This is a transcript of a Ramit Sethi YouTube episode in which he interviews Christina and Ron about their finances. Key specifics revealed: the couple has a net worth of about negative $47,000; roughly $30,000 in credit card debt (currently balance-transferred to 0% promotion) with a $450 minimum payment; they bought a 15-year "vacation club"/timeshare negotiated from $36,000 down to $10,000 and put $5,000 down; they pay $430/month into whole life insurance (for both), roughly $1,000/month car payments, and about $500/month for pet care (plus an additional $175 listed); Christina expects ~ $250,000 in student loans from her PhD program (previous loans ~3.99% interest; graduate/PhD loans ~7–8%). Ramit criticizes whole-life insurance and the timeshare purchase, recommends automated aggressive payoff plans for credit card debt, and suggests reallocating cash flow (e.g., invest rather than buy whole life).
Questions this video answers
$30,000
$10,000 (from a $36,000 opening price)
$5,000
15 years
Negative $47,000
Chapters
When we were down in Jamaica, you.
Went to a timeshare presentation.
We did.
Is this a joke right now?
So it's a 15 year vacation club membership.
It's not a timeshare per se. It's a vacation club.
It's a timeshare.
They did start the package off at 36,000. And because I kept on saying, no, no, no, no, no, no, no, no, no. I got them down to 10,000 for it.
Wow.
Bravo.
You put down 5,000 while you had tens of thousands of dollars of credit card debt. Do you think that's a good decision now that I'm saying it out loud? Nope. Nope.
So we have this club for 15 years. Prime Deals on everything that the Hyatt owns, I think. And then we get a crazy amount off of them.
Oh, the stuff you already paid $10,000 for, you get a little discount on it?
Yep, pretty much. We said yes to going to a free breakfast. That's.
I wanted free breakfast. I didn't know that that was going to be a timeshare.
That free breakfast cost you $10,000.
I think I just didn't know how.
To get out of it.
I felt very uncomfortable in that situation.
Oh, my God, there are suckers. You two are the suckers. Welcome to part two of my conversation with Christina and Ron. You can check out last week's episode for a lot of important background information on these two.
But.
But let me give you a quick recap. She's 30, he's 45. And she's frustrated that she's the one who manages money in their relationship. I thought that was the major problem. But as I started looking at their numbers, including their net worth of negative $47,000, I discovered they have a ton of big red flags in how they spend their money, including a timeshare, which we are going to talk about today. Now, some of you love to talk about the things that you enjoy spending money on. You know, for me, I have an amex platinum card. I like it for the lounges. Doesn't make any financial sense, but I love it. This coming Saturday in my newsletter, I'm going to talk about different money lenses that we can look through. A lot of people use frugality or cost. That's the number one money lens they look through. But there are so many more. Just remember, a timeshare does not fit into any of these. Okay. Make sure you're on my list@iwt.com podcastnews newsletter. That's the only place you can get this material. Now let's get to the conversation.
All right. You have pet insurance? Is this for real?
We, we do. And it's. I don't.
I don't.
You know what?
I don't even know nor whatever. It's fine. All right. Your car payment is a thousand dollars a month. What car is this?
That's two cars and two motorcycles.
Okay. That's a lot of cars. Debt payments. What is 450. What is this debt payment?
That's the credit card.
Huh?
We. We have a credit card debt.
How much?
Right now we have about 30 of that is credit card.
$30,000 in credit card debt. How did this not come up before? Is this the minimum? $450 a month?
Yeah. There's no interest on them right now because I balance transferred them. But $30,000 is the whole lot of it.
Everybody sounds real calm about $30,000 of credit card debt. How come I'm the one freaking out about this?
I'm not scared of debt. $200,000 of a student loan. That's scary to me. More than the $30,000 credit card debt. And we've paid off a lot of from that.
Your pet care is 500 bucks. So I mean, really, Your pets are also. Plus the 175. That's 675amonth. Plus probably some extra stuff you didn't counter. That's 7, 800 bucks a month for pets.
Yeah.
Okay. Domestic help 380. Somebody to clean your place. Is that what we're talking about? Okay, fine. And you have a vacation. Oh my God. Do you have a timeshare? Is this a joke? What is this?
I'm going to let him take it.
I'm going.
What is this? So.
Yeah, it is.
What is this? Life insurance? Is this whole life insurance, Christina?
Whole and term.
Oh my God. What the.
I know.
How much are you. You're putting $430 a month into this whole life insurance policy.
Yeah, for both of us.
That's a lot of money.
I read it in your book.
I know, but that was the time that his dad passed away. And that like, that's like the first death that I've experienced and he's experienced that's close to us. And so we decided to get a life insurance because it scared us both. And it was a fight. And so I fought with him about it. We ended up getting it right. But there's still a part of me that's like, did we make a right decision financially to get this life insurance? Some people say it is. Some people say it's not. But I don't care what other people say. What I want is what he thinks and what would be best for us. And I just felt like he gave in because I convinced him.
Tell me about that time, Ron. And I'm sorry to bring up memories of your dad passing away.
At that point. Yeah, it was. It was a little hard just to have that conversation.
I know. You know, sometimes people overcorrect. You had a death in the family, you want to protect, all that stuff. I would look at what your options are in terms of getting out. You probably spent, you know, a certain amount of money on it, but I never am a fan of throwing good money after bad, especially for the next 20 years. Insurance is insurance. It's not an investment. It's different. Oftentimes it's better to take the same money you would have put in to a whole life insurance policy. Just invest it. Right. Invest it whether through a retirement account or even a taxable account, and you'll end up with way more money. Don't fall for the sales guys talking about cash value. Borrow against it. All this nonsense that right there is a lot of cash flow every month that you could get.
Yeah, yeah.
Listen up. Whole life insurance is not an investment. In fact, insurance is not an investment. Insurance is insurance. And whole life insurance is a scam to fill the grubby little pockets of these insurance salespeople. Almost everyone would be better off buying term life insurance and investing the difference in all the fat fees that you would be paying the salesperson. I say almost everyone because there's this myth that rich people can benefit from whole life insurance. But I'm rich and I know a lot of rich people, and we've never been able to make the numbers work on whole life insurance. I avoid it like the plague.
I'm going to go out on a limb here, Ron. Can I guess that you absolutely hate debt?
Absolutely.
Yeah. So how long is it going to take you to pay it off?
I mean, my plan is to pay off aggressively within a year or two if we find a way to make some money, some extra money that we get, since we both are, you know.
Yeah, I got a way. So commission sitting in your garage.
Is it smart to do, like, balance transfers, you know, from one credit card to another to get out of, like, the interest to a zero percent, you know, even though you have to pay a little bit to do it? Or is. Are we giving money away at that point still?
You know, it's a good question. Balance transfers can be okay. They can Save people a lot of money. But I will tell you that I often find people in credit card debt will do everything except making a plan to actually pay off their credit card debt. They use balance transfers as a gimmick. Basically, how do I buy myself another 12 months? But what they don't do, which is.
The most important thing, is they don't.
Look at their fixed costs and they go, okay, what are we eliminating? Okay, we're going to cut 500amonth off, and it could be by. We're going to eat out way less. We're not going on vacation, et cetera, et cetera. And I'm going to take all that money and I'm going to automatically set it up to be transferred to my credit card bill every single month. It's not a choice. It's not. It's not chance. It's math. It just happens automatically. So do the balance transfer, don't do the balance transfer. But what matters really is setting up an automated transfer every single month, aggressively paying off your credit card bill. Okay, all right.
I am still at school. I'm getting my PhD. That's why there's such a big student loan. So after calculating the cost of the program, after the. With all the PhD and everything, my student loan is going to be around 250,000. I have not paid because I've always been in school. And then when Covid happened, there was a postponement. There was no interest. So it's almost like I didn't worry about it, but I will be having to pay for it in 2025, 2026. So I don't know what to do either.
Do you know the interest rate?
The ones from the Bachelor's were about 3.99 or something around that. And then the ones for my graduate school and the PhD program is about seven or eight, I believe.
