78. “I pretend things are fine, but we’re 2 months from going bankrupt”
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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 slash book. Courtney, you applied to talk to me. Uh-huh. Why? Because I want to get past my own bullshit. When you talk about money, what is your tendency? Money.

to try to make it sound better than it is, for sure. I don't want them to know that it's this much. We're just going to go ahead and say it's maybe about this much. I guess it's like a form of self-soothing, maybe. Are you bad with money? I don't think so, no. I've never had a problem paying for anything I've earned until lately. But even then, actually, I shouldn't even say that because we're still, we're not in debt. It's not like we're racking up credit card debt. We're still paying for everything, so. Well, you have $100,000 plus of debt. That's not really true. There is that. That's true.

I've never quite met a couple like Courtney and Alex. She's 35, he's 37, and they live in a high cost of living area in Southern California, close to her parents for help with their young child. What's so fascinating here are the stories that Courtney tells herself about money. If something costs 20 bucks, she'll say that it costs 10. And that's just one of the many stories she tells herself. I think you'll also be surprised when you hear Alex's background.

Now, all of these stories and emotions obscure the truth of their numbers, which is they're going broke within a few months. You can listen here on the podcast. You can also watch on YouTube. Just search for Ramit Sethi, which will allow you to see Courtney and Alex and see their body language as we have this conversation. I'm Ramit Sethi, and this is I Will Teach You To Be Rich.

I'll grab a coffee here, pick up something there, you know, just not as like number by number of things that I'm spending where Alex is really good about like, oh, I will have my coffee every morning at home and this and that. Like he keeps track a lot better. So I think like, yeah, I'm just more of like willy nilly with my spending. This stuff I don't.

And does it ever result in a disagreement or is it fine? It definitely results in disagreement, especially since recently we've more so combined our finances instead of allocating like I cover this and he covers that. It's just been like, well, one bank account, here we go.

So when was the last time you fought about money? Last month probably was the best month that we had with being on the same page because we both were like, don't spend any money. Oh, so not spending any money is being on the same page. Yeah. What is it typically that you disagree about?

What to buy and like groceries, I'd say would be a big one that we talk about a lot that like, he thinks that I could spend less in groceries. And I keep telling him that groceries are getting more expensive. Let's just say like in the kitchen, looking at the receipt, and that I like spent, you know, something Oh, I could spend $80 on this and you spent 180. You know, how do you respond to that?

groceries are getting more expensive. Also, I thought you wanted some bubbly water and wanted to get something nice for you. You know, like a little treat to have in the house. So like, here's that and some ice cream. But I guess I didn't need to buy the ice cream or the bubbly water. But then that to me emotionally just feels like you're not... At least if we're not going out to eat and we can't even like...

get bubbly water to have in the house. And that's like, what are we doing with life? Like if we can't have any nice little treats here and there for ourselves, then like, why, what, what's the point of that? You know, what are we working for? What are we earning money for? Yeah. Yeah, exactly. I like to be able to have like in an ideal world, I like to be able to pay for all the things I need to pay, but you know, the to do's and then still have enough leftover to, um,

Yeah, get the ice cream or get some extra little things here and there that aren't the bare necessities of just protein, vegetable, fruit, grains. The end. What kind of ice cream? The one right now, I think it's Trader Joe's vanilla. Okay. Which is not the cheapest one. But if I'm going to get ice cream, I'm not getting the crappy stuff. I like the... I'm very picky about certain ice creams that I get. It's like Haagen-Dazs, Talenti, or Trader Joe's.

And are you living in that ideal world right now? No, not really. How does it feel when you think about money today? I'm scared. I'm scared right now. Like literally right now?

Yeah, a little bit. My month is shaping up really nicely with work. By the end of the day tomorrow, I will have grossed more this month than I did last month. So I'm doing good. I just... I think I'm still just kind of freaked out where I'm like, Oh my god, what if I get sick again? And then it goes down. And then it's the third month in a row that we're having to pull some savings. And then we really can't afford the ice cream and really shouldn't be doing that. So it's like that guilt that you feel about spending, but then also you feel guilty for not. And then we went...

Christmas shopping yesterday, I brought my daughter and there was something that she wanted and she was like crying walking out the store and I'm like, oh God, like should I just, I don't, like no, sorry. And so that kind of sucks. Listening to you talk about it, it feels overwhelming. Yeah. And do you think that that's normal? No, I didn't used to feel this way. Notice the invisible scripts here. First, Courtney offhandedly mentions that not spending money means they're on the same page.

This is a really common belief of people who grew up with frugal families. The idea that if we are not spending money, we're doing it right. And you can see the costs of hearing phrases like that, like we can't afford it and you don't need that. You grow up believing that spending money is bad. And because you inevitably have to spend money to live a rich life, you end up living with existential guilt for the rest of your life. Sorry, was I talking about Catholicism or money?

Second, I also hear how Courtney feels frantic. Do you pick up on that? She's spinning. She's creating worst case scenarios and then adding a layer of guilt on top of it, peppered with lots of sorries and other tip off words.

Also, the thing she mentioned about being an entrepreneur and having a really good month, all of these things are clues that I want you to file away. I've been in business for 10 years now and have never heard of a profit and loss sheet. And I finally was informed of what that is and how to use it and what bookkeeping is and all that stuff. I'm like, so my mind is blown. So now I'm actually using profit and loss sheets and seeing, like, I would always just go off of like,

Oh, I grossed this much this month. And then I set aside my money for taxes and it would just always work. It was one of those things that would just always work. I'd always be able to pay my bills, never have to pull from savings. I could buy whatever I wanted. And I couldn't tell you how. It just always worked out. What changed? Noticing the profit and loss sheet and actually looking at the numbers. So between that and then we moved and our rent doubled.

So my financial awareness and then our expenses going up by $2,000 a month. $2,000. That's a lot. Yes. So your rent went up by $2,000 a month. Yep. Wow. So we moved. We were living in San Diego and moved back up to Orange County where I'm from to be near my family and get help with babysitting and just family support and all that jazz. So we were looking at...

the things that we wanted in a house and or in a home, you know, apartment, whatever. And for Alex, it was at bare minimum in one car garage. And for me, it was a washer and dryer. Those requirements for an apartment were around $3,600 to $3,800. And then for a house, it was $4,100. So we said F it and went for the house.

As you might as well. Can you finish that sentence for me? You might as well what? Might as well just get the big house that has all the things that you want and spend, you know, two, $300 more a month and have a nice big house instead of being in an apartment that you don't have a yard. You have a one car garage. I mean, the price difference was for us. We were just like, eh, what's a couple hundred dollars more months? Like, just get the nice thing. And has that turned out to be a good decision? Yes and no.

Like, yes, in terms of living comfortably. And like, when you talk about living your rich life, like to me being in this house fully is that 100%. And so I tell myself that too, where I'm like, look, just because you can't get the ice cream today or right now, doesn't mean that's not going to change down the line and look at what home you're in and how rad that is. Wait, wait, wait, hold on, hold on. You have ice cream in your freezer right now. Okay. Yep. Get me called out. I encounter this a lot.

I'm talking about when people say one thing and then seconds later, they contradict themselves. This is way more common than you might think. You see, when most of us talk about ourselves, we live an idealized life. We try to be fit. We try to manage our money. We spend a little too much and we could probably cut back, but nothing outrageous. I've spoken to couples on this podcast who literally say, yeah, we could do better, but we're making it work as they are hundreds of thousands of dollars in debt.

And one of the things I try to do on this podcast is help people cut through their self-created identities to look at the facts of the situation. Sometimes it works in their favor. Are you stressed out by $2,000 of credit card debt? In the grand scheme of things, that's not that much. We could fix it. On the other hand, are you totally relaxed about $200,000 of credit card debt because it's actually not that much and your neighbor Mary has 500K of debt? That's not good.

you can hear a lot of playing with identity in this conversation, a lot of comparisons and rationalizing. For example, we were going to overspend, so we just said, screw it.

Let's hear how Alex feels. I feel the same way I've felt for the last five years. Always in fear. And I feel like I'm behind the ball as far as with my, in comparison to my peers. I can say money's always been a big stressor. Four years or so, we were doing really well. We were in a place that the rent was cheap. We didn't have a child. We were both working.

and making decent money and saving money. I paid off my car, my motorcycle, and I was debt-free and I had more money in the bank than I had ever had. It wasn't a lot, but it was more than I had ever had. Before you go, what did that feel like at that moment? It felt great. However, my fear with money never changed. Did you think that once you were debt-free that your relationship with it would change magically?

No, because knowing how I function, especially with money, I was just super driven to accumulate wealth, so to speak. And I was like, I have debt free. Okay, cool. Now I need 20 grand in the bank. Okay, cool. Now I need 50 grand. When did things start to change financially? I would say over the last year. What happened?

We had a kid last couple of years. We had a kid. We were earning less. We had moved before our, our, um, our rent was more, it was about eight or $900 more than we were paying at our original place, our one bedroom. And, um,

I feel like for the last year, we've been chipping away. We got married in October and that cost quite a bit of money. How much? The numbers aren't... I'm not sure, but I would say if I count the ring and I count the bachelorette party and the bachelor party, I'm thinking probably out of our pocket, 15 grand. Courtney, does that sound about right to you?

I guess. I honestly am not really sure. I'd say around, I'd guess more around 10, but he's probably closer. Like I, it's probably 15. Is that a common dynamic? Is that a common dynamic where Alex, you know the numbers more than Courtney? Yeah. And I tend to undershoot it when I want to. Why do you undershoot it? I think emotional, emotional part of it, just to not stress myself as much. Like when I hear 15 grand, I'm like, oh, but when I hear 10, I'm like, okay. Another common tactic.

People who know they're making a mistake will use a variety of techniques to not feel bad. Some will simply ignore it. Others will compare themselves to someone worse off. Sure, it was $10,000, but at least it wasn't $30,000 like Jack. That is so irresponsible.

and some will undershoot the number. They're basically lying to themselves. And because money is fluid, you know, you can make a lot one month and you can actually lose money due to inflation and phantom costs, and there's bookings and revenue if you have a business, you can kind of get away with it for a long time. Personally, I find Courtney fascinating. I don't get the chance to talk to someone who openly misrepresents numbers consistently.

and is candid about it that often. 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.

$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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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 Alex says it was 15. Courtney, does that number sound right to you?

Yeah, I guess. Yeah. And what did you hear in yourself when you answered that question just now? Not happy about it. Kind of. Yeah. I mean, it's your wedding. I know. It's your bachelorette party. You sound excited about it. Yeah. So I noticed you're tearing up. Sorry. That's okay. Money is emotional. Tell me a little bit about why. Well, I don't want to feel bad about our wedding, about spending that money.

Do you? I mean, a little bit. Yeah. Now, like today. Yeah. Two months ago. No. When it happened, I didn't. But after having had the two months of pulling from savings. Yeah. It's like, oh, it'd be nice to have that. And what does it make you feel when you think about that now? I don't know. Kind of sad.

Sad because you don't have the money or sad for another reason? Oh, sad that I don't have that emotional component that I feel sad about our wedding. It's a bummer that I look at it and I'm like, ugh. I don't want to feel that way about it. Because when I think about it, I don't. When I don't think about the money, I don't feel bad at all.

You know, I'm stoked about it. And I think that's part of the reason too, why in my head, I'm like, no, it was less. But don't, don't include those things, you know, don't include the parties and stuff, you know, the bachelor party in the ring and all that. Like the wedding itself was only this much. But who are you fooling when you say it that way? Me. So here you are today. You came on, you want to get some help. It sounds like a few big things happened in the last year.

You had a child, your rent went up by $2,000. And Courtney, you started becoming a little bit more financially aware through a P&L, etc. Would that be accurate? Yes. Okay. And how would you rank your financial situation right now? Would you say it's very good, average, bad? How would you describe it, Courtney? Optimistic. Have you ever said that your money situation was bad?

I don't know. I don't think maybe, maybe. Cause yeah. Otherwise like straight reality, like money situation in this second, eh, moderate to poor. Wait a minute. You went from optimistic to poor.

In like 10 seconds. Which one is it? Well, okay. I mean, I guess it's a matter of like reality and mindset. I don't, you know, like in reality, we had to just pull from savings to pay for stuff. So to me, that's poor, but I'm trying to just be like, nope. Okay. Don't get emotionally hung up on all of that. Like fudge ahead. Don't let this like let you stumble and take you down a spiral of negativity.

You know, it's interesting. I agree with a lot of what you're saying. I don't think that your situation should result in a spiral of negativity. I'm hearing this all or nothing approach to money a lot. Either Courtney is optimistic or poor. She feels happy or sad about money. And you've heard me say many times that money is emotional. I even said it to Courtney a few minutes ago, but sometimes we let our emotions overwhelm us. Emotions overwhelm

can give us clues, but they can also lead us astray. And yeah, I talk about how in a rich life, you have to work on improving your money psychology and your emotional relationship with it, but you also have to work on improving the basic nuts and bolts of personal finance. That means that to become confident with money, you have to become more competent. - When I communicate about money, it usually comes

from an area of frustration and fear. Give me an example. I can be short and rude. Now that our finances are combined, at the end of the month, she would transfer her earnings after expenses and tax into our account so then we can pay bills. And it seems like when I ask...

How much are you going to be able to transfer? Then she'll say one thing and it'll be significantly less. Or, oh no, here's the best example was when we were combining stuff and I was like, let's pay off all of our credit cards. And so we have a great baseline of how much money we actually have, how much liquid we actually have. How much do you owe on your credit cards?

Her number was thousands of dollars less than what we actually owed on those credit cards. And so I was like, I don't understand how somebody couldn't just immediately have that number. I know exactly how much is in all of our accounts and how much money we owe on credit cards and how much money we owe and have. So I guess when I communicate with her after stuff like that, I can be very...

short and frustrated and maybe at times belittling. Why not just say, I don't know? Oh, because I would just piss him off to high hell. You don't know? How do you not know? That's ridiculous. How do you not know? Is that true, Alex? Yes. It's very interesting when you see a dynamic. I love how honest the two of you are. You see that oftentimes dynamics are co-created. It's not...

simply one person. One person is reacting to very real pressures from another. I'm not using this to excuse anybody, but simply to describe what's very obviously going on. So you did not want to say, I don't know, because that would have resulted in all that stuff. What did you do instead? I just, I guessed and I was wrong. Yeah. Yeah. And, and when you guess, or when you talk about money, what is your tendency?

To try to make it sound better than it is, for sure. Yeah. Yeah. And I think too, like, I'm sure when I said that number, it was probably something that like in my heart, I knew it was more than that. But I'm like, I don't want them to know that it's this much. We're just going to go ahead and say maybe about this much. I guess it's like a form of self-soothing, maybe. It makes me think of that meme with the dog sipping coffee in the fire. Yeah. This is fine. Everything's fine. I'm fine. Totally. How come you're so open admitting that to me?

I mean, he knows. He's called me out. I've admitted it. You applied to talk to me. Why? Because I want to get past my own bullshit. Okay. I like that. I appreciate the candor. Are you bad with money? I don't think so. No, I've never had a problem paying for anything ever until lately.

But even then, actually, I shouldn't even say that because we're still, we're not in debt. It's not like we're racking up credit card debt. We're still paying for everything. So. Well, you have $100,000 plus of debt. There is that. That's true. It's fascinating to hear Courtney admit this. I have never had a guest on this podcast who downplays their financial problems quite like Courtney. But at a certain point, I understand what's going on and I start to lose my fascination with it.

Yeah, it's interesting and amusing to hear Courtney use these phrases like he calls me out on my bullshit. But her admitting her tendencies is in itself a strategy to avoid making real changes.

When people talk about money, you have to remember that they use all kinds of conscious and unconscious strategies to resist changing. And Courtney, in this conversation, is going almost over the top to admit that she's often a hypocrite about money. Okay, that's fascinating. But I think it's become this quirky thing that's actually an unconscious strategy. And it's one that's not really helping her.

Alex, why do you think that money is registering with Courtney now? Because I explained to her that at this point, with our expenses and our income, anything, when you look at that pair of pants or you look at that cup of coffee, is that worth pulling out a savings for? I don't think that's why.

Look at her face. She's shaking her head no. Okay, Alex has no ability to understand why this is happening right now. That's okay. Actually, most couples don't understand why they are doing the things they're doing. Alex, are you surprised that your answer, which sounded really logical and cool, is not actually the right answer? No. You're not surprised. Why not? Because I feel like my...

My understanding, the way my brain works is quite a bit different than the way Courtney's does. How does yours work? I feel like, well, it doesn't work great. But for me, it works well as far as when I can make things very cut and dry and compartmentalized. Okay. We come from different backgrounds and...

I've always stressed about money. So her money not being something that she thinks about as often as I do is understandable. So I think she's used to things just kind of working out, you know?

And I always had to kind of make things work out. I ran away from home when I was 16 and started working and dropped out of high school, started working and was hanging around with some kids that were up to no good. And I also was up to no good and ended up in some trouble and in the juvenile detention system and group homes.

And then on my 18th birthday, I was kicked out with nowhere to go. And I went into... I moved into a, for lack of a better terms, a tweaker pad. And I was living with a bunch of criminals and we were doing a bunch of dumb stuff and drugs. And I'm...

you know bounced around a lot i ended up moving you know i made a friend who invited me his parents invited me into their home in a different city so i moved down there with them and uh but continued to struggle with drugs and alcohol um and 10 years ago i got sober and um yeah i mean i

There was periods of homelessness. There was periods of, you know, long periods of unemployment and, you know, just kind of couch surfing and depending on other people to support me, you know, lots of, lots of money, money issues. And, you know, and it,

Honestly, it wasn't as much of a stress then as it is now. I don't know if because the drugs helped with that or it's just because I was just so used to not having any money and owing people money that I didn't know anything else. And I was depressed and suicidal for a long time. And I had been in rehabs and sober living before.

And, you know, there was a guy that was in 2010. I was in a sober living house and my roommate had been there for years, much more time than anybody else. And I was like, what are you still doing here? He's like, I don't trust myself out there. Without the structure of this, I think I'll be back in prison. And I was like, fuck that.

And, uh, but after about, you know, 18 months, that seemed like a way better situation than what I had going on. So I went, um, to, to, I went and sought help thinking that that was going to be the rest of my life was just being locked up and living in a structured environment. Thankfully that that wasn't the case at all. I have more freedom than I've ever had. That's a pretty incredible journey you've been on. And I don't,

often get the chance to talk to somebody who's gone through that journey. So I really appreciate you sharing it. My pleasure. To try to put myself inside your shoes. And at the time where you said, wow, I would rather be in a structured environment instead of being out and having my own freedom. And that is a more attractive outcome to me. It's hard for me to put myself in those shoes. I can't imagine what that must have been like.

And now for you to be here where you are together with Courtney and talking about money and talking about a pretty large amount of money now, that journey is absolutely incredible. So regardless of where we go, I just want to say, wow, absolutely amazing. And congratulations on being sober. And it helps me understand where you're coming from when you share that with me. So thank you. Thank you. How did you grow up with money?

Oh, it was never an issue. I actually found this to be interesting because as I have been working with myself and my business coach more on this kind of stuff and realizing that...

I think actually, no, it was one of your podcasts. There was another wife that was doing something and it's kind of similar. And she was like, I don't know. It just always works out. It always works out. And I'm like, yeah, it always works out. Like that resonated with me so much. And then within the week, I'm talking with my mom about finances and she goes, well, I don't know. It just always works out. And I'm like, oh,

Interesting. And because it has, it just has always worked out. And I always remember her saying, I don't know how it does. It just always does. Don't ask me how it just always does. And they have questions. What do you remember hearing from them about money growing up?

I guess just that we never really like worried about it. It wasn't, I don't know. We didn't, there wasn't like a whole lot of topics. It was mostly just like, I think the one thing I can remember is when I was 18, my mom told me to take out, get a credit card. She like kind of, I shouldn't say forced, but highly encouraged to get a credit card. Like I had like a $500 limit on it. And she taught me how the interest worked and how the minimum payment on the card is not going to save you if the interest is higher. And so like, I've always understood that, um,

That's very savvy of her. Yeah, credit cards I've been great on. And I've actually manipulated the system with credit cards quite well. Getting little points and borrowing their money and blah, blah, blah, all that kind of stuff. So I've always been good with the credit card stuff. But it's the student loan thing that for whatever reason, it did not... I don't know. I think it was one of those things that just... You take out a student loan to go to school. So how much did you take out? I took out $80,000. So that's how much interest has accrued at this point. And I've paid off $10,000.

You went from $80,000, you paid off $10,000, and it's currently $107,000. Yes.

Okay. What does it feel like to hear those numbers? Oh, I hate it. It pisses me off. And that's why I just put it, I put it in a different compartment because I feel like I can't even emotionally like deal. Like I talked to colleagues about it and we all have this running joke that we like, we're going to die. Not that we're going to die, but we all have the running joke of like, yeah, I mean, there's that, but we just kind of put that over there. Cause if I think about it, then I'm not okay.

like the amount of emotional stress i had when i graduated and looked at that and realized that i accrued ten thousand dollars in interest just while in school still i like wanted to puke it is so it's common um people who have relatively high amounts of student loan debt they do exactly what you do they compartmentalize it and then they start making jokes going well i'm probably going to die with that amount of debt but what can you do it's it's very predictable yeah and yet

Have you ever actually calculated how long it would take you to pay that debt off? No. What's the interest rate on this debt? On my student loan? Yeah. It's like 6.8 on average. Okay. What do you think about that number? Robbery.

High, way, robbery. You think it's high. All right. I agree. And you have something about if you have income-based repayment. Explain that to me. So if I make $0 or they have some wacky calculations, I have no clue how to figure out. But based off of my earnings from the previous year, they will calculate how much my minimum payment is.

So that's why you go in... This is what I was taught is that when you graduate, that's the best one to go into because initially, you won't be earning a lot of money as a business owner. And then it basically takes the pressure off of having a minimum payment, whereas like, I'm going to get into a 10-year repayment plan on $100,000. I'm not gonna be able to afford that. And then you're just in panic mode from day one. So that's why I was guided into that.

Okay. And what's your process in terms of knowing when your debt will be paid off? I don't have one. People do this really weird compartmentalization with money. If I ask them about their investments, they won't include their 401k. In their head, they literally don't count a 401k as investments. On the other hand, if I ask them about their debt, people who have large student loans, I'm talking six figure loans, they often will not count it.

It's like we pick and choose partly to protect ourselves, but partly because we don't really understand how money works.

Anyone who did would understand that a 401k is an investment, whether it's a retirement account or non-retirement account, it's an investment. And this is where it becomes personally frustrating to me. That's one of the reasons I started my entire business because money affects us in so many ways, but few of us actually decide to get proactive about taking control. I mean, how many people have listened to this podcast for over a year?

Okay. And yet listening is one thing, but shifting to proactively taking control is a totally different thing. If you're ready to take control of your money, get my book. You can get at the library. You can get at any bookstore. If you want more help and you want direct answers from me, join my money coaching program at IWT.com slash money coaching. Whatever decision you make, know that you can change your life in less than six months.

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Elevate your style using Next Level Wardrobe at nextlevelwardrobe.com slash Ramit. That's nextlevelwardrobe.com slash Ramit. Let's look at some of your numbers. Let's go through it. So who put together this conscious spending plan? I love hearing this.

Okay, so I listened to your podcast on the one where you're like, you guys need to do this together. I was like, okay, cool. We're doing this together. And then I tell Alex, I'm like, hey, you need to come read this email. And then I'm in a different room hanging out with my sister. And he goes, okay, it's done. Why'd you do that, Alex? To avoid us being helpful. What do you think the effects are, Alex, of you doing the conscious spending plan for Courtney? Well, the effect for me is it gets done quickly.

Okay, that's true. That's true. And would you consider that a good thing? Yes, I would consider that a good thing. Okay. And are there any other effects for you? We avoid any sort of conflict while putting it together. Okay, fine. So from your perspective, it seems very reasonable. Let me do this. It gets done faster and we don't fight about it. Okay. What about the effects for the two of you?

You made a good point. We don't get to have a bonding moment with each other. And also, we're a team in this venture. And it's hard for us to be on the same page and both have the same knowledge of our situation if we're not looking at the numbers together. Yeah. And what do you think the effects are for Courtney?

when you do the CSP for her? Given the last 20 minutes of conversation and the person she has whispering in her ear, it probably would have been extremely beneficial if we looked at that together and did it together. Courtney, what do you think about this whole CSP experience? I kind of rolled my eyes and laughed and was like, well, okay.

Finish the sentence for me. I mean, yeah, I would have liked to have done it together. I think I've finally hit that point in life where I'm like, all right, let's rip the bandaid off no matter how much this hurts. Like, I want the growth. I'm sick of going in circles. So let's do it. This was an amazing opportunity that they missed.

Money is so much more than numbers. So while yes, the conscious spending plan is a spreadsheet that you enter data into, the emotional benefits of being able to work on something together, to bond over it, to figure it out, to basically do this puzzle together, that's a missed opportunity. If you want to do this alone or with your partner, get the conscious spending plan in the show notes. Now let's zoom in on what they actually spend their money on.

for new parents navigating how to do this. Yeah, and that's okay. In fact, I think for a lot of new parents, they start to feel really anxious and guilty that they're not hitting their savings numbers that they used to be. And one of the things I always encourage them to do is it's okay to take your foot off the gas for a couple of years when you have a new kid. There's all these expenses you could have never expected as the two of you have discovered. There's all kinds of complexities that come up

It would probably be unrealistic to expect to be firing on every other cylinder in your life when you just brought a new life into this world. So as I say that, does that give you a little bit of room to breathe? I mean, kind of. I feel like I've kind of already been telling myself that, but then the flames are still burning. Yeah.

It sounds like you've cut your spending down quite a bit. Significantly, yes. And it's frustrating me to high hell. I feel like I'm pinned in a corner, not able to buy anything, and it sucks. And I think that's probably part of it too, is that I've been so far cut back on everything that now I'm like, all right, something's got to give. Let's finally figure out how to make it so that I can go get my nails done again. Alex, would you agree that Courtney has cut her discretionary spending way back?

Yes. Okay. That's good. That's great. Have the two of you celebrated that? I find that very impressive. Thank you. No, we haven't. Well, let's do it right now. How do you want to celebrate? Yeah. What do you think, Alex? How should we celebrate? Yeah. Like right now, right here. What do you want to do? High fives. There you go. Let's do it right now. High five, everybody.

Nice work. All right. Awesome. We got to take the win when there's a win to be had. Otherwise, you go through your life feeling bad about money. Now, Alex, I'm curious about your discretionary spending. What do you spend money on? Riding motorcycles and motorcycles and maintenance on motorcycles. Do you have a motorcycle? Yes. Three of them. You have three? I have five. Wait, what? There's five in the garage?

How much are each of these motorcycles? Oh, they're assets, Ramit. They're assets. They are assets. Whatever. Yeah, close this piece of paper I have on my desk. That's an asset. Thank you. There's probably, if I sold them all today,

No, I'm not. I'm asking how much did you pay for them? Okay. $8,000 for the Supermoto, $7,800 for the race bike, $800 for the 50, $1,500 for the trials bike, $3,200 for the Sur-On. Okay. So like $21,000 or so together. All right. And over what time period did you buy these things? Well, I'm always buying and selling motorcycles. But all of these bikes have been purchased within the last couple of years.

Wait, I have a lot of questions. So, you know, here we are talking about the price of like getting your nails done. How much does it cost to get your nails done, Courtney? One that I want to get, like 60 bucks, 50 bucks. Okay, 60 bucks. And so we got 60 bucks over here on Courtney. And then we have $21,000 in motorcycles. It seems like a kind of a big disparity. Yeah.

Care to tell me a little more, Alex? Well, I mean, over the last... I love cars and motorcycles and I usually make money on them. How much? Buying and selling. Yeah, sometimes a couple thousand bucks. Other times I'll get to ride something for free and sell it for what I paid for it. Okay. For the cost of maintenance and registration. For the cost of maintenance. Yeah, maintaining the stuff does cost money. How much? Um...

On a monthly basis? $300 a month. $100. Okay. Courtney, do you agree with that? Do you have any knowledge of that? Zero. I mean, he will come to me and be like, oh, I need to do this. I'm just like, all right, whatever. You're the one that's frugal, so I don't expect you to overspend. So do you. I see. Yeah. I have no clue how much he spends. Otherwise, it's... He tells me, he's like, I need to do... I need to get some tires. It's going to cost this much. I'm just like, okay.

Notice that subtle comment from Courtney. She said, he will come to me and say, I need to do this. And I'm just like, all right, whatever. You're the one that's frugal. So I don't expect you to overspend. There's so much detail in those sentences. Let me replay it and tell you what I notice. He comes to her saying, not asking, I need to do this.

Her response is, whatever. You're more responsible than I am. So who am I to say anything? To me, this shows a total disconnection of a relationship with money. They're not united. They haven't set up any rules on how to make big decisions. They don't even really communicate effectively about this. It's just, okay, I know I'm bad. So you do you. When did the two of you combine your finances?

Two months ago. Two months ago when you got married. Okay. Was there a discussion about what does it mean to bring our finances together? Yes. It's easy for both of us to look at both of our money. So we have it in one account and all the credit cards are visible on that app.

We use two credit cards and we have one account. It sounds very logical to you, doesn't it, Alex? Yes. Can I make a suggestion? Please. Can I suggest that maybe Courtney was not motivated or excited by that? Yes. Okay. I'm going to go out on a limb. Courtney probably said, whatever. I don't even want to think about this. You do you. How does that sound? Alex, did I get that right?

Yes. Okay. Courtney, did I get that right? Yeah, like it's a fly on the wall. Right. And what do you think is missing from all this? Because technically all that is correct. You should have a joint account. You should have visibility. So why isn't it working? We don't earn enough money to support our lifestyle. Fair enough. Something's missing here.

Courtney? Well, I would say my ability of awareness because at this point, I don't have the ability to view what was purchased on the credit card that we're using. Why? It's not on the app and I have... Alex makes that face like, I don't have the login for it.

Well, what if we fix that right now? Oh God, not another one of these. I'm not going to put you through another 20 minutes of listening to people try to log into an account, but just know that when I talk to couples who are not connected on money, it's becoming more and more common that one of them just doesn't even know how to log into the accounts. If this is you, you got to fix this. This is table stakes. All right. Both partners should be able to log into the accounts.

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I have this hilarious slash sad thing that happens to me almost every single week in my Instagram DMs. Somebody will write me, they go, hey, I'm paying 1.25% AUM to my financial advisor. I know you've talked about not paying a percentage to a financial advisor. I just want to know if it's worth it or not. Where can I ask you a question? I go, just join my money coaching program. It's like 69 bucks a month. I do live Q&A every single month. And they go,

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What I think is missing from all this transactional talk of transparency is that, let's say you get access to everything, Courtney, and the two of you can ask each other assorted random questions. How much did we pull from savings? Okay, and you can get an answer very quickly. Great. Does that solve your problems? No. No. My relationship with money is unhealthy, and I think now Courtney's relationship with money is unhealthy, and we're both fear-driven.

Is that true, Courtney? Yeah. Fear means what, Alex? You fear what? Fuck everything and run. So why do you think that that feeling of fear and running away persists? I think because, well, I mean, we've had some big major changes, especially in the last few months with the marriage and the move. The move was not cheap. The marriage was, you know, expensive. Yeah.

but I had a blast and I'm looking back. I'm very glad that we spent that money to do that. I had a wonderful time and I mean, it meant a lot to me to, to see Courtney have a wonderful time too. I love that. Um, and I think we're just playing catch up and you know, I, I, like I said, we, we have some cash. I have some shit I can sell. God forbid I have to, I'd really like to keep that stuff. Um,

But I think our income needs to catch up. And we're strategizing. We're making moves in that direction. What is missing from the way that the two of you talk about money, Courtney? I mean, I think my guess on that would be like a game plan other than make more money. And then kind of like, oh yeah, I mean, I guess just like a game plan on like, what are we doing? Other than just like...

money coming in and money coming out and work, work, work, work, work, work, work, work, work. Until you die. Yeah. Just like a full-blown panic mode of like, we're not going to ever get out of this. And the treadmill just keeps going faster and faster. We'll talk about the numbers. But the way I see it is you've been given a golden opportunity where this is a pivotal moment for the two of you. You just got married. We're on this call.

Your expenses just went way up with a new child and a new rental. You have the ability to take one of two directions. One, you can keep going the way you're going. You'll play catch up for the rest of your life. You'll be like many Americans. Expenses, constantly worrying, but then you paper over it and then you die. Yeah, fuck that. Okay, I like that. I like that. The second option is you can make some...

difficult decisions. You can do it today at the young age that the two of you are at. And if you do that now at the age of 35 and 37, it's possible you have a very, very healthy future as it relates to money. But the way that you approach money has got to radically change. Here's what I see is missing from the way that the two of you talk about money. You have no shared vision. There's no shared vision. If I'm Courtney and

I want to learn about money. Yes, I'm willing to put some time in, but I want to know when I can get my nails done. Yeah. What else does Courtney want to know in this shared vision of a rich life? Courtney, tell me.

Well, yeah. I mean, definitely just nails done, not feel guilty about getting my hair done, not being like kind of back to the grocery thing. But like, I was so excited when I only spent $80 on four bags. I was like, look at what I did. You know, like seeking that approval for doing. Yeah. So you want verbal approval?

Or validation from Alex. Yeah, I like verbal dribble, hon. Great. Love it. I love just putting it out on the table. Here's what I need to be happy. I want nails. I want to be complimented. And I want X, Y, Z. Love it. We can write that down. That's fantastic. All right, Alex, in this shared vision of a rich life, what do you want? Short term, I'd like the time and freedom to...

Use my toys. Ride dirt bikes and not worry about spending gas money to ride out to the trails or take a day off to spend a couple days down in Mexico. Long term. And I'd love the time to go bring the family out camping so we can all kind of enjoy the stuff that we like to do together. Financial freedom, really. To...

Be able to only work if I choose to, not out of necessity, and have the ability to do some traveling and enjoy time with my wife and family and not...

not worry about where the money's coming from. Courtney, does that resonate? I didn't hear the long-term rich life for you. Yeah, I'd say we're on the same page for the long-term one. It's like, have that nice little cushion of money that we're like, okay, cool. We can live off of this and not be staring at a bank account and go do whatever we want to do.

So that we're on the same page. Yeah. Courtney, I'm going to ask you to walk me through these numbers. Let's start off with the net worth section. First of all, without looking at it, how much money do you think you have, Courtney?

Oh, do we like... Okay, here's a question that Alex always asks. I'm like, uh... Well, that's okay. Let's break it down. No need to feel nervous. We're going to take it step by step. Okay. So let's start off with how much do you think you have in savings? In savings? Okay, so I took a quick peek at it. It said $10,000. How about investments? Let's see. My Roth has $13,000 the last time I checked. And then Maggie's fund has...

I don't know, probably like $1,200 or something right now. The stocks have been dropping. How about your assets? How much would those be worth? Like Alex's cars and motorcycles and stuff? This is going to be a ballpark. Let's just say $28,000. Okay, $28,000. Anything else? Do you have a car or anything like that you want to add in there? Oh, I didn't think about the Lexus. I have no clue how much that's worth.

$35,000. $35,000. Let's say $30,000 just to keep it even. And how about how much debt do you owe? Okay, so it's $107,000 on my loan. And then the car is, I think, at $22,000. So $129,000. So let's say $130,000. Courtney, how do you feel about that? I mean, I don't know. The assets are kind of just like, eh, whatever. That's going to change...

Depending on what the market is. So, I mean, that's cool. But if nobody's buying motorcycles, then that's worth dog shit. So it's $45,000 worth of assets. That's money in the bank. Now we would need to sell it. We might incur some transaction fees, et cetera.

But that's not nothing and it's not eh. And in fact, I don't want you to use that eh word anymore because we don't use that when we talk about money. We're going to get more precise with our language. You have $45,000 worth of assets. The fact that the two of you are arguing over groceries does not make sense when you have $45,000 worth of assets. Would you agree? Yeah. All right. Great work. Let's take a look at your income.

How much do you make gross? That's like a funky one. So I took the last four months and averaged that out. So it came to 5,000 gross. Good. 4,000 a month for Alex, 5,000 a month for Courtney. Let's take a look at your expenses. So the fixed costs, let's walk through it here. Your rent is 4,100 a month. What do you think about that? It's high. Okay.

Yeah. But also worth it. I don't look at that and think like, bad move. I'm happy in this house. What do you think, Alex? I think it's high. It's much higher than anything I've ever paid. But I looked really hard. And we live in Orange County. And we work here.

And, you know, we had some criteria and I mean, we weren't going to get into anything on free grant. Can I point something out to you both? I think that

The place you live in, I'm sure, is very nice. I know that Orange County is incredibly expensive. And it's totally unfair, especially to young couples or single people trying to make it. It's impossibly expensive. That's one of the reasons I'm such a fierce advocate for building way more housing. Apartments, duplexes, quad, everything. We need more options. But I don't think you have applied any standards for...

finances when it comes to buying or renting this place. So you had your criteria. It was the yard and the washer dryer. Those are fine, fine criteria. But what was your financial criteria? Under $3,000 is what we initially talked about. First of all, where'd that number come from? And second of all, you're paying $4,100 a month. Right. So what does it matter? Before we started looking, so let's try to keep it under $3,000.

And then we started looking. You said that, right, Alex? We agreed on that. Okay, but who came up with that number? Me. And then when you went and found this place, what happened? Who was the one who said, let's stretch it, let's do this place? Me. You wanted to stretch it? Yes. Why? Well, I was the one up here a portion of the week looking at places and shopping for rentals and quickly found that $3,000 wasn't going to get us

even in a decent neighborhood. Yeah. You know? And let alone a garage. Aha. A garage. For the four or five motorcycles. Yes. Yes. Courtney, why are you smiling? Look at that smile on your face. Calling him out. You know...

I mean, I enjoy a good call out as much as anybody. Trust me, you listen to my podcast. I love it. But this is really serious. This is your finances, right? Like I'm not, my goal is not to just jab each of you and put up the points on the board. I really want to help you come up with a shared rich life vision. Thank you. Okay. You had criteria for a garage. You had criteria for the washer and dryer. But the fact of the matter is that a good guideline is,

for housing costs is to keep it below 28% of your gross income. Now, you all live in a very high cost of living area. So we can stretch that. We can stretch it to 32, maybe even 33. And if you had no debt, I might even push it a little bit higher. But do you know how much your percentage is right now?

Would that be 60? 45% of gross. No, well, you just came up with that number arbitrarily. 45%. And let me tell you something. Look at the conscious spending plan. Look at it. Do you see your entire fixed cost category? What is the number that I typically recommend people spend for all of their fixed costs as a percentage of take-home pay? What's that number?

45? 50 to 60% is what I recommend. Okay. Your number is what? Is that the 147? Nope. It's two to the right of that. 91. 91% of your take-home is being spent on your fixed costs. You see why we're stressed? Two things I want to point out here. First, notice how Alex is the perfect example of letting the tail wag the financial dog.

Let me explain. He bought a bunch of motorcycles and now he has to spend literally tens of thousands of dollars more on rent just to get a big enough garage to house them. Have you heard this phrase? The things you own end up owning you. That's what's happening here. Five motorcycles means you need a big garage. If you live in an expensive neighborhood, that means expensive groceries and repair people. An expensive house means extremely high phantom costs for repairs and maintenance.

Now listen, it's fine to buy really nice things, but you have to factor in all the costs, the time and the money and the mental overhead. Because if you don't, these inanimate things will start to own you. And second, this one has really been on my mind. I don't really get the sense that Courtney is taking this seriously. The comment she just made about me calling him out. I mean, it's funny, I guess.

But you just discovered you're spending way, way too much. You're losing money every month. It's not that funny. I think there's a time and a place for jokes. And there's a time to face reality. And even in these dire circumstances, perhaps especially in them, Courtney continues to evade and joke and distract from really taking an honest assessment of what is going on.

This is not a good sign. We did this with the best of intentions. And I think that, you know, we are, we're in a great neighborhood and a great house. That's real important to us. We're close to your folks and we don't, we don't have to pay for any childcare, which is huge. We're definitely saving money there. I'm happy about the house. I'm not happy about the amount of money we're spending. Um, I mean, we, we just, we got to make more money. Yeah.

Yep. But we can do that. Courtney, hold on. Before you go and agree and go down the rabbit hole of that, ask him, is that our only option? Do you see any other options? Yeah. Do you? Yeah. Yeah, definitely. It takes some sacrifice, but I think if we could, I mean, if you wanted to get crazy, we could move into your folks' house. We can move into a cheaper place. Good. Pause there.

Pause there. Now, Alex, toss it back to Courtney because you're not the solution haver in this relationship. You're just a partner. So why don't we play a game called bounce back? You bounce it back to her. She bounces it back to you. And the two of you get them all out on the table. Go ahead. Okay. Do you have any ideas? I mean, one that I'm not excited about, but a roommate. Okay. Bounce it back. Your turn. We could make more money. Bounce it back. Okay. Roommate move out.

Yeah. What was the other? Make more money. I think that's all I can really think of. Bounce it back. Okay. Back to you. This is more of a Band-Aid solution, but I could sell some stuff. Okay. Like what? Sell motorcycles. All right. And Courtney, if he sold those motorcycles, are you curious how much you two could get for those? Yeah. Yeah. Why don't you ask him? Yeah. How much would that be?

I want to preface with saying keep the one you use. Sell the 500, sell the other one, and sell the pink one. 10 grand quick. And slow? 12. Nice work. First of all, how did that feel to do that bounce back? That was nice. I like that. Teamwork-y. In order to go forward together, you've got to start building these little rituals. Sometimes it's as simple as

changing the dynamic of the way that you talk about these things. It was about to go into a rabbit hole of like, well, the only way we can do this is earn more money. And so we got to earn more money. Well, why haven't we already done? Right. You guys already know you want to earn more money. Fantastic. Check. What are the other options? So from having that bounce back conversation, any of those sound appealing to you? Earn more money. Okay. Check. You're going to do that. What else?

For me, the only thing at this point I'd be willing to do is to sell some stuff. That'll get you 10 grand. How long will that extend your finances? It's just a band-aid. It'll take you like one month, basically. That's how far it'll get you. Your expenses are over $6,000 a month. So what happens? Right now you're drawing into savings. Is that correct?

Yes. Okay. So how long can you go? Six months. Maybe less. Maybe less. Depends on the months. What happens when you run out of money? Start selling stuff. That already includes selling stuff. You don't have that much to sell. Move into mom and dad's house or a trailer or a studio and try to not murder each other. Do you all realize how close you are to that scenario?

Pretty close. Denial. I'm in denial. You two are spending 91% of your take home on your fixed costs. I recommend people spend no more than 60%. And that's at the high end. What do you think that my suggestion would be? Move. Immediately. You are months away from running out of money. Months.

and we have not even factored in your debt payments, if those were to turn on tomorrow, we're talking about shrinking how long you can afford to be here. We're probably not even capturing all your true expenses. There are a lot of expenses people forget about. The motorcycle expenses were not on there. Yeah. So you are months away from being completely out of money. I think moving into your folks' house is the only option.

Yeah, I mean, so Rami, I do have a question though, because I mean... I'll answer your question, but he just said something very profound. I know, yeah. Can you please react to the huge elephant in the room instead of distracting and asking me an unrelated question? Sure. I mean, yeah, moving into my folks, I don't know if that's an option. Well, assuming that was an option, it's just good. Assuming it is an option, would you be down to do that?

Oh, man. I mean, yeah. I mean, it would save us $3,500 a month. It'd save us probably closer to $5,000 a month. Yeah. I mean, there's part of me that would love that, part of me that would hate it, but...

Well, how quickly could we get out of debt? This is an amazing conversation. First of all, Alex, amazing job asking that question. Assuming that it is an option, would you be willing to do that? That was masterful. I just want to take a second to commend you on that. Courtney is kind of going through things as she's talking out loud. I can hear that, Courtney. That's okay. This is a big potential change that you're considering. Courtney just said,

Yeah, I wouldn't love it, but I would be willing to do it. Can we take a second for both of you to acknowledge how far the two of you have just come? It's really important to do this. Yeah. Try it. Go ahead. Good job. Good job. Yay. Having tough conversations.

I do think that there are a few moments in these conversations that are so important. I don't want to just skip over it into the logistics because the logistics are minor details. You're going to figure that out. But the feeling of connection that the two of you are creating with each other, that is teamwork. That is creating a shared trust, which will lead to a shared vision of a rich life. You are paying too much for your rent by a huge, huge percentage.

And the fact of the matter is with your income, you cannot afford to live where you're living. You cannot. And I hope things change. I hope your income goes way up because I would like for you to be living beneath your means and be able to pay this debt off aggressively and to start investing. But right now you have put yourself in a situation where you cannot afford to live here and you see it because it's training your savings every single month. What would it mean to be able to

live with your parents for some amount of time, financially speaking? Well, I feel like it would give us a, it'd be a great opportunity for us to start piling away some money and then deciding what we want to do with it, whether it's, you know, throw it at debt or invest or whatever. It would, it would take the pressure off of, you know, the financial stress that we are both have been experiencing. How does that strike you?

I mean, I like having my own space. It would be cramped. It's more in that aspect of it. And then just like the emotional component again of like, I think I like the visual that you have of yourself where you're like, oh, 30s and living back at mom and dad's house. The whole being 30 and living at your folks house that...

With that comes the implication of somebody who doesn't have their shit together, who... Our reasons for being 30 and moving back in with your folks would be for us to create a bright, wealthy future for ourselves, not to couch surf and mooch off of your folks. Right. It's completely different. Yeah. Completely different.

It's to do a responsible thing and pay off some debt and save some money. Not because we're in between jobs for the eighth month in a row and we have a drug problem. It's different. What would we accomplish by moving into your folks' house? Well, yeah. I mean, saving a bunch of money. Do you think we'd be taking advantage of your parents?

My mom would say no, my dad maybe. I mean, I did not take advantage. I just think that my mom would be excited about it. My dad wouldn't. Well, I mean, I get that 100%. Yeah. I wouldn't be excited if I was your dad either. I'm not excited to live with your dad. Keep going, Alex. You're on the right track here. But do you think it'd be beneficial...

for us as a family and for our future if we made, with your parents' help, some major sacrifices right now? Yeah, possibly. It's yes. I could see that. I think where I'm just struggling with having a full-blown yes to this answer is that I... Oh, I'm not asking for a yes or a no. No. We're just talking it out. Right. But I just think for it to be in full agreement of what you're saying, like...

just strictly numbers, that's a no-brainer. No duh. But then in the nuances of things and relationships and that kind of stuff, that gets it to be a little hairy. It's your money. It's up to you what your risk tolerance is. But you've got $15,000 in savings. That is basically two months of expenses.

That is as red flag as it gets for me. If I was down to two months of expenses, I would be making drastic moves. Now, it's easy for me to say I'm not the one who would have to break the lease, move in with my parents, change everything, explain it to a lot of people that I'm living with my parents in my 30s. But that's also part of the reason that you come to somebody like me. So you either make tough choices now or you sort of meander along for the next 40 years.

You don't have to make as tough choices, but you never actually get to do the things you want to do. Which do you think you would look back on and regret? I'd probably be pissed at myself right now. I don't know what will happen with Alex and Courtney. What I know is we started talking about Trader Joe's ice cream today. And in one conversation, we found out that Alex and Courtney are close to going completely broke. They have two months of living expenses and it's going fast.

You know, when it comes to money, we often get fixated on these $3 questions instead of asking the $30,000 questions, the ones that are really important. And part of the reason is that's what we know. Part of the reason is that's where we feel comfortable. But that's not always the right move. For me, what's even more worrying is that Courtney has developed a habit of evading the real issues, not just with Alex, not just with me, but worst of all, herself.

You've heard me say that a rich life means being honest, honest with yourself and honest with the people around you. If Courtney can't be honest with herself about the severity of their situation, it's going to be difficult to actually change. But what's amazing here is that they actually have a magic option that almost nobody else has. They can move in with her parents.

Now, I understand why it might be difficult to fathom, but if that could transform their finances and give them the support they need to get back on their feet, I would encourage it. We all need a little help sometimes. Now, I did get a follow-up message from Alex and Courtney. Before I read it to you, a quick reminder that you can watch this episode on YouTube to pick up some of the subtle cues in their body language. Just search for Ramit Sethi on YouTube.

And if you are listening to this and you are ready to make a change with your money, you can join me in my money coaching program where I answer questions live every month. And you can join the community of other people who will hold you accountable as you take control of your money. To join, go to IWT.com slash money coaching. Here's a message I got after our conversation. Courtney wrote,

I learned that it's best to be honest with myself and Alex with spending and that he responds better when I am. I was surprised by how quickly we were able to calmly communicate and work together as a team over finances. Alex said, I learned that our current financial situation is not something that we can maintain without serious changes and housing is too large of an expense for our budget.

On housing, we are crunching the numbers on what we can afford with a house and plan to move when our lease is up. We are also working on other ways to earn more and save. We are subletting my office space, which would save us $800 a month. Alex is looking for a job that would pay more. And I, Courtney, am focusing on my high price point services in my business.

I want to thank Alex and Courtney for sharing your story. I want to thank you for your candor. It's not easy to come on and have a conversation like this where you're sharing everything. And I know that all of our listeners and YouTube viewers appreciate you sharing your story with us. I know I do. I'm Ramit Sethi. Thank you very much.

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.