“We're $500,000 in debt. Can I retire early?”

Seeing where I've come from, everything I've been through, I actually feel like I'm rich. I've hit rock bottom twice and I feel like I did a pretty good job at climbing myself out of it. One time I was basically on the point of I was basically homeless with my first marriage.

I divorced my ex husband because of financial infidelity and it ended up the day after Halloween. We got a knock on the door. It was the owner of the house, he with the sheriff, another cop evicting us. I lost everything except for my children.

Both of us went through a lot and I want to show her that life is better now. But financially, we're pretty much back in the hole.

Meet David and Halima. David's 33, Halima's 37. They've been married for about a year. This is their second marriage for each of them. Now, they initially came to speak to me because David wanted to know if he could retire early. But when I started to peel the layers of their finances, I was truly shocked. And not just once, multiple times. In this conversation, you're going to hear the ways that both of them treat money. We're going to delve into their past to try to understand their behavior, and you are going to hear a lot of puzzling explanations today. My goal for you is to help you try to understand why people act the way they do with money. Before we get to the episode, I was just reading this post on Reddit about lifestyle changes at various income levels and damn, it was depressing. I don't need new shoes. I don't even need any shoes. Yeah, I can use the same shoes from when I was 11 years old. What the hell is wrong with these people? What is with this mob mentality of proclaiming all the things you don't want? It's okay to spend money. That's the point of it. To create a rich life. Not to hoard it and then brag about how you don't spend any of it. In fact, if you make more money, you should spend more money on the things you love. This Saturday in my newsletter, I'm going to dive into strange money psychology and how we build the skill of spending money meaningfully. Now let's meet David and Halima.

I was talking to my wife about investments and stuff, and she hasn't invested in a Roth 401K, nothing like that. So when I asked her if her job matches, she didn't know. And then I told her, well, look, just, you know, Ramit says like 10%, so just put 10% towards your investments. She said she didn't feel comfortable with that, which was frustrating to me. She said, all right, let's do baby steps. And she did. 1%.

He started mentioning word investment, and I just felt like. Like the anxiety rushed through me. And then he started, you know, mentioning things, Roth, Ira and etc. Etc. And to me, you know, finance is. Is not something that I have. I have never. I've never studied. I don't really have much experience with it. So to me, it's like a different language. Let's just put it this way. I don't like to take money and put it into something that I don't truly understand because. Because I'm afraid I'm going to lose it. When I think of investment, I think of, like, gambling.

Okay?

I think of stock markets, I think of gambling. You know, it's like a different language to me. I don't understand it, so I kind of just freeze. I. I do try to hear him out and try to take in the information that he's giving me, but to me, numbers, it's just a big mush, and I. I shut down. Like, when I start hearing things like that, I. I feel like not only the anxiety, but I start to get angry.

Angry about what?

Angry that I don't understand. And that when I ask him to explain to me, I get angry because I feel like he's not really doing a great job explaining it.

Do you remember what you asked him to explain and then what he said.

Like, investments and percentages and. Yeah, all that with the numbers and, like, the difference between 1% and 10%. I'm just like, where does that money come from? Where is it going? How come I don't see it? Like, I'm. I need to see things. I'm very visual. You know, you add more words in there that I don't understand, and I just. I shut down.

Okay. And then do you get angry at him?

I get angry at him. I get angry at myself, yeah.

Are you going to get angry at me today?

No. I would like to understand the process better before I commit. I'm going to do it regardless, because I trust him. And that's what you've been saying. But I don't want to go into it blindly. I feel like in the past that's what I've done. You know, not really understanding things, but, like, trusting people. I do trust David, but again, I also want to trust myself. And right now, I don't trust myself with money.

Let's take a second to deconstruct what Halima just said about investing and gambling because it is such a common belief. To Halima, investing feels scary. Feels like you're taking all this money you worked so hard for, throwing it into some black box with a confusing name like 401k or SEP IRA and then just hoping that it spits money back to you. Of course she wouldn't go to Vegas and spend all of her savings account on slots, so why should she invest it? And anyway, does it really matter? Because after all, to Halima, she earns money, she sees the money in her checking account and it feels safe to her. Unfortunately, the cost of this belief that investing is gambling can literally be hundreds of thousands or even millions of dollars. The people who believe this are worried that they're going to lose money by investing, but they are actually losing hundreds of thousands of dollars that they could have had if they had sensibly invested. And predictably, as they get older, they get increasingly worried about money, never realizing that their own fear is directly responsible for their precarious financial situation. Now, I have a lot of compassion for people who feel like this. They often have nobody around them who ever invested. In fact, a lot of them had family members who themselves said, just save your money. People like us don't invest, but I can acknowledge their upbringing and also highlight the importance of personal responsibility. You'll notice that 100% of people who say this, that investing feels like gambling, have never read a single book about money. They don't understand that by investing in an index fund, you're essentially buying a share of 500 of America's best companies. And they don't understand that by taking a long term view, one in which stocks have typically returned over 7% for the past 70 plus years, that they can totally change their socioeconomic future. This is why I completely understand when people tell me that investing feels like gambling. But it also makes me really sad and it makes me really frustrated too. When you think about the money in your relationship today, what word comes to mind for you, David?

Well, seeing where I've come from, everything I've been through, I actually feel like I'm rich.

Really? Tell me more.

So when I was a teenager, I, you know, I didn't grow up very wealthy or anything with my family. So we basically, my parents wouldn't give me money. So then I went out and tried getting, making money on my own.

How'd you do that?

We did boxing, my friends and I.

Where did you grow up? We didn't do this in Sacramento.

Here in New Jersey.

Oh, say no more. New Jersey. All right, fine. All right. Boxing, like street boxing?

Street boxing?

Yeah. Did you use gloves?

Most of the time.

Okay, yeah. All right. Boxing. This is crazy. What else?

I tried getting a job at certain stores, but they were like, yeah, we're not hiring a 14 year old.

Okay.

So then, yeah, my friends and I would go into like convenience stores, like seven eleven and stuff, and we would steal candy and sell it at school.

This is crazy. Freaking boxing, you know, stealing stuff. This is insane.

I was a pretty bad kid. My mom says that she's very grateful that I joined the army because it straightened me out.

I've heard that from a number of people.

I feel like I've hit rock bottom twice and I feel like I did a pretty good job at climbing myself out of it. One time I was basically on the point of. I was basically homeless at one point. But yeah, now I'm. I'm financially well off right now, I feel like. Except for when it comes to like retirement. Like right now I feel like I'm. I'm probably gonna work till like I die, which I love my job. I don't. I probably am going to keep doing something similar to that after I retire, but I want to do it on my own time and I want to do it as a hobby.

Okay. So you feel rich, especially in light of where you've come from. And you mentioned you hit rock bottom twice. One was when you were nearly homeless. How old were you at the time?

22.

Wow.

It was for like a year and a half. I was basically squatting in the house that my family basically just left. There was no running water, no electricity. I had to buy myself several blankets to keep myself warm in the winter.

Because how did you get out of that? That's a tough situation.

So, I mean, to shower and stuff. I got myself a gym membership. I thankfully I still had a car. I had one job, and then I was trying to do a lot of overtime with that job, but it wasn't enough. So then I got myself another job and then a third job. I was basically just trying to save up money. I tried paying the water bill so that I could at least have running water, but it. Because it wasn't under my name, the company wasn't taking it.

Yeah, yeah.

I mean, I tried using the army as well because I'm in the army reserves. So, like, I would ask to be put on orders from my leadership and they would occasionally try to help me out with that. Yeah. And then eventually I found an opportunity with Rutgers, where they would put me through a program for veterans. I was so tired from working all those jobs. I got into like two car accidents from falling asleep driving.

Geez. What was the second time you hit rock bottom?

After my first divorce. Well, my only divorce, because that's not happening again.

Do you mind sharing what happened?

My ex wife, she. She liked to spend a lot. She was very materialistic. She grew up with her mom not working, so she didn't want to work. She had a job. And then while we were on our honeymoon, she got laid off. Like, it was literally right in the middle of the honeymoon, she got a message from her supervisor saying that the company was bought off and she's not going to be with the company anymore when she comes back. Oh, my God. After that, she didn't have a job. She was physically violent towards me because I wouldn't listen to her. I would like. She would tell me not to do overtime, but I'm like, how are we going to pay bills? Yeah, that dragged on. I was for like three years. The point where I was just like, I can't do this anymore, I have to get divorced, is when she literally threatened to kill me. I had to get the police involved in everything.

You left that marriage how long ago?

The.

It finalized December 2021.

Okay. Wow. Well, I'm sorry you had to go through that. That is tough. Devastating. Nobody should have to go through that. And now I think I understand a little bit more about why you said you feel rich. Thank you for walking me through it. I really appreciate it. David's story highlights how our past can affect how we feel about money in a profound way. Because he was previously homeless, anything feels better than that. In fact, having tens of thousands of dollars in credit card debt feels rich to him. Why? Because he can still go on vacations with his family. And this is one thing that really fascinated me. If we're talking about buying something like a car or a nice vacation, I can take two people with the exact same financial situation and I can ask them a single question, can you afford it? One person will say, of course. The other will say, no way, not in a million years. Two people with exactly the same financial situation can have a dramatically different interpretation of if they can afford something. They can have different risk tolerances. One might say, we can't buy a car without a six month emergency fund. Another might say, yeah, let's get it. We need it for the kids and we'll figure out the finances later. Our feelings, which are directly affected by Our past have a massive impact on how we see money today. This example reminds me of episode 75 with the COVID nurses. One of whom thought that because they paid off their debt, he should buy a luxury car even though they had no investments. Principle is the same. His past shaped his view of money today. So when you hear someone acting in a way that surprises you with money, it is possible that their numbers are simply different than what you thought behind closed doors. But it's also very possible that their past is causing them to act in a way that you would never, ever act yourself. We'll be right back. Now back to the show. David, I understand that you. You described some of your past finances as some get rich quick stuff. Tell me about those.

I joined, like, two different MLMs.

What two? Well, you know what? That doesn't surprise me, because when. When someone joins one, they usually end up in another. It's very similar to why somebody who joins a cult is susceptible to joining another cult. But I want to know which mlm.

Tell us first. One was started with an A. Amway. Amway? Yeah, Amway. And then the other one, I think, is called Worldventures.

What do they sell?

Packaging deals for traveling.

All right, so what drew you to those?

Actually, also Primerica.

They're the worst. Wait, you were. You were a sales rep for Primerica?

Yes.

By the way, do you know how many people are watching and listening to this podcast right now who are like, they're getting so mad because they're involved in one of those and they're about to write me these messages? Primerica's not actually an mlm, if you technically define out. I have a Netflix show where I talk about what an MLM is. Don't send me messages. Just unsubscribe. All right, so you got out. What was the thing that initially drew you there?

Basically that I would be my own boss and I determine how much money I make. Like, you determine. You are your own boss. You determine your destiny. You determine if you're going to be financially successful or not.

It's a powerful vision.

Yes.

It just happens to be a complete scam that over 99% of people fail at. And just to do a quick statistical check. David, did you make a lot of money with 1, 2, 3 MLMs?

Nope.

Shocking. Shocking. All these MLM people about to send me messages on social media. They're like, david, just didn't work hard enough. If you put the time in, then you can get the results out.

I have the statistics.

All right, so you got out so that was one get rich quick thing. You joined. What else?

I tried. I tried doing the whole cryptocurrency thing.

How'd that go?

Terrible.

Okay.

I held on when I should have sold.

That's about all we need to cover on that. That's pretty much most crypto guys. All right. Okay. Who else? What else did you do for get rich quick?

What else did I do?

You did try to get your real estate license.

No, I tried getting my real estate license.

Oh, my God. The realtors already hate me, so we can just sidestep this one.

I tried getting jobs with. With certificates, when in reality, you need to get a job with a degree.

Okay, okay, so what's. What's the thread among all these decisions?

Get rich quick doesn't really work.

But you knew that, right? Like everyone says, it's in the air. Don't try to get rich quick. And yet you did all these things. Why?

Because I would see that there are some people that succeeded, but it's such a minuscule amount that, like, it's nearly impossible to make it.

Like, why didn't you try to be in the NBA? I mean, you can pick up a basketball and you could throw it. There are people who do that and make millions of dollars. Why didn't you try that?

I didn't train hard enough.

What was the period of time from the first get rich quick scheme until the last? Or is it still going on?

No, no, it's not going on.

All right, what was the time period?

So about five years ago. So it was basically from when I was. I would say maybe when I was a teenager. It kind of started.

It's like 10 years.

No, more like almost 20.

20 years. Okay. This is a great reminder that people can stay married to delusions for far longer than you think. In investing, there's a famous phrase, markets can stay irrational longer than you can stay solvent. Meaning if you're making a bet against the market, you're saying, this just doesn't make sense. Maybe you're right, maybe not. But the market can keep acting irrationally, far past the point where you run out of money. And many great investors have experienced exactly that in this case. The psychology here is very simple. Get rich quick David is what I call a believer. He believes that success is right around the corner with the next mlm, the next crypto, the next real estate license. And you hear how he swallowed these messages whole. I can work for myself. I don't have to have a boss. I don't want to trade time for money. I can control my future. It turns out that most of us respond better to a big promise than a smaller, sensible one. And companies know this. This is why they offer one huge prize, not 10 smaller prizes with better odds. In other words, companies know exactly how humans act. They know how you act, often far better than you do. That's why the average person has very little chance of winning when they go up against realtors, MLMs timeshare salesmen and AUM financial advisors, mutual funds that specialize in survivorship bias and so much more. What I'm trying to do with all of my work is to equip you to understand how you can actually build serious wealth without having to spend a ton of time on it. But the one ingredient you need is patience. If you don't have that, I can't help you. And you are basically prey for the entire financial industry. Now let's talk to Halima.

I'm scared, nervous, like, trying to make sure that I'm going in the right path and doing things the right way. This time.

Yeah, this time. What happened the first time?

I lost everything except for my children.

Do you mind telling me a little bit of what happened?

No, I don't mind. With my first marriage, I divorced my ex husband because of financial infidelity.

What happened?

We were going under and I didn't know it was a high school teacher and I had a great job. I got pregnant with my firstborn, decided that I wanted to be a housewife and have babies, raise children and that the man of the house was going to work. And my ex husband was in, in the banking, he was in finance. And to me, I feel like if you're dealing with money, you know everything about money.

Ah.

The house that we purchased when I was working, we were going into foreclosure. The house was being sold because I thought that, you know, I was pregnant with my second. Now they're only 16 months apart and we needed to upgrade. We were living in a really small 1200 square foot home. So we wanted to upgrade and buy something bigger and better for about six months while we were, you know, we sold the house, but it was actually foreclosed. The bank took it.

You didn't know this?

I didn't know this. I didn't know this.

Wow.

He was responsible for all the bills and I trusted him with that as any, you know, good wife. You know, I feel like I had a good. In the beginning, I was married to my ex about 10 years, 12 years total being together with him. So I trusted him and I loved him. We ended up renting a house. And while we were renting this house and we, you know, sold our home with that money, we were going to buy something bigger. So for about six months, I became really, really good friends with the real estate agent that we were working with because I was basically, you know, my Saturdays and Sundays would be going to look at homes with him. It was this, this grand plan for him to kind of drag things on because he knew that once I found out that I was going to leave him. And it ended up the day after Halloween, on November 1, 2019, we got a knock on the door. It was the owner of the house with the sheriff, another cop evicting us. My son at the time was about 18 months old. My daughter was a little bit older. They were both in diapers. I still have the, the hamper that's downstairs that I was able to fill in with whatever I could. And that's how I left the house. And my whole foundation, my whole world came crashing down. Long story short, he left the country because there was really nowhere else for him to go. Nobody trusted him anymore. He was borrowing money left and right. Nobody believed him anymore. And he left me with the two babies.

I'm sorry you had to go through that. And I assume you've never seen him again.

I did. He came back and we tried to co parent, but at the end of the day, I couldn't trust him. You know, you said you're sorry that I went through that. In a way, I'm not sorry I went through that.

Why?

Because I learned from it. That period with, you know, with me divorcing him, I really. It was a period where I started getting help, therapy, reflecting on myself, working out, losing weight, being surrounded by positive minded people. I wouldn't be here with David today. So I'm not sorry I went through that.

Wow. Looking back now, I'm sure you've gone through a lot of reflection on what happened. What do you take away from everything that happened?

Maybe it's kind of cheesy to say, but there's always a rainbow after a storm. And you know, just like David, he's hit rock bottom. If you have the right mindset. And I, I truly believe if you really want something, you can go after it. You just got to do it.

Wow. Do you find that your stories, David and Halima have brought you together? The fact that you've both gone through some really difficult things. Okay. Seeing nods from both of you.

So basically when I, because I was going through a divorce For a whole year. And during that time, I was reflecting on what I wanted in a partner. I created this mental checklist of what I wanted. And I met her. She literally checked off everything. I can't think of anything she didn't check off.

I just want to describe Halima's smile right now for everyone who's not watching on YouTube, but she's got this very radiant smile. Halima, what do you think?

I'm just filled with joy.

These stories helped me understand David and Halima a lot better. And I love that they've been able to overcome so much. But I also asked a subtle question at the end. Did you catch it? I asked, do you find that your stories have brought you together? And both of them said yes. What I want to know with that question is if they define themselves by their struggles. I believe in honoring our past and acknowledging whatever struggles that we have gone through or are going through. But I also think that we are more than simply our struggles. And in many cases, when couples define themselves by their struggles alone, they can become a self fulfilling prophecy. We struggled through that. It was us against the world. And now we're going to make more decisions to recreate that struggle because that's what brought us together. Struggling is love. I don't know if that's the case here, but my antenna are up. We'll be right back after this. Now back to David and Halima. David, you said you feel rich. What do you mean by that?

It's like looking at how much we make annually. I made this amount once before and I feel like I'm finally back at it again.

Okay, but if you make that much, if you're rich, why are we talking?

David can be compulsive sometimes, you know, and like we just, we bought this house too. So that's another thing to add on the list. We just, you know, bought a house as well and.

Well, that, that, that can never be gambling because houses prices only go up. That's what I was told in America. Yeah, that's why. Because they always go up. Always, without exception. Therefore it doesn't even matter what the price is.

Right.

Because they're always going up. So it actually doesn't matter what the price is.

I mean. Yeah.

You agree?

I agree. Because that's kind of why we bought this house. We, we got married, we wanted to live together. We were, you know, we were living separately in two different states and we're like, all right, let's do this, let's buy a house.

Hold on now. Now you got Me? Interested?

Sure.

I was planning to just roll right on by that I've talked about houses enough, but you stopped me. Now I'm interested. So you two were living in different states. Where do you live now?

In New Jersey?

All right, so you said, we got to get back to Jersey. I'm itching to box some little punk kids on the street. Back to Jersey we go. All right, so. So. So then the next thing you said was, let's buy a house.

Mm.

Talk to me about that.

Buying a house has been instilled in me. You know, my childhood was very different than David's. I lived a very sheltered life. My parents immigrated here, you know, in the mid-80s, and, you know, they tried to shelter us and, you know, keep us, I guess, in the culture and, you know, following with all their friends and family that were here.

So.

So, you know, this whole growing up, it's always like, you have to grow up. You have to get married before you have kids, buy a house. You know, it's what society. It's the American dream, you know, that's why my parents came here, for the American dream. So even though, like, wait, what else.

Is in the American dream? I want to know.

Going to school, having an education. That was really big growing up.

That's good.

What else?

Having the house, the cars, the children, the white picket fence.

And then.

And. And then you tell me.

They never really tell you what happens after that, do they? They say, get an education, which is a nice thing for a lot of people. Get the house, the pick, white picket fence, the 2.5 kids, the car or cars. And then it sort of just fades off. I go, well, okay, you're 30 or 35 or even 40. What else? You got a lot of time to live. They don't tell you anything about that. How come?

Maybe because they don't know either.

Maybe they didn't know at all. And maybe they were just telling you what they did. And everybody thinks that the decisions they made are the same one kids should make. But do you think the same decisions your parents made are going to be the same Right. Decisions for your kids?

No.

Life's different. I think what parents are saying when they talk about a house is security, safety. If everything goes bad, at least have something. And that could take the form of a house? Absolutely. Especially if you have a family. Absolutely. It can also take the form of what. What are other ways to have safety and security.

Investments.

So many of us are following money stories that someone else wrote for us, and they didn't even finish it if your rich life is traveling around for two months a year or building a ranch or going child free, whatever it is, I want you to define it and design it and I'll show you how. But please don't just follow the idea that someone else created that you've got to buy a house in the suburbs with a white picket fence and that is the only way to measure a successful life. It's not. By the way, I'm trying something new with YouTube in 2024. I'm drilling down into topics like this so you can find a new video where I did a detailed deep dive covering renting versus buying on my YouTube channel right now. How much did the house cost?

It was 440. And it's a fixer upper.

I mean, in terms of us moving in this summer into this fixer upper. And you know, we went into a lot of arguments back and forth, you know, for months about, about the house and, you know, the functionality of it and how quickly we moved into the house. And you know, with him, his timeline I felt wasn't realistic.

Okay, so you're renovating it, things like that?

Yes.

How much have you spent? How much did you budget?

I think we initially bought like 30 grand for renovating.

That's exactly what I thought you would have said. And how much has it been so far?

I think we're at about 40 or maybe 50.

So let's just say 60 almost. That is double. And how long is this going to continue going on for?

Ballpark, hopefully not past the winter.

It's not even winter yet, is it? That's a long time. That's like four, five more months.

I feel like that's unrealistic because right now we're working on the basement. But there's so many other projects that also need to get done.

So why do you need to do the basement right now?

The house is small like this. It's a small house and. Okay, so let's. Oh, have you heard of the love sack? The couch is the love sack.

Yeah.

Okay, so he, he's, he just wants the love sack. And right now our living room doesn't fit the love sack. We actually have a sectional. That sectional is too big for our living room. So the idea was to fix the basement, put the sectional downstairs in the basement, make the basement like an everyday room and then buy the love sack that'll fit the dimensions of the living room and everybody's happy. Well, David's happy.

How much did this couch cost?

I bought that a while ago. I Want to say maybe like two grand.

All right, two grand. And this loves that you want to put there. How much is that going to cost?

Go ahead.

Maybe maybe about ten grand.

$10,000.

Maybe less.

No, because he wants to get the, the speakers in it and the, the storage space underneath and I don't know what other accessories.

Well, hey, look, maybe when we look at your numbers it will be obvious, like if I wanted to buy a $10,000 love sack, whatever that is, then I, I could afford it. We'll see. They definitely cannot afford a ten thousand dollar love sack. I see this theme of being unrealistic with money coming up over and over again. David chases ways to get rich quick. He confuses wants with needs and he essentially buys things without understanding how they affect his overall picture. Halima ignores money altogether. We're about to open up their conscious spending plan to find out if they can actually afford it. If you want to follow along, you can download your own conscious spending plan for free@iwt.com CSP let's take a look at the numbers. Assets. $524,000. All right, what's next?

Investments. $11,249.

Okay, next.

Savings? 62,752 in debt. $517,045.

What's your total net worth?

80,956.

How do you both feel about that number?

More than I've ever had before.

Okay, so which means it feels like what?

I'm rich.

Okay. Halimah.

It's a good number. Would I like it to be more? Absolutely.

How much more?

Six digits at least.

Well, it's 81,000. So you want 19,000 more? Look, you're holding your breath.

Have you.

Do you notice that?

You see that if I'm, if I'm completely honest, I'm not sure.

Do you think you're going to magically change the way you feel about money when you have 19,000 more dollars?

No, I don't think so. Not at all.

All right, let's look at the income. Halima, I'd like for you to read. What's your combined GROSS Monthly income?

$16,044.

All right. Do you know how much the two of you make?

$192,528.

Did you know that you made that much as a household?

I do now.

Is that a little or a lot?

That's a good number.

Thank you for saying that. Nearly $200,000. The two of you are in your 30s.

David, you agree it's okay?

Yes, or no.

Yes, it is.

All right. It's okay, though. It's not accessible to you.

Her and I have this thing going on back and forth as to who's gonna make more money, because you can see her and I make almost the same amount.

Yeah.

So, like.

So what, do you got a little race going on? Little competition? Yeah. Like David. David's like, yeah. And then Halima's, like, shaking her head.

Like, no, I think. I think it's more on him. I think he's got, you know, he kills. Calls me the sugar mom all the time because I'm making more than him.

I have a question for you, David. I'm married as well. Do you think that my wife and I compete over who makes more money? No. No. Why not? Just because I've had a business for a long time. Let's say we were almost identical in income, like the two of you are. I still wouldn't. Why?

Because you're a team.

Yeah. We might compete with our rich life goals. We might compete with the outside world. We might compete with the credit card companies if we have credit card debt. But why would I want to compete with my teammate?

So you can push each other to improve.

You can definitely push each other. You can set ambitious goals. You can be specific about. Oh, my gosh, let's set a milestone. If we hit this number or when we achieve that number, then let's do X. That is very motivating. And you can congratulate your part. Oh, my God, you did such a great job. I love you. I feel totally confident with you. Those are the ways that you can be a team. But when you think about competing, especially in a zero sum game, somebody wins. And what's the other side of that?

Loser.

Yeah. I don't really want to make my partner feel like a loser, and I don't want to feel like a loser with my partner.

Part of me does feel like I should make more money than her because it's a cultural thing for both of us. I grew up Hispanic. My wife is Turkish background. So both in both cultures, usually it's the man that makes more money.

Okay, so what's the point of that? Do you need to make more money?

Of course.

Oh, of course.

I'd like for it to be like more than seven figures, maybe eight figures.

Come on.

Yeah, it's unrealistic.

I don't know if you caught me there saying, come on. Come on. David, you earn about $100,000, you're in debt, and you're talking about earning eight figures. A year. That is $10 million per year. What I want you to notice is that each of these examples, MLMs, LoveSack, wanting to earn eight figures, are all fruits of the same tree. And I could try to tackle one of them one by one, but it's really like playing whack a mole. The real issue is his unrealistic relationship with money as a believer. This is why I'm encouraging him and a lot of my guests to see a therapist. I want to remove the stigmatism. There's nothing that has to be wrong with you to see a therapist, but. But you can improve some part of you. In David's case, he can understand why he has this unrealistic relationship with money that is manifesting in so many different ways. Let's get back to the show. Let's move along to your fixed costs. What's this number here, you see, David?

72%.

Yeah. All right. What number technically should that be in my benchmark?

50 to 60.

So 72 is good or bad?

Bad.

It's over the number. Your Savings are at 21%. Let's see where that's going. Oh, what the. What is this? Okay, hold on. Sorry, I gotta. Sorry, I'm so stuck on this, I forget some people are listening. We got vacations at 500amonth, long term emergency fund at 500amonth, and then I've never seen a line item called outings. And that's $1,462 per month. Can somebody explain this to me?

She should explain it, because that was her.

I mean, it's just the. The things that we don't really know where to categorize or like, it's.

What's. Outings? What is that?

Do you want me to take over?

No, I want Halima. Okay, David, do you see what just happened there? You want a teammate, right?

Yes.

So you gotta let her speak up, even if it means that sometimes she's not certain, etc. Halima's already said, look, I'm not sure about money. I don't feel as certain. So when she's actively in the middle of something, we gotta let her play it out.

Honestly, I said the out the part because to me, I didn't understand it. So I was like, all right, let's just put. Because I didn't know where else to put those things.

This is more than just some text that Halima wrote in the csp. This is not taking the process seriously. On this podcast, I try to be deeply respectful of different experiences that people have had along Their money journeys. And my team and I spend literally hundreds of hours finding diverse couples from all around the world. I'm even sympathetic to people in tons of credit card debt. But I have no sympathy for people treating my process as a joke. And deep down, that is what's happening here. Halima didn't understand it, so she reverted to her usual behavior. Head in the sand. Only this time because she couldn't hide from the black and white numbers that she knew we would all be reviewing. She wrote a sarcastic label. She threw everything in one category, and she essentially said, ramit can figure this.

Out for us now.

I can help people do amazing things, but only if they want to do the work. What's a weekend getaway? What's that?

A weekend getaway is somewhere local that.

We go stay overnight.

Yeah, sometimes.

Like, is this like a hotel motel? What are we talking about?

Yeah, it's. It's part of our timeshare.

What? You have a timeshare?

Yeah.

Which company is this part of?

Hilton.

Hilton. So great. Wow. Who bought the timeshare?

David.

Wow. David. I know. This had to have happened at least five years ago because that's when you ended your get rich quick stuff. So what year did you buy this timeshare, David?

This year.

This year. Why did you do it?

I was running through the numbers. I told you, the sales guy, that he needs to give me a minute. I was literally sitting there by myself for, like, half an hour running through the numbers.

How did you end up in this room?

We went to Hawaii.

And you sit in the presentation, and what goes through your mind as you see the presentation?

I'm not gonna do this.

Really? Yeah.

The whole time is just like, all right, Wasting my time here. And then he showed me the numbers, and then I was like, nope, nope, nope. And then finally he showed me a number that I was just like, wait a minute.

Which number was it? Tell us.

It was 10 grand.

But what. What's the number? Like, what 10 grand gets you this thing? Why did that number convince you?

They kept correcting me, saying, it's not a timeshare.

It's a timeshare.

Yep. That's what I kept saying. It's a timeshare anyway.

It's a vacation club.

Yep. Yep, exactly. So then when he showed me that it was 10 years for 10 grand, and then I was like, that's a thousand dollars a year.

Okay.

I was like, all right, well, I need to see the terms and everything. And of course it said variable. But then I said, I'm not Signing this. Unless you change it to fixed. And they changed it to fixed, so it's not supposed to go up. All right.

You really got it?

Yeah.

You feel good?

Yeah.

Okay, so what do you get for $10,000? Is that the total amount that you're going to pay over 10 years? 10,000.

Plus it's going to be another 2,000 every. Or. Yeah, basically 2,000 every two years. So basically it's 20 grand.

Oh, so what do you get for 20 grand?

Just that one trip alone was five grand.

No, that's not my question. What do you get for 20 grand?

The ability to go to a lot of these places and not have to spend money on where we're staying.

How long can you stay every year?

It depends on the points, but we can do multiple trips. Like we could do two to three trips a year for one week long each trip.

Like let's say you want to go to Bora Bora. Okay. Maybe you can, maybe you can make the points work or at some hilted property in Italy or whatever. And like, what would it cost to go there, fly there, eat there, all that stuff?

It'll probably cut it down by like three grand, I would say.

Okay, you think this was a good decision or a bad decision?

I think it was a good decision. Just because we're not going to be paying for the stay.

How come everyone who comes on this podcast of which you've listened to every episode, I'm told, how come everyone who comes on here with a timeshare gets absolutely reamed by me? But in your situation, this was a good decision. Explain that to me.

Doing the math, like I said. Yeah, that one trip to Hawaii cost us like five grand. And then these, if we take out the flights, it was close to three grand. Basically, if we go to all these other places, we're gonna cut the costs on the stays.

So it's a no brainer.

Basically. Yeah. I also want to point out that when I told my wife that we were going to be on this show, she was like, I can't wait to tell him about the timeshare.

I know. Halima's had the biggest smile for the last five minutes. She's just sitting over there and she's shaking her head. It's actually hilarious. Come watch this on YouTube. It's so good. Halima, you want to add anything to David's quote, good decision. Yes, tell us.

So I remember I'm sitting by the pool with the kids. He gives me a call, he's like, oh, you know, they're giving a really good deal, babe, what do you think? And I, you know, I just. I was getting frustrated. I was getting, you know, kind of angry, but at the same time, I was like, you know, what if he thinks it's a good idea and it makes sense with the numbers? I was kind of like, all right, it's at the end of the day, sure, let's do it.

What? Hold on, hold on. I'm sorry, I have to cut in here. You're. You're telling, first of all, you both agreed not to do it. You know, that time shares are not a good idea. And then you go, let me, let me turn over and delegate. Notice that word keeps coming up today. Let me delegate the decision to my husband, who has been involved in get rich quick schemes for, in his own words, 20 years.

Honestly, I didn't understand it, and I didn't ask too many questions because I didn't understand it. I did know that timeshares are bad and it's, you know, taking money out of it and it's not worth it. But I trusted him, and I was just kind of like, all right, if you think it's a good idea, I guess, let's go for it.

You trusted him on the renovation. You trusted him on the timeshare. Didn't you yourself say that you. You want to trust, but you also want to understand something? All right, and then, David, you knew Halima didn't understand this. You knew that you had agreed to not purchase a timeshare, and so yet you called her and said, oh, the deal is actually pretty good. What did you expect her to say?

I mean, I explained the numbers to her. I thought she was understanding when I was explaining the numbers to her.

No, but you explained the numbers to me, and I think they're total. I think you genuinely believe this is a good deal, and it's totally not, like, 100%. It's not a good deal. And you genuinely believe because of what those sales guys put in your head, just like what those Amway guys put in your head, 10, 15, 20 years ago, you've bought into the next MLM style get rich quick thing. Do you not see the pattern here?

Yeah.

This decision will cost you how much over the course of the next 10 years?

20 grand?

Way more than that. How many times are you planning to take a trip? You told me you can go two to three times per year. You planning to scrape it all for what it's worth? Like, make sure you take as many as possible?

Three a year.

Should we just say three a year.

Okay, yes.

All right, so three trips times 10 years. How many trips is that?

30.

30 trips. How much is it going to cost on average for airfare, taxes, food, the occasional lost luggage, the new clothes you got to purchase, the souvenirs. How much is it going to cost on average per trip?

Probably an additional three grand.

Three grand each trip. All right, so 30 trips times 3,000. 90,000. Plus the initial 20,000. That's $110,000 on vacations.

Okay, but we're not paying for the stays.

Here's the fact that you probably wouldn't spend $110,000 on vacations in the next 10 years if we had gone through your CSP and looked at it. Aren't you the one who called me and said, I want to retire early? Yeah. Every dollar you spend on this is $1 not going towards your retirement, which right now you have $11,000 in your investments. I don't understand how this seems like a good idea to you. Companies are very good at finding the one single argument that resonates with people who don't really understand the intricacies of a sophisticated financial purchase. Let me give you some examples. With timeshares, the argument is you're saving on the amount you would have spent on vacations with whole life insurance. You get cash back with get rich quick scammers on TikTok. It's about passive income. You make money while you sleep and you never have a boss. And with financial advisors who charge 1% AUM or more. Just kidding. They don't actually have an argument because they never want to actually talk about their fees. You can see that nothing I'm saying is really reaching David. He still thinks this timeshare was a good idea. And this is why it is so difficult to reach people after they have been surrounded in these worlds for so long, inculcated with these messages that they have absorbed. So I'm going to call this miscellaneous. Why I'm putting it in fixed costs is that people typically have just a certain amount of money they spend every single month. Okay, I'm gonna move this here. So 1462 means now you're currently spending 85% on fixed costs. That's 85% of your net pay is going to fixed costs. I'm going to go ahead and drop the number here, which means you're. I removed it from savings, which means you're now saving 8% of your net pay. And let's just finish up the CSP and then we could go back up. Let's look at your guilt free spending. I'm curious about that. Okay, well, I don't believe this. So it says that you, you have less than a hundred. You're basically spending more than you make every month, which of course you and I know that you're spending on outings and things like that. So probably part of this stuff like the getaways. Let's even just say a thousand dollars should. Well, let's move it from your fixed cost down here. I mean, just the numbers just don't work. You're essentially. How do we do this? Let's say 6, 7, 3, 0. Yeah, basically the, the thing, you're spending more than you make every single month. Did you know that?

I mean, that was my biggest concern. You know, when we would go back and forth, when we would sit down with these talks, I felt like, you know, the numbers again, numbers to me, it's confusing for me to even like, try to understand it, but like, I just, I have this, this feeling inside that I feel like we're spending more than we're making.

You are, I guarantee that.

And like, my gut knew that, like my, like something inside me was telling me that, you know, something's not making sense.

David, do you see that?

I mean, every month that has been going by since we've combined our income, our checking account has just been going up and up steadily.

This is why it's confusing people who are just beginning with money. Their barometer of success is how much money is in our checking account. That's it. And the fact is you have a pretty high income, so it works for a while. And what that probably means is you're not actually actively and automatically contributing to your savings. You're not automatically contributing to your Roth ira. You're spending a bunch of money on credit cards, which I want to get to. And so from all looks, the checking account looks great. You're getting paid like 15, 16 grand a month. Fantastic. But every month that goes by, you're compromising on your savings, you're compromising on your investments, you're adding to your debt. If we were to actually look at it all, which we are right now, you would realize, oh my God, we're actually in the red every single month. And you want me to show you how I know that? Because let's look at your credit card debt. You were very helpful in breaking out all your credit card debt. Just to keep in mind, you have $517,000 of debt. Now let's be fair. $447,000 of that is your home loan. Okay, at about a 5% interest rate, correct?

Yes.

All right, let's take a look at your credit card bills. You got over $10,000 on your Amex. You have Synchrony ADT. What is that? Is that a credit card?

It's a credit card for the home security system.

Why do you have a credit card for it?

Because a lot of the equipment was pricey and, I mean, I. We could just pay it off.

Why not?

Why not? Why did you.

Paid it off? Yeah. 3,000 bucks?

Yeah. I'm not sure.

Then you have another kitchen credit card. $4,944. Then you have a Best Buy appliance for 4,424. And you also have two car loans, one for $33,000 and one for $13,804. Do you realize you're spending more than you make every single month and that's where it's going? Yeah. Tell me what's going through your mind right now, David, you're the one who's been managing the money and moving it around and sharing it with Halima. What's going through your mind right now?

I'm failing. Like, we shouldn't be in this type of position. And I feel like I've gotten us into this.

What is this type of position? Describe it for me.

Being in the red.

Okay.

Spending more than we make.

And. Quantitatively, you are spending more than you make. I agree. You're spending more than you make. Tell me about qualitatively. How are you spending that money? Where's it going?

Debt, mostly.

And what is the debt for credit cards?

Other stuff that we purchased. Cars, the house, security system.

What else? What's that kitchen thing? All the renovations. You can't even remember all this stuff. Then where's the Hilton expenses on here. Where's that?

On the MX.

10,000 bucks this month. So it's hidden. You've created your own nightmare. What's shocking to me is that when we started this call, you said, I feel rich. You said, looking at the numbers, I feel rich. We have $70,000 in credit card debt and car loans, not to mention the mortgage. How do you reconcile that?

I don't know.

I need you to dig deep because you've been making decisions. Renovations, timeshare, putting things on certain credit cards. There's nobody else here who has the answer except you. So tell me your thought process. How did you end up here?

Wanted to create a life where I can provide for my wife and kids, you know, not be able to say no. You know I want to give them a better life than what I've had.

How do you do that?

Improving our finances.

How are you currently doing that?

Not saying no, just giving and giving and giving what I don't have.

What else? What about your partner here Alima?

Both of us went through a lot and I understand she went through a lot and I want to show her that life is better now because we have each other but financially we're.

Pretty.

Much back in the hole.

David and halima are in $500,000 of debt. They're currently renovating their house with no end in sight. They're talking about buying a $10,000 couch and traveling three times a year using their timeshare until this very moment I'm not sure David realized the severity of their situation. Unfortunately they need a true wake up call to see what their future really looks like and in part two of this conversation next week I will tackle it with them.

It.