185. “My fiancé has no savings at 43. Should we get married?”

Summary

Money For Couples with Ramit Sethi
Episode 185: “My Fiancé Has No Savings at 43. Should We Get Married?”
Release Date: December 3, 2024

In this compelling episode of Money For Couples with Ramit Sethi, host Ramit Sethi delves deep into the financial struggles of an engaged couple, Dawn and Richard, who grapple with merging their finances amidst past traumas and differing money philosophies. This detailed summary captures the essence of their conversations, the financial analysis conducted by Ramit, and the actionable insights offered to help them—and listeners in similar situations—navigate the complexities of money in relationships.

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Introduction to Dawn and Richard’s Financial Dilemma

Ramit introduces Dawn and Richard, a couple in their early to mid-40s living in upstate New York. Despite a combined gross income of approximately $10,251 monthly ($123,000 annually), they find themselves living paycheck to paycheck with minimal savings and significant financial stress.

• Dawn's Concerns:

  • "I'm just not doing any saving or anything. We have no emergency fund. We have nothing." [00:37]

• Richard’s Acknowledgment:

  • "I know I'm behind. You need a 401k. You need finances in the bank." [00:41]

Background and Financial Histories

Dawn:
A single mother with two daughters and a son, Dawn has experienced financial instability through her previous marriages, including bankruptcy and living alone for 12 years. Her spending is heavily influenced by her desire to support her family, often overspending on her children and family-related expenses.

• Financial Struggles:
  • "We almost broke up. I have children and grandchildren, so my money goes many places where he doesn't have the children." [01:07]

Richard:
At 43, Richard carries scars from a financially devastating breakup that led to the loss of his home and substantial debts. He is cautious about spending, fearing financial instability, and struggles with contributing adequately to their shared finances.

• Impact of Past Trauma:
  • "Lost the home, lost the money, sold off a camera equipment, and I'm almost afraid to spend money." [01:26]

Detailed Financial Analysis

Ramit conducts a thorough analysis of Dawn and Richard's financial situation using their Conscious Spending Plan (CSP):

• Assets and Investments:

  • Assets: $28,500
  • Investments: $24,900
  • Savings: $58,000
  • Debt: $14,000
  • Total Net Worth: $97,000
  • Ramit notes: "To only have about $25,000 of investments around the age of 43 and 48, that is a problem." [03:00]

• Income Breakdown:

  • Dawn's Income: $6,700/month
  • Richard's Income: $3,500/month
  • Ramit highlights: "The median income in your city is $57,000... you're making double that, which indicates you might be living above your means." [46:48]

• Fixed Costs:

  • Combined Fixed Costs: 74% of income, with Dawn’s at 100%
  • Ramit critiques: "Fixed costs are at 74%. That's too high." [03:34]

• Debt and Spending:

  • Dawn's Debt Payments: $14,895
  • Richard's Debt Payments: $800
  • Groceries: $800/month for three
  • Subscriptions: Dawn pays $275/month
  • Ramit observes: "You're losing tons of money every single month by not investing." [05:53]

Emotional and Psychological Impact of Money Issues

The conversation reveals how financial stress strains Dawn and Richard's relationship, leading to feelings of guilt, resentment, and fear of financial insecurity.

• Dawn’s Emotional Strain:

  • "I feel like he's paying rent, which again, he is... If I'm late on something or, you know, can't make rent, that stress is all on me." [09:29]

• Richard’s Fear of Spending:

  • "There's not one day that goes by where I'm just punching mathematics, doing problems in my head, moving things around..." [14:23]

Ramit’s Financial Coaching and Solutions

Ramit employs his financial coaching techniques to guide Dawn and Richard toward financial stability and a shared vision for their future.

1. Reducing Fixed Costs:

   • Dawn identifies high fixed costs and considers downsizing or renegotiating expenses.
   • Ramit advises: "You have to prioritize yourself first." [67:33]

2. Increasing Income and Investments:

   • Richard contemplates downsizing his business efforts to focus on income generation.
   • Ramit recommends: "Start to be aggressive about investing. It's the easiest decision you will make." [83:18]

3. Establishing a Shared Vision:

   • Creating a plan to contribute jointly to bills and savings.
   • Ramit emphasizes: "You have to have a vision together. If we are going to get married, this is what it's going to take." [72:54]

4. Setting Boundaries with Family:

   • Dawn agrees to stop paying for her son's phone to reduce expenses.
   • Ramit supports: "Prioritize a healthy, rich life." [66:53]

Key Quotes and Insights

• On Financial Consistency:

  • Dawn: "We have no emergency fund. We have nothing." [00:37]
  • Richard: "I know I'm behind. You need a 401k. You need finances in the bank." [00:41]

• On Spending Behavior:

  • Ramit: "You're losing tons of money every single month by not investing." [05:53]
  • Dawn: "I feel like I'm creating a monster because he wants what everyone else has." [32:34]

• On Emotional Struggles:

  • Richard: "I've been through a lot, and I don't want to struggle." [12:22]
  • Dawn: "I have the ability to bank half of my income." [60:17]

• On Taking Control:

  • Ramit: "What you’re doing is reactive guilt. It just seems like you're always one step behind." [63:53]
  • Dawn: "I need to start putting more money into my 401k and investments." [93:05]

Conclusions and Actionable Steps

By the episode's end, Dawn and Richard commit to several actionable steps to improve their financial situation:

1. Dawn:

   • Sell the Camper: Generating approximately $10,000 to pay off credit card debt and bolster savings.
   • Stop Supporting Extended Family Expenses: Redirect funds from her 401k loan towards savings and retirement.
   • Implement Investment Strategies: Increase contributions to her 401k and start investing more aggressively.

2. Richard:

   • Focus on Income Generation: Consider closing his struggling business if it doesn’t meet specific income targets within six months.
   • Increase Financial Awareness: Take control of his finances, prioritize savings, and reduce discretionary spending.

• Ramit's Final Advice:
  • "If you want to live comfortably as you get older, you will need to make aggressive, sweeping changes very quickly." [89:45]
  • Emphasizes the importance of having a clear financial vision and making intentional, disciplined financial decisions.

Final Takeaways

This episode underscores the critical intersection of personal relationships and financial health. Dawn and Richard's story exemplifies how past financial traumas and ingrained spending habits can hinder a couple's ability to build a secure financial future together. Ramit Sethi's guidance highlights the necessity of:

• Open Communication: Honest discussions about income, expenses, and financial goals.
• Financial Education: Understanding investments, savings rates, and financial planning.
• Discipline and Boundaries: Setting clear limits on spending and prioritizing long-term financial health over immediate gratification.

For couples facing similar challenges, this episode serves as a potent reminder that taking control of finances is essential not only for individual well-being but also for the health and longevity of the relationship.

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Notable Quotes with Timestamps:

• Dawn on Financial Instability:

  • "We're not really sure how to get to the goals that we have with what we have. I also don't know if my expectations are a little too high." [00:47]

• Richard on Past Financial Trauma:

  • "Lost the home, lost the money, sold off a camera equipment, and I'm almost afraid to spend money." [01:26]

• Ramit on Investment Deficit:

  • "To only have about $25,000 of investments around the age of 43 and 48, that is a problem." [03:00]

• Dawn on Emotional Spending:

  • "I almost afraid to spend money." [14:51]

• Ramit’s Coaching Insight:

  • "This is the easiest decision you will make out of the things that we're going to talk about." [67:39]

• Dawn on Behavioral Change:

  • "I want to stop buying stuff for my family." [72:36]

• Ramit’s Final Counsel:

  • "You have to have a vision together. If we are going to get married, this is what it's going to take." [72:54]

---

This episode serves as a valuable resource for couples navigating financial uncertainties, offering both empathy and practical strategies to foster financial harmony and a shared vision for a prosperous future.

Transcript

[Ramit Sethi]

This 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.

[Unknown Host]

To see you there.

[Ramit Sethi]

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.

[Dawn]

We're just not doing any saving or anything. We have no emergency fund. We have nothing.

[Richard]

I know I'm behind. You need a 401k. You need finances in the bank.

[Unknown Host]

In today's episode, meet dawn and Richard.

[Dawn]

We're not really sure how to get to the goals that we have with what we have. I also don't know if my expectations are a little too high.

[Unknown Host]

Don is 48. Richard is 43, and they live paycheck to paycheck.

[Dawn]

When I get his money, the 200 or 250, I feel better, like I can breathe.

[Unknown Host]

They're engaged, but they're struggling to combine their finances.

[Dawn]

We almost broke up. I have children and grandchildren, so I have my money. Goes many places where he doesn't have the children.

[Unknown Host]

Dawn wants financial stability, but she overspends on her family.

[Dawn]

We went on vacation. I brought the whole family. I'd say probably 6,000.

[Unknown Host]

Richard has deep scars from a financially devastating breakup.

[Richard]

Lost the home, lost the money, sold off a camera equipment, and I'm almost afraid to spend money.

[Unknown Host]

And he isn't sure how to contribute to their household and his retirement with his current income.

[Richard]

I haven't made this amount a year since I was in my early 20s.

[Unknown Host]

Can they create a financial plan, move beyond their money past and start getting aggressive about investing?

[Ramit Sethi]

You're losing tons of money every single month by not investing.

[Dawn]

I don't want to be 70 years old and working a second job.

[Unknown Host]

Now let's meet dawn and Richard. Okay, let's take a look here. Don is 48. Richard is 43. They live in upstate New York. They want to buy a house in the next 12 years. One of them has three kids, live in a house they're renting to own. They struggle to put their finances together because of past financial trauma. I have trouble saying no to my children, but I also want to save for vacations, and I Want to buy the house? Rich does not have any retirement, and I claimed bankruptcy eight years ago after my divorce. We stress about money constantly, and it.

[Ramit Sethi]

Has caused us to almost break up.

[Unknown Host]

Rich has no children. I'd spend more than I should. And my son has no concept of money. We've postponed our wedding because of money. I make three times what Rich does, so his go to answer is he does not make enough money. Except he hardly has any bills. This is my third marriage. Don says we'd love to have a budget together and both feel we are contributing to our future. All right, well, let's take a look. Assets of 28,500. Investments of $24,900. Okay. Savings of 58,000. Wow. And debt of 14,000. Total net worth of 97,000. Okay, so this is troubling. It's not necessarily an issue. To have a small amount of assets, I don't mind that. But to only have about $25,000 of investments around the age of 43 and 48, that is a problem. To also have more savings than investments probably suggests to me that this couple has not been particularly educated about money. Because why would you have more in savings than in investments around the age of 50? That makes no sense. You're leaving so much money on the table and time is against you. The debt at least is nominal. 15,000 bucks. We could knock that out if necessary, but we need to take a look at the incomes to understand more. Okay, we have one partner making 6,000 bucks, another making 3,000 bucks, for a total of about $10,000. So they make six figures gross. I'm curious why one partner is making $3,000. That's pretty low. $3,000 a month as a 43 year old, so I'll want to find that out. Going down to the fixed costs. Fixed costs are at 74%. That's too high. Way too high. Housing costs are fine. 21, 22%. That's not bad. Car payment is 766. Okay. It's not horrible. Debt payments, 557 per month. That's a lot of money. Phone is 275. Also, why? Subscription is 299. Okay, so we see some sloppiness here. Just out of curiosity, if I drop that subscriptions down to like 50 and I drop that phone down to, let's just say 150, what would happen? Well, their fixed costs would drop down to 68%. Still high, but moving in the right direction. Let me tell you why I did that. What that tells me is there is sloppiness in their spending. If you're at 74% and I just simulate using the CSP and get you down to 68% with a couple of clicks, you could do it. I bet you there's some other various expenses that we'll get to in guilt free spending. Overall, that's slightly reassuring. Let's keep going. Investments are at 0, huge problem. Savings are at 0, huge problem.

[Ramit Sethi]

What the hell?

[Unknown Host]

Guilt free spending is at 32%. I don't even really believe this number. According to the CSP, it says their guilt free spending is at 32% or $2,200 a month. I don't believe this. I think they're spending discretionary money on eating out, travel, et cetera. But I don't think this properly reflects it. In any case, this tells me they have money to use. So we could redirect this money. We could invest it aggressively, we can save it, we could pay off that debt. There's a lot we can do, which gets me excited, but I suspect that this goes a lot deeper. In Dawn's application, she mentioned that she spends too much on her son who quote, has no concept of money. She mentioned resentment about how Don and Rich spend money together. She mentioned that they'd even put off getting married because of money. So we have a lot to unpack here. I'm excited to get a chance to speak to them.

[Dawn]

I have a family. My money goes to supporting my children, my home, my house. Financial stability is number one on my list of what I need. And we're engaged. And so I think part of me, we haven't gone to the next level, one for money, but for two, I need to feel secure. So we're not on the same page. Many times I'd say back in February was one of the times that we were really last year.

[Ramit Sethi]

What happened in February he moved in.

[Dawn]

And that was when it really became more of a struggle of that we're not kind of on the same page where how much money he should give to the household.

[Richard]

She would give me just a relative.

[Dawn]

Number, give me 200 a week. That will at least help me. But then as you talked about, you didn't want to be without money for yourself.

[Richard]

We moved into a house that was. Had a lot of love to be put into it. Just a fixer upper. It wasn't moving ready so inconsistently. I would give money, I'd give money here and here, but I took money that I would have and put it into the house. As far as Fixing it.

[Ramit Sethi]

Okay. So you're putting money in sporadically in different ways. Not necessarily handing over 200 a week, but contributing in other ways.

[Richard]

Yes.

[Ramit Sethi]

Okay.

[Dawn]

So I'm struggling to pay, you know, the mortgage and things like that. And so I'm not seeing consistent money coming into me. Like the 200 I wasn't seeing every week it was like one week it'd be 100, the next week it'd be 200.

[Ramit Sethi]

Were you struggling before he moved in?

[Dawn]

I was struggling before he moved in, but things were different economy wise. My daughter had lived. We redid the basement, so she had an apartment down there. So she lived down there and was giving me money towards that. She has since moved out. It was kind of perfect timing. He moved in, so I was like, okay, well, that will help. But then it was very inconsistent. So I never knew if I was getting money from him. So that was definitely. That's been our fight, how to put our money together. Cause I feel like he's paying me rent. He's not really into putting our finances together because of some of his past stuff. So I didn't know how to do it. I've never done that before. I've never had anyone move in with me. And I was married, so it was different.

[Ramit Sethi]

How many times were you married before?

[Dawn]

Twice.

[Ramit Sethi]

Twice. Okay, so you've never had somebody move in, not married, and figure out how to deal with the money together?

[Dawn]

Correct.

[Ramit Sethi]

Okay. And when you said it feels like he's paying rent, is that a good or bad feeling?

[Dawn]

That's a bad feeling because it just feels like all the financial. I pay all the bills in the house. I pay the household bills, he pays his bills, but I pay all the household bills. So if I'm late on something or, you know, can't make rent, that stress is all on me.

[Ramit Sethi]

And out of curiosity, if Richard were not here, how would you be dealing financially?

[Dawn]

I'd be struggling.

[Ramit Sethi]

What would you do?

[Dawn]

Get a second job.

[Richard]

Okay.

[Ramit Sethi]

So you began these conversations and you said, I'm putting money here, I'm putting money there. How did you resolve it?

[Dawn]

We almost broke up. It was very, you know, talking about him leaving. But I said, I just need consistency at least. I need you at least to show me consistency. Let's start with that.

[Richard]

I've been more consistent as far as, like, funding and money dispersed in the house. About 250 a week. 225. 250?

[Dawn]

Yeah. Anywhere from 200 to 250 a week he's been giving.

[Ramit Sethi]

Okay. So does that Work. Is the problem solved?

[Dawn]

No.

[Richard]

Yeah. No.

[Ramit Sethi]

Oh, wait. What? This was the problem. You asked for the solution. It sounds like you got the solution you wanted.

[Dawn]

Yes.

[Ramit Sethi]

Why are we here?

[Dawn]

Because I guess I thought we would have, like, extra money that we could, like, because that was our plan. Like, oh, we'll each put, like, $50 into a savings for this and we'll have an emergency fund. But then I realized when he gives me the 200, it still just pays the bills. There's still not a lot of extra. We're just not doing any saving or anything. We have no emergency fund. We have nothing.

[Ramit Sethi]

Is this a problem for you, Richard?

[Richard]

It is. At the end of the day, we just want structure.

[Ramit Sethi]

Okay.

[Richard]

I have the ability to pay, like, to put money aside, but it's. Now where do I put it?

[Ramit Sethi]

You said you wanted structure. Did you have structure in your finances before you met Don?

[Richard]

I would say yes. There's. There's a lot there. Okay. So I met Don. I had an ex girlfriend. Before that, there was an ex fiance, a home, finances, and just the whole thing. Was there structure? Yes.

[Ramit Sethi]

Who ran the finances in that relationship?

[Richard]

We had joint finances, but we had a number of different, I would say, accounts. That one paid the bills, one for the cars, one for, like, fun money. Like, it all just went in. We had money. It was. It was good. We were good financially. But then after a while, she lost her job. And for me, like, she wanted to take over the finances, and sure, she did that. And then just ultimately, in the long run, it didn't end well. She wasn't paying anything, and things went into her own accounts. And in the end, when it almost like a fallout, a breakup. Lost the home. Lost. Lost the money. Sold off a camera equipment and a lot of different things.

[Dawn]

Shut down your business?

[Richard]

Yeah, shut down my business. And there was a lot of things that happened. I was in a rebuilding process, okay. For a long time before I met Don. I've been through a lot, and, yeah, if you want to join finances, because I know her good heart. You know what I mean? Good person, beautiful, amazing. You know what I mean? Like, I know there's no wrong to be had there in the end.

[Ramit Sethi]

Are you saying you are open to joining finances?

[Richard]

Absolutely. Okay. Absolutely.

[Ramit Sethi]

Just out of curiosity, how long have you two of you been together?

[Dawn]

Three years.

[Ramit Sethi]

Three years. And how come you haven't joined it yet?

[Dawn]

I think a lot of it is his last girlfriend that he lived with was asking him for a lot of money, and he was like, always, like, I gave her everything. He had no money for himself, so he's worried.

[Richard]

I didn't make a lot because I had. From my previous experience, I had a lot of debt, a lot of wage garnishments and everything like this. Like, everything in my past, I've already kind of paid my dues.

[Ramit Sethi]

Why were the wages garnished?

[Richard]

Just ran up. Credit cards.

[Ramit Sethi]

And why no fiance?

[Dawn]

Yeah, the ex fiance.

[Richard]

It was just like.

[Ramit Sethi]

For what?

[Richard]

Just random things. I don't know. To this day, would you say that.

[Ramit Sethi]

You'Re on top of your finances?

[Richard]

I would say yes. It's very minimal. It's very, very minimal.

[Ramit Sethi]

Listening to Richard talk about his past experience with finances, did anything surprise you?

[Dawn]

No.

[Ramit Sethi]

Okay. What do you make of the journey that he's been on?

[Dawn]

I guess a couple things come to mind. I do think he needs to be a little more aware because when one happened when we were together, his wages were being garnished, and I was like, well, do you know what it's for? He's like, no. And I'm like, fight it. I'm a little different, you know, like, I will call and be like, what's this for? And find out and fight it. And, you know, like, if there's a late fee, I'll call them and say, you know, this happened. Can I not get that? I'm a little more aggressive in that sense.

[Ramit Sethi]

Richard, how does your journey with money affect your relationship with it today?

[Richard]

A lot of stress. A lot of. There's not one day that goes by where I'm just punching mathematics, doing problems in my head, moving things around, just bills and numbers and. Yeah, because I have the feeling that one day you could lose it. There's been times I will go to the store and, like, I'm almost afraid to spend money.

[Ramit Sethi]

Have you always thought I could lose it all?

[Richard]

No, absolutely. I've always had a pretty. Pretty good income. Pretty. Pretty good. While single, mostly. I mean, I've had my relationships, but, yeah, I've always had just. It was a lot more simple. Yeah.

[Ramit Sethi]

When you were single, did you get ahead with money?

[Richard]

There's been some times in my life where, yes, I didn't. I was pretty, pretty ahead with money. Yeah.

[Ramit Sethi]

What was money like for you then? What'd you do with it?

[Richard]

Invested in my business as far as, like, gear and camera equipment and things like this. Upgrade clothes.

[Ramit Sethi]

Did you save?

[Richard]

I did.

[Ramit Sethi]

Where'd you put the money?

[Richard]

I had a 401k. I had a savings, paid the principal on my car and everything like this. But then what happened to me? I just lost it all. There was a lot that happened in a short period of time where I just needed money.

[Ramit Sethi]

You cashed out the 401k?

[Richard]

Yes.

[Ramit Sethi]

What was that for?

[Richard]

There was a house in foreclosure, my car got repossessed, I had credit card debt. Yeah, just a lot of different things.

[Dawn]

She didn't pay anything. Yeah, she just took the money.

[Richard]

Took the money.

[Ramit Sethi]

That sucks.

[Richard]

In the long run, it was almost bittersweet because it just, all of it's paid. It's in the past. Not really as far as like trauma and things you carry, but as far as like everyday life. It almost started me out on a blank slate. I know I'm behind 43. You need a 401k. You need think you need finances in the bank.

[Dawn]

And yeah, I have like a pension with the New York State. So I was like, so what are you going to do in 20 years? Like, I'm not paying for your retirement.

[Ramit Sethi]

Meaning you are not going to pay. If the two of you are married, you're not going to pay for him.

[Dawn]

My amount isn't going to cover mine and his. I don't have that big of a 401k. I don't want him to have to work like I want to travel some or enjoy our retirement. Not that I'm not going to pay for the home and stuff with my retirement, but I mean, he's going to need money. Like I'm not going to have enough to give him.

[Unknown Host]

I get a lot of requests to speak to couples with different income, especially lower incomes. Well, today we have Don and Richard and as you listen, you're going to hear how money lessons are passed from one generation to another. And at times today's conversation is going to be really frustrating. I know it was for me. But I want to encourage you to keep listening. Let's recap. Dawn has been married twice. Richard moved in and she asked him to pay and he did. But now she feels like he's paying rent, which again, he is. Yet that didn't even make her financial situation improved. When I asked what dawn would be doing if Richard wasn't paying, she admitted she would be struggling. She also acknowledges that Richard helps in non financial ways around the house. Now, Richard has a complex financial background. As he tells it, his previous fiance caused his wages to get garnished and destroyed his finances. Now, I don't know the details. I can only take his word for it. What I can see is that he's afraid to spend money today. And candidly, he's not in a good financial place. What really stands out to me is the total lack of a shared vision between the two of them. In fact, you'll notice that dawn uses her finances almost as a weapon, saying, I have a pension. What are you going to do in 20 years? I'm going to probe on the kind of vision they have together. But first, let's take a quick break to support our sponsors. If you have kids, you probably have 5,000 photos of them from just the last few months. And whenever you open up your phone, you scroll down, you smile. But how nice would it be to actually have those photos displayed around the house? Well, with Aura frames, you can show off your pictures whenever you want, wherever you want. And it's a great gift option for grandparents who would love to see all the photos you take every day. My coworker recently got an aura frame for her house and she told me that she loves it. She said, I take so many pictures that I forget about because they just sit on my phone buried. So I selected all the photos I love and I have them displayed on this beautiful frame for our family to see all day in our living room. I think this is a really cool gift to get for this holiday season. If you take photos of your kids, your dog, your travel, what do you do with the photos? A lot of times you just sit buried on your phone. But what if you could actually have them displayed in your living room? What if you could actually send that same frame to your parents, to your in laws, to your loved ones? Suddenly, all the experiences you're having can be shared anywhere. Save on the perfect gift by visiting auraframes.com to get $35 off Aura's best selling Carver matte frames using promo code ramit. That's a U R A frames.com promo code RAMIT. This deal is exclusive to my audience, so get yours now in time for the holiday. Terms and conditions apply.

[Ramit Sethi]

I don't mind surprises on my birthday, but I do not like surprises in my business. I want to know how much we're going to make. I want to know if we have a problem and what we are doing to take care of it. Now, we can't predict the future, not with our investments, not with our business. But I want to be able as much as possible to see what's coming. Now think about it. As entrepreneurs, when you run a business, you have tons of different areas to focus on and you can get lost in the weeds, which means you're not looking ahead at growth. What if you could add all the important parts of your business into one place. That's what you get with this episode's sponsor, NetSuite. With one unified business management suite, there's one source of truth giving you the visibility and control you need to make quick decisions. With real time insights and forecasting, you can start to go on offense with your data and look ahead. If I needed a platform that integrated accounting, financial management, inventory and HR into.

[Unknown Host]

One place, this is what I would.

[Ramit Sethi]

Use to be able to see the opportunities in front of me. Speaking of opportunity, download the CFO's Guide to AI and Machine Learning at iwt.com netsuite the guide is free to you at iwt.com netsuites N E T S U I T e I w t.com.

[Unknown Host]

Netsuite now back to our conversation.

[Ramit Sethi]

What's the vision of the together thing that you want to build?

[Dawn]

I'd like to do our finances together. So I don't pay all the bills myself and all the stresses on me. I would like to, you know, once a week we sit down and say, okay, this is what we need to pay this week. And he'll be like, okay, I'll take this and go pay that.

[Ramit Sethi]

So share the responsibilities of bill pay. Okay, got it. What else?

[Dawn]

I'd like to have some joint savings that we're each putting some money into. I don't want to just have me put money in. I make more than him. So that's where we struggle a little bit. I want us both to put some money in. So I feel like when we go on vacation or we, or we have an emergency fund, it's not just all me because then I feel like in time I'm going to build resentments against that.

[Ramit Sethi]

Okay, what else?

[Richard]

Get married.

[Dawn]

Yeah, get married. Purchase the house.

[Richard]

Purchase the house. Have something you own. Number wise, the house, when you look at it on paper, it's a really good deal, but it's not hers yet.

[Ramit Sethi]

This is a house that you're renting to own. You could own it or not. It's up to you.

[Dawn]

I could walk away. Yes.

[Ramit Sethi]

How much have you put into it?

[Dawn]

I'd say probably 10 to 12,000 because we redid the base math.

[Ramit Sethi]

Ah. And if you were to buy it, how much would it cost?

[Dawn]

It's my ex husband. He takes $1,000 a month off of the house, like sale price. So he was selling it to me for 330,000 and now I think we're about 317, 315. So the longer I wait, the longer it goes down. So I'm assuming like 300,000.

[Ramit Sethi]

How much would a house like that cost if you were to buy it?

[Dawn]

Right now? It's about 495,000.

[Ramit Sethi]

Wow.

[Dawn]

Yeah.

[Ramit Sethi]

So that's a good deal.

[Dawn]

It's a huge deal. And it's because he's financially in a horrible position and he wants me to have it because it's for our children. I thought about getting out of it and I looked around to see, because I want to stay in the same school district for my son. And I can't find anything under 250 to 300,000.

[Richard]

There's nothing close to what we would buy that for.

[Ramit Sethi]

If you were to buy that, how much would it cost you per month?

[Dawn]

At least 2,000.

[Ramit Sethi]

So a little bit more than you're paying right now.

[Dawn]

Yeah.

[Ramit Sethi]

Okay. And if you were to rent two.

[Dawn]

Bedrooms where we are, or about 2,000.

[Ramit Sethi]

Somewhere in there, this makes sense. In certain low cost of living cities, it can be more expensive to rent or as expensive as it is to own.

[Dawn]

Right. I'm in a better financial position, like monthly. I'm going to pay more when I get a mortgage.

[Ramit Sethi]

How would you afford this house? How would you buy it?

[Dawn]

I have a house savings.

[Ramit Sethi]

Okay.

[Dawn]

I have 69, 68,000.

[Unknown Host]

What?

[Ramit Sethi]

You have 68,000 in a house savings account?

[Dawn]

Yeah. To buy the house. Oh, it was 100,000 when I started the process, but that's slowly dwindling down. We used it for the basement for my daughter to have a place down there.

[Ramit Sethi]

What do you think of that decision?

[Dawn]

Yeah. Financially, not the best. Both my daughters aren't in stable positions at this point, and they both have children. So I was like, it's kind of a spot for them to come back.

[Richard]

There's a lot of things with that house. Cause it's very family oriented, where it has a pool, it has the backyard, a patio. There's 10 grandchildren.

[Dawn]

I do have 10 grandchildren.

[Richard]

There's a lot of get togethers, a lot of parties.

[Dawn]

It's always at mine.

[Richard]

The house totally fits the bill when it comes to that lifestyle.

[Ramit Sethi]

I appreciate that. And I know that parents, grandparents. It feels amazing to be able to have the house that everybody comes back to.

[Dawn]

Yes.

[Ramit Sethi]

I am trying to understand the financial side. How much did it cost to renovate the basement?

[Dawn]

I'd say 9,000.

[Ramit Sethi]

Okay, so you renovated for 9,000?

[Dawn]

Yep.

[Ramit Sethi]

In a house that you're renting.

[Dawn]

Correct.

[Ramit Sethi]

Which I don't mind. I've put money into rentals I've had because I want to live in a nice place.

[Dawn]

Right.

[Ramit Sethi]

But I could afford it.

[Dawn]

Right.

[Ramit Sethi]

How did you decide if you could afford that or not?

[Dawn]

Well, at the time, I'm just looking at, oh, I have 100,000. Like, you know, that's not something I normally have in my bank account. So it was like, it's not that big of a deal.

[Ramit Sethi]

So 100,000. And how much is it now?

[Dawn]

68,000.

[Ramit Sethi]

Ah. What happened to the rest?

[Dawn]

I mean, we went on vacation.

[Ramit Sethi]

Oh, where'd you go?

[Dawn]

Outer Banks. Okay, so that wasn't huge, but it was. I brought the whole family.

[Ramit Sethi]

How much?

[Dawn]

Um, I'd say probably 6,000.

[Ramit Sethi]

Okay, 6K. What else?

[Richard]

This was really great that year.

[Dawn]

Yeah, I just kind of spent. Not on anything for, like, myself. I mean, house, things. I paid off my car.

[Ramit Sethi]

Ah, what car was that?

[Dawn]

Um, it's 2015 infinity. I owed, like, 12,000, so I paid that off to put me in a better financial place. Monthly, it was a high interest. It was 9%. I claimed bankruptcy eight years ago.

[Ramit Sethi]

What?

[Dawn]

When I got divorced the second time, I was in a home, and we had a ton of credit card debt because he had stopped working and wasn't paying any bills. I wasn't making a lot of money, so we lived on credit cards. I did have a prenup, so when he left, he left with nothing. But then it's all on me. I could not afford the bills. I couldn't afford my car payment. So I claimed bankruptcy.

[Ramit Sethi]

What did it feel like to make the decision to declare bankruptcy?

[Dawn]

It was a hard decision for me in the long run. After it felt good just because everything. It was like a clean slate. I had my car in my house, but all the credit card debt and all that was gone.

[Ramit Sethi]

Do you notice the similarity in your journeys?

[Dawn]

Yes. It is what brought us kind of together.

[Unknown Host]

A lot of this is hard for me to hear. When I ask about what they want to build together. I hear I want us to split the bills. I want us to talk about money, and eventually, I want us to own a home, because you should own something of your own. It's a simple set of goals, even simplistic. Then I Hear Don had $100,000, but tapped into it for vacations and a car and a basement renovation. This is after declaring bankruptcy, which is just another reminder of how hard it is to actually change your financial behavior. Then dawn says that she and Richard came together after their respective financial history, and that is a huge red flag, because people who bond over trauma can often solidify and weave that trauma into their own relationship dynamic. Let's hear from dawn about how growing up with money impacted her money. Psychology Today.

[Ramit Sethi]

What do you remember hearing about money in your household?

[Dawn]

Only the fighting.

[Ramit Sethi]

Okay.

[Dawn]

It was always, we don't have enough money. Was fought about in my house all the time. My dad owned a business, and my mom worked two jobs, and he never could pay the bills. It was just constant fighting back and forth about not having enough, not having enough, which I understand as a mom, like, how that would be if she's working two jobs. And he was like, well, I am paying the bills.

[Ramit Sethi]

Does that sound familiar to you?

[Dawn]

Yeah.

[Ramit Sethi]

In what way?

[Dawn]

It sounds like me.

[Ramit Sethi]

Yeah. And whatever happened with your parents and money?

[Dawn]

They divorced.

[Ramit Sethi]

What else do you remember your family discussing about money?

[Dawn]

Just we'd never had enough. It was always, we never had enough. Like, we'd go grocery shopping and we'd always have to watch what we would. By per se, I mean. I never went without my parents, but my mother did what I do. She never said no.

[Ramit Sethi]

Wow.

[Dawn]

Yeah. I was bratty. And if I wanted something, a new Barbie house or something like that, I would. I would get it even if they didn't have money. Very similar situation to now.

[Ramit Sethi]

What lessons do you take away from that?

[Dawn]

Looking back, I wish my parents taught me more about and how to be financially stable. I wish I did that to my children because they're in different situations. They had children younger, but I wish there was more. Talk about it in a positive way.

[Ramit Sethi]

What would that have looked like instead.

[Dawn]

Of fighting about it and me hearing about the fighting, maybe sitting down and, like, actually knowing what was going on.

[Ramit Sethi]

Looking at where you are now and looking back at your journey from growing up to these two marriages, where would you have thought that you would be, financially speaking?

[Dawn]

I'm much better than I thought I would be because I didn't have a degree. I went to college. I went and got my substance abuse counselor after that. And now I'm an investigator. So I make more money now than I ever thought I would ever make. And it's still not compared to some people. It's not a lot, but for me, it's a ton. Or when you look at me, like, as a single mom and I've never been without a home. I've never been without a job, a car. My kids don't go without.

[Richard]

Works very hard.

[Dawn]

Wow.

[Richard]

Very, very ambitious.

[Ramit Sethi]

I appreciate the gratitude. I really do. That's really cool.

[Dawn]

Yeah, I try to think of that sometimes, but it's hard because I still struggle. And I'm like, I make this much Money. Why am I still struggling? But it's because I live above my means in some ways. I mean, I spend too much.

[Ramit Sethi]

You do?

[Dawn]

Yeah, my kids, yeah.

[Ramit Sethi]

Okay. How old are your kids?

[Dawn]

25 and 22 are my girls and they have children, so my one daughter. My 25 year old has one daughter and then her fiance has five kids. My 22 year old is pregnant with her third child and then her fiance has one, so they have four.

[Ramit Sethi]

And let's talk about your son. How old is he?

[Dawn]

My son is 12. He's with my second husband. He's tough. He's tough. He wants a lot. Every day there's something he wants. I mean, I just, just yesterday he sent me three things he wants and I'm like, well, maybe for Christmas. They're $125 jackets that he wants.

[Ramit Sethi]

Can we see? Well, he has very good taste. He sends a Nike tech men's full zip, windrunner hoodie. It looks pretty cool, I have to say. It looks pretty cool. So he doesn't even say like, can I have this, mom?

[Dawn]

No.

[Ramit Sethi]

He just sends the picture and the link.

[Dawn]

Yep.

[Ramit Sethi]

What's your reaction when you get a text like this?

[Dawn]

Typically I get upset with him, which isn't. Doesn't help our relationship. I'll be like, I don't have that kind of money. So if that's something you want for Christmas, I'll add that to your list. Sometimes it's okay, but most of the time it's a meltdown and sometimes I give in because I just don't want to deal with the reaction.

[Ramit Sethi]

What's your ex husband's take on this as well?

[Dawn]

My ex husband doesn't spend money on him like that. He knows if he reacts poorly that I'm going to give in. When I had my girls, I was in my 20s. I had a lot more. Yeah, that's the word. Tolerance. Now I'm tired and I also work and I didn't work with them, so I'm working hard. I have the house, you know, I have the grandkids that I'm. Yeah. So it's just sometimes I just don't want to deal with it. And I think.

[Ramit Sethi]

And he knows that that's a good explanation. Can you go beyond the explanation and tell me what will happen as this continues?

[Dawn]

Oh, I'm creating a monster because he wants what everyone else has. And in a way, I struggled with that for a very long time.

[Ramit Sethi]

You did.

[Dawn]

I really, really struggled with comparing myself. And I still do in some sorts, like Facebook's horrible Because I see all these vacations and people are in Italy and Spain and Caribbean and I'm like, I wanna go. Like, I work really hard, I wanna go. And that's where I go back and forth with. Some days I'm like, I need to save and have a future. And then other days I'm like, can't bring it with you. So that I do struggle with that sometimes.

[Ramit Sethi]

Let's trace the pattern here. You were young, you wanted a Barbie house. Mom said fine, even though they were fighting about money and never had enough. You wanted X, you wanted Y, you got it. Your 12 year old wants a Nike tracksuit, he's probably going to get the tracksuit. So what happens? Like what do you see in this story?

[Dawn]

Well, it's going to be a repeat. I mean, I know that's part of his issue with combining our incomes and I don't blame him because he's going to give me all his money and then I'm going to spend it all on my kid. And I get that, I do get that. But I'm hoping if we're doing it together at that point, I want to change my son's outlook on money.

[Ramit Sethi]

So you believe that when you have more money at your disposal, you're going to stop saying yes to your son?

[Dawn]

Yeah.

[Ramit Sethi]

Doesn't strike me as true.

[Unknown Host]

We are seeing how easily we can replicate past family patterns right on to the next generation. Dawn's 25 year old daughter has six kids with her fiance. Her 22 year old daughter has four kids with her fiance. Her 12 year old son is extremely spoiled. And dawn admits that she is creating, quote, a monster. I was honestly shocked when I saw those text messages. He just sent links of things he wanted. He did not say please, he did not even ask. He just added links of what he wanted. And dawn knows she's a pushover. She tells me that her ex husband doesn't buy those things for her son and he wouldn't ask him. Go back to her childhood and her mom bought her everything she wanted. Now she's replicating that for her son. Meanwhile, she directs her worries about money towards Richard. I want to get into their specific numbers and we're going to open up their conscious spending plan after this break for our sponsors. I have a lot of entrepreneurs who follow me and want to grow their business and when you start to grow your business, you're going to want to set up the right corporate structure, llc, S Corp, et cetera. Now you could hire an attorney to do that for you. That's what I did, but I recognize that that can be expensive for small businesses just starting out. And that's where this episode's sponsor LegalZoom can help you LegalZoom has everything you need to launch, run and protect your business all in one place. LegalZoom saves you from wasting hours making sense of all this legal stuff [e-mail] you can take care of business legal needs in just a few clicks. Also, if you need some hands on help, they have a network of experienced attorneys from around the country. Launch, run and protect your business to make it Official [e-mail] and use promo code Rich Life to get 10% off any LegalZoom business formation products excluding subscriptions and renewals. Expires 123124 get everything you need from setup to [e-mail] and Use promo code Rich Life legalzoom.com and Use promo Code Rich Life Disclaimer LegalZoom provides access to independent attorneys and self service tools. LegalZoom is not a law firm and does not provide legal advice except where authorized through its subsidiary law firm LZ Legal Services llc. What would it mean if you looked under your couch cushions and you found 1200 bucks just sitting there? You would be overjoyed. But how many of us are spending hundreds of dollars per month on subscriptions without even realizing it? I see it all the time in people's CSPs. 100 bucks, 150 bucks a month on subscriptions, which easily adds up to 1200 bucks a year on things they often don't even remember signing up for. Let's get rid of those subscriptions so you can pay for the things you actually care about using this episode's sponsor, Rocket Money Rocket Money is a personal finance app that helps you find and cancel your unwanted subscriptions. It helps you monitor your spending and helps you lower your bills so you can grow your savings. Rocket Money allows you to see all of your subscriptions in one place so you know exactly where your money is going. For any subscriptions you don't want anymore, Rocket Money can help you cancel them with just a few clicks. 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 of 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 RocketMoney.com Ramit RocketMoney.com Ramit now let's dig into dawn and Richard's CSP.

[Ramit Sethi]

Go ahead and read off the word in bold and then the full number next to it.

[Dawn]

Okay. Assets, 28,500. Investments, 24,985. Savings, 58,484, and debt, 14,895. Total net worth, $97,074.

[Ramit Sethi]

Okay, what do you all think of the numbers?

[Dawn]

I wish assets was higher, but I don't own a home, so that's why that's so low. Investments is not very big. I would like them all to be.

[Richard]

Bigger, pretty much the same. The debt definitely could be. It could be worse. I mean, it's manageable. I like the assets higher as well as the investments.

[Ramit Sethi]

What does this number mean to you? $97,000.

[Dawn]

So low. But I guess I never thought of a net worth.

[Ramit Sethi]

What'd you think about?

[Dawn]

Just what I owed, I guess, meaning.

[Ramit Sethi]

How much do I owe every month for my car? How much do I need to pay my bills every month? And that's why you talk about weekly. Richard Pay me 200 a week. Like, I don't talk to anybody about week ever. Week is. That's kind of like saying, like, let's go for a walk. Let's walk 2,520 inches.

[Dawn]

Right.

[Ramit Sethi]

Why would I talk in that term of measure.

[Dawn]

Right? Right. It's very small.

[Ramit Sethi]

Yeah.

[Dawn]

Yes.

[Ramit Sethi]

But often people who were not taught about money, they shrink their world down to the month, or in your case, even the week. And what is the effect of that when you talk about things on a weekly basis?

[Dawn]

I don't think it allows us to look towards a future at all. It's just paying what you pay. It's almost like going into a car salesman and saying, I don't want my payment to be over 500.

[Ramit Sethi]

Yeah.

[Dawn]

Instead of actually looking at the numbers.

[Ramit Sethi]

That's right.

[Richard]

It shrinks your bubble. It shrinks your world. It's almost like it distorts your vision to look out into the future. And what, like the big picture?

[Ramit Sethi]

Right. So out of curiosity, how come you haven't looked at the big picture of money, both of you?

[Dawn]

I've been single, in a sense of living alone for almost 12 years, so I've never had to talk about it with anybody.

[Richard]

I would say my case was just adapting to it. Like, I'm big on adapting and fitting in.

[Ramit Sethi]

When you say that, you adapt. So when Don comes to you and says, I, I want to 200 or 250 a week, your method of adapting is to kind of do the fence, et cetera. But then eventually say like, okay, here's 225 a week. Right. Did you say to her, this is how much I can afford?

[Richard]

Not really. Just that I don't really make a lot of money, so my money only stretches so far.

[Ramit Sethi]

Do you know how much you can afford?

[Dawn]

We did it together.

[Richard]

Yeah.

[Dawn]

Like, I sat down and I said, let's sit down and figure out. So I wanted to make sure he still had money for himself, because that was a big thing. I'm like, so if we do your bills and what you get paid and you give me 200 a week, that leaves you enough for what you need.

[Ramit Sethi]

How much do you have left over every week?

[Dawn]

Oh, God.

[Richard]

150.

[Ramit Sethi]

Okay. And what do you do with that 150?

[Richard]

Gas? I'm a smoker.

[Ramit Sethi]

Do you notice that? The way that both of you talk, There is no discussion about savings rate? None of that. It's. I have 150. It's enough to pay my gas and to smoke.

[Dawn]

Right. It's very, very weekly. It's just getting by.

[Ramit Sethi]

Is that okay with you?

[Richard]

No, no. We have the dream.

[Dawn]

I've tried to do budgets. I tried to do apps. I don't know if I just don't follow through.

[Ramit Sethi]

Do you think it's a budget that's the problem, that you don't have the right spreadsheet set up? I don't think it is.

[Dawn]

Probably not.

[Ramit Sethi]

What is it?

[Dawn]

I guess I don't really know. I mean, saying no and actually taking control, like you said, of my finances and being like, no, this is going to go in here and being disciplined.

[Ramit Sethi]

Okay, what about for you, Richard? Why haven't you gone beyond the weekly basis? It's been 40 plus years.

[Richard]

In my case, it's what I make. I haven't made this amount at a year since I was in my early 20s. With what I make a year, like my ability, like, to put money and save money, like, it's. How far can it actually stretch?

[Ramit Sethi]

You're right. Maybe your income isn't high enough. We're going to get to that in a second. But if. If I were in your situation and I were talking to a partner who said, hey, I want you to contribute something to the household, I would definitely have that conversation. But if I can't afford to save any money every month, then I can't afford to contribute. I need to be paying myself first. Right. Meaning I need to be saving 20 bucks a week, 50 bucks a week, 50 bucks a month, Whatever the Number is, that's how I would think about it.

[Richard]

Okay.

[Ramit Sethi]

Anybody teach you that ever?

[Richard]

Not really, no.

[Unknown Host]

I'm really glad that I get the chance to talk to Don and Richard, because I want you to understand how most people in America grow up with money. Most people have never heard the word investment in their household, ever. Their parents don't talk about it because they don't even know what investments are. What's a savings rate? How does retirement work? Parents don't know. So kids don't know. So their kids don't know. And the cycle simply continues. The truth is, most people grow up with simple money messages. Very simple. Save money, make your own coffee at home, buy a house. And then they enter into a complex world with words like mortgages and deductibles and expense ratios. It's almost unfair. Almost. You'll notice that Don and Richard have not made a serious effort to learn about money. This is why I say that we can simultaneously call for systemic reform while encouraging personal responsibility. Pick up a book, listen to podcasts. Start to focus time, at least an hour a week at the beginning, on your personal finances. It's one of the most important uses of your time in your entire life. Don and Richard are focused on paying weekly bills, while the real problems are much, much bigger. But they don't even realize it.

[Ramit Sethi]

Don, that. That. That urge you have to combine finances so that you can pay the bills. What do you notice about that?

[Dawn]

It's me, probably because I've. I've had to do things on my own. So it's just. I take control. I do it in the house, too. Everything needs to be planned, you know, if there's anything going on, I just kind of.

[Ramit Sethi]

Why didn't you plan more investments?

[Dawn]

I never really thought about it growing up. It was just the bills. It was always the bills. It was never investments. It was never, you know, like I said, go to college to get a better job. You know, I try to instill that in my children.

[Ramit Sethi]

You instill the saving investing part in them, I think.

[Dawn]

I try to, but not with. I don't.

[Ramit Sethi]

What's going to end up with his financial situation when he becomes an adult?

[Dawn]

He's going to struggle. I mean, because if he wants, you know, $100 this, hundred dollar that every day, he better make a lot of money.

[Richard]

You come accustomed to getting what you.

[Dawn]

Want, which I was.

[Ramit Sethi]

And now he will. And probably his kids will probably, which.

[Dawn]

I'd like to stop that, really. I would like to make a plan and do it. I have. I have Been putting my foot down more like, with that. I was like, you're not getting it. I don't have the money.

[Ramit Sethi]

You said that?

[Dawn]

Yes.

[Ramit Sethi]

And how did that go?

[Dawn]

A couple weeks ago, I had a surprise bill taken out, so my bank account was like, nothing. And I'm like, I literally have, like, $8 in my bank account. Like, I don't have it, you know? And then he's like, oh, well, you.

[Ramit Sethi]

Should have told me what has happened with the fact that he asks you for things all the time and he doesn't ask your ex, I think, because.

[Dawn]

His father wasn't around and I overcompensated first.

[Ramit Sethi]

I wish it wasn't guilt. I wish it was caring, and I wish you had that same care for yourself. The reason I wish you had that care for yourself is that by prioritizing yourself, you actually create a model for everyone in your family.

[Dawn]

Right.

[Ramit Sethi]

To see what it's like to have healthy boundaries, to see what it's like to prioritize things that are important for you. Still be generous, but to prioritize a healthy, rich life.

[Dawn]

Right.

[Ramit Sethi]

Let's look at the income. Richard, can you read off the combined current monthly income?

[Richard]

10,251.

[Ramit Sethi]

I know you two have not combined your income, but just for simplicity, if you did, your household income would be $123,000. Did you know that?

[Dawn]

Not really, Richard.

[Richard]

No.

[Dawn]

It took. It took a long time for him to even tell me what he made.

[Ramit Sethi]

Why?

[Richard]

I'm not comfortable with what I make.

[Ramit Sethi]

Okay, so the income split here is 6700 is for you, Don.

[Dawn]

Yes.

[Ramit Sethi]

35 is for you, Richard. All right. And you net about $7,000 a month again, combined. But if you look at that, we make $123,000. What do you say?

[Dawn]

I don't think it's terrible. Of course I'd want to make more.

[Richard]

I say it's almost average.

[Ramit Sethi]

I don't know too many small towns that make 123k average. That's a lot of money. You want me to look it up right now?

[Dawn]

Sure.

[Ramit Sethi]

The median income in Your city is $57,000. What does that tell you?

[Dawn]

That we're not doing poorly for where we live. So we might live above our means.

[Ramit Sethi]

What do you make of it, Richard? The fact that the two of you combined make double the median income in your town.

[Richard]

Very eye opening. It's. That's good. Good news for me.

[Ramit Sethi]

If I had just sat down and discovered that I make twice the median household income as what I thought I would feel A lot of gratitude. We should give ourselves a pat on the back. We should appreciate how far we've come.

[Dawn]

Yeah.

[Ramit Sethi]

How hard we've worked. And, you know, sometimes people become addicted to the feeling of struggle. It is all they know. And when I ask them, like, what if you didn't worry about money, what would you do? They go, I have no idea. The second thing I would feel is anger. Anger at. Why do we feel so behind? If we make more than a lot of people in our area, what are we doing? And I would start to get bad if I make that much. Where's it going?

[Dawn]

Yeah.

[Ramit Sethi]

What are we doing wrong? Because it shouldn't be like this if we're making double what other people are making, right?

[Dawn]

Yeah, absolutely.

[Ramit Sethi]

Shall we take a look at the fixed costs? All right. What was that laugh?

[Dawn]

Because mine are 100%.

[Ramit Sethi]

Wow. Your fixed costs are 100%. Okay. What does that tell you right there?

[Dawn]

That I have too much for what I make.

[Ramit Sethi]

Yeah. It tells me you're broke. You are literally spending more than you make every month.

[Dawn]

Absolutely.

[Ramit Sethi]

That's where the money from your $100,000 is going. It will go away, and you will be left in extreme peril.

[Dawn]

It scares me, and I think that's where my stress comes up. And maybe that's where I portray it onto him like, I need more money.

[Ramit Sethi]

Yeah, that is. You'll also see that stress manifesting in other ways in your financial life. How many times a week do you log into your accounts, look at the numbers, run calculations?

[Dawn]

I have it on my phone right on the. Right on the screen.

[Ramit Sethi]

Does it get you anything?

[Dawn]

No, I mean, stress. That's what it gets me.

[Ramit Sethi]

Why do you do it, then?

[Dawn]

Maybe have it.

[Ramit Sethi]

Remember when your kids were young, they have a blankie. That's your blankie. You log in, feel this intensity. You click the button, you see the same familiar numbers, but there's this, there's that. It's a bit of stress. And then what do you feel at the end?

[Dawn]

Still stressed.

[Ramit Sethi]

Still stressed.

[Dawn]

But, well, a little relief that I've done it.

[Ramit Sethi]

I can make it this week.

[Dawn]

Correct? Correct. I have a little calendar that I have everything that comes out, and I look at it almost daily of, okay.

[Ramit Sethi]

This comes out today making $123,000. But talking about making calendars, like. Like a child would make them to make sure they did their homework correct. I think there's a different way. One of the reasons I wanted to get a chance to speak to you was that sometimes we're just not taught this and we are passed down conscious and unconscious messages from our family. And, you know, we've talked about them. Mom did this, I do this. Now, my kids do this. Right. In your case, Richard, things happen to you in your relationships. You were not in control of your money. It almost was like you were a passenger for some of this. Oddly enough, the journey you went through brought you two together. But you haven't rewritten the chapter of your life that you're in now. And you're just continuing the same trends, being passive with money, mistaking, observing your finances for being in control of your finances. And so I see this and I get alarmed. I look at your fixed cost, don, I see 100%. I look at yours. Richard, is this right, dawn? Are you paying less than Richard pays?

[Dawn]

Well, I pay all the other bills, so I guess when it comes to.

[Richard]

Just rent, the money I give her, I don't know where it goes. I'll just say bills.

[Ramit Sethi]

No, that's not acceptable. To just say she wants 250, so I gave her 250. And as long as she's okay, that's okay with. No. You're in your 40s. You have to prioritize yourself first. You're not married. And similarly, Don, it's not acceptable to just say, I need 250 to cover my weekly bills. Because you'll be covering your weekly bills until one day you can't work anymore and now you're screwed. So this isn't acceptable. $723 a month for rent is what Don is paying. Richard is paying $1,000 a month. All right, that doesn't make sense to me, but let's keep going down the list. Utilities, Don is paying all of them, $486 a month. Okay, so you're picking up more of the housing proportionally. I get it. Insurance, you're paying 238. Don Car payments. 260 is what Don is paying per month. So I assume you have a paid off car. This is just your gas. And then, Richard, you got 506. You have a car still?

[Richard]

Yes.

[Ramit Sethi]

What kind of car?

[Richard]

It's a 2015 Jeep Cherokee.

[Ramit Sethi]

Does the thing break down a lot?

[Richard]

Been pretty good.

[Dawn]

It's starting to break down. And we want a truck.

[Ramit Sethi]

Wait, hold on. Just explain the logic. We need a truck because we own. What's the connection?

[Dawn]

Well, I own a camper.

[Ramit Sethi]

Explain these words to me. What's a camper?

[Dawn]

An RV that you pull behind a truck.

[Ramit Sethi]

Oh, my God. Is this a joke? How many couples do I Talk to that. Tell me they own a truck. I go, why do you own a truck? They go, I gotta pull the boat. Okay, so you currently tow it behind what?

[Dawn]

I have to pay somebody to tow it.

[Ramit Sethi]

Okay, where do you.

[Dawn]

So I have a membership to a campground. So we camp for free. We go camping for a couple weeks in the summer.

[Ramit Sethi]

Okay.

[Dawn]

And that's kind of our vacation.

[Ramit Sethi]

And how much does this camper cost in maintenance fees?

[Dawn]

I pay 500 a season to have it towed.

[Ramit Sethi]

And then you want to get a truck because you want to stop paying someone to tow it for you?

[Dawn]

Some of it, yes. And then just household. Like when we're doing household things, like, we have no way to get stuff to our. Like, lumber and things like that.

[Ramit Sethi]

Okay. Can I just say, without even looking at the rest of the numbers, don't buy a truck. Okay? Do not buy a freaking truck right now.

[Dawn]

Okay.

[Ramit Sethi]

All right. 517amonth in debt payments for dawn. What is that for credit cards? What. How many. How much in debt?

[Dawn]

I have a loan on my 401k because I needed the money back before my. Before my bankruptcy.

[Ramit Sethi]

Okay.

[Dawn]

I tried to do it that way. First pay things. Okay. And then I took out the rest for the camper.

[Ramit Sethi]

Why'd you do that?

[Dawn]

Because I wanted a camper.

[Richard]

And what she grew up with.

[Dawn]

I had this membership. What was I gonna do with it?

[Ramit Sethi]

So I grew up eating Indian food five times a week. It doesn't mean I do it now.

[Dawn]

Well, that's my spoiledness of that part.

[Ramit Sethi]

Okay. I wanted the Barbie house, I got the Barbie house.

[Dawn]

Correct.

[Ramit Sethi]

I wanted a camper. I got the right. Okay, well, I will say that was a horrible decision, but a lot of people who take loans out don't even pay themselves back, so the fact that you're paying yourself back is better than most. And you have 40 bucks a month, Richard, in debt. What's that?

[Richard]

I have a personal loan. Yeah. How much is it for right now, the debt? The total is about 800, 850 around there.

[Ramit Sethi]

Groceries are 800amonth. That's for the three of you.

[Dawn]

I would love to get that down.

[Ramit Sethi]

Groceries are not the problem. That's fine. I have no comments. 800 bucks a month. Fine. I'll take it all day.

[Dawn]

Okay. Yeah, that's the three of us. And if the kids come over, I'll make dinner.

[Ramit Sethi]

Phone is 150 for you and 125 for you, Richard. That's 275 total. Why is it so much?

[Dawn]

I pay for my children, and then they pay me. We're on one together.

[Ramit Sethi]

And do they actually pay you?

[Dawn]

Well, they didn't used to, but I just took on my other daughter, so they said, let me know when you get it and I'll pay it. So it's more me having to ask for it.

[Ramit Sethi]

How many text messages are you sending that pay? Time to pay me. How many meetings are you having with Richard? Time to pay me.

[Dawn]

That's a lot. I would love to not do that ever because it makes me feel like I'm like a debt collector.

[Ramit Sethi]

You are a debt collector. That's the role you've given yourself. Remember when I told you that the way you feel about money, that stress will manifest itself in certain ways?

[Unknown Host]

What is this?

[Dawn]

More stress?

[Ramit Sethi]

Yeah, but what are you getting out of it? You go around to everyone, you knock on the town's doors, including your fiance, hey, it's time to pay me again. I feel horrible doing this, but in the end, what happens?

[Dawn]

I feel better once I get it.

[Ramit Sethi]

Yeah. Let that temporary sense of money wash over me and give me control.

[Dawn]

That's absolutely right. When I do get like when I get his money, the 200 or 250, it just like I feel better.

[Ramit Sethi]

Yeah.

[Dawn]

Like I can breathe.

[Ramit Sethi]

Richard, I can see. I can see you are very observant about what's going on in the studio.

[Richard]

Love it.

[Ramit Sethi]

How long has it been since you've been in the photography business?

[Richard]

Four or five years.

[Ramit Sethi]

What if you just never start the business?

[Richard]

If I never start the business, then I'd have to kind of dive into something that made a little more money.

[Ramit Sethi]

What do you do?

[Richard]

I do assets protection and logistics. And there are 12 hour days, Saturday, Sunday, Monday, Tuesday through Friday. Have open all that's open to start a business.

[Ramit Sethi]

What do you currently do during that time?

[Richard]

Just the housework, organization, renovations. That's kind of nothing. I always say that's nothing for me.

[Ramit Sethi]

Well, it's something for me. I don't know how to do any of that stuff. If somebody was doing that, that's worth a lot of money. You know what I mean?

[Richard]

Yeah.

[Dawn]

He works very hard at the house.

[Ramit Sethi]

Yeah.

[Richard]

I don't stop.

[Ramit Sethi]

Is there value in that?

[Dawn]

Oh, absolutely.

[Richard]

I save money. Yeah, there's money saved.

[Ramit Sethi]

Is there financial value besides just the money saved?

[Dawn]

I've told him when we first talked about him starting his business, I'm like, why don't you get something like part time? And he's like, well, I couldn't pay the bills. I'm like, all you need to do is pay Your bills and just kind of help out a little. But what you do in the house is so much more to me than like financially. But at the same time, I don't want to struggle.

[Ramit Sethi]

What's the balance that you've decided on?

[Richard]

I work now and the struggles there. Even though I'm giving the money, but.

[Ramit Sethi]

I'm still a struggle.

[Richard]

Time grind my business, but we all know when you're starting out, it's up and down.

[Ramit Sethi]

What if Richard told you that looking at his finances, he can't contribute 250 a week? He can contribute 100 a week because he needs to prioritize his own retirement.

[Dawn]

I would be okay with that if I could get my finances under control more.

[Unknown Host]

You can see that a lot of Dawn's financial struggles are due to her own decisions. She took out a loan on her 401k for a camper. When I asked her why, she said, because I wanted a camper. Now of course, I'm getting frustrated listening and I know a lot of you want me to scream at Don and Richard, but this isn't a zoo. I'm not here to create a spectacle with my guests. It might feel good to you, but I'm not here to scream at them. I'm here to try to help them live a rich life. This is why I'm asking them lots of questions and I'm going slowly. I'm letting them hear their own responses. When we get back from this short break, I'm going to talk to Richard about what she wants. I got this DM from someone. They were like, I saw you coming out of my building. I just wanted to say hi. I was like, I don't need my skin worn like a raincoat, okay? But the worst part is that was just an Instagram dm. Imagine if you went on Google. You search for your name and city. Guess what you find. You'll notice your address is out there, your phone number, even your family members personal information is out there.

[Ramit Sethi]

Not okay.

[Unknown Host]

Delete me. Today's sponsor will remove your name, age, address, phone number, relatives, names, all of it from online. Here's how it works. You sign up, you submit your info for remove. Delete me Experts search for and start removing your personal information. You will receive a detailed delete me report in seven days with what they've found so far. And then they continue to scan and remove your personal information regularly all year long. Now, I'm happy to promote this service because I personally use it and I recommend it to all my friends and family. So if you want to get your personal information removed from search results on the web, go to joindelete me.com ramit for 20% off a plan for you or your entire family. Again, that's joindelete me.com Ramit R A M I T. Let's keep going.

[Richard]

If we didn't work out, I have the ability to bank half of my income.

[Ramit Sethi]

How?

[Richard]

My family owns a duplex apartment and I can move in there rent free.

[Ramit Sethi]

How long can you do that for?

[Richard]

Forever. But that's not what I want.

[Ramit Sethi]

Okay, very interesting. You want to live together and you're willing to contribute in some way. Financial, logistical, all the above. So that you two can do that.

[Richard]

Yes.

[Ramit Sethi]

Okay, hear you loud and clear. Let's keep going down the numbers here. So we are currently at 74% fixed costs, which is a lot. Well, it's 77% for Don, which is high but fixable, and 69% for Richard, which is also high, but we can work with that. Okay, 74% joint fixed costs. Although again, you're not joint expenses. Your subscriptions, by the way, are 161 and 138 per month. Let's go down to the investments. Investments are $00 being invested?

[Dawn]

I have a 401, but it's pre tax.

[Ramit Sethi]

All right, so how much are you putting in that 401k?

[Dawn]

It's about 120 a check.

[Ramit Sethi]

So like 3,000 a year? Ballpark. Okay, fine. And what about you, Richard? Investments?

[Richard]

Nothing.

[Ramit Sethi]

How come?

[Richard]

Trained it. Just trying to rebuild after things.

[Ramit Sethi]

Okay. Savings are at zero for everybody.

[Dawn]

Besides my house savings, which needs to go to buy the house, that's all.

[Ramit Sethi]

There's no savings down from 100 to 58. Okay. And going down every month, probably. Okay, let's look at guilt free spending. Whoa. So first of all, I don't believe these numbers. I know you're spending more than 9.93amonth on eating out, travel, et cetera, stuff for the kids. What happens at Christmas?

[Dawn]

Last Christmas I probably took out of my savings.

[Richard]

It was either that or credit cards.

[Dawn]

Yeah, one or the other. It's very stressful.

[Richard]

A lot of kids, a lot of family members.

[Ramit Sethi]

What I took away from that was life happens to me, Not I decide what happens at Christmas. Another couple I could speak to could be making half of what you make, even a third of what you make. And they could say something like this, you know what, we talked about it. And we save up for the whole year. And each child gets one gift and we really spend Christmas together. We all watch a movie. Fraction of what I'm sure you pay. But they decided. The world didn't decide. I also noticed that you said, I don't know what's going to happen this Christmas. What's that saying to me? So by saying I don't know what happens, life is out of control for me. I don't know.

[Dawn]

Other people are going to tell me what happened exactly.

[Ramit Sethi]

And why is it that you're so afraid to decide what happens with your own money?

[Dawn]

I don't want to disappoint my children, maybe.

[Ramit Sethi]

And other people, what would be disappointing to them?

[Dawn]

I don't know with my girls if they would be disappointed really. Because they're older and they're like, don't buy for me this year, buy for the kids instead. Like, I think they'd be okay if I really said I don't have money. My son, it depends with him. He might be disappointed. It's the guilt. It's that overcompensating.

[Ramit Sethi]

If guilt is the primary driver for your financial behavior, you're going to guilt yourself right into running out of money.

[Dawn]

Which I done.

[Ramit Sethi]

Yeah. Look at this number. You're down from 100k to 58k. It's going down.

[Dawn]

Yeah.

[Ramit Sethi]

I don't know about you, I would not want to live my life based on reactive guilt. It just seems like you're always one step behind. No matter what you do, it's never enough.

[Dawn]

That's exactly how I feel.

[Ramit Sethi]

If we were to speak about money in a combined Sense. You have $123,000. It's a good salary, particularly relative to the median salary in your area. You have an enviable housing situation.

[Unknown Host]

Like, unbelievable.

[Ramit Sethi]

And in your case, Richard, if you need to, you could always go and live back for free. So you both have an enviable situation, housing wise?

[Dawn]

Correct.

[Ramit Sethi]

But you have only $24,000 in investments and you're investing very little. And if we run a calculation on how much you will have, I can show you, but it's going to be very little. You have a pension.

[Dawn]

Yes.

[Ramit Sethi]

How much is the pension going to pay you?

[Dawn]

Maybe 1100amonth, 1,200amonth.

[Ramit Sethi]

Just so everybody knows, you're currently making 6700amonth gross. So to go from that to 1100, what would you do?

[Dawn]

I wouldn't be able to afford to live or get a job.

[Ramit Sethi]

So right now you don't have enough money to retire.

[Dawn]

Correct.

[Ramit Sethi]

You're not on track to have enough money.

[Dawn]

Right.

[Ramit Sethi]

So I guess I'm I feel like from the reactions you're both giving me, I feel more alarmed for your situation than you are. Why is that?

[Dawn]

I've never had to really think about the future much. You know, it's more like you said, living the day.

[Ramit Sethi]

So here we are. What do you want to do? This is your chance.

[Dawn]

We want help.

[Ramit Sethi]

Okay, tell me what you want to do.

[Dawn]

I want to be 70 years old and working a second job right now.

[Ramit Sethi]

You're on track to do that?

[Dawn]

Yes. So I need to start putting more money into my 401k and investments.

[Ramit Sethi]

How are you going to do that?

[Dawn]

I need to get some of my fixed costs down so I have the money to put in there if I didn't have the debt payments, but I do. So I don't know how to get those down besides just paying them off.

[Ramit Sethi]

Well, you could pay that off today if you wanted.

[Dawn]

With my 58,000? Yes. Which is what I did with my car. I don't think I can be in a better spot, rent wise, mortgage wise financially.

[Ramit Sethi]

I agree. Even if you were to downsize to a two or three bedroom, you'd pretty much be paying the same.

[Dawn]

Right.

[Ramit Sethi]

What about the basement that you spent $9,000 on? Is there an opportunity there?

[Dawn]

There is an opportunity there. It's just finding some way to utilize that with somebody.

[Ramit Sethi]

Yeah. Somebody you trust. I totally hear you on that. But getting aggressive, putting the word out. But if somebody were to come in, how much rent would they pay you?

[Dawn]

800 maybe.

[Ramit Sethi]

800. Let's even say 700.

[Dawn]

Okay.

[Ramit Sethi]

That changes the whole game.

[Dawn]

Absolutely it does.

[Ramit Sethi]

Okay. So that's a huge lever you have to pull as long as it is safe for your family, right?

[Dawn]

Yeah, I have no problem with that.

[Ramit Sethi]

Okay. What else?

[Dawn]

Not pay for my kids phone.

[Ramit Sethi]

Agreed. Every bit helps. Just to show you, instead of 150, if we take it down to 80, that drops you from 77% fixed cost to 75%. So it actually is meaningful. Right, but what's more important about that? Can you imagine sending a text message to your kids and letting them know they're going to be responsible for covering their own phone?

[Dawn]

I try to help them out because to be on mine, it's cheaper than if they went on their own.

[Ramit Sethi]

Look, it's your money. You could do what you choose. It's your family. But the way you are currently managing your money, you will run out of money.

[Dawn]

Right.

[Ramit Sethi]

This is the easiest decision you will make out of the things that we're going to talk about.

[Dawn]

Right.

[Ramit Sethi]

So would you be Willing to do it?

[Dawn]

Yes, I would be willing to do it.

[Ramit Sethi]

Are you ready to turn the page on that chapter of them being little kids and you helping them with everything?

[Dawn]

Yes, I think it would be good for them.

[Ramit Sethi]

Can we do it right now? Can you send the text?

[Dawn]

Oh, boy. I mean, I will.

[Ramit Sethi]

Tell me what you're going to say in this text message.

[Dawn]

Looking at my finances, it would be financially in my favor if everyone had their own phone plan.

[Ramit Sethi]

Okay. Was that difficult?

[Dawn]

It's very difficult. Now I'm going to cry.

[Ramit Sethi]

It's okay to cry.

[Dawn]

I just want to help my kids and I don't have a lot of money to help them and that's really like small amount. And I do ask them for the money and they pay, but I just at least feel like I'm.

[Ramit Sethi]

I think everyone wants to take care of her kids and that changes over time. Seems like you are providing a place for the whole family to come.

[Richard]

That's kind of what the house is. That's kind of what that plays. Everybody gathers grandkids, Everybody. Pool yard, anything like that. That's the hub.

[Ramit Sethi]

So you are living that dream.

[Dawn]

My house right now is my. I would say is my dream.

[Ramit Sethi]

Okay.

[Richard]

Yeah.

[Ramit Sethi]

In order to keep that dream, would you be willing to make other changes?

[Dawn]

Yes.

[Ramit Sethi]

Which ones?

[Dawn]

Like sell the camper, things like that. Okay, I can sell the camper.

[Ramit Sethi]

How much would you get?

[Dawn]

Somewhere between 10 and 12,000.

[Ramit Sethi]

Let's say 10,000. 10,000. What do you do with the money?

[Dawn]

That's where I'm not sure if I would put it into the house fund to make my mortgage go lower when I do buy it or put it into 401k.

[Ramit Sethi]

Like, is anyone looking at the credit card debt here?

[Dawn]

Oh, definitely. Get rid of the credit cards and pay. Pay back my 401k.

[Ramit Sethi]

Yeah, that would be good.

[Dawn]

And then the rest put into my savings.

[Ramit Sethi]

I think that you should probably be investing more and a lot more. And I think that you probably don't understand how investments work. And I'm going to be willing to bet both of you you haven't read a book, my book, or anyone's book on personal finance, stuff like that, right?

[Dawn]

I've read the book.

[Ramit Sethi]

Yeah?

[Dawn]

Yeah.

[Ramit Sethi]

Oh, what did it tell you?

[Dawn]

Well, it told me a lot of things, but I have to put it into play.

[Ramit Sethi]

This isn't a hypothetical life. This is your life. Either I want that and I'm going to do it, or I'm not. You can also say I'm not. I like the way it is. I Don't want to make any changes. I want to pay the cell phone and keep the camper. I will respect that.

[Dawn]

No, I want to do it and I will do it. I want savings. I want to get married.

[Ramit Sethi]

Now, you guys talk a lot about what you want, but you don't talk about what you're willing to do.

[Dawn]

True.

[Ramit Sethi]

And I have a lot of compassion for both of the things that you've gone through in your journeys. I feel for that because not everyone grows up learning about this stuff when you're a kid. But at a certain point, you have made decisions that have kept you here. And even when we have this time together, which I want to help you, you're reliving the past and you are telling me what you want. But kids want unicorns. That doesn't mean they're going to get them. And kids want everything. That's not a plan. So I'm begging you to tell me, what changes specifically are you willing to make? Let's start with Richard. Now.

[Richard]

Sell the camper. 10, 10, 5, 11 at most. Pay your 401k. But you look at the money you're already putting into the camper as far as like towing it. The expenses.

[Ramit Sethi]

Yes.

[Richard]

The money that you would spend doing that, Put it where you want.

[Ramit Sethi]

Oh, wow. Okay. So normally during summer, let's just say you would spend. I'm going to make it up 300 bucks a month on XYZ, assorted expenses. So that's three months. That's 900 bucks you would have normally spent. You take that 300 bucks a month and you what? Put it.

[Richard]

Put it in your 401k, put it towards your wedding, put it in an emergency fund.

[Ramit Sethi]

It's either one of two things. Save it or invest it. In your case, because you are starting later than most, but you still have time. 48 years old and 43. So you have time. You have, you know, 15 to 20 years to let money compound and grow. That's a long time before potentially you retire. For me, if I'm looking at it, I'm investing aggressively. I'm finding an extra 5,000, 6,000 or more per year to be investing. And that's right there. I love what you said. 900. Pull it. Put it in there. Okay, what's next? Let's go back and forth.

[Dawn]

I need to stop buying stuff for my family.

[Ramit Sethi]

How?

[Dawn]

Well, the phones, like you said.

[Ramit Sethi]

Is that a done deal or no? If you are serious about making these changes, you're probably going to make a series of changes to recalibrate the financial relationship between you and your loved ones.

[Dawn]

Correct.

[Ramit Sethi]

It's not just about the cell phone.

[Dawn]

Correct.

[Ramit Sethi]

So this is a great opportunity to let them know that you're going to recalibrate it. It's not just about the cell phone. Because if it's just about the cell phone, then it's going to be just about this and this. And they're just going to feel like she's constantly just stabbing me. Yes. So let's set the tone. Hey, I'm in New York. I'm meeting with this guy. I've realized I need to make some big changes with my finances. The first thing that I'm going to do is I'd like for each of you to be responsible for your own phone plan, and I'd like for you to switch over to your own plans by the end of the month.

[Dawn]

Okay. I'm in New York and meeting with me, and I need to make some big financial changes. I would like you both to switch.

[Ramit Sethi]

To your own phone plans before you send it. At the very end, put this. This is important to me. I love you.

[Dawn]

Look, I'm proud. Are you sending it?

[Ramit Sethi]

Yeah. Good work.

[Dawn]

You think I'm taking away their dog or something?

[Ramit Sethi]

It goes a lot deeper than just a cell phone bill, doesn't it? What is it to you being there for them?

[Dawn]

It was just me and them for a long time. Like 11 years.

[Ramit Sethi]

Yeah.

[Dawn]

I went through a lot with the divorce, like, emotionally. And if it wasn't for them, I don't know how I would have gotten through it.

[Ramit Sethi]

You know, you're still there for them. You're there physically, you're there emotionally.

[Dawn]

Yeah, I have a great relationship with them.

[Ramit Sethi]

Mom is Mom. You're going to be there, but you're going to change the dynamics. It's the same way every parent has done when they were little kids. You used to feed them. You don't feed them anymore. Right. Same way that you used to pay for them to go back to school shopping. We don't do that anymore. And this is just another evolution of that. Okay, so what feels big to you? I get it. It feels big because you're just. It's just closing the door on one more chapter of parenting, but you are actually giving them the keys to start their own chapter. They're going to figure things out now with their spouses and fiances. They've got to figure it out just as you're doing it right now. Not everybody has a chance to come to New York and talk to me and others. You had that chance. Now you're passing that gift along to them. Yes. It's going to be tough for them. It is. There's no doubt. Especially with the incomes they make, the number of kids is going to be tough.

[Dawn]

Yeah.

[Ramit Sethi]

Well, let's remember they have a house that they can go to where mom. Where grandma's there, they're loved. And a cell phone bill. They will figure out a way to make it work. Okay?

[Dawn]

Yeah.

[Ramit Sethi]

All right, Richard, what do you say? I noticed you were holding her hand during that process.

[Richard]

That's a really big deal. Like, I know what family is to her. It's everything.

[Ramit Sethi]

Yeah. I kind of love watching the two of you. I love that you reached over and comforted her and Don. I love that. I think when we were talking about the numbers, you were quite stoic, even though I was becoming alarmed. But this. This really tells me so much about you. It is family. And just the fact that it is so challenging for you to send this.

[Dawn]

Text message, I've never realized that that would be so hard.

[Richard]

Yeah, it's like kind of standing up. What's like me first?

[Ramit Sethi]

Yeah, that's right.

[Dawn]

I don't do that.

[Unknown Host]

That conversation was really hard for me, but it was 10 times harder for Don. Truthfully, looking back on the recording, I don't know if it was the right call. Think about it. Her daughters are engaged. They seem to be responsible. They have big families. They don't make a lot of money. Why are they being penalized? Let me tell you why. I decided for dawn to start with her daughters. They're grown up. They have their own families. And dawn is my guest. Dawn, she's my focus today, along with Richard. Without making a change, it is a certainty that dawn will run out of money. She doesn't have enough saved. She doesn't own a house. She is at extreme risk of living in poverty when she gets older. And I know that her saving $50 a month on cell phone bills will not materially change her financial situation. But I need her to take an action, a hard one, to show herself that she can put herself first. Also, I intentionally did not tackle her relationship with her son. The fact that she spoils him, that a 12 year old essentially orders her around, that she has allowed him to control the financial dynamic at home that goes much deeper than the scope of this show and that needs the help of a therapist. Back to dawn standing up for herself.

[Ramit Sethi]

What could be a new definition for you of who Don is going to be?

[Dawn]

Somebody that takes control of my own life. But is still there for my children and still a good mom.

[Ramit Sethi]

It's not a But you're taking control of your life and you're going to continue to be there, but in a different way. You'll be there to hug them, you'll be there to talk to them. You're not going to be there to pay their bills. Right. And you're not probably going to be there with your son when it comes.

[Dawn]

To what things that he wants every day.

[Ramit Sethi]

Yeah, that's going to be really challenging. Right?

[Dawn]

It's going to be challenging, but I think it's going to be easier than sending that text. I think it's just the bond with my girls and like, they. They're in college and trying so hard, and I do feel like I financially failed them. I wasn't able to pay for their colleges. You know, I look at, like, my brother's situation, and he's done so well. His house is paid off. He paid for his kids to go to college. He's got a ton of, you know, money and savings and all on one income. I just wasn't able to give them any of that. And I could have if I did things differently.

[Ramit Sethi]

Don't you think that's what we're doing right now? You can give them cell phone payment and you can do that for the rest of your life and put yourself into complete debt.

[Dawn]

Right.

[Ramit Sethi]

Or you can actually give them something even more valuable than 50 bucks a month. You can give them. What I think is the opposite of a doormat is being a role model with money. Can you imagine? They look and say, wow, mom took total control of her money. Mom went through so much. And look at now her retirement account is growing. She feels confident. And believe it or not, I guarantee your family will respect you when you start to have very clear boundaries of what you will and will not do with your son. I think that that's probably outside of the scope of what we could talk about today, but I noticed that there is no therapy on this as well. Is that something that the two of you have done before?

[Dawn]

Oh, yes.

[Richard]

We're very big into mental health.

[Ramit Sethi]

Love it. I'm so happy. If you haven't already, although I assume you have, talking about the financial relationship with your son, Is that something you could bring up comfortably in therapy?

[Dawn]

Yes.

[Ramit Sethi]

Highly encourage you to do that because you'll get some great tools to have conversations with him, and I think that will be fantastic. Yes. What about you, Richard? If you want to live together, then that makes it difficult for you to start A business or have the financial security in order to. You're investing zero, you're saving zero. So what's the plan?

[Richard]

God, I can almost say, like, not even pursue the business, really. It's time. That's the balance issue with me. Where do you fit it all in as far as, like, house care and renovations and grinding a business?

[Ramit Sethi]

Well, maybe. What's the point of the renovations? What if you stopped doing that? What would you do instead?

[Richard]

Probably that.

[Ramit Sethi]

What?

[Richard]

The business. Taking pictures, creating content, doing things for myself.

[Ramit Sethi]

All right, and if you do that, how long will you give it? And how much do you need to make to know if it's the right financial decision or not.

[Richard]

That I don't know.

[Ramit Sethi]

Let's pick it.

[Richard]

Enough to pay bills. Obviously, I'd have to pay my bills first and foremost if I were going.

[Ramit Sethi]

To start a business. Let's forget it. Video, audio, it doesn't matter. It's just a business. At a certain level. You currently make $3,500 a month.

[Richard]

Yes.

[Ramit Sethi]

Okay, so that's like roughly 40k a year. The thing is, we can start to make some choices about finances by just looking at the high level. We go making roughly 40k a year. You could make 20 bucks an hour and I don't know what, you know, places around you pay for minimum wage and things like that. Probably what, 18? 18. So that's close to it. That's right there. You could make minimum wage and make similar to what you're making. No grinding, no nothing. Just go to work. And after work is done, you're over, but you're working, you know, full time. The real reason that I think there's so much confusion in your mind about what to choose is that there's no clear end goal. Like, the two of you haven't talked about. What is the actual lifestyle we want. Do we actually want to buy this house? If so, how much is it actually going to cost us and when are we going to do it? That means you need to make this much and I need to make this much. That means we need to be contributing this much every month right now. It's. It's a lot of, you know, like, I'd like to do this and travel. You guys are in your 40s, so either you decide now or you just coast into the rest of your life and close off lots of doors.

[Dawn]

Right. Which I don't want.

[Ramit Sethi]

Richard, for you, if I were in your situation, I would say I have six months to be making more than I currently make at my job right now. I make 3,500 bucks a month. I need to be making 3,500 bucks a month within six months. Otherwise, close the business down. It's not working. And if you can make 3,500, you could probably make 5,000 and on and on and on. Set a time limit and an income goal because that forces me to be really specific about what I'm doing in my business. Otherwise I'm just like doing random stuff and hoping one day it will take off. I don't have time for that.

[Dawn]

Right.

[Ramit Sethi]

I'm getting aggressive with my business. I'm getting aggressive with my finances. What do you all notice about the way I'm talking?

[Richard]

Confident, aggressive.

[Ramit Sethi]

I'm going to do this. And hey, it won't always work. But if it doesn't work, here's my plan, right? Close it down or change approach, etcetera, etcetera. Timelines, specific numbers. If you look back over the last 10 years, you know, financially speaking, what's changed? It sounds like you've gone through. Well, you've gone through a lot of relationship changes and things like that. Yes, but I want the next 10 years. I want you to be able to live this amazing life. Now, amazing might be different than what you envisioned when you were 20, but it might be. Look, being able to be in your dream house and have your family over XYZ times per year, maybe it's not fighting about money, maybe it's taking a camping trip. Fine. But you got to be intentional about it. If it were me with the numbers, I would not combine my finances until I got married. I would not get married, financially speaking, until I had a shared vision about what we're going to do. And the fact that you can't afford a wedding right now. I mean, this is where I think you need to start talking about compromises. I would never let the cost of a wedding get in the way of getting married. A wedding is a wedding. If I didn't have money when I got married, I still would have gotten married. I would have done it in the courthouse. If having a wedding in your fashion is important to you, fine. What choices are you willing to make to do it? So I would make the changes to cut this number down to roughly, you know, 60%. That would be difficult. That would involve raising incomes in your case. Don, you mentioned that if you didn't have Richard, you would get a second job. I would hate to see a 48 year old mom have to get a second job simply because of her inability to say no. It's like Let me just take on more and more and more so that I can just give, give, give to others. And then what happens to you?

[Dawn]

Well, I get lost in it.

[Ramit Sethi]

You are lost in it, but nobody can get you out except you. Not even me. I would increase my savings and my investments. I would take this house payment and I would say, look, I don't know if we're going to get a house or not, but right now what's more important is we have an emergency fund. That emergency fund is going to be roughly 30k because that is six months of expenses. Okay. Again, I'm speaking jointly. I know you'd have to divide it for the two of you, right, Richard, since you don't have any savings, that would be first priority for you is to build up those savings. And that is why you cannot afford to be paying a thousand dollars a month. There are a lot of things here that need to change if you two want to be financially secure.

[Unknown Host]

A lot.

[Ramit Sethi]

And it's difficult. We saw the text message. Difficult. It's difficult going to be for your son. It's going to be really difficult for you. This is where the two of you can actually show that you are partners. And it's like, hey, I know this is so tough for you to say this. Let me help role play with you, what you're going to say to your kids before they come over. Hey, I know it's tough for you to quit smoking. How can I help? How can I support? This is where partners can step up.

[Dawn]

Right?

[Ramit Sethi]

And you can do it together. But what's important is you've got to have a vision together. If we're going to get married, this is what it's going to take.

[Dawn]

Right.

[Ramit Sethi]

If I were in your position, I would be putting a lot more money towards investments than savings.

[Dawn]

Okay.

[Ramit Sethi]

Why? Because savings make you very little. You need time for these investments to compound. Typically, historically, these numbers have returned roughly 7% per year after inflation and all that stuff. That doesn't sound like a lot, but it adds up to a lot. And that. And in your case, you're 48, presuming you retire at 65. 68, that number could turn out to be quite a bit. Would you like to see?

[Dawn]

Sure.

[Ramit Sethi]

All right.

[Dawn]

Love to see that.

[Ramit Sethi]

I'm going to show you the math really quickly here. You have 25,000 you are putting in, let's say, 6,000.

[Dawn]

Okay.

[Ramit Sethi]

You want to retire 65.

[Dawn]

That would be my goal, but I don't know if that's doable.

[Ramit Sethi]

All right, so you'll currently have $276,000. That means you will have $11,000 a year in income, plus your extra 12,000. We're talking about $22,000 a year in income.

[Dawn]

Be hard to live on that.

[Ramit Sethi]

Can't live on that.

[Richard]

You can't.

[Ramit Sethi]

What's going through your mind right now?

[Dawn]

I'm in a really bad place.

[Ramit Sethi]

Do you see why I've been in such a hurry? You can't live on this. It's not a good life. Can we make some changes?

[Dawn]

Yes.

[Ramit Sethi]

Instead of 6,000 a year, you put 12,000 a year. That's $1,000 a month. Okay. That's pre tax. It's extra money. You have all of it to your 401. Let's just say keep it simple. 17 years. You're now at 474,000. It's growing. Still not enough.

[Dawn]

Right.

[Ramit Sethi]

What else could we do? Let's assume for the moment that you are not going to buy a house.

[Dawn]

Okay.

[Ramit Sethi]

So we take 30k out of here and put it into the investments. Watch what happens. You're now at 569. All right.

[Unknown Host]

What else?

[Dawn]

Like, put more money in?

[Ramit Sethi]

Yes. 18,000 a year. We're now at 767,000, which means you could have $30,000 of income, plus your pension, plus Social Security.

[Dawn]

It's doable. I can live.

[Ramit Sethi]

You can live. You know what else you can do? You can stay working for a couple more years. Why don't we do that? Watch what happens. Instead of 767,000. A million bucks. You see what just happened? It grew a lot. In three years, you're up to 40,000 a year in income, say, plus all that other stuff now.

[Unknown Host]

Why?

[Ramit Sethi]

Because we're in a hurry. Compounding needs time. It's like cooking a turkey. You can't just do it in five minutes. That's why I'm getting so passionate about, like, oh, are we talking about sending a text message? Like, send the text. We got bigger things to worry about. We need to be putting well over a thousand dollars a month into investments. We need to be decisive and making big moves with our money needs to become a regular thing. And these conversations that feel so existential right now, they're actually the tiniest conversations in the grand scheme of what's important. What are you all taking away from this?

[Dawn]

Dawn, I just need to be more aggressive with what I do with my money and take control of it. I have to not make impulse decisions when it comes to my family and buying, even buying for myself in the house. I love to Buy things for the house. But I just have to look at my future more.

[Richard]

Richard, know about your money. Be more aware where you want it to go.

[Ramit Sethi]

Yes.

[Richard]

Be more aggressive.

[Ramit Sethi]

I like that you said be aware of where you want to go. Because it's not enough to just be aware of what's going on today. We have to be aware of where we want to go. And in your case, because you have 20 plus years to do it, you have a chance to actually build a pretty healthy financial life.

[Dawn]

Right? Right.

[Ramit Sethi]

In this calculation, I didn't even combine the two of you. If you were to combine makes things even better.

[Dawn]

Oh, absolutely.

[Ramit Sethi]

But you can't combine it until you each get control of your money. Right.

[Unknown Host]

Now, the real issue with Don and Richard is that they don't believe they have agency or control over their lives. This is very common with people who grow up low income who often see the world as happening to them, not as something they can influence. And this explains so much of some people's passive behavior with money. You'll hear them talking about their decisions and you'll say, why don't you just do X or Y? And they'll have an answer for everything. You're basically playing financial whack a mole. And after a while, you realize there's a deep lack of agency. And it goes something like this. Nothing I ever did made any difference, so why bother? It's haunting, really, when you think about it. And these messages are passed down generationally. So even when you get someone trying to make a change, they often lack the basic fundamentals. Sometimes they try to make a change, but they end up fixating on how much money they're spending on groceries that week. This is where we really have to have compassion for the different ways that we grew up. I grew up knowing that I could make an impact on the world. It was an expectation. My parents told us, of course you're going to college. Of course you're going to get a good job. Of course you're going to get A's. That's an expectation. I knew that I could work and that I could get results. But that was taught to me from my parents, whose parents taught them and on and on and on. And we have to remember that not everybody grew up the same way. In this conversation, I also wish I'd gotten to the retirement numbers earlier. It was only at the last minute that I showed dawn these numbers. And did you see her reaction? She looked alarmed. All that talk about their situation. But it was only when she realized she'd have to live on a fraction of what she makes now that she sat up and realized she was in trouble. I want to thank Don and Richard for asking for help. I truly hope they're able to make the changes they need to. Time is not on their side and if they want to live comfortably as they get older, they will need to make aggressive, sweeping changes very quickly. Let's hear what they have to say, starting with Dawn's follow up.

[Dawn]

I guess Rich and I came into it thinking that it would be more of like a plan of what we would do to move forward. More of like a idea or blueprint of what we are to put our finances together so it doesn't feel like I'm paying all the house bills and he's just giving me money. We did come up with a solution. He is going to actually pay certain bills because the money he gives me doesn't go solely to rent. It does have to go to food and electricity, things like that. So he is going to actually take on some of those bills and be responsible for those. So that takes a little weight off me. I don't have to ask him for the money. So that did make us open up a conversation about that and we were happy with the outcome of that. When it comes to my retirement, I did look into that and I actually have a New York State pension which is so much better than I thought. I am going to be putting into a 401k but I get a pretty high percent of my top three years that I work for New York State. So looking at that now I know how to actually navigate that. Rich has started putting money into his 401k and so we are well on our way. So thank you. Bye.

[Unknown Host]

Unfortunately we never got a follow up from Richard even after my team reached out several times and I have to tell you I am very, very disappointed to hear that. Don and Richard, I'm wishing you the best. I would love to stay in touch and I would love for you to keep me updated. Thank you again for coming on the.

[Richard]

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

[Ramit Sethi]

It starts as a Playboy Channel fantasy.

[Unknown Host]

But this is real life where passion leads to murder and a killer seeks.

[Richard]

God's help with the COVID up.

[Ramit Sethi]

I'm Josh Mankiewicz and this is Deadly.

[Richard]

Mirage, an all new podcast from Dateline.

[Ramit Sethi]

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