“Why did we spend $40K on trips we can't afford?”

One of the biggest myths about money is that the wealthy have access to some secret investments that everyday people do not have and that's why they make so much more money. This is not true. Tom Brady, for example, had access to a private crypto investment. He recently lost tens of millions of dollars. But let me give you a better example. Me, I'm rich. I have access to vc, pe, pre ipo, angel investments. And with small exceptions, most of them fail to even beat what you and I can get in a Vanguard index fund. Now, people find this impossible to believe. They get really angry. Which is exactly why I'm writing about this in detail this Saturday on my newsletter. You will not be able to get this newsletter after it goes out Saturday, July 29th. So here is how you sign up right now. Go to iwt.com podcastnewsletter I'm going to break down why wealthy people do not have access to better investments. And in fact they often get worse investments. Only this Saturday@iwt.com podcastnewsletter where we're from.

It was a sailing. Almost was. You got a house, you got a good job and a car and maybe you take your kid to Disney, go to Cape Cod. There wasn't too much more than that. I never really thought bigger than that. Our parents are going to work until their death. Her mom's retired, but she doesn't have any money. Getting older faster than I expected. Yeah, it's definitely going quick. I just put it off for so long and now it's like I got to do it now or I'll never do it.

We are one life altering financial event from happening, from being ruined and like that, like again. I think my motivation is like this.

Page and you have a two year old son.

That's why it's more real.

I'm scared I'm not going to understand it well enough in time to get my act together and be there for our son. I don't want him to grow up being so naive and unaware of all of this. Will I be able to get there and you know well enough. We've put ourselves in a position where we now just got to focus on ourselves and we won't be able to help him. And that's very, very real possibility and that's really devastating to me.

Do you think you're spending more every month than you actually make?

The answer is yeah.

That scare you? Yeah, now it does.

Is it too late for me when it comes to money? This is a question I get a lot and that's what we're gonna talk about on today's episode. I'd like to introduce you to Emily and John. Emily's 35. She works as a nurse practitioner. John is 36. He works in the entertainment industry. And one of the reasons that Emily and John have started to wonder if maybe it's too late is that they've been together for a long time and they've been spending a lot of money, but they have a two year old son. And usually when couples have kids, they start to think about money in a totally different way. You know, I also want to point out that this is the only podcast where people come on, they share every number of their financials, they talk openly about their childhood, and they let all of us listen in on the most intimate conversations that we've ever heard. I just want to give a huge thank you to every single guest who's ever appeared on this podcast, including today's couple, Emily and John. Let's get into it.

We have both come from a place of not knowing how to manage our money. We don't know what we don't know. And I don't think that that was realized honestly, and admit embarrassingly, admittedly was until recently, until I kind of found you. It's terribly embarrassing to admit that.

Why is that embarrassing?

I don't know. I feel like, like, seriously, I was like on Apple podcasts. You were. Podcast popped up. I usually don't even listen to anything like this. I'm like a true crime podcast person. I just. But it, I know. And I was like, what is this? Like, I will teach you. I don't know. And so I clicked on it and it like, it blew me away. You realize you kind of acknowledging that, you know, listening to the couple and I don't remember which one at the time, but looking at their finances and then being like, well, the reason you don't have anything in your account is basically because your psychology and what you grew up with. And I, all of a sudden it was like, boom. I was like, oh my God. Yeah. Like, and I try, I started to like thinking in be trying to be like insightful and like being like self aware of, like, well, yeah, that makes sense. Like, maybe that's why. And like really thinking about it and then honestly really taking a hard look at our finances and realizing, wow, yeah, like we have, we are not on path to retire at any rate ever if we continue the way that we are. Like, we are one life altering financial event from happening, from being ruined. And now saying it out loud is like, you're an idiot. What are you talking about? You have to have a plan that makes so much sense. I relate to so many of your couples, and it's almost like, gosh, why don't I know this by now? I'm 35. I'm going to be 36. I feel silly because I. I feel like I pride myself on a lot of other accomplishments that I've had in my life. And then all of a sudden, I. I listen to all this, and it's like, eye opening, really. I was like, wait, what? Like, what? I didn't know that. I didn't even ever think to think about. And so we both have really lots to learn.

When she started bringing this podcast up, I won't lie, I was kind of aggravated. I was like, oh, this is the last thing I want to deal with. I don't know. I feel like I'm going to the principal's office or something. Like, I didn't even know about. I've had a pension. I didn't even know a thing about it, even up to today. We're, like, trying to find out my username and password on there. Okay. And it's like, it is embarrassing. I should know more than that.

Who is it embarrassing to?

I'm embarrassed.

Ourselves.

Yeah, well, both of. We're both. Just because they're so naive to it. It's a. It just seems like a lot. But now looking into it, like, I. It's something I. I do want to know, and I do. I would like to. We have a young son now, and it's like, it's more important than ever, just being a father and I guess getting older and wanting to grow our family. Maybe someday. When I was. When I was younger, I didn't really see the importance to it, I guess.

I'm so glad that I get the chance to talk to both of you, because what you just said is so advanced. Do you know how many people I talk to that make hundreds of thousands of dollars or even more on this podcast? Many of them agonizing over the price of a pack of gum or blueberries and never realizing, like, there's actually ways to make a plan and to stop worrying about little things and to elevate. Right. I'm with you 95% of what you just said, Emily, except for the last part where you called yourself an idiot.

I didn't mean to ignore it. It was that I truly wasn't even aware of it. And I feel so silly. I feel so. I feel so stupid. I. I'm Truly embarrassed.

All right.

How old is your son?

He's two.

Ah, cool. Congratulations.

Thank you.

All right. So do you think that your perspective on money is different?

I would say it is. I'm. I don't work. Like, she definitely worries more.

Oh, yeah?

And what about you?

I'm all laid back, and I definitely procrastinate. That does not help with finances. I'm learning.

So, yes, I. In general, I'm the more worrier type a person from all aspects, I admit. Like a control freak. I like things done the way that I like or whatever. Which is, again, laughable to say, because if you look at our financial situation, it's like, well, really, that's not reflective of that personality. So, yes, I worry more, and I'm more like, okay, this needs to get done on top of it. And. And I'm the one kind of being on top of it all. I'm a control freak. I, like, strive for perfection, I guess.

So what you're telling me is that your concept of your identity of being perfect might not actually be true?

Yeah, I mean, I know I'm not perfect. Of course not.

Would you two ever call each other an idiot?

No.

So let's just not do it to ourselves. How about that?

I like it.

All right, new rule. We're going to say nice things, and sometimes, hey, we go, wow, I wish I had learned that starting at age 18, but I didn't. And so the next best thing I can do is to get really good at money now. Same thing, just a different frame. Much more empowering.

Yeah.

How's that feel, Emily?

Feels good. Yeah.

All right, so let's. Let's agree on that. That's one of the rules we've come up with today. Love it. So you heard the podcast, Emily, and you were like, oh, my God, I don't know any of this stuff. And what'd you do after that?

I listened to a ton more. I bought your book. I told John all about you. I was like, listen to these things. Like, listen, like, we could have this, or, like, what were we doing? Like, we. We're in no plan path. I kind of, like, divulged all my anxiety on him. Convince him that we need to, like, change, try to have him see my perspective, and then tried to start setting things in motion, I guess.

John, how did you receive that when she started telling you about this stuff?

So, honestly, I. I thought it was a scam.

You thought a site called I will teach you to be rich was a scam?

And then once I started Looking into the book, and then I was listening to some of the podcasts. I like the way you just spoke about it very bluntly. And it didn't seem like you were selling anything. You were just trying to educate, which I. I like that.

Wait. The hilarious part is that I actually am selling things. Like, I have many products. Did you guys know that?

Yeah.

That's actually really funny.

So I don't even know if he knows that you have, like, you know, the money coaching program, like, all of those things. I know them because I listen.

You didn't tell him that because you're like, he'd really think it's a scam. And now he's learning it right now.

Yeah.

Am I being scared? Yeah.

No, No.

I love hearing this stuff. I know this site sounds like a scam. I will teach you to be rich. Like, come on. I kind of love hearing these dynamics. Emily stumbles across it because it's on Apple podcasts. She's like. And then she comes home, she tells John, oh, my God, we got to do all this. He's like, what kind of is this?

Yes.

But, John, to your credit, you were like, okay, I'll listen. I'll watch a little bit. And then you were like, wow, there's something here. And here you both are. That's a pretty interesting path that brought them here. It's kind of humbling to think that more people may have heard about me in the last two months than maybe the last 20 years combined of my career. There are also so many things to note about the way that they make snap judgments. Emily says that she's a control freak in her own words, but her finances don't really reflect that. It's like, if you're going to be a control freak and your finances aren't even dialed in, what's the point? Then John is like, that sounds like a scam. But he also ignores his money. Now, I'm not blaming them. All of us have these funny quirks of identity or even gaping blind spots. The important part is that Emily and John realize they need help, and they are here now. How'd you grow up with money? I'm guessing nobody was sitting there doing compound interest charts for you as kids.

No.

Seeing a lot of shaking heads right now. All right, tell me, John, how'd you grow up with money?

I was raised by my grandparents. My mother had me when she was 18 years old. Was not planned, so she didn't know anything about money. She was a kid, and my grandparents pretty much, I think, just spoiled Me, because they felt bad. Even if I wasn't doing right, I would get not anything I wanted. We were pretty blue collar family, but I didn't want for anything. And it didn't matter, like, if I was getting bad grades, I still probably got what I wanted anyways.

Got it. Okay.

So it kind of just felt like, I don't know. I never took money serious, I would say, because no one around me took it serious.

You grew up with your grandparents both?

Yes. Yes.

All right.

He was a mechanic.

Okay, Emily, tell me about money growing up for you.

My mother and father divorced when I was really young. When I was like four. It left my mother to care for me and my two older brothers alone. That included financially as well. That. Yeah, there was no financial support from my father's end. And you know what? I. I remember feeling like we didn't have money. She had to work, you know, incredibly hard to support just the three of us. Right. But it's. It's really conflicting because she had to like. I remember her working like three jobs. I actually was just sharing this with John the other night is that I have like this memory of being little and her coming home from like her 9 to 5. And I would want to play with her when she got home, but she would just be like, can I just need to like, rest my eyes for like five minutes on the couch so she could get ready to go to her other job to work till one in the morning. And I would be sad because I would want to like, play with my mom. And thinking about it now, it makes me really sad that she even had to kind of do those things, like to work so incredibly hard. But I also realize now that she didn't. Also didn't know even though she was working so hard, she didn't manage her money well either. I don't think she ever knew how to manage her money because this is a perfect example. Every Christmas, she. And actually, it's funny, John had this similar thing, so it's really weird, but I would get like that department bookstore, like that JCPenney bookstore. I don't know if that rings bell, right? And it'd be like, the catalog.

Yeah, the catalog.

Thank you. Circle the toys you want. And she would give that to me and my two brothers. And like, Christmas morning would come and our living room would be to the filled to the brim with every toy we wanted, every toy we asked for. She would work so hard, and it made her so happy to give us that. But, you know, at the same time, I Have very vivid memories of being, like, called into the principal's office, being pulled out of class to be told that, hey, we've been trying to get a hold of your mother. Your tuition's not paid, so you, you know, you can't go back to class.

Wow.

She knew how to work hard for her money. She was generous with her money. Right. Because she really wanted to make us happy. And I think in her eyes it was, you know, giving us all that. And that's how she tried to portray that by, you know. Yeah. Like, she would take me to the mall like once a week and we'd go on a shopping spree. But like once a week, like, sometimes we would.

Like, that's a lot.

No. Yes. She's in a situation where she's retired, but her retirement is purely. She's living off of Social Security and a disability check. And it makes me feel sad to think, well, she's already a lost cause. Now I'm going to get upset. Yeah. So, like, for example, like we've been saying, oh, we're gonna meet with this financial advisor. Like, I'm referring to you, but not gonna tell her I'm gonna be on a podcast.

Tell her I'm not a financial advisor.

Yeah, I know, I know. I just don't know how to explain you.

That's okay. I get it.

But I can already, I can tell that she's like. Like, that's weird because that's something that's before into her.

Right. It's out of her day to day, even year to year. I get it. Look, our parents grew up with different situations, different tools, certainly a different income than the two of you have. It's not necessarily fair for us to expect for them to have the same advantages that they gave us. I get that.

Both of our families and all of the relationships in our families and clearly the finances too, but the relationships and things that in mental health problems and, you know, things like that are generational. Yeah.

Like, I don't know, issues and yes.

You know, not treated. And we, we pride ourselves that, like, we're breaking the cycle together. And we laugh and say all the time, like, who did we think we are? Like, us two getting together? Because now we're just like meshing too bad gene pools that, like, when we were going to have a kid, we're like, is this the right decision? Like, should we do that to a kid? Like, a therapist said that to me. All it takes is one to break the cycle and you're already doing it and it. And it Was really amazing and really nice to hear.

I noticed that Emily's mom works really hard. Probably feeling guilty about not being able to buy her kids lots of things. And then when the holidays came around, she gave him a JCPenney catalog and said, get whatever you want. I noticed that her mom had a lot of anxiety around money and not necessarily the best financial skills. Now, when it comes to money behavior, do you see any similarities between Emily and her mom?

I never flew anywhere until we were to. Until we started dating.

When was that? What age?

Oh, geez. 18 years old.

Okay, you guys have been dating since you were 18 years old?

I was 17, yes.

Wow. And is this like, you're from the same town or something?

Yes.

Wow. This is a real small town love story here. I love it. Okay, where'd you meet? The. Where? The ymca. Where was it?

Like, in, like, a field?

No, like, we met in a field. No. Like, kids would hang around at, like, parks and stuff like that.

Yeah.

So, like, wait, that's a field? No, I guess that sounds more terrible.

Well, that's true.

We met in a field and it was love at first sight. Oh, it was a beautiful day. Hey, look. That's like, neighborhood love. I kind of love it. That's beautiful. Have you two been together since then?

Yeah.

Yes.

Wow. So you've been together 17, 18 years.

Yeah. Go 19 this year. Yeah.

Wow. Congratulations. That's amazing.

Thank you.

That's amazing. I don't hear that story too much these days, so it's. It's kind of cool.

And also, sorry to interrupt. Like, we didn't have a money conversation before we got together. We were little.

Yeah, right.

Like, we didn't surprise me. Yeah, yeah.

We were kids. We both got our careers, I guess, pretty young. I remember we were going to, like, trips to islands when we were probably 19 years old.

What islands?

I think we went to Jamaica. We went to Jamaica, I think.

Oh, yeah. Hold on. I have to ask you guys this. So in the pre screen, my colleague made a comment. She goes, you guys love Aruba, don't you? And you were like, yes, we do. And I was like, what is this? How does it. She goes, everybody from Boston goes to Aruba. And I'm like, what the hell is this? That I had no idea about. Can you please explain it for all of us?

I can.

I know we can. Actually. I.

For some reason, everyone goes.

For some reason, everyone from Boston goes to Aruba.

Yeah.

Yeah.

A lot. They go there a lot. I. Because it's a quick flight and it's Great there. The weather's always great. So it's just like the go to. I think so. It's just easy.

I love it. I did not know this little micro trend of people from Boston always going to Aruba. That is amazing. Thank you for opening my eyes to that. Let me tell you why I love this so much. There are micro trends in cultures that will never, ever show up in a written book, but they are nonetheless real. Like, if you go to any Indian person's house, like my mom's house, every single one of them has this Le Persil serving pot with orange flowers on the side. I don't know how every Indian mom has the same pot, but they do. It will never show up in a book, but it's real. I don't know why I love collecting these tiny, specific cultural examples, but now that I've got this podcast mic, I want to ask you if you have one. Send me a DM on Instagram and tell me what it is. It can be a little quirk of culture or religion or gender, geography, whatever, but I just love collecting these, and I want to hear from you. And you were taking trips.

We would just take trips, and we never thought of it. We just would get paid, and we thought we were getting paid well, and we'd just go on vacations or out to restaurants, and it's like, oh, we can afford it.

Surely you grew up hearing people around you say, like, save, save, save. Everybody in America hears, save, save, save. Doesn't mean you do it. But surely you heard that. Is that fair to say? Yeah. Okay. Did you save?

No. Well, no.

I mean, we. We saved to buy a house.

Yes.

Okay. Did you buy it?

Yes.

Yeah. Not the right way.

No. What does that mean?

We didn't run the numbers.

What's your mortgage?

So our mortgage is 3,300.

Okay.

But we own a multi family.

Okay. You rent it out. All right, fine.

We're renting one of the units, so we're getting, you know, I. That's what's included in there. And then what I did. Because you're gonna be really excited. What we did is we got a heloc.

Why'd you do that? Everyone told you to. It's free money.

Yeah, yeah. 100amonth.

Hold on. Don't even tell me. Let me guess. Let's take out the home equity line of credit and let's renovate it, because renovation is free money. It will add to the price of the property, and we'll get the money back. Did I get that?

Yeah. We did a little rent. Yep. We did. Did spend some of it on renovations. Yep.

Shocking. Okay. Wow. And what else did you do with the money? If you say Aruba, we're in real trouble here.

No, actually, it was. It was a much better trip. It was a much better trip. We spent three weeks in Italy and Croatia.

You took a vacation?

No, that's the thing. We didn't take it out for that. But then once it was there, we.

Were like, I mean, listen, I'm all with you. Like, you got the childhood, you got the blue collar family. I'm like, okay, I can roll with that. But this is crazy.

I know. Yeah, I know.

Do you know why is it crazy?

Well, now I.

No, it's going to cost us like 10 times what we paid for.

Exactly.

In the long run.

You're telling me that your loan officer didn't clarify all of these details? You're telling me your loan officer didn't have your best financial interests at heart?

He did not. No.

I'm shocked that anyone in the mortgage industry would possibly not put you and your interest first. That they would only be trying to make a commission.

And that's. Right.

That's so shocking. Anyone in the mortgage industry. I'll see you in hell. All right, so I just want to point out that you're spending like 17%, 17.5% of your gross income on your housing. Is that good or bad?

I don't know.

Okay, that's a fair answer, Emily.

I think it's good because you said it should be about 20.

Less than 28%.

Am I wrong? Less than 28.

How much did you take on the home equity line of credit?

The we. I think it's Approved up to 130,000. It's at 94.

You have $94,000 taken out. Okay, that's a lot.

Oh, we also had this plan that. Oh, if it's opened, that could be. We could dip into that for a down payment on another house and then don't.

Don't do all that.

Yeah, please stop. I know.

I'm not even going to get into how some of you actually trust your loan officer to look out for you. I want you to think of anyone in the mortgage industry as one of those little merry go rounds you used to see outside of Kmart and Target. You know, you put the little two year old, they ride on the horse, it costs a quarter. The mortgage industry is like that. They're coin operated. That's what they do. They get you financing so you can buy a house. That is it. You wouldn't expect your merry go round to do your taxes, would you? That merry go round is not going to kiss your boo boo.

Ooh.

It's not going to rotate your tires. So why the hell would you expect your loan officer or your realtor to look out for your financial interests? They are not there for that. They are there to make a commission. Okay, let's look at their numbers. Their assets are $900,000. Their investments are $57,000, and they're currently investing 9% of gross. Their savings are $2,000. And. And their debt, $557,000. Okay. Total net worth.

400. 401,000 is.

Okay. What do you think about that?

I hate it.

Okay.

John, what do you think about it?

I hate it.

How come both of you hate that number?

It should be more for what we've made. Okay. We blew a lot of it frivolously.

Okay.

I thought I was just having fun, but now I'm looking back and, I.

Mean, we did have fun, but it was.

We did.

It was at the expense of.

Yeah. Our future, it seems.

Okay. What scares you about money the most? Emily, I know you're scared of it.

Right now. I feel like we've gotten ourselves in a position financially that it's just going to take so long to recover from that it's going to now, like, again, another drain of time before we're getting back on the right path.

Okay. John, how do you. What scares you about money.

Before this? Not too much, to be honest. We always. Where we're from, it was the sailing, almost was. You got a house, you got a good job and a car, and maybe you take your kid to Disney or go to Cape Cod. There wasn't too much more than that. So I never really thought bigger than that, honestly. But then I started listening to the podcast, and we're talking, and it's like, our parents are going to work until their debt or her mom's retired, but she doesn't have any money, so it's. They didn't. They're not going to retire with a pension. I don't even know when I know in my family had a pension other than my grandparents getting older faster than I expected. Yeah, it's definitely going quick. And I'm like, I just put it off for so long, and now it's like, if I gotta do it now or I'll never do it.

Okay.

I'm scared I'm not gonna understand it well enough in time to get my act together and be there for our son or in future, children, too. Now, hearing this, I don't want him to grow up being so naive and unaware of all of this. I want to start talking to him about money when it's age appropriate and doing all the things that, you know, everyone clearly know or not everyone, but people do and recommend. This whole life that I never even knew existed, these dynamics in someone's family I never even knew about, I. I want to be those parents and, like, will I get there? Like, will I be able to get there and, you know, well enough and. And then also I want to be able to financially, you know, get him on a right path, too, like, also provide for him. And now I'm afraid that I've put myself in it. We've put ourselves in a position where we now just got to focus on ourselves. We won't be able to help him. And that's very, very real possibility, and that's really devastating to me.

So it sounds like this is, Emily, you coming to terms with this idea of breaking the cycle that you talked about, specifically relating to money. Is that right?

Yeah. I think you just said something that just made me sorry. Yeah, like, I just said, like, we're really proud that we've, like, broken the cycle in other areas. And now I'm realizing that because we didn't break this one, I won't. My son won't benefit from it. Like, I didn't break it for him.

Can we reframe that slightly using that rule that we all agreed on? What was the rule?

I'm not an idiot.

Yeah, basically, we're not going to beat ourselves up. What are we going to do instead?

Get better.

Yeah, get better. Exactly. So try that same thing, because you're giving me the honest truth, Emily, and I could hear that. I'm going to cue you up with the first part of the sentence you said. You said, we're so proud of how we broke the cycle in so many other ways, but now with money, we're.

Going to break it. We're going to be the ones to break it. I. I know that I guess, will it be all that I thought I could be. I could provide or could give him feel like, all right, I'm gonna stop being so negative on myself. Yeah, we're gonna break the cycle. We're gonna be better. We're gonna be. We're already amazing parents. And, you know, I know that I.

I would like to chime in a little. Our parents were very worried about, like, where do they go when they get older? They don't really have anything set up. So that's a very real fear of hers that, like, she doesn't want our son to feel that way the way she feels.

Yes. Yes.

Which is like, is that burden gonna be put on her or.

Or us right now? The way that my parents and even my sibling have been, you know, their financial situation is set up is that I'm, like, the stable one of the family. Right. And so I'll be the one that will have to step forward. I do not want that for my son. I refuse to put that. To have him feel the way that I'm feeling right now and to feel that burden. And I'm feeling like there. That situation with them. If it does burden me, it will just trickle down and burden him. Yeah.

Would you like to change it?

Yes, desperately.

Just want to reflect for a second on how many couples come on this show and acknowledge that they want to break the cycle of how they grew up with money. And I find that to be very, very powerful. Especially when a couple decides they want to do it together, they have a very good chance of being able to do it. Now, they may not necessarily have the role models. They may not even have the skills, but the desire alone is a very, very promising ingredient in wanting to change the way that you treat money. By the way, if you want to do this, you can download your own conscious spending plan@iwt.com CSP Talk to me about your combined gross monthly income per month.

16,200.

Do you guys know what your income is combined per year? You do? What is it?

$200,000.

John, what do you think?

We live in an expensive city.

Weird. I didn't ask where you live. I just asked what your income is.

I mean, I think it sounds a lot better than we're making out to be, I guess.

What's the number?

200,000.

Yeah. Correct. About 200,000. I mean, that's a lot of money. I know you all live in an expensive area. That's fine. But I just want to point out, like, you two grew up blue collar. You grew up with nobody teaching you about money, and you're making $200,000 a year in your 30s. What do you think?

You say it like that. It sounds good, but I don't feel good about it.

Of course you don't feel good about it. Let me ask you this, John. If you had to break down the percentage, how often did you feel bad about money, and how often did you feel good about money.

Growing up? Mostly bad. Yeah.

Like what percent 80.

20?

Yeah. 80% bad, 20% good. And the 20% you felt good. What was happening when you felt good about money?

Someone was buying something for me or spending it.

Wow, that's so shocking. Do you see any connection to your adult self right now?

No. Definitely.

When do you feel good as an adult with money?

Spending it.

Yeah. Specifically where?

Vacation.

Bingo. Do you ever make that connection before.

Recently, but not before that? No.

Yeah. So it's no surprise to me that you don't feel good about money. It's no surprise to me that the two of you are sitting here all depressed, sounding about, oh, boohoo, we only have $400,000 in net worth. I'm looking at something complete. I'm looking at the same exact spreadsheet. You're looking at the conscious spending plan. And I'm seeing something totally different. I'm seeing a young couple in their mid-30s with a young son who grew up. Nobody teaching you about money. You met 18 years ago and you said, we're going to break the cycle, and you now make $200,000 a year. That, to me, is incredibly impressive. What do you all think?

I just think the same. I said earlier, it does sound good. It just. We're not doing the right things with the money.

Yeah, it sounds great in theory. And I'm, like, proud of, like, what we made. I'm just not proud of the way we've managed it. And so it's hard for me to feel proud about it, I guess.

All right, let's make some changes. So you feel proud. How about that?

Yes.

All right, fine. Now, can you just. How much are you spending as a percentage? Emily, what's this number up here under fixed costs, 71. What's it supposed to be? Ideally, 50 to 60. Yeah. So what do you think about that?

That's too high.

It's a little high. What's interesting is your. Your rent and mortgage is actually quite good. Usually these numbers, especially in expensive cities, are like, 28, 30, 32, even 34. You've kept this number really low. So there's some other stuff that's really high. We can talk about that, you know, and we're gonna have to find a way, ideally, to bring this down.

We're gonna have to get rid of the parking.

We're gonna have to drastically change.

She pays for a private spot at work. There is, like, shuttles and.

Yeah.

Free shuttle.

Okay, done. How can you do that, Emily? Are you committing to that?

Yes.

All right, how much is that?

$400 a month.

Whoa. All Right.

If we put my Ubers and parking down as well.

Yeah, yeah.

How much?

I mean, probably like 200.

You want to take 200 off this number? Okay. John, are you okay with that?

Yeah, and I could. I'll just have to only take them if it's nighttime and the Uber's a. I mean, the trains are closed.

Okay, fine. We're at 65. We're getting closer.

It's like, we could definitely get rid of some of the subscriptions, but like you said, there's saving third.

Keep. Keep YouTube, because my show is on there. Get rid of YouTube TV. I don't know. Pick one. Let's. Let's just play with it. Let's at least get down to 60.

I know that this it. I feel so silly like this. I listen to your people do this and I'm always like, why can't they figure it out? And now here I am.

Well, 854. I'm taking YouTube away.

Okay, 64%. All right.

IPhones.

Yeah.

Anything on that? I don't know. I feel like we're scraping the bottom here. You two. Tell me, holy. What is all this stuff?

So I. Yeah.

Pretty litter, you guys.

Yes.

So, wait, you have a cat? Where's the cat food in here?

So, yeah, you're right, I didn't. Well, I include that in the groceries.

Oh, okay, fine. Peloton, 44 bucks.

Blah, blah, blah.

Well, look, you guys want to tell me how you want to get to 57%?

Yeah, isn't this crazy? Like, I. It seems silly that I don't.

I feel like it's impossible.

Before we go on, listen very carefully to this life lesson, okay? It's really important. Be very cautious about what you add to your fixed expenses because once it's there, it is extremely difficult to get rid of. Once you get used to two car payments, it's almost impossible to think of only having one car. Once you get used to feeding your dog some organic stuff from Switzerland, it's almost impossible to imagine getting your dog food from the grocery store. And when it comes to housing, forget about it. Once you get used to a certain lifestyle with housing, whether it's a four bedroom house or a certain neighborhood, it is almost impossible for people to contemplate downsizing. The lesson here is to be extremely cautious about what you allow into your fixed costs. You want to rent a beach house for a week, be my guest. But if you want to buy a beach house, keep in mind that it is going to be extremely difficult for you to ever downsize because of financial reasons in my own situation. I know that one day when I buy a new car, it's going to be a nice car. And I'm never going to want to downgrade. Same thing with a house. I'm going to buy one one day. And I know once I buy it, I'm never going to want to go down. I'm only going to want to stay or go up. So my philosophy is that I'm going to set myself up so I never, ever have to put myself at risk for what earns its way onto fixed costs. I recommend you do the same. All right. And then everything else, your guilt free spending is 1600 bucks a month. I don't really believe this number. I think the two of you spend a lot more than this. And this is including all your vacations spread out through the whole year. You didn't include that?

No.

What are we talking about?

Right, because we're. I'm not going to say the word.

Can we just do it? Let's. Let's just. Okay. Take your number. Put a pin in that. Your vacations last year, how much did you spend on all of.

I truly don't know.

Well, I can. I'll help you figure it out. Right now, Emily's like looking down, Emily, the ground is not going to open up and someone's not going to grab you and take you straight to hell. You got to stay here with me. This is your hell from now on. Okay, how much?

I mean, our trip last March was probably, I don't even know. This is what's so silly. It was probably like, I don't know, five, six thousand dollars.

Okay, Usually when someone says six thousand, it's like about ten thousand because they don't add in taxes, taxis to the airport, flights, tips, drinks, all that stuff.

Yeah, because definitely we don't, like, think about those things on vacations.

Spend the money. Definitely not.

All right, 10,000 for the big trips, that's two a year. 20,000. And then the small trips.

I mean, at least 500. If we even like one to two nights somewhere. Definitely more because, yeah, the room, just the hotel and.

Yeah, 2,000 more. 3,000.

No, one.

Maybe a thousand.

2,000 is the minimum. We don't say one to two. We say two. And how many did we say you do? Eight per year. 16,000 plus 20,000. That's $36,000 a year in travel. How weird. We don't see that represented on the conscious spending plan. Emily.

I know that we do. So I. There's no way we spend that much money, I believe. I mean, yeah, I guess so. See?

See, it's called. Everybody, listen closely and look in my eyes right now. That's phantom costs. That's how it works. They're called phantom for a reason. They're invisible. You forget about them. Your mind does not want to factor in 38% taxes at a hotel or the drink, much less the tip you left for the bartender. We don't want to think about that. We go, oh, the hotel cost 200 bucks, 250. It's like 2000. That's how it works. So again, I don't know if these numbers are right or wrong. They're actually. They're definitely wrong. We don't even know what direction they're wrong in, but we know that it's a lot of money. Would we agree.

Yes.

Yes.

If you actually knew that you were spending $40,000 a year on travel, would you be going to the same places you go to in the same style, in the same sense?

No. When you say it like that, Absolutely not.

That's the point of a rich life.

I know.

You got to get it on paper. You got to be honest. And then you have to design your rich life. And I guarantee if you're going, I'm dropping 40k a year on travel. You're not traveling like this.

Yeah, you're right.

If we correctly calculated this, and I just added like 3,000 bucks a month to this expense, your guilt free spending, your number jumps from 15 to 43%. You're going broke every month. That's exactly how people can make a lot of money and actually feel like we're doing okay. We could be doing better, but we're doing. And they're actually losing money every single month until they skate so close to the edge that one minor problem can totally destroy them financially. I don't want you to get there. I want to flip it around so you can keep traveling, so you can build some really good habits. You teach your son how this all works, all that. All right. How are you both feeling right now? Emily?

No, I feel it. I. I'm ready for your suggestions and your help. And I'm open.

Cool. John?

I'm feeling a little better than I was coming in. I was very nervous coming in and it doesn't look as bad. That does not look good as well. But I feel like that's something that could be corrected. That's like a self inflicted thing.

Yeah. Yeah, totally.

If we're not over our heads with that, we could stop it.

No, you could you could totally stop this. And just the fact that you even said that is amazing because you realize that's in your control.

I think it just all adds up.

Do you think you're spending more every month than you actually make?

I do. I think so.

Very close.

Oh no, we, the answer is yes.

I mean we only have 2,000 in our savings, so we must be. That scare you? Yeah, yeah, now it does.

It is so, so easy to spend more than you make. I think a lot of us have this belief that if you spend more than you make, suddenly your credit cards are going to stop working and a big loud alarm is going to start blaring somewhere. Nope, that's not how it works. In fact, so many people spend more than they make and don't even realize it. You can do it in a lot of ways. Most commonly you do it slowly with a little bit of debt, thinking it's not so bad. The debt starts to cost you more each month, especially if it's high interest credit card debt. And then suddenly you are trapped. Or you can draw down your savings. You used to have $5,000 in savings, now you only have $500. What's going on? You're spending more than you make. It can happen with one off expenses like medical expenses, which is actually extremely common later in life with things like vacations. You usually hear people saying it's not like I'm spending a ton, but oftentimes they're doing it eight times a year. The point is it's much easier than you think to spend more than you make. And you can actually go years doing this never even realizing it. How long can you go keeping on spending more than you make?

I mean we're one injury or knock on wood like, like an accident away from something bad happening.

And you have a two year old son.

I know, that's why it's more real. We just need to be honest with ourselves and realize like we just can't keep up the lifestyle that we got used to. Another thing we didn't factor in. What, like how much we spend, just like taking them out and things like that.

Where do you take your two year old?

Well, I feel like anytime it's raining or bad weather, we spend money. We take them to like an indoor house or take them to a museum or like we'll go to Target and just like buy him a toy because it's raining and not this again. Whenever we're bored we go and spend money. It'll just be like, oh, this is boring. Let's go to the bar or the restaurant around the corner.

Tell that to Emily. Have a discussion about this.

Oh, he. I know it.

We know it.

Oh, we know.

Well, it's good, you know. Did you do anything about it?

No, that's.

Well.

Well, now we're trying to.

Now we're trying.

I'm realizing that it really is just about getting out and being together. And it doesn't matter about what the things that we do and we just somehow always are lean toward end up spending money.