“She racked up $50K debt. Why should I trust her w/ money?”

I don't want to tell you what I did.

Tell me. Come on.

Emma believes she's the best with money and I feel that she's not.

Part of it was our wedding. I took a loan from my 401k just to make sure we had money.

What the. You took out a loan to pay for your wedding? How much?

I'm putting all this money into savings and you're still telling me it's not enough.

I have this like small chunk of money that's like controlling what I can and can't do. Discretionary money stresses me.

When we have these financial conversations. They typically don't end well and think, I want to hear this from someone else.

It encapsulates a lot of the conversations we have. I'm talking. Dave is listening, but he doesn't really believe in what I'm saying.

I don't think it's funny when one partner is skeptical of another. I actually think it's one of the most soul crushing dynamics that exists in a relationship. And also you have a narrative. We don't have any money. We're not spending anything. Guys, if you don't effectively communicate, you can't make good decisions. You're going to slide into every financial decision of your life. I'm about to open Dave and Emma's conscious spending plan which breaks down their net worth income and where they spend their money. You can download and create your own conscious spending plan@iwt.com CSP that's a free download@iwt.com CSP the applicant says, I'm the driver planner and I want us to combine and automate everything. But I'm also the overspender in debt. Interesting. He's the basic paycheck to paycheck and defines himself by what is in his checking account on a given day. Fixed expenses are really high. Daycare times two. And debt. We're trying to buy a house and we surround ourselves with rich things and people, but we can't seem to make an inch forward. We're actively trying to buy a house, but we're 50k in debt with 40k saved, so we're anxious about getting more into debt. I live in fear every day. We will never be able to retire. And they What? They make $280,000. All right, let's take a look. Assets are $5,000. Fine. Investments $158,000. Okay. Savings, $41,000. And debt, $53,000. Wait, what? The way they talk is so depressed. They're 39 years old and they have a net worth of $151,000. Okay. They have a very high income, $260,000 to $280,000. But it's interesting that their fixed costs are at 61%. So typically when you have a high income, you will see that number naturally go down because you rarely see anybody spending $4,000 a month on groceries. Okay. Basically, this is the power of earning a high income. When your income goes up, you're still buying roughly the same type of bread. So it's a little surprising to me that I see 61% fixed cost. And I'm wondering, where are they spending their money? If we look at their housing, yeah, it's a little pricey. They can afford it, but it's a little pricey. Okay, fine. Then we add on insurance, which is over $1,000 a month. We add on childcare, we add on a car payment, which is over $1,000 a month. Now it really starts to add up. Now let me say this. It's okay to be at 61%, but it explains why I see words like stress and anxiety. You can see that they have added basically multiple line items. Spending a thousand dollars a month. Okay, So I can understand where they're coming from. Let's take a look at the rest. Ah, Here we go. Investments, 3%. Their post tax investments are $540 a month. They're probably putting something in pre tax. Not bad. And I will say they have $158,000 invested. Fine. Savings, okay, are at 1%. They're saving $200 a month for a down payment on a house. And they have $41,000, which is like four, four and a half months of an emergency fund. If I'm making $270,000 a year, I want more than four months of an emergency fund. So it's interesting. And then finally. Oh, what is this, guilt free? What? The guilt free spending's at 33%. Okay, $5,000 a month. So now I really gotta speak to this couple to find out what's going on. What I see is a lot of stress, a lot of overwhelm. I see one partner who's anxious about money and chases the other who avoids it. Classic chaser, avoider dynamic. I also see that their income is quite high, but it's being spent in a quite a peculiar way. What I also see here is that there's a lot of communication I need to dive into here because these numbers don't tell the full story. There's a lot going on and I don't quite understand it yet. So I'm looking forward to speaking to this couple.

So Dave had been putting a ton of money into savings because we were saving to buy a house. And then he said, I'm going to stop for a while so I can kind of catch up. So now Dave, all of his extra money just goes into his checking account. And I am like, well, what's all that money doing? It's just sitting there. It's not in our savings account. It's not in an investment account. It's just kind of sitting there.

Okay, Is the money still there?

Yes.

All right, what's your perspective, Dave?

So my perspective was that I stopped putting money into savings because I was literally living with, like, you know, I'd say a couple hundred dollars a week, and half of that goes to my basically paying for gas because I do work very far away. So it felt like every single month I was falling short and kind of freaking out about not being able to pay the bills and all that stuff. So I was like, hey, I need to take a break.

And this is because of how much money Dave was putting into savings. And I said, we have the money. Don't put as much money in savings, and you don't have to feel like that. So when he says, you know, I didn't have enough money, I said, you we did. It was sitting right there. It's not like we didn't have it.

Emma, what are you feeling right now?

Frustrated.

Okay. Dave, how are you feeling? As you explained words like scraping by and freaking out, I'm annoyed.

I was putting a lot into savings while someone else was putting the bare, bare minimum in my eyes.

Okay.

So I'm sitting there struggling, and, yeah, the money is in savings.

You can take it.

But also, we worked hard for those savings. We are planning to buy a house with those savings. I didn't want to have that kind of burden over my head anymore, but just kind of felt like I was working paycheck to paycheck.

Dave, it sounds like a lot deeper than annoyed.

Maybe not heard, sometimes, maybe misunderstood.

Okay, I appreciate that. The reason I asked was minutes into our conversation, I can already see a dynamic here. Do you all notice that dynamic?

Yeah, I guess in our house, it seems as though sometimes Emma believes she's the best with money, and I feel that she's not. And I think we butt heads on that a little bit, but we use different language towards it. The language being, why don't we put money in a savings? Why aren't we starting this account? But I think there's some other issues behind that. Whereas sometimes I feel like, hey, if I'm the only one putting this huge chunk of money into our savings and you're still telling me we have all this debt, and you're still telling me it's not enough and I'm the bad guy, that's where I start getting a little annoyed and frustrated.

Okay, I'll just tell you what I observed in five minutes. I asked you, can you tell me a time where you didn't see eye to eye on money? There was this thing about the savings account. Both sides very frustrated, immediate frustration, Both sides defensive. Do you all see the dynamic that I see?

Yeah, I can hear that.

Okay, y' all ever feel joy around money?

Of course.

I guess. Like, when I get my bonus, like, oh, that feels good.

How long does it last?

Not long.

Like, 10 seconds. What are we talking about?

Yeah, until I put it towards another bill.

10 seconds of joy per year. All right. Do you all think it's possible to not feel stressed about money?

I'd hope so.

I'll take that as a no.

Yeah, I do.

Okay. Dave says yes. Emma, how would you do it?

By not having debt. That would be a first step.

Okay, so, like, if you pay off your debt, let's just wave a magic wand, and tomorrow you're debt free. Would you be stress free?

Not stressy, but a lot less stressed.

Okay. Is it possible for you to feel good?

Yes.

How would you do it?

By paying off debt and having a plan that we're actioning on and allows us to do the things that we want to do.

Sounds pretty good to me. I agree with that. Dave, would you agree with that?

I agree with that. Okay.

We're all on the same page about that. That's good.

Yay.

Okay, so the question for today is, what has stopped you from paying off your debt and from coming up with a plan?

We both work very hard, and she does spend a nice percentage of her checks just paying off her debt, and she's been doing it for years, and she's almost there. I'm very proud of her for doing that.

Did you know Dave felt that way?

I think more recently when I've just showed him more. I brought him into exactly what the debt is and how much I pay. So I feel like he's a little bit more aware of it now.

That's cool. I like that a lot. Sometimes we do things with really positive intentions, really positive outcomes, and we just don't tell our partner, and they don't how, how can they know if we don't tell them? And I think it's really cool that you shared that with Dave so that he is in the loop about it. How often do you talk about money together?

Maybe once a month.

What do you talk about in those conversations?

These conversations are more towards retirement. Even though we still need to buy a house.

You're both 39 years old. Why have you suddenly started talking about retirement?

I am a long term planner and I know what we do now is going to help drive what we're doing when we retire. And I know that we need to make movement now to do that.

Dave, what do you think about retirement?

It's not something I really thought about at all. Until Emma brought it up. My focus was make as much money now as you can. I'm not really financial savvy. I know 401ks, but like, you know, other accounts, like a Roth IRA, like how the rich stay rich, like that whole formula, that's foreign to me.

I can help you. I can tell you how I've built wealth and how a lot of people I know have done it. Do you feel like you are the driver of your money or do you feel like you're a passenger?

Yeah, I feel more like a passenger.

Okay, I agree. I think that's pretty honest. And Emma, would you say you're a driver or passenger?

Like, I'm a driver in some terms. Like all of this stuff I allocate to 401k and our medical and the kids savings. So, like, I am in control of like that. But then when it comes to like the discretionary money, I feel like a passenger because it's like I have this like a small chunk of money that's like controlling what I can and can't do. So like that discretionary money stresses me.

I've been there, so I get that. But maybe we can take a look at it and help you feel a little bit more in control also. Sometimes we just have to accept this is the phase of life we are in. Like, I understand you have a house that's a little small for your family right now. And sometimes we can make changes and sometimes we can be like, okay, this is reality for XYZ future. Let's figure out a way to accept it. Just moments into this conversation, you can feel the tension. On one side, Dave is frustrated. He thinks he's the only one putting significant contributions towards their savings goals. And on the other, Emma's frustration is boiling over as she struggles with the lack of a clear plan. For their debt and how to start thinking about the future. And did you hear what Dave said about Emma's relationship with money? He said, Emma believes she's the best with money and I believe she's not. That's quite a striking statement. And what's even more interesting is that Dave describes himself as not financially savvy. So if you're not financially savvy, are you really in the position to be judging who's good with money and who's not? Well, we're going to dive into the complexities of their money dynamic and after this short break. Growing up, you notice a lot of peculiar things about your parents. Like my mom would take us anywhere. She would sit and watch us at sports, she would take us to any type of educational thing. But she absolutely hates going to the post office and I could never figure out why until I grew up and became an adult. And I hate going there too. Nothing wrong with the post office. I'm a big fan. I just don't want to wait in line. I don't like lines anymore. And so if I find a way to to skip the line or not have to be there and figure out which freaking envelope I need, that is a big win for me. Now you know, one of my money dials or areas I like to spend on is convenience. And thanks to this episode's sponsor, stamps.com you don't have to wait in lines at the post office anymore either. Stamps.com handles all of your mailing and shipping needs wherever, whenever. All you need is a computer and a printer. They'll even send you a free scale. Using their app, you can access all the USPS and UPS services you need to run your business right from your house, anytime, day or night. No lines, no traffic, no waiting. Plus you automatically see your cheapest and fastest shipping options from different carriers, including rates you won't see anywhere else. Like up to 88% off. USPS and UPS have more flexibility in your life with stamps.com Sign up at stamps.com ramit for a special offer that includes a four week trial plus free postage and a free digital scale. No long term commitments or contracts. Just go to stamps.com ramit what normally happens when an older generation dies? A lot of times they leave a house. Now imagine you're long gone and your kids have this one house. Two of them want to sell it, one of them wants to keep it. What's going to happen? You have to think about these things and that's one of the reasons you need a will with Trust and Will. You can create and manage a custom estate plan from the comfort of your home. Go to trustandwill.com ramit and get 20% off plus free shipping. My coworker recently created a will for her family on trust and will and here's what she told me. Getting started was incredibly easy. I just followed their prompt. I provided the needed info about my beneficiaries, assets and personal preferences. In less than an hour I had a will, power of attorney, documents, last will and testament and HIPAA authorizations, all of which I easily downloaded and I could have them executed or checked by a for hire attorney if I wanted. Now I personally used an attorney for my own estate plan, but not everyone has access to a great estate attorney. So if that's you, trust and will might be a great option because they make estate planning accessible and affordable. Each will or trust is state specific, legally valid and customized to your needs. Their simple step by step process guides you from start to finish with one question at a time and Trust and will has an overall rating of excellent with thousands of five star reviews on trustpilot. Let trust and will uncomplicate the process for you. Protect what matters most in minutes@trustandwill.com ramit and get 20% off plus free shipping. That's 20% off and free shipping@trustandwill.com ramIT now back to the show. Who was the first one who started this conversation about saving?

Emma, we were saving for a house. You wanted to start talking about putting savings away and you had asked me hey, can you do this amount a week? And I said yes. And then I did it and here we are.

How did it come up?

I had just read your book about automating what's going where and all that jazz and I was working on it on my side and I had asked Dave, can you automate into savings so we know exactly how much is going in there?

Okay. And Dave said yes. And that was it.

Yeah, there was a lot more in my brain going on. Right. But that was like Dave's piece to the puzzle.

You mean the part that you shared with him already in your first substantive conversation about money? What dynamic did we see? We saw one person, Emma, the quote driver, doing all this work behind the scenes but not really bringing the other partner, Dave along on the journey.

Wait, can I just tell you what I did really quick after reading your.

Book, Want to interrupt my analysis? Go ahead.

Sorry. I read your book and I was on maternity leave and I took the big post. Its that Go on the wall. And I was on the ground writing all the plan out for us. And then I put it up on the wall when the kid was napping. And like, we went through it.

So. So why did you bring that up? I'm curious.

Well, because that was part of what prompted this conversation with Dave was I had this plan, and part of that plan was that we needed to automate the savings of the couch.

And when you were doing this massive plan on the floor, did you bring Dave into that planning session?

I wrote it all down and then put it up on the wall and we looked at it together after.

And what was that like when you looked at it together?

I thought I was back in math class and, like, this was being taught a lesson.

Do you like being taught about those money things you saw on the wall?

It was off putting at first. I guess my hang up at the time was, why is Emma teaching me this? She's not some financial expert.

Oh, wow. But would you admit that you're not a financial expert yourself?

Yeah, absolutely on that. And obviously she's my wife and I know it's all within good intentions, but I know she's not great with money either. But my thought process when I first saw the whole thing laid out was, I think I want to hear this from someone else.

And did you find somebody else to teach you about money?

No.

It's not really fair, right? She's, like, doing some work. Maybe she didn't even get everything right, but she put an effort into it. During maternity leave, she put together this plan. And your initial reaction was, why is she teaching me this? We need an expert. Who, by the way, I'm not going to go and find. Right.

That's also not what I did. I sat there, I listened. We were conjuring up a plan.

I know she made a plan. Did you believe it? Like, deep down?

It had me worried at the time. I'm still already kind of going paycheck to paycheck a little bit, and it's, oh, man, now I got to put more money here, and she wants five different accounts and I have to separate everything. And it just seems like a lot.

Did you tell her that?

I don't remember.

I don't know if he said the words, but I. I know Dave very well, and I got the feeling. I knew coming away from that, that doing all of that was going to be a lot, and he was uncomfortable with it.

So what do we do when we are presented with this massive plan that our partner put together without really talking to us about it. It's going to require a lot of work. I don't necessarily have the confidence in my partner. Realistically, do we think that plan is going to get executed or not? Oh, Emma says no. Dave.

No, because it didn't.

Exactly. What are you observing about this meeting with the big thing on the wall?

I think it encapsulates a lot of the conversations, big or small, that we have. I'm talking. Dave is listening, going along but not believing and being like, I don't trust that you know what you're talking about. So you can say whatever you want and I will say yes, but he doesn't really believe in what I'm saying.

Dave, what are you noticing about this example with the big thing on the wall?

Obviously I can see Emma's excited about it. You know, I was certainly more than willing to listen, but Emma's right about me. I do have internal feelings that probably don't agree with her at the time. Well, I don't remember exactly how the whole, the whole conversation and the presentation went, but.

Hold on, what's that? Why the laugh, Emma?

I said it wasn't a presentation.

It sounds like to Dave it was. He sat down like a student and you stood up like a teacher. I don't think this is funny. Actually, you said it right. This is a great microcosm of your relationship with money. I don't think it's funny when one partner is skeptical of another. I actually think it's one of the most soul crushing dynamics that exists in a relationship. I don't think it's funny to indulge your partner and let them talk, thinking in your head this plan isn't really going to happen. I don't think it's funny to question your partner's credibility, which may or may not be good, but then to offer no solutions yourself. I think it's telling. I think there's a lot of things we can do with this. I think it's really candid and honest of you both to share it and I appreciate it, but I don't think it's funny. What do you both think?

I mean, I think what you just said is very insightful and a way that Dave and I probably have never looked at that situation.

What part of it was new to you?

The skeptical part and how it just goes deeper than just talking about money. Right. It's how we relate to each other. It's how we respect each other.

The idea that one person needs convincing. Dave, why do you need to be convinced? Do you know about money?

No.

So then technically, shouldn't you just go along with whatever Emma says?

Not all the time. Because I know Emma has a. Not a good track record with money. Maybe scared me at the time. How do I know if this plan is going to work? I've kind of seen how you've dealt with money in the past. I see how you spend it. I'm a little hesitant to believe this, and I think that's a fair, Fair thing to say.

Okay. Another approach might be. Hey, I don't really know if Emma knows what she's talking about. I better learn this stuff.