217. “Are we broke…or just bad with money? (Part 1)

Summary

Episode 217: “Are we broke…or just bad with money? (Part 1)”

Release Date: July 15, 2025
Host: Ramit Sethi
Guests: Dominique (33) and Chris (34), engaged parents of a two-year-old son

---

Introduction

In Episode 217 of Money For Couples with Ramit Sethi, Ramit engages in a candid and raw conversation with Dominique and Chris, a young engaged couple grappling with significant financial stress. This episode delves deep into how money psychology influences their relationship, uncovering the root causes of their financial strain and the emotional turmoil surrounding it.

---

Understanding the Financial Strain

Dominique's Perspective: Dominique expresses a profound sense of overwhelm and isolation in managing their finances alone. She states:

“I feel like we're almost like one really big couple way from just losing everything.”
[01:04]

Chris's Perspective: Chris reveals a sense of shock and realization about their financial mismanagement:

“At the moment, no, I don't think we can afford it. I really. I really don't.”
[16:37]

Key Financial Metrics: Ramit breaks down their financial situation using the Conscious Spending Plan (CSP):

• Total Assets: ~$1,003,100
• Investments: $24,526
• Savings: $13,198
• Debt: $615,339
• Net Worth: $425,485
• Combined Annual Income: ~$180,000
• Fixed Costs: 69% of income
• Investments: 13%
• Savings: 18%
• Guilt-Free Spending: 0%

---

Root Causes of Financial Stress

High Fixed Costs: Their fixed costs consume 69% of their combined income, significantly higher than the recommended 50-60%. This excessive allocation leaves little room for savings or investments.

Lack of Guilt-Free Spending: With guilt-free spending calculated at 0%, Dominique and Chris find themselves unable to enjoy discretionary expenses without financial guilt, leading to increased tension.

Debt Management: A substantial debt of $615,339, primarily from mortgages and credit cards, contributes heavily to their financial anxiety.

---

Communication Breakdown

Recreational Conversation Analysis: Ramit facilitates a reenactment of a typical financial disagreement between Dominique and Chris about purchasing another vehicle. This exercise highlights their communication barriers and emotional responses.

• Dominique's Concerns:

  “Our house is expensive. But I don't think we should get rid of it.”
  [05:25]

• Chris's Approach:

  “I think we should get it. Look into getting another vehicle because we need to have something in case something happens.”
  [09:26]

Emotional Responses: Both parties exhibit feelings of being overwhelmed, misunderstood, and annoyed, rather than addressing the financial issues constructively.

---

Impact of Upbringing on Financial Psychology

Chris's Upbringing: Chris shares his childhood experiences of financial instability, witnessing his parents' struggles and eventual foreclosure of their home. This background fosters a "live in the moment" mentality towards money.

“Tomorrow's not promised. So you know, live in the moment, have fun while you got it.”
[01:28]

Dominique's Upbringing: Dominique recalls her father's mantra of "we're broke," instilling a fear-based relationship with money despite their actual financial status.

“We're screwed.”
[07:56]

Current Financial Behaviors Influenced by Past

• Chris: Tends to make financial decisions based on feelings rather than numbers, leading to impulsive spending.
• Dominique: Adopts a scarcity mindset, resulting in excessive spending on non-essential items to compensate for perceived financial inadequacies.

---

Conscious Spending Plan (CSP) Evaluation

Initial Assessment: Dominique initially perceives their finances as dire upon reviewing the CSP, feeling "screwed" due to high debt and low savings.

"We're screwed."
[07:56]

Detailed Breakdown: Ramit guides them through their CSP, revealing discrepancies between their perceived and actual financial status. Notably, Dominique's investment contributions are misrepresented, highlighting gaps in their financial understanding.

Adjustments Made:

• Corrected investment figures to reflect actual contributions.
• Identified significant overspending in guilt-free categories, particularly eating out and personal services.

---

Overthinking and Reactive Financial Management

Dominique's Overthinking: Dominique admits that overanalyzing financial decisions leads to paralysis and inaction.

“I could be nicer. I mean, I could hear him out, you know, and I.”
[12:18]

Chris's Reactive Approach: Chris acknowledges a lack of proactive financial planning, often reacting to financial crises rather than preventing them.

“I feel like I need to be more positive for myself and not beat myself up about certain things.”
[54:25]

---

Lessons from Upbringing and Their Impact

Chris's Takeaways: Growing up in a middle-class family that faced financial struggles, Chris developed a belief in spending freely when possible, fearing future scarcity.

Dominique's Takeaways: Dominique internalized her father's message of scarcity, leading to a constant fear of financial instability despite their substantial assets.

---

Conclusion and Insights

Ramit Sethi's session with Dominique and Chris sheds light on the profound impact of money psychology on relationships. Their upbringing instilled conflicting financial beliefs—Chris's "live in the moment" mindset versus Dominique's ingrained scarcity mentality. These divergent beliefs manifest in poor financial communication, excessive fixed costs, and a lack of proactive planning.

Key Takeaways:

1. Align Financial Goals: Couples must openly communicate and align their financial goals to avoid hidden resentments.
2. Move Beyond Emotions: Financial decisions should be based on numbers and data rather than emotions or past conditioning.
3. Proactive Planning: Anticipating future financial needs and planning accordingly can prevent reactive financial crises.
4. Address Money Beliefs: Understanding and reshaping inherited money beliefs is crucial for building a healthy financial relationship.

Notable Quotes:

• Dominique on financial despair:

  “At that moment I'm just like, we have no money, we're screwed.”
  [01:15]

• Chris on financial education:

  “We're doing something wrong.”
  [33:30]

• Ramit on changing beliefs:

  “If we can change our beliefs, then sometimes we can change our realities.”
  [79:21]

This episode serves as a crucial first part in understanding and addressing the financial struggles that many couples face, setting the stage for actionable solutions in part two.

---

Stay Tuned:
In Part 2 of this conversation, Ramit will explore strategies to handle rising childcare costs, develop long-term financial plans, and ensure that Dominique and Chris do not pass down detrimental money messages to their son.

---

Follow Money For Couples:
Connect with Money For Couples on Instagram, YouTube, Facebook, and X to start living your rich life today.

Transcript

[Ramit Sethi]

If you have been wanting to start a business, I have a special free online event coming up that I want you to know about. It's called Start a Business. In one hour, I'm going to be there live and in this session I'm going to walk you through the exact steps that I've used and that I have taught to thousands of other people to go from no idea to a ready to sell offer in under 60 minutes. Students like Lindsay, who's a mom of two young kids, she used these steps to consistently make $3,000 a month as a financial therapist. Here's what she told me. She said it's the most rewarding thing I can do. I can be home with my babies and have my dream career, something I've built for me and my family. If you've been waiting for the right time to start your business, here it is. Join me Monday, July 21st at 8pm Eastern, 5pm Pacific. Seats are limited. You can grab yours now for [e-mail] earn more or click the link in the description below.

[Dominique]

I feel like we're almost like one really big couple way from just losing everything.

[Ramit Sethi]

How much money do you have in your checking account right now?

[Chris]

At the moment? In my checking account I have $64.18.

[Dominique]

I'm kind of like depleting my saving, trying to pay for everything. I felt like I was doing it by myself, just trying to handle everything, all the bills. And at that point I'm like, I just do this by myself. Just seeing it laid out. I'm just like, we have no money, we're screwed.

[Chris]

Tomorrow's not promised. So you know, live in the moment, have fun while you got it. I mean, I feel like if you have it, do what you want with it. If you look at it the right way, things will eventually work out for you. Just how uneducated we really are about money and how much we are just kind of, I don't want to say wasting, but wasting money in a sense and things that you don't really see until you kind of put it on paper or put it right in front of your face and you're like holy.

[Ramit Sethi]

Today I'm speaking with Dominique and Chris. They're 33 and 34, engaged and they have a two year old son. Here's what Dominique wrote in her application and I want you to really listen closely, she said. Talking about money seems to end in an argument. Part of me feels like if we had more money we would have more love for each other. At this rate, I feel like we'll be co parenting in the next year or so. And I always feel like we can lose everything at any moment. This is brutally honest. Do you hear what she's saying? She's saying she basically sees this relationship ending in about a year. This is one of the reasons I want to talk to them right now. So I just opened up their conscious spending plan. It shows us their four key numbers. Their fixed costs, savings, investments, and guilt free spending. If you want to follow along or create your own CSP, you can go to iwt.com CSP their total assets come in just over a million bucks, which is very impressive for their age. Their investments though are only 24,562, should probably be higher. Savings are at $13,198. Their debt is at $615,000, which puts their net worth at $425,000. Now they earn roughly 180k a year combined, which is a very strong income. But their fixed costs eat up 69% of it, which is too high. Investments and savings are 13 and 18%. But the real red flag here is that their guilt free spending is listed at 0%. I don't believe that number. So let me find out what's going on. So who filled out the application to speak to me?

[Dominique]

I did.

[Ramit Sethi]

Okay, Dominique, do you remember where you were and can you walk me through what was going through your mind at that time?

[Dominique]

I was in a bad place straight up. I think that we have been arguing a lot. I don't remember specific details. I think we just couldn't catch a break. The baby was up every single night. It was just like really overwhelming. Maybe our air conditioning bill was super high. I don't even know.

[Chris]

I was off work a little.

[Dominique]

That's right, he was off work. So it was, it was kind of me handling it. I really felt like alone in handling it. And I had saw that application roll through and I honestly, I was in my bed. Chris was knocked out snoring next to me and I'm filling this out just like, oh my God. And I kind of just laid everything out.

[Ramit Sethi]

Chris, what was your reaction?

[Chris]

I'm still kind of in a shock, but I mean, I'm all for it. I'm ready to dig deep into it.

[Ramit Sethi]

And Dominique, since you filled out the application, can you tell me what is going on here?

[Dominique]

I think that we don't know what we're doing ever, you know, when we're talking about finances, I don't know everything. I don't know how to prepare for them, it's kind of overwhelming. I think we wing it a lot. I feel like we're almost like one really big up away from just losing everything. You know, we have so much that is going out money wise, and I see nothing coming back or when it comes back, it's gone immediately. And then I'm like, what are we doing? We have nothing to show for it.

[Ramit Sethi]

Can you describe the primary problem in one or two sentences?

[Dominique]

Think we have a very expensive house that we're paying for in Arizona.

[Ramit Sethi]

Okay. That's the problem. The house.

[Dominique]

I mean, I can't say that it's not a huge problem. Right.

[Ramit Sethi]

What's the primary problem?

[Dominique]

Our house is expensive. Yeah. But I don't think we should get rid of it.

[Chris]

I think that the problem is we don't know what the other has, in a sense, and we don't really, like, communicate about it. And I think the problem is that we need to, in a sense, be more conscious of each other's finances and help each other.

[Ramit Sethi]

Do you both think that you understand the problem?

[Dominique]

I think we have so many problems, we don't ever talk about them.

[Ramit Sethi]

Yeah. It was notable when I asked what's going on, that both of you gave different problems and then both of you shifted into what you need to do, like, solutions. It's kind of like me going to get my car fixed and there's like a pinging noise, and I walk in, I go, well, the seat is loose and the glove compartment doesn't close. And. And also there's a pinging and. But what I really need to do is I need to change the type of gas I use.

[Dominique]

Use.

[Ramit Sethi]

It's kind of what's going on, right?

[Dominique]

Yeah.

[Ramit Sethi]

What would be a different approach? If you had a problem in your car and you took it to the car repair place, what would you do?

[Dominique]

I mean, for me, if I have a problem in the car, I'm gonna take it to the mechanic. I'm gonna just tell them, fix it. I don't care how much it is. Just fix it for me.

[Chris]

Okay, Chris, if you don't really know much about it, you ask questions of how to maybe someone else can figure out the problem or, you know, help with the solution to the problem.

[Ramit Sethi]

All right, well, that's why we're here. We're going to figure out what's going on and then come up with some solutions. All right, Dominique, in your application, you wrote, quote, I need us to be on the same page before we can move forward and be the best parents to our two year old son. At this rate, I feel like we will be co parenting in the next year or so. Now those are pretty striking words. What do you mean by in a year or so? I feel like we will be co parenting.

[Dominique]

I just felt like we could not communicate about anything. Chris mentioned that he was off of work for a while, so that was pretty tough on us. You know, I'm kind of like depleting my savings, trying to pay for everything. I needed him to figure out what his next move was going to be as far as work goes. You know, if you don't have work for X amount of days, figure it out quick because at that point it was like I. I felt like I was doing it by myself, just trying to handle everything, all the bills. And at that point I'm like, I could just do this by myself.

[Ramit Sethi]

Can you walk me through a time where the two of you were not on the same financial page recently or not even recently.

[Dominique]

I don't even know when it was. But we were arguing because he wanted to buy another car.

[Ramit Sethi]

Okay, let, let's start there. So where were you when this conversation happened?

[Dominique]

This conversation has been happening for a while, maybe like a month or two.

[Ramit Sethi]

Okay, and what was the conversation?

[Chris]

Because I drive a car and we only have two vehicles at the moment. We have our forerunner that we have and I drive a little car on the way to work and stuff like that. And I just thought that for one, I want to get another vehicle to help take my stuff for work because I do construction and sometimes I need to get longer material that I can fit inside of a car. And as well as. Since we do have the baby and the car is always filled up with, you know, all my tools and stuff for work, if there were to be in any type of emergency or any type of situation and she's gone with the car and I have the baby or vice versa, you know, I just always want to have some kind of way to have transportation for both of us.

[Ramit Sethi]

Okay, can we recreate that conversation? Where were you? Paint the picture for me the last.

[Chris]

Time when this hell happened. I think we're on our way to Target.

[Ramit Sethi]

And who was driving, Chris?

[Chris]

I was.

[Ramit Sethi]

Okay. All right, so, Chris, we're in the car. I'm just in the backseat listening like a creep like this. All right, so you two have the conversation as if you're in the car. Okay.

[Chris]

I think that we should get it. Look into getting another vehicle because we need to have something in case something happens with Troy. Something happens with, you know, the other car, and I'm out of a car, and we only have one car, and I can't get to work. So I was thinking about looking into a bank and seeing how much a loan would be.

[Dominique]

And what bank did you look at and what was the APR and how are you going to pay for this? And is there anything that you could pay down before we have another bill?

[Chris]

No, I didn't look all into that then.

[Dominique]

I don't really want to have a conversation if you don't have the information.

[Ramit Sethi]

How did it end?

[Chris]

I kind of shut down because I didn't have all the information. And I know she's very like, give me this information. Have this. Have this all lined up and stuff like that. In a sense, I was just kind of mentioning it because it was a thought that I had and just wanted to look into it to be able to find more information. But she took it as if, like, I'm going to go tomorrow and go buy this car right off the lot for a $10,000 loan and things like that.

[Ramit Sethi]

Okay, Chris, when you brought up the idea of getting another car and Dominique responded in the way that she did, what did it feel like to you?

[Chris]

I just felt like what I was saying doesn't matter. Like, attacked to where. Like, what are you saying is for, like, you don't have all this information, so what are you even bringing it to me?

[Ramit Sethi]

And then I want to ask the same question of you, Dominique. What did it feel like when Chris brought up the idea of getting another car?

[Dominique]

There are so many other things that are going on that adding a car to the list is just. It's just too much.

[Ramit Sethi]

I noticed that when I asked you, how did it feel? I get a lot of words that are not feelings, and I actually am very compassionate about that because I wasn't raised, like, talking about my feelings. So I have a tool that a therapist suggested to me. This is the wheel of emotions. I'd love for you to just take a second and look at it and see two or three feelings that come to mind. Can you see that?

[Dominique]

Yeah.

[Ramit Sethi]

Chris, I'm going to ask you first, and then I'm going to come to you. Dominique. Chris, what did you feel now, reflecting on that in that conversation?

[Chris]

I don't know, like, misunderstood. It just felt like what I was saying was just uncared for, in a sense.

[Ramit Sethi]

Dominique, how about for you in that.

[Dominique]

Conversation, overwhelmed and annoyed. And I want to point out, too, that I just want Chris to know that his siblings are valid. I could understand how you feel. Unheard in that conversation, 100%.

[Ramit Sethi]

You ever talk about how you feel?

[Chris]

Sometimes we talk about how I feel, especially when we get into really uncomfortable situations. I mean, we might get real quiet, and it might take a second for us to get to that, but I think after we give ourselves a second, we do kind of come back and talk about how we feel in the moment.

[Ramit Sethi]

Now that you recreated that conversation for me, which was really helpful, what did you notice about that conversation? With a little distance and perspective, that.

[Dominique]

I could be nicer. I mean, I could hear him out, you know, and I. And I don't do that a lot. So from that conversation, I understand that I definitely could have heard you better, Chris.

[Chris]

I just could have had more information, but I didn't have all that information. So when I was kind of just saying something about it, I didn't expect it to get kind of where it ended up getting to.

[Ramit Sethi]

How do you think other couples have conversations like this?

[Dominique]

I don't really want to compare myself to anybody, but I feel like people have probably better communication. I want Chris to come to me directly and confidently, and that makes me feel better about going into a conversation.

[Ramit Sethi]

Okay. Chris, how do you think other couples have conversations like these?

[Chris]

Maybe the same as we do. You know, it really all depends on the people, the context, the way things are said or brought up.

[Ramit Sethi]

Is everyone evading my question right now? What's happening? Dominique's answer to that question was what she wants Chris to do. And Chris's answer is, it all depends on the cosmos and the oceans. The question is simple. How do you think other couples have conversations like these better than us? Like what?

[Chris]

I don't know.

[Ramit Sethi]

Okay. That's an honest answer.

[Dominique]

They're like, hey, this is what we want. Yeah. I feel like people just have a better way. Maybe they start arguing. Maybe it's a worse way.

[Ramit Sethi]

Okay, interesting. Who says I don't know in a conversation? Do either of you?

[Dominique]

I mean, we both say I don't know a lot.

[Ramit Sethi]

Really?

[Dominique]

Yeah, we say it tons.

[Ramit Sethi]

Okay.

[Dominique]

We always say I don't know.

[Ramit Sethi]

Interesting.

[Dominique]

I think, to avoid everything that we know.

[Ramit Sethi]

Do you have friends who you talk about money with?

[Dominique]

Yeah.

[Chris]

No.

[Ramit Sethi]

Dominique says yes. Chris, you said no.

[Chris]

I don't talk to really many people at all about money or my own money or things like that.

[Ramit Sethi]

How about family?

[Chris]

Here and there, I guess, but not really.

[Ramit Sethi]

Okay. Chris says, not really. Dominique nodded her head like, yes. Okay, so not to stick on this point, but, Dominique, you talk to friends, you talk to family about money. How would they Have a conversation like this.

[Dominique]

The main person that I go to is. Is my dad about money. But he just gives me advice. It's not really a question. I'm just listening at that point. When I talk to my friends about it, we just communicate way better than Chris and I.

[Ramit Sethi]

Okay, if you were to buy another car, how would that affect your finances?

[Chris]

That's just going to add more money to our, I guess, overall debt.

[Ramit Sethi]

Can you afford it?

[Chris]

If I'm working all the time and I have consistent work, then I. I believe we could afford it.

[Ramit Sethi]

Chris, how do you know if you could afford something?

[Chris]

I feel like if I have the money to do it, I feel like I can afford it.

[Ramit Sethi]

Meaning if you have the money where? In your checking account?

[Chris]

Yeah, if I'm making enough money and we're putting enough away, I feel like we could afford it.

[Ramit Sethi]

Is a question about affordability. Is that about feelings, or is that about numbers?

[Dominique]

Numbers.

[Chris]

Numbers, yeah.

[Ramit Sethi]

Oh, so where the numbers in your answer?

[Chris]

They weren't there.

[Ramit Sethi]

Okay, well, the good news is that almost nobody in America knows how to answer the question, can you afford that? They give me these real funny answers, like, if it's on your feet or your back, then you can afford it. Because whatever's between your feet and the Lord or whatever that phrase is, you can afford it. I go, that was invented by a mattress salesman and a shoe salesman. That's not affordability. Affordability has a number. Yeah, but we'll get there. Dominique, same question to you now. How would another vehicle affect your personal finances?

[Dominique]

I think immensely. I already think that we're cutting it close, so an extra 200. 300 for a vehicle is not working in what I see our finances doing right now.

[Ramit Sethi]

Okay, how much money do you have in your checking account right now?

[Chris]

At the moment, in my checking account, I have $64.18, but we went grocery shopping this morning.

[Ramit Sethi]

Okay, Is that your joint checking account?

[Chris]

No, no, we don't. We don't have a checking account.

[Ramit Sethi]

Okay, you have separate accounts. So, Chris, you have 64 in your checking account. And, Dominique, how much do you have in Your checking account?

[Dominique]

339.

[Ramit Sethi]

$339. Okay, so can you afford another car? Dominique says no.

[Chris]

Chris, no.

[Ramit Sethi]

Are you just saying that because you think I want to hear it?

[Chris]

It's no. At the moment, no, I don't think we can afford it. I really. I really don't.

[Ramit Sethi]

The way Chris approaches purchasing a car is a huge clue. Did you catch it? He started out saying they could afford another car, but that Confidence was not based on numbers. It was just a feeling. And he even said, if I have money coming in, I feel like I can afford it. That's it. That was the extent of his logic. Then I asked one question. How much is in your checking account? Two minutes later, his answer changed from yes, we can to no, we can't. This happens all the time. Most people treat affordability like a vibe. It's like, oh, I'm at a restaurant. Should I order the burger or the fettuccine Alfredo? No, that is not how you make affordability decisions. In fact, cars are one of the biggest financial decisions that people get wrong. And they get it wrong for years. You know how I always talk about running the numbers on a house? You got to do the same for a car. The real key here is that your feelings matter. But you also got to use some math when you make major financial decisions. How much can you afford? If you hear me saying that in your head, your answer better have a number, because that is how you answer that question. Now, you mentioned you have a son. How old is your son? To 2 years old. All right, and are the two of you married? No. Okay, not married. But do you live together?

[Dominique]

Yes.

[Ramit Sethi]

Okay, live together. You have a two year old son, and you, it sounds like, have not combined finances. Is that accurate?

[Dominique]

We have an account for bills that are combined.

[Ramit Sethi]

Okay, you have a joint account where you both put money in. All right. And do you both have individual money as well? Yeah. Okay, cool. All right, just so I know, any plans to get married?

[Dominique]

He knows when we'll get married.

[Chris]

I mean, the stipulation is she wants to get married in Italy because that's where I proposed to her. But at the moment, we are.

[Dominique]

I just don't see that we need to do it anytime soon.

[Ramit Sethi]

You don't need to. Chris, what about you?

[Chris]

It's always kind of been something I want to do, and I've never really found somebody. And then I found her. And, yeah, I would love to be married.

[Ramit Sethi]

Got it. That's all I need to know. Look, I'm not judging. Married, not married, doesn't matter to me. I just want to know the situation so I can understand what's going on. One of my co workers recently started seeing a new eye doctor. And the first thing she said to me was not about the glasses or the exam or the cost. You know what she said? I can text them anytime. One phone number. I ask a question, reschedule an appointment, I text them, and someone always responds. When she had her last visit. She mentioned a recent text and the doctor goes, yep, I saw your message. Pulled it up right there on the computer. Even though it wasn't the doctor who replied to her text, she could tell the whole office was on the same page. That's a beautiful personal touch. That's exactly how OpenPhone, this video's sponsor, works. OpenPhone is the number one business phone system that streamlines and scales your customer communications. It runs through an app on your phone or your computer. No need to carry two phones or mess with a landline. Your team shares one number and handles calls and texts like a shared inbox. That means anyone can see the full conversation and step in without missing a beat. Keeps everything fast, clean and consistent. Even if five different people touch the same customer thread and after hours, their AI agent can actually step in and to handle calls, answer questions and capture leads. So you don't lose business when you are offline, Openphone is offering my listeners 20% off your first six [e-mail] ramit that's o p e n p h o n e.com ramit and if you have existing numbers with another service, Openphone will port them over at no extra charge. Open Phone no missed calls, no missed.

[Chris]

Customers.

[Ramit Sethi]

AI is supposed to make work easier, but now it seems like you have to hire an AI consultant just to figure out which tool handles what. Are you using AI for writing? Or is there another one to use for meetings? What about one for project planning? And they actually don't talk to each other. That's when things start slowing you down instead of helping you move faster. But Notion, the sponsor of this episode, can help solve that. With Notion, everything is in one place. Clean, simple, easy to use. And now with Notion AI built right in, it's even more powerful. Enterprise search can pull answers from tools like email, Jira, even PDFs. Research mode. Writes full reports in minutes and meeting notes, captures and summarizes everything so key decisions don't get lost. No more bouncing between apps, no more guessing where things live. Just one system that keeps things moving. That's why more than half of Fortune 500 companies use Notion. Try Notion AI, the best AI tool for work by going to notion.com ramit that's all lowercase n o t I o n.com r a m I t notion.com ramit now you both created your conscious spending plan using my CSP template. What was that like?

[Dominique]

I think it was eye opening. I didn't realize. First of all, subscriptions didn't realize that. And then just Seeing it laid out, I'm just like, we have no money.

[Ramit Sethi]

Okay.

[Dominique]

We're screwed.

[Ramit Sethi]

Oh, that was your reaction after seeing the numbers were screwed?

[Dominique]

Yeah.

[Ramit Sethi]

Okay, and what was it like for you, Chris?

[Chris]

It was nerve wracking just being able to put all the numbers on the table and see how far behind we are or we aren't.

[Ramit Sethi]

Did you have any conversations about the numbers?

[Chris]

Not really.

[Ramit Sethi]

Okay. He just looked at him, and then Dominique said, I'm screwed. And that was it. Like, good night.

[Dominique]

You know, honestly, no, I think it was like we just looked at him. We're like, okay, here's our starting point. Oh, you know, like, we see it now, you know? So I. That was the eye opener. And yeah, I said other choice words, but, yeah.

[Ramit Sethi]

What. What words?

[Dominique]

We're so.

[Ramit Sethi]

Wow.

[Dominique]

Yeah.

[Ramit Sethi]

So, Chris, when you heard Dominique say that, what was your reaction?

[Chris]

I said, well, this is why we're doing this. And, you know, hopefully we can get out better on the other side after we go through this whole process.

[Ramit Sethi]

All right, cool. Let's take a look at the numbers. So just so we know, you are both in your early 30s, and Dominique, why don't you read off the word in bold and then the number in full next to it for the entire box.

[Dominique]

Okay, so assets, we have 1,003,100. We have investments, $24,526. Savings, 13,198. And debt is 615,339. Total net worth is $425,485.

[Ramit Sethi]

What do you think about those numbers?

[Dominique]

I just see, like, a huge debt.

[Ramit Sethi]

You. You just see debt?

[Dominique]

Yeah.

[Ramit Sethi]

You don't see the total net worth number?

[Dominique]

It's hard for me to see that because I feel like if we miss a payment or something goes wrong, we can lose that quickly.

[Ramit Sethi]

You hate debt. Like, you hate it.

[Dominique]

I don't want to say that I hate it. I feel it scares me. Debt scares me.

[Ramit Sethi]

Debt scares you? Okay.

[Dominique]

Yeah.

[Ramit Sethi]

If. If you had a choice of paying off debt or investing it, what would you prefer to do?

[Dominique]

I mean, I would prefer to invest, but I just don't know how. Okay, so now I just. Paying off debt.

[Ramit Sethi]

Okay, Gotcha. All right. And what about you, Chris? What do you think about those numbers?

[Chris]

They're kind of what I thought in a sense, of, like, the debt, because we do have two houses. But I think that the numbers could be better. I think that, you know, they're. They're okay, but I think that we definitely could be better.

[Ramit Sethi]

Like what. What Would be better.

[Chris]

Just a higher. A higher net worth.

[Dominique]

I want bigger savings.

[Ramit Sethi]

Okay, can I ask a little bit about what these numbers are? So the assets. One million bucks. What are those assets?

[Dominique]

Both houses.

[Ramit Sethi]

Two houses.

[Dominique]

The car.

[Ramit Sethi]

How many cars?

[Dominique]

We have the Celica, which I went high on that one and said it was worth 5,000 because it's my baby. But the Forerunner is like 30 or 40. Arizona house is about 400,000. The California house is about 600.

[Ramit Sethi]

Okay, so that's it. Those, those four things. Two houses, two cars. Okay, great. And then what's the debt?

[Dominique]

Both houses, the car. I think I put my school loans in there.

[Ramit Sethi]

How much are your student loans?

[Dominique]

Between 10 and 14. I. I forget.

[Chris]

And then also our credit card, I have 10,000, and I think mine was.

[Dominique]

Like eight or something. Okay, maybe less.

[Ramit Sethi]

All right, can you tell me about these two houses? How, like, you own one and you rent another one out?

[Dominique]

So the. Our California house is ours. We use the money from our family home to pay off most of the mortgage. So we only owe about 200 on this one.

[Ramit Sethi]

Okay.

[Dominique]

The Arizona house, I feel like we definitely purchased at, like, the wrong time. And we have people renting that house.

[Ramit Sethi]

Out, so covering the mortgage?

[Dominique]

No, no, not fully.

[Ramit Sethi]

How much are you losing every single month?

[Dominique]

Anywhere from 800 to 900.

[Ramit Sethi]

Okay, 900 bucks a month. And what about maintenance?

[Dominique]

Maintenance. Anything comes up, we pay for it.

[Ramit Sethi]

So in my estimation, you know, without looking at exact property or anything like that, if it were me calculating it, I would probably assume instead of 900amonth, I'm losing more like 1600amonth, maybe even more. More. I'm always conservative. I would probably just make it 2,000amonth just to be super safe. So, like, you're down 2,000amonth? Okay. I don't know if that's good or bad. We can figure it out. But you're losing every month on that. Okay, fine. And the California house, do you own it in full or you still have a mortgage on it?

[Dominique]

No, we still have the mortgage on it. So 200 on this one.

[Ramit Sethi]

All right, and then how did you get the Arizona house?

[Chris]

We got it in 2022. Basically, the market was really high. So it was either rent and put our money towards nothing or buy, in a sense, is what we thought. So.

[Ramit Sethi]

Wait, what? Unfortunately. What do you mean? Rent and put your money towards when we were.

[Dominique]

So when we were in Arizona, they were going to raise our rent so high and.

[Ramit Sethi]

Okay, I didn't want to do this, but we're going to do It.

[Dominique]

Okay.

[Ramit Sethi]

All right, let's do the numbers. Okay, hold on. I need to get my game face on.

[Dominique]

Oh, yeah.

[Ramit Sethi]

Okay, I'm ready. How much was your rent before they tried to raise it?

[Chris]

When we first moved out there, it was 13. And then they raised it to about 18 something. And then they wanted to raise it again to about 24 or 2500, 23 or something like that.

[Ramit Sethi]

Okay, fine. So you're paying 1,800 and they want to raise it to, let's say, 2,400. Okay, fine. And how much is your mortgage plus HOA, plus maintenance, all of it included.

[Chris]

We haven't had much maintenance to have to take care of, but our mortgage and HOA is about 26, 2700.

[Ramit Sethi]

Okay, so let me. So the thing you were so afraid of, you're actually paying more than that every single month, and you haven't even included maintenance in, which is probably another five to five hundred to a thousand dollars a month. Do you guys see.

[Dominique]

Yeah.

[Ramit Sethi]

How this sounds? I just have to disabuse us all of this idea that if we rent, we're throwing money away and sometimes even rent increases. Like, Americans hate the idea of some landlord raising rent on them. So they will literally cut their own nose off to spite their face. They'll be like, you're going to raise my rent to 2,400. Mother you. I'll pay 27. And they don't. They don't understand because they just say equity. But if you all looked at the amortization table, you basically have no equity. You know, you have very little equity in the last few years. And you, right now, you're lucky you haven't had maintenance. But once your air conditioning breaks in Arizona. Yeah, that is thousands of bucks. So this idea, which is so strong in America, these landlords raising our rent, remember that old story of a scorpion going on like a turtle's back or something? And the scorpion stings the. Whatever the. That animal was, and the. The animal goes, why'd you sting me? And the scorpion goes, I'm a scorpion. That's what landlords do. They literally raise or drop the rent based on the market. That's what they are. So I'm not getting mad at you. This is not directed to you. This is directed towards the millions of people listening to this who think rent is throwing money away. It's not. It's simply a financial and lifestyle decision. You know, I find it fascinating how little curiosity we bring to major life decisions. You know, people will spend hours picking the perfect kid's toy or researching the perfect frying pan. But when it comes to a $400,000 house, they don't even Google anything. They just go, ah. Yep, sounds about right. No second opinion, no math. That's exactly what happened here. They bought a second house out of fear. Fear that the rent might go up. They didn't run any numbers. They didn't ask for any advice. They just did it. Now listen, I don't care if you buy the wrong phone charger for your phone. Okay, big deal. But a house, that can literally affect your finances for decades. And ironically, in this case, the rent increase they were trying to avoid would have been less than the mortgage they ended up with. Now they're losing $2,000 a month on that rental. This is what happens when people use these simplistic terms like I'm throwing money away on rent. But what they don't understand is you can be throwing money away on interest. You can be throwing more money away than you have just so that you can say, I own I'm part of the American dream. You're going to see a pattern in how lots of people talk about major purchases. They talk about money in terms of monthly payments instead of total cost. I'm going to tell you straight up, that is not how people who are savvy with money talk about their purchases. Okay? I never talk about how much I pay per month for a major purchase. The problem with monthly payments is that you don't account for the total cost of ownership. And for a house or a car, the total cost can actually be double what the sticker price is. That's what happens when you properly factor in property taxes, insurance, maintenance, HOA fees, opportunity cost, all of it. This is just another example of making major purchases based on vibes. It works until it doesn't. And when it doesn't, you can be in big trouble. So if you're thinking about buying a house, you want some help to run your numbers, check out my free three step guide to buying a [e-mail] House cool. Your net worth is $425,000. Your savings are 13,000. Investments are $24.5K. Let's talk income now, Chris, I'm going to ask you for this one. I'd like you to read me your GROSS Combined monthly income.

[Chris]

14,949.

[Ramit Sethi]

All right, so the two of you make $179,000 a year combined. Did you know that?

[Chris]

I knew how much I made, but I didn't know that together we made.

[Ramit Sethi]

That much okay, so neither of you knew. That's, that's quite common. 50% of people I talked to don't know how much money they make. How much did you think you made together? Yeah. Or did you not think about it ever?

[Dominique]

No, I don't think that we think about it together because we don't join that together.

[Ramit Sethi]

Yeah. And so is it just like monthly? Do we have enough to cover the car payment and the mortgage? Is that the kind of approach, we.

[Dominique]

Just make sure that there's enough money in our bills, account for everything to be paid and that's it?

[Ramit Sethi]

Chris, same for you?

[Chris]

Yeah. We put most our money into that bills to make sure all those are going to be paid. And then just kind of with our own money that we have left over, we do whatever we do with it.

[Ramit Sethi]

Can I ask a question? Do you think that you would ever get out of this month to month thinking with your money?

[Dominique]

I would hope so. But how I feel now, I feel like we're never going to get out of it. This is why we're here.

[Ramit Sethi]

Yeah.

[Chris]

Yeah. I feel like sometimes I feel like I'm going check to check, in a sense.

[Ramit Sethi]

And it's like, check to check on $180,000 a year. What does that tell you?

[Dominique]

We're doing something wrong?

[Ramit Sethi]

Yes. What a great answer. Because so many times in life I, I learned this in math class, like seventh grade. The hell was I taking pre calculus or algebra or something. And like, you know, you have to work those problems. They take a lot of calculations and stuff. And then, you know, you're five, 10 minutes into it, 15 minutes, and you're like, oh, like I'm stuck. I basically took a wrong turn. And our math teacher taught us if you take a wrong turn, don't just keep brute forcing it. You got to go back and take a different approach. And I think that is true of money too. So I love your answer. It's like, hey, we're doing something wrong. I don't know what.

[Dominique]

Yeah.

[Ramit Sethi]

But only focusing month to month on 180k, something's not working out here.

[Dominique]

Correct.

[Ramit Sethi]

All right, let's. Let's go down the numbers. I want to read off the four key numbers from the conscious spending plan. Your fixed costs, 69%, your investments, 13%, savings, 18%. And guilt free spending is at 0%. All right.

[Chris]

I don't remember seeing when we were filling it out the guilt free spending part.

[Ramit Sethi]

That's because it automatically calculates how much you actually have for guilt free spending. But I know and you know you're not only spending 37amonth. Come on. When was the last time you guys ate out? Tell the truth.

[Dominique]

Yeah.

[Chris]

The other day.

[Dominique]

Recently.

[Ramit Sethi]

Yeah, exactly. And just out of curiosity, what'd you get when you ate out?

[Chris]

Mexican food. They gave us free tacos.

[Ramit Sethi]

Hold on. This is bringing up some very sad memories for me. I also love Mexican food. I used to live across the street from a Mexican place in New York. I went there, like, three times a week. Okay. I went there so much. And then I met my now wife, and she started, you know, hanging out around my apartment. And she. One time she went there and she comes over after and she goes, hey, do you want, like, a free burrito? And I was like, excuse me? She goes, yeah, they're so nice there. They just gave me a free burrito. I'm like, I have spent $10,000 at Dos Toros, and. And they have never given me one. Free chips and salsa. Not one. And she goes in there, just walks in with her big smile, and they just hand her a free burrito. What the.

[Dominique]

I feel you.

[Ramit Sethi]

All right, so definitely the CSP is not quite accurate. We know that, but that's okay.

[Dominique]

Yeah.

[Ramit Sethi]

The point is not the first draft to be totally accurate. Just to get a sense, what do you think of the fact that your fixed costs are 69%?

[Dominique]

I thought they would be way higher.

[Ramit Sethi]

Okay.

[Chris]

It sounds about right, to be honest with you.

[Ramit Sethi]

What's it supposed to be? Ideally, way less.

[Chris]

Less.

[Ramit Sethi]

50 to 60% is typically what I recommend.

[Dominique]

Okay.

[Ramit Sethi]

So if it's 69, I can already tell what's going on in the house without even talking to you. If I just look at that number, I go, oh, they're probably stressed out about money. They're probably fighting about some random expense, who's buying this or that, and they're probably not saving or investing a lot. And I think I got one of those things right, but not all of them. So I think you probably are fighting about random expenses. I think you've told me that. However, what's really interesting to me is that your investments are quite high. Combined, they are 13%. Now, one of you is investing 28% and the other is investing zero. Who's the one investing 28% of take home pay?

[Dominique]

I'm pretty sure that's me.

[Ramit Sethi]

You make $5,709 a month.

[Dominique]

I mean, I. Maybe I answered the question wrong, because. Are we talking about my investments? Like my stock? Yeah, that's just kind of in there.

[Ramit Sethi]

Who makes more, Chris?

[Chris]

I do.

[Ramit Sethi]

Okay. Let's take it from the top. So, Chris, you make 9,000 bucks a month gross, and Dominique, you make $5,700 a month gross. What's interesting is your net is Almost the same 5200 versus 4700. Why is that?

[Chris]

The union takes taxes like crazy. I work in the carpenter's union, and some of the money that gets taken out of my taxes goes towards a vacation fund that I receive every six months.

[Ramit Sethi]

What's that? How does that work?

[Chris]

So I guess for the union, they take out it's like $5 an hour on every check, and it goes towards a vacation fund. And then every six months in July and in December, you get like a lump sum amount of whatever you've developed over that time.

[Ramit Sethi]

Why don't they just give it to you?

[Chris]

That's just the way the union works. Because there's times that you could take it out if, like, say something happened and you need to take it out early. You can do that. It's like a savings account that you don't have control of. And then every six months, you're like, oh, let me take some out.

[Ramit Sethi]

You know, I would go in there after three months, and I'd go to my union leader and I'd be like, something came up. It's an emergency. And they're like, oh, I'm sorry, Ramit, what's wrong? Like, I found a extra large suite available in Tokyo. I really need early access to this vacation. Listen, I never heard about this, but okay, cool. So you get a certain amount back every six months. How much is that?

[Chris]

When I was in Arizona, it'd be a whole year, and I'd only get 1300, but they were only taking a $75 an hour. Out here, they take $5 an hour. So basically $200 a check. So within six months, it's anywhere from, I don't know, like four to $5,000.

[Ramit Sethi]

And can I just ask, is that included in your net, or did you not put that in your net?

[Chris]

No, I didn't include that in the net because I don't get that in my check.

[Ramit Sethi]

Okay, I get you. So you're going to get an extra roughly 4,000 bucks every six months.

[Chris]

Yeah, like in July.

[Ramit Sethi]

Good to know that. That will certainly help. You're equally paying your mortgage with that.

[Chris]

I think we kind of did it a little bit wrong in a sense, because I do get paid every week, and since I do make more, I do put more into our bills account. So I. It's not like exactly 50, 50 in a sense.

[Ramit Sethi]

So you're paying a little bit more IC towards insurance. I can see that. Like an extra 100 bucks a month, you're paying a little bit more towards a car. You probably have a more expensive car.

[Chris]

I mean, we. We try to make it 50, 50 in a sense.

[Ramit Sethi]

It is tricky because on a gross level, you're both making. One of you is making almost double the other. Chris, you're making more than. On a net level, it's quite different. Yeah, we can work through it. I just want to hear your logic on it. Anyway, going back down to the investments. Chris is investing 20 bucks a month into investments. But are you getting a pension, Chris?

[Chris]

Yeah, I just don't like. That's something I wasn't really too sure of, like, how to kind of look up. And I called the union to see how that worked, and they say I have pension credits. But they didn't really kind of break down, like, how much each credit is worth or things like that. So I'm not really exactly sure of how much money is in that pension.

[Ramit Sethi]

Yeah.

[Chris]

But I do know that I have like five or six credits.

[Ramit Sethi]

Okay. You're going to want to find out. I do appreciate that you called them. That's great.

[Chris]

Yeah, yeah.

[Ramit Sethi]

You know, this stuff can be very confusing. Like, what's a pension credit? Who the hell knows? But, yeah, exactly. That's their job, to explain it to you. And trust me, they will. And then in addition, if you're not sure, you can Google it or put it into chat, GPT, upload all those docs and they'll tell you exactly what it means.

[Chris]

Yeah, okay.

[Ramit Sethi]

That'll be good to know. One of my favorite phrases to use in my company is check the box and move on. Just think about all the things that are on your to do list, and they've been sitting there for months, sometimes years now. Imagine instead of thinking you need time to get it perfect, you just get it done. It's handled now so you can check the box and move on. A great example of this is estate planning. A lot of people put this off. What's a trust? Do I need a will? I don't know where to go. But once this is done, there is total peace of mind in knowing that it's handled. That's why I recommend trust and will. There's no scheduling appointments, there's no digging through legal forms. You go online, answer a few questions, and it walks you through everything in less than an hour. My co worker actually recently created a will for her and her family. On Trust and Will. Here's what she told me. Getting started was incredibly easy. I just followed their prompts, provided the info they needed about my beneficiaries, my assets, and my preferences. In less than an hour I had a will, power of attorney documents, last will and testament, and HIPAA authorizations, all of which I easily downloaded and I could have them executed or checked by an attorney if I wanted to. Now, I personally used an attorney for my own estate plan, but not everyone has access to a great estate attorney, so if that's you, Trust and Will is a great option because they make estate planning accessible and affordable. With Trust and Will, you can create and manage a custom estate plan starting at $199. Let trust and Will uncomplicate the process for you. Protect what matters most in [e-mail] Ramit and get 10% off plus free shipping. That's 10% off and free [e-mail] Ramit A lot of people tell me they read my book or listen to this podcast, but they haven't gotten around to filling out the conscious spending plan, which is a very important part of living your rich life. I get it. It can feel overwhelming to log into all your accounts and have to pull up spending from the last month or two or three. If you've been dragging your feet on your csp, here's what I suggest. Sign up for Rocket Money, this episode's sponsor, link your accounts and in minutes you can see exactly where your money has gone for the last few months. Now you've got everything you need to get your CSP together. Rocket Money is a personal finance app that helps you find and cancel your unwanted subscriptions, monitors your spending, and helps you lower your bills so you can grow your savings. And you can see everything in one place. Your subscriptions, your bill due dates, your paydays. The dashboard makes it really easy to understand if you see a subscription you don't want anymore, Rocket Money can even help you cancel it. And if you've got a goal you want to save for, Rocket Money can look at all your accounts and figure out the best time each month to put extra Money aside. Rocket Money's 5 million members have saved a total of $500 million in canceled subscriptions, with members saving up to $740 a year when they use all the app's premium features. So cancel your unwanted subscriptions and reach your financial goals faster with Rocket Money. Go to RocketMoney.com Ramit today. That's RocketMoney.com Ramit RocketMoney.com Ramit okay, and then Dominique, you're. You're investing quite aggressively for making $5,700 a month. So you're putting 28% of take home pay into investments.

[Dominique]

I think that that's totally wrong. That's just the number in how much is in my stocks because I'm not adding anything to those stocks whatsoever.

[Ramit Sethi]

Oh, where did this come from? Look at these two numbers.

[Dominique]

That 200 for me, honestly, whatever I have left over in my checking account goes straight to savings, so. Yeah, but that number could fluctuate as far as the stocks go. That's just the total amount that I have in my stocks right now. But I'm not actually adding anything additional to them.

[Ramit Sethi]

You have 1,123 in stocks. Okay, then what's this number up here? 24,526.

[Dominique]

That's my 401k.

[Ramit Sethi]

Can I ask a question? When you think of retirement accounts, what do you think of 401ks? Okay.

[Dominique]

Or the pension? A Roth IRA.

[Ramit Sethi]

Great. And when you think of investing, what do you think of stocks? Are they the same or different than retirement?

[Dominique]

I think that they're different, but I don't know. I don't have that much knowledge about it. So, you know, of course, these are just the things that have been told to me for 1k is what you retire with. Stocks are just like if you have some extra money, you can put it in there and see what happens. Okay.

[Ramit Sethi]

I never mind if somebody doesn't know something. And what you're saying, Dominique, is so common, not knowing the relationship between stocks and retirement. It's not obvious actually. So I can definitely walk you through how to think about it differently. And, you know, you can read it in both of these two books as well. But I'm just trying to gauge how you think about this. Looking now back at the CSP, what I can see is that you don't put $1,123 a month into investments. Correct?

[Dominique]

Correct.

[Ramit Sethi]

All right, so I'm going to zero that out. And by the way, I don't mind that this is a little messy. You know, I see some comments online. They go, oh, Ramit should check their CSP before they come on. Why would I? I want to see how you did it. Yeah. Because then I can understand the logic. My goal is not to get this pristine csp. It's to get the real information, the real way that you talk and think and write about money. And then we'll work through it together.

[Dominique]

Right.

[Ramit Sethi]

So let's fix this. 1123. I'm zeroing that out. Is there 200 bucks a month going consistently towards investments?

[Dominique]

That is actually the low number. It's anywhere from 200 to 500.

[Ramit Sethi]

All right. We'll just keep it at 200 then. Looks like you all are very diligent about putting aside $550 a month for vacation.

[Dominique]

So this is where it got a little bit muddy for us. Right. Because we see goals. We see savings goals. What we would like. So that's how we thought of what we would like to be putting away. What the.

[Ramit Sethi]

Oh. Hold on. Excuse me. I would like a 15 micron vicuna top coat.

[Dominique]

I thought those were our dreams at first.

[Chris]

It was a lot more than that. It was like $10,000.

[Ramit Sethi]

10,000Amonth for vacation. First of all we're going to stop using the word goals. I hate that word. Because nobody uses the word goals unless they are talking to some financial professional. Our financial goals are. No one talks like that. It's a made up word. And then it causes all kinds of perverse behavior. Like you all are not saving $550 a month for vacations. But someday I'd like to. But I'm talking about today. That's what the CSP is. What is actually going on. So nice to know you'd like to save $550. That's charming. Can we talk about what you're actually doing in savings today?

[Dominique]

Sure. Zero.

[Ramit Sethi]

All right. Wow. How do I zero the whole thing out at once? Let me see. I never had to do this. 000. Wow. Okay.

[Dominique]

Ah.

[Ramit Sethi]

That's more realistic that the two of you have $2,910 a month on guilt free spending. And I bet that's what you spend.

[Dominique]

Possibly.

[Chris]

Probably.

[Ramit Sethi]

What do you spend it on? Because I know it's not just one Mexican meal.

[Dominique]

The last couple months I've been spending a lot of money. Chiropractic appointments. Doing massage. Because my injury. So we have been eating out a lot. I haven't been able to cook. It's been harder. So we've been. I've been spending a lot of money on that.

[Ramit Sethi]

What else?

[Dominique]

Going to. Going to target. Just grabbing random things. Anything that we don't have we're just buying it really expensive dog food. I don't know where it all goes. You know. But it's going somewhere. I guess. We don't know Because I don't really think about it. We just go buy whatever we need whenever we need It.

[Ramit Sethi]

I think this is more than just what you need. Can we get past the functional stuff like feeding the dog? Y' all are not spending $3,000 a month on dogs. Yeah, what else is it?

[Dominique]

So I'm at least spending $120 a week at the chiropractor.

[Ramit Sethi]

Okay, so first of all, we never talk weekly.

[Dominique]

Okay.

[Ramit Sethi]

Monthly, we talk annually. And at a certain point, you'll talk on a decade long basis. So 120 a week is how much per month?

[Dominique]

Like 480.

[Ramit Sethi]

Great.

[Dominique]

Yeah, so about 480 for that.

[Ramit Sethi]

What else?

[Dominique]

Call it 600amonth for massage.

[Ramit Sethi]

Okay.

[Dominique]

Food wise, that's. That's been tough. This has definitely been tougher for us month wise. So I'd say food wise, maybe 500amonth.

[Ramit Sethi]

On eating out, how often you think you eat out per week?

[Chris]

Maybe once or twice a week.

[Ramit Sethi]

Are you guys ready to tell the truth? All right, let's do this. Let's do Ramitz. Ramitz eating out, constant. We're gonna do the exercise. All right, we're gonna start it Sunday. This is a given week on Sunday. Do you eat out?

[Dominique]

I mean, usually we make breakfast at home.

[Ramit Sethi]

Great. Do you go out for brunch, coffee, lunch, anything like that on Sundays?

[Dominique]

I mean, of course it's not a consistent thing, but yeah, of course we do that.

[Ramit Sethi]

Okay, great. So what would that be? What, brunch?

[Dominique]

Yeah, I guess you can call it brunch. Yeah.

[Ramit Sethi]

Okay, and like, how much would you spend at brunch?

[Dominique]

I mean, we could spend a hundred dollars at brunch together.

[Ramit Sethi]

All right, so what about dinner?

[Dominique]

You don't really do dinner a lot.

[Ramit Sethi]

Cool. Let's go to Monday. Anybody eating out, buying coffee, any kind of drink or anything in the morning?

[Dominique]

I'm definitely buying Starbucks.

[Ramit Sethi]

Okay, great. How much does that cost?

[Dominique]

575.

[Ramit Sethi]

575.

[Dominique]

Every single day.

[Ramit Sethi]

That's every single day.

[Dominique]

Or five days a week. We'll call it five days.

[Ramit Sethi]

Five days a week. Chris, do you do Starbucks or anything in the morning?

[Chris]

No, normally I make coffee in the morning because I wake up very early to work.

[Ramit Sethi]

Stop anywhere on the way to work in the mornings on weekdays?

[Chris]

No, not I don't stop in the morning, but on lunch I might go get a drink and a snack or something. Like the 7 11.

[Ramit Sethi]

How many days a week would you say?

[Chris]

Probably every day.

[Ramit Sethi]

All right, cool. And then what about for you, Dominique, coming back to you on lunch on weekdays, Ate at home. Any dinners out on weekdays?

[Dominique]

Yeah, like maybe one to three, let's say Three.

[Ramit Sethi]

Chris, is that accurate?

[Chris]

At the moment, yes.

[Ramit Sethi]

Okay, great. How about Saturday?

[Chris]

I'd say Saturday is more of a day that we would go to brunch or go to dinner.

[Ramit Sethi]

Okay. There's a little number I invented called Ramit's eating out constant. And it goes like this. Whatever somebody thinks they eat out, multiply it by three to get the accurate number. Now, do you recall how much you told me you eat out per week?

[Chris]

Three times, you said one to two.

[Ramit Sethi]

Times, so I say two. Two times three would be six. But in actuality, if we add it all up, and remember, I'm considering each of you eating a meal separately, just for simplicity's sake. My math might be a little off, but it's something like 17 times a week.

[Dominique]

That's a scary number.

[Ramit Sethi]

What does that tell you?

[Dominique]

That we should never be doing that.

[Ramit Sethi]

Before we jump to solutions, just tell me what that number tells you. Just money being wasted without making a moral judgment on it. Just like a scientist. What does that number tell you without judgment?

[Dominique]

It's just too much.

[Ramit Sethi]

Chris, what does that number tell you without judgment?

[Chris]

That we need to eat out less.

[Ramit Sethi]

What's going on right now? Like, to me, I just go, oh, that number is higher than they thought. It doesn't mean you're bad people. What's with the jumping to immediately blaming yourselves and wallowing in guilt? You notice you do that a lot.

[Dominique]

I feel like it's our. Our fault where we are financially because we do these 17 outings.

[Ramit Sethi]

Hey, maybe it is. But beating yourselves up is obviously not going to work. It doesn't work. Look at where you are financially. So maybe instead of like beating yourselves up and then beating each other up and doing all this judgment, we just start looking at it like a scientist. Hey, we're actually eating out five times more than we thought. Actually, almost 10 times more than we thought. Wow, that's a lot. I wonder if we could make a change. What's the difference?

[Dominique]

That's the more accurate solution. Yeah.

[Ramit Sethi]

It's also more kind to yourself. Like your son, right? How old is he? Two years old. What if he starts to paint or color or something and then kids are horrible at painting and you're like, jesus Christ, you use red when it should have been green.

[Dominique]

Yeah.

[Ramit Sethi]

That's not good, right?

[Dominique]

No, no.

[Ramit Sethi]

Nobody wants to talk to a little kid like that. So how come you talk to yourselves like that?

[Dominique]

I feel like that's just how I've always been.

[Ramit Sethi]

I don't know who taught you that.

[Dominique]

I mean, I don't Think that it was taught. I don't think that there was any other way that I've learned. I didn't see it any other way.

[Ramit Sethi]

I don't think it was taught. There was no other way that I saw. What do you see right there?

[Dominique]

I feel like I see a lot of things in between there. Tell me when we're talking about my son, this is exactly why I want to make changes so that I can be better, to teach him better and to be kinder. And, you know, I like that.

[Ramit Sethi]

If you want to be kinder to him, do you think that you need to make changes for yourself in order to be kinder to him?

[Dominique]

Yeah, I think I need to be the better version of myself to be the best version for him.

[Ramit Sethi]

Chris, how about you?

[Chris]

I feel like I need to be more positive for myself and not beat myself up about certain things as well so that I could show him how to be able to manage certain situations and have more self care.

[Ramit Sethi]

What Dominique and Chris are experiencing right now, wanting to make financial changes for their son, not necessarily for themselves, is incredibly common. I hear it all the time from young parents. What they basically are saying is, I know I messed up with my money, but I'm not gonna let the same thing happen to my son. It's a beautiful sentiment, but it's also wrong. I know, I'm sorry. I'm gonna pre apologize for all the parents out there that are about to hear a non parent tell you you're wrong, but you are. Being selfless sounds great, feels good, but when it comes to money, it is an extremely bad move. Remember this, your children have time. You have far less. There are so many things they can do. What are you going to do if you run out of money in retirement? That's why one of the best things you can do for your children is not just to blindly start socking money away for them, but actually to model a healthy relationship with money. Another thing that I noticed, especially with Dominique, is that she spins. She gets stuck on the problem and loops on how bad it is. She beats herself up, but what she doesn't do is zoom out and look for solutions. This happens a lot, especially around smart people. Smart people have a specific set of problems that inside of my company, we call too smart for their own good. You know, smart people, they love to overthink everything. They like to see all the angles. Well, what about this? What about that? Option three. Oh, what about this? Risk mitigation. But sometimes they need to basically tell themselves, shut the hell up. Stop using My overthinking as a crutch and actually start taking action. This is one of the things that we are seeing with Dominique, which is this incessant spinning and we're going to get into how they both think about money right after the break. You know, I love spending time in New York, but every time I'm there in the summer, I forget how hot it really is. You step off the subway, it's like walking into a freaking oven. Your shirt is sticking to you. I don't know about you, I got sweat dripping down my back. And if you sweat like that, a great way to stay hydrated is with this episode's sponsor, Elemnt. Element is a zero sugar electrolyte drink mix. No sugar, no food, dyes, no junk. It's used by Navy SEAL teams, Olympic athletes, and a bunch of pro sports teams. People keep using it because it works. You stay hydrated, you feel better, it tastes good. Perfect for hot days, travel days, or anytime you just want something that hits without a sugar crash. Get a free 8 count sample pack of Element's most popular drink. Mix flavors with any [e-mail] Ramit Find your favorite Element flavor or share it with a friend. And it's totally risk free. If you don't like it, they'll refund you, no questions asked. This deal is only available through the link in my description below. Or go to drinklmnt.com ramit that's drinklmnt.com ramIt Can I ask how each of you grew up with money? Chris, what do you remember your family saying about money when you were young?

[Chris]

Some things were just too expensive to have or too expensive to buy. I did a board where it's a lot of money and my parents put everything they could to it. So we kind of got by with what we had. I didn't have the best things. We lost our house eventually, you know, so I've seen my parents struggle and there wasn't a lot of money. I saw my parents do everything they could to see me try to succeed in a sport that I was going after. And when that didn't happen, it just. You just kind of figure it out on your own in a sense.

[Ramit Sethi]

What did your parents do for a living?

[Chris]

My mom worked for Safeway for a long good while and my dad, he had his own heating and air conditioning company.

[Ramit Sethi]

All right, and how would you describe socioeconomically? Would you say poor middle class? What would you say?

[Chris]

We didn't grow up, like, having all this stuff, you know, but I'd say, I guess middle class.

[Ramit Sethi]

Okay. What was the sport that was expensive?

[Chris]

I raced motocross.

[Ramit Sethi]

Oh, okay.

[Chris]

Yeah.

[Ramit Sethi]

All right. So when you say they. They gave up a lot or they sacrificed a lot, is that so that you could have the vehicle, the equipment, that kind of stuff?

[Chris]

We just kind of did what we could with what we had, but me and my dad were traveling a lot. It's cost a lot to get new parts for the bikes, like oils, gear, just all the different ins and outs of it, you know, So I know they were putting me first in a sense of, this is what we want you to do, or this is what you want to do, so we're going to do everything we possibly can for you. It didn't put them in the best place because they were helping me chase my dream.

[Ramit Sethi]

Did you hear them talking about money, worried about money at home?

[Chris]

Yeah, all the time. And even, like, once they got to the later part of my racing and stuff like that, when I got to a professional skill level and things were getting even worse and my dad's business at the time wasn't doing that great, and my mom was trying to help with the business, and it just caused a lot of friction at home and, you know, they almost had to separate, you know, because of just, like, different situations. So it was all just a combination of money things going on. You know, like I said, we lost our house at one point.

[Ramit Sethi]

Can you tell me about that? What happened with the house and how old were you?

[Chris]

My parents were just kind of getting by with the finances as far as paying for the house and all that good stuff. But close to the end of my time when I was racing and we didn't really have the money to keep going and doing it because I didn't have sponsors and support my dad, his business wasn't doing too great. So my grandma used was living in Oregon and she had some stuff going on up there, and my dad and mom were having the greatest time, so he moved away and it was just me and my mom in the house. You know, they were still together, but they just kind of had to separate. And it was just me and my mom together until, I think, 2014 or so. And they finally, the house just kind of foreclosed.

[Ramit Sethi]

Wow. When you look back on money in your family, what are the lessons that you takeaway as an adult now?

[Chris]

I don't know. I just kind of live in the moment in a sense. Like, if I got it, I spend it.

[Ramit Sethi]

Can you tell me why that is?

[Chris]

Tomorrow's not promised. So you know, live in the moment, have fun while you got it. I mean, I feel like if you have it, do what you want with it, and if you look at it the right way, things will eventually work out for you.

[Ramit Sethi]

What lessons have you brought from your upbringing with money, your parents relationship with money, into this relationship with Dominique?

[Chris]

To be honest, as much as we're in a relationship, I feel like I'm still kind of just worried about my own money in a sense, you know, and we need to be worried about each other together. I live check to check is how I feel, you know, And I don't want to be in that situation, or I feel like I'm in a struggle like my parents were, and I want to be better, but I can't really figure out the way to do that.

[Ramit Sethi]

Yeah, well, that's why I'm glad you're here. You know, there's lots of different options you have, but in order to go forward, sometimes it's helpful to look back, see where you came from, what messages you grew up with. I think that one you told me was really honest. You said, look, if I learned that, if you have it, spend it, because tomorrow's never promised, by the way. Feel free. We can take a break. Can pause. I know this stuff is difficult to talk about. Seems like it's bringing up a lot for you.

[Dominique]

You okay, B?

[Ramit Sethi]

It's all good.

[Chris]

I'll get better.

[Ramit Sethi]

Wow. If you don't mind my asking, what's difficult about talking about this?

[Chris]

Just the fear of not having anything. We have something more to live for than myself, like my son. I just want him to be able to do whatever he possibly wants, like what my parents did for me, no matter how struggling they were or anything like that. I just want to be able to have him be able to do whatever he wants in his life and be unafraid and unapologetic for the way he goes about it. You know, I just want him to be better than I was and not like I was bad kid or did bad or doing things. But of course, we all want for our kids to be better than we are.

[Ramit Sethi]

It's kind of a beautiful vision, honestly. You know, one day your son is going to be able to watch this. It's kind of beautiful to be able to see their young parents talking about this stuff dishonestly. Who gets that chance? We didn't have it. Yeah. Imagine being able to see your young parents talking about being honest, saying like, I don't know what this number is, or I. I'm not sure. What to do? I don't know. What a gift. You mentioned your son. Let's say that your son gets good at some sport. Maybe it's baseball, maybe it's soccer, maybe it's motocross. What would you want his experience to be as a kid?

[Chris]

He really loves motorcycles and motocross. And if it comes to, like, that's what he wants to do, then I just want him to be able to put 100% into it and feel confident that he can do that. And my dad taught me the most important thing is that you go and have fun and you love it. You know, if you're not having fun, then why do it? Because once the fun gets out of it, then you know it's time to move on.

[Ramit Sethi]

So you want to. You want to keep showing him how to have fun. And what about when the practical realities of money come into it? He gets better. He starts to become really good Boy, that's pricey. And you know how pricey it can be. It's getting more and more expensive.

[Chris]

Yeah.

[Ramit Sethi]

What do you want his experience to be? Do you want it to be the same as when you grew up?

[Chris]

No, I want him to have no worries. I want him to feel like he's not bringing us down.

[Ramit Sethi]

Like he's a burden. Yeah. Were you a burden to your parents?

[Chris]

I don't think I was a burden, but if I look at how much they put towards it, especially because it didn't work out in the end as my ultimate career to where I could take care of them the way that I would want to.

[Ramit Sethi]

You're pretty young. I'm not sure I would write that off yet.

[Chris]

I mean that in that sport, I'm definitely old.

[Ramit Sethi]

Well, okay, fair enough on that. Maybe it's not going to work out in that sport, but in your financial life, yeah, definitely. You're quite young. So to be able to take care of your parents can come in lots of different ways. You know, sometimes I get the very rare privilege of speaking to somebody or a couple, and sometimes I can see things in them that they can't even see in themselves. It's a gift because I have received that gift when I had mentors and professors and friends who said just these very offhand phrases. Why don't you do that? You could do that. You should give it a shot. Just a simple little phrase. And sometimes I just. I heard it and I just thought about it later, like, wait, I actually could do that. I could write a book. I could do a TV show. Who knows? I could Help my parents. And so when I hear you say, like, oh, that didn't work out. Okay, maybe your professional career didn't work out. But if the goal is to help your parents, you still got plenty of time. Yeah. Dominique, as you heard Chris talking about his childhood, what were you noticing and what were you feeling?

[Dominique]

I don't ever want Chris to feel less than. And I know it was. I know it was a lot for him, and so I can. I can hear it in his voice. And I know that that was a tough time for him. So it. It hurts me to know that. That he's hurting.

[Ramit Sethi]

I appreciate that. Dominique, do you think that Chris brings any money messages from his childhood into this relationship?

[Dominique]

I mean, I think he already said it. You know, tomorrow's not promised, so if he has it, he's going to spend it. And that's what he's working for. And so, I mean, that's exactly what it is.

[Ramit Sethi]

What's an example of that?

[Dominique]

Like the car. He thinks if he makes money, then he could just spend it.

[Ramit Sethi]

One of the things that's so valuable about understanding where we came from with our money messages is childhood is formative for our relationship with money. For example, parents saying we can't afford it, or they fight about money. And if you really think about it, we don't really learn about money much after we leave our parents house. Maybe you have some friends, you talk about it, maybe you read a book. Most don't. Maybe you watch how to Get Rich on Netflix. But the point is, like, we don't really learn about except from what our parents taught us. And inevitably, we bring those messages into our adult, adult relationships. We can see that every single one of us on this call does it. I do it, you both do it. Nothing to be ashamed of. It's just something we want to be conscious of. And then, especially as young parents, you can decide which messages you like and you want to pass on and which you don't. You choose. All right. Dominique, I'm curious about your childhood. What conversations, what phrases do you remember your family saying about money as you grew up?

[Dominique]

We're broke. Even if we had it. Not going to say that we were just super well off. But I never went for anything. My dad took really good care of me and my mom. But yeah, for him, it was kind of secret. He's taking care of everything and he.

[Chris]

Just does it on his own.

[Dominique]

But, you know, he definitely instilled into me, like, we're broke.

[Ramit Sethi]

Why did he say that if you were not broke?

[Dominique]

I Think that that's his way of teaching me the value of a dollar.

[Ramit Sethi]

Make the connection for me.

[Dominique]

He had nothing.

[Chris]

He's.

[Dominique]

He's the youngest of 13, and he built his way all the way up. And he, at a very young age, bought a house and took care of me and my mom, and he did everything. And he wanted to put me in a position where I didn't have to want for anything and I didn't have to worry, which he did. And I'm grateful. But I think he wanted me to know that there is another side, that people live completely different. And he didn't want me to know that we had the money. We did.

[Ramit Sethi]

So he said, we're broke.

[Dominique]

That's just kind of how he was. Just super old school. We don't need to buy the fancy car. Even though he could do it. We don't do it. We drive the same car for. Until the wheels fall off.

[Ramit Sethi]

I don't mind that I could buy a fancy car or fancy whatever, but. And maybe I don't. Maybe I do, but do you guys say, we're broke?

[Dominique]

I think, I think. I feel like I say it. If we don't have money.

[Ramit Sethi]

Oh, you say, wow.

[Dominique]

I. I say a version of it.

[Ramit Sethi]

Yeah, there we go. I think I said it.

[Chris]

I think I said, I'm broke the other day, actually today or the other day.

[Ramit Sethi]

So. Wow. Here we have generational messages being cast right in front of our eyes. Hey, how long till your son starts saying, we're broke and we don't have any money?

[Dominique]

Tomorrow. He's already saying everything that we say anyway.

[Ramit Sethi]

What does he say?

[Dominique]

I mean, he started saying, oh recently. So.

[Ramit Sethi]

Yo.

[Dominique]

Yeah, yeah, you know, so.

[Ramit Sethi]

Yeah, listen, I have nothing to add on this topic, but. Except that I hope I run into a two year old who says some of this stuff. I will be dying. All right, so your dad said we're broke. He was not broke. You were not broke. Correct. Okay. And would you agree that you say a variation of that same phrase now?

[Dominique]

Yeah. Like, we're screwed.

[Ramit Sethi]

Are you screwed? You have a net worth of over $400,000 in your 30s.

[Dominique]

In comparison to my dad, I feel like I haven't done enough.

[Ramit Sethi]

Oh, how interesting. Because just a few minutes ago you said, I don't want to compare us to any other couple. Now you're comparing yourself.

[Dominique]

I put my dad pretty high, and I feel like I didn't reach what he reached at his age. And so that's why I feel like we're screwed.

[Ramit Sethi]

First of all, you're not screwed. And how can you be screwed with a $400,000 net worth in your 30s? That's actually absurd to say. It's actually offensive to the people who truly are in financial trouble. You realize that right now that you're.

[Dominique]

Saying that I never want to come off that way whatsoever.

[Ramit Sethi]

You make $180,000 a year household income. You're not screwed. You're rich. You just eat out 17 times a week. Guys, come on. Let's get real. 180k, two houses. Who are we kidding? You make choices that you probably need to change. Yeah, sometimes we got to, like, take off these glasses you're wearing and clean them off and go, oh, it's actually a beautiful world. We just been living with this grease on our lenses for too long. All right, so what else happened as you were growing up with money, I.

[Dominique]

Feel like, because money was never a conversation in our house whatsoever.

[Ramit Sethi]

Did you talk to your dad about money as you got older in the past?

[Dominique]

I'd say probably five to seven years? Yes. I ask him absolutely everything. When we were doing the csp, I called him and I said, what does this mean? Post. Post tax savings? What are we talking about?

[Ramit Sethi]

Okay.

[Dominique]

Yeah.

[Ramit Sethi]

And did your dad teach you about savings, investing, those kinds of things? What do you teach you?

[Dominique]

I don't want to say nothing because he's taught me everything, but money wise, like, nothing. So now I'm here, and then it's like, okay, now I have a house. This is where my mind starts running. This is why I'm asking questions.

[Ramit Sethi]

Okay. When it came to buying your house, how did you guys decide to buy this house? Just the rent thing in Arizona. That was it.

[Dominique]

The big thing was the rent thing. Chris's grandma had passed away prior to that, and of course, that was one of her goals for him. I think buying a house was one of the goals that my dad had for me too. So I feel like it would have been an accomplishment to do that.

[Ramit Sethi]

And for whom?

[Dominique]

For us, I guess.

[Ramit Sethi]

The two of you. How come if you not only accomplished buying one house, but two. It sounds like somebody just died in here.

[Chris]

We're fortunate that we're here in this house because of her. Dad helped us get this house.

[Ramit Sethi]

How much did he give you to help with the house?

[Dominique]

Well, he put down 400,000 on this one.

[Ramit Sethi]

He. He put down 400,000?

[Dominique]

Yeah.

[Ramit Sethi]

The California house. How much did it cost total?

[Dominique]

601,000.

[Ramit Sethi]

Oh, so he put 400k out of 600k down.

[Dominique]

Mm.

[Ramit Sethi]

Okay.

[Dominique]

What do you think about that, that I'm extremely fortunate.

[Ramit Sethi]

Yeah. That's cool. All right. It's interesting that your dad has been such a role model. It sounds like he accomplished a lot. He helped tremendously with a 400 out of 600k payment, which is life changing. And yet I'm struck that you didn't learn about savings, investing, the basics of money. What do you make of that?

[Dominique]

That's just something that we never talked about. And so that's why I feel like I'm behind, because I'm. I'm trying to figure it out.

[Ramit Sethi]

Do you all talk about savings and investing in your relationship?

[Chris]

We definitely talk about savings because Dominique likes to tell me that I need to save more. As far as investments, I mean, I don't really feel like we either one of us have enough information about investments or like how to kind of go about the investments.

[Ramit Sethi]

What do you say? You're in the carpenter's union?

[Chris]

Yeah.

[Ramit Sethi]

What do you do?

[Chris]

Acoustical ceilings.

[Ramit Sethi]

So, hey, Chris, I'm thinking of joining the union as well. California Carpenters Union. Did you know that?

[Chris]

No, I didn't.

[Ramit Sethi]

Yeah. The only problem is I don't think I can do it because I don't have enough information about framing. So therefore I'm going to stay unemployed for the next eight years. What's your response to that?

[Chris]

Well, you could start by going to the union hall and asking them about how the whole union side of things works and.

[Ramit Sethi]

Yeah, I just. I just don't know where I would start, though.

[Chris]

Well, you look up the union hall by where you're located in your county, you can go there, give them a call, and they could give you a little more information on how, if you are interested in going for a certain trade, they have classes. You start off as a. An apprentice one, and you learn from there over the years to get higher up.

[Ramit Sethi]

Okay, first of all, I really enjoyed that, Chris. What did you notice about my responses?

[Chris]

You were still not getting it.

[Ramit Sethi]

Yes, yes, I was not getting it. Totally like what you were saying all factually correct. And you could see from my body language. Right. I was like, this sounds pretty hard. Union hall sounds like a bit of a drive, right? Just like this guy doesn't get it. What was your, like, emotional reaction to that as you kept talking and giving me valuable information?

[Chris]

Maybe he's just not as interested as he came off about being interested.

[Ramit Sethi]

Yeah, yeah. Like, you're like, dude, information. What the. I just told you exactly what to do. Not that hard, right? Take one step and then one step more. Do you see Why? I don't really buy your answer. About. I don't have information about investing. Yeah, it's literally right here. Or you can get it for free, or you can Google how to invest. It's every. It's on my Instagram account. Right. It's everywhere. So what is it really? Because, like with me, it was probably just that I'm lazy or I wasn't actually interested in a union job or I want someone to do it for me or whatever. What is it for you when it comes to investing?

[Chris]

Just kind of where to start.

[Ramit Sethi]

That's the equivalent of me going to the union hall. Do you see yourself as somebody who invests money?

[Chris]

No, I don't know what I'm investing money into or kind of what exactly an investment is, in a sense. Like what's considered an investment.

[Ramit Sethi]

Okay. And what type of person invests? What do they look like?

[Chris]

Normal, human. Someone that has money.

[Ramit Sethi]

Okay, so what are they wearing? What do they look like?

[Chris]

I don't know, high end clothes.

[Ramit Sethi]

Okay.

[Chris]

Showing off, you know, where their money's going, in a sense. Like what? They have their, their cars, their assets, things like that.

[Ramit Sethi]

Okay, so they got a nice car, maybe they're wearing some nice clothes, that type of thing.

[Chris]

Unless they're faking it. So they're making it.

[Ramit Sethi]

Are they wearing a baseball cap and gold chain?

[Chris]

They might.

[Ramit Sethi]

They might. I agree.

[Chris]

Chain can be 5, $10 or it can be thousands, who knows, you know?

[Ramit Sethi]

Hell yeah. That's a cool answer. My point, Chris, is that, yes, I agree, you don't know what to invest in. Fair enough. But I don't think your parents probably talked a lot about investing. Right. Were they sitting around discussing the finer points of diversification? I don't think so. And I would suspect that you don't see yourself as the kind of person who invests.

[Dominique]

I.

[Chris]

Maybe not. I don't see myself as the kind of person, but I'm just. I'm not doing it. So I don't know what the person looks like that invests.

[Ramit Sethi]

Could it be you?

[Chris]

It could be.

[Ramit Sethi]

Okay, great. Looking back on Dominique sharing her upbringing with money, what money messages that she grew up with do you think she brings to your relationship?

[Chris]

I don't really know if she really brings those money messages.

[Ramit Sethi]

How about money habits?

[Chris]

I don't really know because I don't know what she kind of puts most of her money towards. As far as money habits.

[Ramit Sethi]

What do you think, Dominique? What messages or behaviors do you bring from your childhood to this relationship?

[Dominique]

I think that I always just Say we don't have it. And I think that that makes Chris feel less confident as well about what he does or does not have. Because my initial instinct is we don't got it.

[Ramit Sethi]

Right. I agree. You say that. And in what other ways of your money does that belief show up?

[Dominique]

Investment is definitely one. I feel like if we don't have it, then we're not putting anything towards investments, but in other ways, we are just spending the money how we'd like to because we feel like we don't have it.

[Ramit Sethi]

Yes, very perceptive. So you tell yourself you have this deeply held belief, we don't have it, and therefore you spend, like, thousands of dollars every month, which obviously, like, you literally are eating it or drinking it or consuming it in some way. But that belief is so strong that it actually blinds you to. To consuming these things on a daily basis. That's how powerful our beliefs can be. It's quite shocking, right?

[Dominique]

Yeah.

[Ramit Sethi]

But for me, it's. It's a great opportunity because if we can change our beliefs, then sometimes we can change our realities.

[Dominique]

Facts.

[Ramit Sethi]

Okay, let's take a look at the CSP again. I have some questions for you. Where is child care on this?

[Dominique]

This. To be honest with you, I don't think that we put it in there.

[Chris]

I think we put it in debt.

[Dominique]

Yeah, I think we might have.

[Ramit Sethi]

Okay, fine. So how much is your childcare per month?

[Dominique]

It's $120 a month.

[Ramit Sethi]

120Amonth? How are you only paying $120 a month for childcare?

[Dominique]

So it's about to change. But it's because I'm, you know, a single mother, and that's just the rate that we got based off the county that we live in, going to go up to $120 a week in two weeks.

[Ramit Sethi]

Oh, it's going to quadruple.

[Dominique]

Yeah.

[Ramit Sethi]

How are you going to handle that?

[Dominique]

That's a big concern of ours, of mine at this point. His daycare is coming out of my savings account.

[Ramit Sethi]

Yeah.

[Dominique]

So I guess we're just going to keep doing that.

[Ramit Sethi]

Do you find that when it comes to money, you both are pretty reactive? Like, we'll figure it out when it happens.

[Dominique]

I feel like there is no other option but figuring it out. We have to.

[Ramit Sethi]

I'll take that as a yes. Do you know there is other options? If I was in the same situation, do you think, and you asked me, hey, how are you gonna pay for quadrupling your child care? Do you think that I would ever say, like, oh, gosh, I Don't know. I guess, like we're just gonna have to figure it out.

[Dominique]

No, probably not.

[Ramit Sethi]

What would I say?

[Dominique]

I don't know, because I don't even know how I'm gonna figure it out myself.

[Ramit Sethi]

Let's play a hypothetical. What would I say?

[Chris]

I'm going to put a little bit extra away each month towards that so that when the time comes, I know that I'm in a better position financially.

[Ramit Sethi]

Nice. So I would have seen this coming down the road, say six months early maybe I would have started putting some money aside. Love that. Yes. That's great. That's being proactive. I love that. And then the next question of course is like, well, where would the money be coming from?

[Dominique]

I mean, I think that the money's definitely coming from the savings that I've been putting away in preparation for this.

[Ramit Sethi]

The savings of $13,198.

[Dominique]

Yeah, it's already coming out of my savings and so I knew that we were going to be paying more anyway, so that's good.

[Ramit Sethi]

How long will that savings last you?

[Dominique]

Not long.

[Ramit Sethi]

You know, how long.

[Dominique]

Honestly, I'm just waiting for something to happen in any one of the houses and it's gone.

[Ramit Sethi]

That's called being reactive. I'm waiting for something bad to happen so that I can respond to disaster.

[Dominique]

I mean, realistically, if we're thinking about everything that we're paying for, maybe it'll last us a month or two.

[Ramit Sethi]

Two months. That's it. Two months and you have a little two year old.

[Dominique]

Yeah.

[Ramit Sethi]

What do you think about that?

[Dominique]

We're screwed.

[Ramit Sethi]

I don't think saying the same words is probably the right move to get you to make a change.

[Dominique]

Yeah, I agree.

[Ramit Sethi]

I'm kind of struck that sometimes one of the ways that I can help people unlock from their habits and being stuck is to ask them a hypothetical. Hey, what would a guy like me do? Or what would somebody else do? And sometimes people are game to play with the hypothetical, sometimes they're not. I feel like this one is a tough one. I, it's tough for you to engage in a hypothetical. Have you noticed that?

[Dominique]

I think it's just overwhelming.

[Ramit Sethi]

Okay. I agree. There's a lot of things, variables here. Part of what is helpful about this is that you can stop thinking and put yourself in my hands.

[Dominique]

Okay. I think that's hard for me. I think I am definitely a thinker. I, I, I think too much about it and then that's what gets overwhelming. When really it could be simple.

[Ramit Sethi]

What do you get out of overthinking things?

[Dominique]

Nothing. It just takes me into a big dark hole.

[Ramit Sethi]

That's not true. If you didn't get something out of it, you wouldn't do it. What positive rewards do you get out of overthinking?

[Dominique]

Oh, gosh. A positive from overthinking. Maybe I think that if I overthink it, then it makes sense not to do something or to do something or. I don't know. I don't. I don't feel like I get any positives out of my overthinking.

[Ramit Sethi]

You want to try one more time?

[Dominique]

Like, what's the right answer? I. I genuinely. I don't. I don't know.

[Ramit Sethi]

When you overthink something, when I'm asking you a question or you're looking at some number, take the child care example, and you're thinking, okay, well, we could do this, we could do that, we could do this. I don't know about that. But then if we do, this is cut and cause this thing down the road in retirement, this is what's going through your head, right?

[Dominique]

Yeah.

[Ramit Sethi]

What are you feeling? What positive emotion are you feeling?

[Dominique]

Maybe that I'm thinking about everything.

[Ramit Sethi]

Yes. Think about everything. What does that make you?

[Dominique]

I don't know. I feel like because I'm thinking about everything, that I'm handling it. Yes.

[Ramit Sethi]

You feel like you're in control because you've thought of all the angles.

[Dominique]

Yeah. Which is also the bad.

[Ramit Sethi]

You feel like you are smart because you've looked around every corner. Any of these sound familiar?

[Dominique]

I mean, yeah, I feel like certain things, if I think enough about it, then I make the better decision. Maybe it's not true.

[Ramit Sethi]

You have two months of savings you're not investing. You're spending 10 times what you thought on eating out. You feel like you're running a marathon in your head and you're sweating and exhausted, but you actually haven't taken a single step. And Chris, where are you in these discussions about quadrupling childcare?

[Chris]

I know that it's happening, but isn't.

[Ramit Sethi]

It kind of important? You make twice as much as she does.

[Chris]

I also put twice as much towards our bills and our things like that as well.

[Ramit Sethi]

I don't see that. Look at this. She puts a higher percentage towards your fixed cost than you do.

[Chris]

I don't think we did it correctly because I actually put anywhere from 50 to 60% of my check each week into our bills account.

[Ramit Sethi]

You guys are kind of missing the point. You're sitting here talking about weekly basis. I don't care. I'm Never going to talk about weekly. I'm trying to get you to elevate and look at how you're thinking about money and you're talking about weekly basis. We're not speaking the right language at all. Yeah, okay. I'm getting frustrated. This kind of thinking is exactly why Dominique and Chris feel like they have zero money. They are playing small. They made major financial decisions using shallow thinking, monthly thinking. And when you're only looking at what you can afford next month, you are missing the big picture. I got to tell you, this is actually really common. Most Americans, in my experience, do not plan long term. They've never been taught how. Take the everyday person. They live thinking about what's happening today, maybe next week, maybe up to the month. But if you ask somebody, hey, if you take this vacation, how is it going to affect your finances? Three months from now? They'd be like, what, three years from now? 30 years from now? They look at me like I asked them to solve a physics equation. This is not part of how most people think. But that's my job. That's why I'm doing what I'm doing. My job is to get you to zoom out. And that is exactly what I'm going to do with Dominique and Chris next week when I shift the burden back onto them and make them take control of their money. In part two of our conversation, we'll talk about how to handle rising childcare costs, how to actually build a plan and to think long term, and most importantly, how to avoid passing these same money messages onto their son. Stay tuned. That's coming next week.