Ramit’s 3 Lessons: It's time to cut off your son
Ramit Sethi talks with Mike and Janice, a couple who've spent 39 years enabling their 31-year-old son. He earns $3,500 a month but they've bailed him out for car repairs and let him keep a $400 monthly Land Rover lease. They're learning to stop, and how childhood money trauma shaped their spending patterns.
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How are you both feeling about our conversation today?
Excited and scared, I guess.
I feel like I'm gonna look really stupid.
Oh, why do you. Why you worry about that?
Like, Mike does most of the finances. You know, I'm just like, tell me how much I should spend.
And Mike, you mentioned excited. Great. And scared. Why scared?
Well, because I know that I'm not a good conscious spender and I have a history of, I guess, enabling where I want my family to have what they want.
We really need somebody to kind of put these things in front of our face and help US finally, after 38, almost 39 years of marriage, be able to, you know, dream and make it happen instead of one day. One day, one day.
This week in episode 102, you heard from Mike and Janice. They're a couple in their early 60s and they told me we've been together for 39 years and we've been broke for 39 years. This was an unforgettable episode with lots of twists and turns. We heard about their 31 year old son that they can't seem to cut off financially. We heard about Mike feeling like a commodity when he was growing up. And we heard about the ducks and the cats and the dogs and all kinds of farm animals. So today I want to do something a little different. Starting today and every Thursday from now on, I want to take you behind the scenes of this week's episode. I want to share the can't miss moments and even some cut moments that you didn't hear the first time so you can go deeper when it comes to your money psychology. So let's kick it off with three can't miss moments from my conversation with Mike and Janice. First up, you got to listen to this background of Mike and Janice. You've heard me talk about how our upbringing affects the way that we look at the world of money. Listen to Janice as she describes what Mike's parents gave him at his college graduation.
At the graduation, my parents were there and or my mom and her husband were there and Mike's parents were there and they handed him a graduation card. And he looked at it and then he handed it to me and I opened it up and it had every single cent that he had borrowed. Like Christmas present for dad, $20. And she had listed every debt that he had to them and then put minus 100. We're proud of you. And he had a master's in architecture from University of Illinois.
Wait a minute. Yep, Mike's mom listed every expense he incurred as a kid.
Beanbag Chair. College. Yeah.
And. And what was the minus 100? What is that?
That was her gift. Graduating with a master's.
Yeah. And Mike, was your reaction. Here we go again.
Right?
Yeah.
Yeah.
He didn't do anything. I ripped it up and threw it on the ground.
Imagine getting a card like that from your parents on your graduation day. How would that affect the way you look at. And how do you think it would affect the way you think about money and time going forward? We spend a lot of time talking to couples about how they grew up. And one of the reasons I do this is I want to disabuse you of this idea that we are all rational robots, that we go to the grocery store and we compare the price of bread by number of slices per dollar, and then we buy. Rationally. That's just not how it works. We are a product of our experience. It actually is shocking to me that people will listen to 100 episodes of show and they'll be like, wow, childhood really matters. And then they'll go right back out in the world and post on Twitter, oh, pull yourself up by your bootstraps. It's just a matter of showing up to work. That's not how it works. We are a product of our experiences. What I didn't get to tell you on the episode with Mike and Janice is a little bit more about their background. If you listen to them, you go, why don't they just get their CSP in order, have a conversation about money, stop paying for their deadbeat son, and live a rich life? Mike actually sent me an email after our conversation sharing some of his upbringing that I didn't know about. Let me read you some of what he told me. He said I had an alcoholic father. My grandfather would often send my mother his paycheck because my father had spent it on weekend drinking binges and not coming home. Janice also had an alcoholic father. Her parents divorced when she was 13. Her mom remarried when she was 17 to a guy who turned out to be horrible. So at 17, Janice and her older sister moved out of their house. When Janice was 19, her sister was killed by a drunk driver. Janice's father was a homicide victim when our daughter was three and a half and our son was only 10 months old. These experiences are deeply interwoven with who they are. And I share this because if you see someone acting in a peculiar way with money or a way that doesn't match up with how you would act, there's often a reason. Sometimes they don't even know what the reason Is. But there's often a reason way, way, way back in their history. And as part of this podcast, my dream, my wish is for us to all become a little bit more compassionate about the people who, as it comes to their spending and financial behaviors. Next up, financially supporting their 31 year old son. Your son is 31, you're 63 and you're helping him with his finances. Yeah. Does he have a job?
Yes.
How much does he make? Ballpark.
Right now he's at like 3,500amonth.
Okay. All right. And for his area is that he's.
Up in Seattle, so it's pretty expensive.
Yeah, that's expensive. Okay. All right, so you help him with some stuff. And you said to your own detriment. Hold on. Janice just let out a huge sigh and she looked down at the floor. Don't worry, Janice, I'm coming to you soon. I know you got a lot of stories. She's probably going to pull out this scroll, 35 pages. She goes, ramit, run the tape. I got a few things I want to talk about.
Yeah, my mom wasn't the only one who kept the list. Yeah.
So, Mike, to your own detriment. Give me an example where you have helped your son financially speaking to your own detriment.
I think it's really in the past few years because when he was younger, we helped him financially as far as he was in a few bands. He. He traveled the country. So we helped him with that and it was great experience for him. But then when he moved out, he got himself into situations with a variety of girlfriends that were not helpful as far as economically.
What is that? That's a very nice way of putting it. What does that mean?
Just say it.
They were freeloaders, basically. Now, it's been a few times, but there were two big incidents. One where his girlfriend wrecked his car and to get it fixed, you know, they. He couldn't pick it up till he paid for it.
His insurance laps.
Yeah.
How much? What? Oh, his insurance slapped. Okay, that's not good. And how much did he have to pay?
It was about 3,600.
And so what do you do? He picked up the phone to you?
Yeah.
How'd that call go? Hey, dad, what do you say?
The car, you know, he's. And the, the bad thing was that he actually worked at the car dealership that was repairing it and they, they wouldn't give him a break.
It's like out of a. This is crazy.
Yeah, yeah. Okay. So they wouldn't. It's like Well, I take it on my paycheck. But they wouldn't do it. They wouldn't release a car till he paid for it.
What kind of car, by the way?
Well, that was actually a Land Rover because he worked Land Rover.
Are you kidding me? He makes 3,500amonth and he drives a Land Rover.
Well, now this world is this. Well, previously he had worked for Land Rover, so he was making a lot more.
You don't get that much of a discount.
Again, instead of saying, no, I don't have the money either, I put it on a credit card to, you know, bail him out because he needed a car to get around, but with the.
Intention that he was going to pay us back.
Right, right. Yeah.
Who's. Whose intention? Who said that?
Well, it was. It was an agreement that they were going to pay it back and they started to.
When he stopped paying you, were. Were there any consequences?
No.
Well, because they laid him off because of co. Of COVID They laid him off from his job and they still made him keep the lease on the land Rover for $400 a month.
That's horrible. That's why we don't take those kind of obligations from our employer. It's handcuffs and people think they're getting a great deal, but they're actually being encumbered. Did he learn any lessons from this?
I don't know.
No. Mike? No, because I like Mike's honesty.
No, because now he drives a Jaguar.
I have to admit that when I heard about their 31 year old son calling them up and basically extorting them to send money, otherwise they're never going to see their son again, I got pissed. I'm still pissed. How can you do that to your elderly parents, especially knowing how they were raised? I just can't stop thinking about this. I want to point out what happens when. When you enable someone else financially. And we've seen it. We've seen it in many examples of couples on this show, on the Netflix show, and many other places. If you do not actually feel the effects of your behavior, like if you don't have to have a job cause someone's just sending you money, it's probably likely that you're gonna lose touch with reality. It's no surprise that Mike and Janice's son lies to them, evades them, doesn't take responsibility, because in many ways, the way that they treated him with money was to enable him. Mike and Janice know this. Janice rolling her eyes the entire time. She knows it. But I want to emphasize for you to really Be critical about any areas where you might be enabling someone else or even allowing yourself to be enabled. Think about it. A lot of people go, how would I turn down money from my parents if they want to give it to me? And sure, if your parents have the ability and willingness to give you some money for down payment or a car, whatever, fantastic. That's awesome. But you have to remember that there are strings that come along. It may be explicit, like, you need to have your wedding the way we want. Or maybe implicit, like, because somebody gave me this money, I don't take it as seriously, or I don't understand how hard it was to earn it. Now, I want to add one last thing to confound this entire example. I used to think growing up, going to public school that if you had wealthy parents and you went to private school, that you were spoiled. I just thought that. I don't know where I got that idea from, but I think a lot of people believe that I certainly did. And then I went to college and. And within my first week, I met a lot of people who had wealthy parents and who had gone to private school. It was like my world shattered in front of me because I realized this thing I had believed fervently for so long was totally wrong. Doesn't mean you're spoiled just because your parents have a lot of money and even sent you to private school. My college friends, some of them worked really hard, some of them less so, but there was basically no correlation at all. And in fact, I really admire a lot of the friends that I met who grew up really wealthy and work insanely hard. So being enabled or enabling someone with money is not as simple as it's good or it's bad. It is complex. But I just want you to understand that if you are considering paying for somebody, enabling them in a certain way, it might have effects. And if you are the recipient of that, it also might have effect effects. Finally, we have to talk about the phantom cost of these pets. You know, a lot of people in America don't like to talk about costs when it comes to their pets. It's like, very unromantic. It's like talking about the cost of how much it costs to date or, you know, be in love and build a relationship. It's like, hey, money is real. Just because it's romantic doesn't mean that the money part of it fades out of the equation. Let's be honest. It costs money to have pets. It costs money to date, it costs money to get married and on and have kids, and on and on and on. Whenever someone dares to bring up the idea of the cost of pets, people get really defensive. Mike and Janice were actually great. They acknowledged, particularly Janice, that she hadn't really thought that if once a year she has to take her duck to the vet and it costs 1200 bucks, that she actually needs to spread that cost out or amortize it over the course of a year, that will be a hundred bucks a month for the ducks. In fact, in America, we're simply taught to look at the sticker price. That's it. And companies incentivize us. They have no reason to tell us about all the secret phantom costs. They're just like, oh, look at the price. The house, the car, the dinner. But of course, phantom costs are prevalent. For example, whenever I plan a vacation, I know whatever the hotel nightly rate is, I add 50%. That accounts for 38% taxes if I get a drink, tip, etc. It was really important for Mike and Janice to grasp the importance of these phantom costs. One, whenever you buy something, in fact, the more expensive you buy, the more phantom costs you're going to have. Second, there are one time costs that still need to be accounted for in your conscious spending plan. And if you don't do this, you end up like millions of Americans who, who earn decent money, but they are always confused, where's it all going? That's because you didn't honestly calculate the insidious phantom costs that are present in many purchases. So we talked about your pets costing 600 bucks a month or $500,000 a month, because we factor in, right. We gotta amortize or spread all those costs out. I think that you need to be thinking very carefully about how much you can actually afford to spend on pets. Like, I know you have a good cause, but if, if I were in your position, the first thing I would say is, like, absolutely no more animals.
Oh, yeah, no, we're in agreement on that.
Okay. And next is how long and like, what's the plan for these animals? Do you plan to provide for them forever, etc. Just because $1,000 a month is a lot of money right now. It's a lot.
500. I thought that was a lot.
So let me give you an example why this is so important. So when I, I. You love ducks. I love hotels. Okay, let's just. Perfect example. So a duck, you go, oh, this duck costs like 50 bucks a month. But then you forget that once a year you need to pay some expensive vet fee. For me I go, oh, this hotel is 300 bucks a night. But I gotta factor in taxes, tipping, eating at the restaurant, whatever. It actually adds 50% to the price. So 300 actually becomes $450 a night. It's a lot of hidden costs in all these things that we choose. And a hotel is just a hotel. Animals are a whole different story.
We don't make a thousand dollars in eggs from them.
So let's say you spend a hundred dollars a month for your pets. Just easy math. 100 bucks a month, that's 1200 bucks a year. Let's say that you have to take one of the dogs to the vet, and that costs 1200 bucks. So if I were to ask you, how much do you spend on your pets every year, what would you say?
So you said, I already lost you.
It's okay. We'll go slow.
Okay, so $100 a month.
Yep.
Over 12 months.
Yep.
Yeah.
That would be how much?
1200?
Yep. And then your dog has an accident, and it costs 1200 bucks, so that.
Doubles it right there.
So how much would that be per year?
2400.
2400. Which is 200 bucks a month, not 100. Right, right.
I was just figuring the food and stuff.
Exactly. So what I'm doing is I'm helping you to kind of think at a higher level. So now you have a bird's eye view over all of your expenses. Fun fact. In their screening interview, one of Janice's primary questions was to ask my producer, should we put the costs of our pets in this category or that category? It's like, who cares? There's so much chaos going on in their financial life, and she was worried about cell B32 versus B46. Again, we find comfort in $3 questions because it allows us to control something. How it's categorized is totally irrelevant. We simply need to start from ground zero and calculate what's really going on here. You'll notice this in episode 80, where I point out to Sarah and Kevin that the amount of their vacation is probably double what she thinks it is. And she's visibly startled. Same thing here, but this time with pets. All right, I want to thank you for listening to this Thursday episode. I have a podcast newsletter where you can come and ask me questions about these episodes. Or Money psychology. Go to iwt.com podcastnewsletter Ask me your questions there, and I will answer them every Saturday. See you next week.
