possible.

How come you haven't done it?

I don't know.

Habit.

What else? Well, you're telling me it's stressful in a bad way. So why haven't you changed that?

Because I don't feel like we're comfortable enough or we have enough of, like, a cushion in our finances or a savings, you know, in our finances that can, like, kind of, like, account for those ebbs and flows.

Yeah.

Feels like you're living on the edge.

A little bit all the time.

Okay.

All right, Thomas, tell me about your financial firefighting every morning.

My financial firefighting every morning is listening to Christine. And you know, I am not a morning person. And having three kids under five, it's a lot to do. I'm out the door by 7am Bringing the kids to daycare. And so I'm not super chatty in the morning and I am not very talkative in the morning.

When do you talk about money.

All the time? Basically whenever Christine brings it up.

Oh, okay.

This is a super common reaction when one partner is anxious about money and the other is avoidant. The avoidant person almost always believes that their partner constantly talks about money. And to some extent that may be true. If you are anxious about money, you will probably tend to bring up money a lot, especially at inopportune times in the morning when you're in bed, when the person comes home from work all the time. As you can hear, Christine cannot imagine a world where she isn't constantly checking her accounts. But it's also true that the avoidant partner exaggerates how often money is brought up because they're sensitive to it. If money was brought up even once a month, they would probably still say she brings it up all the time.

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I mean, like just the example she shared this morning with that couple hundred dollars charge. We were still in bed when she saw that I was. I probably had been just woken up a few minutes ago, and so I didn't know where it was from. I didn't, you know, still in a daze a little bit. And.

And what does that feel like to talk about money in that context?

I'm getting to the point now where I'm more used to it and expect it, but it's not what I want to talk about when the first thing when I wake up.

Okay. Okay, I can understand that. When. When would you want to talk about it? If you could choose? What's the smile that everyone's secretly having?

Well, because we used to have Sunday budget meetings. Okay. And that was maybe before kids or with one kid and just over time they have gone away. But we would sit down every Sunday night and we use a different budget platform before then and look at everything and plan for the week and we don't do that anymore.

Were you in a better place when you were doing that, financially speaking?

Probably, yeah.

Okay.

We have a lot more expenses now than we did.

I'm sure that's true. Three kids is a lot. But is there any other potential correlations here? Let me try to lay out the Facts. As I've heard it, you used to talk about money every week you were in a better financial position. Now you don't talk about money every week, you're in a worse financial position. Is there any correlation? Maybe. All right.

The magic wand would be no weekly meeting. And I think that's a little bit why it stopped was because I could tell Christine was getting frustrated. You know, Sunday night I kind of want to watch football or something. And we had to turn the TV off and sit down together for an hour and look at finances.

Wait, that's. What do you mean? That sounds awesome. I get to turn off football and turn on finances. That's the dream, the American dream.

That's the Sunday scaries right there.

Oh, all right. Yes, we have different dreams. Okay. So that's kind of why it stopped. So what is your dream? Like, what would it be if you could do anything.

Have someone take care of it all for me.

Okay. Okay. You don't want to, you don't want to talk about it?

No, not really.

Okay.

I know for the most part where we're at, what we have, what our expenses are, but, yeah, I. I don't love talking about it.

Okay. That helps me understand where, where we're dealing with here. So, Christine, you reached out to me. Why now?

Because. So in the fall, when I had reached out, I knew that there were some things coming up in the next couple of months that were going to greatly impact us. Like our mortgage went up. We, you know, had another daughter, so daycare. She started daycare this month. So that's, you know, an extra kid in full time daycare and, you know, hospital bill on top of that. I knew that was coming up. And then we, about a year and a half or so ago had found ourselves in some credit card debt. And so we had transferred that debt to zero interest card for a period of time. And I knew that time period is expiring soon. So we have to, you know, I, you know, it's. We've been paying on it every month and somewhat on track to pay it off in the next couple of months, but. So I knew, you know, all these things were coming up and just got really scared.

Scared of what?

Going into debt and not having a way out. Or I shouldn't say not having a way out. I know there's a way out. I know there's always a way out. But just we've been working to get rid of this, like one credit card debt, and then we're coming up on that on the, at the Same time, like, getting kind of flooded with all these other increased expenses. So just not sure that that's, like, how we're gonna make it all work. I feel like we're always, like, treading water and just, like, bobbing at the surface is like, you know, this month we are maybe a little bit ahead, so, like, great. And then, like, the next month we're a little bit under, and it's just kind of like always up and down. And I feel lonely like that. Like, you know, because, like, I know that Thomas doesn't want to talk about it, and I don't want to be the person that's, like, nagging about it all the time either. So I've of, like, taken on the responsibility of that or taking on the responsibility of, like, managing things. And it's just, you know, made me feel a lot of weight, you know, it's just very stressful and I feel, you know, alone in the stress, you know.

Yeah, it definitely makes me feel sad that she thinks she's alone, because I don't want her to feel that. But then I also know that she knows, you know, that I. It's not my favorite subject to talk about as well, so.

Some couples leave very, very obvious clues, and today's clues are enormous. They used to have money meetings when they were in a better position. Now they don't, and they're in a worse position. Thomas mentioned he's listened to the podcast before, but he also admits that his dream is to not think about money or talk about money or manage his money at all. Oh, and by the way, she checks their accounts in bed every morning to put out fires. I want to talk about Thomas's dream of never having to think about money or talk about money. It's a really common one, but unfortunately, it's delusional. Think about it. You would never say that about food, you would never say that about parenting, but we say it about money. And the reason why is that we see money as a negative, as boring, as hard, as a source of pain and shame and debt and negativity. And until we can change that view, there will be avoidance.

I think one thing that's maybe jaded me in the. In the past was this is our third home. And I kind of did the whole home buying processes before, like working with realtor and lenders and all those things, and it. And it took a toll on me to just the amount of communication and things like that. And I. Once we finally got in this house that we hope to be in for a long Time I was kind of like, I'm done with this, you know? And.

And this means what, like, money?

Like, yeah, I guess. You know, big expenses, dealing with lenders, paperwork, credit card stuff. I was just over.

Okay, I get it. That's a lot of paperwork to go through. But that's like me going into the forest, finding the most gnarly rotten mushroom I can ever find. It's got maggots crawling on it, and then I eat it. I eat it three times, and then I go, you know what? I'm done with food.

Food.

Food is disgusting. I'm done with that. Like, you picked the worst of the worst of the worst thing to engage in three times, and now it's really colored your view of money.

Yeah, exactly.

Notice the blending of buying a house with money. Thomas had a bad experience buying three houses. So now he goes, all money is bad. And this is a classic clue for all or nothing thinking.

They have kids.

Let's say one of their kids throws up on their shirt. Are they going to say, I hate all kids? Of course not. But why? What's the difference between what Thomas does with money and what he likely does with his children? The difference is, if you are a parent, you understand that a kid throwing up is one tiny part of parenting. Yeah, it sucks, but it goes with the territory. In other words, you can see the big picture, including the joys of parenting, and you can put that disgusting puke in perspective with money. Most people do not have that perspective. They do not understand the big picture. Thomas literally sees buying a house as equivalent to money. He sees Christine's anxiety about money every morning, every. As money. So it makes sense that he doesn't like money, that he avoids money, because from his perspective, money sucks.

So you've had expenses going up before. These expenses recently increased. How were you doing with your finances?

So I think we've always felt like we're not poor, but I think we with the baby, with, you know, just with the medical bills, we've had so much more larger expenses happen where in the past it was so much smaller expenses that would pop up that we could manage and handle better. Now I still think we're okay, but we need to be more careful and more smart about what we're spending our money on.

I would say that before these larger expenses came up, we were not in a wildly different place. Our expenses were a little bit smaller, so we had a little bit more of a cushion month to month. But we've just never had a good like or a com in my Perspective, a comfortable amount in our savings that makes, you know, makes me feel like whatever comes our way, you know, we could field it. You know, what does that amount? Probably 20,000 would be. Would be comfortable. A comfortable starting place for me.

But we both wish we could make more money. And so that's kind of an ongoing battle, I think, where I had a job, my previous job, right before this, I was making more money, took this job for more happiness. And so not only did we have a large medical bill, another baby, two dogs, larger house, we had no car payments before. Now we have one. All these huge expenses that we have to pay monthly. And my job is making less money. We don't put anything into our, like our Roth and things right now where we used to.

What was the time period where all those changes happened?

Within like six months.

What?

Pretty close.

Well, looking back, what do you think about that?

I mean, we bought our house because the interest rates were so incredibly low that we could afford it. And I still think we can afford it.

Can we look through the numbers? Because I think that's going to provide something to ground us around. Christine, walk me through these numbers.

Yes. So our assets are 597,500.

All right, fine.

Investments, 106,800.

Okay. Savings.

Savings is a little over 5,000.

And debt?

Our debt. So this includes our mortgage, credit card, and vehicles, and that's 394,000.

Okay. What's the total net worth?

315,000.

All right. How do you feel about that number?

I was pleasantly surprised when I, when we came, came up with that, because I was like, we're positive. Like, that's. That feels good to me.

Okay. And how much credit card debt?

Our credit card debt is 2,200.

All right, let's take a look at the income. Thomas?

Yep.

So just tell me your gross household income.

Our gross household income is 11,122.

Yeah, that seems pretty good to me. And you said that you used to make more. Now you're making 11,000amonth household income. So just to summarize, so far, the two of you make $133,000 a year. You've got $106,000 in investments, $5,000 in savings, $394,000 in debt, of which 360 is your house, $2,200 is your credit card, and $28,000 is your cars. And in terms of ages, Christine, you're 32. Thomas. 35. All right, so far. Okay, let's take a look at the fixed costs. Shall we? What's that number next to the fixed costs? The combined. How much are you both spending on your fixed costs as a percentage of your gross? Excuse me, your net income.

98%.

Is that high or low or. What does that number mean to you?

Outrageously high to me.

Yeah. Thomas?

Yep. Same.

Okay, what should it be?

That's no wiggle room at all.

Yeah, none. What should it be?

75%.

Where'd you get that?

I think Christine told it to me one time in the past. Or maybe it was 60%. Yeah, well, I can't remember exactly.

It's less than 98, I'll tell you that. It's.

Gee, I wonder why Christine wakes up every morning feeling worried about money. And why when she tries to bring it up with Thomas, he avoids it. When you lock yourself into high expenses like they've done, you cause all kinds of downstream effects. It would be like building a house with an absolutely tiny kitchen. You go, hey, let's save some space. But suddenly you only have one burner, which cooking takes longer. You don't have a big enough fridge to store stuff, so you have to run to the store three times a week. Your kids can't come home from college because you can't cook enough food. And on and on. These unintended consequences happen all the time with people's money, but we almost never trace it back to our fixed costs being too high. That is what's happening here.

Generally I prefer to see 50 to 60%. Okay, there are rare exceptions, but they are extremely rare. And you two are not in that rare of a situation. So with 98, what is the implication? If you have 98% of your take home income is being spent on fixed costs, how do you think that that affects your life?

We can't save an emergency fund. And we also can't save to do, you know, things that we want to do.

Yeah, what else?

Can't go on vacation. Can't lose our jobs.

Right. That's a good one. What else?

Can't get sick or have any other major expenses.

It suddenly makes a lot of sense. Why? Christine, you're waking up, looking at your phone, you're asking about, like sending urgent messages about a $200 check, which I don't do that. Right. I don't. And I don't want you to have to be fixated on $200 when the two of you make $133,000. It's just it, it. The way you have set your expenses up, it forces you to play small. And so you have taken this. This beautiful set of eyes that you both have. You can look at the entire world, you can see for miles, and you have turned it into a little pinhole where all you can see is sell D32. What is that expense? And we need to like, light a fire in our relationship to identify this $13 expense that we don't know any of that Sound familiar? Yep, it sounds awful. So it doesn't mean you're awful people. That's not what I'm saying at all. It just means the situation that you are in, it's not good. So let's see if we can find a way to make some changes. Okay. Daycare slash school is $2,000 a month. So who's that for? Two kids? Three kids.

Three kids in daycare and one is in a private preschool right now.

Okay.

Gosh, I hate how expensive child care is in this country.

And we. We actually have. Our daycare is an in home daycare. And it's probably about the cheapest you could ever ask for in our area.

Do you have any maintenance on that Jeep Grand Cherokee? Aren't those horrible vehicles?

Yes, and the gas is outrageous too. I have to drive. I drive 30 minutes to work one way, so I drive an hour a day.

Why do you have a Jeep? Is it like your childhood thing?

Exactly. Yeah. I used to have just a car. I had a Chevy Malibu with no car payment.

And I like that.

And then we added over $400 a month.

How did you decide if it. If you could afford it? Don't tell me you talked to the car dealer and he talked about monthly payment. Please don't say that.

I will tell you that I very specifically remember being at the dealership and we looked at, you know, we drove it and whatever, and we sat down and I was like, you know, the car salesman was, you know, gave us the price or the monthly payment, and I said no. And we walked away. We walked out. And I was so proud of myself. Like, like, no. And Thomas was like, I thought that was good. Like, why did you. Why did we walk away?

We had got. We had gone in there knowing that we didn't want to pay over 400amonth.

Thomas, I'm going to kill you right now. What have I said on this podcast 10,000 times? When the car dealer says to you, how much you want to pay? You look him straight in the eye. You say, tco, motherfucker. I don't talk car payments. Nobody ever talks payments. You talk about total cost of ownership. I want to know the full price.

I think we said we didn't want to go over 400amonth.

All right? He's like, I can make it work. And he gave you a fat loan for what, 60, 72 months? What was it?

I think it's 60.

I don't think we ever have felt good about it. And we even refinanced like a year ago and lowered our payment. That's good, but we still don't feel good about it.

Thomas, do you get why I don't want you to make decisions based on monthly payments?

No.

This is why you never buy a car based on monthly payments. You need to understand that car dealers are there to make the maximum amount of money from you. Let me show you how it works. Assume you're buying a $75,000 truck at 5.5% interest. If you put zero down with a five year loan, you'll pay about $1,432 a month. And the total amount you pay for that truck will be about $91,000. Let me say that again. You thought you bought a $75,000 truck, but. But it's actually costing you $91,000 plus the incremental gas, plus all the other assorted maintenance, which means your truck actually costs way over $100,000. Do you see why I am so, so focused on fixed costs, specifically a house and a car? Because these are the places that you trap yourselves. Let me give you another example. Let's say you want a lower monthly payment.

Sure, Chet.

Your friendly car dealer can help. He'll just stretch that loan out to seven years. Now, instead of your monthly payment being $1,432 a month, it'll be 1,225. So you'll save about $200 a month. Now, most unsavvy people will go 200 bucks a month. That's a good amount of savings. That sounds really good. Do not do that, because the total cost of ownership will now be $94,000. Okay, that's more than than the previous one. So you will save a little bit every month, but you will actually pay way more. This is how it works with all big purchases. Your house has massive phantom costs. Your car has very large phantom costs. Investments have phantom costs. If you don't understand what they are, read my book. Never buy something expensive based on monthly payments alone. Always calculate tco, or total cost of ownership, and then decide if you can afford it. That is how savvy people make big purchases.

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. Built 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 at 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. 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 gilt. 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 Gelt, you get a proactive yield, 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 G'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 wait list. Again. That's join gelt.com ramit join g l t.com ramit taxes don't have to be a task with GT. They can be a tool to build wealth. So your Debt payment is $300 a month. What is that for?

Our credit card?

Okay, when's it going to be paid off?

Well, it has to be paid off by, I think, April.

Are you on track?

No, we're a little off track.

What happens if you miss the full payment?

Then we'll get have an interest payment on or be charged interest for moving forward.

Is it for the remaining amount or is it for all the amount that you had during that last 12 months?

Great question.

Don't fuck with these 0% offers. Can I just tell you right now? Let me just put it this way. You're not smarter than the credit card companies. So I often find couples, they have some credit card debt, and you know what they do? They spend more time finding some cool 0% offer than they do actually fixing their spending. And so they go, okay, we got the zero percent. It's 12 months. Why wouldn't I take it? I'm going to do it.

What they don't realize is if they.

Look in the fine print, sometimes if you do not hit the exact term specified, not only will you pay interest going forward, you'll pay interest on everything retroactively. Also your credit score. If you miss a payment, it can affect, like, all kinds of crazy stuff. You can't beat these credit card companies at their game. You can beat them at your game, which is to pay the debt off as quickly as possible and then never get into it again. All right, I would strongly encourage you. I haven't looked at the terms of your zero percent thing. Figure out a way to pay that off. I added up your mortgage and your utilities, and it's 25% of your gross income. What does that tell you? Is that good or bad?

Well, you want us to be at 50 to 60%. That's half right there.

Yeah, it seems like a lot. And it seems like it's expensive to keep our house.

And I also think that our house is our most important asset. And it's the most important part. Not the most important part, but one of the biggest parts of our livelihood and family. You know, all of our girls have their own room we have a finished basement now, you know, and three car garage. So it's an important expense.

It's important because what.

Because it's of like, high value to us. Like we. I think what Thomas is maybe trying to say is like, that's something that we don't want to change. Like we don't want to move.

Okay, well, I get it. Most people don't want to move, especially out of financial necessity. That's the greatest shame there is in America. So. All right, I understand that you are where you are. You have your house. You've told me it's important to you. But I think realistically you should really write yourself a new story, which is, we spend a lot of money on our house, we value it, but it's not like it's a cheap house. Did you grow up in the Midwest?

I did.

Your parents, what do you remember them in terms of their lessons that they taught you about money?

My parents were extremely frugal. My mom was a Catholic school teacher. Never made over $40,000 in 38 years. My dad was an architect, but in small town Iowa. And so, you know, I don't know, maybe towards the end of their careers they made a hundred thousand dollars together, but it would only been a few years. So we know, we probably went on maybe three vacations my entire 18 years living out, growing up, same house, and my parents never had a car payment. They always paid cash for their cars.

Oh, wow.

They, they still, even to this day. But growing up, they would walk. They walk all the time and they bring a grocery stack and pick up cans. Wow. And turning cans. And it's, you know, we, everyone around town, you know, everyone kind of knows. Everyone in small towns knew them, you know, knew that we were not homeless people or poor people. But they would pick up cans to get those couple bucks every week.

What was the dynamic between your parents when it came to money?

From what I know, I think they had a really good relationship with money. They have a financial planner that would come to our house maybe every six months where me and my sister would have to stay in the basement while they met with. With Rick upstairs. There was one time when me and my sister were both out of college where my parents finally, we had like a family meeting. And they looked at like, this is how much we have in retirement. You know, if we die, this is where these things are. Yeah, this is how much we have. And we're like, whoa, wow, you guys have a lot of money. And they're like, that's because we didn't do anything.

Okay. And what do you think about that? That they didn't do anything.

You know, at the time, I wish we could have got on more vacations and stuff like my friends were doing. But now looking back, I'm like, wow, they get. They're going to retire and they're going to have a lot of money for when it seemed like they didn't have jobs that made a lot of money. Yeah.

Are they retired now?

They both are retired, Yep.

Okay. Do you grew up in the Midwest also?

Yes.

What are some of the money lessons you took away from your upbringing?

There's, I think, I mean, there's a lesson I feel like in, I don't know, frugality is the right word. But I do remember, like, you know, we would use coupons when we'd get pizza. And I remember, like, going to, you know, like, my mom likes to go to thrift stores and like, things like that. Like, I remember that and I carry some of that with me today, too.

Do you carry any of those lessons into your relationship with your children?

I think a little bit in terms of, like, I want them to be able to do gymnastics and I want them to be able to do swimming lessons because they love it and like, those kinds of things, I want to provide for them. So if there's other areas that we can save so that we can spend money in those areas or like put our 5 year old in private preschool, you know, that's. Those things are important to me.

How many siblings did you have?

I had two.

Two, okay, so there was three of you, just like you have three daughters. And what if you can recall, what was the square footage of the house you grew up in?

Ballpark.

1500.

Okay. What is the house?

No.

Oh, he's Thomas. It's always the partner who knows the partner. Always Thomas. How much?

I'd say the house that she grew up in, because it's still the house we go back to for holidays and stuff. 2500 at least.

25.

Okay.

And what is the square footage of your current house?

3200. Okay.

Any takeaways from that, Christine?

Not really. I mean, I do feel like we live in a. I felt like I lived in a nice house growing up. But of course, you know, like, I had friends with nicer houses, too. Like, I wasn't. Like, I didn't have the nicest.

Yeah, I have nice sweaters, but there are people who have even nicer sweaters. So does that mean that I don't have nice sweaters?

No.

All Right.

Thomas, what was the square footage of your house growing up?

1200, maybe 1100.

How many siblings?

Me and his older sister.

Okay, can I just point out the elephant in the room? Your parents both had smaller houses than you two do, and you two have this house in your early 30s. Okay. Now, if you can afford it, fine. But, Christine, one of the things you mentioned was that you took away from your parents that they would cut back on certain things so they could spend more on experiences. And you also like experiences for your kids. But right now you have a lot of money in your house. You have a 3200 square foot house. That's pretty big. I mean, not pretty. That is big. Huge. Now, if that is what both of you value, awesome. We can find a way, hopefully to make it work in the conscious spending plan. But if you value that and childcare and car and saving, you can't do it all on your income.

Yeah. I would say for me, the house is the number one.

Christine.

That we like to keep.

Yeah. Value the value of the house more than any. More than the other major expenses.

Yeah. Because we do feel like this is our. This is our forever home. I mean, I. We don't.

We don't ever want to move again.

All right, so your fixed costs are $8,000, $8,200 a month. Again, reminder, you take home $8,300. So what do you all want to do about this fixed cost category?

Make more money.

Yeah, everybody says that. But if that were true, wouldn't you have already done it?

Yes. Okay.

So, you know, I noticed something interesting on your interview with my colleague. You both said, we want to see if there are some changes we can make because we don't want to have to radically change things in our life. Do you remember saying that we love.

Both, enjoy and like our jobs. Our three kids aren't going anywhere. We want them to have a nice, you know, a nice childhood. And we want, we want to live the way we're still living without the burden of knowing every single dollar that we make is allocated to some line.

Okay, Christine, what about you?

My perspective from that statement was like, we don't want to move. I don't care about cars. Like, we could buy, drive less expensive cars. And that's fine with me. Daycare, you know, we have to pay for daycare. So the biggest thing was me, for me was just like, we don't want to move.

Okay, so what do you want to do? Christine, your guilt free spending is negative 10%. So you're losing like Hundreds of dollars every month, as indicated by the sheet. Christine, you just took a big sigh.

I think that's where Christine mentions how we're kind of bobbing because, like, one month we, you know, we just did, you know, we got money from Christmas, so, like, oh, but we don't want to count that. And it's like, oh, we had hail damage, so we got an insurance claim. So we have this unexpected money, and that's. These things. Things keep popping up. But, like, we talk about it, we're like, we can't count on these things, and we don't want to count on these things. But that's the only way we've been like, able to. To not feel like we are totally losing money every month. But you are, and we still are. Yeah.

Okay, so what do you all think is the solution here? Please don't say earning more money.

Well, I think, you know, we've talked about it multiple times. I think the car, the vehicle is a huge piece.

Something that we explored recently was selling Thomas's vehicle and purchasing something that we know that a friend was selling that would be a lot less expensive. But, you know, through that, like, week or so of, like, thinking about that and, you know, kind of, like running the numbers of, like, what could we get for Thomas's vehicle and what would we buy? This, you know, all of this.

So what did you decide, Thomas?

So we still have the Jeep.

Okay.

The more I'm thinking about it, I'm like, do I. It's just a car. I don't. I guess I've never had the car growing up that I wanted. You know, I had my parents hand me downs all the way through high school, college, you know, and then this is the first car that I actually bought that I liked and wanted.

Yeah.

And so now just to give it up or not just, but to give it up because it's too expensive. Sucks.

Sucks means what?

Knowing that I'm gonna drive something that I don't like.

Yeah. Feels like what?

It's a bigger picture. I. You know, I guess in the scheme of things is the car gets me from A to B. And if it means we have more money to live the life we want to live, then that's a sacrifice that I should make that really isn't even. Should be considered a sacrifice, I guess.

It's interesting hearing you talk about it like that, kind of contextualizing this car from it first being a dream of yours and something that you achieved. It seems like you were proud to be able to achieve it to now saying, well, in light of looking at some of these numbers, maybe it's just a car. It's kind of an interesting journey to hear you say that. Have you ever talked about anything else like that?

I don't think so. Not really.

So if we were to truly mathematically calculate this, you would go search for a car, and you would find out that this car. You know, you're going to get a used car and you're gonna. You could do chapter nine of my book. It has how to do this. Your Jeep payment is currently 407. Just for easy math, let's make it 400. Let's say you cut that payment in half. That's pretty extreme. Would you agree?

Yes.

All right. Plug that number in. So again, your Jeep payment is going to go down by half. Plug it in and let's see how it affects your overall money.

So it would be, how much do we have for gas, Christine? Because with the van is 300. The half would be 200. So that's 500 with.

I think we usually have about 300 for gas.

Can I. Can I suggest something, guys?

Yeah.

$15 here or there makes no difference. Keep it simple. I'm just trying to show you how the overall thrust of this works.

We'll just have it at 500. Whoa, whoa. Hello.

Not that. Not that simple. Go back. So what he just did, for everyone who's not watching, it was $953 a month. And Thomas was like, fuck it, let's make it 500. I was like, whoa, hold on. You took my advice too literally. Take it back to 953. I want to show you. Let me go step by step. Okay, so 953, you got a Jeep payment of $400. I just want to cut that in half just to keep things simple. So if I cut that in half, how much would your payment be?

200.

200. So why don't you take $200 off of your current car payment? So instead of 953, it would be what?

753.

Exactly. All right, cool. And like, yeah, you'd probably save a little bit more with gas and all that stuff, but, like, whatever. We're in the ballpark. Kate, can you tell me what just happened to the fixed cost number? What did it used to be and what is it now?

It was at 98%. Went to 96%.

What does it tell you?

Doesn't really make a huge difference.

This is irrelevant. You sell your Jeep, it's irrelevant.

Should you.

Yeah. Sell that thing but this is not going to move the needle for you at all. And think about it. You were about to spend the next two months analyzing it. I don't know how to calculate all this shit, and it's pointless.

Yeah.

What does this tell you? Both of you?

That we're. We're focusing. We're micromanaging.

Yeah. I think it also says that. I don't know. I mean, I think that was a pretty big, drastic change. And our fixed costs barely moved.

Which tells you what?

That more and more little things like this aren't going to move the needle.

I could tell that was a challenge for you to put yourself in a different set of shoes, but I appreciate you did that. I think the way I would articulate it would be, gosh, that really opened my eyes. I thought that selling this car would be, like, a huge thing. And now I realize what I thought was huge is actually not even close. I need to make a lot bigger changes than I thought.

Yeah.

The thing that felt enormous to you, like having to move heaven and earth to emotionally reconceptualize this car, it actually essentially makes no difference. And I don't know where to start, but I'm ready.

Yep. That's how I feel. Yeah.

Why do you think you've ended up here, spending 98% of your income on fixed costs? What decisions have brought you here?

I think the biggest decision would be to get a new house. And then I had got a new job two months later having two dogs that have not been cheap, which is an understatement. At one point, one of our dogs was taking eight pills a day. And so we were spending hundreds of dollars a month on these dogs. And then also the decision to have three children. I think we. And we've articulated this with each other in the past, that we have thought it's going to be a lot now, but we're always going to make more money as we get older. And so knowing that we can. We think we can afford it now, but we should just keep making more money as we get older.

But you took a job that pays you less.

Yes.

I would be scared. And I deeply understand why you wake up and why you look at these things, why you send these instant messages. Like, from a IWT philosophy perspective, you shouldn't be doing any of that. But realistically, day to day, I understand it. I would be feeling very scared, living on the edge. Christine, what do you think was behind the decision that led you here?

Like our dreams and like what we always imagined for our life and Our family, you know, just kind of like, I always imagined that I would have three kids, and I, you know, always imagined that we'd live in this nice house in a nice neighborhood. And so it was kind of. Yeah, just like, what's wanting everything that I wanted and wanting it right now.

That's honest. Thomas, do you agree with that?

Yeah, I would agree with that. And I think at the time when we were in our old house, we weren't even looking to move. But then looking at what the rates were when we. We were like, man, if. And talking to our financial advisor, we were like, we are just want to throw it out there that we are thinking about maybe moving. And he's like, if you're gonna move in the next five years, now's the time to move, because the rates will never be what they were. And so. Okay, hold on.

We have to do this.

I didn't know.

Christine, do you want to have a.

Conversation with a true story?

No, Thomas, you don't know what's about to happen. But Christine does. Christine, do you want to go ahead and just take control of the next two minutes of this conversation? Go ahead.

About that whole situation and the financial advisor.

Yes. Just answer all the questions that, you know I'm going to ask you. Go ahead.

So we hired this financial advisor several years ago when we were starting our family, and at the time, didn't know any. I wouldn't say we didn't know much about personal finances. We were just kind of like, you.

Know, like we had a checking and savings account and that was it.

Yeah. Like, it was like a vulnerable feeling, like we're having kids and we feel like. We feel like this is the right thing to do to, like, you know, help get somebody to help manage our money.

Did you. Did you hire a parenting advisor when you had kids?

Yeah.

That's weird. Just jumped right in, huh?

Yeah.

Do you know the other questions I'm about to ask you?

How much we're paying him?

Yes.

I want to say it's like. I don't know exactly. I want to say it's like half a percent.

What?

It's not half a percent.

I was going to say I think it's half a percent. Like quarterly. Is that.

That's more realistic. These motherfuckers. They changed it. Oh, let me. Let me set the term 18 of a year. Three eighths. It's like, how's any human being supposed to calculate this shit quarterly? Can you pull out the piece of paper that has the fees on it? I know you have it somewhere.

Actually, I don't. I would have to dig for it.

Of all the numbers you have at your fingertips, this is the one number you don't have.

Honestly, I've been like putting my blinders on to it because. Because it. So it's kind of like been my goal or like something. I'm like, I need to break up with him.

Oh, I'm an expert at breaking up with financial advisors.

It's just like the awkwardness, I guess.

Do you feel awkward if somebody came in and robbed your house and you're like, dear sir, could you please stop robbing us of all of our life's assets? That would be awkward, right? How about this Guy Charging you2 fucking percent per year?

2% per year means over 50% of their returns will go into his greasy little pocket. If you want to learn the math, read my book. I'm not even going to get into it right now because I'm just going to get too mad. But I do want to highlight how they got to this place. Did you hear it? A lot of following the American dream. They wanted a big house, so they bought it. That's about the level of rigor that most people put on towards the biggest.

Purchase of their life.

I'm not judging Christine and Thomas. This is actually extremely common. What I am saying is it's no surprise that so many people feel trapped with money. So many people feel like they can't afford to do the things that they claim they want to do, like go out for a nice dinner without worrying or take a weekend vacation.

Why?

Because they've made a series of episodic one time decisions like buying a car, then a house and and trap themselves in what has become the American nightmare.

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Yeah, fair, Very fair.

It's not even about the financial advisor. We could fix that. You're young. You haven't paid that much in fees right now. The fees really hit you later on in life. So it's a totally recoverable decision. No problem. What do you think is the real issue here?

What we're focusing on? Yeah.

And what is that?

Small everyday expenses. And not things that will long term set us up for where we want to be. Yeah.

Yeah. Christine, would you agree?

Yeah, I agree with that.

Can I tell you that I really hate this idea that managing money is making sure that bills are paid on time. It's playing small. Do you know, Christine, that a computer can make sure bills are paid on time better than you ever can? So why are you spending your valuable time, quote, managing money, Tracking down a fifteen dollar check? It makes no sense. I would rather have the two of you together manage your money by focusing on five really important big things. Start there. Look, our fixed costs are way too high. We need to talk about how to get that down below 60%. That is managing money. Our investments. We need to be investing at least X percent every single month. And if we're not, we got a bigger problem. We got to talk about that. That is managing money. The real wealth is created in a couple of areas. One, designing your rich life. I would love that to be part of managing money for the two of you. And two, the nuts and bolts mechanics of personal finance involve these four critical numbers. Your fixed costs, your savings rate, your investment rate, and your guilt free spending.

Get those right.

And you shouldn't have to worry about the $15 check here and there. What do you think, Christine?

I. I love that. Yeah.

Yeah.

I don't. Where do we start though? You know, I want somebody like you to come to our house and be like. And just tell us what to do. Because I don't know where to even start.

You're not going to get that. I know. Can I tell you the real truth, Thomas, is you're going to have to engage with me.

Money.

This is one of the most important things in your life. In fact, let's break it down. What are the three important things in your life?

Family.

Yep. Health. Okay.

And livelihood.

Okay. Livelihood would be work. Money. All those things.

Right.

Okay, great answer. Christine, what about you?

I would say, you know, our kids and each other and experiences.

You know what's interesting? I love your answers. First of all, they're aligned. They're a little different, too, which is cool. I like hearing all the similarities and differences. But some of the things you mentioned are your top three things are not actually represented in your spending at all. So do you all see that? The way that you've gotten here is you've gone bottom up. Whatever was put in front of you, you were like, we want that. Let's get that house. Let's get that car. Let's just do this. But you forgot about also going top down, which is. Let's start with our vision of a rich life. What is important to us, and let's actually give ourselves permission to spend more there if we can afford it. But then we're gonna have to cut on stuff that's not important to us.

Yeah.

So can we do that exercise right now?

Sure.

All right. What is your rich life? If you were to describe it. Let's go, Christine.

First, I would say my rich life is that we. I was thinking about this and kind of thinking of, like, I want to be able to spend, like, 50 to $80. Like, no questions asked. Like, that's my conspinage money.

Maybe I have to cut in here, listening to this after I spoke to them. I find that answer to be so sad, and I wish I had said something at the time. Christine's rich life is being able to spend $80, no questions asked. Think about that. After all the work, all the worrying, all the decisions they've made, that is her promised land. Surely there's got to be more to life than not worrying about $80. That's like me saying my rich life is walking outside and not stepping on a nail.

That's it.

That's all we're working for. What you see here with Christine is a series of decisions that have four forced her into thinking small, but she's been doing it for so long that she doesn't even realize it.

Let's continue some.

Things, like, around our house that we. That I would like. We. When we bought this house, it was a new build. So, like, we don't have landscaping. We don't have a fence. We'd have a swing set. Like, things like that for. For our house would be something that I'd like to have. And then I like if we could go on, you know, one or two vacations a year, like, if we could Go on a family vacation, and then like, a vacation with just Thomas and I at least once a year would be something that I would be my rich life.

Fantastic. All right, Thomas.

I would like to be a season ticket holder at my favorite. With the Iowa Hawkeyes.

All right, that's cool. All those sound good. I like that. They are. Like, I can see your eyes light up when we talk about it. Is there anything about, like, do you care about kids, college? Do you care about retirement? Does that fit in anywhere here?

Yes, I guess. Yeah, that's true. Yeah. I mean, I think kids, college, and having three girls, knowing that weddings are a thing in the future as well, especially knowing, like, our wedding, how much Christine's parents helped us out with that. Yeah. College weddings and then not having to work till we're 68 years old as well. I mean, we both want to retire.

Can I just tell you? Just. Just so you know, I'm the opposite. Like, if there's a hundred bucks missing, I'm like, whatever. Who really gives a shit? But I know every last decimal place on my investments. What's the difference?

The investments are. Are much larger.

Yeah. And long term, that's where we spend the time and attention. That is way more important than $15, $20 here or there. Do you see why I'm emphasizing knowing certain. Focusing on certain things versus other things?

Yes.

Okay. Makes all the difference.

Yep. So. Let me show you something.

Here's your investments. Right now you have $106,000. Agreed. Yep. And how much do you invest every single year?

We haven't been for, like, the past year outside of our 401ks.

401Ks are investments.

Yeah.

So what we do 600amonth.

600Amonth. Yeah. So let's just say 7,000 bucks. Fair.

Just want to clarify something. 401ks are retirement accounts where you invest money. One odd peculiarity that I've learned with people is they literally do not consider 401ks to be part of their investments. And we have this mental bucket where a lot of people, they go, no, we don't invest, but oh, yeah, we also have this 401k thing that we contribute to. I'm like, that's an investment. There is this widespread lack of basic knowledge about money. And it's no surprise that we feel worried when it comes to money, because most of us do not understand the basics.

Let's just make it 8,000, because I.

Don'T want to get a bunch of math people complaining to me.

Years to grow. How many years until you Want to retire, Christine?

22.

22.

Great.

And what should we assume for your return rate on your investments? If you've read chapter six and seven of my book, you know this.

I haven't gotten that far, but I think it's 10%.

Okay. Yeah. 10% is a. Is a good nominal number. Minus inflation, we can assume roughly 7 to 8%. I like to say 7, just to be conservative. All right. How much is it going to be worth your portfolio by the time you are 55? Guess.

Million dollars, Christine?

As I say, $1.5,892,000.

What?

Ouch.

Are you both disappointed?

Very.

All right. What. What does that number mean to you?

We can't live. We can't retire at that age.

Why? How do you know?

I guess I'm gonna sound so stupid, but everyone, I mean, it just seems like you have to have over a million dollars to be able to retire comfortably.

Okay. This is a really important number, and it's one of those things that I want you to get savvier about, because you can't just go the rest of your life, like mindlessly saving without knowing how much you need, what type of lifestyle. This is worth understanding deeply. You spent more time looking up your Jeep than you did thinking about the number that is actually going to determine the second half of your life. So it's really important to engage on this. That means you're going to have $35,000 a year to live on. What do y' all think about that?

I mean, you would think, like, we wouldn't have, you know, our house hopefully is paid off and other things like that, but also paying for college and all those other things that are going to take those spots.

So I.

There be no way we could live off that.

Yeah, there's no way that we could both live off of that. We really need to focus on our future and investing for our future.

The thing that matters the most is what are we investing in and what can we do to make sure we have the most amount of money when we need it?

My concern is that it's very easy in America to just get on the conveyor belt and go. You wake up, you go, oh, that's what success looks like. I want that. I want that. And you wake up one day and you blink your eyes and you say, how did we get here?

Yeah. And I think that's kind of what led us to where we're at with this conversation right today.

All this is fixable, but you have some stories you tell yourself. You know, this Is we wanted this. We're not willing to give up this. Okay. I'm not here to tell you what you believe is right or wrong. I'm here to probe and interrogate your beliefs and say, is that true? Do you really need three bedrooms, four bedrooms, whatever. Maybe five.

Five.

Five bedrooms. On $130,000 income. I know you live in a low cost of living area, but that doesn't add up. If 98% of your fixed of your income is going to fixed costs. What are you hearing so far in this conversation that is different than what you have previously talked about when it comes to money?

I, for me, I think what I'm hearing is that we need to kind of prioritize our investments and start there.

I agree. I think our, our focus.

Of where.

It has been needs to change. You know, we've gone through Dave Ramsey. We did every dollar where we tracked every thing we spent on. We do ynab now. And I think we can keep those things, but our focus has to be, I think number one is a big mind change set for me to be involved. Let's figure out what we need to do together where we can prioritize and shift our focus to not the little expenses. But what can we do together where we can break up with our financial advisor, do it ourselves intelligently and make sure that we have that we're putting our money in the right spots for us for the future without having to drastically change our lifestyle, which we've kind of gone through, we can't really do.

Wait a minute, Wait a minute.

That would make huge amount of difference.

Hold on. I'm concerned that you're taking away the wrong message.

Okay.

Yes. You need to prioritize investments. Yes. But it's very interesting to me that you've suddenly both gotten super motivated about investments. Seeing that $892,000 number, that is a problem. But that's not your near term problem. That's like you're driving and you see a wreck five miles down the road. But guess what, There's a truck swinging around the freeway right in front of you. What is that truck?

Our fixed costs.

You still have this belief that we don't want to have to dramatically change our lifestyle. You guys spend 98% of your take home income on fixed costs.

Yeah.

I really have to be very candid with you. There is no extra money to invest because every month you're currently losing money.

Right.

Would you guys. It's up to you how you want to proceed. I'd love to walk through your fixed costs and actually talk about some options. Yeah, Sometimes it just helps to have a fresh set of eyes on this stuff.

Okay.

This is probably going to be a little difficult to talk about. And I don't. Generally, I don't come into conversations ever planning to be like, no, no, no, no, no. That's not my style. And I'm not. I don't want to do that. What I do want is your participation in helping to create the kind of life that you want. It's got to be your rich life together.

Okay.

All right, let's look at the numbers. So we're in the conscious spending plan. A good guideline is to get this number below 60%. And I will say one thing. You have young children. Sometimes, especially these early few years, it's okay to break the rules a little bit. You know, your savings rate might not be what it needs to be later. That's okay. We can give yourself a little bit of grace. And once the kids are in school, you know, you can increase that number. But 65%. Okay, 98%. It just can't happen. So how do you. I'd like to see the two of you have a discussion about this, and I will observe.

I don't know where to start.

I mean, we just really don't want to move. I mean, that story about downsizing and everything, like, I just don't think for either of us, that's something we want to do.

Don't talk to me. Talk to each other.

Right? I mean, Christine.

Yeah, No, I. Yeah, I don't want to.

We love our house, and we want to be here forever. Right. So taking the house out of it, I think that's where we need to start.

Since the house is off the table for some reason. Let me painfully illustrate what they are about to do. Over the course of 30 minutes, they attempt to adjust their truck payment, pay off the van, a loan repayment with Christmas gift money, dog expenses to stay at 100, lowering their insurance costs, which is managed by an advisor. By this point, by the way, we're at 84% on fixed costs. They then continue on to cut $100. Eating out cheaper phones, drop Amazon prime, cut swimming lessons, cut gymnastics. And now we are at 83%.

All right, so what did we start the fixed cost number at when we started this analysis?

98.

Okay, what is it now?

83%. All right.

How do you feel about that?

Part of this exercise is, you know, as we keep making smaller changes like this, you know, we started two hours ago at 98 that's a pretty big jump. I mean, there's a lot of work to get to that that we have to do, but. Yeah, isn't that the right track?

It's good. Like, what do you say when your oldest brings home, like a C minus or something? Do they even grade kids that young? I don't know. What if you were my parents and I brought home a C plus? Just look at the skin color. Unacceptable.

Yeah.

We came to this country with $10 in our pocket and you can't even get a A plus.

Yeah.

Okay, so I'm not going to say that to you, but I am going to say, look, I think you could do better.

Okay. Utilities is also higher. One of our higher ones.

And time to get a blanket.

And we also have DirecTV, which is over a hundred dollars a month.

See, I don't feel that bad about. I know it's an expense, but, like, I'm pretty proud of the way that I've every year called them and said, I'm gonna cancel. And I don't think $100 is that bad when, like, you think about if we're going to supplement that with all these different subscriptions that are going to equal a hundred dollars.

I think if you were making $500,000 a year, I wouldn't even be having this conversation.

Yeah.

You two are living above your means.

Yeah. Yeah.

Have you ever acknowledged that to each other?

I don't think so. Not in terms, at least, of, like, these assets.

Yeah.

Well, every month you're losing money.

Yeah.

You tell me when you want me to give feedback because I'm not here to just puncture holes in what you're doing. That's not my role.

You know, the DirecTV, we've talked about that before, too. I mean, that's. I mean, that's just gonna. That's going it back down. Getting into the little things again, like. Like we just talked about. So I don't know where. Where we should go, because that. I think all the rest of the conversations when we go down the list are all these smaller things. Right.

Somebody. Somebody please ask me for my opinion.

I'm. We want your opinion.

Yeah.

Okay. Thank God. I, like, feel like I'm gonna explode. Okay, listen. Yes. You need to be focusing on the big things, but when you encounter something that is small, this is how you do it. You need to be a lot more decisive. I feel like we're so slow. Everything's moseying along. I'm like, fuck, we have a lot of urgency here. You have three young kids, you're in your 30s. You either correct this or you spend the rest of your life treading water. That sucks. So $100 for DirecTV. I go. Question number one. Is this part of my rich life? No. Gone, Done. What's next? That's the tenor. I want to get this cadence. We've got to pick up the pace here. All right? That's just my opinion. Now you decide what you want to do with it.

Will you just do that for every line? For us?

I did something better. I just taught you how to do it. How are we going to get it down to 60 though?

A great question.

Can we play with something for a second? The beauty of having this on the conscious spending plan is we can just delete something and see what happens and then put it right back. Okay, so what is a very, very expensive thing on your fixed costs or mortgage? Okay, let's just zero that thing out. Pretend that you have no payment.

You.

I don't know. Who cares? It's just a model. Zero it out and see what happens. Okay, what just happened?

Our fixed costs went down to 55% from.

From what to what?

83.

From 83 to 55% is what just happened. In other words, all those changes you just spent the last half an hour agonizing over were exceeded by one decision. What does that tell you?

Let's focus on the big things.

And the fact is, you're losing money every single month. Somebody like me, a third party observer with a clipboard, needs to see something dramatic changing in your life. Otherwise you will be stuck here for the rest of your lives. So you can put the number back on your mortgage. It's up to you. But what would you like to do to make a bigger change?

I don't know the answer to that.

These ones make everybody uncomfortable, don't they? To talk about this?

Yes.

And yet it is really the only thing that actually matters. The point of this discussion is not to just arbitrarily get to 60%. Trust me, a day from now, neither of you are going to be motivated by some arbitrary number called 60%. The point of this is for you to define your rich life, which you told me was family, was experiences, was health, etc. And to match up your spending into that vision. Even though you have made progress, you are still approaching it with like a tiny point three millimeter pencil. And you need to have a gigantic, gigantic, gigantic pen, broad stroke to make big changes. One of the first things you said to me when you spoke to my colleague was, we we don't want to change our lifestyle too much and we're still there. You don't have to. It's your lifestyle. You will keep paying your mortgage, you will send your kids to school, all that stuff. It's fine. But invisibly you will be slowly getting pulled underwater and you will increasingly fight. You will increasingly be stressed out with little issues that come up and you will continue to make arbitrary episodic decisions about buying a chair or a bed frame or taking a trip. And what will become bigger and bigger in your relationship will be money.

Let me jump right into the follow ups because they are fascinating. Christine said, I have been reflecting a lot on my mindset towards money and our budget since our call. One thing that is really sticking out to me is that for years I have been focusing on small details which put me in a vicious cycle of frequently checking account balances and and strictly tracking our spending which has caused worry, stress and lost sleep. I learned that the real impact for our money happens at the 10,000 foot level. Thomas and I now have a plan to improve our greater areas of spend. Our call also helped Thomas and I to start handling our finances as a team. We have a short term and longer term action plan that we both agreed to. I feel much less alone and am motivated to succeed as a team with Thomas and Thomas said we understand that we are focusing too much on the small details and not the larger picture. We also took to heart each other's feelings and thoughts toward how we approach money. We've set goals. I am going to give up the Jeep sad face but we both understand we are living above our means and willing to make sacrifices. They also updated their plan together and here are some of the decisions they made to reduce their fixed costs in the next 30 days separate from current financial advisor and shop out insurance. Cancel DirecTV, cancel gymnastics, look for cheap car options, Begin process to sell Jeep, cut 100 bucks from monthly groceries and they continue on. Get a raise, get a side job and not look at accounts each day. Their goal is within a year 60 to 65% on fixed costs. Now here's an even more recent update. I actually heard from Christine and Thomas a few weeks later and this is what they said since our last update. We have sold the Jeep and purchased a less expensive vehicle for Thomas which reduced our car payment because by $200 per month we canceled our daughter gymnastics class, have reduced our grocery spending and got the PMI removed from our mortgage. Ryan got his annual 4% raise and I adjusted my tax deductions which increased my take home pay. These changes have reduced our fixed cost from 97% to 80% of our income. We still have a ways to go and we are very proud of the progress we have made so far. We have weekly budget meetings and I've gotten out of the habit of checking our accounts first thing in the morning or even daily. I feel like we are partners and more equally share the responsibility of managing and being aware of our finances. We've both been listening to recent IWT podcast episodes too and it has been fun to have those as a topic of discussion. You have made a big impact on us and we really appreciate it. Well, I'm thankful to both of them for coming on this episode, for having this conversation with me, and for you for listening. I'd like to encourage you when with a couple of things that you can do now. If you listen to this episode and you heard something that struck you that you feel the same way, you're thinking too small. You can take control of your money. First, you can do it on your own. Get my book. Get it from the library or any bookstore. I will teach you to be rich. Pair it with the journal and you solo. Or you and your partner can sit down and design your rich life and use your money to live it. Second, if you want want help to actually do this faster and adapt it to your life, get in my Money Coaching Program iwt.com Money Coaching I'd love to see you. We have hundreds of other people who are sharing their wins and can help guide you. And then I'm there as well every single month doing live Q and A. Thank you for listening and I'll see you next week. Thanks for listening to I will teach.

You to be rich.

Hi, 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 you to be rich. My book. Pick up a copy.

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