"I make $300k but we might have to live in our car"

This is the plan that we want and we're going to earn more money. However, my worry is we're gonna spend even more. She's a spender.

But my argument is that our son is never gonna be three years old again. I worked 80 hours a week for three years. I have this kind of stealing from my future picture myself because I have this contract that I signed. I'm going to start summer that will increase my salary three or four times.

You know the reputation of doctors with money, right?

Doctors don't know anything about money. I don't want to be that. No. I think we just went all out. I honestly, I don't know what happened. We just decided to like upgrade our lifestyle. Trips, clothes, furniture. But like a nice furniture from West Elm. We need to pay deposit, we need to pay first month payment. And we didn't have any money, no money. And I got scared that like, where are we going to live?

Meet Jack and Christina.

They're both 33 years old. They're from the same town in Russia, but They met in LA 10 years ago and they were married in 2020.

They earn a lot.

Christina, for example, is a doctor. But what you'll hear today is an interesting combination of their culture, their upbringing and a lack of financial discipline which has led them to a very troubling situation. They are in tens of thousands of dollars of debt and they even admit that if and when they start earning more, it's not going to change a thing. Now a couple things I want to point out before we go on. Of course you can watch this Entire episode on YouTube. It's fascinating to see the body language and the eye contact. There is a little bit in today's episode about travel which got me inspired by. So on Thursday's episode, just two days from now, I'm going to share how I plan my travel, how I take my dream vacations. And then on Saturday on the podcast newsletter, I'm going to talk a little bit about some peculiar psychological things I've noticed about money and travel. So to get that, you can go on iwt.com podcastnewsletter I send that out on Saturday.

Now let's get to the episode. Let's talk about a specific example in the last month or two where you were not on the same financial page.

We rent. So we were notified by the landlord that she wants to sell the place and we were given 60 day notice and now we have to find a new apartment. So they need to run our credit score. When I looked at my credit score Six months ago. And I was like, oh, holy crap. We need to pay deposit. We need to pay first month payment. And we didn't have any money. No money. And I got scared that like where are we going to live? Nobody will rent us like a normal place and we have two kids, we need to stay in the area because of the school and et cetera. That's when I felt very scared. I really was scared because we needed to pay $7,000 for the apart for the our townhome deposit and first month and everything. And we didn't have that.

When did that happen?

Two months ago. Honestly, pretty scary. It was really scary.

It's interesting hearing the two of you living paycheck to paycheck, making $207,000 a year. Do you think that that's normal?

We have never been connected in terms of money. So when you ask like when did you guys disconnect? We've never been connected. So we kind of were separated from the get go.

We've been together for quite a few years. We got married in 2020. Before we got married, we got first kid and then we got second kid. We got married. We never talked together how we're going to handle finance it together from now on.

Do you have conversations about having kids?

We did.

Do you have conversations about where you're going to live and if you're going to buy snoo or some type of diapers? Yes. Not money though.

Not money really. We didn't know what we're going to get into in terms of money issues. We thought we're not going to have any issues.

How often do you think about it.

Lately? Quite often. If one of us brings up conversation about money on a daily basis, that would be every day you fight about it? No, every time we do have conversation about money. First of all, it's rare that Christina says we need, we just need to make more money and we'll be fine.

Just a quick reminder that 100% of the couples I speak to who have a spending problem always believe that if they just earned more money, their problems would vanish. And of course, this is totally untrue. This is what I call being a believer, believing that the next raise or the next deal or the next lottery ticket is going to change everything. You know, in fact, most believers would rather believe they're going to win the lottery than take a hard look in the mirror at their own behavior.

This is the plan that we, we want and we're going to earn more money. However, my worry is we are going to Spend even more. Just a spender. If we get a good check or she gets a good check, she can go ahead and spend it on. On something nice. I have a feeling that we're gonna change our lifestyle, and I don't want to be in the same situation we're in right now because. So I want to be conscious about what we spent on.

And when we got married, maybe we started to plan it more together. But again, because of the differences in our money philosophy, we. And not doing a good job.

This ever come up before you got married? Like, for example, hey, I've noticed that you blank, blank, blank. And it makes me feel blank, blank, blank.

Coming from her or you? No.

I knew he was worried about money, but I didn't. I think I didn't realize how much he was worried about money. Up until we were, like, married legally, I did not feel comfortable to ask for money, like, anything to do with money. Once we were legally married, then I kind of, like, became more comfortable.

And that was exactly when the debt started.

Correct.

We got married debt free, as far as I remember.

Really?

Yeah.

You got married only three. Three years ago?

Yeah. So we all the debt accumulated within the last three years.

So what happened in three years?

The credit card debt is huge. We don't have money to pay more than minimum pay. And the minimum pay equals the apr. Yeah. So we, like, at the, like, don't.

Move anywhere, you know, that got you worried?

Yeah.

Yeah. I can go back to. Was it last year? The plan was, let's plan a trip to Hawaii. When you look at the flights and bookings, everything, you see the number, let's say $5,000 for the whole trip with the family. And I know we don't have immediately that number. The only way to pay for it is credit card. So my argument is, hey, maybe we should skip the trip this year. Let's just save up. Let's get rid of some debt. Let's plan it ahead of time. But next time, when we do have cash, Cristina's argument is, hey, I'm going to be on vacation. What else am I supposed to do on vacation? I want to go somewhere. I'm tired because I'm always working. I want a vacation. Let's pay for it. We went on that trip. Trip was amazing. Great experience, pictures. Everybody had fun. Awesome trip, came back happy. But that dark spot in our wallet is still there because it left a scar, which is more credit card debt.

What do you mean it left a scar? It was a $5,000 trip. You put on your credit Card. And then what happened?

And that trip never got paid for.

Still.

I don't think it has been.

We actually planning the trip in July. This come in July.

What? What trip?

We want to go to Singapore.

What the fuck? Did you already book stuff?

Not yet.

How much is this Singapore trip going to cost?

The flight only is like $10,000.

Oh, that's nice. And how much for all the other stuff, too?

Yeah. So you can imagine it'd be at least five grand more.

Yeah, at least. Let's say 25,000 total. Would that be fair? You factor it all in, taxes, all that stuff, don't you think? 25,000. Okay, so where's that gonna. Oh, you're going on that. Because by that point you'll be making a lot more money.

No, actually starts right after. But again, this pressure, it's like pressure of myself on me, the society. Pressure of the society, you know, which.

Society is pressuring you to go to Singapore?

Not to go to Singapore, but, like, oh, I'm. I'm a doctor, so, like, I can afford, like, my friends, like the friends that we plan to go with to Singapore, you know, everything.

Should we get them on this zoom call right now?

They don't know.

Yeah.

The thing is, they don't even know.

They don't know you have debt, right?

Yeah.

If they knew you had debt. I'm not asking you to tell them, but if they knew, what do you think they would say about you taking a $25,000 trip to Singapore?

No. Yeah, they would say we're crazy.

Do you think you're crazy?

When I think about that that way, yeah.

Would you be open to canceling or delaying the trip?

Sure. Yeah. And I probably won't have another opportunity to go until later, but my argument is that our son is never going to be three years old again. And I want to give them, like, the best what I can. I want to give them this experience. And again, as he said, I worked 80 hours a week for three years. So now when I am having, like, more free time, I really kind of feel guilty that I didn't spend the time with my kids. And I. I have this kind of. I'm stealing from my future future myself because I have this contract that I signed. I'm gonna start summer with, like, that it will increase my salary three or four times. So I'm kind of thinking like, oh, that's not a big deal. And then I pay my $100,000 credit card debt, but I know that's not right thing to do. Yes.

So what's the problem?

Because I'm stealing from my future, you know, future myself.

You care? Does it really matter to you if you're going to triple your income?

It does, because again, I won't be able to use the money because I'll have to pay off my credit cards. And then I think I won't be able to save for the house or for whatever it is vacation. And I'm afraid that it's gonna be the same and it actually might get worse. I might have even more debt. Right. If I don't stop.

Well, you'll definitely have more debt. I mean, what are you paying, 26, 28% on your credit card?

Yeah.

You're using the magic wand right now with debt free, same income, we're gonna go back to debt with current lifestyle. That's the truth.

That's consideration of higher income, actually. What caused this, all this debt, to be honest.

Yeah, yeah, yeah, keep going.

And we should stop considering that until we have it.

Oh, shit. Okay, talk it out. I want to hear you tell me, what do you mean by that?

So first it started with Jack's job giving him higher salary. And then all of a sudden the business went down, but the lifestyle did not. And then now I'm approaching my, the end of my training. It's actually like two months pretty much. And so I'm just like all out spending whatever credit cards I've got.

Have you actually thought about what you're going to do with the new income?

Yeah. So that actually makes me very anxious.

Oh, why is that?

I don't know. So that's why I've started to look into all this retirement plans. First of all, I'm scared of the taxes I have to pay. And second of all, I again, like, yeah, I don't know what to do besides of paying off my dad. I don't know how to save. I don't know how to use money. That's the problem.

Great. Very honest answer. Okay, I could work with that. Jack, what's your take when her income goes up? Have you thought about what the two of you should do?

Yeah, that was my primarily concern. Right. That's why I applied, because it's coming, it's around the corner and it seems to me that hey, now the income is more, let's go on this vacation.

Yeah, but look at Christina smiling right now. She's like, that sounds pretty good to me. Christina, am I reading that right?

Yeah.

Notice the clues? They never really talked about money when they got married. Then they had two kids and Realized they were in financial trouble, they were almost homeless, and now their backs are against the wall with tens of thousands of dollars of credit card debt. Now, Christina has lots of very logical reasons for her spending. For example, her son is only going to be three once, but the fact is they're in debt and they are trapped. She admits that with more money, their situation wouldn't really change. Now let's talk about her salary to set the stage. She currently earns $136,800 per year, and.

She'S expecting that number to go. Doctor, are you going to be.

I'm going to be oncologist.

Oncologist. All right. What are you going to make?

About 300,000 a year.

So when you were doing your residency and then your specialty and you know, there's the moment where you really start to get it. You can see all the concepts coming together. You, you can see how things link together. It kind of starts to make you understand why you did humbio way back there. Would you say you have made those connections with money or do you still feel like it's a bit murky or dark for you?

It's a bit dark still.

I just realized something. One of the reasons we got into debt and we allowed ourselves our current lifestyle is first of all, we knew about Christina's path, right? It's pretty straightforward. Hey, I'm in training now. I'm going to triple, quadruple my income later. So I will have opportunity to pay off if we get in debt, which we did. And the thing with me, right, we were talking like, hey, Jack, what is your. What do you want to do with your life? You want to earn more? You good where you at? And I said, I want to earn more too.

So he had jump in his salary during COVID and when he started to have this six figure salary, he shared with me that he never thought he would have that much money. Although it was not a lot. But he, for him it was like, oh, I would never even think that I deserve that. I think that.

Hold on just a second. Just to clarify, six figures is not a lot to you?

So I mean, it was like low six figures. That's what I mean.

Low is what, like a hundred thousand?

Pretty much, yeah.

What is a lot to you?

Okay, that's a good question. Maybe half million dollar.

Did you expect to be the higher earner when the two of you met?

Not necessarily, no.

And is it common in Russian culture for women to be the higher earner?

Probably not.

Is that an issue for the two of you or. No.

No, not. I don't think that's an issue for.

Me, Jack.

On the, on the surface, I don't think it's an issue. Just growing up right in our culture, men would be always a breadwinner. At least in my family, that's how it went. I've had conversation with my dad when we talked about my current income, my future income, and he did mention that, hey, you're supposed to earn more no matter what because you're the man. You're supposed to provide for your family. That's this kind of thinking I grew up with.

How did you receive that when he told you that?

So I don't fight my dad. Whatever I feel, I'll just tell him, but I don't fight about it because I know he's not gonna change his views.

How would you describe the way you grew up when it came to money, Christina?

And I remember my dad, he is a physician and he had to take like extra night calls. And then he also was like a taxi driver to like earn a little more income. Up until I was eight, we were kind of struggling. So I was born in ussr, so there was like not much money overall in the society. When I was eight, he, he opened up like a business clinic that grew substantially. So now he has a chain of clinics. So he did a really great job. So I didn't have any needs in terms of like financially when I was growing up. We didn't need anything. He paid for my medical school, you know, like everything. I didn't have medical students, school debt, which is huge. But then I kind of got myself into worse debt.

And what about your mom?

So my mom is a spender like me. So she, she never really worked. I don't think she has a real like understanding what money is. And I think it's for her it's really easy to spend. So she's kind of standard in our family. Still is.

Would you say that you have an understanding of money?

I don't think so, but I kind of. At least I am curious about it now and I want to learn. So I think that's a first step.

First of all, you guys really have.

To stop using low six figures and mid six figures. None of you know what you're talking about and you always use it incorrectly. Have you ever noticed people totally use these phrases and they always twist it to their advantage. You have some 23 year old banker living in Murray Hill, he's out, he's trying to hit on people. He goes, yeah, I make mid six figures. He makes $149,000 a year. And then you have some wealthy person, you ask him, are you wealthy? They go, me, little old me, I'm no Jeff Bezos. I only make six figures. I'm working class. Turns out they make $979,000 a year. Please stop it with this six figure mid low bullshit. Let's get honest with each other. Okay? Now to Christina and her background. They started struggling, in her words, in the former ussr and climbed the social ladder to where she, quote, didn't have any needs. Her dad paid for med school for her. Christina's mom is a spender like her.

Did you hear that?

And interestingly, she said that her mom doesn't really understand money. Never did. But when I ask if she does, Christina says, I don't think so. But at least I'm curious about it. Lots of clues here that are getting me thinking. What do you notice?

Seems like you're comfortable. If I'm reading it correctly, that Christina earns more than you. Would that be fair to say?

Well, yes and no.

Tell me.

So currently, right? Because we kind of go up and down, at least in my incomes, right? I was a high earner, then I dropped down to be not the high earner. I don't even know how I feel. I feel fine. And I. I don't even think about how I feel about that right now because I think about how we handle our debt situation.

So would you say that the two of you are on the same page right now?

I think we're getting there slowly. Really?

Why'd you fill out the application then? It doesn't look like it from the application. Should I read it?

You can read it.

Have you read it, Christina?

No. Oh, no, she wish.

I know because. Because I wrote it twice. And. Well, I guess the. The second one got. Got big.

No, I. I have no idea.

Okay, let's just take a look here, shall we? What is the biggest challenge you are facing when it comes to love and money in your relationship? Answer. Lack of responsibility for our money. Living a lifestyle we can't afford. Is there one main issue you'd like help with from Ramit? Answer. We earn good salaries, yet we have debt that keeps piling up. However, given our spending ambitions, we are very likely to keep living paycheck to paycheck. We'd like to both understand that no matter our income, we must still be conscious of our spending and money relationship. That answer is where I knew both of you did not fill this out. One of you filled it out. In code for the other one to be able to do that. Jack, am I telling the truth here?

Yes.

Yes, Christina.

Okay, I agree with all of that in theory.

Oh, in theory. Oh, please tell me.

But no, I, I totally agree with the. The problem.

And what is the problem in a sentence or two?

Like, living the, our expenses, like the, the lifestyle is way beyond what we earn.

This is becoming more and more common on this podcast. One partner submits the application, the other has no idea that first partner who submitted the application is worried. They're concerned, the other one, not a care in the world, everything's fine. It'll all work out in the end. This is kind of mind blowing to me because they go through application, a screening interview, they get detailed instructions. There are so many opportunities for them to talk about things. How can a couple end up talking to me finally, after this entire process and they never even shared the application with each other. Whatever. People are weird. This is why I love my job. Let's take a look at some of their numbers. Their assets are $11,000 in a Jeep Grand Cherokee. Their investments are $54,400, savings are zero, and their debt is $87,475, all of which is credit card debt.

What credit cards? By the way? What do you have, Chase?

I got three of them. And we have like Best Buy. We, you know, bought some stuff on it.

But hold on, hold on. You was this like you were in line at Best Buy and you're like, no, I know I'm going to save 10% on my 30 purchase. What? How did you get a Best Buy card?

The thing is, we've been moving from place to place at least once a year. Sometimes this is where the card came from because, oh, 0 APR. We can get a fridge. Let's look at it online. We don't have money to pay for fridge right now, but let's get that 0 APR or whatever.

Did it work? The 0% APR?

We got a fridge this year. APR didn't work.

No, it didn't. I'm so shocked. Don't even tell me. Let me guess. 12 months, 0%. And then you got to 12 months or 12 months and two days and you missed a payment or you didn't realize it was due on this stay and they backdated all the interest and now you had to pay it all. Did I get that right?

Not quite right. We.

You just kept using the cart. That's the problem.

Oh, yeah.

For.

You did get. So you did get 0% APR for a year. For A while.

Yeah.

And then you just kept using it and like.

Yeah. So it was not just the fridge. Cost of the fridge. So.

And how much debt is on that Best Buy card now?

Things like, maxed out probably.

Best Buy is fine. Hold on, hold on. I think I have it.

Jack wants to set the record straight. Hey Ramit, don't rag on my Jeep and my Best Buy car. Go ahead, tell me.

Jack, 2500.

Okay. Not bad.

Yeah, but you know the Home Depot one? Can we spend it?

Don't ask why we have Home Depot. So it was the same Home Depot. We actually, I paid it off, so that one works.

There you go.

What else do you have? Best Buy, Home Depot. What else?

I have Capital One, Citibank. I have two Chase credit cards. Yeah, I have like seven.

Why?

I don't know.

No, you know, you know why.

Tell me why.

Again, it's the same story. So we, we went to Hawaii vacation to get with a 0% APR for 12 months that were never paid it off. And then Jack went to Florida to visit his friend. That's why we got Alaska card. So we get miles.

How much is on that Alaska card now? Please tell me zero.

No, it's actually $12,500 and it's pretty much maxed out. So I think the credit limit is like 14,000.

Yeah. So you're paying almost as much in debt payments as you are for rent. And this is like what, the minimum?

This is only the minimum, literally. Wow.

You know, with the minimum, you're basically going to be paying this for like 25 plus years.

Yeah, that's what they send me. Yeah, 30 years. Recently I forgot and I got like the fine and like another fee of like 60 bucks. And I was like always like, oh, I should call them. And I never did call because I think I, I feel embarrassed. That's the reason I didn't call you.

You feel embarrassed to call bank of America. But you're on this podcast.

I know.

You know how you hear stories about people opening up credit card after credit.

Card, jumping from zero percent gimmick to.

Another gimmick and you go, haha, that's so crazy. There's no way that's true.

It's just something people talk about. Nope. Here we have a chance to meet people who actually do exactly that. I have a real problem with people who write me asking if they should open up the 0% balance transfer thing that they can get for 12 months because why do they have to pay interest? It turns out that people who ask those questions are almost always looking for a gimmick, a hack, a shortcut to avoid doing the one thing they need to do. If you have credit card debt, the single thing you need to do is to set up an automatic payment plan so that you are paying off your credit card every single month. And if you set that up, that means you will naturally be controlling your expenses. But most people don't want to do that. They want to jump on any particular gimmick they can find instead of the single thing that actually works. Stop it with these gimmicks. Spending $50,000 so you can make 10 cents in free Marriott points, jumping around from 1 0% balance transfer to another, promising yourself that you will magically change in the future when you're not even willing to change today. Get real, take control of your money, and do it the real way. That is the only way to start living a rich life.

Total net worth is how much?

We're negative 22,000.

How do you feel about that number?

I feel like that's. That's not good. I feel like that needs to change in the opposite direction.

Christina, how do you feel about that?

I was actually pretty happy when we filled it out because I thought we're gonna be like a hundred thousand in credit card debt. But then I forgot about my retirement account. So that kind of is it that.

You are surrounded with other, like, physicians who have tons of debt. So it's normalized to you?

Kind of, yes. That's. I guess there's like, delayed gratification and. And knowing that we'll have. I will have money in the future, and many of my physician friends do that. Yeah.

You know the reputation of doctors with money, right?

Kind of. I mean, I can guess what.

What is your guess?

That, like, doctors don't know anything about money.

You care?

I do. I don't want to be that.

All right, let's move on. Let's take a look at the income. I'm so interested in this line. Christina, can you read this to me?

The gross monthly income for me is $11,400.

And what about for both of you?

For both of us is $17,268.

What do you think about that number?

It's a lot.

Yeah.

Did you know that actually, when we put the numbers again, I was surprised and I don't know where it goes.

You don't know where it goes?

I mean, credit card debt.

Well, we're about to find out. But, you know, if we annualize that number, that's $207,000. That's a pretty good income, wouldn't you say?

Yeah, fantastic.

Any comments? You don't. Wait, wait, didn't you say that like $100,000 is like not that much? So is $200,000 a lot or. No.

It is. I mean it's definitely enough, especially if we didn't have dad.

How much were you making when you got married?

Probably around the same. Right. So if you. Yeah, it was around the same because Jack was earning more but I was earning less.

Was it enough for you then?

No, I think we just went all out. I honestly, I don't know what happened. We just decided to like upgrade our lifestyle trips, like clothes, furniture, but like a nice furniture from West Elm.

So it's kind of interesting that you said just a minute ago 200k, 207k is good. If we didn't have debt, but used to make the same amount with no debt and it wasn't enough for you, what's your takeaway from that?

I mean, we definitely increased our spending.

Do you ever want to go down in how much you spend?

I don't know. I don't want.

Yeah, I suspected that. And why is that?

Because I want to go out.

Why?

You know, like I always believe like in growth and like going up, not going down means. Means like, like anything. Right. So like lifestyle wise, money wise, the earnings, attention.

What is the word? Up to you means what?

It means like I don't worry about my finances and it means that I don't work for the money.

We have a bit of a conundrum though, because you told me 200k is enough money for our family if we don't have debt. But then we realized you used to make 200k, you had no debt, it wasn't enough. And now you've told me you don't want to go down in spending. So we've kind of boxed ourselves in. What do you think the solution is here?

I mean, I think the solution is will definitely have to go down in spending to pay off that debt and then be more careful in the future and like use cash. So that's.

Do you think that that's possible for you?

I think so, yeah.

You seem very achievement oriented. Seems like you've been like that for most of your life. Would that be fair to say?

Yeah.

So if you have been doing this for your whole life and suddenly you're asked to do this, this. Do you think it's possible for you to do it?

I think I can.

Why?

I mean I do have experience with delayed gratification in like through medical school and through my training. Totally. So I think I can handle for another year.

Another year?

Yeah.

What if it was. What if it was two years?

I mean, two years also should be okay.

You know, what Christina said resonates a lot with me, this idea of wanting to go up in life. And I'm going to give you an example from my own life. I'll use hotels because I love hotels. I want to go up in life.

When it comes to hotels.

If I go to the same hotel, I want to stay in the same room or nicer. I don't want to go to a less nice room. Now that might resonate with you. Or if you don't like hotels, think about the food you buy, think about your kids activities, think about the clothes you wear, whatever it is that's important to you. Most of us have at least one area of life where we want to go up, we don't want to go down. So I get it, Christina. In order to do that, in order to have a constant upward trend, you need to keep an eye on two things. Number one, your income and number two, your expenses. Now, Christ.