217. “Are we broke…or just bad with money? (Part 1) - Money For Couples with Ramit Sethi

Transcript

Ramit Sethi (0:00)

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Dominique (1:04)

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

Ramit Sethi (1:09)

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

Chris (1:11)

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

Dominique (1:15)

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 (1:28)

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 (1:54)

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?

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:

Align Financial Goals: Couples must openly communicate and align their financial goals to avoid hidden resentments.
Move Beyond Emotions: Financial decisions should be based on numbers and data rather than emotions or past conditioning.
Proactive Planning: Anticipating future financial needs and planning accordingly can prevent reactive financial crises.
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.

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