176. “I’m 8 mos pregnant. He only wants to talk about how much the baby will cost”

Summary

Podcast Summary: Episode 176 - “I’m 8 Months Pregnant. He Only Wants to Talk About How Much the Baby Will Cost”

Money For Couples with Ramit Sethi dives deep into the financial dynamics of couples navigating significant life changes. In Episode 176, Ramit Sethi engages with Jason and Megan, a couple facing the financial and emotional challenges of expecting their first child. This episode unpacks how money psychology can strain relationships and offers actionable insights for couples aiming to create a harmonious financial future together.

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1. Introduction to Jason and Megan

Timestamp: 01:01 - 01:15

Jason, a 40-year-old COO, and Megan, a 34-year-old flight attendant, find themselves in a precarious financial situation as they prepare to welcome a new member to their family. Their finances have become disorganized, leading to stress and uncertainty about their future.

• Jason: “We should be able to have some agreements on how this works.” [01:15]

---

2. The Financial Strain of an Upcoming Baby

Timestamp: 01:33 - 07:41

As Megan approaches her eighth month of pregnancy, the couple faces the daunting task of budgeting for the baby's arrival. Megan expresses anxiety over upcoming expenses, such as hiring a doula, while Jason grapples with extended maternity leave and its financial implications.

• Megan: “I would like to have a doula at our birth. Where is that money coming from?” [02:41]

The financial expert analyzes their assets and debts, highlighting a significant imbalance:

• Assets: $3,073,000 (Partner One: $3,053,000; Partner Two: $20,000) [02:12]
• Savings: $27,000 [02:27]
• Debt: $778,000 [02:12]

---

3. Discrepancies in Financial Management

Timestamp: 02:10 - 03:24

The expert points out the oddity of having substantial assets but minimal savings and significant debt. This disparity raises concerns about their financial strategy and preparedness for unexpected expenses.

• Financial Expert: “Why do you have credit card debt when you have 3 million bucks? Makes no sense.” [03:18]

---

4. Impact of Income Reduction and Lifestyle Changes

Timestamp: 05:24 - 16:26

Jason and Megan discuss the drastic reduction in Jason's income due to a job change, dropping from $350,000-$450,000 annually to $185,000. Megan has also decreased her working hours, affecting their combined income and financial stability.

• Jason: “Looking at the CSP, I feel like our pre-tax, you know, our gross to net number looks quite good.” [53:10]

Despite cutting back on expenses like subscriptions and entertainment, their debt continues to mount, exacerbated by unexpected events such as property floods and vehicle accidents.

---

5. Communication Breakdown and Financial Avoidance

Timestamp: 16:26 - 29:19

A significant issue emerges in their communication styles. Jason seeks concrete numbers and structured plans, while Megan tends to avoid detailed financial discussions, opting instead for "band-aid fixes" like using credit cards to manage expenses without comprehensive planning.

• Financial Expert: “If one of you is not working at a hundred percent, then you can't spend the same as if that person was working at a hundred percent.” [10:31]

Megan's avoidance stems from traumatic childhood experiences with money, leading her to protect herself by keeping finances separate and avoiding in-depth financial conversations.

---

6. The Role of Personal History in Financial Behavior

Timestamp: 67:55 - 76:45

Megan reveals her challenging upbringing, marked by financial instability and her father's suicide related to financial stress. These experiences have ingrained a deep-seated fear and protective attitude towards money, making her hesitant to engage in open financial discussions with Jason.

• Megan: “I've been operating and like I have to protect myself.” [68:24]

Jason shares his own financial upbringing, emphasizing a strong focus on saving and financial independence, which contrasts with Megan's approach and contributes to their current struggles.

---

7. Expert Recommendations for Financial Harmony

Timestamp: 76:45 - 85:19

The financial expert offers several strategies to bridge the communication gap and create a unified financial plan:

• Combine Finances: Merging their incomes could simplify expense management and reduce the friction caused by separate accounts.

• Establish Clear Guidelines: Implementing a Standard Operating Procedure (SOP) for financial decisions can streamline budgeting and spending habits.

• Regular Money Meetings: Scheduling monthly discussions ensures both partners are aligned on financial goals and expenditures.

• Distribute Financial Responsibilities: Sharing financial duties equally can prevent debt from becoming one person's burden.

---

8. Overcoming Financial Shadows and Building Trust

Timestamp: 85:17 - 89:22

The episode concludes with reflections on rebuilding trust and understanding within the relationship. Megan acknowledges her patterns of overspending and the need to address them proactively, while Jason recognizes the importance of emotional connection in financial planning.

• Jason: “I think a good example there is we... bought under our means, and then we picked up all the picking out together.” [81:33]

• Megan: “I just hold on to it and keep paying off what I can.” [74:03]

The financial expert emphasizes the necessity of confronting these issues head-on to prevent further financial instability as they embark on parenthood.

---

Conclusion

This episode of Money For Couples with Ramit Sethi underscores the critical interplay between money management and relationship dynamics. Jason and Megan's journey highlights how personal histories and communication styles can impact financial decision-making. Ramit and the financial expert provide valuable insights into fostering transparency, cooperation, and shared financial responsibility, essential for building a resilient and harmonious financial future together.

---

Notable Quotes:

• Megan: “I don’t feel entitled to his money.” [26:40]

• Financial Expert: “If one of you is not working at a hundred percent, then you can’t spend the same as if that person was working at a hundred percent.” [10:31]

• Jason: “We have not done an excellent job of executing the post pay cut plan.” [01:25]

• Megan: “I've been operating and like I have to protect myself.” [68:24]

---

For more insights on managing finances as a couple and building a shared vision for your Rich Life, consider pre-ordering Ramit’s new book, Money for Couples, available at iwt.com/moneyforcouples.

Transcript

[Ramit Sethi]

Planet Money helps you understand the economy. We find the people at the center of the story.

[Jason]

Garbage in New York, that was like a controlled substance.

[Ramit Sethi]

We show you how money influences everything. Tell me what you like by telling me how you spend your money. And we dig until we get answers.

[Jason]

I had a bad feeling you're gonna bring that up.

[Ramit Sethi]

Planet Money finds out, all you have to do is listen. The Planet Money podcast from NPR this.

[Megan]

January, I'm coming to a city near you. Tickets are now available for my Money for Couples Live book tour. Now, if you love the podcast and you want to connect with hundreds of other people who are trying to improve their relationship with money, I would love to see you there. Go to iwt.com booktour and use the presale code richlife to get your tickets. Now, I can tell you nothing beats the energy of being in that room and seeing couples live on stage. I'm coming to New York, LA, Chicago, SF and more. So get your [e-mail] booktour and use the presale code richlife.

[Ramit Sethi]

Anytime I spend money, it's all guilt full. Like there's never a moment that I think I deserve this.

[Megan]

Today, meet Jason and Megan.

[Ramit Sethi]

I'm trying to keep up with him and with lifestyle, but I also like know that I can't actually afford that.

[Jason]

We should be able to have some agreements on how this works.

[Megan]

He's a 40 year old COO, she's a 34 year old flight attendant. And their finances have gotten very sloppy.

[Jason]

We have not done an excellent job of executing the post pay cut plan.

[Ramit Sethi]

Can I actually afford this? No. But am I still going to do it? Yes.

[Megan]

But what's really stressing them out. Megan is eight months pregnant.

[Jason]

The maternity rule for work, it was like, I'll take three months off and then it was like, I'm going to take six.

[Financial Expert]

Oh.

[Jason]

The company gives me 12. Oh, now it's 15.

[Ramit Sethi]

How much is the baby going to cost? I would like to have a doula at our birth. Where is that money coming from?

[Megan]

Can they make the check changes to their finances and their relationship to work.

[Jason]

Together with baby coming, how do we figure out how much work is needed from each of us to support the family?

[Financial Expert]

Do you have a plan?

[Ramit Sethi]

No, I just don't go to work. That's the plan.

[Megan]

All right, let's take a look at the CSP.

[Financial Expert]

Wow.

[Megan]

$3,000,000 in assets. But of that $3,073,000. $3,053,000 is from partner one. Partner two has $20,000 in assets. Hugely Unbalanced.

[Financial Expert]

Okay.

[Megan]

It can work. It's just something to Note. Savings at 27k, pretty low relative to the other numbers. And then debt at 778,000, which is fine with all the rest of the stuff. So total net worth of $3.1 million.

[Financial Expert]

Okay.

[Megan]

At age 34 and 40, extremely impressive, but kind of odd. Like why is there only 27k in savings when you have $3 million in assets?

[Financial Expert]

That's odd.

[Megan]

Just to clarify, when you have $3 million in assets, those assets cost money. So if this is real estate, which I assume it is, you know, you get one repair that's $20,000. So people who have a lot of assets should have a lot of liquid money to be able to maintain those assets. This is something that you have to remember as you start to get more money and you start to buy more things. I'm talking about assets. You have to remember those assets aren't free. They take maintenance, they take staff, they take all kinds of stuff.

[Financial Expert]

So it's a bit odd, but we'll figure that out. Wow.

[Megan]

Okay. Income is 21,000amonth gross. But of that, 17,000 comes from one partner who I assume is the person writing the application.

[Financial Expert]

Debt. What the hell?

[Megan]

Debt payments at 1,200 bucks.

[Financial Expert]

Why?

[Megan]

Why do you have debt? Why do you have credit card debt when you have 3 million bucks? Makes no sense.

[Financial Expert]

It makes zero sense.

[Megan]

Okay, I'm going to give a fresh perspective on the csp. First off is they're not really saving and investing very much at all. On the other hand, this couple may have very consciously decided, hey, we're going to be asset rich. We're going to invest or buy a lot of assets and we love our guilt free life. We love traveling or buying cool stuff, eating out five times a week, whatever.

[Financial Expert]

And maybe that's what they decided to do.

[Megan]

It's okay. If you have $3 million in assets, you can make certain decisions that you would not make if you're making $50,000 a year with basically no net worth. So I have a lot of questions to ask, primarily about, number one, what.

[Financial Expert]

Are all these assets?

[Megan]

Number two, why do you have such low savings relative to the other numbers? And three, where's all this guilt free spending going? I just want to know. Looking forward to speaking to them.

[Jason]

We were in the midst of discussions about what's going to happen when baby comes from a lifestyle change, income change and expense change. So we're actively talking about that together. I was asking Megan, what's your plan for when baby Comes. What does your employer offer? How is income going to change? Because I wanted to plan ahead and know what, if anything, I need to do about it. So we started there and had to ask that question lots and lots of times.

[Financial Expert]

Why?

[Jason]

Because I couldn't get a straight answer.

[Ramit Sethi]

He didn't like my answers.

[Financial Expert]

What were those answers, Megan?

[Ramit Sethi]

They were, well, I can take this much. And then I kept learning more of how much. So I didn't have a concise answer originally. And then I learned what the maximum benefit is and what the maximum amount of time I can take is. And that's where I emotionally landed.

[Jason]

Yeah. The way I would describe it is I learned about her plan through overhearing her explain her plan to her friends. So originally it was, I will take the first three months off, you know, basically through winter. And then the next friend, it was, yeah, probably about six months I'll take off and then I'll go back to work to some degree. And then the next one, it was a year, and then the last was 15 months.

[Financial Expert]

Wow.

[Jason]

And so my eyes just got bigger, bigger, bigger.

[Financial Expert]

And when you say they got bigger, why? What's the implication?

[Jason]

The longer there's a lack or low income, is the a larger problem that I'll need to solve or a bigger dollar amount I need to cover?

[Financial Expert]

Meaning her income will cease and you're going to have to be the sole income earner, and that becomes stressful.

[Jason]

If she just said, I want to have baby and I'll go back to work. Cool, let me work on that. And I'll see how possible that is. And I'll come back to her with the impacts. Right. Okay. Just so you understand, that means no more this. No more this. No more this. This changes, you know, I need a new job, whatever it is. Right. And let's go through the impacts. And then she'll come back and say, well, okay, maybe I could do this. Right. And then I'll have another scenario. But what's been difficult is without a plan and then time to plan, it becomes impossible to solve that, and then that makes it impossible to come up with changes or get ahead. Right. So here we are at what, so do like, seven weeks or something.

[Ramit Sethi]

Yeah. Baby's coming out in seven weeks.

[Financial Expert]

I want to hear from you, Megan. Tell me about your perspective on these discussions.

[Ramit Sethi]

Did tell Jason that I wanted to have a baby ages ago, and in the last five years, I've been financially preparing for that. And once I learned the finer rules and what I could actually do is when it became more of A conversation and more of like a. I don't actually think I need to. My income doesn't really impact our lives very much because we've focused on putting more money to my 401k and saving for my lonely future rather than our together future.

[Financial Expert]

So what if Jason asked you, like, how long do you want to be home? It seems like from his perspective, he's not getting a straight answer. Is that accurate or do you see it differently?

[Ramit Sethi]

I would say initially, yes, it's accurate. But my answer of I will go back by baby's first birthday has been very steady for the last six months.

[Financial Expert]

Oh, okay. So your answer is one year, I want to stay home.

[Ramit Sethi]

Yep.

[Financial Expert]

And then I'm back to work.

[Ramit Sethi]

Yep.

[Financial Expert]

If you had to do an educated guess right now, what capacity would you go back at after baby's first birthday?

[Ramit Sethi]

I would go back at 50 to 55 hours a month, whereas 1:20 is full time that we've calculated in the past.

[Financial Expert]

Okay. Does that work, Jason?

[Jason]

It's very doable. It's not going to, like, screw anything up, but it does have impact in stuff you plan for ahead of time. Right. So what you're going to do or what additional income do you need to come up with, or what do you need to turn off for a time?

[Financial Expert]

So you're saying, hey, if she goes back at 50%, probably we can't afford to do all the things if she was working 100%. Right.

[Jason]

Fact. Yes.

[Financial Expert]

Fine. Do we all agree on that?

[Ramit Sethi]

I don't agree with that because we're adding this new factor of a baby in. So can we go back to doing all the things we've already added, like a whole nother variable. So whether that's child care costs, like, if I'm working at 100% time, where is this baby going to be? Do I want to be away from this baby? I don't want to be away from this baby for 100% of what I have been doing in the past.

[Jason]

Yeah, but we also, we also have some. Some ideas. Like what, what amount can you work without introducing childcare cost? Right. And. And how can we work that out?

[Financial Expert]

Do you guys find that you talk about certain things and spin a lot but don't make decisions?

[Ramit Sethi]

Yes.

[Financial Expert]

Wow.

[Ramit Sethi]

That's shocking. Whoa.

[Financial Expert]

What I asked is, can we all agree that if one of you is not working at a hundred percent, then you can't spend the same as if that person was working at a hundred percent? Seems like pretty basic math to me. If one of you is not making as much money as you, you can't spend as much.

[Ramit Sethi]

I agree with that statement.

[Financial Expert]

So let's. Let's talk about how we got to this position. So I can already tell Jason, you're the optimizer. You love the numbers, right?

[Ramit Sethi]

And Megan traditionally been very good at it. I can, like, set a number for what full time is. Like, how can I swing this? And how can I flex in my savings?

[Jason]

I would rephrase that to be. Megan will run. Run the numbers to figure out how little she can work to get everything she wants.

[Financial Expert]

Okay. That's fair.

[Ramit Sethi]

True. Okay. I agree with that. Actually, you're right. You're right, Jason.

[Financial Expert]

Meaning you try to be as efficient as possible. You want to work as little as possible and get the maximum financial benefit.

[Ramit Sethi]

Correct.

[Financial Expert]

Fine. Nothing wrong with that. Okay, that's good to know.

[Jason]

With baby coming, lots of things are different. And some of these decisions. Well, some. Some are happening. Right. We don't have a choice. They're going to come. But what we really want to understand is how do we better plan and then execute what comes next? Primarily with income is a. Is a big one. Right. How much does Megan need to work and then, you know, do I need to change and when. And then what needs to change in lifestyle and expenses? In the past, we haven't had to be so diligent because had much higher income. With adjustment to lower income, we did have to make many, many adjustments and say, what do we cut out? How do we make this work? And I feel like this is the next step of that.

[Financial Expert]

What adjustments did you make when your income went down?

[Jason]

So Megan took a side job and we started renting rooms in our house to get additional income. And then we also cut back on a bunch of spending so, like, travel way fewer trips. We. We cut back on some subscriptions to. To the expensive subscriptions. We cut back on attending live sports and events and. Yeah. What else makes.

[Ramit Sethi]

I think we only really cut out two subscriptions.

[Financial Expert]

What subscriptions?

[Jason]

We.

[Ramit Sethi]

Well, we gave up one theater.

[Financial Expert]

Okay. Okay.

[Ramit Sethi]

And you gave up symphony.

[Financial Expert]

Oh, okay. How much are those? Out of curiosity?

[Jason]

Each of those is. Is in the. Probably a thousand to two thousand bucks a year. But we also. We also gave up. We had season hockey tickets.

[Ramit Sethi]

Oh, yeah, I didn't like that one.

[Jason]

Yeah, we gave up season talking. That's expensive. That was like 17,000 here.

[Ramit Sethi]

That was really expensive.

[Financial Expert]

17.

[Megan]

How much?

[Jason]

17,000.

[Financial Expert]

$17,000 for hockey tickets?

[Ramit Sethi]

Yeah. For me. I agree.

[Financial Expert]

Wait, wait, wait, wait, wait, wait. No, no, no, no, no. I'm not Judging. I just don't know anything about this. $17,000 for two seats? What are we talking about?

[Jason]

Yeah, two seats, 44 games. They're like 200 something bucks a piece per seat, per game.

[Financial Expert]

Is this like, in a box?

[Jason]

No.

[Financial Expert]

Holy.

[Jason]

Yeah, that's pretty standard here. Like the. Almost the entire arena goes for that much.

[Financial Expert]

Did you say $17,000 per season?

[Jason]

Yes.

[Financial Expert]

Man, I had no idea. I would have been wildly off every single person who's listening, including my friends who, like, I have friends who are agents for, like, baseball agents and stuff. They're like, this guy is so dumb. Wow. I appreciate it. I get to learn on this show. I get to learn things I would have had no idea about. That's amazing. All right, so you cut back on those things. That's cool. And was it difficult for you to have these discussions and to make the decision?

[Jason]

The stuff with the house is difficult because I want to get more income there. And Megan's like, get everybody out of here. This is my space.

[Financial Expert]

What about for you, Megan? Was it difficult to make those decisions?

[Ramit Sethi]

No, I didn't want hockey that badly. Hockey's lame.

[Financial Expert]

Okay, so you. You took a pay cut. What was the salary before and the current salary?

[Jason]

The. The before was depending on performance for the year was 350 to 450.

[Financial Expert]

Okay.

[Jason]

And after went down to 185.

[Financial Expert]

Wow. Wow. That's a significant drop. What happened there?

[Jason]

So left. Left a. A job where people turned evil and went to a place where people were good. But it was from a larger publicly traded company to a startup.

[Financial Expert]

Okay, so was the evil company a whole life insurance company? Out of curiosity.

[Jason]

Not that evil.

[Financial Expert]

Okay.

[Jason]

Not that evil.

[Financial Expert]

Okay, so got it. So that's a big drop. Makes sense. And then, you know, we heard that, Megan, you had been kind of cutting back on time. And just give me a sense of the scale. Well, if you're working 100% time, what are you making versus 50% time?

[Ramit Sethi]

4 or 5k down to like 2k a month. Okay, got it.

[Financial Expert]

The scale is like, you cut your pay by 30,000 or 40,000. Right. Meanwhile, we're over here talking about, you know, you cut your pay by 300,000 or 200,000, something like that. Okay. All right. So big changes. Got it.

[Megan]

Jason wants certainty. He's the planner. And as the person who's the money guy in the relationship, he wants to know concrete numbers. How much are you going to work? How much money you're going to make? Just give me the numbers and I'll plug it in the model, he chases.

[Financial Expert]

Megan for the answers.

[Megan]

Megan avoids the answers. As you can see, they've entered into the chaser avoider dynamic. What's interesting is how cagey Megan is. Most avoiders just openly avoid conversations about money. Or they use a variety of techniques. For example, getting mad and saying things like, can't we go a single day without talking about money? Megan does this trickle truth sort of thing by saying, I want to stay home for five months. No six months, no 15 months. Now, understandably, no first time parent knows exactly what having a baby is going to look like. But importantly, you have to be able to make at least some assumptions which you can always change later. Am I going to stay home for one month or two years? We need to be able to put something down on paper and then we can change it if needed. That is how you make a plan. So from my initial conversation, it looks like Jason just wants a number and Megan doesn't want to give it.

[Financial Expert]

But I suspect it's more complicated, especially.

[Megan]

When Megan reveals she's talking about a few thousand dollars difference. Does everybody remember during COVID people started baking their own sourdough bread? It looked amazing, but I'm gonna tell you right now, I'm never baking my own sourdough bread. I don't know what a starter is. I don't want to know. I just want someone to do it for me now. Wild Grain is the first ever bake from frozen subscription box for sourdough breads, fresh pastas and artisanal pastries. The team at Wild Grain just sent my coworker a new box. Here's what she told me. It had croissants, sourdough bread, ciabatta sandwich rolls, giant snickerdoodle cookies and pumpkin cinnamon biscuits. She popped the croissants in the oven for her and her daughter. She said it came out flaky buttery, just like she was getting it from a French bakery. It took 20 minutes to bake. Your Wild Grain box is fully customizable so you can choose any combination of breads, pastas and pastries that you want. Also, Wild Grain just launched a plant based box and a gluten free box featuring a wide selection of plant based and gluten free pastries, breads and hand cut pastas.

[Financial Expert]

Best of all, for a limited time.

[Megan]

You can get $30 off the first box plus free croissants in every box when you go to wildgrain.com ramit to start your subscription. Yes, free croissants in every box and $30 off your first box when you go to wildgrain.com ramit that's wildgrain.com ramit or you can use promo code ramitzekout. I have a friend of mine who was taking care of his granddaughter the other day and he was looking for a movie to watch with her. He found something on Amazon prime and then he refused to pay for it because it was $3.99 to rent the movie. Now keep in mind, this is the same person who pays a lot of money to a financial advisor paying a percentage of his considerable portfolio. Think about it. He's paying hundreds of thousands of dollars, probably more. But he won't pay $4 for his granddaughter to watch this movie. Anybody else find that crazy? Yet so many people are working with a financial advisor paying tens of thousands of dollars or more without even realizing it. That's because the industry set it up this way to be intentionally confusing. You never get a bill saying thank you for choosing us. Here's your invoice for this quarter. $5,000? Nope, they just take that fee right out of your account, listing it in your activity statement along with everything else. Oh, and since it's a percentage of your investments, as your investments grow, so does your fee every single year. So when I ask most people how much do you think you pay to your financial advisor? They just shrug. Most people have no idea. This episode's sponsor, Facet, is changing that. With Facet, you get flexible access to a team of financial planners who are CFP professionals and a team of others providing guidance across retirement planning, tax strategy, estate planning, and more. Instead of taking a percentage of your portfolio, there's an affordable flat membership fee. Look, not everybody needs financial planning. Many of you can manage your own investments, and that's totally fine. Use my book. Get it from the library. But if you have a complicated situation or you want someone to help make sense of all of your options, then I recommend a flat fee financial planner like Facet. Facet will waive the $250 enrollment fee for new annual members and they'll add $500 into your brokerage account when you invest and maintain $5,000 in the first 90 days of membership. Check out their new membership [e-mail] ramit Again, facet.com ramit sponsored by facet facet wealth, inc. Facet is an SEC registered investment advisor headquartered in Baltimore, Maryland. This is not an offer to sell securities or investment financial, legal or tax advice. Past performance is not a guarantee of future performance. Terms and conditions apply welcome back.

[Financial Expert]

Let's keep going.

[Jason]

The first time Megan and I had a really good, productive financial conversation was prepping to buy the house. Fantastic. Yeah. Because we wanted very different things in a house. I wanted it to have downside protection and cash flow and do all these different things. And she's like, I want a house for the family. And so we had a really good discussion of what we each wanted. And then we looked for what was out there that had everything we wanted. And then we ran all the numbers, made sure we had the down payment, made sure we could have a backup plan that hey, if something really did change, this mortgage is covered no matter what.

[Financial Expert]

Yes. Hey, for everybody listening, all you, all you real estate denialist who always argue with my basic premise to all I want you to do is run the numbers on the biggest purchase of your life. I hope you're listening to this couple. You don't need to earn $600,000 a year. Okay. All you gotta do is simply run the numbers. Okay. Good job. I'm very proud of you both. So here you are. It's kind of interesting to me. You already went through a $250,000 plus pay cut and aren't we only talking about like losing a few thousand bucks now?

[Jason]

Here's the thing. Tell me we have not done an excellent job of executing the post pay cut plan. Ah, there's been several. Something happens over the past few years that are. Yeah. That make things difficult. Like Megan got injured and was out of work for majority of a year. I was hit and run and somebody flipped my truck. So then I was injured and had no vehicle commute in and had to to do that. I don't know.

[Ramit Sethi]

Other little series of floods in our condo.

[Jason]

Yeah. Our place is flooded three times and for only insurance only covered one time. So the second two were self insured. Okay. So you know stuff like that.

[Financial Expert]

You're basically saying, look, when we made like over half a million dollars a year, if things came our way, we could deal with it. We had plenty of cash flow at this time. It's getting tighter and tighter. We still have cash flow, but getting a little stricter. We're not particularly great at following that plan, but we're concerned. We can't be thinking the same way as when we were making multiples of our income. We have to be tighter, right?

[Jason]

Yep. You have to be tighter. And when these things happen, we will need to do something. And sometimes those things go on credit cards and then we have to fight the credit card machines.

[Financial Expert]

Megan, what. What is Your central challenge. I mean, it sounds like you have a vision. You want to stay home for a year. You want to go back at 50% time.

[Ramit Sethi]

My challenge is not living in my realm. I've had enough windfalls where I can wipe out all my credit card debt, and it's fine, and then they just fill back up.

[Financial Expert]

Do you have credit card debt right now?

[Ramit Sethi]

Yes, I have $13,000. And I just looked at all of my other money sources. I'm like, can I just take all this and pay it off?

[Financial Expert]

Yes, why don't you?

[Ramit Sethi]

That's a great question. Because maybe. Maybe bitcoin is going to come up for me, and maybe I'm going to be a whale.

[Financial Expert]

Yeah, maybe.

[Jason]

I do think that's an interesting question to ask you in those situations where you can redirect. Would you redirect or would you only redirect if you have confidence that you're not going to get back in there?

[Financial Expert]

Wait a minute. I'm confused here. Do you two combine your incomes?

[Ramit Sethi]

No, we live separately. Why financially? This is the first time we. He ever let me know how much money he makes.

[Financial Expert]

What?

[Jason]

No, that's not true. We had that. We ran all the numbers together for the house. So way back in 20. 19. 2020.

[Ramit Sethi]

Okay, that's acceptable.

[Financial Expert]

You're all married and having a kid, right?

[Ramit Sethi]

We're not married. He's my. He's my lover.

[Financial Expert]

Okay.

[Ramit Sethi]

Of eight years together.

[Financial Expert]

Okay, that's good. Why are your finances separate? Out of curiosity. I guess because you're not married.

[Jason]

Yeah, no, I haven't had a need or reason to.

[Financial Expert]

Okay. And you own a house together, or is it separate?

[Ramit Sethi]

His name's on it.

[Jason]

Yeah, my name's on it. Yes.

[Financial Expert]

Okay. Do you make.

[Ramit Sethi]

I feel entitled to it sometimes.

[Financial Expert]

Okay. Do you pay for it?

[Ramit Sethi]

Megan, Emotionally.

[Megan]

Notice these peculiar responses that Megan keeps giving me. Now, we need to acknowledge that Megan probably grew up with some unusual messages about money. And she's about to have a baby. And they're talking to me for the first time about this intimate topic. So I don't mind people being nervous, but I think it goes much deeper than that. Megan is an avoider. And avoiders have a series of conscious and unconscious techniques they employ when conversations make them uncomfortable. And you're going to hear lots of them through today's discussion.

[Financial Expert]

Now, before we hear Megan's answer, I.

[Megan]

Need a quick favor from you. Hit that subscribe button because it really helps my team and me grow this podcast.

[Financial Expert]

How about financially?

[Ramit Sethi]

Financially? Yes. Traditionally, yes. I just direct deposit Money from my.

[Jason]

Paycheck, all the expenses come basically and I pay for it.

[Financial Expert]

Why is your financial situation more confusing than mine? That doesn't make any sense. I have, I have a very complex financial situation, but I have simplified it a lot. Okay, let me make sure I understand the relationship status. So unmarried, own a house that's in your name, Jason. And having a child. Any plans to get married or combine finances? It's fine either way. I'm just asking.

[Jason]

No.

[Financial Expert]

Okay.

[Jason]

What if, if any benefits there are to combining? Something like I, I guess I have a bit of a expectation that there's. There's probably going to be a need with baby to have some sort. To have Megan have access to funds. Typically though, she'll just take a card of mine. We don't actually go change accounts and stuff. It's just like, hey, take this charge.

[Financial Expert]

In general, you can definitely go through life without combining your finances or getting married. Of course, I would never sit here and tell you you have to get married or you have to combine. I do think that you will find that over time, especially with a little one, that your lives will structurally be set up to be individualistic and even diverge. And it really helps if you were to have your finances combined because it actually helps you make these joint decisions. Like right now there's a lot of like negotiating and going back and forth and part of the basis and the part of the reason for that is that you're not actually operating as a unit. You know, it's like, what can I get away with? And like, hey, I need clarity on your numbers so I can plug it into my calculator. Like it's not together. One of the easiest ways to change that is just to put your money together. Now it becomes very tricky because putting your money together without being married has all kinds of implications and co mingling. I get all that plus the property and you know, all. There's all kinds of stuff. The simplest thing, not saying you have to do it is simply get married, combine your finances. That is the simplest thing. But I'm all for people having alternative perspectives and alternative views. That doesn't bother me at all. We can make it work.

[Jason]

I think the simplest is here's a card to an account that has cash in it, spend what you need.

[Financial Expert]

It could be that basically the envelope system, which is like, we agree that every month there's X dollars in the account relating to these categories, yourself, your personal care, perhaps, Baby, perhaps, whatever responsibilities you focus on. I'm focusing on these things. Yeah, you could make that work, no problem. How do you deal with things like, say, like eating out or the hockey tickets, for that matter? Like, who decided on that one? Because clearly one person wants them and the other is not as into it. How do you decide on those kinds of things?

[Jason]

If it's something small, usually we'll either just do it or she'll ask. She'll ask her or whatever. Hey, what about this? And then it's usually like, yep, fine, whatever. Let's just do it.

[Financial Expert]

What about the big things like the hockey?

[Jason]

Then we talk about it and try to figure it out.

[Ramit Sethi]

I guess, like with my most. My most recent car, it was a discussion, where's the money coming from? How are we going to pay for it?

[Jason]

It usually goes, megan, what do you want? I want this. How much does that cost? I don't know. Great, let's figure it out. We figure that costs this much. That means this many dollars per month. Wow, that's way too much.

[Financial Expert]

Cool.

[Jason]

I think that this much would be doable, I think. And you can get something like this for that cost. Right.

[Financial Expert]

And Megan, what. What is with the I don't know response?

[Ramit Sethi]

In my mind, I just think it's always going to work out. I don't feel like I'm ever going to be homeless, carless, or any dire straits situation.

[Jason]

One thing that Megan has available to her is a fully scalable income mechanism. With this, you know, with these kind of multiple roles, it's like you can work more nearly infinitely. Right. And. And if you want to change your income and buy a car in the next three months, you can just out and get overtime.

[Financial Expert]

Okay.

[Ramit Sethi]

We've also, like planned this. I see enough people who I work with who are divorced, and by the time they raise their kids, they go their separate raise after 20 years. And they're the women who stayed home with the kids, flew minimally, and now they have no money for retirement. So I've always known that. I've expressed those concerns with Jason in the past, and him and I were always on the same page of protect my future self. So I've always been really grateful for that. But also like, it's been part of the plan to make sure that future self is taken care of.

[Jason]

That was probably the first financial discussion we had was very early on it was, what are your finances? And we kind of had that chat and do you have a match? Are you using it? We had that chat early on, and so I encouraged her to max everything. I was like, don't worry about stuff that we need to pay for. I'll take care of all that. And she did an excellent, excellent job at that.

[Megan]

The way you set up your finances will affect the rest of your lives, in my opinion. The way they're talking about their accounts, where Jason basically gives her an allowance without combining income, is going to set them up very poorly going forward. Who wants to have to ask their partner for an allowance? And who wants to have that conversation 300 times a month for groceries and diapers and a car and Starbucks? Jason has taken on the role of the money guy in this relationship and he's even continuing it with his idea of how to set their accounts up. And yet he's frustrated. He can't get a straight answer out of Megan. He doesn't quite see that when you don't both have skin in the game, it's very hard to recalibrate that relationship. This is why I insist both partners participate in a monthly money meeting. Sure, one might take the lead on investments, but but both of you should be actively involved in the finances. We'll open up their conscious spending plan after this. Three things you'll find in my office Books, pens and ultra obscure Japanese artisanal crafts from a metal worker that I will never use. Now what you will never find in my office Huge filing cabinets. Just think about it. Would you rather have a huge filing cabinet or a beautiful picture of a cheetah? Now a lot of us have those old style filing cabinets from holding onto all these paperwork items. We need passports, birth certificates, licenses, insurance policies, trust wills, tax filings, and so on. Do I want to rummage around files every time I need one of these things? No. I want it digital, all online and secure. Meet Trustworthy, the family operating System who I'm excited to partner with for this episode. Trustworthy is a secure online service that helps you protect, organize and optimize all of your important information. You can easily send files to Trustworthy by scanning in their mobile app or just forwarding emails. And once you set up your account, you can find all of your important family information from the Trustworthy site or app and you can share access to your loved ones in case something happens, or to trusted professionals like your accountant so they can keep everything up to date. Our listeners can enjoy peace of mind with the Family Operating System by Trustworthy. It's the safe, easy way to store, access and share important family documents. Head to trustworthy.com ramit to learn more and money for couples. Listeners will save 10% on upgrade. 14 day free trial. No credit card required. Cancel Anytime discount applied at checkout. That's trustworthy.com ramit on every episode of this show, I ask couples to fill out a conscious spending plan before they speak to me so I can get an idea of their finances. And for some couples, especially if you haven't spent much time talking about money together, this can take a while to put together. You got to find your logins, you got to look up pay stubs and find all the details for your csp. Well, I recently found out that many of you use our sponsor, Rocket Money to easily plug into your conscious spending plan each month and see how your spending is stacking up. Rocket Money is a personal finance app that finds and cancels your unwanted subscriptions, monitors your spending, and helps you lower your bills so you can grow your savings. And there's a section that breaks down your spending, like how much went to utilities, rent, shopping, groceries, subscriptions, etc. So you can easily see where you're spending and how that spending stacks up against previous months. One couple on my podcast was able to fill out their CSP by just taking those categories. Rocket Money was already tracking and plugging directly into their CSP. Great example of convenience. Rocket Money has over 5 million users and has saved a total of $500 million in canceled subscriptions, saving members up to $740 a year when using all the app's features. Stop wasting money on things you don't use. Cancel your unwanted subscriptions by going to RocketMoney.com Ramit that's Rocket Money.com Ramit Rocket Money.com Ramit now back to the show.

[Financial Expert]

Okay, let's move on to the csp. Megan, can you read the word in bold? And then the combined number next to it.

[Ramit Sethi]

Assets, three $73,000. Investments $859,095. Savings $27,455. Debt 778,835. Total net worth, $3,180,715.

[Financial Expert]

Okay, great. And I want to point out that Jason has a net worth of 3 million independently. And Megan, your net worth is $172,000.

[Ramit Sethi]

Yes.

[Financial Expert]

Okay, got it. Okay. How do you all feel about those numbers?

[Jason]

Not good enough.

[Financial Expert]

Not good enough. Oh, wow. Why. Why is it all. Why is it so negative in here right now?

[Jason]

For. For me, it's. The cash flow still feels really tight.

[Ramit Sethi]

It just feels unsure, unstable.

[Financial Expert]

Okay.

[Ramit Sethi]

Anxiety provoking.

[Financial Expert]

Can I. Can I ask a couple questions? Because I want to understand these numbers. So it says that you have $3 million of assets. Can you break that down for me?

[Jason]

Yeah, so that's. We have a. We have a condo. We have a house, cars, and then business. Condo's like 400ish, something like that. Houses, like a million ish businesses. Million ish.

[Financial Expert]

Cars. What the. How much are these cars worth?

[Jason]

They range the most. Most expensive ones, like 60, 70. Most are in the 2025, something like that.

[Financial Expert]

How many cars are we talking about?

[Jason]

I think it's seven, including Megan's.

[Financial Expert]

This can't be real. You have seven cars?

[Jason]

Eight with Megan's.

[Financial Expert]

Is this a joke?

[Ramit Sethi]

No, I wish it was. Ramit.

[Financial Expert]

Why. Why am I here? Hold on. You know, I have a master's degree, and I'm here talking to a couple that's worried about cash flow. They have eight goddamn cars.

[Megan]

What the is going on here? Why do you have so many cars?

[Jason]

I used to own and operate an automotive business, so I had cars and tools and stuff for that. And then with kind of work changing and stuff, I put it into, like, sleep mode, but have not fully wound it down.

[Financial Expert]

Oh, wow. So, like, when you said we haven't really cut our spending commensurate with our income going down by $300,000, you were referring to the eight cars. All right, we'll get back to that. Investments are What?

[Ramit Sethi]

I have 7K in crypto.

[Financial Expert]

Okay. What else? Yeah, my index funds. Please tell me. God.

[Jason]

Yeah, mostly.

[Financial Expert]

All right, and then savings is whatever. What's the debt? Break that down for me.

[Jason]

Debt are. Yeah, the two mortgages. And then on. On my side, there's like 26k on the credit card right now.

[Financial Expert]

Let's go to income real quick. Jason, what's the combined income?

[Jason]

21,408.

[Financial Expert]

Okay, so that's $256,000 a year. Did you all know that? That's how much you make?

[Jason]

Definitely. Yes, I know that.

[Ramit Sethi]

I didn't know. For me. I told you, I didn't know how much he made till recently.

[Financial Expert]

In your case, you have a slight justification, because, you know, you're not married, I guess, but if I was having a kid with somebody, married or not, you know, I would know their finances. I would have done a triple drill down into their investments. I would have been like, you invest.

[Megan]

In this dog fund.

[Financial Expert]

They have a 1.5% front end load. What the. But that's just me. All right? We all look for different things in our partners. At $256,000 a year, how is it that you all have, like, $40,000 of credit card debt?

[Jason]

Bloods Wrecked car, all that stuff.

[Financial Expert]

All right, so accidents, that's one thing. What else? Megan, why do you have credit card debt?

[Ramit Sethi]

Because I carried too much. I don't live within my. What I make.

[Jason]

Also, you're working less than you were, but not changing expense habits, Correct?

[Financial Expert]

Yeah.

[Ramit Sethi]

Haven't changed.

[Jason]

Yeah. So to Megan, the costs and things stay the same, but the variable work went down. Right. So my encouraging is variable work. Get it back up. Right.

[Financial Expert]

Well, I think the larger problem is that you are the one having to tell her to get her income up. That's really the problem. Like, why is Megan not in charge of her own independent finances if the two of you are not married?

[Ramit Sethi]

I'd argue I am, but I also feel in the moments where there's a question of who should pay for what. If Jason doesn't have a card for me to use for a household expense, or if there's no room on a credit card, I will just cover it.

[Financial Expert]

If that is what's getting you, in part, into this credit card debt. That's just sloppy financial management, because a couple making $256,000 a year should not have the issue of there's no room on a card. That's crazy. Okay, that is. That's insane. If you're going to live independently, not married, that's totally fine. However, you got to have a really defined set of rules, like an SOP. It would be like a McDonald's franchise.

[Jason]

Sounds perfect.

[Megan]

Let me explain what an SOP is. You unstructured. An SOP is a standard operating procedure. It is a manual for how to do a task. McDonald's employees have tons of SOPs, which is how they can hire someone who walked off the street and have them making fries very quickly. Same for airline pilots who religiously use their checklist. I love SOPs. I have an SOP for when I rebalance my investments. I have an SOP for how to handle unexpected income. My wife and I have an SOP for who loads the dishwasher and who empties it and when. Oh. Oh, no, Ramit, that's so unromantic. Things should just happen. What are you talking about? Think of the things you do repetitively. It could be who mows the lawn or goes to the gym. It could even be when you talk about money, which, as we both know, is never. Which is why I shared my exact monthly money meeting agenda in my new book, Money for Couples, available for preorder now. The point is, you can systematize and schedule the important things to you, which Leaves you abundant free time to use guilt free for the things you love. Is anybody seeing the similarity between the conscious spending plan and creating SOPs for your life? Am I the only one who's becoming enraged and starting to sweat while sitting in front of a camera alone at the fact that more people don't use SOPs? What the hell is wrong with me? Let's get back to this episode.

[Financial Expert]

Yeah, I love a good sop in the household. Sop for who empties the dishwasher, what time, sop who's doing the dishes, the laundry. Like, write it down. Don't leave it up to romance. And certainly not like, oh, let's talk about it. Because the last thing you want to do is like, babe, can you give me money for formula 409? No, just SOP it, make an agreement, and then if you need to revisit it, revisit every six months. What concerns me is the fact that you're all OK with having, like, credit card debt with a baby on the way. About to get real.

[Jason]

I don't know if I'd say okay with it. The bigger, the biggest chunks are. What the unexpected stuff that wasn't budgeted. Like, we, we got, we got rid of all the student loan debt. That was a big one. Right? Then we got rid of all the credit card. And then it's like the next, the next thing. But it's, it's. I. I look at it as 100% income related because it's hard to go down and then stay down.

[Financial Expert]

You're gonna have to change the way that you both interact with money and probably create a new framework for how you deal with your finances individually and together. This doesn't make any sense to me. With the income, if you guys were making like 100k, okay, I would be like, we got a slash and burn. But you're actually making like, way more than that. So there's something going on here and I can already see some of it. Let's look at the fixed costs. Fixed costs are at 62%. That's pretty good. You're at 20% for your housing costs. Not bad. Not bad. All right, fine. Transportation is 400 bucks. Oh, plus fuel, that's 1,029. Okay, fine. Debt payments are killing you at $1,204 a month. That's a lot. In fact, just for easy math, let's zero that out. Watch what happens to the fixed cost. Number drops to 53%. Okay, so that's good to know. We could tackle the debt no problem. Groceries at 715. Okay. Clothes at 40, phone at 178 and subscriptions at 336. If we actually look into the breakdown of how each of you is spending your fixed costs, Jason, you're at 61%, but Megan, you're at 66%. Do you see that? So your blended average is 62%, but Megan, your number is actually high. So that's a, that's a problem. If the two of you were married, then we'd be having a discussion about how to do this as a team, but with the assumption that you're going to continue as is, then what? That implication is that each of you needs to be responsible for your own finances. Agreed.

[Jason]

I think our intent is that we, we build this plan as a team.

[Financial Expert]

Okay.

[Jason]

So for example, when, and I think maybe this is obvious, but when her income goes to zero, her fixed costs come to mind.

[Financial Expert]

All right, so you are approaching this as a team. That's actually great clarification. Cool.

[Jason]

Okay.

[Financial Expert]

All right. So if that's the case, then that raises some very interesting questions. So let's take a look here on your fixed costs. Then probably Jason might need to shoulder some more of Megan's fixed costs if that's the case, because your income is way higher. Like just to put, put the numbers out there. Jason makes 17,000amonth gross, and Megan makes 4,000amonth gross. So something to think about. Let's keep going down the list. Investments are at 2%. Are you doing some pre tax investments?

[Jason]

Yes.

[Financial Expert]

How much are you taking out for each of you?

[Jason]

Mine's like 13.7.

[Financial Expert]

13.7%.

[Jason]

Yes. Percent.

[Financial Expert]

And what about you, Megan?

[Ramit Sethi]

Mine was at 11 and I just reduced it to the company match at 7.5.

[Financial Expert]

Great. So that's great. That offers some margin to play with. We can look at all that stuff later. But right now your post tax investments are basically very nominal at 2%. Fine. Your savings are at 3%. You're saving 200 bucks a month for your emergency fund and 150 for your gifts. You basically have three months of emergency fund. That seems a little low.

[Jason]

Agreed. Yeah. We've had to tap the savings for the stuff that's been happening.

[Financial Expert]

So that seems bad.

[Jason]

Yes, exactly.

[Financial Expert]

So you have to tap it. You also are at the sort of low end of a emergency fund and you have a baby coming. Plus income is going down, a lot of risk at once. So let's focus on what matters, that you have a lot of risk. Okay. And then what the. Your Guilt free spending is 33%. And I believe that. Is that true? 4,600 bucks a month on guilt free spending. Yeah. What do y'all spend it on?

[Jason]

That's where we have like the theater tickets are in there. The sports ticks. That's the eating out budgets in there.

[Ramit Sethi]

Theater should be plural. Sports should be plural.

[Financial Expert]

Just have to say I love, I love this show. I love this show because like I talk to people who have like they bought a $78,000 truck and their income is $60,000. OK, I have that and I have a couple you who has ballet, multiple theater tickets and $17,000 for hockey tickets. Like, this is the most diverse show on the Internet. I love it. Everybody who's always leaving comments. Oh, ramit, boohoo. Always talking to rich people. Well, actually in this case, you guys.

[Megan]

Are pretty rich, but we also talk.

[Financial Expert]

Talk to people from all over the country, all over the world, all over the socioeconomic spectrum. I love it. What do you all think of this CSP plus a baby?

[Jason]

I've never seen a CSP like it.

[Financial Expert]

Every CSP is different. It actually to me is like the fingerprints of your life.

[Jason]

Yeah.

[Financial Expert]

It really shows what you value. And here it's clear. Ballet eating out. Like it's very clear now. Can we fit it? We'll talk about that. But I can sure see who you are from this csp. It tells me so much. All right, Megan, what do you notice about the csp?

[Ramit Sethi]

I don't think it's all encompassing. Like when we list out the things that we guilt free spend on, it doesn't have all the things that I think about and all like the goals and the things that are going onto credit cards. Like my epic pass is coming up. So like for our ski season and also any traveling, we're still doing like a lot of very cool things. And there's like the occasional Michelin star restaurant. And that's not in the budget in general, but also just like I don't feel like it's accounted for. I want more detail. That's what I see in my csp.

[Jason]

Well, you want more guilt free spending is what you want.

[Ramit Sethi]

I want more guilt free spending. Yes.

[Financial Expert]

That's good to know. I think that that's a pretty candid answer. How would you address that?

[Ramit Sethi]

In years past, I would write out a list of all the things. I put it in order of priority and then that's as far as I get.

[Financial Expert]

Writing it down and prioritizing it is not actually the point. The point is just to have an honest, accurate assessment of where your money's going. Okay, I'm, I'm guessing you're underestimating your guilt free spending by at least, at least $2,000 a month. If it says $4,622 a month, maybe it's 6,000 bucks a month. So for me, I always say in order to live a rich life, you got to be honest. Honest with yourself and honest with the people around you. First thing first is just to actually put those things in here. It doesn't make you a bad person. You don't need to prioritize it. Just put the numbers in here. It's currently at 33%. If we made it 6,000, it'd be 43% and that immediately is a red flag. Okay, it's a red flag because it, it's higher than average or higher than the recommended percentages, which probably means you're compromising on your savings or investing goals. Now if the couple, if you already had maxed out everything and you were just coasting, you don't need to invest anymore. Fine, spend the money. Go have a nice time. But I think in your case, you got a baby coming up and that's going to have its own unexpected expenses. Right?

[Jason]

Looking at the csp, I feel like our pre tax, you know, our gross to net number looks quite good.

[Financial Expert]

You have other problems. One is that you're in credit card debt. Both of you. Like, I don't know about you, but if I was making $256,900 a year, I would have a no debt policy in my house. We are never getting into credit card debt. That's just unacceptable for our family. That's like, that's the equivalent of saying like, we're not going to urinate on the rug in our, in our house. It's just not going to happen. This crazy. That's how I feel. At $256,000, there's no debt. That's ridiculous.

[Jason]

Yeah.

[Financial Expert]

What do you all think about that? Is that too strong of a statement or do you agree?

[Jason]

I love that.

[Ramit Sethi]

I agree.

[Financial Expert]

This is overspending, like it almost always is when I see people in credit card debt. So to me, this goes deeper than an SOP here and should we work an extra five hours or. It's not about that. It's about the fact that I think you've gotten sloppy with your spending. I don't think you have a clear vision on what kind of money policies and culture do you want to create in your household. And I think it's slightly complicated by the fact that you do combine your income, but kind of not. You're a team, but you don't technically combine your income. So it's like, yeah, who gets to say what the rules are? It's very murky. The whole thing is murky.

[Megan]

I hate murkiness.

[Ramit Sethi]

Very muddy.

[Financial Expert]

It is. I want clear lines of demarcation. This is our rule. This is our policy. If this, then that. So first of all, how does that sound conceptually to you, Megan? Do you like clear lines of demarcation or no? Yes, you do.

[Ramit Sethi]

I do.

[Financial Expert]

I'm surprised.

[Ramit Sethi]

In theory, I'm surprised, too. In theory, I do.

[Financial Expert]

No, I don't believe you. I don't believe you. I. I feel like you try to squirrel out of that and you go like, I don't know, like, it depends. And. Because in the end, you kind of want it your way, and you're like, it's going to work out my way. I don't want to give a. A straight answer and get pinned down.

[Jason]

Wow.

[Financial Expert]

Do you agree, yes or disagree?

[Ramit Sethi]

I agree.

[Financial Expert]

Like, even in your answer. Even in your answer, you can't say, I agree. Like, I agree. What the. Agree or disagree?

[Ramit Sethi]

Ideally, I agree.

[Financial Expert]

What is that?

[Ramit Sethi]

If we had rules, like, if we had these procedures, that'd be great. I would love that. I love operating within my rules. I do. I love that. With Mike.

[Jason]

Could you follow them?

[Ramit Sethi]

That's the thing. I'm not sure. I know it comes from, like, a. How I grew up and how I was raised is how this comes up. Because I. I understand. I can work a lot and I can get money and I can pay for things and live within my means. But then I also know that if it's been demonstrated to me that you can just put it on a credit card or, like, it's okay to have massive amounts of debt. Like, I know that's not okay conceptually. Like, ideally, I don't want that. When I'm debt free, it feels really nice. But then it's also, like, I get sloppy, and then I get the slippery slope, and then I just don't live within my means.

[Financial Expert]

We'll be right back after this short break.

[Megan]

After 20 years in business, there are a few things that I have a lot of patience for. For example, my Netflix show, I waited to find the right team, the right network, and to get it right. But for other things, I have very little patience. If you're late to a meeting, by five minutes, I've already gone. If you get to the front of the Chipotle line and you've been dilly dallying around looking at your phone and you don't know what to order. It makes me want to know what went wrong in your childhood that brought you to this place. And finally clicking around with a mouse to manage your email. Have you ever seen somebody using Outlook or Gmail? Their mouse takes like two hours to go across the screen and then they click once and then they're typing like this. Are you kidding me? You just wasted 15 seconds of your life and you still have 197 emails to go. Instead of doing it that way with this episode's sponsor, Superhuman, my fingers never leave the keyboard. That allows me to process emails lightning fast. Using keyboard shortcuts saves me at least 10 hours a week easily. And it works with any email provider you already use, including Gmail or Outlook. One thing I love about Superhuman is it splits your inbox into streams so all of your important emails show up in one place. They are separated from subscriptions, promos, etc. And again, there's a keyboard shortcut for everything. You don't have to use your mouse, which makes you move so much faster. I can go through 50 emails in just a few minutes this way. Another feature that I like is their new Ask AI feature. I can ask questions like what was that Asian restaurant I ate at in New York? And it will go through your inbox to actually give you answers that are valuable to you. So if you want to buy back your time, Superhuman is a complete no brainer. It's something that I spend my own money on and I highly recommend it. Right now, all I WT listeners get a free month of Superhuman and you can get [e-mail] Ramit that's superhuman.com Ramit R A M I T. Now back to the show.

[Financial Expert]

Why don't you live within your means? Megan?

[Ramit Sethi]

I don't think I'd ever asked Jason to like pay for something for me. Like something specific. Like I we Jason want me to go mountaineering with him. And so, or like whatever the activity is, I refuse to be taught by him. So I'll hire people. But so to learn how to ski and to learn how to rock climb and mountaineer, like these were things that got put on a credit card because I wanted to be able to keep up in his lifestyle. But I could I afford that? No, but like the opportunity cost was there. So it's this. I'm trying to keep up with him and with the lifestyle, but I also like know that I Can't actually afford that. It's this sloppy, slippery slope of can I actually afford this? No. But am I still going to do it? Yes.

[Financial Expert]

Have you ever had a series of discussions about this?

[Ramit Sethi]

No.

[Jason]

Why?

[Ramit Sethi]

When I express frustration or, like, cost of things that I would like to do, like, I would like to have a doula at our birthday, there's questions of, like, well, where is that money coming from? And so then I think, well, I want it. So I'm just going to put on my credit card because that's important to me. Can I afford it with my income? No. But I also know that because we keep our things so separate that, like, I know that he's covering so many other things in our finances. I don't feel entitled to any of his money. When I say I want to do something that's specific to my needs, rather than feel the pushback, then I'd rather just avoid that conversation. And I'd rather just put on a credit card and I'll figure it out somehow, kick it down the line. Whether that's, like, in years past, Jason will say, I'm going to get a bonus and we'll just wipe out all our credit cards, and that's going to be fine. And that's great. But, like, the last bonus could cover his credit cards and say, but we put a lot of mutual expenses on my credit cards. And so I just hold on to it and keep paying off what I can.

[Financial Expert]

As you're saying this to me, what are you hearing?

[Ramit Sethi]

A whiner. Inequality in our understanding and just operating in gray space rather than being firm.

[Financial Expert]

I agree. You're operating in gray space. There's a lot of murkiness. There's a lot of things unspoken. Yes. What else?

[Ramit Sethi]

I try to be accommodating.

[Financial Expert]

Go ahead.

[Ramit Sethi]

Lots of moments where I'm not putting the logical rules down of if I want to do this, I should actually, like, plan to do this. And just because it sounds great now doesn't mean I need to do it right now.

[Financial Expert]

There's a lot of focus on the individual in the way that you conduct finances. Like, yes, you do you, I do me. But sometimes we combine. But if I, Megan, can't afford, like, a ski jacket, I would have to ask. I would have to bring it up. And then I sometimes get pushback, which makes me not want to ask at all. It's this default of every single time there's a purchase decision. I have to agonize over which card is it on, who's going to pay what If I can't afford it, it's exhausting and it's actually not working. You're in credit card debt again. If you have a baby coming, your income is going down. Like, it's not working. And it's actually not the sign of a unified money management system in a couple. Jason, what did you hear?

[Jason]

I heard that I think for the first time that her decisions are, I'm just going to do it on the credit card because I don't want to talk about it.

[Financial Expert]

That caught you by surprise, right?

[Jason]

Yeah, yeah. Because in. In the past, like, she just gave the example of, oh, like, I can't afford that. I can't work for it. And I said, great, how much does that cost? How do we make it work? She tells me the cost and then, great, I can figure that out.

[Financial Expert]

Right.

[Jason]

That's a. The dollar problem I could solve. But we haven't done that discussion in years.

[Financial Expert]

Megan, why are you crying?

[Ramit Sethi]

Pretty normal state these days with pregnancy, but I just had a lot of feelings and it brought up a lot of things that I've just been avoiding.

[Financial Expert]

Oh, okay. Are part of those that sometimes like having to ask and then get the question, where's the money come from? How much is it going to cost? Is that upsetting sometimes?

[Ramit Sethi]

Yes, it is upsetting. And so it brings up a lot of like, well, I can figure out something. I can do a band aid fix and it's all going to work out later. And my band aid fix is, I could just put it on a credit card.

[Financial Expert]

Nobody in a relationship likes to have to ask for money. And then they certainly don't like to be questioned, like, where, where is it going? It feels very diminutive. It feels very like parental child. Okay. At the same time, Jason is like, well, I need some numbers here. Like, I need to be able to operate somehow on the finances. And you can see this dynamic that's been created. Jason is trying to get information. Megan is like, I don't want to deal with it in this way. I'll just do it myself. And it's produced this dynamic where neither views like, feeling good about your money decisions. It's certainly not a smooth running machine, which is what I would love for the two of you to have a clear understanding who owns what part of the spending, how much have we agreed clear boundaries of like, this is how much we're going to put towards xyz and much fewer questions back and forth about, can we afford that? Like, that question should not be coming up. What do you think would Be a way for you both to feel good about money.

[Ramit Sethi]

My immediate response is to have more of it, but I don't really need more of it, but to have a plan, to have an understanding of what where I our budget is. It's never been shared in this intentional detail before.

[Financial Expert]

Okay, well now you have it. So what, what do you need going forward?

[Ramit Sethi]

I'd like it to all be combined. That would be very nice. I think an envelope system could be very nice for us. It would help like anytime I spend money, like when you say guilt free, like it's all guilt full. Like there's never a moment when I spend money that I think like I deserve this.

[Megan]

Extremely insightful. Megan says I don't feel entitled to his money. The invisible script here is talking about my needs makes me unreasonable, so I'll just do it on my own. See, we're all raised with this idea of independence in America. And independence can be good. But hyper independence taken to an extreme leaves you a pregnant woman in credit card debt who feels guilty even talking about money. Meanwhile, Jason wants numbers, which is fair to ask for, but his approach is not connecting with Megan at all. Megan has a ghost. If you remember from episode five of this podcast, Sheena had a ghost of I need to pay off debt. And anytime her partner Peter wanted to talk about how they can spend their money, even for a special event like an anniversary, he was talking to her ghost, not to her. So can you identify Megan's ghost? Let's listen to her describe her childhood for a clue. Please be warned, there will be a discussion about suicide in the upcoming story.

[Financial Expert]

What do you remember about earliest memories about your family talking about money?

[Ramit Sethi]

There's never enough of it. I remember my parents arguing and like one racing to the bank and the other like I got in the other the second parents car to chase them because one was gonna empty out their checking account. They later divorced, but it's still like that's scary.

[Financial Expert]

What did you take away from that? If now as an adult looking back.

[Ramit Sethi]

I've been operating and like I have to protect myself. Like I know that no relationship is guaranteed to last for forever. And so like the hesitation and always knowing to protect myself for my future, like is very much a part of the every paycheck understanding of what I put away and what I save for my future self.

[Financial Expert]

You said protecting your future self, right?

[Ramit Sethi]

Yeah. My dad got laid off when I was a kid, like 14ish. He killed himself when I was 21. He never was employed between those ages. He was Supported by selling off properties that he had owned with his dad and my uncle. And then towards the end of his life, it was asking his dad for cash. When he chose to take his life, it was like a money thing. Like, he owed back child supports, like, he couldn't protect himself. It's like, I have that very much understanding. I also know that, like, my mom and her husband have extreme amounts of debt and they don't have any retirement savings. Like, they don't have a way to protect themselves. Like, this is very much, like, forefront of my mind for since I was 21 years old, that, like, I have to have a plan to protect myself at some point. So, like, I did years of service after university because I knew that's how I could beat down a bunch of student loan debt. So I took, like, a volunteer job because that gave me education grants. At the end of it, I don't have parents who can float me thousands of dollars. If I were to ever be in a situation where I can't pay for something or like, I'm choosing to not get a job.

[Financial Expert]

You mentioned the word protect many times.

[Ramit Sethi]

Yeah.

[Financial Expert]

Protect yourself, protect your future. And now that I understand your family dynamics, that really makes a lot of sense. I'm so sorry for what happened to your dad. I can only imagine your relationship with money.

[Megan]

Before we hear Jason's upbringing, let's just acknowledge the horrific experience that Megan had growing up. I'm very glad that she's in therapy, and I'm truly honored that she would come on this show to have a discussion with me. I think we can all start to understand that we have no idea how we would react if we had the same childhood as Megan. Now I wanted to understand more about her. Invisible scripts around money.

[Financial Expert]

I am curious if protecting yourself is the one of the primary ways you describe your relationship with money. How does it feel that you are the lower earner in this relationship, not married, pregnant, and if something happened in this relationship, like, you would be on your own?

[Ramit Sethi]

That's also probably one of the reasons why I've not wanted to share finances with Jason in the past is because I know that he has a mentality to fight tooth and nail. And in the event of the demise of our relationship, if he knows all the things about me and all about my finances, he would win any argument based off of finances. And that didn't matter until I chose to make a person with him.

[Financial Expert]

Is this relationship on the way out or something? You're like, two months away from having a baby.

[Ramit Sethi]

No, but it's also like, I'm a planner in the sense of, like, I feel like Jason and I make a really great team, and we have a lot of fun together. And. But I also. I didn't trick him into having a baby or anything. Like, there's a lot of things that I'm like, I really want to go into all of these big life decisions intentionally, and it was all very intentional. But I also know, like, people get divorces and people break up and people. We're going to be different people in 15 years, and maybe, like, we still like each other and we still respect each other, and hopefully that's the case. We've grown together and not apart.

[Financial Expert]

Would it be scary to you to say out loud, I want to be with Jason forever?

[Ramit Sethi]

No. No. Because I try to trick him into saying that back at me because I.

[Financial Expert]

Tell him that, oh, that's surprising to.

[Ramit Sethi]

Me, but he doesn't necessarily say it in the right words that I would like to hear it back.

[Jason]

I think that is more scary for me than for her. But I also have more confidence in, like, our ability as a team to do and execute these things we want to do. I think we're good. Good happy and want things to continue and get better.

[Financial Expert]

Megan, I'm curious also that you said, you know, you use the word protect a lot, but you don't seem to protect yourself when you overspend.

[Megan]

True.

[Financial Expert]

How do you reconcile that?

[Ramit Sethi]

You don't know if I reconcile it. I just. It's just a naughty habit of trying to bridge the gap of whatever that is. If we're choosing to go to Ireland for the weekend and we're booking our very discounted tickets, I put on my credit card. Should I said yes to put it on my credit card? No. Could I have really afforded that? No. But is there a rationalization that Jason and I go through when we're like, well, we're gonna spend the same amount of money anyways on, like, eating out for the weekend? Should I have asked Jason just to pull out his card for that? Like, if that was our choice as a couple? Yes. But in those moments, I. I'm not going to.

[Financial Expert]

You've already lost at that point. If you have to sit and decide who is pulling out their credit card, that's a systems failure. Are you in touch with your mom? You mentioned that her finances are in trouble.

[Ramit Sethi]

Yeah, yeah. I'm very much like my mom in the sense of, well, I have a plan. This is the ABCs of it. But this outlier opportunity came out so I'm just gonna spend anyways. And it just gets tacked on to the bottom of this plant. So, like, does this plan really exist? Theoretically? Do we follow it? No. And that's kind of how I also operate.

[Financial Expert]

Yeah, you have a double whammy as well, because in your job, you can work as much as you want and make a lot of money. People who work these hourly type of jobs or jobs where they can, you know, more time equals more money, they end up getting a very distorted sense of reality. It's. And it's bad on both sides. One, they don't really think credit card debt or anything is a problem because they're like, I'll just work a few extra weekends, it's no big deal. But then second, when they are not working, they are constantly thinking about how much money they're losing. So it's not just a trip to go skiing. It's like, well, that trip is actually costing me $6,000. Right. I see the nods on your faces. It's an extremely perverse, unhealthy relationship with money. Unless you are strongly rooted in how money works, what are your values? And then your job, whether it be flight attendant or whatever, it becomes something that serves your rich life. Your finances are not.

[Ramit Sethi]

Not great.

[Financial Expert]

Like, they're not. They're not meeting you where you need to be. And more importantly, the dynamic that the two of you set up is not serving you, especially with the upcoming major financial disruption.

[Megan]

I asked Jason now about his upbringing with money.

[Jason]

When I was a kid, I would make as much money as I could and save it and not spend anything. So it's very much save, save, save, save, save, don't spend. Started a business at 14, paid from 14 on. Paid for all my own stuff. Did take loans to do school because parents didn't have anything, so didn't get the contribution there.

[Financial Expert]

What did your parents say about money when you were a kid?

[Jason]

My father, the only thing he ever said was buy low, sell high. So it was find the value deals. You're going to buy something, make sure it's a value deal. He made mostly made the money and my mother did the balancing the checkbook and all that, paid the bills, but it was very separate things. He just kind of sent the money to her and she took care of it.

[Financial Expert]

And what do you think about that, looking back?

[Jason]

It was generally fine. When you became an adolescent and started needing stuff on your own, it was like, on your own. Right. Figure it out. So that's what I did. Figured it out.

[Financial Expert]

But okay, a Lot of our parents, they had the same dynamic, right? One. One person, usually dad earning money. Mom would maybe get the check and sort of administer the household. Isn't that kind of happening in reverse then? Like, she basically makes her paycheck and sends a little bit to you, and you administer the household.

[Jason]

Yeah, but it's not. Yeah. Not the full picture, obviously, because she.

[Financial Expert]

Has her own expenses, et cetera.

[Jason]

Yeah. And if. And if her own expenses were within her means, great. No problem. I don't.

[Financial Expert]

I think.

[Jason]

I don't think we would. I don't think we have a problem. Wouldn't be kind of where we are.

[Financial Expert]

Yeah, well, let's not Forget you have $26,000 of credit card debt, too.

[Jason]

Yeah, but I also have means to take care of it. Like, if I. If we said. But then to this call, we're like, that's the number one priority. We need to do it, and it's done before the end of the year.

[Financial Expert]

I. I agree. That's fair. At the same time, if. If Megan were not pregnant and needing to take care of the baby, she could theoretically get on a plane and rapidly pay it off, too. Right?

[Jason]

Totally. Yeah.

[Financial Expert]

So, you know. Okay, I. I agree with your point. Technically, I think that biologically we gotta acknowledge, you know, Megan is Megan, you're gonna be home for a while. And that's just reality. Y. I guess. I guess I want to know how much do you want to bring your money together? Because I can help you in any way you want.

[Megan]

If you want to keep your money.

[Financial Expert]

Separate and you want to set up some rules, we can tighten them up. It's not a problem. We'll create some simple guidelines. You all understand where you stand, but ultimately, each of you is responsible for your own finances. Like, that's. That's simply that you're basically running a business partnership. It's like, here's what you're responsible for. Here's what I'm responsible for. Transfer this much money each month, et cetera. You can do it. We can make it work, but each person has to hold up their end of the bargain. And it's like, if you don't, we need to talk about what happens then. Okay.

[Jason]

I think that's the true for both sides. Right? So, for example, if we combine and then we plan on 15 months later, Megan does go back to work, and she doesn't. Right. That impacts the plan. Similarly, if it's separate, hey, here's. I'll take all the fixed costs. Here's your, you know, your keep your savings Rates and stuff high the way they are. Anything that comes down and hits your account as your guilt free for whatever you want. Right. We can do it that way. But similarly, if you overspend, that. That creates a problem. And I feel like those problems all come to me. Right. So eventually they all become my problems. So.

[Financial Expert]

Right. Which. Which is my point. It is a problem that all financial problems become your problem.

[Jason]

Yes.

[Financial Expert]

They should not be only your problem. It should. The. The risks and rewards should be distributed. Not necessarily 50, 50, but everyone's got to have some skin in the game. That's exactly why I don't do the family finances solely for my wife and me. Yeah, I could. I made sure not to. My wife is extremely adept at the finances. She does parts of it. She does parts of it way better than I ever could. And we talk about it. We are rowing the same direction.

[Jason]

I think a good example there is we. When we did the math on the house, we. We did the, what can we afford? What. What's comfortable and good and easy, which was way less than we could afford. Of course, like, we didn't want to spend what was possible, so went. Bought under our means, and then we picked up. We did all the picking out together and all that. But then when it came to actually understanding the mortgage, the costs, when those costs hit, what accounts they go to, how they're paid for all that. She did not want to participate. Well, I. I have to say I.

[Financial Expert]

Wouldn'T either if I was not owning the house. And. Megan, you didn't want to be a part owner of the house.

[Ramit Sethi]

I was there for signings and things and read documents and. But at no point was there. But there was never a do you want to be on the house? Like, there's never that conversation. It was always a understanding that, like, it was gonna be Jason's house, it was gonna be his name. There was never like, well, do you want to be a part of this? And I offered my cash for it, but he declined and said no. So there was never like a. Do you want.

[Financial Expert]

Hold on.

[Megan]

Did you offer your cash?

[Financial Expert]

And he declined?

[Jason]

Yeah.

[Financial Expert]

Why, Jason?

[Jason]

Because she couldn't afford it. That My. My goal at the time was get her savings, get her investments up, because it was. It was not. It wasn't set up right. So it's like, get. Get your.

[Financial Expert]

I get it.

[Jason]

Financial house there. I was like, we already planned for that. I already saved for that. We have it all in cash.

[Financial Expert]

Jason, you remind me of me in my 20s, like, in. In a good way. And A bad way. I'll tell you what I mean. Okay. The good way is like, you're. You know, you have a high income. You are clearly interested in personal finance, and you've accomplished a lot. You own the house. Your investments are $694,000. Like, it's all. It's all very impressive. Okay, there's a little bit of debt, but, like, fine. All that is all manageable. It's good. It's really impressive. And obviously, you're going to, financially speaking, be very wealthy, et cetera. When I was in my early 20s, I was a very utilitarian guy. Like, that poster you have behind you. If I even had a poster hanging on my wall, it wouldn't. It wouldn't even have a frame. It was just like, tack that up.

[Megan]

Who gives a right?

[Financial Expert]

Why do you know? Why did a poster. That's. That's frivolous, you know, that kind of thing. And it was, like, very efficient.

[Jason]

Yes.

[Financial Expert]

Like, let's get the numbers, and then, like, boom, move on. And I hear some elements of that in the way that you talk to Megan about money. And the thing is, like, yeah, of course you need to understand the numbers. Yes. You need to have ratios. Yes. But I learned it took me a long time that it's so much more effective to meet people where they are. Okay, remember, Megan has had a very traumatic experience with money in her past. Then to, like, paint a picture, what's the vision? Connect emotionally. Like, you'll have a baby coming. That raises so many questions, especially for women.

[Jason]

So.

[Financial Expert]

And we've heard Megan use the word protect over and over. There's definitely so much to be covered there. Connect. That's what I learned. And then finally, on the very back end, I'm talking, like, the last 5% is like, get the numbers dialed in.

[Megan]

Like, that's the polish.

[Financial Expert]

What I hear, though, is the opposite. It's like. Like she comes to you. She's talking about something. You go, like, how much is it going to cost? And she's instantly turned off. Like, so many people are meeting her. Where she is is like, well, like, hey, let's talk about it. Like, what do you think? What would make you feel good? Here's what would make me feel good. Gosh, this makes me a little concerned, but I'm not sure. How should we handle it together. It's really shifting these conversations into a joint unit, us against the world. What do you think about that?

[Jason]

Interesting. Megan's been assertive about what she wants or decisions. That's super helpful to Me, I'm like, got it. Can work with that. Right? That's helpful. The vague stuff is very difficult.

[Financial Expert]

I understand that it's frustrating to get squirrely answers. I get that. And we can fix that. We can work on that. But I think what I'm really saying is starting off with, like, how much does it cost? Let's get the numbers. It's not producing the result you want. And I'm going to just ask Megan, like, does it feel good?

[Ramit Sethi]

No. It was also, like, when I'm asked, like, well, how much is the baby going to cost? I said, well, I don't know. I don't have. I've never had a baby. It's also very Googleable.

[Financial Expert]

Totally. I believe that the person who makes more money, especially if they make vastly more than their partner, oftentimes they are more financially savvy. Not always, but often I believe it's their responsibility to work with their partner and help bring them up to a level where you're both effectively partnered. And sometimes that means you got to deal with stuff where like, like, of course. You're like, jason, you're like, just give me the number. Trust me, I get it. When I first got married, I was like, just give me the number. And I'm like, oh, this is not working. Okay, it's not working. I have to connect with my wife. I have to understand where she's coming from. I have to slow down in order to go together. And you might have to slow down in a way that feels, like, so unproductive to you. I'm very passionate. You can hear it in my voice because I know what that feels like. It feels like I just need a number in cell C13. That's all I need. But actually, what we're realizing is this.

[Megan]

Whole conversation is so much bigger than.

[Financial Expert]

A number, isn't it?

[Megan]

Okay, so Megan is eight months pregnant.

[Financial Expert]

They keep their accounts separate.

[Megan]

Both Megan and Jason are in credit card debt. Jason owns the house, and they don't communicate effectively about money. Honestly, a lot of couples are in somewhat similar situations. Most couples only have an honest conversation about money maybe five times in their entire lives. And one of them is when they have children. Now, beyond the upcoming baby, which is really causing a lot of these conversations, you will notice the traumatic upbringing, the stories that they've created about each other and how they are really not connecting. It just feels very transactional. Next week, we'll continue this conversation, and I promise you will be surprised.

[Jason]

They called it the happiest place on the high desert home to a tight knit group of 30 somethings who like to party.

[Financial Expert]

It starts as a Playboy Channel fantasy, but this is real life where passion.

[Ramit Sethi]

Leads to murder and a killer seeks.

[Jason]

God's help with the COVID up. I'm Josh Mankiewicz and this is Deadly Mirage, an all new podcast from Dateline.

[Megan]

Listen to new episodes for free each week wherever you get your podcasts.