120. “We have 3 kids, $1k saved, $0 invested. Is it too late for us?”
56:58 Share

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 slash book. Have you ever admitted out loud that you were spoiled? Yeah. They told me they spoiled, like I was spoiled. I would talk like a little spoiled kid. Do they still spoil you? Um, I would think...

In a way, yeah, probably. Our first child was a sweet surprise. And so right off the bat, we were like having kids and working full time.

But then I started noticing, like, with our finances, things are not adding up. Where is this money going? Where is it all being wasted? And there were a few times where, you know, I was like, you know, I'm not going to come home. Like, this is it. It's over. Like, I don't want anything to do with it. And it's so funny because I graduated with a psychology degree. And looking back now, I'm like, all the signs, all the flags were there. But it's like when it's your family, you put the blinders on, you know?

Let's meet Anna and Gabriel. Anna is 31 and Gabriel is 28. They've got three young children and they've been married almost 10 years. Now they currently live in Gabriel's parents' house and Anna wants to move on. She wants to begin the next part of their lives. But there's a challenge when it comes to the way that they talk about money and there is something in their history that we're going to dive into today. This is Anna and Gabriel.

The situation is just, I feel like we've been stuck doing the same patterns over and over again. And even though over the years our income has grown, it just seems like we can't get out of, you know, living with Gabriel's parents, separate home, but same property or land. And even so, even after having three kiddos, we're still there. And your children, how old are they?

So we have a two-year-old, a four-year-old, and a seven-year-old. All right. Congratulations. That's a great, beautiful family. You're living with Gabriel's parents in a separate, like an ADU or some type of separate unit. Is that right? Yeah. It's like a studio. Yeah. We did have our own apartment. And Anna was going to school. And I was the only one working. She was working a part-time. So that was...

Still tight. I mean, we made it work. My parents helped us out. We've been married for nine years. It'll be 10 years next year. So yeah, I was 20 years old. So they were helping us out with sometimes with groceries. They would go to Costco and help us out. So it's been tight since you met. You could theoretically go the rest of your lives with money being tight. Why come here? Why decide to potentially make a change? Anna?

Because it's too tight. I want to be able to move out to rent a house and just have more space where I'm not necessarily with my kids in the same room all the time. Gabriel, why do you think that we're here right now? Why do you think Anna filled out this application? I think I made a bad decision, to be honest. I feel guilt. I made some impulsive decisions. And I think...

It was my fault. We dug ourselves maybe into a hole and I'm accepting my fault. What was the impulsive decisions? For example, I bought a quad during my times that I was my addiction. What's a quad?

Uh, like a four wheeler. Oh, okay. Like a ATV. Yeah. All right. How much did that cost? Um, like $8,000. No, about $9,000. Right now it has a flat tire and I haven't fixed it. How many times did you ride that thing? Like five times. That's like $2,000 a ride. Cool. Yeah. And I, and I, I admit it was an impulsive. That's one of the impulsive purchases that I had because

I did it on my own. And then I just told Anna, oh, I'm going to go pick up the quad. He leaves and he comes back and there's like a trailer with a quad on it in front of our house. And I was like, what is this? Wow. So was this kind of during the full blown addiction? It was impulsivity as well? Yeah. Mm-hmm.

Getting a car maybe that was over our budget at the time. Which car? BMW X3 2019. How much did that cost? What was it, Anna? I think it was $60,000. Yeah, around $60,000. $60,000. Okay. All right. And the other big thing, obviously, was that I wasted...

A little over three years of just my addiction. I kind of did the math and it was...

Around, I would say like 30,000 that I wasted with drugs and alcohol. But I've been sober three years now. So I feel like there's a new me. So it's like a Gabriel 2.0. And so I want to work at it. And I do. I want to get out of my parents. It's nice to have them. But sometimes I want to have my own space. I want the kids to have their own space. So I'm willing to work at it. I love hearing it.

Thanks for being honest. Thanks for taking responsibility. And I love your vision, Gabriel 2.0. That's cool. In fact, I'll tell you this. I've never heard someone who went through addiction, look back and actually calculate how much they think it costs them. I know it was a big chunk and now it opened my eyes even more and made me want to change everything.

my mindset and maybe my lifestyle as well too now. It's not a small amount. It's a lot of money. But I'll tell you something, what's impressive to me, sometimes people come on and they're very concerned that they did the math wrong. I'm less concerned about that. What I always look for is what type of character traits do they show? Do they come prepared?

Do they care for their partner? And are they listening? And the fact that you calculated that is very impressive. You came prepared and ready to change. I appreciate that. I noticed that. And that means a lot, I think, to us and to you. I really love this. I never judge someone for not knowing some technicality about personal finance. And I'll never judge someone for being poor or not having enough money. Why would I?

What really impresses me about Gabriel is how seriously he is taking this entire conversation. He got help. He even looked back to calculate how much money he spent during his addiction. And he's acknowledging that he was impulsive. Personally, I would rather work with someone in $50,000 of credit card debt with this kind of attitude than someone who makes $250,000 and has no desire to change. We'll be right back after this.

Now, what I want to do is I want to hear from Anna. I'm not an addiction expert, so I'm going to ask for the broad strokes, and then I want to move on to the financial part of our conversation. But I do think it's important to know the backstory here. So Anna, can you tell me from your perspective, the brief version of what was it like as Gabriel went through addiction and seems to have gone through treatment and is now Gabriel 2.0? What's that like for you?

It was very hard. I started noticing...

just little things here and there. And I would kind of brush, brush them off. Our first child was a sweet surprise. And so right off the bat, we were like having kids and working full time. Of course, my attention wasn't always on him and my concern wasn't on him. So, you know, I would let it slide. And so a couple of months would go by. And, but then I started noticing like with our finances, things are not adding up. Like where is this money going? Where is it all being wasted? And so again, I would question him, but we would always meet somehow ends meet.

So then life would keep going. Yeah, I would start finding little things here and there and I'm questioning it and he would always deny it. And it's so funny because I,

I graduated with a psychology degree and like looking back now, I'm like all the signs, all the flags were there. But it's like when it's your family, you put the blinders on. So, yeah, it was it was hard just kind of, you know, praying about like, what do I need to do? What's my next steps? Like, I obviously want my kids to be safe. I want them to be protected. And there were a few times where, you know, I was like, you know, I'm not going to come home like this is it. It's over. Like, I don't want anything to do with it.

But sure enough, after months of like encouraging him to seek counseling and just to talk to people, he decided to take that big step and, you know, go to a facility center. And he was there for three months. And even during that time, like my in-laws were super sweet and so supportive and they helped me meet the ends meet that he obviously couldn't provide during those three months. Wow. Three months. That's a long time. Yeah.

It was hard. Yeah. I had two kids and I was pregnant as well with our third. Okay. All right. Thank you for sharing that with me. Gabriel, hearing that, anything surprise you from hearing that? Well, it's just sometimes I feel guilt. That's why I'm here to try to make it up and cover that ground that I lost. And I guess that would be why I'm kind of nervous because...

Like, I don't, let's see, of like, if when the podcast airs and say the addiction part, and then people will comment, I just don't know how I'm going to react. But I do care, but I don't care if that makes sense. Tell you what, I don't have a lot of experience with people who have gone through addiction and certainly gone to treatment centers. But you let me deal with the people online.

who say anything, okay? - Okay. - Of course there are people on the internet who say things, but I can tell you right now, just from listening to both of your stories, there's nothing here that people would make fun of that any reasonable person would, and if they do, I will handle them myself, okay? - Thank you, yeah. - What's it been like in those three years that you've been back?

Well, when I came back, there was some guidelines or parameters that I had to follow. So I couldn't have, I didn't have a cell phone. I didn't, I couldn't have money with me. I had to be with someone else.

in other words you were never alone in six yeah never alone yeah one was because obviously i could fall back and two was also because i was taking medication now i'm off the medication so now i'm more more i just slowly like i said like been updating into a new version of myself and i think it's it's getting better talking about money

But we still need to work on it. That's why we're here. Yeah. Good. Okay. And what's it been like for you? Three years. I understand that he wasn't allowed to have money for a while. Talk to me about that.

Yeah. So the first year was a big adjustment because yeah, like you mentioned, like the first six months, gosh, I would even say it was even longer. There was like rules that they set him home with. And of course, like his parents and all of us made sacrifices to like be able to help him through those rules. He can never be anywhere by himself, no money.

And so, yeah. And so I would say definitely the last two years have been like a total turnaround. Just who he is, who his character is. Like I would tell him at the beginning, I'm like, is this really you? Like,

you know, is this guy here to stay? And now total, total difference because now he's totally active with the kids. He wants to do stuff with the kids. He wants to be there for the kids. Okay. All right. Well, you know what? I just want to acknowledge Anna. Obviously you took on so much of the burden of helping and supporting, but also his parents. Sounds like you have a really strong family support system. We don't all have that. And so big kudos to your families as well. Thank you. Thank you.

You know, I want to acknowledge something really special about Anna and Gabriel. They've gone through Gabriel's addiction. And listen to the way they talk. They are a team. Now, whether you've had personal experience with addiction or not, you know that this can't have been easy. And we are only hearing a compressed version of what their entire family went through for years.

What's really remarkable to me is how they are approaching this conversation. Do you notice the tone of voice? Do you notice their body language if you're watching this on YouTube? Notice even how they're framing the challenge. They have kids and they live in a studio at his parents' place. I've had people on this podcast who have a lot more money and they live in a much bigger place and they were screaming and catastrophizing about it. But to me, I noticed this sort of ease that Anna and Gabriel have.

That comes from being a teen. Of course they have problems. But what I really love is that they are approaching it with calmness and unity. That is something that I really admire.

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.

Thankfully, this episode's sponsor, Rocket Money, can help you easily find and cancel those unwanted subscriptions. Rocket Money monitors your spending and helps you lower your bills so you can grow your savings. Rocket Money will even try to negotiate lower bills for you by up to 20%. Just submit a picture of your bill

and Rocket Money takes care of the rest. They'll even deal with customer service for you. Rocket Money has over 5 million users and has saved a total of $500 million in canceled subscriptions, saving members up to $740 a year when using all of the app's features. Stop wasting money on things you don't use. Cancel your unwanted subscriptions by going to rocketmoney.com slash Ramit. Give it a shot at rocketmoney.com slash Ramit. That's rocketmoney.com slash Ramit.

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.

Well, guess what? That is a lot of copy. Before, it would take my team a ton of time to work through everything I had written and edit it and make it right for email. Now, Grammarly does it for us in seconds. Grammarly Premium actually gives us suggestions on how to make our writing more impactful for you. It identifies gaps in the writing and shows personalized suggestions to improve the whole thing. And it can even add images like that.

Save time with one click and go from editing drafts in hours to seconds. Get AI writing support that works where you work. Sign up and download for free at grammarly.com slash podcast. That's G-R-A-M-M-A-R-L-Y dot com slash podcast. Easier said, done. So you mentioned that you have different money mindsets. How would you describe your money mindset, Gabriel?

I am more of a spender, like kind of like spend now and think about it later. Again, I'm an impulsive buyer, I guess sometimes I've been trying not to be. And so you just stay away from those areas of temptation, right? Yeah. Okay. Anna, what's your money mindset? How would you describe it?

Um, I would say like, I'm okay with waiting to buy things. Like I could save up and then buy whatever we need later or yeah. Or like, if we don't have the money for it, then we don't have the money for it type of thing. And if you don't have the money for something, Gabriel, will you buy it on credit? Uh, yeah. If we don't have the money, I wish no credit. I mean, I tried not to get anything on credit now. Okay. All right.

Go ahead. But we did just get a washer on credit. How much? 800. And why, just out of curiosity, I mean, your parents are being very generous. You can stay there, but is it your responsibility to replace the washer or did they offer to do it? Gabriel offered. Yeah, I offered. Oh, you offered? Yeah, I offered. With what money?

Well, Anna did tell me that we had, because since I came back from the rehab,

I've kind of just let her handle the money. And she did tell me that we did have the money to pay it off. And I guess it's my mindset is still, well, if we can get on credit and just pay it off slowly, like not slowly, but like in a few, like two months, like pay it off. Why not just get it just theoretically with cash or something like that? Like why put it on a credit card? If you say credit card points,

No, no, no. Just zero interest. I'm not going to say zero interest. Did you open up a Lowe's card? He did. What do I say about those retail cards? They're not good. They're horrible. What does that mean? Zero percent interest. Well, we don't get charged interest. That's my guess. You also wouldn't get charged interest if you just handed over $800. Yeah. And I guess that's, again, that's one of my...

spending patterns that I maybe have. And that's kind of the mindset that I want to change. What do you think would be a healthy relationship for the two of you to have with money? What would it look like? To be more on board, like on the decisions, I guess. What does that mean, on board? She told me at the store, like, let's pay. We can pay it off right now. And I'm like, yeah, but I guess, I don't know. It's just like in my...

Like that's the way of my old thinking and it just came out like, "Why if we have 0% interest?" So maybe now I need to be like, "Yeah, you're right. Let's just pay it off." - Does she know more about money than you do? - Yeah, I think so. - I'm just imagining the two of you at Lowe's. There's like a gigantic pallet with a washer and you're just about to check out and then you're like, "You know what? I think we should open up a Lowe's cart." And she's like, "Huh?"

Like, why did that come up for you that you wanted to advise her to open up a Lowe's car? Well, now that you say it, I think in a way it might have been the way that I was brought up. My dad, I think instead of, and he has the money, but he'll go to Home Depot and stuff like that and say he needs to build a fence and he'll

get it on the credit card even though i know that he has the money but he'll question is your dad debt free no well no no what so that's like let's charge it up on the card but he's got credit card debt yeah he could be he could be yes so why isn't he

I honestly, we, we, the same way, maybe that me and Anna can't, like, I try to tell them like, well, if you have the cash, why don't you just, I try to give them the advice. You told your dad that? How about you tell yourself that? You're like, don't do what I do. Just do what I say. It's better that way. Is this about to become a multi-generational podcast? I'm going to get your dad. Your parents are going to come on here too. It's going to be amazing. That would be awesome. That would be, that would be pretty cool. So can I go out on a limb here and say that

Some of the dynamics in your marriage in terms of money, might they be mirrored like 30 feet away in your parents' house? I would think yes. The problem is that I don't have the income that my dad has. So maybe that's not a good idea for me to mirror. That's kind of why I wanted to come on here and do the podcast because I

I need to change that mindset. Let's talk about it because I'll tell you something. If I had to go get a washer and God forbid, I had to walk into one of these home repair shops and I saw a washer for 800 bucks, I would put it on my credit card. I would, I'll put it on my credit card knowing that I have my credit card set up to automatically pay off in full every single month. I don't even look at it. It just pays it off. I also know that I have the cash to do that. Make sense? Yeah. Yeah. Okay.

So we probably need to adapt a little bit of the way you think about money. No problem. That's money mindset changes. I don't mind that. I'm also interested in the dynamic between the two of you, how you make money decisions. He fully trusts me. Like every week he'll just give me like what he makes and I just stick it in the, in the bank. And then from there, I just took it. Like I just pay off everything or whatever. I just make sure there's enough. So you're handling the day to day. He's,

Gabriel sounds like you're mostly on board with what Anna wants to do, but once in a while you're going to go out and get something of your own and then Anna's got to figure out how to make it work. Right? Yeah, but it's not like I just go out and like, oh, I'm going to go get this. Like I do ask her like, oh, is there like, is there a chance? Have you ever said no? I think so. I think it's the last time I said no. I don't know if I fully said no, but I think it's like, oh, well, can you wait?

for it or something i don't know it's probably something i'm saying no not the same thing at all that's interesting i can't think of the last time i said no okay okay so anna you're the kind of financial executive in the household but also the operational person the day-to-day gabriel is bringing his paycheck to you and saying here you go

Once in a while, he comes and asks, hey, I need to buy these shoes, et cetera. Is there money? To which you always reply either yes or can you wait a couple of weeks? Fair? Yeah. All right. Is this system working for you? No, because I would want for him to kind of –

I want for him to be the vision of like where I want our money to go. So I would like for him to kind of know that stuff so that way he wouldn't have to come to me and ask like, hey, can I get this or I need work boots or whatever. Okay, fair enough. And Gabriel, same question for you. Is the system working for you? Technically, yes, because I feel the less...

I know there's been situations in the past where I see that we have money in the account and it's easy for me to, oh, it's fine. I'll get it. So sometimes I think that's my struggle. Sometimes I don't even want to know how much money we have because then I'll make those impulsive decisions. So I do want to get more involved. Good answer.

Good answer. I like that you said, yes, it is working because it's a great system for you. You just bring your paycheck and then you're like, here you go. I'm out of here. P.S. Give me some shoes. It is working for you. But I also like that you say, hey, I want to I want to know a little bit more. However, when I see money in there, sometimes it makes me want to spend it. I get that. Before we continue, are you continuing to get treatment for the impulsive behavior?

Well, I'm meeting with my therapist every two weeks. You talk about this? A little. Yeah. Not too much, but maybe I can bring it up. Great. That would be awesome.

Now back to the episode. That scene at Lowe's is so interesting to me. Just this idea that a couple would even be debating whether to open up a credit card while standing in line is absolutely wild to me. That would be like me standing in line for Chipotle and deciding to buy an alligator. It literally makes no sense to me. And then Gabriel telling Anna, Anna who knows way more about money, that they should open up the card.

And Anna, who's never said no, and even sounded startled by my question, just quietly letting it happen. All the while, the ghost of Gabriel's dad is watching over them. This is like a movie scene. I'm actually curious what else Gabriel learned from his dad about money. I was an only child for a long time. My dad had his own landscaping business. And yeah, I just, I never really struggled with like anything around the house. Like I was always had money.

I was like spoiled, I guess you can say. Have you ever admitted out loud that you were spoiled? Yeah. Okay. Are your parents both alive? Yes. Okay. And if I asked them today, did you spoil Gabriel? What would they say? They would say, yeah. Yeah. Okay. Then they told me. What did they say?

They told me they spoiled, like I was spoiled. I would talk like a little spoiled kid and I would say well not anymore. Yeah. Okay. Do they still spoil you? I would think in a way yeah probably. How so?

I don't know, but I just feel like they do help us out a lot. And I don't know if that's bold or not. I guess the only thing I can think of is like, I work with my dad and well, he just gifted me a truck for us to have a second car. I don't know if that's bold or not. How much is that truck worth?

He paid $20,000 for it from one of our clients. Oh, okay. He bought it for $20,000 and gave it to you? Yeah. And did you have to pay anything for that truck? No. Okay. All right. Got it. It's just the registration. I guess my dad would be an impulsive buyer too as well. He'll show up with a pickup that a client offered him.

Okay. Anna, would you say that Gabriel's dad might be impulsive with money as well? Gabriel's word? Yeah. So I definitely see a lot of similarities and if it's fair enough to say, and his dad shares his story, his testimony all the time. So his dad was also an alcoholic. And so I think the, the impulsiveness, I think they share that. Cause I definitely see his dad like

My father-in-law is the most generous person I've ever met. I don't know if this is impulsive, but he will gladly pay for everyone's meal if we go out to dinner or do things like that. Gabriel, are you the same way in terms of that generosity?

Yeah, I believe so. He tries. Yeah, I try. Yes. To my, to my, I guess you can say to my, my, my budget, I guess. Yeah, I do it to a smaller scale. So for example, like if you were out with, let's just say friends or family or something like that, might you offer to just pick up the check for everybody?

Yeah, if it's not something. Say if we go out with friends to In-N-Out, I might pay for their meals, which is not super effective. But if we go out to a nice restaurant, then that's where I'm like, no, I can't. Got it. All right, Anna, how about you? How were you raised with money? What do you remember about growing up as a kid and money in your family?

I remember watching my dad scratch his head a few times just as he was sitting with the mom in the bed, just taking out the money to pay rent. I remember we had to rent one of our rooms to a roommate just to meet the rent for that month. Granted, we did live in Southern Orange County, so rent was expensive. Yeah. And there was a season where

that happened like part of my life growing up, like maybe in the elementary school years, but then later we didn't need that kind of help anymore. Like we didn't need a roommate anymore. And so, yeah. And so I remember going to the store and my mom saying, no, we can't buy a Barbie or, you know, things like that. What changed for you to not have to have a tenant in your house?

My dad's income went up. He just started getting better at what he was doing, which was like pour cement concrete, or he started doing like the foundation of homes and stuff like that. Got it. Um, did your mom work? No, she was a full-time stay at home mom. Gabriel said that he was spoiled. Would you say that you were spoiled as a kid or no? No. Um, um,

Do you learn about savings, investing, things like that before you... No. No? No, no. We never talked about money. I was actually the one that encouraged my mom to take me to the bank to open up my first checking and savings account. Wow. Do you like money? Yes. When you think of money, what words come to mind for you, Anna? Freedom came to mind. What other word would come? Money. Fun. Yeah.

and future. Wow. Freedom, fun, and future. They're all abundant. They're all future-oriented. They're very positive. Do you know that? That's really striking. Gabriel, what about for you? When you think of money, what words come to mind? To me, it's like to have money, obviously. I more picture a house, like our own house, like a home. Okay. Home. What else? Yeah.

Not being so tight, like living, I guess, almost paycheck by paycheck. It's really interesting to hear the way that you both think about money. And in a way, it's funny because two of us can say the same words, freedom or fun, and we can see them totally differently. Because Gabriel, I bet that quad that you bought was fun, right? Super fun. Yeah. But I bet you that's not the type of fun that Anna thinks about. Is it, Anna? Right.

It's very interesting that Gabriel had a positive upbringing with money, but he doesn't really have a cohesive philosophy about money today. If anything, he mentions it would be not worrying about money. That's his dream, which is not a real philosophy because the absence of something is not enough to be a financial philosophy. And also, interestingly, Anna grew up with stress on her family finances, and now she talks about fun, freedom, and future.

It's very interesting how people can have a certain background and the way they react to that background can be completely unexpected. Now, listen to how they divide up the financial responsibilities. 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,

help you accelerate your career, then I'd like to invite you to check out this episode's sponsor, Sidebar. Sidebar is an exclusive, highly curated leadership program where you can tap into a group of supportive peers, including Fortune 500 executives and innovative startup CEOs. You can get expert advice, new perspectives, and most importantly, raw feedback, which is so rare on how you can get unstuck.

When you become a member, you get matched with a group of 8 to 10 peers. Then you meet with your group twice a month for 90-minute facilitated sessions and have real-time messaging access to the entire community. Learn more at sidebar.com slash ramith.

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.

But I started to realize that clothing is the first thing people see about you. They don't see how nice I am or how much I know about personal finance. They see what I'm wearing. And like it or not, that shapes a lot of how people perceive you.

Now, I take a lot of pride in the clothes I wear, and I love knowing that when I buy something, I'm going to keep it for years, and I know that the people who made it were paid well. I actually hired my wife, who runs Next Level Wardrobe, a luxury personal styling company, to style me for my Netflix show and all of my events, including what I wear day to day for more casual outfits. If

If you're a professional who wants to dress better, maybe you recently got a promotion, maybe you've gone through body changes, or maybe you're just tired of wearing the same clothes you wore in your 20s, I recommend you check them out. When you hire them to work with you virtually or in person in New York, they'll help you clean your closet, buy the right items with the perfect fit, and they'll help you put together polished outfits you can wear to work.

You'll be able to open your closet every single day and know exactly what to wear for every single event. They'll help you look like an elevated version of you. And they work with professionals of all ages and sizes. I love the convenience. Next Level Wardrobe has over 125 star reviews from happy clients and they've been featured in the Wall Street Journal. Take their free styling quiz at nextlevelwardrobe.com slash Ramit.

Elevate your style using Next Level Wardrobe at nextlevelwardrobe.com slash Ramit. That's nextlevelwardrobe.com slash Ramit. It works in the short term. It actually works quite effectively because Anna seems quite capable, but there's two problems. One...

Is it drives you apart because she's the one who has to be responsible all the time and like mind the numbers and you don't. So that's a huge wedge, which drives people apart. And then two is what happens if something happens to Anna? Now we got an existential problem for someone who does not know how to deal with money. Yeah. So that's why I totally respect that in the past you had to put blinders on.

When you came out of rehab and they gave you these rules, of course you had to follow them, right? And of course you had to give up control and Anna and your family were there to support. And it was fantastic. But what I'm hearing is Anna wants to give back some of that control because of course you've proved it. I love that you have a support system now where you can talk to a therapist and we can do this gradually in terms of giving you more control. But I do want you to take the blinders off slowly. Yeah. How does that sound to you?

Okay. Anna, how does that sound to you? Good. Why do you think she needs you for this process? Now, because she wants me to be more involved, to be aware of what we're spending, where the money is going and what we're spending on and what she wants to pay off. Yeah. Why does she want you to be more involved? Why? Why? Because she wants to...

Not be responsible, fully responsible for it. Maybe. What else? She works full-time, right? Anna, you have a full-time job and you have three kids. Okay. All right. So you have a busy household. So that's number one. Gabriel, what is it? Can you say it for me out loud? She just wants me to be more involved. Yeah. Like she needs a little help. Yeah, sure. Yeah. All right. Like that's a lot of work for one person. Anna, is that fair to say?

Yeah. I think that by you seeing the numbers and what can be done with the numbers will hopefully help us be united into sacrificing now so that we can have a better future. Okay. Well done. That was really cool. Round of applause for the two of you. It's hard stuff to really communicate what actually you want and why.

Boy, it's easy for us to jumble it up with a lot of words. And sometimes we just need really simple, simple things. You have a four-year-old, right? Your four-year-old asks, I don't know, why is there a moon or something? Like, we don't need to get into all the astronomy. It's just like, the moon gives us light at night. Clear. Sometimes we want to start there and be super clear. And then later we can get into the details. All right.

Let's get into the numbers. All right, let me walk you through their numbers very quickly. Their assets are zero. Their investments are zero. Their savings are $1,000. Their debt is $56,300. Anna's gross monthly income is $5,400. Gabriel's gross monthly income is $3,200. Their combined gross monthly income is $8,600 or $103,000 per year.

And finally, their fixed costs are 61%, which is pretty good. However, they pay no rent. Total net worth? Negative $55,368. All right. What do you think about that? It's scary to me. Why? Because if one of us were to lose our jobs, we don't know where the income would come from. And or again, thinking of the future, there's no money in our retirement.

Yeah. Okay. And Gabriel, what do you think about that? Honest, I feel guilt and regret because I wish I could have done things differently, but I'm hopeful that we can change it. Powerful. Do you believe that you could change it? Yeah.

Yeah, I wish I could. I mean, the things that happened, happened. But now it's to look forward. The only thing to do now is to look forward and to change my habits that I had before to better ones. Okay. So negative 55,000 net worth. Not great. Just going to be honest. You both are around the age of 30. You have three kids. Okay. In certain cases, that would be disastrous. However, you have like a magic card, like a joker.

And you know what that magic card is? Is that you don't pay rent. That's a secret code you both have. So we're going to talk about that. We're going to talk about the rest of your spending, but just know that there's definitely a path forward. Okay. You're not going to be stuck here forever. Okay. And you have $1,145 in car payment, including transportation and gas as well.

So the car payment is $745 and then gas is about $400 a month. Yeah, because I commute. $400 to $500 because I commute, yeah. Okay. What kind of car? BMW. Oh, shit. How long until that thing is paid off? Oh, I think it's 20 months. 20 months, so less than two years?

Yeah. Okay. And have you explored options to kind of turn that thing in and get something cheaper? Have you looked into that? No. I wouldn't mind at all. And I wouldn't either. That's good. Okay, fine. Let's put a pin in that. That's an option. Who knows? But all right. Your debt payments are 641. What kind of debt is this? $56,000 in debt.

So we have two school loans. We have Gabriel's and mine. We have the city credit card. We have the quad. I think that's all. How much is on the credit card? $8,000. Okay. And the student loans? Mine is closer to $12,000. So it's like $11,800. And I think Gabriel's is also $11,000. Okay. And that quad? We have a little under...

3,000 left. I love so many things about this quad. First of all, the fact that I didn't even know what a quad was. Second of all, that it just shows up one day in the driveway, which is literally inconceivable to me. Third, that you've only used it five times and you're still paying it off years later. And then my favorite part of all is that it's just sitting in the back with a flat tire. Absolutely couldn't script it better.

Ladies and gentlemen, I'm sorry, ATV Association of America, Ramit Sethi is out here telling people, don't buy an ATV, okay? Just rent it. You want to go on a nice trip? Just rent it. 300 bucks a day? God bless, okay? Do not buy an ATV with a flat tire. Yes. Yes, do not. All right, so your debt payments are $640. Are you paying the minimum on that or are you paying more?

On the quad? No, I'm paying way more on the quad. Like, so the quad I'm paying like 300. Uh-huh. How about the credit card? Uh, the credit card. I'm paying minimum on that. Yeah. Why are you paying so much on the quad? Cause I want to get rid of it. Cause you hate it. Okay, fine. So my, I want to like pay off all the debt. Like I want to throw in like a thousand dollars a month on the debt and I

Gabriel is not fully on board with that. He says, no, let's not do that much. Let's have some extra money to do other things. Like? Maybe vacation. Maybe do more stuff with the kids. My example would be have the kids grow up and then

We are paying off the debt. And then when we have the money, the kids don't even want to hang out with us anymore. That's kind of my thing. I want us to have like the same goal as to what we want to do with our money. Got it. Have you both ever articulated what your goal is with money? No, not. I mean, we both are in agreement that we do want to move out of his parents' house and that we do want to get out of debt. But there's no like roadmap to how we're going to get there.

It's just like one day we'd like to do X, that type of thing. Right. All right. Yeah. If you want to move out of your parents' house, that's a pretty big lifestyle thing that affects everything. I say we make a couple of very specific plans around those areas so that they're not just pie in the sky ideas. That would be my approach with this. Gabriel, would you be on board with that? Yeah. All right.

What I want is for you to tell me how you can dramatically change what's going on here. Because right now you're okay, but it's because you're subsidized. You have free housing. If you were to go out to the open market, meaning you were to pay the full price of what you should quote should be paying, you'd be broke. Okay. So in the, here's the way I look at it. I go, if, if I'm given the gift of free housing,

phenomenal. I'm going to take that opportunity, save as much money as possible. I'm going to live lean. And then I'm going to save up huge. And then when we go and get our place, we're going to be really mindful of how much we add because I want to keep saving money and never have to go backwards. That's the way I think about it. What do you both think about that philosophy?

Yeah. I mean, that was supposed to be the intention when we moved back home with his parents for us to like save the money that we would be paying in rent. You have $1,000 in savings. Yeah. Yeah. And you make $103,000. What happened?

Sometimes you might be fortunate enough to be in a temporarily great financial position. Maybe you moved in with your parents, or maybe you're getting a big tax refund, or you've had your student loans paused for years. Listen closely. The key is to take advantage of these opportunities. They don't come around that often. Now, most of us don't do this. We simply go on our merry way, spending like usual, and then when the temporary situation ends, we are stuck.

Anna and Gabriel live with their parents. This is the time to be saving thousands and thousands of dollars. I like companies that find innovative ways to save money and then they pass those savings along to you. Take Mint Mobile, one of our sponsors. Unlike other wireless companies, they decided to ditch retail stores and all those overhead costs and they passed those savings along to you.

For a limited time, they're passing on even more savings with a new customer offer that cuts all Mint Mobile plans to $15 a month when you purchase a three-month plan. That's unlimited talk, text, and data for $15 a month. I had one of my coworkers test out Mint Mobile. She said the service was identical to her existing Verizon account.

So if the service is the same, switching to premium wireless for just 15 bucks a month is a no-brainer. Now you'll notice on this show, I recommend to couples ways to cut their fixed costs. If you can dramatically cut your fixed costs on say wireless, that is one way that you can take that money, pay off debt faster, spend it on guilt-free spending or invest it aggressively.

Go to mintmobile.com slash remeet. That's mintmobile.com slash remeet. Cut your wireless bill to $15 a month at mintmobile.com slash remeet. Additional taxes, fees, and restrictions apply. See Mint Mobile for details. 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.

Listen, imagine you're going to Mexico or Italy or Thailand this year. Wouldn't it be amazing to at least ask where the bathroom is in the local language or to say thank you when you're walking out of a restaurant? This fall, you can start speaking a new language with Babbel. Babbel's quick 10-minute lessons are designed by over 150 language experts to help you start speaking a new language in as little as three weeks. Here's

Rules and restrictions may apply.

I mean, for me, the car payment is definitely, I think, the one that's like horrible. Yes. Oh, yeah. The car payment would be, yeah, super helpful. Yeah, I would be on board getting rid of the car. How are you going to do that? I know. How do you do that? You could sell it. You can get a much cheaper one. Do you know if you sold it how much you would get for it? No. I researched a couple years ago, but I don't know what we would get for it now. Okay.

Well, I would definitely look into that. You have to remember there's two things that are important when it comes to selling your car. First of all is how much would you get? Okay. Well, most of the time you're surprised in a bad way. But the second thing that a lot of people forget is the monthly costs. It's really important. So if you're currently spending over $1,000 a month and you're able to cut that down dramatically over the course of a year, 18 months, two years, that savings is massive.

Yeah. It could be a 500 bucks a month. That's pretty impressive, right? You two get a nice, safe, used car, save a bunch of money every month. Let's just, let's take a look at what that would look like. Okay. What I'm keeping my eye on as I make these changes is this number right here, the 57%. I'm trying to get in the neighborhood of 40%. That's really what I'm trying to do. Just because I know then that if I were in your situation, I could then afford to

to eventually go out and get my own place, which is the goal you have. Okay. We don't have to get to 40% exactly, but just see that we're moving in the right direction. So let's take this number from 1145 to even seven. Well, you pay 500 bucks a month for gas. Damn. Is that premium gas? Yeah. Yeah. See, this is the thing. When you get expensive stuff, it has all kinds of expensive accessories with it.

So trust me when I say this, whatever car you get next should use the cheapest gas possible. Yeah. Right. That alone save you tons of money every month. You see what I'm saying? All right. Let's say that we're able to turn this number into, I don't know. I want to be a little conservative here. 800 bucks. So that's 345 bucks a month. Can I just point something out? So the minor changes we've made so far, they're really not that big.

would get you $675 a month in extra cash. What would you do with that money? Oh, shit. We didn't talk about that quad. Sorry. We got to talk about that. Why is that quad sitting in the backyard and not just sold? Someone explain that to me. I don't, I didn't want to sell it, but I can sell it. How much can you get if you sell that thing?

I don't know. Whatever we own it. Yeah. Or whatever. Just get rid of that thing. Yeah. Okay. Just get, get rid of it. Okay. Listen, I want to acknowledge a personal philosophy that I have of money, which is if you made a bad purchase, get rid of it. Stop throwing good money after bad. This is why you sometimes hear me advising couples to sell their house, even at a loss,

which is incredibly difficult for people to do because it means they actually have to face the decision they made. You know what most people do? They just keep on paying for something that is slowly causing their finances to sink. And they agonize and they worry and they get in fights about finances for years. It almost never gets better.

My suggestion, rip that bandaid off. Because remember, it's hard to look forward when you are so busy looking backwards with your finances. That's going to save you quite a bit of money as well every month. All right. So you're basically like you got like 800 bucks extra per month. What do you think about that? I'm surprised, to be honest, because it seems like we...

I didn't think we could get that much cut back and have that much more money. I didn't know where it would come. I guess in my thinking. The fact is you, with a few minutes of work, cut 800 bucks a month off of this. What do you think about the exercise that we did with the conscious spending plan? Well, I think it's a great...

And personally for me, it's like it was foggy, like my vision was foggy, but now it's more of it's I can see. Yeah. Maybe not the finish line, but I can see that there might be a finish line. So I feel a lot more motivated to actually start getting more involved. I'm excited. I like that. I like that. Anna, what about for you?

I liked it. Like I enjoyed seeing how we can play around with the numbers and just by moving a few things around, selling the quad or, or even, um, yeah, just thinking about the possibility of like looking into getting a different car. I think that's huge. I didn't hear you kind of like pushing back, fighting, none of that. It was, it was like, all right, we got a problem.

well, could we do this? So I'll stop doing that. A lot of selflessness, which I think was really inspiring. How do you want to go forward? How do you want to manage your money together so it's not just one of you doing it and the other handing over a paycheck? Well, I think I need to take more initiative in getting to know

I guess maybe even actually doing a few of the payments myself, just being more involved. And I need to sacrifice now so in the future we can have a better future. Gabriel's in charge of the ATV sale. Can we set a timeline? Like how long?

I'm up. If you do it tomorrow, that would be amazing. Get some video, okay? I want to see the video of them taking that thing away. Okay. Let's check out a follow-up video from Anna and Gabriel. What I find surprising is that with a few minor tweaks that we did to our budget, which I didn't really think were possible, our financial future has cleared up. What I take from it is that now I'm more motivated than ever to go

go ahead with that plan and to get out of debt sooner.

I would say my biggest surprise is how much on board he was during our call and how much he was just contributing and sharing. And I've seen still about a week or two out. He's still motivated. And we're talking about the changes that we need to make. And then the second thing, my biggest takeaway is that it's not too late for us. Like we can still retire, hopefully being millionaires. And so that was super encouraging to me because I thought we were kind of like

late and we kind of be struggling as we got older but yeah those are our takeaways. Thank you.

I want to thank Anna and Gabriel for coming on the podcast, being so candid. I also want to thank you for listening and taking away your key lessons. Do me a favor. If you enjoy this podcast, go to Apple Podcasts and leave a written review. It really helps the podcast grow. And of course, if you want to learn more about money psychology, go to iwt.com slash podcast newsletter to get this Saturday's newsletter today.

Because once we send it out, we will not send it out again. 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 the specific tactics for how to build the I Will Teach You To Be Rich system into your personal finances.