“I’ve filed for bankruptcy twice…Will I ever stop spending?”

On today's episode.

As it relates to money, I don't value it. It's disposable.

Meet lakeisha and James. Lakeisha is 38. James is 45. And they are caught in a cycle.

Of overspending, getting things that I can't afford. But I will convince myself that it's out of necessity.

I have set my future self up for failure. I have not thought about the future because the future seems so far away and I want it to enjoy my money now.

Their spending habits have stopped them from saving and investing.

It's heartbreaking. I wish I did have savers.

There was nobod else to hold me accountable.

And they've both accumulated a lot of debt, which has even caused lakisha to file for bankruptcy.

I know for a fact that I need to do better with money.

Lakeisha and james recently moved in together and they have brought their complicated financial histories with them.

I got a check and it was in her handwriting, but it was from my account and it was to tiffany's. It's the said on the memo line, mom's birthday gift.

My dad was the breadwinner in our house. He was like, work hard and get by. That's how I've been living the last 40 something years of my life.

Can they work through their money histories and create a shared vision of a rich life?

We've talked about money, but it's come more from a lack of right. I want to get on the other side of that.

Let's meet lakeisha and james. I'm about to open up james and lakeisha's conscious spending plan which breaks down their net worth income and where they spend. You can download your own version of the conscious spending plan or csp@iwt.com CSP. Okay, I'm looking at the CSP for James and Lakeisha. James is 45. Lakisha is 38. Let's take a look here. Assets. James has no assets. Lakeisha has $21,000. No investments, no savings.

Okay.

James has $26,000 of debt. Lakisha has $165,000. Didn't she just declare bankruptcy? I don't understand this. Combined, they have $190,000 of debt. Okay, let's look at the income. He makes $5,000 a month, so about $60,000 a year. She makes 7,300amonth, so about $88,000 per year. Okay. I mean, combined, that's a lot of money. But individually, we can already see in the fixed costs he's at 67% which is too high. And let me just look here. Yeah, that doesn't include his Debt payments are $25 a month. So that's actually artificial. It's going to be much higher. Probably like 73, 75%. She's at 69%. She's paying $205 a month in debt payments. There's no way if you have $165,000, you're paying thousands per month. So that's also artificially low. Probably like 80%. Well, a couple of other things that stand out to me in their fixed costs. Their rent or their mortgage is quite low. 16%. That's not bad. Car payment a little high. 950. Okay. Groceries only. 400 bucks. Okay. That's good. Cigars and alcohol. Excuse me, I don't recall putting that in my csp. Was that a line item I added? Anybody? Okay, how are you going to add $450 a month for cigars and alcohol when you have $190,000 in debt? No, no, no, no. We're going to fix this. Cell phones 125 and 170. I guarantee you at least one, maybe both of them are paying for their kids and other people. Subscriptions are not bad. 110 total and miscellaneous. 330 and 500amonth. No, we're going to fix that. Zero investments, zero savings. That's not acceptable.

And then.

Yeah, I don't believe this guilt free spending number. It's basically, I think they just don't track it at all. And I do think they spend thousands. The CSP indicates $3103 together, but I don't think they know how much they spend. So we'll, we'll find out about that. The reason I don't think that some people spend a large amount of money on guilt free spending. And I can tell that they're probably telling the truth. You can see the clues in the CSP. The fact that they have $190,000 of debt and they're paying almost nothing towards their debt tells me they're not carefully tracking any of this. The fact that they have zero savings and zero investments tells me that there's a lot of sloppiness that we can work together to improve. Now the good news is they do have thousands of dollars left over per month. So that's good. Now we need to figure out how to react. Allocate this money for me. I'm looking at their fixed costs. They don't have a lot of huge fixed costs. We're going to fix that cigar and alcohol thing right now. We're going to fix that miscellaneous thing right now, and we're going to get some savings and investments going. But I need to understand more about what brought them to this place. I'm excited to talk to james and lakisha. Before we jump in, I want to share a few things. Lakisha and james are in a romantic relationship, and they recently moved in together. There's a possibility of marriage in the future, but according to lakisha, it won't happen unless they get on the same page with their finances. In their application, lakeisha wrote that james doesn't want to discuss their money. She wrote, it's almost impossible for us to create a plan. Us getting on the same page regarding finances is a deal breaker. Obviously, the stakes are high, so I'm looking forward to helping them out and to start to figure out what's going on. I asked lakeisha about a recent shopping trip to target.

I went to target. I was supposed to just drive up and pick something up. He said, like, I'm going to go in and get some water. And then I said, oh, I'll go in with you. And he's like, are you sure? And I was like, yeah, it's fine. I go in. I told him, I just want to go to the dollar section. I went to the dollar section. I also went to the clearance section. I probably spent 50 more dollars than just the drive up.

What'd you get for 50 bucks?

I got an outfit, and I got my daughter a sweatshirt. And from the dollar section, I got, like, a little headband and, like, wristband things that you could wear, like when you're washing your face so water doesn't get on your hair.

Okay. All right.

James, I know you don't love talking about money, and I know that it's taken a lot of courage for you to show up today and talk about it, which I appreciate. I'm curious about the target experience. You go to target with lakeisha. She's got a list. She says, hey, I'm gonna just go inside and walk around. And you said, really? Just say it for us. Like you said it.

She was like, I'm gonna go in too. I said, do you really need to do that? We have conversations like this all the time.

So how often do you say something like that?

I'll probably say about two or three times a week.

Whoa, that's kind of a lot, don't you think?

She likes to browse Amazon and things like that.

So you see her. What is she, like on her phone or laptop, and you just kind of see her.

And then.

And then what do you. You just walk up to her and what do you say?

Well, it was Amazon. I definitely say something. You don't need to buy that.

Or, ah, just. Everybody knows Lakeisha is smiling right now. She's kind of looking down. I take it that you agree that this is what happens, Lakeisha?

Yes. When we were living separately, we both get paid on the same day. When it was payday, we would usually first call each other first thing in the morning. And there. Sometimes when it's payday, he would reach out to me first. Usually I reach out to him. And so he'll call me and be like, you're too quiet. What are you doing? Are you on Amazon? Because he would just assume that I was up in spending money because we just got paid. And I would say that there is some truth to. To that assumption. Not every time. Sometimes it's me paying bills or whatever, but he attributed my. My silence on payday to me spending money.

That's interesting, James.

Yes.

When you ask that question, you know, you're too quiet. What are you up to? Or you don't really need that. What is your role in that moment?

I guess a voice of reason, maybe.

Oh, okay. And if you're the voice of reason, then who is she?

I'm not sure. What would you be, Keisha?

I. I don't know. The voice of being unreasonable? I don't know.

Why is this such a struggle for you?

I'm not sure.

Let's shift roles. Let's say that I said this to my wife. First of all, I'll never say this to my wife, but let's just say that I did. And I. I'm going around looking at her, scrolling on her. On her phone, and I'm like, you don't need all that or you're really going to buy that watch? Put that away. We don't need that stuff. I'm the voice of reason. Who's my wife in this scenario?

I don't know. You got me thinking real hard.

What are you thinking about?

Past things. Where maybe my. My dad asked me if I needed that.

Forget the. Forget this role thing, then. Let's talk about that. To me, about your dad. What'd your dad say? Was your dad the voice of reason in your relationship?

Yeah, a lot of times. Yeah.

And what did he say to you, James?

Do you need that or what are you doing?

Okay. Love it. How old were you at this time? Take me back.

Oh, man, all the way up to my 20s, you know what I mean? My whole life, you know?

So like five years old, you remember this? Up to your 20s, correct?

Yes.

Okay.

Wow.

And can I ask you a question? When you're a little boy, go all the way back, five or six or seven years old, your dad says this to you. What did you feel?

I guess guilty at some. At some point. And at some points, you know, I'm glad he did say something because it stopped me from doing things that I probably shouldn't have done.

Why shouldn't you have done them? Because at that time, you were a child and broke. What else? As you got a little older, you got a paper route, summer job, maybe you weren't as broke, but what were you.

Learning? And irresponsible. Right, There we go.

Irresponsible, unreasonable. So your dad was the voice of reason and you were irresponsible, unreasonable. Wow. And so now you have somehow elevated. It's crazy. Your dad was a voice of reason. Now you are. And now what's lakeisha?

Unreasonable.

And do I gotta say it? Yes.

Irresponsible. Okay.

Don't worry. Nobody's getting in trouble here. I'm not saying that James ever said to lakeisha, you are irresponsible, but do you all see that I'm trying to help you see the different pieces on the chessboard?

Yeah, Absolutely.

Okay, so if the role is voice of reason, which you yourself gave that term, James, then it stands to reason that the voice of reason is speaking to. Teaching, lecturing.

I got you. Okay.

The irresponsible and unreasonable one. Now let's just tie this all up with a bow. Lakeisha, how much debt have you been in in your life as an adult?

In the six figures, including student loans.

Okay, so over $100,000 of. Of debt, correct?

Yes. Yeah. Okay.

And some of that was purely discretionary. You charge stuff up on credit cards. You bought stuff you couldn't afford, correct?

Yes.

Okay. And when you went to target, you had a list. You already had the stuff pre bought. You went in there, you dropped 50 bucks on stuff that you probably did not need, correct?

Yes.

And are you still in debt right now?

Yes.

Okay. So do you all see that the roles are not far from what we're talking about? I certainly wouldn't call my partner unreasonable and irresponsible, but I do think the behavior of charging up a bunch of stuff when you don't have the money to pay for it is unreasonable and irresponsible.

I agree.

Did your mom take you To Target when you were a kid?

It might have not been target, but yes, I definitely remember going to the stores with my mom. It was usually my mom and my siblings. Sometimes it was fun because we knew that the chances of us getting something were greater if we went, but if we did not go, we were definitely not getting anything Right. So it was always if she was going to the store, we wanted to go. For the most part, I remember it being fun, but there was some stressful moments going to the store, too. People don't write checks as much as they used to, but she used to write checks, and they would bounce a lot. And so there was a certain sense of anxiety or maybe even embarrassment when it came time to pay, like, oh, God, here we go. So for that reason, there were times where I would just opt not to go.

You would opt not to go because the payment part was too anxiety inducing?

Yes.

Wow.

What did you tell your mom when she asked you, do you want to go to the store? What would you say?

No, I'm okay. She would say sometimes, like, make a list. Right. Of all the places she needed to go. And so I would attribute it to, like, I don't want to be out all day, or, I don't want to run all those errands, so I'll just stay back. But sometimes I didn't have a choice. Like, she didn't want to leave us home for too long, so we would have to go.

Do you ever hide purchases from anybody?

I was sometimes embarrassed with James. There was one point in time where I was buying a lot of stuff on Amazon to the point where, you know, those big plastic containers that they put your packages in to, like, transport on the actual truck? There was one point in time where I had so many packages that they just took that plastic package and left it, like, inside the building. And inside that package, there was, like, five, seven different packages. Okay.

Do you have a lot of stuff in your house?

Yes.

She's nodding yes. James. James, just smiling quietly. James, what do you say? Yes.

She has a lot of stuff in her hand. Yes.

And what kind of stuff?

She likes smaller things, I guess you should say. So there's all type of contraptions and container things.

Lakisha, what do you have? What kind of stuff?

I have a lot of things. I like color. Right. So there's color everywhere. Some times when I shop, it's impulsive. So a lot of times I will buy something, and then we'll later be like, I don't need this, or I'm mad at myself that I even purchased it. Sometimes when I see a need, immediately I'll try to purchase it. So the other day, it was snowing. James went downstairs in the basement to do laundry. When he came back up, there was snow. It was wet all over the floor. And there. I didn't have a rug in the back, like, by the deck. And so I bought a rug. But not only did I buy a rug, I bought, like, a boot tray so that the water doesn't get everywhere.

It's kind of striking that the example you just are giving me is a need, a functional need. Would you say that that's mostly what you buy? I don't think so.

Not mostly what I buy, but it'll be things that I feel like is a need. I'll give you an example. I have a dehydrator.

Come on. Who use. Who buys this? The only people who buy it are on qvc, and then they never use it. They're like, oh, I could get a lot of fruit or whatever. A dehydrator. I don't even know what it does.

Okay.