Episode 202. “She racked up $50K in debt — why should I trust her with money?”

Emma (39) and Dave (39) make $258,000 a year—but they’re stuck in a toxic money dynamic. She built a financial plan during maternity leave. He didn’t believe her. Now, they’re battling over trust, $50K in debt, and whether they can afford a $700K house.

With conflicting money roles—she’s the anxious planner, he’s the passive skeptic—they can’t move forward. In this episode, Ramit breaks down their “chaser/avoider” dynamic, the emotional cost of skepticism, and how to finally create a shared vision.

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Links mentioned in this episode 

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Transcript 

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[00:00:00] Emma: I don’t want to tell you what I did.

[00:00:02] Ramit: Tell me. Come on.

[00:00:03] Dave: Emma believes she’s the best with money, and I feel that she’s not.

[00:00:13] Emma: Part of it was our wedding. I took a loan from my 401K just to make sure we had money.

[00:00:18] Ramit: What the [Bleep]? You took out a loan to pay for your wedding? How much?

[00:00:24] Dave: I’m putting all this money into savings and you’re still telling me it’s not enough.

[00:00:28] Emma: I have this small chunk of money that’s controlling what I can and can’t do. Discretionary money stresses me.

[00:00:35] Dave: When we have these financial conversations, they typically don’t end well. I think I want to hear this from someone else.

[00:00:44] Emma: It encapsulates a lot of the conversations we have. I’m talking. Dave is listening, but he doesn’t really believe in what I’m saying.

[00:00:51] Ramit: I don’t think it’s funny when one partner is skeptical of another. I actually think it’s one of the most soul-crushing dynamics that exists in a relationship. And also, you have a narrative, “We don’t have any money. We’re not spending anything.” Guys, if you don’t effectively communicate, you can’t make good decisions. You’re going to slide into every financial decision of your life.

[Narration]

[00:01:13] Ramit: I’m about to open Dave and Emma’s conscious spending plan, which breaks down their net worth, income, and where they spend their money. You can download and create your own conscious spending plan at iwt.com/csp. That’s a free download at iwt.com/csp.

[00:01:32] The applicant says, “I’m the driver/planner, and I want us to combine and automate everything, but I’m also the over spender in debt.” Interesting. “He’s the basic paycheck to paycheck and defines himself by what is in his checking account on a given day. Fixed expenses are really high. Daycare times two and debt. We’re trying to buy a house, and we surround ourselves with rich things and people, but we can’t seem to make an inch forward.

[00:02:04] “We’re actively trying to buy a house, but we’re 50k in debt with 40k saved. So we’re anxious about getting more into debt. I live in fear every day we will never be able to retire.” What? They make $280,000? All right, let’s take a look.

[00:02:19] Assets are $5,000. Fine. Investments, $158,000. Okay. Savings, $41,000. And debt, $53,000. Wait, what? The way they talk is so depressed. They’re 39 years old and they have a net worth of $151,000. Okay. They have a very high income 260,000 to $280,000. But it’s interesting that their fixed costs are at 61%.

[00:02:51] So typically, when you have a high income, you will see that number naturally go down because you rarely see anybody spending $4,000 a month on groceries. Basically, this is the power of earning a high income. When your income goes up, you’re still buying roughly the same type of bread. So it’s a little surprising to me that I see a 61% fixed cost, and I’m wondering where are they spending their money. If we look at their housing, it’s a little pricey. They can afford it, but it’s a little pricey. Okay, fine. Then we add on insurance, we add on childcare, we add on a car payment, now it really starts to add up.

[00:03:40] Now, let me say this. It’s okay to be at 61%, but it explains why I see words like stress and anxiety. You can see that they have added basically multiple line items, spending $1,000 a month. Okay, so I can understand where they’re coming from.

[00:03:59] Let’s take a look at the rest. Ah, here we go. Investments, 3%. Their post-tax investments are $540 a month. They’re probably putting something in pre-tax. Not bad. And I will say they have $158,000 invested. Fine. Savings, okay, are at 1%. They’re saving $200 a month for a down payment on a house. And they have $41,000, which is like four, four and a half months of an emergency fund.

[00:04:30] If I’m making $270,000 a year, I want more than four months of an emergency fund. So it’s interesting. And then finally– oh, what is this? What the [Bleep]? Guilt-free spending’s at 33%? Okay. $5,000 a month. So now I really got to speak to this couple to find out what’s going on.

[00:04:50] What I see is a lot of stress, a lot of overwhelm. I see one partner who’s anxious about money and chases the other who avoids it. Classic chaser-avoider dynamic. I also see that their income is quite high, but it’s being spent in a quite a peculiar way. What I also see here is that there’s a lot of communication I need to dive into here because these numbers don’t tell the full story. There’s a lot going on, and I don’t quite understand it yet, so I’m looking forward to speaking to this couple.

[Interview]

[00:05:18] Emma: So Dave had been putting a ton of money into savings because we’re saving to buy a house and then he said, I’m going to stop for a while so I can catch up. So now Dave, all of his extra money just goes into his checking account and I am like, “What’s all that money doing?” It’s just sitting there. It’s not in our savings account. It’s not in a investment account. It’s just sitting there.

[00:05:40] Ramit: Okay. Is the money still there?

[00:05:43] Dave: Yes.

[00:05:44] Ramit:  All right. What’s your perspective, Dave?

[00:05:48] Dave: So my perspective was that I stopped putting money into savings only because I was literally living with, I’d say a couple hundred dollars a week, and half of that goes to basically paying for gas because I do work very far away. So it felt like every single month I was falling short and freaking out about not being able to pay the bills and all that stuff. So I was like, “Hey, I need to take a break.”

[00:06:12] Emma: This is because of how much money Dave was putting into savings. And I said, “We have the money. Don’t put as much money in savings, and you don’t have to feel like that.” So when he says, “I didn’t have enough money,” I said, we did. It was sitting right there. It’s not like we didn’t have it.

[00:06:27] Ramit: Hey, Emma. What are you feeling right now?

[00:06:29] Emma: Frustrated.

[00:06:31] Ramit: Okay. Dave, how were you feeling as you explained words like scraping by and freaking out?

[00:06:37] Dave: I’m annoyed. I was putting a lot into savings while someone else was putting the bare, bare minimum, in my eyes.

[00:06:48] Ramit: Okay.

[00:06:50] Dave: So I’m sitting there struggling and, yeah, the money’s in savings. You can take it. But also, we worked hard for those savings. We are planning to buy a house with those savings. I didn’t want to have that burden over my head anymore. But just felt like I was working paycheck to paycheck.

[00:07:06] Ramit: Dave, it sounds like a lot deeper than annoyed.

[00:07:10] Dave: Maybe not heard sometimes. Maybe misunderstood.

[00:07:14] Ramit: Okay. I appreciate that. The reason I asked was minutes into our conversation, I can already see a dynamic here. Do you all notice that dynamic?

[00:07:26] Dave: Yeah. I guess in our house, it seems as though sometimes Emma believes she’s the best with money, and I feel that she’s not. And I think we butt heads on that a little bit, but we use different language towards it. The language being, why don’t we put money into savings? Why aren’t we starting this account?

[00:07:49] But I think there’s some other issues behind that. Whereas, sometimes I feel is like, hey, if I’m the only one putting this huge chunk of money into our savings and you’re still telling me we have all this debt and you’re still telling me it’s not enough, and I’m the bad guy, that’s where I start getting a little annoyed and frustrated.

[00:08:13] Ramit: Okay. I’ll just tell you what I observed. In five minutes, I asked you, “Can you tell me a time where you didn’t see eye to eye on money?” There was this thing about the savings account. Both sides, very frustrated, immediate frustration. Both sides defensive. Do y’all see the dynamic that I see? 

[00:08:34] Dave: Yeah, I can hear that.

[00:08:35] Ramit: Okay. Y’all ever feel joy around money?

[00:08:39] Dave: Of course.

[00:08:40] Emma: I guess when I get my bonus, I’m like, “Ooh, that feels good.”

[00:08:44] Ramit: How long does it last?

[00:08:46] Emma: Not long.

[00:08:48] Ramit: Like 10 seconds? What are we talking about?

[00:08:50] Emma: Yeah, until I put it towards another bill.

[00:08:52] Ramit: 10 seconds of joy per year.  All right. Do you all think it’s possible to not feel stressed about money?

[00:09:00] Emma: I hope so.

[00:09:01] Ramit: I’ll take that as a no.

[00:09:03] Dave: Yeah, I do.

[00:09:04] Ramit: Okay. Dave says yes. Emma, how would you do it?

[00:09:08] Emma: By not having debt. That would be a first step.

[00:09:11] Ramit: Okay, so if you pay off your debt, let’s just wave a magic wand and tomorrow you’re debt-free, would you be stress-free?

[00:09:18] Emma: Not stress fee, but a lot less stressed.

[00:09:20] Ramit: Okay. Is it possible for you to feel good?

[00:09:23] Emma: Yes.

[00:09:24] Ramit: How would you do it?

[00:09:25] Emma: By paying off debt and having a plan that we’re actioning on and allows us to do the things that we want to do.

[00:09:32] Ramit: Sounds pretty good to me. I agree with that. Dave, would you agree with that?

[00:09:36] Dave: I agree with that.

[00:09:37] Ramit: Okay. We’re all on the same page about that. That’s good.

[00:09:41] Emma: Yay.

[00:09:42] Ramit: Okay. So the question for today is, what has stopped you from paying off your debt and from coming up with a plan?

[00:09:50] Dave: We both work very hard and she does spend a nice percentage of her checks just paying off her debt. And she’s been doing it for years and she’s almost there. I’m very proud of her for doing that.

[00:10:02] Ramit: Did you know Dave felt that way?

[00:10:05] Emma: I think more recently when I just showed him more, I brought him into exactly what the debt is and how much I pay, so I feel like he’s a little bit more aware of it now.

[00:10:14] Ramit: That’s cool. I like that a lot. Sometimes we do things with really positive intentions, really positive outcomes, and we just don’t tell our partner. And how can they know if we don’t tell them? I think it’s really cool that you shared that with Dave so that he is in the loop about it. How often do you talk about money together?

[00:10:36] Dave: Maybe once a month.

[00:10:38] Ramit: What do you talk about in those conversations?

[00:10:41] Dave: These conversations are more towards retirement, even though we still need to buy a house.

[00:10:47] Ramit: You’re both 39 years old. Why have you suddenly started talking about retirement?

[00:10:51] Emma: I am a long-term planner and I know what we do now is going to help drive what we’re doing when we retire. And I know that we need to make movement now to do that.

[00:11:00] Ramit: Dave, what do you think about retirement?

[00:11:03] Dave: It’s not something I really thought about at all until Emma brought it up. My focus was make as much money now as you can. I’m not really financial savvy. I know 401Ks, but other accounts like a Roth IRA, how the rich stay rich, that whole formula, that’s foreign to me.

[00:11:21] Ramit: I can help you. I can tell you how I’ve built wealth and how a lot of people I know have done it. Do you feel like you are the driver of your money, or do you feel like you’re a passenger?

[00:11:31] Dave: Yeah, I feel more like a passenger.

[00:11:33] Ramit: Okay. I agree. I think that’s pretty honest. And Emma, would you say you’re a driver or passenger?

[00:11:39] Emma: I’m a driver in some terms, like all of this stuff I allocate to 401k and our medical and the kid savings. So I am in control of that. But then when it comes to the discretionary money, I feel like a passenger because it’s like I have this small chunk of money that’s controlling what I can and can’t do. And so that discretionary money stresses me.

[00:12:02] Ramit: I’ve been there, so I get that. But maybe we can take a look at it and help you feel a little bit more in control. Also, sometimes we just have to accept this is the phase of life we are in. I understand you have a house that’s a little small for your family right now, and sometimes we can make changes and sometimes we can be like, “Okay, this is reality for X, Y, Z future. Let’s figure out a way to accept it.”

[Narration]

[00:12:27] Ramit: Just moments into this conversation, you can feel the tension. On one side, Dave is frustrated. He thinks he’s the only one putting significant contributions towards their savings goals. And on the other, Emma’s frustration is boiling over as she struggles with the lack of a clear plan for their debt and how to start thinking about the future.

[00:12:49] And did you hear what Dave said about Emma’s relationship with money? He said, “Emma believes she’s the best with money, and I believe she’s not.” That’s quite a striking statement. And what’s even more interesting is that Dave describes himself as “not financially savvy.” So if you’re not financially savvy, are you really in the position to be judging who’s good with money and who’s not?

[00:13:15] Well, we’re going to dive into the complexities of their money dynamic after this short break.

[00:13:22] Now, back to the show.

[Interview]

[00:13:23] Ramit: Who was the first one who started this conversation about saving?

[00:13:28] Dave: Emma. We’re saving for a house. You wanted to start talking about putting savings away and you had asked me, “Hey, can you do this amount a week?” And I said, “Yes.” And then I did it, and here we are.

[00:13:41] Ramit: How did it come up?

[00:13:43] Emma: I had just read your book about automating what’s going where and all that jazz, and I was working on it on my side, and I had asked Dave, “Can you automate into savings so we know exactly how much is going in there?”

[00:13:58] Ramit: Okay. And Dave said yes, and that was it?

[00:14:01] Emma: Yeah. There was a lot more in my brain going on, but that was Dave’s piece to the puzzle.

[00:14:06] Ramit: You mean the part that you shared with him. Already in your first substantive conversation about money, what dynamic did we see? We saw one person, Emma, the “driver,” doing all this work behind the scenes, but not really bringing the other partner, Dave, along on the journey.

[00:14:26] Emma: Can I just tell you what I did really quick?

[00:14:29] Ramit: Okay. You want to interrupt my analysis? Go ahead.

[00:14:31] Emma: Sorry. I read your book and I was on maternity leave and I took the big post-Its that go on the wall and I was on the ground writing all the plan out for us, and then I put it up on the wall when the kid was napping and we went through it.

[00:14:44] Ramit: Why did you bring that up? I’m curious.

[00:14:47] Emma: Because that was part of what prompted this conversation with Dave, was I had this plan and part of that plan was that we needed to automate the savings account.

[00:14:58] Ramit: And when you were doing this massive plan on the floor, did you bring Dave into that planning session?

[00:15:04] Emma: I wrote it all down and then put it up on the wall and we looked at it together after.

[00:15:13] Ramit: And what was that like when you looked at it together?

[00:15:16] Dave: I thought I was back in math class and just was being taught a lesson.

[00:15:21] Ramit: Do you like being taught about those money things you saw on the wall?

[00:15:25] Dave: It was off putting at first. I guess my hang-up at the time was, why is Emma teaching me this. She’s not some financial expert.

[00:15:35] Ramit: Oh, wow. But would you admit that you’re not a financial expert yourself?

[00:15:39] Dave: Yeah. Absolutely I’m not. Obviously, she’s my wife, and I know it’s all within good intentions, but I know she’s not great with money either. But my thought process when I first saw the whole thing laid out was, I think I want to hear this from someone else.

[00:15:56] Ramit: And did you find somebody else to teach you about money?

[00:16:01] Dave: No.

[00:16:02] Ramit: That’s not really fair, right? She’s doing some work. Maybe she didn’t even get everything right, but she put an effort into it during maternity leave. She put together this plan, and your initial reaction was, why is she teaching me this? We need an expert who, by the way, I’m not going to go and find.

[00:16:20] Dave: Right. That’s also not what I did. I sat there. I listened. We were conjuring up a plan.

[00:16:28] Ramit: I know she made a plan. Did you believe it deep down?

[00:16:32] Dave: It had me worried at the time. I’m still already go paycheck to paycheck a little bit, and it’s, oh man, now I got to put more money here. She wants five different accounts, and I have to separate everything. And it just seemed like a lot.

[00:16:49] Ramit: Did you tell her that?

[00:16:52] Dave: I don’t remember.

[00:16:53] Emma: I don’t know if he said the words, but I know Dave very well, and I got the feeling. I knew coming away from that, that doing all of that was going to be a lot and he was uncomfortable with it.

[00:17:07] Ramit: So what do we do when we are presented with this massive plan that our partner put together without really talking to us about it? It’s going to require a lot of work. I don’t necessarily have the confidence in my partner. Realistically, do we think that plan is going to get executed or not?

[00:17:21] Emma: No.

[00:17:23] Ramit: Emma says no. Dave?

[00:17:24] Dave: No, because it didn’t.

[00:17:26] Ramit: Exactly. What are you observing about this meeting with the big thing on the wall?

[00:17:31] Emma: I think it encapsulates a lot of the conversations, big or small, that we have. I’m talking. Dave is listening, going along, but not believing, and being like, I don’t trust that you know what you’re talking about. So you can say whatever you want and I will say yes, but he doesn’t really believe in what I’m saying.

[00:17:50] Ramit: Dave, what are you noticing about this example with the big thing on the wall?

[00:17:54] Dave: Obviously, I could see Emma’s excited about it. I was certainly more than willing to listen, but Emma’s right about me. I do have internal feelings that probably don’t agree with her at the time. I don’t remember exactly how the whole conversation and the presentation went, but–

[00:18:16] Ramit: Hold on. What’s that? Why the laugh, Emma?

[00:18:18] Emma: I said it wasn’t a presentation.

[00:18:22] Ramit: It sounds like to Dave it was. He sat down like a student and you stood up like a teacher. I don’t think this is funny actually. You said it right. This is a great microcosm of your relationship with money. I don’t think it’s funny when one partner is skeptical of another.

[00:18:41] I actually think it’s one of the most soul-crushing dynamics that exists in a relationship. I don’t think it’s funny to indulge your partner and let them talk, thinking in your head, this plan isn’t really going to happen. I don’t think it’s funny to question your partner’s credibility, which may or may not be good, but then to offer no solutions yourself. I think it’s telling. I think there’s a lot of things we can do with this. I think it’s really candid and honest of you both to share it, and I appreciate it, but I don’t think it’s funny. What do you both think?

[00:19:12] Emma: I think what you just said is very insightful and a way that Dave and I probably have never looked at that situation.

[00:19:23] Ramit: What part of it was new to you?

[00:19:24] Emma: The skeptical part and how it just goes deeper than just talking about money. It’s how we relate to each other. It’s how we respect each other.

[00:19:33] Ramit: The idea that one person needs convincing.

[00:19:37] Emma: Mm-hmm.

[00:19:38] Ramit: Dave, why do you need to be convinced? Do you know about money?

[00:19:43] Dave: No.

[00:19:44] Ramit: So then technically, shouldn’t you just go along with whatever Emma says?

[00:19:48] Dave: Not all the time, because I know Emma has not a good track record with money. It maybe scared me at the time. How do I know if this plan’s going to work? I’ve seen how you’ve dealt with money in the past. I see how you spend it. I’m a little hesitant to believe this, and I think that’s a fair thing to say.

[00:20:09] Ramit: Okay. Another approach might be, hey, I don’t really know if Emma knows what she’s talking about. I better learn this stuff because then I can understand what she’s saying and maybe ask her some questions.

[00:20:22] Dave: That’s true.

[00:20:23] Ramit: You didn’t do that, right?

[00:20:25] Dave: No.

[00:20:26] Ramit: Passenger. What do y’all think about this dynamic? Is it good or bad?

[00:20:32] Emma: Not great.

[00:20:33] Ramit: Okay. Is it going to get you where you want to go together?

[00:20:36] Dave: No.

[00:20:38] Ramit: Hell no. It’s like you two are in a boat. You don’t even know where your destination is. One of you’s not particularly good at boating. You capsized it a few times already, but you’re the one who’s like, “We’re going East.” And then the other one’s like, “What the [Bleep]? East? I don’t even know if you know what east is. I’m going to stick my oar in the water and I’m going to wait until you show me true North.”

[00:21:00] I’m really stretching my knowledge of nautical terms here. Okay, please, let’s end this metaphor. But you’re not getting anywhere with one person in their oar in the water and the other’s talking furiously and rowing this and rowing that direction. Can’t get anywhere. And the worst part is you’re not even having fun doing it. You’re all just feeling anxious and skeptical. The answer is not to just wait. It’s to change something big.

[Narration]

[00:21:25] Ramit: Okay. You know what? I’m cutting in quickly because looking back, I wish that I had approached this part of the conversation differently. Dave’s skepticism about Emma’s relationship with money is actually really hard to hear, and yes, she has struggled with credit card debt, but using that as an excuse to dismiss all of her efforts with the family finances does not seem fair.

[00:21:48] It also doesn’t seem like a good strategy. Because if you are constantly second guessing someone else, that’s not going to get them to rise up and to become confident and competent. And this skepticism is something that a lot of people, particularly women face, whether it be mothers under constant pressure to prove themselves, whether it’s going to work and somebody questioning them, making them feel like they have to justify their mere existence.

[00:22:17] Or why would you think that? When the same questions are often not asked about other people? The feeling of being unfairly questioned, of someone being skeptical of you for merely existing is one of the worst feelings on earth. And in a way, I think it’s especially gendered. I don’t think men experience this of being questioned for one thing or another all the time.

[00:22:42] If anything, if I had to really stretch it, maybe we take a man who’s not assertive and we call him weak. Can you imagine what it’s like for the guys listening if I was like, “Why don’t you just be more assertive? What’s the problem? Why can’t you do it? Just be more assertive. Just speak up.” And they’re like, “I don’t act like you. I’m not you.” Why don’t you just [Bleep] do it? That feeling is horrible.

[00:23:05] Now imagine that happens to you in so many different parts of life. I wish that I had brought this topic up right here because this skepticism is toxic. What I would’ve asked Dave would’ve been something like, what would it take for you to trust her? Because once you get caught in this, I don’t trust my partner narrative, it’s really hard to break free.

[Interview]

[00:23:26] Ramit: I would like to lean in more to this idea of the house. When you met, and I believe you had your daughter before you were married, is that correct?

[00:23:35] Emma: Yes. So we were in California when she was born, then we moved to Connecticut, and that is when we started saving for a house.

[00:23:43] Ramit: Let’s talk about the numbers that you chose for the house. How did you decide how much you wanted to put aside each week or each month for this house?

[00:23:51] Emma: How much we could.

[00:23:53] Dave: That’s the thing, is that we’re still so far beyond even being able to put a real down payment on a house that works for our family. We’re not talking luxury.

[00:24:04] Ramit: How long will it take you to have enough for a down payment?

[00:24:07] Dave: At this rate, 10 more years. We can put at least 5% down right now on, say, a $400,000 house.

[00:24:15] Ramit: So you have 20,000 you could put down right now.

[00:24:17] Dave: Yeah.

[00:24:18] Ramit: Okay. Could you afford a $400,000 house?

[00:24:21] Dave: Technically, no.

[00:24:22] Emma: Why?

[00:24:24] Dave: We’d be paying probably somewhere around 4,000, maybe a little less, but it’s still a lot of money per month compared to what we pay in rent, which is also a lot of money per month. But we’re willing to stretch that 400,000 a lot more because the housing market is just terrible.

[00:24:43] Ramit: What do you mean you’re willing to stretch the 400,000?

[00:24:46] Dave: To maybe 500,000, maybe 600,000.

[00:24:49] Ramit: How could you do that if you can’t even afford a $400,000 house?

[00:24:53] Dave: We can make it work. Daycare is killing us. There’s a lot of debt, and it seems like all this is getting taken care of within a year.

[00:25:00] Ramit: Okay. We’ll look at the numbers, and we can certainly make some projections. I think that’ll be really helpful. I understand that you were looking and you found a house that was above your budget. How much was the house that you found?

[00:25:14] Emma: I think it was around 700.

[00:25:16] Ramit: 700,000.

[00:25:18] Emma: Mm-hmm.

[00:25:19] Ramit: Okay. So what happened?

[00:25:20] Emma: I was very uncomfortable with that number. And it ended up going for above that before we had to talk about it more.

[00:25:29] Ramit: Dave, what was your approach when you heard the house was available? Did you want to get it or no?

[00:25:34] Dave: I did.

[00:25:36] Ramit: What did you say to Emma?

[00:25:38] Dave: I said we can figure it out.

[00:25:40] Ramit: Okay. Awesome.

[00:25:41] Dave: Our daughter’s out of daycare next year. Your debt is paid off next year. That’s a good chunk of money back in our accounts to help pay the mortgage.

[00:25:49] Ramit: Okay. Awesome. Did you know the exact dollar amounts, or was it more of a feeling that these things are going to be gone from our spending, so that’ll probably make up for this new mortgage?

[00:26:01] Dave: Maybe it was more the feeling. I didn’t have the exact dollar amounts.

[00:26:05] Ramit: Got you. And Emma, when Dave said that to you, what was your reaction?

[00:26:10] Emma: I wanted to see it on paper.

[00:26:13] Ramit: Okay. Did Dave put it on paper for you?

[00:26:16] Emma: No.

[00:26:17] Ramit: Dave, you don’t put things on paper when it comes to money, right?

[00:26:20] Dave: No, not the best at it.

[00:26:22] Ramit: Okay. So Emma, what happened then?

[00:26:24] Emma: The house ended up selling for higher, and so we weren’t forced to make a decision together on that particular house. So if it were to come up again, we’d probably be in the same situation, potentially.

[00:26:40] Ramit: What will you do next time?

[00:26:41] Emma: Hopefully not the same thing. 

[00:26:44] Ramit: Dave will say, like, “I think we can make it work.” Reassuring, even though you don’t really know about the numbers. How can you reassure someone if you don’t actually know what you’re talking about?

[00:26:54] Dave: Yeah, it’s a good point.

[00:26:55] Ramit: And then Emma’s over here, anxious, worried about the numbers. Wants to see it on paper. But of course, you know when you ask that question of Dave, he’s not going to put it on paper. He even said he doesn’t really do the paper stuff, the numbers stuff. So when you ask him that, it’s not really a fair request, is it?

[00:27:09] Emma: No, and I guess my ask would be I would want him to participate and we could look at it together.

[00:27:14] Ramit: I want you all to do your money together as well. That’s why I’m here. But let me also say this. I don’t really think it’s fair to ask your husband to work together on the most complex financial decision you will ever make. Y’all haven’t even sat down and mapped out having two savings accounts. How can you expect to figure out an amortization chart together? It’s not fair, right? Dave, would you agree?

[00:27:42] Dave: Absolutely.

[00:27:43] Ramit: Okay, cool. I love when we all agree on a few key things. I do think that, Dave, you’ve taken a backseat. I think you are the passenger. And what’s worse, I actually think you are the backseat passenger. That’s not healthy. I don’t like that.

[00:27:57] Emma, I think that the way that you engage with money, it’s not serving you because you’re actually not feeling good, even though it seems like you’ve paid off a lot of debt. It’s not serving your relationship because Dave’s not engaged. And sadly, sometimes the person who’s more apt towards money has to find a way to get the other partner engaged.

[00:28:19] Emma: Agree.

[00:28:20] Dave: Yes.

[00:28:21] Emma: I think that is what we’ve been feeling and not been able to really vocalize to each other.

[Narration]

[00:28:27] Ramit: Dave is what I call the ignorant reassurer. And you see this dynamic in a lot of the heterosexual couples I’ve spoken to. In these couples, she will often manage the day-to-day finances. The way that she describes it is pay the bills, make sure we have enough in the checking account, etc. And oftentimes she will start to get worried about the money.

[00:28:48] Are we going to have enough? Maybe she has a history of scarcity with money, and she will bring these topics up. And he will do this. He’ll cross his arms effectively and say, “We’re going to be fine, babe. Stop worrying.” It’s like, how the [Bleep] do you know you’re going to be fine? You haven’t looked at the numbers in 13 years.

[00:29:06] He is the ignorant reassurer. Ignorant because he, and it’s almost always he, has no real relationship with the numbers. He doesn’t look at them. He just earns a paycheck and that’s it. Reassurer because deep down he sees emotions as bad and he wants them to stop.

[00:29:26] Now, as a guy, I totally get this. Emotions feel uncomfortable. I just want it to stop so I can look at my spreadsheet all day. Cell C32 never made me feel this way. So what does he do? He goes, “It’s going to be fine.” You don’t know if it’s going to be fine. You don’t even know what fine is. You have no relationship with the numbers. You’re simply saying, “Stop worrying. Your worries are not real.” You will see this dynamic of the ignorant reassurer in many places. If you see it, call it out, and recalibrate your relationship.

[00:30:00] Before we get back to the show, if you enjoy these videos and you want to be the first to know when a new one drops, make sure you hit that Subscribe button. It really helps my team and me grow this channel.

[Interview]

[00:30:08] Ramit: Why do you need a house?

[00:30:10] Emma: For me, just having a house feels like our family is settled. This is where our kids are going to grow up. This is the school system they’re going to be in. We can paint the walls. It’s ours.

[00:30:21] Ramit: And right now you feel unsettled?

[00:30:24] Emma: Yes.

[00:30:25] Ramit: Mm. That doesn’t feel good.

[00:30:27] Emma: No.

[00:30:28] Ramit: Emma, are you the one who wants a house or, Dave, do you also want a house?

[00:30:31] Dave: I also want a house too. I want some stability. Be part of a community, part of a neighborhood.

[00:30:37] Ramit: What is the most important? Have you all discussed that?

[00:30:39] Dave: I think the most important thing for me is the kids having a yard, having a driveway to play in, us having space to be a family. We’re really cramped right now.

[00:30:49] Ramit: It doesn’t sound like you actually talked about this with clarity. Would you both agree?

[00:30:53] Emma: Not with clarity.

[00:30:57] Ramit: Again, I’m not blaming y’all. This is how most people talk about the biggest purchase of their lives. They actually start with the destination first and then they reverse engineer it into coming up with several reasons why they need a house. But they are rarely crystal clear about exactly why they are getting a house. It sounds like you’re saying you need more space. Is that right?

[00:31:20] Emma: Yes.

[00:31:20] Ramit: Okay. What if I told you, yeah, you can have a bigger house, but you got to move 40 minutes away or 80 minutes away or whatever? How would you all feel about that?

[00:31:28] Emma: In answering your question, then location would be number one. Dave, would you agree?

[00:31:34] Ramit: What the [Bleep]? That never came up once. You all see what I’m talking about?

[00:31:38] Emma: I feel like it’s just so ingrained in us that we know exactly where we want to be, that we forget it’s here.

[00:31:43] Ramit: Is anyone seeing a pattern here? Oh, there’s this thing in my head, but I never said it out loud, and so it’s causing massive amounts of confusion.

[00:31:50] Emma: Yeah.

[00:31:51] Ramit: Guys, if you don’t effectively communicate, you can’t make good decisions. You’re going to slide into every financial decision of your life. Why am I creating this massive freaking calendar presentation? I don’t know. I never told my partner. Why am I sitting back like this skeptical of my partner? Oh, I don’t know. I never really told her, “Hey, I actually don’t think you have a great track record and it makes me nervous. Here’s what I’m going to do about it.” Why are we buying a house? I don’t know. Everybody needs a house, right?

[00:32:18] Guys, we got to be more communicative about this. That’s why we’re here.  All right. You want location? Amazing. I love it. That’s actually my first priority as well with housing. Location first. I’d rather have a much smaller place and have an amazing location. Would you all be willing to make that trade off? Sounds like you have a pretty good location right now. What if all other options for bigger places were in worse locations? Would you stay in this place?

[00:32:42] Dave: Yeah, I would.  

[00:32:44] Ramit: All right. It’s helpful to know. When we look at the numbers, it’s going to tell us a lot more.

[Narration]

[00:32:48] Ramit: I just want to point out that so many of our goals are based around this idea of what life should be, and it’s usually a vision that we all have in our head– a suburban house, a yard, going apple picking in the fall– which can all be nice, but we should know what it takes to get that.

[00:33:09] For example, if you want to have that big suburban house, would you be willing to move an hour away? Meaning you or your spouse is gone for an extra two hours a day. Would you be willing to cut your vacations from twice a year to once every three years? Would you be willing to go two months without eating out?

[00:33:30] These are the questions that I want you to be asking because most of us don’t think about actual trade-offs. We just go, “I want that.” We don’t think about what it takes to actually get that. So if you find yourself in a similar situation with you or with your partner, ask yourself, first of all, do we really want that? Let’s get specific. Let’s get vivid. Second, what are the sacrifices we will have to make to get that?

[00:33:56] Now let’s take a quick pause to support our sponsors.

[00:34:01] Welcome back. Let’s keep going.

[Interview]

[00:34:02] What was it like doing the conscious spending plan together?

[00:34:07] Dave: We’ve done it together before, so we knew our numbers.

[00:34:11] Ramit: Whoa. Awesome. When did you do it for the first time?

[00:34:15] Emma: A year and a half ago.

[00:34:16] Ramit: Go ahead.

[00:34:16] Emma: It was around the same time as the chart, and we weren’t really happy with it, but we didn’t know what to do about it, so we just did it and then we’re like, “Okay.”

[00:34:25] Ramit:  All right. Let’s take a look at the CSP, huh, the one that you’re unhappy about. Emma, can you read off the word in bold and then the number in full next to it for this entire box? Go ahead.

[00:34:34] Emma: Assets, 5,000. Investments, 158,000. Savings, 41,000. Debt, 53,000. Total net worth, 151,000.

[00:34:46] Ramit: All right. What do y’all think about those numbers?

[00:34:48] Emma: They’re not horrible, but I wish they were different.

[00:34:53] Ramit: Okay. Dave?

[00:34:55] Dave: Actually seeing it on there, it doesn’t make me feel so bad. 

[00:35:00] Ramit: Which part?

[00:35:01] Dave: The total net worth.  

[00:35:02] Ramit: All right. I like when people see the CSP and it gives them a new perspective. Sometimes we forget how far we’ve come. We’re over here hoarding money or feeling worried about X, Y, Z and we go, “Wait a second. I got to actually zoom out, look at the big picture.” That’s what the CSP excels at doing. It allows you to see everything in a very simple format. So I’m really happy to hear that. Dave, can you tell us your gross monthly combined income?

[00:35:32] Dave: $21,554.

[00:35:35] Ramit: Did y’all know that your household income is $258,000 a year?

[00:35:41] Emma: Mm-hmm.

[00:35:42] Ramit: Emma says yes. Dave?

[00:35:44] Dave: Yeah.

[00:35:44] Ramit: Do you guys think that’s a lot of money or not?

[00:35:47] Dave: I think that’s a lot of money.

[00:35:48] Ramit: Emma?

[00:35:49] Emma: It sounds like a lot, but then I feel like it only is as much as you have with all the expenses. I feel like so much is being taken out that when it comes to saving and spending, we have nothing. So as much as I know that that’s how much we make, and that feels good, that only goes so far when we actually don’t see it in our every day.

[00:36:11] Ramit: Okay. I want you to remember what you just said. $258,000, you go, “We don’t have any money to save or spend.” You said that, right?

[00:36:20] Emma: I did.

[00:36:21] Ramit: Okay. Hold that thought because we’re going to look at the rest of your spending.

[00:36:24] Emma: Okay.

[00:36:24] Ramit: Let’s take a look.  All right. So you’re netting 15k a month, which means you got a 401K, right?

[00:36:31] Emma: I am the only one that has 401K.

[00:36:34] Ramit: You’re maxing it out?

[00:36:36] Emma: I’m contributing the most amount that I get the full match for.

[00:36:39] Ramit:  All right, fine. That’s still thousands of dollars a year. That’s meaningful. That matters. It’s real. We got to start rewriting our narrative that we make $258,000 and we don’t have any money to save or spend. That’s simply not true. We see it right there. Let’s keep going. Fixed costs, 61%. What do you guys think about that?

[00:36:58] Dave: It’s a high number.

[00:36:59] Ramit: What should it be?

[00:37:00] Emma: Wait, is that right? Mine is 82 and his is 67. How is it 61 combined?

[00:37:05] Ramit: That is weird. One of you is at 82% and one of you is at 67%.

[00:37:12] Emma: I added in the line of childcare. I don’t know if that messed things up.

[00:37:15] Ramit: Oh [Bleep]. Yeah, it messed–

[00:37:18] Emma: I know.

[00:37:19] Ramit: Why do you guys mess with my formulas?

[00:37:20] Emma: I know I wasn’t supposed to, but I didn’t know where to put childcare, and that’s a fixed cost.

[00:37:25] Ramit: All right, fine. So now your fixed cost is 76%.

[00:37:28] Emma: Yeah.

[00:37:29] Ramit: Oh, that’s pretty high. It should be 50 to 60%. And frankly, with your income, which is a very high income, typically it’s the lower end of that. So at 76%, that number right there is why you feel stressed and anxious and why you’re having these small arguments about how much money’s going into a savings account. Y’all get that?

[00:37:52] Emma: Yeah.

[00:37:53] Ramit: Right there?

[00:37:54] Emma: Mm-hmm.

[00:37:55] Ramit: We’ll dig into those numbers in a minute, but let’s keep going down the list. Investments, 3%. Savings at 1%, and that is $200 a month for a house down payment. And then finally we have guilt-free spending, which claims to be 19%. I actually don’t think you all know how much you’re spending on guilt-free spending per month. Do you?

[00:38:17] Emma’s shaking her head, no. Dave is standing like a statue. Approximations are okay the first time you do the CSP. You jot down what you think. But then the instructions in the CSP are, you actually got to pull your numbers and you got to look at the rest of the year.

[00:38:32] What are we spending? You got to spread that out to get a much more accurate number. You don’t know how much you’re spending and also you have a narrative, we don’t have any money. We’re not spending anything. Our stories are more powerful than reality, and that’s what the CSP helps you cut through. Dave, what are you noticing from this?

[00:38:50] Dave: It’s an eyeopener. It’s interesting to see how much we’re actually spending on certain luxuries, I guess.

[00:38:59] Ramit: Yeah. The irony is because you all don’t really talk about money, you’re not actually both engaged with money. Not at all. You actually don’t have any guilt-free spending because all your money is guilt-ridden. That’s a terrible way to live, especially making $260,000 a year.

[00:39:16] But if you actually were a team and you came together, you said, like, “Let’s create a shared vision. Let’s actually decide what’s important to us. Let’s be honest. And we both need to be at a certain level. We need to understand money.” Suddenly, you would actually have more money to spend guilt-free than you do right now.

[00:39:34] Emma: That’d be great.

[00:39:35] Ramit: I got some questions for you now on the numbers. We have $53,000 of debt. What type of debt is that, Emma?

[00:39:42] Emma: Student loan and credit cards.

[00:39:43] Ramit: How much is the student loans.

[00:39:45] Emma: Student loans, 5,000.

[00:39:48] Ramit: What’s the interest rate?

[00:39:49] Emma: 7%.

[00:39:51] Ramit: And the rest of it, 48k, credit card debt?

[00:39:54] Emma: I have one personal loan that was a consolidation that’s 15k at 6%. And the rest is credit card.

[00:40:05] Ramit: What’s all that debt?

[00:40:06] Emma: I wish I could tell you. I opened my first credit card in college and I had a lot of student loans and I feel like it’s just snowballed since then. And I feel like I just never really had the tools to manage money or knew what I was doing.

[00:40:21] Ramit: What did you spend it on?

[00:40:22] Emma: Just everyday stuff. I was just trying to live and get by and I feel like I didn’t have enough money for a while, so I was using the credit card to do that.

[00:40:30] Ramit: Who’s the one who makes more out of the two of you?

[00:40:32] Emma: I do.

[00:40:33] Ramit: Okay. Emma, you make $13,000 a month gross. It’s a lot of money. Both of you make a lot of money. Dave, you make 8k a month gross. It’s very good. When you look at me and you think about how I relate to my money, do you think I’m constantly in motion?

[00:40:47] Emma: No, I know you’re not. It’s supposed to automate and you’re not supposed to have to think about it.

[00:40:52] Ramit: Describe my behavior with money.

[00:40:53] Emma: Thoughtful, planned, purposeful.

[00:40:57] Ramit: Calm. Describe your behavior with money.

[00:41:00] Emma: Frantic, impulsive.

[00:41:02] Ramit: You like it?

[00:41:04] Emma: No, I don’t. I struggle because it’s part of just how I work. I need to check things off. I need to feel like I’m doing something. And because I feel like money is something that we need to work on, I always feel like I need to be doing something to make it better.

[00:41:20] Ramit: Maybe what I don’t hear you saying is I really need to find a way to calm myself. I don’t hear you saying, I need to find a way to connect with my husband about money. I don’t hear you saying, I need to find a way to work together with him to create a vision of money for our family. I don’t hear any of that.

[00:41:41] What I hear is, we need a house. No, we need a house, house, house, house, house. I hear we need to transfer money, this money, that money, this money, that, consolidate, do it all. It’s very erratic.

[00:41:52] Emma: Yeah, it is.

[00:41:54] Ramit: How long have you been in that behavior pattern?

[00:41:57] Emma: Forever.

[00:41:58] Ramit: Mm-hmm. And you said, “That’s just the way I operate.” What if I told my wife, “Listen, lady. I don’t talk about feelings. That’s just the way I am.” What do you think my wife’s response would’ve been to that?

[00:42:11] Emma: See you later.

[00:42:13] Ramit: Yeah. I don’t think she would’ve been too happy with that. She would’ve really laid me out. But yet you say that about yourself. That’s just the way I am. I don’t believe that. I believe you can be calm, cool, connected with Dave when it comes to money. I don’t think you’re getting that right now. I think you’re getting a lot of drama. I think it feels in a misguided way, productive. Although it’s not. You have $53,000 of debt. It’s not working, obviously.

[00:42:40] Emma: I know. And I feel like that’s where I am. I’m at a loss.

[00:42:43] Ramit: Okay. Dave, I want to check in with you. Does any of this surprise you?

[00:42:47] Dave: No. I’m hearing a lot of truth from Emma, which she’s very good at. She’s very good at talking about her emotions even while we’re talking about her finances.

[00:42:58] Ramit: I agree. You’re more emotionally attuned, Emma. But I also think you have some stories about yourself that are obviously not true. You could change the way that you think about money, behave with money, and even feel with money. Do you believe that?

[00:43:11] Emma: I do.

[00:43:11] Dave: Absolutely. Yeah.

[00:43:12] Ramit: Okay, good. Good. That’s a huge step. That’s great. Why do y’all have separate accounts?

[00:43:18] Dave: I guess it goes back to hesitancy. I’m worried she’s going to spend a lot, and then that leaves me with whatever bare minimum I would need to get gas and whatever keeps me going to work. So it’s like, I’m worried she still continues her spending habits and I’m stuck with the bare minimum

[00:43:37] Ramit: Okay. What, Dave, would you say are Emma’s spending patterns that you referred to? What are you talking about?

[00:43:43] Dave: A lot of Amazon packages and I see her rolling her eyes, but there’s packages every day, and there’s no real accountability for it.

[00:43:51] Ramit: What else besides Amazon? What’s going on the credit cards? What’s the rest of it?

[00:43:55] Dave: I don’t know.

[00:43:57] Ramit: Do you ever ask her?

[00:43:59] Dave: She’s showed me all her statements. I’m not very financially literate. I couldn’t tell you exactly what’s being spent, but I do see money being spent. And I do know that she’s doing a lot of work paying off her debt.

[00:44:13] Ramit: Can I just call out the elephant in the room right now? What I don’t sense is a lot of curiosity from both of you in what’s going on here. And even in that last few sentences, Dave, where you said like, “I don’t know. I’m not financially oriented, I just need a number.” I’m not into that, Dave.

[00:44:31] You’re telling me that you feel anxious about money all the time. You don’t trust your wife who has two kids with you to combine money, but you can’t figure out how to read where she’s spending her money or have her create a chart for you. I just don’t buy it. I actually just don’t think this is important for both of you.

[00:44:50] I think you’ve gotten used to feeling bad about money. I think you have these dreams of buying a house, and you both have found a way to thrive on this anxiety about money without actually changing anything.

[00:45:02] Emma: I think we’re struggling because we don’t know how to change it. I think we both want to change it. We both recognize the cycles that we’re in and we just keep on going in them because we don’t have the tools or the communication skills to change it.

[00:45:15] Ramit: Okay. I agree with that, but if you really want to change it, what I want to see, or what I would expect to see from both of you is physically and figuratively leaning forward. I feel like I’m pulling teeth to get answers.

[Narration]

[00:45:28] Ramit: Honestly, I’m starting to get a little frustrated. It feels like they are leaning back and expecting me to fix everything for them. And it’s a funny dynamic I see a lot on this podcast. People go through a lot to come and speak to me. They fill out an application, they talk to multiple people on my team.

[00:45:46] They have to do all kinds of checks and complete their CSP. It’s very time consuming. And then when they finally sit down with me, some couples basically lean back, put their hands in the air and go, “You fix it.”

[00:45:59] Their entire mental model is that they have done the work to get here, and now I’m a magician who’s going to wave this magic wand and fix it for them. Not going to happen. That’s not how this works.

[00:46:13] In fact, I’m not going to fix your situation. You are. What they don’t realize is that their delegation of this problem to me is just yet another symptom of the passive relationship with money that has led them here. So I’m going to try to shift that right now. Listen as I toss the ball right back in their court.

[Interview]

[00:46:37] Ramit: So here’s what we’re going to do to change the dynamic. Right now we’re going to switch things up. I am not telling you anything from now on. I’m simply executing what you tell me what to do.

[00:46:46] We have the conscious spending plan in front of us. So you ask me questions. I will answer them for you. You tell me, let’s cut this spending or that spending and we can do it. But I can’t be the one driving this because, Dave, you’re playing passenger again. I’m just not into it. And Emma, you’re justifying your behavior by saying, “It’s just me. I can’t change.” Not into it. I’m trying to change our dynamic, and we’re going to change it with a big bang. So you tell me what you want to do.

[00:47:12] Dave: So I think we want to continue with the conversation on how couples like us can do better in our current situation.

[00:47:18] Ramit: Okay, great. What specific questions can I answer for you?

[00:47:22] Dave: How can we save more money throughout the year? How can we allocate our monthly finance? And best way to combine our accounts together where we both feel comfortable.

[00:47:34] Ramit: Okay. Let’s start with talking about the accounts, because I think that’s the foundation of your finances. There’s good research showing that combining accounts is very helpful when it comes to money in a relationship. Not only is it good for trust. It’s good to make things smooth.

[00:47:52] Right now, it’s very confusing. It’s also complicated. You got money being transferred around different accounts. Somebody has to reconcile all this stuff. At the same time, I hear what you said, Dave, about, one, worrying about Emma spending too much, which is a real concern, and we should talk about that. Two, wanting to make sure you have money for yourself, which I totally respect.

[00:48:16] Each partner should have money for themselves for guilt-free spending. It doesn’t even matter if one partner’s a lower earner. It doesn’t even matter if this partner earns $0. They should still have money for themself for guilt-free spending. So one way to solve that is to combine your incomes into one joint checking account.

[00:48:34] All your joint expenses are paid from that. And because you’re married with kids, most of your expenses are joint. Under your fixed costs, pretty much everything is joint. So you could pay all that from your joint. Your savings is going to be joint. Your investments are to some extent going to be joint. That will affect both of you. And then your guilt-free spending, most of it will be joint because you’re a family.

[00:48:58] But each of you should have some amount of money that goes to each of you. If one person wants to go out for beers, the other wants to get a massage, that’s fine. As long as it fits within your number, boom. You’re even using a separate card for that, an individual card, not your joint card where you then have to transfer it back and forth. You see how that works? How does that sound?

[00:49:17] Dave: Yeah, that makes sense to me.

[00:49:19] Ramit: What would it look like and feel like if the two of you had joint finances like I just described?

[00:49:25] Emma: I would love it.

[00:49:26] Dave: I think it’s a good first step.

[00:49:28] Emma: I think we could also just have more healthy conversations and we could look at it together and separately. I think that’s where we struggle a lot right now, that we can’t take our time to look at it separately because we have different accounts. So I can’t see everything. He can’t see everything. So it’s very hard for us to then come together and have a conversation because neither of us has the full picture.

[00:49:51] Dave: For me, it creates trust. We’re both working at it together. Someone one messes up, we can call them out right away for it, vice versa, but it builds partnership.

[00:50:04] Ramit: Yeah, I agree with that. I might even look at it in a slightly different way. I would say something like, “Look, I’m really excited to combine our accounts. First of all, it’s going to be easier for us to see what’s going on, get the big picture. It means that we’re going to be more aligned, and I want to build trust.”

[00:50:23] Part two, “I have to tell you, I’m a little worried. It worries me because in the past, I know you’ve gotten into credit card debt. And I want to be really open letting you know that I’m worried, but I also know that I have to trust you, and this is a way that we can come together.

[00:50:41] “The way I feel is I really don’t want to get into any more debt. That would be really hurtful to me. But I know that mistakes might happen. My expectation is that we both talk about money every month. We both have total transparency on our spending. We’re both involved with managing at least one number, groceries, eating out, whatever.

[00:51:02] “And in that way, I want us to get really good as a team at paying off debt, at investing more, even on spending on the things we love.” That’s part two. Dave, what do you notice about that part two?

[00:51:13] Dave: Accountability. A little bit of grace. I’m not great either by any means. I’m not going to let Emma take the whole brunt of that conversation. It does fall on both of us.

[00:51:26] Ramit: Agreed. I don’t think you’ve ever said anything like that in your relationship, have you?

[00:51:30] Dave: I don’t think so.

[00:51:31] Ramit: No. You’ve been the passenger and Emma’s been chasing you, even though she’s not even particularly great at spending or managing money. She admitted it. Everybody admits it on this call, but yet she’s chasing you and you’re sitting back avoiding. The more you avoid, the more she chases.

[00:51:46] You’re in the chaser-avoider dynamic. And in fact, you’re even going like this, “Convince me.” But there’s no trust. So it’s a very odd dynamic that the two of you have. You’re just stuck, and the only way to get out of it is to decide to get out of it and to radically change. Setting up accounts is the first step. What’s next?

[00:52:04] Emma: How we can move our investment percentage higher.

[00:52:10] Ramit: You currently have 3%. It’s maybe more like 6% if we include your free tax. So let’s just make it easy, like, 12,000 bucks a year. So Emma, your question is how do we get that number higher? You tell me. Tell me what to do, and I will change numbers as you tell me.

[00:52:28] Emma: As I look at the top right, rent, none of that can really change. So groceries would be the first one that I think we could cut from.

[00:52:37] Ramit: How much?

[00:52:38] Emma: $200.

[00:52:41] Ramit: Okay. You’re the shopper. Do you actually have a number that you use when you shop?

[00:52:45] Emma: I try and keep it to 800 a month, which is 200 a week. But then there’s extra stops, so then it’s about 1,000.

[00:52:52] Ramit: . All right. So you could eliminate $200 a month off of that. Is that what you’re telling me?

[00:52:57] Emma: Yeah.

[00:52:58] Ramit: You feel confident about that?

[00:52:59] Emma: Yes, I definitely can do it.

[00:53:01] Ramit: Love it. Love that answer. Okay, let’s take it down to 800. Good job. Watch this number up here. It goes from 76%. What happened?

[00:53:08] Emma: It went down.

[00:53:10] Dave: Down a percent.

[00:53:10] Ramit: It went to 75%. Okay, cool. It’s a small move, but it’s a move in the right direction. That shows us that we can affect these things.

[00:53:17] Dave: I agree.

[00:53:18] Ramit: Should we just redirect that money into investments?

[00:53:22] Emma: Yeah.

[00:53:22] Ramit: Let’s just do it right now. Yeah. Okay. I’m just going to put it for stocks. You can obviously do whatever you want. Keep going.

[00:53:27] Emma: Dave, your phone bill is at 140. Maybe we could get that down a little bit.

[00:53:33] Dave: That’s what my phone bill is. You get yours paid through work, so it doesn’t make sense for us to do a family plan and then you end of paying a phone bill.

[00:53:42] Ramit: What’s happening right now?

[00:53:44] Dave: We’re separating our finances.

[00:53:47] Ramit: Yes. And really what Emma just did is she’s asking for help and what you are doing, Dave, is leaning back and you’re explaining why it is the way it is. She’s not asking for you to explain why it is the way it is. She’s saying, “Help me.”

[00:54:00] So what you should do as a passenger is get your ass out of the passenger seat and say, “Babe, you’ve been driving for long enough. In fact, you just saved us $200 a month. Let me take the wheel for a second and let me make some suggestions on how we can increase the investment number.” Get out of the passenger role. Go ahead, Dave.

[00:54:20] Dave: Auto insurance, we are going to combine ours, and that’s going to save us an extra 100 a month after we combine it.

[00:54:27] Ramit: You already checked that?

[00:54:29] Dave: Yeah.

[00:54:29] Emma: Mm-hmm.

[00:54:30] Ramit:  All right. So tell me what to do.

[00:54:31] Dave: Instead of the $180, combined it would be 280. We’re saving an extra $100 by combining that. So we can put an extra $100 into investments.

[00:54:44] Ramit: Watch. Look at the fixed cost number. It’s at 75%. Went down to 74%.  All right, what do you want to do with 100 bucks? You want to put in investments?

[00:54:53] Dave: Yeah, I like stocks.

[00:54:54] Ramit:  All right. Let’s put it there. We’re still at 5%.

[00:54:57] Dave: All right. Let’s find somewhere else so we can move it up.

[00:55:00] Ramit: Nice. What else you got? Where’s the Amazon stuff? I don’t see that on here. The boxes every day.

[00:55:06] Emma: Subscription. I count that as guilt-free.

[00:55:09] Ramit: Open up Amazon real quick. Go to your orders if you don’t mind. 

[00:55:14] Emma: So there are sprinkles for Valentine’s Day.

[00:55:19] Ramit: Okay.

[00:55:21] Emma: Decorations for my parents’ 50th anniversary that’s on Sunday, and nail polish.

[00:55:28] Ramit: Okay. Keep going. Just read them off.

[00:55:31] Emma: A under the desk cable holder for my desk, kitchen scissors, because we lost them, diaper cream for our son, dryer sheets, diaper pail, garbage bags, our kids’ soap, my protein powder, dish soap, a water filter for our fridge, hand soap, and a brush.

[00:55:58] Ramit: Okay, let’s pause. What do you think about those purchases?

[00:56:01] Emma: Some of them are necessary. Some of them probably are not.

[00:56:05] Ramit: How do you decide what’s necessary and what’s not?

[00:56:07] Emma: I don’t have a good criteria.

[00:56:10] Ramit: Sounds like you see what you want and it arrives the next day.

[00:56:14] Emma: If it’s not for myself, I feel like it’s okay.

[00:56:17] Ramit: This is a common deception that a lot of moms use, usually with their kids. And I see almost always the story that people in this situation often tell themselves, “It’s not for me. I don’t need all this stuff, but it’s for my kids.”

[00:56:31] And I can see, as I say it, you becoming a little bit emotional. But we have to ask ourselves, what lessons are we teaching kids by buying thing after thing with no framework on what is necessary, what’s important. We have to ask ourselves, what’s it costing our relationship? And what’s it costing you individually from a mental health perspective?

[00:56:51] I’m not here to tell you not to buy soap or anything. But I do think that there’s probably no vision of what you spend as a family. Can I ask you a question about food? Dave, finish the sentence for me. In our family, Dave, when it comes to our kids, we…?

[00:57:08] Dave: When it comes to our kids, we definitely spoil them.

[00:57:12] Ramit: Oh. Y’all make $260,000. I don’t think any of your parents made 260k. It’s not surprising that your kids get more. Plus, they have Amazon Prime. I actually don’t think it’s a problem that your kids get more than you. Things have changed since back then. Y’all remember how many toys we had as kids? Not a lot.

[00:57:27] Emma: Mm-hmm.

[00:57:28] Ramit: However, the question is not simply about quantity. It’s about meaning. Do they understand the value? Do we even understand the value as their parents? How are we deciding what they get? Emma, let me ask you the same question. In our family, when it comes to our kids, we…?

[00:57:46] Emma: Give them what we think they need.

[00:57:48] Ramit: Okay. You know what occurs to me? I don’t think you two have really developed a family culture. I’ll give you an example. Some families might say, in our family, we eat dinner together every weeknight. Or in our family, we have dinner out every Saturday night. Cool. That’s a culture thing. That’s awesome. In our family, we take off our shoes before we come in the house. Okay, cool. In our family, we are very relaxed about rules for our kids, except when it comes to safety. You all have any rules like that?

[00:58:21] Dave: Every Friday we get takeout pizza, come home, let the kids watch a kid’s movie. They love it.

[00:58:28] Ramit: Hell, yeah.

[00:58:30] Dave: Every night we try to sit at the table all together. Emma, she’s great at preparing meals, getting dinners ready. Making sure that we can do that type of thing.

[00:58:43] Ramit: Amazing. Okay. I’m glad that I gave the example. I love hearing these. Emma, you got any ones you want to share too?

[00:58:48] Emma: While we’re eating, even if Dave and I are not eating, we sit with the kids and we talk to them or we read them a book because I just want to make sure that eating is a happy celebratory time.

[00:58:59] Dave: Yeah.

[00:58:59] Ramit: Yeah.

[00:59:00] Emma: Also, our family, we really value time outside and play. We are always on the floor playing with them, getting outside every day, going to walks, going to the skate park.

[00:59:09] Ramit: You know what? I got to tell you, I love hearing different people’s philosophies, their points of view on eating, on parenting, on cleanliness, whatever. I love it. I don’t even have to agree with it, but I’m just like, “Damn.” For you to have come up with that rule, “Every night we try to eat with the kids and we sit there and talk to them, or we read them a book,” you had to go through a lot of really hard dinners to come up with that. And I love it.

[00:59:41] It shows me that you too have a vision. That is so cool. In my opinion, having that strong point of view, one of the rarest things in the world. Now, can you do me a favor and apply that to money? In our family, when it comes to money, we…?

[00:59:58] Dave: When it comes to money in our family, we value travel, memories during that travel. We value going out with each other.

[01:00:06] Ramit: Okay. I like it. You’re telling me, in your family, you value travel and experiences. Is that right?

[01:00:15] Dave: Yeah.

[01:00:16] Ramit: Okay. Where’s that on the conscious spending plan?

[01:00:19] Dave: Not.

[01:00:20] Ramit: Yeah. That’s the point. So while you may value travel, if you really value whatever it is that’s important to you as a family, it should show up on your calendar and it should show up on your CSP. That’s how you know you’re actually being honest. What’s happening right now is your money’s just going random places. Let’s create a rule. Let’s create one that helps you create trust with each other and money. Emma, why don’t you go first?

[01:00:47] Emma: We talked to each other about anything before we buy anything.

[01:00:51] Ramit:  All right. You’re to text him for everything you buy?

[01:00:54] Emma: No, no, no, no.

[01:00:55] Ramit: Can I give you a simpler example?

[01:00:57] Emma: Yes, please.

[01:00:58] Ramit: In our family, we talk about money once a month and both of us come prepared and ready to share our numbers. Doesn’t that accomplish the same thing without putting a spotlight on me and making me the victim or the criminal? I know it’s hard because you don’t have a healthy model. Your parents didn’t really talk about money. I get that it’s hard. But imagine.

[01:01:19] Emma: We talk about it openly and honestly.

[01:01:23] Ramit: If I had debt, what would I do with my wife to build trust?

[01:01:27] Emma: Show it to her. Allow her to see it, what it is and let them see it every month.

[01:01:35] Ramit: I would make a plan for my debt payoff. I would show them the exact month and year that the debt’s going to be paid off. And every month, like a video game, oh, I’m 6% closer. Still on track. In fact, got a bonus at work. Put an extra $5,000 to towards it. It’s going great. High five. Building trust by loving you. Not just transparency, which is great, but also getting excited. What do you think about that?

[01:02:02] Emma: That sounds really nice.

[01:02:03] Ramit: You build trust with your kids every day, don’t you?

[01:02:06] Emma: I hope so.

[01:02:07] Ramit: Yeah. I’m sure they love you and I’m sure they trust you. How you build trust with your kids?

[01:02:12] Emma: Spending quality time with them. Listening, not just to respond, but to hear them.

[01:02:18] Ramit: Any possibility of doing that here?

[01:02:19] Emma: We do struggle with that with each other. 

[01:02:22] Ramit: Yeah, I totally agree. That would be such an amazing thing to do. Say, “You know what? I want to build more trust with you, Dave. I want us to both build trust. I want to take a couple of steps forward. One thing I’m going to do, I’m going to create a debt payoff plan and I want to show you. So every month you’re going to see where I am.

[01:02:39] “But also next time we go into therapy, I want to talk to our therapist about what are some other tools we can use to build trust? It’s so important to me. This isn’t just about numbers. It’s actually about something so much more important than numbers. It’s about us and the connection we are building together.”

[01:02:53] Emma: Mm-hmm.

[01:02:53] Ramit: What do you think about that?

[01:02:55] Emma: It’s something that I don’t know that I realized was at the core of a lot of what’s going on.

[01:03:01] Ramit: Dave, I want to hear from you because you correctly raised that, “Hey, part of the reason we haven’t combined money is I don’t really trust her handling of money.” What do you think about her responses here?

[01:03:12] Dave: I am proud of her. It takes a lot of courage to admit your debt in general. It’s not easy.

[01:03:20] Ramit: When you say, “I’m proud of you,” to your partner, what a beautiful thing. When we’re kids, we want our parents to be proud of us. When we’re older, we want our spouse to be proud of us. And instead, actually, Dave, when we started this call, you were at the opposite. The opposite of proud is often skeptical.

[01:03:38] Dave: Yeah.

[01:03:38] Ramit: That’s why I said it’s death to a relationship. Skeptical means I don’t even believe what you’re telling me. But being proud is the opposite of that. So I think it’s really cool that you completely swung to a much more loving side of that spectrum. Now, Dave, Emma took two steps forward. She said like, “Hey, this is how I want to build trust.” How about you? I don’t think Emma really trusts you about money either. She hasn’t said it, but I suspect it. Emma?

[01:04:03] Emma: I think in a different way, yes.

[01:04:06] Ramit: I think you’re afraid of money. I think you’re afraid of her behavior with money. I think you don’t understand money, but most of all, if I were your partner, I would find it difficult to connect with you because you are so passive with money. 

[01:04:20] Dave: Yeah, that is true.

[01:04:21] Ramit: I can suggest this. I can pay off $50,000 of debt. He’s just going to sit there glumly. It’s really hard to be in a constructive relationship with a partner who’s just opaque. You want your partner’s love. You want their connection. At least you want some kind of response. And the partner goes–

[01:04:41] Dave: Yeah.

[01:04:42] Ramit: It’s actually one of the most devastating things that can happen. So finish the sentence for me because you need to build some trust as well. In our relationship, when it comes to money we?

[01:04:52] Dave: In our relationship, in our family, we will be more transparent sharing our finances.

[01:04:59] Ramit: Oh. We’ll combine our finances. Is that what you’re saying?

[01:05:03] Dave: Yeah.

[01:05:04] Ramit: I think sometimes when it comes to making changes with money, we start using real technical language. People start speaking like Shakespeare. I doth not know what to do with my [Bleep] CSP. Just speak English. “Hey, in our relationship I didn’t combine our finances because I didn’t trust you. But I realized you are trustworthy and I need to take a step forward as well. So I’d like to combine finances and work with you.” How’s that sound?

[01:05:29] Dave: Helpful. I’m feeling more optimistic, more excited. I think it’s something we can pull it off.

[01:05:34] Ramit: I agree. I have total confidence so far. So we’ve talked about combining incomes. That’s great. I have total confidence in that. We talked about creating some rules. Rules are not meant to necessarily be restrictive. You create these rules because they start to really share the type of culture you’re creating in your family. Now let’s look at the CSP for a second because I got a question about combining your income.

[01:05:55] Emma: Mm-hmm.

[01:05:57] Ramit: Now, have y’all noticed the disparity in fixed costs? Emma, your number is 80% for your fixed costs, and it’s 65 for you, Dave. I guess part of that is, Emma, you have a lot of debt. Right?

[01:06:12] Emma: Yes.

[01:06:12] Ramit: But you’re also paying all the childcare while Dave is paying all the rent and utilities. Can you see how you’ve both set yourselves up to be stressed? If you’re spending 80% on fixed costs, you’re broke. So the question might be, is there any opportunity for you, Dave, to help Emma with her debt?

[01:06:33] Dave: I guess she’s never asked.

[01:06:35] Ramit: Emma, what do you think?

[01:06:36] Emma: I think for myself, I would rather pay it. But part of it was our wedding that I took out a loan for to pay for. So part of it was combined.

[01:06:45] Ramit: What the [Bleep]? You took out a loan to pay for your wedding? How much?

[01:06:49] Emma: I don’t want to tell you what I did.

[01:06:51] Ramit: Tell me. I love it.

[01:06:52] Emma: No.

[01:06:53] Ramit: Tell me. Come on. I’ve heard everything on the planet. Nothing phases me anymore.

[01:06:57] Emma: I took a loan from my 401K just to make sure we had money. And then we had to put stuff on the credit card, so then I had taken out a personal loan to consolidate those credit cards from the wedding.

[Narration]

[01:07:08] Ramit: What the [Bleep]? Do not do this. There are very few reasons I would ever support borrowing from a 401K, and a wedding is definitely not one of them. But I am glad that Emma shared it because it’s so revealing. This conversation isn’t just about today’s money struggles. It’s a symptom of decisions made years ago.

[01:07:31] It’s just like in math. If a proof doesn’t add up, the mistake usually happened way back in the process. So similarly, when Emma and Dave borrowed from her 401K, they set off a chain reaction that led to mounting credit card debt. And this is a powerful reminder of how one wrong turn can snowball over time.

[Interview]

[01:07:52] Ramit: You ever pay the 401K loan back?

[01:07:53] Emma: Yes.

[01:07:54] Ramit:  All right. How much did the wedding cost?

[01:07:56] Emma: 40,000.

[01:07:57] Ramit: And you’re still paying that off yourself?

[01:08:00] Emma: I don’t even know what portion of that is in mine. I feel responsible for doing it.

[01:08:06] Dave: You did ask for me to help, and I do remember helping on that. And then you said it was paid off?

[01:08:14] Emma: My 401K loan? 

[01:08:16] Dave: I’m just talking about the wedding in general. I don’t know about the 401K loan or any of that.

[01:08:21] Ramit: You guys see that having all these different accounts and all this complexity, it costs you a ton. You don’t even understand what’s going on. This is like how many years ago? Four or five years ago, and it’s just totally in the dark. One way that will help with this is simplifying your accounts and starting to actually talk about money regularly. 

[01:08:44] Dave: Yeah.

[01:08:45] Ramit: I think that you should probably shift the wedding debt. That should be paid off jointly. That’s my opinion. I think the other debt, the personal debt that you incurred, Emma, that should be yours. I think you should pay it off aggressively. Do you know your debt payoff date?

[01:08:59] Emma: It was November of this year, but that included putting my bonus, which I don’t know exactly what it was towards that.

[01:09:07] Ramit: So it’s going to be paid off within a year?

[01:09:10] Emma: Yes.

[01:09:11] Ramit:  All right. [Bleep]. That’s pretty good. How come you seem so depressed about it? I’m really impressed. That’s cool.

[01:09:16] Emma: Because it seems like a far away way.

[01:09:19] Ramit: A year?

[01:09:20] Dave: It’s not though, all things considered.

[01:09:21] Ramit: What the [Bleep]? I spent one year trying to increase my Olympic lift by five pounds. A year is a very short amount of time. That’s so impressive.

[01:09:30] Emma: I feel like that’s work that I need to do on just how I think about myself and not beating myself up for it.

[01:09:37] Ramit: Yeah. Yeah. To me, I see a blank page ahead of you. You can write your story. The story right now is, we’ve always been bad at money. We slipped into getting married and we had kids and we got this house. And we work really hard, but it feels like there’s no money left over at the end. That’s a story.

[01:09:54] Emma: Mm-hmm.

[01:09:55] Ramit: What story would you like to tell yourself five years from now? Your kid will be 10 years old. Tell her the story. Go ahead, Emma.

[01:10:03] Emma: We didn’t talk about money a lot, and we made a change and we made family values around money. We talked about it, and we created a partnership about managing our money.

[01:10:17] Ramit: Beautiful. Dave, give me the same story. What would you tell your 10-year-old?

[01:10:22] Dave: Honey, when we first got married, we didn’t really know what to do about money. We spent a lot of it. We didn’t realize what we were doing at the time. But we met this great guy on the computer and we learned how to value our money and we learned how to put it in the right places so that we can have the things we have now.

[01:10:41] Ramit: First of all, give each other a round of applause. That was really cool. To me, that shows me that you have the opportunity to rewrite your story. Okay, great. Let’s take a look at a couple of other things. Your debt is going to be paid off this year, which is amazing. That’s 2,900 a month going away. All right, let’s take this down to zero. Watch this number. From 74% fixed cost to 56%? Whoa. Okay. That’s [Bleep] amazing.  All right. And then childcare.

[01:11:11] Emma: Childcare will go down to 900 in–

[01:11:15] Dave: Next year.

[01:11:16] Emma: September, this September.

[01:11:18] Ramit:  All right. Watch this. 900. Oh my God, this is crazy. Things just change to 47% fixed costs. That’s amazing. Now, when that happens, what are you going to do with the thousands of extra dollars you have per month?

[01:11:34] Emma: I would probably allocate 1,000 more to housing if we were to buy a house.

[01:11:41] Dave: Yeah, that’s what I was going to say. Could definitely help out with any mortgage payment.

[01:11:45] Ramit: You got to stop talking in terms of absolute numbers and start talking in percentages.

[01:11:49] Dave: So maybe 50% towards a house payment, 25% in the kids’ college fund, 25% investment.

[01:11:59] Emma: Mm-hmm.

[01:12:00] Ramit: What do you think, Emma?

[01:12:01] Emma: I like that. Definitely 50% into the mortgage payment. I would like to add 10, 15% to guilt-free spending, and like 20% in savings or investments.

[01:12:12] Ramit: First of all, I like the percentage talk. This actually feels like pretty good energy. I want to be a little bit more directive because you’re all 39 years old and you told me that you’re talking about retirement. Both of you have got to get educated. You read both my books together. And both of you have got to start writing down certain things that you want to achieve because it’s very easy to slip back into whatever’s in front of you. I notice you both do that.

[01:12:35] Ah, we got to put $1,000 a month towards a house. That’s not how you do housing. You would think about it by saying, here’s how much it’s going to cost us for a down payment. Plus, if we factor in total cost of ownership, instead of us paying– what are you guys paying for rent right now? 2,600, it’s going to be 6,800. I’m making up a number. Therefore, we got to have that much money every single month for housing after we fill up our down payment account. That’s how you think about it.

[01:13:06] Emma: Mm-hmm.

[01:13:07] Ramit: Do you all know how much you’re going to have at retirement?

[01:13:09] Emma: Oh, not enough.

[01:13:11] Ramit: You want me to just run the math for you guys?

[01:13:13] Emma: Yes.

[01:13:13] Ramit:  All right, watch this. What’s your current principal?

[01:13:16] Emma: 158.

[01:13:18] Ramit: And how much are you adding per year?

[01:13:21] Emma: 8,000.

[01:13:22] Ramit: Okay. Years to grow, 26 years until you’re 65.

[01:13:26] Emma: Yeah.

[01:13:27] Ramit: And what interest rate should we put here? Oh, I just put it anyway. 7%.  All right. How much do you think it’s going to be?

[01:13:32] Emma: Under a million.

[01:13:33] Dave: Maybe 600,000.

[01:13:37] Ramit: 1.5 million.

[01:13:38] Dave: Oh wow. That’s a much bigger number than I thought.

[01:13:42] Emma: If I’m being honest, I don’t know how much we need to retire, and that in and of itself is an issue. I see that number and I feel like I need to become more educated on knowing exactly how much we need.

[01:13:53] Dave: 1.5 million, I’d say that’s a pretty good number. Maybe you can’t retire and just do whatever you want, but there’s some wiggle room there.

[01:14:04] Ramit: Dave, can I just be really straight with you?

[01:14:07] Dave: Yeah.

[01:14:07] Ramit: You need to learn about money. Dave, this is a really important moment. This is an opportunity for you to be like, “Oh [Bleep], I have no idea what $1.5 million means. I better learn.”

[01:14:20] Dave: Yeah.

[01:14:21] Ramit: $1.5 million means roughly you can take out about $60,000 a year in income. You guys couldn’t live on 60k a year.

[01:14:29] Dave: No.

[01:14:30] Ramit: Remember, this assumes you do not own a house. So you’d be renting. There’s no way. You couldn’t even do it today. You make multiples of that. So what that tells me is 1.5 million is not nearly enough. So shall we do another calculation?

[01:14:45] Emma: Yes.

[01:14:46] Ramit: Let’s say that you take the amount, Emma, that you were putting towards debt. Let’s just round up for easy math. 3,000. That’s 3,000 a month. That’s $36,000 a year. Fair?

[01:14:58] Emma: Yeah.

[01:14:59] Ramit: And what if we just put that all in here as well?

[01:15:01] Emma: Mm-hmm.

[01:15:03] Ramit: So let’s take a look here. You all would be investing $44,000 a year. Look at this number down here. $4.1 million. That’s $160,000 in safe withdrawal income per year. What do you guys think about that?

[01:15:21] Emma: Feels good.

[01:15:23] Ramit: That’s pretty [Bleep] cool. 4 million bucks. That’s pretty cool. If you were to put $50,000 a year here, you’re now at $4.6 million. It really adds up. What do you think the main takeaway of this is? 

[01:15:39] Emma: Got to get really clear and crisp on the numbers and see what we need and how we’re going to get there.

[01:15:47] Dave: Agreed.

[01:15:49] Ramit: Okay, cool. And then finally, can we talk about the house?

[01:15:51] Emma: Mm-hmm.

[01:15:53] Ramit: So your house that you’re looking at would be $800,000 a year. Is that true?

[01:15:58] Emma: 600 would be the max.

[01:16:00] Ramit: I always assume a 20% down payment. It’s a good guideline in my opinion, because if you can’t save like 10%, 15% for a down payment, how are you going to ever handle things breaking around the house? So to me it’s almost demonstrating to myself I have saved enough. I have the discipline to be able to put 20% down. That means I have the ability to handle whatever might come my way.

[01:16:27] So let’s just go ahead and take a look at this math real quick. I’m going to say 20% down. You can always change it or whatever. 30-year loan, 6%. Fine. So it says from this very simple calculator that you would be paying $3,611. But let me tell you this. When I make my own calculations, I add way more than this, but that’s because I legitimately do not know how to fix anything.

[01:16:55] If it were me, just for safety, I would add another, at least, extra 1,000 to 1,500 a month. So now we’re talking 4,500, 5,000 a month. That’s double what you’re paying today. Right?

[01:17:10] Emma: Mm-hmm.

[01:17:11] Ramit: Now you can do it, but the question is, would we rather put our money in the market, grow it for retirement, or would we rather get a house and not put that money in the market?

[01:17:22] Emma: I haven’t thought about it in that way to say, what else could we use that money for?

[01:17:28] Ramit: I think the first conversation you ever had about money, just presupposed, you need to buy a house. It was just like, of course, we do. Frantic. We got to put money aside. And what I’m really encouraging you to do after all this work that we’ve done is to slow down and say, wait a second.

[01:17:43] Maybe we want to buy a house. That’s important in our family. Okay. We can find a way to do it. But first, let’s zoom out and realize that a house is just one tiny piece of a Rich Life– just one. And maybe we want to buy a house. Maybe we want to rent for the next 10 years. Maybe we want this or that. But we got to be thoughtful about these big decisions.

[Narration]

[01:18:05] Ramit: A big thank you to Dave and Emma for joining me today. They came into this conversation hoping to find a clear path to home ownership. That’s something that so many people in the United States want, but this discussion is a perfect example of letting the tail wag the dog.

[01:18:22] And I see this a lot, especially with major life purchases where one financial decision ends up driving an entire money philosophy. Just like Dave, who justified this enormous purchase by saying, “We’ll make it work,” rather than truly running the numbers to ask how will this affect our finances and our retirement?

[01:18:43] Now they’ve started developing the tools to step back, see the full picture, and make an informed decision together so they can stop being passengers and start driving as teammates. I’d love to know what they ultimately decided.

[01:19:00] Unfortunately, my team reached out several times to ask for follow-ups, but they never responded. That’s disappointing. I spend a lot of time with couples. I become invested, of course, and I want to know what they did with the tools, with the realizations that they had from our conversation. So Dave and Emma, I’d love to hear back from you, and wherever they are in their journey, I wish them the best.