106. “I’m about to make $300k but we might have to live in our car”
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Before we start today's show, I have a really exciting announcement that I've been wanting to share for a long time. On January 1st, 2025, I'm releasing a new book called Money for Couples. For the last three years, you've heard me on this podcast speaking to different couples every single Tuesday. I've spoken to over 170 couples on this show about their money psychology, the money messages they heard from their family, the peculiar dynamics that they have around money and where they get stuck.

and how they can get on the same page. Well, behind the scenes, I've been working on the definitive book to help couples get on the same page with money, and that's what I wrote for you. It's coming out January 1st, and in the book, I'm going to share how to talk about money, including the exact words to use, when to talk about it, how to teach your kids about money, even the exact agenda and account setup that my wife and I use in our finances.

I'm going to show the tactics to make instant improvements, like how to set up your accounts to automatically work together and how to assess your financial health.

And finally, you're going to get a deeper understanding of money psychology in your relationship. And you're going to discover why you and your partner see money differently and how to get on the same page. Now, it's one thing to listen to couples or watch couples every single week. I love doing that for you. But it's a whole different thing to be able to have the book and to be able to work through it with your partner. Okay?

I'm so excited to get this book in your hands. You can pre-order it using the link IWT.com slash money for couples and stay tuned for a lot more on this book this year. Again, go to IWT.com slash money for couples to pre-order my new book about getting on the same financial page as your partner.

Um, what the hell is going on on this podcast that like 80% of the people who come on here go through massive screening, fill out applications, they never actually read my book. Is anyone else puzzled by this? Look, a lot of the questions that you ask me about money are answered directly in I Will Teach You To Be Rich. How do you pay off your student loans? How do you automate your finances? Where do you start investing and how do you handle big purchases?

I wrote this book as a six-week program so you can follow along on your own or with a partner. If you want to improve your finances, I recommend you get the I Will Teach You To Be Rich book. It has over 18,000 reviews on Amazon. Get it at iwt.com book.

This is the plan that we want and we're going to earn more money. However, my worry is we're going to spend even more. She's a spender. But my argument is that our son is never going to be three years old again. I worked 80 hours a week for three years. I have this kind of, I'm stealing from my future, future myself, because I have this

You know the reputation of doctors with money, right? Okay.

No, I think we just went all out. I honestly, I don't know what happened. We just decided to like upgrade our lifestyle. Clothes, furniture, but like a nice furniture from West Elm. We need to pay deposit. We need to pay first month payment and we didn't have any money. No money. And I got scared that like, where are we going to live?

Me, Jack, and Christina, they're both 33 years old. They're from the same town in Russia, but they met in LA 10 years ago, and they were married in 2020.

They earn a lot. Christina, for example, is a doctor. But what you'll hear today is an interesting combination of their culture, their upbringing, and a lack of financial discipline, which has led them to a very troubling situation. They are in tens of thousands of dollars of debt, and they even admit that if and when they start earning more, it's not going to change a thing.

Now, a couple things I want to point out before we go on. Of course, you can watch this entire episode on YouTube. It's fascinating to see the body language and the eye contact.

There is a little bit in today's episode about travel, which got me inspired. So on Thursday's episode, just two days from now, I'm going to share how I plan my travel, how I take my dream vacations. And then on Saturday, on the podcast newsletter, I'm going to talk a little bit about some peculiar psychological things I've noticed about money and travel. So to get that, you can go on iwt.com slash podcast newsletter. I send that out on Saturday.

Now, let's get to the episode. Let's talk about a specific example in the last month or two where you were not on the same financial page. We rent. So we were notified by the landlord that she wants to sell the place.

And we were given 60 day notice. And now we have to find a new apartment. So they need to run our credit score. When I looked at my credit score six months ago, and I was like, oh, holy crap, we need to pay deposit. We need to pay first month payment. And we didn't have any money, no money. And I got scared that like, where are we going to live? Nobody will rent us like a normal place.

And we have two kids. We need to stay in the area because of the school and et cetera. That's when I felt very scared. I really was scared because we needed to pay $7,000 for our townhome deposit and first month and everything. And we didn't have that. When did that happen? Two months ago, honestly. Pretty scary.

It was really scary. It's interesting hearing the two of you living paycheck to paycheck, making $207,000 a year. Do you think that that's normal? We have never been connected in terms of money. So when you ask, like, when did you guys disconnect? We've never been connected. So we kind of were separated from the get-go. We've been together for quite a few years. We got married in 2020.

Before we got married, we got a first kid and then we got a second kid. You know, we got married. We never talked together how to how we're going to handle finances together from now on. Do you have conversations about having kids? We did. Do you have conversations about where you're going to live and if you're going to buy a snoo or some type of diapers? Yes. Not money, though?

Not money, really. We didn't know what we were going to get into in terms of money issues. We thought we're not going to have any issues. How often do you think about it? Lately, quite often. If one of us brings up a conversation about money on a daily basis, that would be every day. You fight about it? No.

Every time we do have conversation about money, first of all, it's rare. If Christina says, we just need to make more money, we'll be fine. Just a quick reminder that 100% of the couples I speak to who have a spending problem always believe that if they just earned more money,

Their problems would vanish. And of course, this is totally untrue. This is what I call being a believer. Believing that the next raise or the next deal or the next lottery ticket is going to change everything. You know, in fact, most believers would rather believe they're going to win the lottery than take a hard look in the mirror at their own behavior.

You know how many people's conscious spending plans I see every week? What's fascinating is the categories of spending, especially the ones where people spend way more than they think they do. For example, subscriptions. Let's take a look at some recent numbers on how much people spend on subscriptions. $100 a month on subscriptions. $205 a month. That's from someone spending 76% of their take home each month on fixed costs.

costs, $211 a month, $147 a month, and $487 a month. This is literally thousands of dollars a year, and most of us have forgotten about all the subscriptions we are actually paying for.

Thank you.

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My team and I create tons of material every single day. Scripts, voiceovers, emails, all kinds of material that we need to be good and we need it to happen fast. And one of the things we use is Grammarly, especially their new AI tool. For example, every Saturday, we send out my podcast newsletter. I break down an anonymous person's conscious spending plan. And I like going really deep to break down the numbers and show you things you might have missed in your own finances.

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This is the plan that we want and we're going to earn more money. However, my worry is we're going to spend even more. She's a spender. If we get a good check or she gets a good check, she can go ahead and spend it on something nice. I have a feeling that we're going to change our lifestyle. And I don't want to be in the same situation we're in right now. So I want to be conscious.

What we spent on. And when we got married, maybe we started to plan it more together. But again, because of the differences in our money philosophy, we are not doing a good job. Did this ever come up before you got married? Like, for example, hey, I've noticed that you blank, blank, blank, and it makes me feel blank, blank, blank. Coming from her? Or you.

No. I knew he was worried about money.

But I didn't, I think I didn't realize how much he was worried about money. Up until we were like married legally, I did not feel comfortable to ask for money. It's like anything to do with money. Once we were legally married, then I kind of like became more comfortable. And that was exactly when the debt started. Correct. We got married debt-free, as far as I remember. Really? Yeah.

Yeah. You got married only three years ago. Yeah. So all the debt accumulated within the last three years. So what happened in three years? The credit card debt is huge. We don't have money to pay more than minimum pay. And the minimum pay equals the APR. Yeah. So we like, don't move anywhere, you know? That got you worried? Yeah. I can go back to...

Was it last year? The plan was to plan a trip to Hawaii. When you look at the flights and bookings, everything, you see the number, let's say $5,000 for the whole trip with the family.

And I know we don't have immediately that number. The only way to pay for it is credit card. So my argument is, hey, maybe we should skip the trip this year. Let's just save up. Let's get rid of some debt. Let's plan it.

ahead of time, but next time, right? When we do have cash. And Christina's argument is, hey, I'm going to be on vacation. What else am I supposed to do on vacation? I want to go somewhere. I'm tired because I'm always working. I want a vacation. Let's just, let's pay for it. So we went on that trip. Trip was amazing. Great experience. Pictures, everybody had fun.

awesome trip came back happy um but that dark spot in our wallet right is still there uh because it left this car which is more credit card debt what do you mean it left a scar it was a five thousand dollar trip you put on your credit card and then what happened and that trip um never got paid for still i don't think it has been

I'll take the complete silence here to mean it's still not paid off. We actually plan in the trip in July, this coming July. What trip?

We want to go to Singapore. What the fuck? Did you already book stuff? Not yet. How much is this Singapore trip going to cost? The flight only is like $10,000. Oh, that's nice. And how much for all the other stuff too? Yeah, so you can imagine it would be at least five grand more. Yeah, at least. Let's say $25,000 total.

Would that be fair? You factor it all in taxes, all that stuff. Don't you think 25,000? Okay. So where's that going to, Oh, you're going on that because by that point you'll be making a lot more money. No, I actually started right after, but again, this pressure, it's like pressure of myself on me, the society pressure of the society, you know, which society is pressuring you to go to Singapore. Not to,

Not to go to Singapore, but like, oh, I'm a doctor. So like I can afford like my friends, like the friends that we plan to go with to Singapore, you know, everything. Should we get them on this Zoom call right now? They don't know. Yeah. The thing is, they don't even know. They don't know you have debt, right? Yeah. If they knew you had debt, I'm not asking you to tell them, but if they knew...

What do you think they would say about you taking a $25,000 trip to Singapore? Oh, yeah. They would say we're crazy. Do you think you're crazy? When I think about that, that way. Yeah. Would you be open to canceling or delaying the trip? Sure. Yeah.

And I probably won't have another opportunity to go until later. But my argument is that our son is never going to be three years old again. And I want to give them like the best what I can. I want to give them this experience. And again, as he said, I worked 80 hours a week.

for three years. So now when I'm having like more free time, I really kind of feel guilty that I didn't spend the time with my kids. And I feel

I have this kind of, I'm stealing from my future, future myself, because I have this contract that I signed. I'm going to start summer with like that will increase my salary three or four times. So I'm kind of thinking like, oh, that's not a big deal. And then I pay my $100,000 credit card debt. But I know that's not the right thing to do. But then again... What's the problem?

Because I'm stealing from my future, you know, future myself. You care? Does it really matter to you if you're going to triple your income? It does. Because again, I won't be able to use the money because I'll have to pay off my credit card. And then I think I won't be able to save for the house or for whatever it is, vacation. And I'm afraid that it's going to be the same.

And it actually might get worse. I might have even more debt, right? So if I don't stop. Well, you'll definitely have more debt. I mean, what are you paying? 26, 28% on your credit card? Yeah.

using the magic wand right now we're with debt free same income we're gonna go back to debt with current lifestyle that's the truth that's consideration of higher income actually what caused this all this debt to be honest yeah yeah yeah keep going and we we should stop considering that until we have it oh

Oh, shit. Okay, talk it out. I want to hear you. Tell me, what do you mean by that? So first, it started with Jack's job, giving him higher salary. And then all of a sudden, the business went down, but the lifestyle did not. And then now I'm approaching the end of my training. It's actually like two months, pretty much. And so I'm just like all out spending whatever credit cards I've got.

Have you actually thought about what you're going to do with the new income? Yeah, so that actually makes me very anxious. Oh, why is that?

I don't know. So that's why I've started to look into all this retirement plans. First of all, I'm scared of the taxes I have to pay. And second of all, I, again, like, yeah, I don't know what to do besides paying off my debt. I don't know how to save. I don't know how to use money. That's the problem. Great. Very honest answer. Okay. I could work with that.

Jack, what's your take? When her income goes up, have you thought about what the two of you should do? Yeah, that was my primarily concern. That's why I applied because it's coming. It's around the corner. And

It seems to me that, hey, now the income is more. Let's go on this vacation. Yeah. But look at Christina smiling right now. She's like, that sounds pretty good to me. Christina, am I reading that right? Yeah. Notice the clues. They never really talked about money when they got married. Then they had two kids and realized they were in financial trouble. They were almost homeless.

And now their backs are against the wall with tens of thousands of dollars of credit card debt. Now, Christina has lots of very logical reasons for her spending. For example, her son is only going to be three once, but the fact is they're in debt and they are trapped. She admits that with more money, their situation wouldn't really change.

Now let's talk about her salary. To set the stage, she currently earns $136,800 per year, and she's expecting that number to go up. One of the worst feelings in life is feeling stuck.

You hear it sometimes with podcast couples here. They feel stuck around their money. I felt stuck in my business. I had made a bunch of decisions years ago and I woke up feeling trapped. So after thinking about it, feeling stuck, not sure what to do, I went to a CEO council that I'm a part of and I just laid it out. And after listening to me, they were like, oh, it's so obvious. You need to change this. Move this person over here. Change this resource allocation. Boom.

I wish I had done it years earlier. If you feel stuck in your career and you also wish you had a group of peers who could help you get unstuck,

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and join thousands of top senior leaders from companies like Microsoft, Amazon, and Meta who have taken the first step towards accelerating their careers. That's sidebar.com, S-I-D-E-B-A-R.com slash R-A-M-I-T. When I was in my early 20s, I was not into clothes. I wore free t-shirts from tech companies, and I really did not want to seem like I tried too hard.

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Elevate your style using Next Level Wardrobe at nextlevelwardrobe.com slash Ramit. That's nextlevelwardrobe.com slash Ramit. What kind of doctor are you going to be? I'm going to be an oncologist. Oncologist. All right. What are you going to make? About $300,000 a year. So when you were doing your residency and then your specialty and...

You know, there's the moment where you really start to get it. You can see all the concepts coming together. You can see how things link together. It kind of starts to make, you understand why you did Humbio way back there. Would you say you have made those connections with money or do you still feel like it's a bit murky or dark for you? It's a bit dark still. I just realized something. Um,

One of the reasons we got into debt and we allowed ourselves our current lifestyle is, first of all, we knew about Christina's path, right? It's pretty straightforward. Hey, I'm in training now. I'm going to triple or triple my income later. So I will have opportunity to pay off if we get in debt, which we did. And the thing with me, right, we were talking like, hey,

hey, Jack, what is your, what do you want to do with your life? Right? You want to earn more? You could, where are you at? And I said, I want to earn more too. So he had jumped in his salary during COVID.

And when he started to have this six figure salary, he shared with me that he never thought he would have that much money. Although it was not a lot. But he for him, it was like, oh, I would never even think that I deserve that. I think that hold on just a second, just to clarify, six figures is not a lot to you.

So, I mean, it was like low six figures. That's what I mean. Low is what? Low is what? Like a hundred thousand. Okay. So. Pretty much. Yeah. What is a lot to you? Okay. That's a good question. Maybe half a million dollars. Okay. Did you expect to be the higher earner when the two of you met? Not necessarily. No. And is it common in Russian culture for a woman to be the higher earner?

Probably not. Is that an issue for the two of you or no? No, not, I don't think that's an issue for me. Jack? On the surface, I don't think it's an issue. Just growing up, right, in our culture,

A man would be always a breadwinner, at least in my family. That's how it went. I've had conversation with my dad when we talked about my current income, my future income. And he did mention that, hey, you know, you're supposed to earn more no matter what, because you're the man. You're supposed to provide for your family. That's this kind of thinking I grew up with. How did you receive that when he told you that?

Um, so I, I don't, I don't fight my dad. I, you know, whatever I feel, I'll just tell him, but I, I don't, I don't fight about it because I know he's not going to change his views. How would you describe the way you grew up when it came to money, Christina?

And I remember my dad, he is a physician and he had to take like extra night calls. And then he also was like a taxi driver to like earn a little more income up until I was eight. We were kind of struggling. So I was born in USSR. So there was like not much money overall in the society. When I was eight, he...

he opened up like a business, a clinic that grew substantially. So now he has a chain of, you know,

clinics. So he, he did a really great job. So I don't, um, I didn't have any needs in terms of like financially, uh, when I was growing up, he did, we didn't need anything. He paid for my medical school, you know, like I didn't have medical school debt, which is huge. Um, but then I kind of got myself into worse debt. And what about your mom?

So my mom is a spender like me. So she, again, I think because she, she never really worked. I don't think she has a real like understanding what money is. And I think it's for her, it's really easy to spend. So she's kind of a spender in our family still is. Would you say that you have an understanding of money? Yeah.

I don't think so, but I kind of, at least I am curious about it now and I want to learn. So I think that's,

First of all, you guys really have to stop using low six figures and mid six figures. None of you know what you're talking about and you always use it incorrectly. Have you ever noticed people totally use these phrases and they always twist it to their advantage? You have some 23 year old banker living in Murray Hill. He's out. He's trying to hit on people. He goes, yeah, I make a mid six figures.

He makes $149,000 a year. And then you have some wealthy person. You ask him, are you wealthy? They go, me? Little old me? I'm no Jeff Bezos. I only make six figures. I'm working class. Turns out they make $979,000 a year. Please stop it with this six-figure mid-low bullshit. Let's get honest with each other. Okay, now to Christina and her background.

They started struggling, in her words, in the former USSR and climbed the social ladder to where she, quote, didn't have any needs.

Her dad paid for med school for her. Christina's mom is a spender like her. Did you hear that? And interestingly, she said that her mom doesn't really understand money. Never did. But when I ask if she does, Christina says, I don't think so, but at least I'm curious about it. Lots of clues here that are getting me thinking. What do you notice?

seems like you're comfortable, if I'm reading it correctly, that Christina earns more than you. Would that be fair to say? Well, yes and no. Tell me. So currently, right, because we kind of go up and down in, at least in my incomes, right? I was a high earner. Then I dropped down to be not the high earner.

I don't even know how I feel, right? I feel fine. And I just, I don't even think about how I feel about that right now because I think about how we handle our debt situation. So would you say that the two of you are on the same page right now? I think we're getting there slowly. Really? Why'd you fill out the application then? It doesn't look like it from the application.

um should i read it you can read it have you read it christina no oh no she wish i know because i wrote it twice and well i guess the second one oh i i got big no i i have no idea okay let's just take a look here shall we what is the biggest challenge you are facing when it comes to love and money in your relationship answer

Lack of responsibility for our money. Living a lifestyle we can't afford. Is there one main issue you'd like help with from Ramit? Answer, we earn good salaries, yet we have debt that keeps piling up. However, given our spending ambitions, we are very likely to keep living paycheck to paycheck.

We'd like to both understand that no matter our income, we must still be conscious of our spending and money relationship. That answer is where I knew both of you did not fill this out. One of you filled it out in code for the other one to be able to do that. Jack, am I telling the truth here? Yes. Yes. Christina?

Okay, I agree with all of that in theory. Oh, in theory. Oh, please tell me. But no, I totally agree with the problem. What is the problem in a sentence or two? Like living, our expenses, like the lifestyle is way too

beyond what we earn. This is becoming more and more common on this podcast. One partner submits the application. The other has no idea. That first partner who submitted the application is worried. They're concerned. The other one, not a care in the world. Everything's fine. It'll all work out in the end.

This is kind of mind-blowing to me because they go through application, a screening interview. They get detailed instructions. There are so many opportunities for them to talk about things. How can a couple end up talking to me finally after this entire process and they never even shared the application with each other? Whatever. People are weird. This is why I love my job. Let's take a look at some of their numbers. Their assets are $11,000 in a Jeep Grand Cherokee.

Their investments are $54,400. Savings are zero. And their debt is $87,475, all of which is credit card debt. What credit cards, by the way? What do you have? Chase. I got three of them. Chase.

And we have Best Buy. We bought some stuff on it. Hold on, hold on. Was this like you were in line at Best Buy and you're like, I know I'm going to save 10% on my $30 purchase. How did you get a Best Buy card? The thing is, we've been moving from place to place at least once a year, sometimes twice.

This is where the card came from because, oh, zero APR, we can get a fridge. Let's look at it online. We don't have money to pay for a fridge right now, but let's get that zero APR or whatever. Did it work? The zero percent APR? We got a fridge. The zero APR didn't work. No.

It didn't? I'm so shocked. Don't even tell me. Let me guess. 12 months, 0%. And then you got to 12 months or 12 months and two days and you missed a payment or you didn't realize it was due on this day and they backdated all the interest and now you had to pay it all. Did I get that right?

Not quite right. You just kept using the card. That's the problem. Oh. Yeah, for something else. So you did get 0% APR for a year. For a while, yeah. And then you just kept using it. We're over it now. Correct. And like, yeah, so it was not just the fridge, cost of the fridge. And how much debt is on that Best Buy card now? I think it's like maxed out probably. Best Buy is fine. Hold on. Hold on.

I think I have it. Jack wants to set the record straight. Hey, Rami, don't rag on my Jeep and my Best Buy car. Go ahead, tell me, Jack. 2500. Okay, so not bad. Yeah, but you know, the Home Depot one, it was Spanish. Don't ask why we have Home Depot. So it was the same. No, Home Depot, we actually, I think it off.

So that one works. There you go. What else do you have? Best Buy, Home Depot. What else? I have Capital One, Citibank. I have two Chase credit cards. Yeah, I have like seven. Why? I don't know. No, you know. You know why. Tell me why. Again, it's the same story. So we went to Hawaii vacation to get with a 0% APR for 12 months. We never paid it off. And then...

Jack went to Florida to visit his friend. That's why we got Alaska card. So we get miles. How much is on that Alaska card now? Please tell me zero. No, it's actually $12,500 and it's pretty much maxed out. So I think the credit limit is like 14,000. Yeah. So you're paying almost as much in debt payments as you are for rent. And this is like what, the minimum?

This is only the minimum, literally. Wow. You know, with the minimum, you're basically going to be paying this for like 25 plus years. Yeah, that's what they send me. Yeah, 30 years.

Recently, I forgot and I got like the fine and like another fee of like 60 bucks. And I was like, always like, oh, I should call them. And I never did call because I think I feel embarrassed. That's the reason I didn't call. You feel embarrassed to call Bank of America, but you're on this podcast. I know.

You know how you hear stories about people opening up credit card after credit card, jumping from 0% gimmick to another gimmick, and you go, ha ha ha, that's so crazy, there's no way that's true, it's just something people talk about. Nope! Here we have a chance to meet people who actually do exactly that. I have a real problem with people who write me asking if they should open up the 0% balance transfer thing that they can get for 12 months because why do they have to pay interest?

It turns out that people who ask those questions are almost always looking for a gimmick, a hack, a shortcut to avoid doing the one thing they need to do. If you have credit card debt, the single thing you need to do is to set up an automatic payment plan so that you are paying off your credit card every single month. And if you set that up, that means you will naturally be controlling your expenses.

But most people don't want to do that. They want to jump on any particular gimmick they can find instead of the single thing that actually works. Stop it with these gimmicks. Spending $50,000 so you can make 10 cents in free Marriott points. Jumping around from one 0% balance transfer to another. Promising yourself that you will magically change in the future when you're not even willing to change today.

Get real. Take control of your money and do it the real way. That is the only way to start living a rich life. Jack, your total net worth is how much? We're negative $22,000. How do you feel about that number? I feel like that's...

um that's not good and i feel like that needs to change in the opposite direction christina how do you feel about that i was actually pretty happy when we filled it out because i thought we're gonna be like a hundred thousand in credit card debt but then i forgot about my retirement account so that's what kind of is it that you are surrounded with other

like physicians who have tons of debt, so it's normalized to you? Kind of, yes. I guess there's like delayed gratification and knowing that I will have money in the future. And many of my physician friends do that. You know the reputation of doctors with money, right? Kind of. I mean, I can guess. What is your guess? That like doctors don't know anything about money. You care?

I do. I don't want to be that. All right, let's move on. Let's take a look at the income. I'm so interested in this line. Christina, can you read this to me? The gross monthly income for me is $11,400. And what about for both of you? For both of us is $17,268. What do you think about that number? It's a lot.

Yeah. Did you know that? Actually, when we put the numbers, again, I was surprised. And I don't know where it goes. Literally. You don't know where it goes? I mean, it's pretty hard to... Well, we're about to find out. But if we annualize that number, that's $207,000. That's a pretty good income, wouldn't you say? Yeah. Fantastic. Any comments?

you don't wait wait didn't you say that like a hundred thousand dollars is like not that much so is two hundred thousand dollars a lot or no um it is i mean it's definitely enough especially if we didn't have a dad how much were you making when you got married probably around the same right so if you yeah it was around the same because jack was earning more but i was earning less was it enough for you then

No, I think we just went all out. I honestly, I don't know what happened. We just decided to like upgrade our lifestyle. Trips, like clothes, furniture, but like a nice furniture from West Elm. So it's kind of interesting that you said just a minute ago, 200K, 207K is good if we didn't have debt, but you used to make the same amount with no debt and it wasn't enough for you. What's your takeaway from that?

I mean, we definitely increased our spending. Do you ever want to go down in how much you spend? No, I don't want. Yeah, I suspected that. And why is that? Because I want to go up. Why? You know, like I always believe like in growth and like going up, not going down. Up means? Means like...

Like anything, right? So like lifestyle wise, money wise, the earning potential. What is the word? Up to you means what? It means like I don't worry about my finances and it means that I don't work for the money. We have a bit of a conundrum though, because...

You told me 200K is enough money for our family if we don't have debt. But then we realized you used to make 200K. You had no debt. It wasn't enough. And now you've told me you don't want to go down in spending. So we've kind of boxed ourselves in. What do you think the solution is here? I mean, I think the solution is we'll definitely have to go down in spending to pay off that debt. And then...

be more careful in the future and like use cash. So that's, do you think that that's possible for you? I think so. Yeah. You seem very achievement oriented. It seems like you've been like that for most of your life. Would that be fair to say? Yeah. So if you have been doing this for your whole life and suddenly you're asked to do this, do you think it's possible for you to do it? I think I can. Um, why?

I mean, I do have experience with delayed gratification in like their medical school and through my training. Totally. So I think I can handle for another year. Another year. What if it was two years? I mean, two years also should be okay. You know, what Christina said resonates a lot with me. This idea of wanting to go up in life.

And I'm going to give you an example from my own life. I'll use hotels because I love hotels. I want to go up in life when it comes to hotels. If I go to the same hotel, I want to stay in the same room or nicer. I don't want to go to a less nice room. Now, that might resonate with you. Or if you don't like hotels, think about the food you buy.

Think about your kids' activities. Think about the clothes you wear. Whatever it is that's important to you, most of us have at least one area of life where we want to go up. We don't want to go down. So I get it, Christina.

In order to do that, in order to have a constant upward trend, you need to keep an eye on two things. Number one, your income, and number two, your expenses. Now, Christina's income is going to go up. That's fantastic. But she has not kept an eye on her expenses. They are going neck and neck with her income. In fact, they're actually exceeding how much she makes. And so it's very predictable that when her income goes up, her expenses will go just as high.

Now, again, it's very, very difficult to cut your spending on things that you've become accustomed to, especially if they're important to you. In fact, for a lot of people, it's psychologically devastating to have to downsize your house or pull your kids out of certain activities. If you have to, do it. But the ideal situation is to monitor your income and expenses so you never have to make that decision in the first place. What situation are you co-creating

Because then, and only then, can we start to change it. Otherwise, we're just talking at the superficial plan level. So what is going on? I kind of have this, you know, like emotional...

I'm getting emotional after I spend a lot of time working and then I have this vacation. And when you're in medical training, you do not get to choose your vacation. They just tell you, oh, your vacation is July 15th to July 30th. That's it. And like in order to like relax or do something,

I just have to like, oh, we'll go to Hawaii or whatever. Yeah. So it's like you have this compressed period of time where you're off work. You don't even know when it's going to be. And when you're at work, you're working like crazy hours. So you're just like, ah, this is my 15 days and we're going to use it to the max.

Correct. And so therefore you go, I don't really care what it costs. Like, let's just go and we'll deal with all that stuff later. Right? That's correct. That's exactly correct. And sometimes Jack would say like, oh, maybe we should not. He'd been very nice. And he's like, maybe we should think about that. Maybe we should save for the next vacation. Like we went to Las Vegas in October for my birthday. And it was like all credit cards.

again. And I know you didn't want to go, but you just went because I was pressuring. How's that work? It's very tight. It didn't really work. And yet, like considering you've tried that, like what, 25 times has it ever worked? No, because it's very convincing. Neither of you really took it seriously either because dynamics win.

not a plant. I'm trying to think of other areas of our life that I think we excel that, right? We, we both, we, we eat healthy foods. We work out every day. You work out every day. We wake up at 5.00 AM and we go work out first thing. You know what I want to do? The way you two treat fitness, calm, cool, methodical. You have a training plan.

You show up every day, you have a goal and you have people in your life who go, how do you so motivated? How do you go to the gym every day? You ever have people who say that to you? Yeah, all the time. And what's your response to them? You have to do that. You have, that's what people always ask me, like, how do you deal with the kids and working out? And you just basically choose to do that. Wow. You don't have another choice. That's so interesting. And Jack, what about you?

I say the same thing. Plus I just add my little philosophy, right? When it comes to training, eating healthy to me, it's, it's to have more energy for my family and kids because it takes energy. So you developed a philosophy around your training. I love that. Right. And either of you seeing any connections to the way that you handle or don't handle money? Yeah. What do you see?

Disconnecting money philosophy and lack of our own money philosophy together. Beautiful. Christina? Yeah, so I agree. So we don't have any plan. We do have this workout plans, but we don't have any plans regarding our money. Yeah, exactly.

Exactly. In fact, I would be willing to bet the two of you are so advanced. Like when people ask, how do you make time to work out or how do you motivate? You're just like in your head, you're like, what? Like, I don't motivate myself. It's just, we go every day. It's a habit. It's important to us. So we do it. It's just, that's what I say. I say discipline. It's not motivation. It's discipline. Yeah. So right now there's no consequences.

But there's also no consequences in fitness if you don't train for a week, a month, even a year. Okay, whatever. So you found meaning in coming up with a training plan and going, et cetera. You found meaning there. I don't think you found meaning with your spending. Would you agree with that? Yes. Jack? Yeah. Yeah.

And so I hope you can see there's so many strands here. We could pull them forever because you could just as easily say that in the morning, in the morning, I'm tired. I don't want to work out, but you've created meaning and a plan and a set of behaviors. And when it comes to money, it's totally absent. And especially when you combine all those absences with really hectic work schedule, of course, you're just going to spend money to feel good.

So looking at your conscious spending plan, what do you think is, well, what's your goal? What do you want to accomplish here? Pay off the credit card. Is that true? Yes. What do you think is a good plan to do that? Kind of limit as much as possible other expenses. Okay. And use that free money to pay off the credit card. So what would be an example?

So our son will start public school in summer. So we can use that $1,000 to pay. My work also will start giving me housing allowance in summer, $1,600 a month. Oh my gosh. So we can use that to pay. Hold on.

Let me make some notes here. So you're going to get a thousand a month for housing? 1600. 1600. Wow. Great. Okay. And how much are you going to be able to spend from your $1,345 towards debt? That's your daycare and afterschool. Likely maybe 900. Can we be conservative?

Maybe like 800. Sure, 800. I don't want to have any bad surprises. So that's 2,400 a month more towards your credit card. That's kind of amazing, don't you think? I read somewhere that you can spend extravagantly on the things you love. Oh my God. Right? It's like music to my ears. Keep going. Yeah, and you cut mercilessly on the thing you don't care about. This is the greatest podcast conversation of all time.

Okay. And so all that sounds really good. Where did it go wrong? That's what you would do, right? That's what you would do. That's what you would do. That's exactly what I want to do. Oh, so you want to do it. I want to do it. So who's missing from this equation? I'd like to hear we want to do it. Why don't you say that? Tell her. I mean, I want to do that. I agree.

Sometimes the best thing I can do is to help people make a connection between money and something that they are already good at. What is it for you? Could be cooking, fitness, organizing your house, whatever it may be. Think of all the work that you've put into getting good at that. Think of all the subtle behavioral tweaks that you make on a daily basis that keeps you on top of it.

That's the same with money. A lot of us think that money is some mystical thing. You're either blessed and good at it or you're not. No. What I like to do is make that connection and show you just the same way you practice cooking for thousands of hours is the same way you can get good at money. You can take control of your money. You can use it to live a rich life. Now, if you listen to this podcast, this gives you an insight into how other people are doing.

it. If you want more specific help, get my book. It's in every library or any bookstore. And if you want to ask me questions and surround yourself with other people, get more hands-on help, go to iwt.com slash moneycoaching. I do a live Q&A every single month. What do you call someone who speaks three languages? Trilingual. What do you call someone who speaks two? Bilingual. And what do you call someone who speaks one language? American.

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First of all, you realize, oh, I got a problem. But you don't know if you need to call a dermatologist or a podiatrist. So you just start calling everybody. Half of them aren't even there. They don't even pick up the phones. Then when you finally get somebody on the phone, you're like, hey, I have this thing. They go, oh, okay, cool. We can see you in July. Then you ask them, are you in network?

Half of them aren't. And you're spending three days just making phone calls. What if there was actually a better way to find a doctor? Check out our sponsor ZocDoc, the place where you can find and book doctors who will make you feel comfortable, listen to you, and prioritize your health. ZocDoc is a free app and website where you can search and compare highly rated in-network doctors near you and instantly book appointments with them online.

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If I need to book a doctor and I wanted it to be convenient and I wasn't sure where to start, I would try ZocDoc. So go to ZocDoc.com slash Ramit and download the ZocDoc app for free. Then find and book a top-rated doctor today. That's Z-O-C-D-O-C.com slash Ramit. ZocDoc.com slash Ramit. Now you're starting to really get into what the core cause of this is.

For so long, you have been subsidized or been made consequence free. Think about it. You were very fortunate that your dad paid for medical school. Amazing. That's like awesome. You were doing okay on your own. You got into a little bit of debt, paid it off. Fine.

Three years ago, what happened? The two of you combined your finances. Suddenly, it appeared that you had a lot of money. So because of this compressed work schedule, small vacation, you were like, let's go. What's the phrase you two use? It starts with an A, all out. Let's go all out. Dinner, fuck it. Trips, book it, right? And that debt starts accumulating.

And you still kept going $10,000, $20,000, $50,000, $87,000 of debt. Honestly, what's the problem? Jack's a little uncomfortable sometimes. Jack writes this application, big deal. But then you almost got kicked out of your housing. And what was the one thing that saved you from getting kicked out of that housing? What was it? My dad. Yeah. Another check, another subsidy.

So I don't mind that you have a dad who's really generous and he's able to, I don't mind that. All right. What I would like is for you to create your own subsidy. I would like for you to, to create your own emergency fund. I would like for you to, to create your own plan fund for Singapore trip before you go. And most of all, the way to do that is to create your own vision.

That is the most important part. A vision would be something like we never take a vacation unless we can pay for it in full. A policy would be we are going to accelerate our debt by cutting back on X, Y, and Z and pay it off automatically every single month. Another philosophy would be we're going to celebrate along the way

but we're going to do it more modestly because we want to live an even richer life in the future. How do those things strike you? I like that. I completely agree. Let's just look at this right now. So I have here...

your debt payoff plan. Now, is it actually true that you're paying $3,841 a month towards your credit cards? So it's going to go down because again, it's like payment plans. So it's going to go down, but I hopefully will not go down because...

Oh, I mean, I will remain it at that amount just to pay it faster. Okay. But it will go down. But the last six months, they were like this, $3,000. $3,841, right? About that. Okay. All right. That's quite aggressive. Great. And with your income, you can afford it. Okay. Right now, you're going to pay it off by January 2026. Okay. Okay.

If you take it up to the number that you discussed, which is with your childcare and the housing allowance, I want to show you from January, 2026, which is about three years. You can actually pay it off by October, 2024, one year. What do you think about that? Oh, it's, it's pretty fast. I would like to do that. That's like amazing. Jack, what do you think? Yeah, I think it's, it's,

It's more than possible. Okay. All right. I think that part is really good. So what that shows you is, yes, you have a lot of credit card debt, but you also have a high income and you have money starting to become more available from other places. That's fantastic. You know, it's very possible. You know, you're going to make what? 300 plus like $370,000 or something like that. It's extremely possible for you two to live check to check on that.

It is extremely possible. I've met people on this podcast who do that. What a tragedy if that's the way you live your life. At $370,000 a year, you could be multi, multi, multi millionaires. Easy. I'll tell you, truthfully, I want to pay this debt off fast. First, just for a sense of pride, but really because I'm like, we're young and we have an awesome life ahead of us. We have two kids. We love to travel. We love to have a good time.

And so we've like created this thing that's just dragging us down and we're going to be doing this for the rest of our lives. Fuck that. Let's get out of this, get rid of these things that are holding us back. And then we can start to do some awesome stuff. That's how I look at it. What do you guys think? Yeah. We need to grab this by the neck and really attack. Attack. Exactly. Yeah. I like it. I like it very much.

And now for their follow-ups. First, Christina. Christina writes, the podcast was truly a life-changing experience with many insights. I was surprised how easy it was to talk with you about this very intimate topic. I consider my financial issues a weakness and I do not want to be viewed as a weak person.

Moreover, I think I hide behind more spending from the fact that I'm in debt just to make myself look better. I realized that I always referred to help from my parents as help from my dad. Probably that's the reason I never connected with Mike on the topic since I've never observed that connection between my parents.

I do understand mutual financial goals are essential and will take steps every day to build that connection. I admit I'm a spender and enjoy it. However, we plan to take care of the credit card debt ASAP before any trips. Lastly, we were truly surprised to find out how much guilt-free money we will have when we updated the CSP. We plan to invest a lot and save up for a Singapore trip that actually was canceled for July 2023. Jack said...

Being a guest on your podcast felt literally like being a guest at someone's house, warm and comfortable. I was actually surprised to see my wife and I so easily share our money struggles publicly, and I'm glad we did. Our talk together helped both of us realize that like other aspects of life, we need to create rules and stick to them. We are now committed to having more money dates together to discuss our rich life and fine-tune it as necessary, at least one in two months.

I was personally surprised to see my wife change her mind about the trip to Singapore and make a better decision together. And by the way, we are not going to Singapore this year. Instead, we are going to plan a smaller trip close to home in California with a couple of nights with the kids.

I want to thank you, Christina and Jack. And I want to remind you on Thursday on this podcast, I'm going to do a special episode where I talk about how I plan my dream travel. I got a bunch of questions from you on social media. I'm going to answer them, including specific locations, numbers, everything.

And on Saturday on the podcast newsletter, I'm going to share some peculiar things I've noticed about the way that we travel and spend money on it. You can get on that podcast newsletter at iwt.com slash podcast newsletter. Thanks for listening. Thanks for listening to I Will Teach You To Be Rich. I'm Ramit Sethi. Please follow the show on Apple, Spotify, or wherever you listen to podcasts. If you haven't read I Will Teach You To Be Rich, my book,

pick up a copy. You can get it at any bookstore or any library, and it will show you this specific tactic for how to build the I Will Teach You To Be Rich system into your personal finances.