Episode 229. “I’m almost 50 and have nothing to show for my life”

Christine (47) and Thad (57) have been together for more than six years, but instead of building wealth, they’re buried under nearly $340,000 of debt.

Christine, the self-appointed “CFO,” is exhausted from tracking every bill, while Thad avoids the details and spends freely. Their conflicting money mindsets (Christine craving stability, Thad living for the moment) have stalled their big dreams like buying a home or taking Rich Life vacations that Christine longs for. With almost no savings and retirement looming, Christine fears she’s approaching 50 with nothing to show for her hard work, while Thad insists a single plan will solve everything.

Can Ramit help them break the cycle of avoidance and control, align their priorities, and finally start acting like teammates?

In this episode we uncover:

Why Christine feels she’s approaching 50 with “nothing to show” for her life
Thad’s $17,000 student loan that ballooned up to $125,000
How Christine became the household “CFO” while Thad continues to avoid responsibility
Their real numbers—and why Christine feels so stressed 
Christine’s frustration over micromanaging bills
Thad’s upbringing in poverty
The invisible power of shame and fear, and why they can’t see what’s right in front of them financially
Christine’s childhood lessons from parents who bought an unaffordable home
Thad’s stark admission: if nothing changes, he’ll be homeless

Chapters:

(00:00:00) When a worrier and an avoider meet…

(00:02:59) “We have a plan… don’t we?”

(00:15:52) “Where is all the money going?”

(00:19:54) Ramit breaks down their numbers

(00:33:46) “I never expected to live past 30”

(00:48:30) “I wish my dad was able to say no”

(00:56:33) “I don’t believe he’ll follow through”

(01:05:11) “We need to be playing way bigger”

(01:22:38) “I don’t feel like I have the power”

(01:36:54) Where are they now? Christine and Thad’s follow-ups

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Transcript 

Download the full transcript PDF 

[00:00:04] Christine: I worry about our lack of retirement accounts, and I worry about our lack of savings. Since my savings account is at $101, we know I’m not saving.

[00:00:13] Thad: I owe $125,000 to student loans on $17,000 principal. The rest is interest. We have been planning stuff. We’re making a plan–

[00:00:28] Ramit: Thad, you don’t have a plan.

[00:00:30] Thad: I’m 57 years old and I’m only now on this point getting my finances and my stuff in order in life.

[00:00:37] Christine: I ask him the same thing, why he gets cash out, and I think it’s so he can hide his spending so that it can’t be tracked.

[00:00:43] Thad: Every dollar I have goes to this household except for the money that I wasted.

[00:00:47] Ramit: This is not fair. You’re not even married.

[00:00:50] Christine: I’m going to be 50 years in three years, and it feels like I have nothing to show for my whole life.

[Narration]

[00:01:18] Ramit: Is it too late? What if you didn’t start saving or investing when you were in your 20s or 30s? Today we’re about to get a look into this pressing question for tens of millions of Americans. In today’s episode, I speak with Christine and Thad. She’s 47. He’s 57, and they do not have nearly enough money saved or invested to retire on time. Each have six figure loans, which creates a toxic mix of frustration and complacency, and even hopelessness.

[00:01:26] They’re also not married, despite being together for over six years, largely because they’re afraid marriage would impact their debt payments. Watch as we unpeel layers of psychological fascinations, especially when we see how their psychology affects their numbers.

[00:01:42] I’m about to preview a few items from Christine and Thad’s conscious spending plan, which breaks down their net worth, income, and where they spend their money. You can download and create your own conscious spending plan or CSP at iwt.com/csp.

[00:01:58] Assets, $0. Investments, $136,496. Savings, $2,612. Debt, $339,000. For a total net worth of negative $199,000. Their combined income is $167,625. Now, this CSP is going to reveal a lot more in the episode, but first, tell me in the comments, when did you start first managing your money in a serious way? What age? Why did you start then? And if you haven’t yet started, that’s okay too. I want to hear from you. Now let’s get into it with Christine and Thad.

[00:02:41] I want to give a shout out to our new Spotify viewers and listeners where we recently started releasing each Spotify episode in video format. And I love seeing all of our new viewers coming in and watching these episodes with real people sharing real numbers from behind closed doors. Big thank you to Spotify for your partnership. If you already listen on Spotify, click over to video. There is nothing like catching these subtle moments and facial expressions that you can’t catch with audio alone.

[Interview]

[00:03:12] Ramit: I understand you’ve been together for over six years. You’ve been living together for most of that time, and you have spent that entire time in debt.

[00:03:22] Christine: Yes, because I’ve spent my entire life in debt.

[00:03:24] Ramit: Got it.

[00:03:25] Christine: But also, my fixed costs are very high, so there isn’t also a whole lot I can do about it. My half of just living expenses are most of my paycheck.

[00:03:37] Thad: Since we’ve been together, I don’t think we’ve occurred any debt. We have both brought debt into the relationship through our big debts. But once we started getting together and once we moved in together, right then at that point, we were matching bill for bill. Anything over that, I didn’t save.

[00:03:55] Ramit: What do you mean? You were matching– what does that mean?

[00:03:58] Thad: So like when we moved in together, we would split the rent. And so I would pay my half. She’d pay her half. When we first started getting together. There was employment issues. One person has made more than the other a little bit, and it’s gone back and forth, but it’s also gone up over that course of the time. So over that course of time, we’ve been working together on the finances, and we really haven’t acquired any debt in the six years.

[00:04:22] Ramit: Has it gotten or worse in six years?

[00:04:24] Thad: It’s gotten better.

[00:04:25] Ramit: Okay. That’s good. Meaning you’ve paid off debt?

[00:04:30] Christine: I think yes and no. We’re responsible for our own debts right now, so I do have credit card debt, and I’ve paid it down, but it’s not going fast. For example, we have actually accumulated some debt, but it’s all been in the service of paying down previous debts.

[00:04:49] I’m just going to throw you under the bus, Thad. He got a master’s degree and didn’t finish paying the last bit of his tuition, but we needed his transcript, and they wouldn’t release it without paying the last bit of tuition, which was like $3,500 or something crazy. So we had to get a personal loan from our credit union in order to pay it, because who has $3,500 just laying around?

[00:05:13] Ramit: Has what the two of you have been doing with money been working?

[00:05:18] Christine: No.

[00:05:18] Thad: No.

[00:05:19] Ramit: Okay, because I’m confused. Because we’ve only been talking a few minutes, and I have gotten multiple contradictory answers. Do you have debt? Yeah, we haven’t accumulated any, but actually we have accumulated some.

[00:05:34] Christine: Mm-hmm.

[00:05:34] Ramit: Is it getting better? It’s getting better, but it’s also getting worse. I’m wondering what the pattern of your answers reveals.

[00:05:44] Christine: I think that Thad often likes to put a very positive spin on things.

[00:05:49] Thad: Yes, I do. I do. I can tell you the big element that’s contributing. I’ll just figure it out myself, whatever we need.

[00:06:00] Christine: The avoider.

[00:06:01] Thad: Avoider, yeah. Try to do it myself and then–

[00:06:04] Ramit: Thad, you’re 57 years old. I feel like if it was going to work, it would’ve worked.

[00:06:08] Thad: I feel that I understand the problem. I think that I’m doing the best that I can. I’m addressing every issue of the problem.

[00:06:18] Ramit: What does that mean specifically?

[00:06:20] Thad: We’re doing everything that we should be doing.

[00:06:23] Ramit: You’re doing it right now, Thad. You’re presenting a positive spin, like, “Oh, it’s been good for the last few years.”

[00:06:31] Thad: No, it’s still crap. They’re still bad. But I’m learning. I’ve learned. Like I open mail now, as before, I never opened mail. So that’s a step. That’s a step up. We talk about this a lot, our dynamic between that. I feel that I attempt to. I’m trying. I’m willing.

[00:06:53] Ramit: You’re not trying right now in this very answer.

[00:06:58] Thad: I don’t know.

[00:07:00] Ramit: I’m getting lost. You guys get lost when you talk about money, right?

[00:07:04] Thad: Yes. Yeah.

[00:07:05] Christine: That’s what I’m trying to tell you. We don’t really have a fight about money because mostly I’m just managing it all and I’m saying do this and it’s not getting done.

[00:07:13] Ramit: Okay. Let’s talk about that.

[00:07:14] Thad: Yeah. That’s our big fight right there. We talk about money on Sundays. We talk about money a lot. We’re doing it now. Right now we’re talking about money. We are always talking about money and I’m there. And you opinion is rare.

[00:07:30] Christine: We are really not talking about money that much, and we are set to have reoccurring conversations on Sundays during our set aside date time. And it doesn’t happen on most Sundays. I guess it’s so frustrating because the money is what we need to deal with.

[00:07:52] Thad: We can’t be fighting about the stuff that we can’t control. And we are talking about it, and we are doing it together.

[00:08:00] Christine: Except that we can control these things and we’re just not, because we’re not talking about them.

[00:08:05] Thad: But we happen to be talking about it right now. We’re talking about it right now.

[00:08:08] Ramit: Can we do this? I’m actually going to flip the script. You’ve clearly thought about it, so I’m actually going to turn it over to you.

[00:08:15] Christine: Oh, geez.

[00:08:16] Ramit: What do you think is the problem, and what do you think is the solution?

[00:08:21] Christine: I’m a worrier, and he is an avoider. And so I worry a lot about our finances, and I worry about our lack of retirement accounts, and I worry about our lack of savings. And he is an avoider, although, true to what he’s saying, he is getting better, but it still is like, why is this mail unopened?

[00:08:40] Recently, a medical bill sat under our counter for $50. Sat there for, I don’t even know how long, two weeks or something, until it got past due. And only then was like, “Look, will you just pay it?” And he logged in and it was paid in three seconds flat. And I was just so irritated. That’s a really common, I think, example of how it goes. Then our normal conversation comes up on Sunday. And I was like, “We already talked about money during the week. We’ve already had our conversation.”

[00:09:11] Ramit: I asked you to describe the problem and then tell me what you think the solution is.

[00:09:16] Christine: Oh, the solution.

[00:09:17] Ramit: Seems you got a bit lost in the story because we didn’t get to the solution. What do you notice about my question and your response?

[00:09:29] Christine: That I’m both frustrated and I don’t know the solution.

[00:09:34] Ramit: Do you think your problem is a 50-dollar medical bill on the counter?

[00:09:38] Christine: No, I don’t.

[00:09:40] Ramit: I think that’s probably a symptom of something much larger. I noticed that you are–

[00:09:49] Christine: A crier? I know.

[00:09:50] Ramit: You’re crying now. Why is that?

[00:09:53] Christine: Because I just find it so frustrating.

[00:09:56] Ramit: Okay. What part do you find  frustrating?

[00:09:58] Christine: I’m going to be 50 years old in three years, and it feels like I have nothing to show for my whole life. I can’t get myself together enough, and neither can Thad. It feels like we just keep doing the same thing where I have to micromanage all of our finances. And that part can be really frustrating because I’m trying to get my own stuff together too. I’m trying to pay down my debt so that we can save more. And I’m trying to put some extra money aside and stuff, but it’s not possible. And then I have to micromanage his finances on top of mine, and that can be very challenging.

[00:10:40] Ramit: It sounds like a lot on your shoulders. Can I suggest a different approach?

[00:10:48] Christine: Sure.

[00:10:49] Ramit: You jumping in to solve the problems is actually part of the problem.

[00:10:56] Christine: Mm-hmm.

[00:10:57] Ramit: And you’re even doing it with me.

[00:10:59] Christine: Okay.

[00:11:01] Thad: When I mentioned that she wants to control things, it turns into a fight. Or not [Inaudible], but she feels like she doesn’t control. So we’ll have a big fight if I mention control or–

[00:11:13] Ramit: Thad, I’ll stipulate, and I will be willing to go out on a limb that Christine will agree that maybe she sometimes has the need to be in control. Christine, would you agree with that?

[00:11:25] Christine: Yes.

[00:11:25] Ramit: When we feel out of control, we will often try to control the smallest things to give us a sense of control in an otherwise uncontrollable world. Christine, how is this striking you?

[00:11:39] Christine: It gets to what Thad says all the time. I just try to control things.

[00:11:45] Ramit: Yeah. Take your time. Take your time.

[Narration]

[00:11:56] Ramit: I want to jump in here because what Christine is feeling is a massive clue. Have you noticed how she communicates? It’s frantic, and I would describe it as controlling. Even here on this show, she seems to try to take over the room. Now, that might seem odd until you realize what this moment means for my guests.

[00:12:19] To get here, they’ve gone through months of prep– applications, calls, filling out a CSP, AV checks, all kinds of stuff. They’ve carved out times from their lives. So for them, this is not just a casual Zoom call. To a lot of guests, they see this as their one shot. So when someone like Christine tries to steer the entire conversation, it’s not random. It’s like walking into a surgeon’s office and then telling them how to operate.

[00:12:44] So I flipped it. I handed her the reins. Okay, Christine, you tell me what the problem is, and then tell me what the solution is. And did you see what happened? She floundered. She brought up an unpaid bill, then jumped straight to, “I’m going to be 50 and have nothing to show for my life.” That’s not a very satisfying answer, especially from someone who wanted to run this conversation.

[00:13:07] And I’m reminded of this classic psychology experiment called the Invisible Gorilla test. People were shown a video of players passing a basketball and asked to count how many times the ball is passed. Now, while they are watching these players pass the ball, a person in a gorilla suit walks directly through the entire scene. Half of the people watching this never even notice the gorilla. Their attention is so locked in that they miss what is obviously in front of their face, and that’s what’s happening here.

[00:13:38] She’s so caught up in her story, her fear, her need for control, that I’m not sure she can see what’s right in front of her. This happens to a lot of us, which is why it is so helpful to get a third-party to talk to. If you find yourself stuck, repeating the same painful story over and over, ask yourself a few questions. If this were happening to someone else, what would I say? When I react the way that I’ve been reacting for so long, am I actually solving anything? Am I trying to control this outcome? Why? Finally, what am I not seeing? Everyone has an Invisible Gorilla in our lives. Sometimes it takes someone else to point it out.

[Interview]

[00:14:20] Ramit: But Thad, what about you? The problem is, what, in one sentence?

[00:14:25] Thad: Communication.

[00:14:28] Ramit: What’s the solution?

[00:14:32] Thad: Clear communication.

[00:14:34] Ramit: Why does she have to ask you to pay the bills, your own bills?

[00:14:37] Thad: Those are my poor life skills. I’m 57 years old, and I’m only now on this point getting my finances and my stuff in order in life.

[00:14:47] Christine: Mm-hmm.

[00:14:48] Ramit: Can I ask Thad the question again? What is the problem and what is the solution in two sentences, please?

[00:14:55] Thad: The problem is lack of clear communication between the two of us and trust in each other.

[00:15:03] Ramit: How do we do it?

[00:15:04] Thad: By going on a podcast and learning how to do it. I’m responsive to the things that we come in with a plan and enacting them. Not just paying bills, but you know–

[00:15:22] Ramit: No.

[00:15:24] Thad: I think I’m doing this stuff what am I not doing that I need to do better?

[00:15:29] Ramit: Okay, so that’s a problem.

[00:15:32] Thad: Yeah.

[00:15:32] Ramit: Thad thinks he’s doing everything that he can. Christine, do you agree or disagree with that?

[00:15:39] Christine: I disagree.

[00:15:41] Ramit: How does that strike both of you, that you may not even understand the problem, much less the solution?

[00:15:45] Christine: Well, I do think that is the problem.

[00:15:51] Ramit: That you don’t understand the problem?

[00:15:53] Christine: I guess. Yes.

[00:15:55] Thad: We have been working together, lock, stock, and barrel as far as what our objectives are and how we achieve those. We have been planning stuff. We’re making a plan going forward.

[00:16:07] Ramit: According to you, you have a plan and it’s working.

[00:16:11] Thad: Christina, do you think we have a plan, and it’s working, albeit not fast enough?

[00:16:16] Christine: I think we have a loose plan, but we have no clear idea how to get there, and we’re clearly not there.

[00:16:23] Ramit: What about the debt?

[00:16:24] Thad: The only debt that I have is my student loans.

[00:16:30] Ramit: What’s the debt payoff date?

[00:16:32] Thad: Never. Who knows? That’s what we’re for.

[00:16:34] Ramit: Okay. Don’t know. And what about retirement? How much do you need for retirement?

[00:16:38] Thad: I have nothing in retirement.

[00:16:39] Ramit: How much do you need for retirement?

[00:16:41] Thad: Oh, I have no idea.

[00:16:42] Ramit: How about how much do you need for an emergency fund?

[00:16:46] Thad: We talk about having $400 minimum so that we can get a rug or this or that or things like that.

[00:16:54] Ramit: No, that’s not an emergency fund. Thad, you don’t have a plan.

[00:16:59] Thad: Okay.

[00:17:01] Ramit: Guys, I really want to help you, but it’s going to be very difficult if you’re not ready to learn. You obviously have some serious financial challenges because you’re in your 40’s, and 50’s, as you put it, broke. Don’t know anything about how much you need for retirement.

[00:17:20] And I want to help, but I can’t help unless you are willing to accept the help. Trust me, you do not just need a budget. And trust me, you do not just need a plan, some magic plan that I’ll come up with. Because if you needed that, you would’ve done it yourself.

[00:17:37] Christine: Mm-hmm.

[00:17:38] Ramit: There’s something much deeper going on here. But what I need from you is to accept that you need help. And right now it feels like every time I ask a question, you’re both resisting me and telling me why actually it’s not that bad.

[Narration]

[00:17:51] Ramit: Let me explain why I’m pushing them so hard right now. Christine and Thad are living in an alternative financial reality, and they don’t even know it. They are in dire danger. But instead of acknowledging it, they’re minimizing and justifying and spinning. They can’t even answer basic questions like, what’s the problem? Or how much do you need to retire? But they’re confident. Confident and wrong. And that’s a very dangerous combination, especially when you are older.

[00:18:19] It’s like their house is burning down and they’re arguing about the paint color in the hallway. You can probably hear it in my voice too. I’m getting less patient because I want them to take advantage of this opportunity and make a change. But first they have to recognize that there’s a major problem. Obviously, it’s not working so far. So my job now is to play detective and find the angle that might have a chance of resonating with them. Let me try.

[Interview]

[00:18:44] Ramit: Okay. I’m going to ask Thad to read off this first box. Thad, can you read off the word in bold and then the number in full next to it for this entire box, please?

[00:18:59] Thad: Assets, zero. Investments, $136,496. Savings is $2,612. Debt is a total of $339,000 and the total net worth is a negative $199,000.

[00:19:29] Ramit: All right. What do you both think of those numbers?

[00:19:32] Thad: The numbers didn’t surprise me because I had an idea what they were. Looking at them is surprising because it’s such a high negative number.

[00:19:42] Ramit: Okay. Christine, what about you?.

[00:19:44] Christine: We have a combined like quarter million dollars in student loans. If you were to pull that out, because I don’t think either of us will ever get our student loans paid off even before we die– I’ve been out of college 25 years and I still owe $180,000. I’m never paying those off, even if I tried really, really hard and put everything into it.

[00:20:04] So it feels like those two student loans are on our back burner a little bit. I’ll pay the minimum and get it done, get that monthly payment made, but I’m not making any efforts to pay it off because I just won’t get to $180,000 before I die, I think. So if you pulled those out, I think our numbers are exactly what I thought they were, and it’s not great. It’s not great picture. That’s for sure.

[00:20:33] Ramit: What does that mean, it’s not great?

[00:20:35] Christine: I’m not surprised that our assets were zero. We have no car and we have no house and we have no business. I do wish our savings was higher, for sure.

[00:20:44] Ramit: Mm-hmm.

[00:20:44] Christine: That’s not even enough for a emergency fund. You know what I mean?

[00:20:49] Ramit: Now, you two are not married, but for the purposes of the CSP, we combine the numbers just for easy math. If we break those numbers apart, the $136,000 in investments, is that Christine?

[00:21:06] Christine: Yeah, I think my part of it is something like 127,000. No, 129,000 was mine.

[00:21:12] Ramit: And of the savings 2,612.

[00:21:15] Christine: Oh, I only have about $150 in savings.

[00:21:18] Ramit: And then the debt, 339,000, how’s that broken out?

[00:21:21] Christine: Like I said, it’s primarily our student loans. He has about 120,000. I have 180,000.

[00:21:28] Ramit: Let’s look at the income. Christine, can you read off your combined gross monthly income please?

[00:21:37] Christine: I can. It is $13,969.

[00:21:41] Ramit: If we combine your income just for easy math, then your household makes $167,625 per year. Did you know that?

[00:21:52] Thad: Yes.

[00:21:53] Christine: We did. Which is why it surprises us that we’re in such financial straits.

[00:21:59] Thad: It has, I guess–

[00:22:00] Ramit: Hold on, hold on, hold on. You all are about to start going off into storyland. Just answer my question. Did you know that you make $167,000 a year combined?

[00:22:09] Thad: Yes.

[00:22:10] Christine: Yes.

[00:22:11] Ramit: That’s interesting because, Christine, you told me at the beginning of this call, “I’m broke, and I don’t make any money.”

[00:22:17] Christine: I don’t, because only part of that’s mine. Only $67,000 of it is mine.

[00:22:22] Ramit: That doesn’t sound broke to me.

[00:22:25] Christine: Yeah. It sure doesn’t. But I don’t ever seem to have any money.

[00:22:29] Ramit: You make $70,000 a year.

[00:22:31] Christine: Not quite, but yeah.

[00:22:33] Ramit: Wow. I’m sorry, $69,465.

[00:22:37] Christine: Do I make that much? I think I make only 67,000, which doesn’t make a difference.

[00:22:42] Ramit: Even in my example, you can’t allow an approximation. You have to make sure that I know it’s less. Why? What does that get you?

[00:22:53] Christine: I don’t know. Some sympathy, I think.

[00:22:55] Ramit: It doesn’t work for me. You’re not getting any sympathy right now.

[00:22:58] Christine: The people listening to this podcast will feel bad for me because they know how little it is.

[00:23:02] Ramit: I don’t think so, Christine.

[00:23:05] Christine: Believe me, I’m way under the average for a person in Arlington.

[00:23:10] Ramit: Would you consider $167,000 a lot of money? What do you think?

[00:23:18] Thad: It’s a lot.

[00:23:19] Ramit: Okay. Christine?

[00:23:21] Christine: I’d say it’s pretty much a lot. Yeah. That part of it is a little like, why do we feel pinched? Although I can look at the numbers and guess where the problems are.

[00:23:30] Ramit: All right. Let’s do the rest. Let’s look at the fixed costs here. Hold on.

[00:23:32] Christine: Mm-hmm.

[00:23:34] Ramit: Wow, I’m surprised. Fixed costs are at 61%. I would not have expected that the way that the two of you talk about money.

[00:23:43] Christine: Right, but you can see the personal breakdowns of the fixed cost where I shoulder about 80% and his is only about 50% of his income because we’re paying exactly half of everything.

[00:23:54] Ramit: Yeah, that’s a major problem.

[00:23:55] Christine: So I feel very stressed.

[00:23:56] Ramit: Let me explain what I’m seeing here. Christine is paying 78% of her take home pay to fixed costs while Thad is paying 50% towards fixed costs. So considering that Christine is making a lot less than Thad, she’s still paying 50% of their rent. Okay, so we’re going to talk about that, fixed cost, but let’s just go through the rest of it. Investments, zero.

[00:24:22] Christine: Mm-hmm.

[00:24:22] Ramit: Savings, what? 3% combined. But I want to point out they’re saving $175 for vacations, $100 for a sewing and improv class, but $0 for an emergency fund.

[00:24:40] Christine: Yes. But could I say–

[00:24:42] Ramit: Don’t explain.

[00:24:43] Christine: Okay, I won’t.

[00:24:44] Ramit: We’re looking at the numbers.

[00:24:45] Christine: Okay. Fair.

[00:24:46] Ramit: 36% combined for guilt-free spending. Christine’s guilt-free spending is 17%. Thad’s spending, 49%. So Thad is spending essentially half of his take home pay on guilt-free spending. What does that guilt free spending money go towards?

[00:25:06] Thad: It’s nothing in particular. It’s the nickel and dime kind of situation. Food, just wasteful spending. I don’t know. Oh, I do have a daughter and so some of that goes towards that, like her teeth and dentist and the costs for school clothes and shoes and–

[00:25:27] Ramit: Okay. Let’s talk about that then. Thad, take us through your spending.

[00:25:34] Thad: Suffice to say–

[00:25:36] Ramit: No, no. I don’t suffice. I want to know what you are spending on.

[00:25:42] Thad: Clothes, shoes, food, and that’s it.

[00:25:46] Ramit: All right. How much are you spending on clothes?

[00:25:50] Thad: $100 a month.

[00:25:54] Ramit: Okay. That’s the first thing you’re mentioning to me. Clothes is $100 a month. You’re spending–

[00:25:58] Thad: Is that right? No. 40 bucks a month.

[00:26:02] Ramit: Oh, it went down.

[00:26:03] Thad: At most.

[00:26:04] Ramit: What’s all that stuff in the background of the videos that I see? What’s your background?

[00:26:08] Thad: Those are the board games. Hobby.

[00:26:11] Ramit: Oh, how much did all those cost?

[00:26:13] Thad: You want to address that one, Christine?

[00:26:16] Christine: A lot, but we haven’t purchased any new games in the last three years.

[00:26:22] Thad: We’re doing the numbers

[00:26:23] Christine: We have cut that off.

[00:26:27] Ramit: You guys ready to give me a real answer instead of trying to deflect?

[00:26:30] Thad: It’s 20 years’ worth of stuff, right?

[00:26:33] Christine: I don’t know. $10,000.

[00:26:35] Thad: $10,000? Not $10,000.

[00:26:37] Christine: I have no idea. In truth, I don’t know. It could be 5,000.

[00:26:41] Thad: Yeah, 5,000 is a better number. 5,000. It’s about 40 bucks, so about $5,000.

[00:26:49] Ramit: Okay. 5 to $10,000 on games.

[00:26:53] Christine: What else are you spending your money on?

[00:26:56] Thad: I’m wasting it. That’s all.

[00:26:58] Ramit: On what?

[00:27:01] Thad: Food, cigars.

[00:27:03] Ramit: How much on cigars?

[00:27:05] Thad: $15 every two days, so 30 bucks a week.

[00:27:12] Ramit: You better redo that math. $15 every two days is not $30 a week.

[00:27:19] Thad: About three times, yeah. It’s about 30, 40 bucks a week on cigars, honestly.

[00:27:25] Ramit: How much is that per month?

[00:27:28] Thad: Let’s say $200.

[00:27:30] Ramit: $200. All right. Fine.

[00:27:31] Thad: Yeah.

[00:27:31] Ramit: Food?

[00:27:35] Thad: $300.

[00:27:35] Ramit: $300 on food. Okay. What do you spend that money on?

[00:27:39] Thad: Eating out, school, eating out at different times.

[00:27:42] Ramit: Eating out at school. And what was the other?

[00:27:44] Thad: I’m a teacher and so I go out for lunches, about $12 a sandwich and a drink, and chips.

[00:27:51] Ramit: Tax, tip?

[00:27:52] Thad: 15 bucks.

[00:27:54] Ramit: Oh.

[00:27:54] Thad: Yeah, no. Of course, tip. Of course. I was waiting for many, many years. Yes, I do tip. So let’s say 20 bucks. About 20 bucks.

[00:28:02] Ramit: You notice which has happened? You said 12 bucks. The real answer is probably 20 or maybe even more.

[00:28:10] Thad: Right.

[00:28:11] Ramit: People who are ashamed of money and who are in debt, they will often use ranges. They’ll say something like, “Oh, it’s like 12 to 15.” It’s actually more like 20, and they feel very, very uncomfortable being honest with how much it is. They always err on the side of less than they are actually spending.

[00:28:34] Thad: Right. Yeah, I do. I do.

[00:28:37] Ramit: You do?

[00:28:38] Thad: Yes.

[00:28:39] Ramit: All right. So how much do you spend per month on eating out?

[00:28:41] Thad: What’d I say? It’s 300 bucks. 300 bucks.

[00:28:45] Ramit: Do you have it on your credit card?

[00:28:47] Thad: I do not.

[00:28:50] Ramit: Where do you spend the money?

[00:28:53] Thad: I get cash.

[00:28:54] Ramit: Why?

[00:28:54] Thad: It’s just an old habit. I don’t know.

[00:29:00] Ramit: I don’t believe that.

[00:29:01] Thad: Because sometimes I’ll lose the card. Like in the last couple of years, I’ve lost the card. I don’t use it.

[00:29:09] Ramit: What the [Bleep] going on right now? This is not believable to me.

[00:29:13] Thad: Right.

[00:29:14] Christine: I ask him the same thing, why he gets cash out, and I think it’s so he can hide his spending so that it can’t be tracked.

[00:29:21] Ramit: I just don’t believe it. I don’t believe that you only spend $300 a month on eating out. I don’t believe that you only spend $40 a month on clothes. The way you’re presenting it, oh, me. Innocent doe. I don’t know where the money’s going. You keep telling me, on one hand, I’m spending a bunch of money, and I’m trying to figure out where, because it’s almost $3,000 per month. How are we getting to 3,000?

[00:29:44] Thad: Okay. Can I say, be fair, one thing?

[00:29:46] Ramit: No. I just want to know the numbers. Where are you getting to $3,000 a month? I can’t help you unless you tell me accurate numbers. The numbers you are telling me are not adding up.

[00:30:00] Thad: That’s it. All right. Hey, can we take a little break for a second?

[00:30:07] Ramit: Sure.

[Narration]

[00:30:15] Ramit: I’m going to be really honest. When Thad asked for a break, I thought he was about to shut this whole thing down and leave. This is a very intimidating environment for my guests. They go through a lot of steps to get here. There are cameras. They’re meeting me for the first time, and they are talking about one of the most intimate topics there is.

[00:30:32] Naturally, it feels really uncomfortable. But I think the discomfort goes deeper than being on a recorded video. With a lot of couples, you’ll notice the long pauses, often the overexplaining, and sometimes the same phrases that they’ve been using with each other for years and years, which suddenly fall flat when there’s a third party involved. But then to my surprise, Thad didn’t leave. Watch what happens.

[Interview]

[00:31:01] Ramit: Thad, the amount you have left at the end of each month with your income is 49% of take-home pay, which is $2,820. And we can’t quite figure out where’s the money going.

[00:31:16] Thad: I had a little discussion and thought about it and broke it down. And I think a lot of it was going to going out and drinking and maybe hanging out with friends and partying and wasting money in that limelight kind of situation.

[00:31:32] Ramit: How much?

[00:31:34] Thad: Whatever was left. I’m being honest with you.

[00:31:38] Ramit: I appreciate that.

[00:31:40] Thad: I said this in the beginning. If I have money in my pocket, I’m spending it. As long as I pay my rent and my food and the bills I got to pay, and I’m meeting my obligation in the relationship, then everything else is mine. 

[00:31:53] Ramit: Thad, did you grow up poor?

[00:31:56] Thad: I grew up very, very poor.

[00:31:59] Ramit: Yeah. What you just said is very typical of people who grew up poor.

[00:32:04] Thad: I know that we overtalk. But again, these are issues that we’ve talked about, and they’ve been walking with for years. Maybe I’m a little vague or that, but I understand the relationship between my money and how I was taught and raised and the habits I have now.

[00:32:21] And it’s been a very long struggle to break those. And the difference between self-awareness and action is a mile apart. It’s hard to be completely open and honest when you can’t be completely open and honest. And about the drinking and the alcohol, Christine and I have been talking about switching from living in the moment and having fun in the moment, which I will always do as opposed to putting money aside and saving it for the future.

[00:32:51] That has always been a balance. And the latter has never been something that I thought about. And now I realize I’m going to reach retirement age. One way or another, I need to be prepared or not. That’s why I’m willing to be as honest as I can here.

[00:33:15] Ramit: I appreciate the honesty. Without you sharing this, the rest of the picture is incomplete. It actually doesn’t make any sense.

[00:33:23] Thad: I know. And I knew that. I’m so sorry. Because I was trying to fix the problem without telling you guys the whole truth.

[00:33:29] Ramit: I appreciate that.

[00:33:29] Thad: And I would say the one thing that I was embarrassed about coming on for the show for was that I owe $125,000 to student loans on $17,000 principal. The rest is interest because I just ignored it for 20 years. And you’re like, “If such a minor thing–” At this stage in life I could pay that. But to have $17,000 balloon to 120, you’re like–

[00:33:59] Ramit: But isn’t there some relief in being able to just shine a light on our deepest shame and just to say like, “Yeah, I didn’t know. And also I was negligent and irresponsible, and here I am. What’s done is done. I’m coming here because I want to understand why I behave the way I do. It’s not okay anymore. I can tell my wife is not okay with it anymore. She’s been crying for almost an hour. And I want something better for the next chapter of my life. So I put myself in your hands. Show me some ways to get there.”

[00:34:31] That’s how I approach this. You tell me you have struggles with alcohol and student debt. Okay. Everybody’s got struggles. I appreciate the honesty. I hope you can see I’m not here to judge. It brings that fuller light, and now we can really start to talk about what is truly going on here and what can we do about it. So thank you.

[Narration]

[00:34:58] Ramit: I was surprised to hear he was keeping a secret, and I don’t mind secrets. I don’t even mind being lied to on this show. It’s part of my job. But usually people tell me the truth about the broad strokes. What I think we can see here is the powerful grip of shame. You and I can deal with being angry or sad or even resentful, but shame is a very, very powerful emotion. It’s often like emotional quicksand.

[00:35:23] When we feel ashamed, it’s difficult to even talk about it, much less come up with a solution. That’s why it’s so important to get help. I also want to point out that I’m very sensitive to addiction issues. It’s not my place to ask anything here, nor am I qualified to. I don’t know if he spent 1,500 bucks or $150,000 on drinking in the last 10 years. I heard him. I acknowledged it. I filed it away and moved on. What matters is that he admitted it and now we can move on to what’s next. Because if he wants any shot at building a real financial future, this is where it’s going to start.

[Interview]

[00:36:00] Ramit: What do you remember your family saying about money?

[00:36:04] Thad: It was an active situation. My mom was a single mother for a long time. I was really bad at money. At a very young age, I realized that at the end of the week it was going to be gone. Ill tell you, we would chase checks. We’d buy food, spend the money, go to a movie, and then for that entire week, have to go to the grocery store to get cash to put in the bank to cover the check from the previous day.

[00:36:35] She would chase a check all week. And I realized we’re sacrificing a moment of play on a Sunday to have fun. But I see we don’t have the money for it, and we’re doing a lot of work to cover that.

[00:36:52] Ramit: How did you know you were poor?

[00:36:55] Thad: I knew I was poor because of friends and expansive life. So I was babysitting, and I’d see how other people lived. Also, my mom had this whole set of friends. And around eight or nine, they said, “Hey, you have to start taking care of your kids more, your son more. Be more responsible.” So it was an ongoing kind of narrative throughout our neighborhood.

[00:37:21] Even in our very poor neighborhood, my house was the dirtiest of all the houses. And I could never in my entire life have people over for– never had friends over, never had girlfriends over. Have to hide that shame. And I will say the biggest thing that impacts me, that I think impacts me the most is, at the end of my grandmother’s life, she had a whole inheritance.

[00:37:47] It was just an ugly scene to watch that play out. My mom who has resentments her whole life doesn’t want to spend a dime because it’s detracting from her inheritance, not telling people things. And I think in the end, grandma passed, and she had all this money. Didn’t reveal it. When I was a kid, I said, “You know what? Buy me PlayStation 2, and I’m gone.” That’s all I wanted. You have $200,000.

[00:38:15] Ramit: What did you mom do with the $200,000?

[00:38:18] Thad: She would buy 1,000-dollar chairs. We had these four chairs. They were $1,000 each. And look, we had a house that had dog poop in the kitchen. And I’m like, “You’re going to buy chairs that cost $4,000 to put them in a house that has dog poop in it.” It’s that God-sized hole that you fill with things. It never gets filled. But she just kept spending and spending and spending, trying to fill it.

[00:38:47] Ramit: Do you any similarities with your mom spending and your spending?

[00:38:51] Thad: Exactly. I’ve lived paralleled lives, and that’s why I’m here. At each station in my life, I would look at where my mom was and see the mistakes that I’ve done, that I’m falling into her path there. And I don’t want to go down the path, but my path, there’s no other option out there. Even if we sit down here today and come up and I understand what the plan is, and we have a budget, and I’m willing to work it all, there’s just the amount of time between now and that.

[00:39:16] Ramit: Mm-hmm. What lessons do you think you took away from your childhood as it relates to money?

[00:39:24] Thad: I don’t value it much. It comes. It goes. I waste it. I spend it. I drop it.

[00:39:30] Ramit: And so you spend it. You waste it. You enjoy it. And?

[00:39:34] Thad: Go get more. That’s it.

[00:39:36] Ramit: Right. Basically no big deal.

[00:39:40] Thad: Yeah.

[00:39:41] Ramit: I think that’s a pretty accurate lesson you took away from your child– look at your mom.

[00:39:45] Thad: Yeah, yeah.

[00:39:46] Ramit: She would spend it, check chase, do all this stuff. And if we take an honest look at her situation right now, it’s actually okay.

[00:39:58] Thad: I would tell you my childhood, I took away– is I never expected to live past the age of 30.

[00:40:02] Ramit: Your dad died at 30?

[00:40:03] Thad: My dad was never in the picture. No one in my family that I know died at 30. I just know that everyone died. It was just an arbitrary number. In my neighborhood, just many, many people died.

[00:40:16] Ramit: Why do they all die?

[00:40:16] Thad: In the ’80s, a lot of drugs like crack hit our neighborhood.

[00:40:22] Ramit: Where did you grow up?

[00:40:23] Thad: Pittsburgh.

[00:40:24] Ramit: Okay. Wow.

[00:40:26] Thad: I went to college, and I came back, and it was devastated by that epidemic. But even prior to that, not having a community where– dads weren’t present. The family structure wasn’t there. Understanding that it existed. We just didn’t have it.

[00:40:44] Ramit: This is really opening my eyes to you today with money when you take me back. And I think it’s a gift you’re giving me. A lot of people cannot imagine what it is like to grow up in a neighborhood where you just don’t see a lot of older men. They’re just not around. How many people from the time you were young to the time you were 30, do you know in your neighborhood that died?

[00:41:08] Thad: I literally was telling my daughter about this because I’m raising her and she’s a teenager. I was going over, and I think that two thirds of the people I grew with, if not 85% of them are dead or in prison. I’m one of the few that I know made it out of there.

[00:41:28] Christine: I think it seems somewhat apparent, like why he, I don’t know, takes the actions he takes, I guess. Spends the money and doesn’t save it. I too did not have a good role model for that, and you can see where it’s gotten me. I can appreciate when he’s growing up with a single mom in a poor neighborhood. If people around him are not living to an old age, why would you prepare for that?

[00:41:54] Thad: I’ve known these mistakes. I’ve been living with this and battling this lack of money my entire life. And I’ve made some strides, but just when you’re aware of it, that makes it frustrating. And I have to break that habit of if I have it in my pocket, then I can spend it.

[00:42:13] Ramit: Or what?

[00:42:16] Thad: Or I’ll continue to be in debt.

[00:42:19] Ramit: Have you ever thought about it, really thought about it? If I keep going on the path that I’m going on, I’m already in my late 50s–

[00:42:27] Thad: I am homeless under a bridge.

[00:42:32] Ramit: Are you being for real?

[00:42:34] Thad: I’m being 100% honest. I would be homeless under a bridge, still trying to do standup comedy at the age of 70. And I’m a dreamer, so I still think for some reason I’m going to make it big somehow.

[Narration]

[00:42:47] Ramit: My jaw was on the floor listening to that. It’s one thing to hear someone say that they grew up poor. It’s another thing to hear the vivid details of what that really means, like never inviting a friend over or never expecting to live past 30. Most of us have no idea how deeply socioeconomic class shapes our life and even what we believe is possible.

[00:43:14] And this is what people mean when they use that word privilege. You know that word that everybody scoffs at? Think about the privilege you have. If you grew up in a family where someone said, “Of course, you’re going to college.” That’s privilege. If your parents took you to visit a campus when you were a kid and say, “Hey, one day you can go here,” that’s privilege.

[00:43:31] In fact, that’s what my parents did. They told my sisters, “You can go here to UC, Berkeley.” They told me, “You can go to Stanford.” And because they said it, because they showed it to us, it suddenly felt normal and possible. And that’s actually where we went.

[00:43:46] Now imagine the opposite. Imagine growing up in a world where according to your eyes, nobody really lives past 30, where you literally don’t see old people around you because they’re either bedridden or they all died. How could you possibly even think of planning for retirement when you don’t even believe you’ll make it there? This is why models matter. It’s what people mean when they say representation matters. If you don’t see it, it doesn’t even feel possible.

[00:44:15] And here’s the takeaway, especially for parents watching this show right now. If you’re raising kids, think about the possibilities that you can open up for them. It could be college. It could be money. It could be anything. I remember my sister once competed in a power lifting event and she brought her daughter to the competition.

[00:44:34] Imagine being a young girl and seeing your mom, who’s a doctor, lifting more weight than most people can imagine. What do you think that does for a young girl’s sense of possibility? That is the gift you can give your loved ones, your kids, your family, even your friends, exposing them to new models, especially you living a Rich Life and being competent with money. Let them see what’s possible.

[Interview]

[00:45:01] Ramit: Christine.

[00:45:02] Christine: Yes.

[00:45:03] Ramit: Take me back to your childhood.

[00:45:05] Christine: Oh boy. Thank God, I have another tissue right here.

[00:45:08] Ramit: Okay. Tell me.

[00:45:09] Christine: I would say that we were lower middle class. I grew up in a suburb of Cleveland, so basically what happened when I was like 12-ish, my parents decided we were going to move. So my mom says, “Oh, we drive into this new development.” She wants to get a house in this development, and it’s going to have to be constructed from scratch.

[00:45:27] Of course, it’s a brand new development. And so they had some model homes there, but they couldn’t afford the model homes. So they literally had to make a smaller version of the model. It’s been a while. But they had to make like a steeper roof because it was somehow less material. All the garages were supposed to be side-facing. They had to get a waiver to make a front-facing garage. So they had to pour less concrete, and that cost us less.

[00:45:50] Ramit: So happened?

[00:45:52] Christine: So basically the house took all our money, and my dad still doesn’t have money to this moment. He still hasn’t paid off the house. It’s been 35 years.

[00:46:01] Ramit: What did you learn from that as a 12-year-old?

[00:46:05] Christine: That I wish my dad could’ve said no sometimes.

[00:46:08] Ramit: Oh, okay.

[00:46:09] Christine: I did find out years later, more recently actually, that my brother and I went to private school for first grade through 12th grade, and they had to take out loans to pay for it. And so those kind of things frustrate me when I’m so much in student loan debt where you’re like, couldn’t you go save some of that money to help me pay for my school or something?

[00:46:30] Ramit: Did you ever talk to them about that?

[00:46:33] Christine: I have talked to them a lot about it, and it just was the decision they made. They felt very strongly that I have a catholic school education.

[00:46:45] Ramit: It’s really interesting. I’ve spoken to several parents on this podcast who insist on sending their kids to private school.

[00:46:50] Christine: That was their Rich Life, I guess, sending me to a private school. And I have a younger brother too, so we both went. But there were other things too because, well, you know how much I own student loans. So a lot of it was my undergrad. I had also gotten a half ride to Eastern Michigan. But I didn’t want to go to Eastern Michigan. I didn’t think it was as great. I went to Duquesne. I loved it, and I wanted to go there. But it was more expensive.

[00:47:15] Ramit: How did you decide not to go to the school where you had half tuition paid for?

[00:47:19] Christine: In truth, I was a stupid 18-year-old. I didn’t understand, and everyone around me– because this was almost 30 years ago and nobody was talking about student loans at that time like we are now. So my dad was like, “Oh yeah, it’s fine. That’s cool.” But then I have been stuck with the burden of the student loan since then. You know what I mean? It’s just very frustrating, I think.

[00:47:40] Ramit: Who are you frustrated at?

[00:47:46] Christine: I think, in truth, mostly my parents. They spent a lot of my childhood robbing Peter to pay Paul. Electricity would get turned off. Our cars would break down side of the road all the time.

[00:47:59] Ramit: Wow.

[00:48:00] Christine: It was always like we were in debt and never could get out of it. I think my dad struggled to ask for help as well, and so would get himself into maybe a financial situation, but didn’t know how to get himself out and would think he had to do it.

[00:48:21] Ramit: Hmm. What lessons did you grow up with relating to money that you bring to this relationship?

[00:48:30] Christine: Woo. That is actually a really tough one because I have done everything I possibly can to be different than my parents, and I still feel like I’m in the exact same spot of not being able to get ahead. Despite my [Inaudible] savings account, it’s certainly is more than they have. My investment accounts are more than they have. I’m aiming for financial–

[00:48:58] Ramit: I’m not asking you to compare yourself to your parents. I’m asking–

[00:49:00] Christine: I don’t know. I don’t I learned any lessons from them.

[00:49:03] Ramit: Christine, I’m not asking you to compare yourself to your parents. I’m asking what lessons did you observe or absorb that you are now bringing to this relationship?

[00:49:16] Thad: I think that you have taken the lessons and internalized them into a fear of yours and operate from that. That’s what I think. I think that you see their life, the choices they made, and you prescribe your own feeling to that. And then that’s fearful for you kind of thing.

[00:49:38] Ramit: You operate from fear. Do you agree, Christine, or disagree?

[00:49:40] Christine: Oh, I agree 100%.

[00:49:42] Ramit: Okay. That’s profound. Good point, Thad. I always say the partner knows best. If you are stuck, sometimes just ask your partner. They know. They’ve been watching it for all the years. Christine, how come that didn’t come up when I just asked you?

[00:49:58] Christine: That is what I was saying. I was trying to be different from my parents because I’m afraid of being like them.

[00:50:03] Ramit: But you’re still afraid today.

[00:50:06] Christine: Right, because we’re not financially stable.

[00:50:08] Ramit: Ah, so if you were financially stable, you would not be afraid. Is that what you’re saying?

[00:50:12] Christine: That’s correct.

[00:50:13] Ramit: Okay. And have you taken specific steps to become financially stable?

[00:50:17] Christine: I’ve tried.

[00:50:18] Ramit: Oh, that huh.

[00:50:20] Christine: It’s not been successful, but I have tried.

[00:50:23] Ramit: How do you feel about your student loan?

[00:50:24] Christine: Indifferent. I don’t think there’s any hope of paying it off before I die, so I just am not making a very concerted effort.

[00:50:31] Ramit: You have $180,000.

[00:50:33] Christine: Yeah, but what am I supposed to do about that? I only make $67,000 a year.

[00:50:38] Ramit: I’m not talking about solution. I’m talking about how do you feel about that debt?

[00:50:42] Christine: I did not understand the ramifications of my decision. I think people had told me I would make enough money to pay it, but the truth was I didn’t. And I do feel indifferent because I have no interest in really making any effort to pay my student loan. I will pay the monthly payment, but I’m not going to make extra payments when it’s never going to get paid off.

[00:51:02] Ramit: And Thad, how do you feel about your 120,000-dollar loan in a word or two?

[00:51:07] Thad: Shameful and overwhelmed.

[00:51:10] Ramit: Yeah. That’s more common.

[00:51:11] Christine: I get that, but what am I supposed to do? It’s been around for 25 years. It’s not getting paid. I’m doing my best, but I have other debt that I can actually pay off and make a difference in my life. The student loan, I just–

[00:51:27] Thad: But it’s something that we talk about a lot. We feel overwhelmed. We’re not going to be able to pay it. It’s a constant hindrance in our lives. It’s the reason why we can’t get ahead. That’s the narrative that the student loans play in our conversations.

[00:51:45] Ramit: I love that you used the word narrative. I love that because so much of the way that we treat our money is purely a narrative.

[00:51:54] Thad: Yeah.

[00:51:54] Ramit: How old is your daughter?

[00:51:56] Thad: 14.

[00:51:56] Ramit: 14. Remember when she was three, four? It’s all like making up stories. I’m flying on a unicorn, that type of thing. Adults are actually not much different. So much of our relationship with money is essentially a fairytale.

[00:52:14] Christine: Yeah. I see what you’re saying. It’s not making me more interested in paying them.

[Narration]

[00:52:19] Ramit: Hearing how Christine grew up with her parents racking up debt, it’s no surprise that she is caught in the same exact cycle today. And this is the unfortunate reality for millions of Americans. Compound interest can work for you, or it can work against you. In this case, it works against them ballooning into something so overwhelming, they’ve basically just filed it away and they try not to think about it.

[00:52:43] But of course, what does that do? Ignoring it only makes it worse, which is one reason that so many people feel crushed by their loans. The weight is so heavy that they just give up. They stop opening statements. They stop imagining what life could look like without that debt.

[00:53:00] But on this show, we don’t run from what’s uncomfortable. We actually go straight through the fire. So if you are in a similar situation, buried under loans, not even sure how to start, you don’t have to do it alone. In my money coaching program, I show you step by step how to take control of your money, build a plan, and then stick with that plan so you follow through. You can sign up at iwt.com/moneycoaching. Now listen as I push Christine and Thad to face the consequences of years of inaction. See if we can finally create a plan for them.

[Interview]

[00:53:34] Christine: In the next 10 years, of course, I anticipate that Thad is going to retire. And I do worry because I certainly have more of my retirement accounts, but it’s not enough to support us both.

[00:53:47] Ramit: What will happen? Well, we’ve talked about moving to a lower cost area once his daughter’s out of high school.

[00:53:54] Christine: She’s just going to be a freshman and starting in two weeks. So we’ve got four or five years before that could even be a reality. We could go back to one of our two hometowns, Pittsburgh or Cleveland– would, I think, be good choices for us and have family nearby.

[00:54:08] But I think we’re going to have to live in maybe small cramped quarters, still no car, relying on public transportation in areas where that’s not as possible as it is here. I definitely don’t think we’re going to be able to take any vacations. I enjoy to get a pedicure, and I used to get one just once per year on my birthday.

[00:54:27] And we have increased that recently in an effort to have a more Rich Life. I think that those kind of things obviously couldn’t be little splurges anymore. I think we’ll just have to live a tiny, cramped life.

[00:54:41] Ramit: Yeah. Thad, what about you, if nothing changes 10 years from now?

[00:54:48] Thad: I have a little bit of a different view. I’m more optimistic about it. I don’t think that it’s going to be crammed. I still think that somehow know we’ll move to a place that we want to live. Something like the Maine or the Northwest. I think that in four years, when we are out of the high school, the future opens up then. We can do it what we want. I don’t necessarily think that that’s going to be a downward trend.

[00:55:16] Ramit: What about the money part of it?

[00:55:17] Thad: I’m not afraid to not having money.

[00:55:20] Ramit: Just to put another way of looking at it, right now the two of you have a savings of $2,612 total.

[00:55:28] Christine: Mm-hmm.

[00:55:29] Ramit: You have $136,000 invested. If we’re being relatively conservative, maybe you take, I don’t know, $6,000 a year withdrawal from that amount. What are you going to do with $6,000 a year? Nobody can live on that. You don’t own a house, so your housing costs, even if you go somewhere cheaper, still going to exist. Now we’re talking about Social Security.

[00:56:00] And if you know anyone who takes Social Security, it’s not a lot of money. We’re talking poverty line, below poverty line. I guess what I’m trying to get at is like, let’s get really specific here. If nothing changes, the way I see it, there’s no vacations. You are forced to move to a place that you will probably not want to move to, because it by definition will be undesirable. You don’t eat out. You’re literally getting the cheapest on sale bread. That’s what we’re talking about day-to-day. What do you guys think of that?

[00:56:39] Thad: And how should I feel about that being–

[00:56:44] Ramit: I think you should feel extremely terrified.

[00:56:47] Christine: Mm-hmm.

[00:56:49] Ramit: Are you all prepared some big changes, or do we want to make little changes?

[00:56:52] Christine: I personally am prepared to make very big changes.

[00:56:54] Ramit: Okay. Thad?

[00:56:56] Thad: Yes. I’m prepared to make big changes.

[00:56:58] Ramit: Love it. Let’s do it.

[00:56:59] Thad: Can we have the options for little ones too? Just kidding.

[00:57:07] Ramit: Your fixed costs were at 61%, which again is striking to me. Couple of things I want to highlight here. Your car payment/transportation is extremely low. So, what, are you taking the train?

[00:57:23] Thad: I ride my bike.

[00:57:24] Ramit: You ride your bike. Great.

[00:57:26] Christine: We use Metro and bus in other times.

[00:57:29] Ramit: I love public transportation. If you had a car, your numbers would be over 70. Great job. Keep it up. Let’s look at the rest of it. Phone at 170. Whatever. Subscriptions at 207. No way. Drop that.

[00:57:45] Christine: I don’t know. Does NFL Sunday Ticket go?

[00:57:49] Ramit: If you’re asking me, the answer is yes. That should have gone in the first place.

[00:57:50] Christine: No, I was talking about Thad. I’m sorry. Not you, Ramit. Because that actually saves us money by him not going out to watch the game with friends and then eating food.

[00:58:00] Ramit: No, no, no, no, no, no, no, no.

[00:58:01] Christine: Yeah, yeah, yeah.

[00:58:02] Ramit: NFL is gone. A family with $339,000 of debt does not have an NFL subscription. I’m sorry.

[00:58:13] Thad: It is gone. Out of there. All right.

[00:58:15] Christine: It’s because we’re still on this Zoom call, I think.

[00:58:20] Thad: We are here to learn and buy into this. Let’s just do this.

[00:58:24] Ramit: Thank you. Let me put it this way. If you guys are faking it for me, good luck.

[00:58:27] Christine: I’m not, but I’m saying like, I don’t think– I don’t know. I’m being–

[00:58:32] Ramit: Listen. Christine, your need to control is showing up right now.

[00:58:37] Christine: Okay.

[00:58:38] Ramit: What is the new subscription number, please?

[00:58:42] Christine: Yeah, it’s at $0.

[00:58:46] Thad: Okay.

[00:58:48] Christine: It does seem extreme, but yeah, no, we can cut.

[00:58:54] Ramit: Hold on. What seems extreme to me is having $339,000 of debt and almost no savings at age 57. I don’t think you’re prepared for the type of changes you need to make. This is the easiest thing we’re going to do on our whole call. $207, Christine, what’s the indecision here?

[00:59:18] Christine: I don’t know. I actually don’t know.

[00:59:20] Ramit: But it’s you.

[00:59:21] Christine: It just feels like a lot, but okay. Yeah, it’s me. It’s totally me.

[00:59:25] Ramit: I think that you are surprised that Thad is actually participating with money, that he’s actually moving in a direction that would produce a healthier outcome. I think You don’t believe it. I think you think it’s too good to be true. And the minute we hang up this call, it’s going to go back the way it is. You think that by decreasing the amount you have to cut, he might actually follow through. But that’s not how it’s going to work.

[00:59:51] Christine: Okay.

[00:59:51] Ramit: Either he’s going to do it or he’s not.

[00:59:54] Christine: Right.

[00:59:55] Ramit: I need you to understand that. You have to be willing to ask for what you need. And Thad, you also need to be willing to ask for what you need because you’re 57. In other words, you can’t both be fighting each other on this. You actually both need to be a team and you need to be having an upward spiral. Otherwise, you’re doomed.

[01:00:15] Thad: I believe in you, Christina. And you can believe that I will be there. How about that? Could you believe that I will put my best forward effort and walk it with you?

[01:00:35] Christine: It is hard because so many things I’ve asked him to do over the years and they don’t get done, and so I don’t feel like this is going to get done. It’s just hard.

[01:00:47] Ramit: I get it. I get it. There’s a lot of scars when you ask your partner and they don’t do it. They either outright refuse. They kick the can down the road. They let a piece of paper sit on the counter for six months. It really causes scars. Look at this. Christine can’t even believe that, Thad, you will cut an NFL subscription. Do you see the effects that your behavior has had on Christine?

[01:01:17] Thad: I do.

[01:01:19] Ramit: So I don’t know if the two of you’re going to stick with any plan that we come up with. I don’t know. And actually, that’s not really my responsibility. I can’t control your finances. I’m not here to be the magical savior. It’s your money. You all got yourself into this situation, and the only people who will pull you out will be the two of you. That’s it. It’s really as simple as that. Now, you might make it. I hope you do.

[01:01:47] I’ll give you as much support as I can on this call, and my community will rally behind you, watching, seeing how you follow up, all of that. But you might not. And think that’s important enough to know as well. No, Thad, now’s the time to listen.

[01:02:07] Thad: Okay.

[01:02:12] Ramit: If you don’t change, then we are also going to talk about what steps you might take. Because right now this is unsustainable.

[01:02:22] Christine: Yeah.

[01:02:23] Ramit: It simply cannot work.

[Narration]

[01:02:25] Ramit: You can hear the scars in Christine’s voice, years of asking, years of him not following through. And this isn’t just about that. Christine says, “I asked him,” but she didn’t actually ask for exactly what she wanted. Everyone listening needs to hear this. That skill of asking for what you want is one of the most important and underdeveloped skills to living a Rich Life. And I say that as someone who’s working on this very thing in my own relationship.

[01:02:56] What Christine needs is competence– competence around money, because competence is what builds confidence. And they also probably need a therapist. Christine is skeptical of that. Fine. I’m skeptical too, but if we both stay in skepticism forever, nothing changes. We could end the call right now and they would walk away with nothing changing. Instead, we’re going back to the numbers to find a different way to tackle this.

[Interview]

[01:03:24] Ramit: Subscriptions, what numbers should I put in?

[01:03:27] Christine: $0.

[01:03:28] Ramit: Thank you very much. Thad, do you agree?

[01:03:30] Thad: I agree.

[01:03:31] Ramit: Zero it is. Let’s watch what happens. Your fixed cost dropped to 59%. All of that work was not a waste. But I do want to point out, we spent probably 10 minutes talking about that one number. It dropped your fixed cost by 2%. Not much. Do y’all see that?

[01:03:46] Christine: Yes.

[01:03:47] Ramit: We need to be playing big, way bigger.

[01:03:50] Christine: I think our cable bill, I think it’s this one, 235.59.

[01:03:54] Ramit: Where’s that? 

[01:03:57] Christine: It’s part of the utilities.

[01:04:01] Ramit: Oh, you want to drop that? Okay.

[01:04:03] Christine: It’s the only other big expense that we actually– we can’t control our rent right now.

[01:04:07] Ramit: You want to drop it?

[01:04:09] Christine: Yeah. I think it goes down to 200 then if it’s 436 and this is 235.

[01:04:15] Ramit: Yeah, it drops into 200. Watch this. Utility’s going down. Whoa. We’re at 56%. Guys, this is really impressive. Okay. I’m liking it. I’m loving it actually. Can we keep moving?

[01:04:28] Thad: Yeah. Let’s

[01:04:29] Ramit: By the way, that nice TV you have on the wall, it’s going to be a beautiful picture frame of just black. It’s perfect. We call it darkness. Ah, perfect. Never turn that thing on. Can I just point something out? Do you realize that you have $4,000 per month to spend wherever you like?

[01:04:53] Christine: I sure it doesn’t feel like it–

[01:04:54] Ramit: I know it doesn’t feel like it.

[01:04:55] Christine: But that is what the chart says.

[01:04:56] Thad: I want to figure out where the best place to put it. I don’t want to just say I’m acquiescing to it, but whatever we think is the best and most appropriate use of the money, that’s where I wanted it to go.

[01:05:09] Christine: I think we do have to hear budget for both of our student loan payments. Neither one of us is making our student loan payments right now. And they’re coming back in October.

[01:05:18] Thad: Mine’s 735 a month.

[01:05:21] Christine: Yeah. Mine’s somewhere around 500 a month.

[01:05:25] Ramit: So 1,200.

[01:05:26] Ramit: Let’s say 13. And that’s minimums.

[01:05:28] Christine: Yeah. We do have to budget for that.

[01:05:29] Ramit: And that’s minimums.

[01:05:30] Christine: Yeah, those are minimums.

[01:05:31] Thad: Those are minimums.

[01:05:32] Ramit: Do you know the interest rate on those?

[01:05:35] Christine: I want to think it’s 6%. It’s outrageous.

[01:05:38] Ramit: Okay. You’re already paying $800 a month towards debt. That’s for what? The credit cards?

[01:05:45] Christine: Yes.

[01:05:46] Ramit: So I’m going to add $1,300 to the amount of debt payments, which is going to take you to 2, 092.

[01:05:55] Christine: Okay.

[01:05:56] Ramit: Your cost jumped up to 70%. Okay. Sometimes debt payments artificially inflate that number. In this case, you’re going to be paying it out for a long time. So we’re going to look at that in a minute. But let’s go down. You still have $2,635 a month.

[01:06:11] Christine: Okay. Yeah. Put it in his retirement account.

[01:06:14] Ramit: That’s it?

[01:06:15] Christine: Yeah. And to our savings. I said that, to our savings and into our retirement.

[01:06:19] Ramit: How much?

[01:06:20] Thad: I don’t know. How much would be a good number.

[01:06:25] Christine: Half.

[01:06:26] Ramit: Let’s put $1,000 a month towards investments, and let’s put $1,000 a month towards long-term emergency fund. You all are not doing this sewing and photography class.

[01:06:41] Christine: No, that was one time.

[01:06:43] Ramit: Vacations at 175. I’m sorry to say you have no vacations.

[01:06:46] Christine: It’s not vacations. That was our savings. We only one savings account, is what it is.

[01:06:54] Ramit: It’s literally labeled vacations.

[01:06:56] Christine: I have the idea of going on a Viking cruise. I really want to go very badly, but it’s not in our budget right now. And that feels frustrating.

[01:07:10] Ramit: I’m not trying be hard on you guys, but look at this. You guys cannot afford to take vacations. That’s it.

[01:07:15] Christine: And we don’t take vacations. It’s not really for vacations. That’s our savings account.

[01:07:18] Thad: Yeah. So you can zero that number out.

[01:07:21] Christine: Yeah. It’s for anything we need for our house in an emergency.

[01:07:26] Ramit: No.

[01:07:26] Thad: So it’s an emergency fund.

[01:07:27] Ramit: Stop. We don’t put money in a vacation fund that is not really for vacations. You’re not respecting money. When you money for one thing, but you deep down, you know you’re going to tap into it when you need it. That is not how we respect money. We need to fill an emergency fund, and we need to be honest with each other. We are not taking a vacation in the near term. That’s it.

[01:07:49] Christine: Mm-hmm.

[01:07:49] Ramit: So there is no vacation fund. There is no vacation savings. None of it. It doesn’t exist because it’s not going to happen. Part of living a Rich Life is you need to be honest with yourself and honest with the people you love. Right now you’re not doing either. Thad, have you talked about college for your daughter?

[01:08:08] Thad: Other than, as throughout life, but no. At this point–

[01:08:13] Ramit: How’s she planning to pay for it?

[01:08:14] Thad: I would be paying for it. You know what I mean? Loans or something like that. I don’t know. We haven’t talked about it.

[01:08:19] Ramit: Talk about it right now. Thad, you cannot afford to pay for your daughter.

[01:08:23] Thad: Okay.

[01:08:24] Ramit: It’s as simple as that. There’s no possible way. That’s it. That’s really hard for parents to hear. My parents didn’t pay for my college. They told us point blank. They’re like, “Of course you’re going to college. We expect that. But we don’t have money for you. So you’re going to have to find a way. You’re going to have to get scholarships, etc.”

[01:08:48] And we did. Sometimes some of my siblings took out loans. I’m not saying that everybody can do it. What I am saying is that my parents were very honest with us. And it actually didn’t make us feel bad. We’re just like, “Oh, okay.” That’s what we knew.

[01:09:02] Christine: Mm-hmm.

[01:09:03] Ramit: They laughed. They’re like, “We don’t have any money. What do you want us to do? We have no money.” Okay. Thank you for telling me. This is the kind of honesty that I want with money. When I say you got to be honest with the people we love and with ourselves, this is what I mean. Are we good to continue on with the numbers?

[01:09:22] Christine: Sure.

[01:09:23] Thad: Yes.

[01:09:24] Ramit: First of all, these numbers have dramatically shifted. Your fixed costs have gone up. They’ve gone up from roughly 60% to 70%. That is primarily because you are paying a lot more towards debt. And we also did drop a little bit of the subscriptions and cable. So you actually blunted that number going up. Good job. I think that’s really good.

[01:09:49] Your investments are at 10%. They’re actually a little bit higher than that if we count all the pre-tax investments, because Thad making some pre-tax 403(b). So it’s at least 10%, probably like 15%, something like that. Your savings are at 12%.

[01:10:07] We have all of the money, $1,175 being directed towards a long-term emergency fund. It’s going to take you six months to get one month of an emergency fund. So it’s a little slower than I would like, but at least we’re going in the right direction. And then guilt-free spending, you have $735 left over total per month. 8%.

[01:10:35] Now normally I would say 8% is pretty low. Typically, I like to see that number 20 to 35%. The fact is you have to start living on way less, way less. 8% is fine. If I were being aggressive about it, I would do it on three to 5%. But I don’t think right now you have the capabilities to do that. It’s hard to go from 40% down to 8%. So I want to be realistic. How does it strike you so far?

[01:11:08] Thad: For me, I like it. I’m paying the bills, the student loans. That makes me feel good. I feel more complete that way. So I like seeing the plan laying out in front of us.

[01:11:20] Ramit: Okay. Christine?

[01:11:24] Christine: The numbers are stark, but I think it’s going the right direction for sure. I’m on board with it.

[01:11:30] Ramit: Where are we going to end up? That’s what we need to know. Is it enough? I want to plug these into my investment calculator. You can just search “Ramit Calculators,” and you’ll find a series of calculators. We’ll use the investment one. So you are starting off with $136,000.

[01:11:50] You’re going to invest $1,000 a month plus Thad’s amount. So let’s make it 1,500 just for easy math. How about that? Is that fair enough? Thad, are we approximately 500 bucks a month pre-tax?

[01:12:02] Thad: Yes.

[01:12:02] Ramit: How many years will you keep investing? Thad, you’re 57. So why don’t we say eight years just to see–

[01:12:15] Thad: Just to get a number, yes.

[01:12:18] Ramit: All right. So if we include both your investments all together, you two will have $430,000.

[01:12:30] Christine: But you didn’t include my contributions to that, if that’s our joint.

[01:12:33] Ramit: Do you have more pretax that you’re contributing?

[01:12:37] Christine: Wait, 403(k), $200 a month.

[01:12:44] Ramit: Okay, let’s take–

[01:12:45] Christine: No, 230. I’m sorry. 230.

[01:12:48] Ramit: All right. So you’re going to have $460,000. Let’s take a look at what that means. You will be able to safely withdraw $18,000 per year for retirement.

[01:13:04] Christine: That is not enough.

[01:13:07] Thad: No.

[01:13:10] Christine: We would clearly be living in a cardboard box next to the ditch on the side of the road.

[01:13:15] Thad: Just say not happy, I guess. Not completely.

[01:13:18] Christine: No, we wouldn’t. We wouldn’t even be able to afford anything.

[01:13:22] Ramit: Yeah.

[01:13:23] Christine: Truly.

[01:13:24] Ramit: What are your options?

[01:13:26] Christine: I can personally increase my investments, but I’ll also be working longer. I probably have 20 years left of working. So I’ve got longer to invest than he does.

[01:13:36] Ramit: I like where you’re going with time. Time is one of your number one variables. Thad, I don’t you will retire at 65.

[01:13:45] Thad: I don’t think so either.

[01:13:47] Ramit: Shall we take a look at the numbers then? If we calculate this for not just eight years, but let’s make it 13 years, suddenly you have $776,000. You could withdraw $31,000 per year.

[01:14:07] Christine: It’s still not a lot, but certainly more than it was.

[01:14:10] Ramit: Yes. It’s going in the right direction. Let’s not forget Social Security. Again, not a lot, but at this point we actually need to factor that in.

[01:14:20] Christine: And I’ll still be working seven years past that.

[01:14:23] Ramit: Yes, you will.

[01:14:25] Christine: I’m hoping to get a higher paying either position at my company or a different job that pays more.

[01:14:32] Ramit: Could you make that happen for sure?

[01:14:35] Christine: No, I will not at my company. I’d have to leave my company to get a higher paying job right now.

[01:14:40] Ramit: Could you do it?

[01:14:41] Christine: Yeah, I could do it. Sure. If there’s one available. I live in Washington DC where basically all the federal employees just got laid off, so job market’s a little stiff, but I’ll have my eyes out looking.

[01:14:53] Ramit: It is one of the most important things you can do, is for you to increase your job, your salary. I know that it’s very, very difficult right now in the federal government, but when it comes to where you are putting your energy, putting it towards finding a higher paying job will be one of the most important things you can do. Thad, what about you? What about your income?

[01:15:20] Thad: I intend on increasing my income considerably, in the next five years or so, like that.

[01:15:25] Ramit: I don’t care about five years. I care about five months at this stage.

[01:15:28] Thad: Oh, in five months? Oh, no.

[01:15:31] Ramit: Not no. How can you do it? Not no. How can you do it? You have to.

[01:15:36] Thad: Get a new job in five months?

[01:15:38] Ramit: I don’t know. That’s one way to go.

[01:15:41] Thad: No. Saving now. Is that what I’m doing right now?

[01:15:47] Christine: You do have to increase your savings.

[01:15:49] Ramit: You need more money. You need more income. How?

[01:15:52] Thad: Yeah. In addition to working more than I could do, I could pick up more work. I could get more jobs. So when school starts, I do math. That’s extra $550. I’m a math coach for the team, for the math coach team. Yeah.

[01:16:08] Ramit: $550 per what?

[01:16:10] Thad: Oh, no, a once time thing. So I do the trainings and like the extra income stuff for teachers throughout the year.

[01:16:21] Ramit: I need more than that. You need more than that. Not me. You need more than that. Tutoring?

[01:16:28] Thad: Tutoring, it’s hard.

[01:16:33] Ramit: Life is hard. Having $339,000 of debt is hard, and being poor when you’re older is really [Bleep] hard.

[01:16:40] Christine: Mm-hmm.

[01:16:41] Thad: No, but instead of tutoring somebody else’s kid, I’m going to tutor my own kid at a time. And that’s a choice I’m would have to make because she’s struggling. I have energy. I understand I need to make that energy.

[01:16:53] Ramit: Hard, I don’t know what that word means when you have this much debt and you are going to retire in abject poverty.

[01:17:05] Thad: Right. Yeah.

[01:17:06] Ramit: I guess we’re speaking different languages.

[01:17:08] Thad: I don’t know what job I can pick up now and how I can increase my salary in six months.

[01:17:19] Ramit: In your head, could you do it? Wow. That’s quite a telling response.

[01:17:32] Thad: Who’s going to give me a job? What am I going to do right now?

[01:17:36] Ramit: I find this extremely fascinating. If somebody told me, Ramit, you have no business, everything’s shut down, and gun to the head, could you find a way to earn more money? I didn’t even tell you how much money. I just said more. My answer would be, “I don’t need six months. Give me five days, get out of my way. I’m done with this conversation. Come back to me on Friday. I’ll find a way.” What is the difference?

[01:18:05] Thad: There is no difference for me–

[01:18:06] Ramit: Why do I say it that way and you don’t? 

[01:18:08] Thad: You’re asking me to get another revenue income stream, which is fine, and I’m willing to do that in any manner that I can do. What that would look like and what that is, I don’t know. Evening job, to work at Subway after school, what I was saying before, there is that work life balance.

[01:18:32] As far as like, if my daughter is– I’m taking care of her as well. I have to be part of her life as well. If I say I work until I come home at 6:00 and I take an evening job and I work overnight, how much additional job should I get and be content with and say, “Hey, I’m content. This is a stateable pattern for the next 13 years.” And being able to meet the obligations. I’m willing to do that. I’m just making sure that the priorities are there. If that’s pushing back, I don’t mean to push back, but I’m just–

[01:19:11] Ramit: I think right now you have $31,000 a year in retirement.

[01:19:16] Thad: Right.

[01:19:16] Ramit: And that’s if the two of you combine your income.

[01:19:19] Christine: Mm-hmm. Right.

[01:19:22] Ramit: I don’t personally really mind if it’s Subway or waitering or tutoring or a second– it doesn’t matter to me. It’s actually not my life where the money is going to affect it. It’s yours. And that is why when you are asking me what kind of job are we talking about, what you’re trying to do unconsciously, although you don’t realize it, is you’re trying to delegate the problem back to me.

[01:19:45] You’re tossing me the ball, and I’m actually tossing it right back to you. I don’t know. If you want to work at Subway, you want to work at the mall, if you want tutor, it’s up to you because you and the two of you will be the ones who experience the after effects of your decisions right now.

[01:20:07] Christine: Mm-hmm.

[01:20:09] Thad: When school starts, we could pick up weekend tutors.

[01:20:12] Christine: Mm-hmm. Yeah. If there are some at your school, I’d prefer that because, honestly, I don’t want to be at home with a 14-year-old by myself all evening. Sorry, man. Not doing it. The parenting is a tough job, and it takes all the dedication. And ultimately, she isn’t my child. So a lot of the decision making isn’t mine. So if I’m the only one here all the time, it doesn’t work that well.

[Narration]

[01:20:39] Ramit: I’m sorry, but if you’re in hundreds of thousands of dollars of debt, you don’t get to ponder the finer points of work-life balance. I’m genuinely mystified right now. All I can think about is all the immigrant parents I know who came to America and did whatever it took to be able to become financially stable.

[01:21:00] I remember recently I was in Atlanta doing a live event. My Lyft driver picked me up, and he looked back. He goes, “Ramit Sethi.” He knew who I was. He recognized me. He was an economist in Ethiopia, and he now drives a Lyft while listening to podcasts to learn how finance works in America. He was an economist. Now he drives a Lyft.

[01:21:21] I think about the Indian parents who work at a gas station or the Chinese family who runs a restaurant with their kids seven days a week. And if you ask them about work-life balance, they would say, “What?” That’s the world I grew up in. Our work ethic was insane because it had to be. That was the only way we could do it.

[01:21:38] Now I love balance. Life is different now. But it would only be possible because of what I learned from my parents and all the other people surrounding us as kids. I appreciate balance, but my definition of hard work is completely different. If you told me right now, Ramit, you’re going to die in poverty unless you make more money this week, my answer would be very simple. “Get out of my way. I’m going to figure it out right now.” I’m not talking about work-life balance when the stakes are this high.

[01:22:05] Thad doesn’t have that urgency, and I don’t think he truly understands the situation he’s in. What’s scarier is even if he did understand it, that doesn’t mean he would be successful in changing. But in order to even have a shot at being successful, you have to recognize the severity of your situation. You have to be honest. The next difficult subject that we’re going to tackle is something I have been waiting for a long time for hours to unpack with them. It’s one of the major cracks in their financial foundation. Do you know what I’m referring to? Let’s take a look.

[Interview]

[01:22:37] Ramit: Look at the difference in income, and look at the way that you have split your fixed costs. What do you notice?

[01:22:45] Thad: We just had a conversation about this not too long ago, about like–

[01:22:49] Ramit: Just what you notice.

[01:22:50] Thad: It’s not balanced. It’s equal. Everyone’s paying equal, but they’re not making the same amount of money.

[01:22:57] Ramit: You make a lot more, Thad, and you are paying 50%, which is great for you, but very onerous and difficult for Christine.

[01:23:06] Thad: Right.

[01:23:08] Ramit: So you all talked about it. What was your conclusion?

[01:23:12] Thad: We didn’t. As I say, since that disparity is new with this year, now that we are aware of that, it had been lopsided before the other way, I think.

[01:23:28] Ramit: You guys make decisions when about money?

[01:23:28] Thad: We don’t.

[01:23:32] Ramit: No, you’re not even making them right now. When you’re faced poverty in old age, you’re still not. You’re just talking around it. The question is, what do you notice about how your expenses are related to how much your income is? Which Thad answered. I appreciate it. And then he said, “Well, we had a conversation about this.” We’ve been talking about this.” Okay. What did you decide? Nothing.

[01:23:54] Christine: Nothing. Yeah.

[01:23:57] Ramit: Couples who are successful with money make decisions, and they make them fast. Couples who are unsuccessful with money talk about it over and over and over again, and they never make decisions. Which one are you?

[01:24:10] Christine: Clearly, we’re the latter, but I don’t feel like I have the power to drive this decision because I’m the one that makes the least amount of money.

[01:24:18] Ramit: Oh, the person who makes less money has less power? Who said that? Or is that just a story?

[01:24:22] Christine: That’s what Thad said, because he used to make less than me. And he refused to do a percentage split out of expenses. So now that we have disparate incomes the other direction, I surely can’t ask for percentage breakouts.

[01:24:38] Ramit: Why not? Why can’t you?

[01:24:39] Christine: Because he refused to do it. So now, it doesn’t feel fair.

[01:24:44] Ramit: Let me make sure I understand this. Thad refused to do percentage-based breakouts when he was making less.

[01:24:51] Christine: Yes.

[01:24:52] Ramit: Even though that would’ve been advantageous to him.

[01:24:56] Christine: Mm-hmm.

[01:24:56] Ramit: And you have said, “Surely I cannot bring up proportional payments.” Why?

[01:25:02] Christine: I said, “Hey, I noticed that I make a lot less money than you and I’m still paying half of everything.” And he said, “Oh, yeah, I noticed that too.”

[01:25:14] Ramit: That’s not bringing it up. What is that? Hey, everybody. I noticed the sky is blue today. That doesn’t mean that I feel like eating soup. That has nothing to do with it. When you bring it up, what do you want? Christine, I can tell that you often have trouble asking specifically for what you want. Right?

[01:25:32] Christine: I didn’t think so, but I guess that might be true.

[01:25:35] Ramit: What do you want when you bring that up? Why are you bringing it up?

[01:25:39] Christine: Because I noticed it was a reason that my credit cards can’t get paid down faster because it doesn’t feel like I have the excess money every month, every pay even.

[01:25:47] Ramit: Yeah. That’s correct. You are right. Your instinct is exactly right. This is not fair. You’re not even married.

[01:25:54] Christine: I know. But that’s more the reason, which should be half and half. We’re not married. We have to shoulder the burdens of our own stuff.

[01:26:03] Ramit: There is an argument to be made for the fact that you are not married, so there are certain differences that you might have. Whereas when you are married, at least in my opinion, you should combine as much as possible.

[01:26:17] Christine: Right.

[01:26:17] Ramit: But can I just say, Christine, it is not fair or feasible to have one person with 78% fixed costs and the other person with 50%.But you haven’t asked Thad for what you want.

[01:26:32] Christine: But I can’t ask in front of what I want. It’s not my money.

[01:26:41] Ramit: When I married my wife, my lifestyle was much more expensive than hers. I had a bigger apartment, spent more on food and that kind of thing.

[01:26:54] Christine: Right.

[01:26:56] Ramit: If I had 50-50 with her, it would’ve financially drowned her. It wouldn’t have been fair to her. Thad, I hope you’re listening very carefully because you are me in this situation.

[01:27:11] Thad: Yeah, but I don’t think it’s a fair–

[01:27:13] Ramit: I did not wait for her to cry.

[01:27:17] Christine: Well, we’re not married.

[01:27:20] Ramit: The marriage part is irrelevant to this.

[01:27:22] Christine: I don’t think it is.

[01:27:24] Ramit: Okay. Tell me. You believe, Christine, that because you’re not married, you should have to pay 50-50?

[01:27:29] Christine: Yes. That’s what we’ve agreed to. I don’t see how we change that because I can’t very well say, “Well, it’s not my money, but give it to me so I can pay my bills.”

[01:27:40] Ramit: Paying proportionally does not mean that he gives you money. That’s not how it works. Christine, what I notice again is I’m trying to really– I’m actually trying to help you, Christine, financially, and you are pushing back inexplicably. I don’t think you even know why you’re pushing back. I’m trying to help you right now.

[01:28:02] Christine: I know you are, and I appreciate that, but it’s not my money to ask for, so I’m not going to.

[01:28:08] Ramit: You are not asking for anybody to give you money. Thad is not going to write you a check.

[01:28:13] Christine: Well, then he would put more into the household account so that we would have more money to pay our bills.

[01:28:18] Ramit: Yes. And you would put less because you earn less. I pay a lot more taxes than you. I make a lot more, so I can afford to do that. Do you see that?

[01:28:30] Christine: I do.

[01:28:32] Ramit: What do you think about that?

[01:28:37] Christine: I don’t know what I think because when the situation was reversed, he said no. And so it doesn’t feel like now that the situation is the way it is now that I can ask.

[01:28:49] Thad: I’ve never flatly refused to say I wasn’t going to do that. We brought this up. I didn’t say I wasn’t going to do portion of that. I wasn’t even asked. I just don’t like being characterized as unresponsive, refusing to do it, not sharing the money. Every dollar I have goes to this household except for the money that I wasted. And I fest up to that and I’m willing to do it now. Yeah. I’m not the bad guy here.

[01:29:18] Ramit: Christine, what do you take from that?

[01:29:24] Christine: I guess he’s willing to split it proportionally, but in fairness, honey, I never said that you wouldn’t. I just didn’t ask because you didn’t do it when the situation was reversed.

[01:29:40] Thad: Right. Yeah, no. I’m not refusing to do anything. I am 100% supportive of you as much as I can with everything.

[01:29:48] Ramit: Do you realize that Thad is offering to do this and you’re refusing to take the help, which would–

[01:29:56] Christine: I didn’t refuse to take the help. I said it sounds like he’ll do it.

[01:30:00] Ramit: I understand that, but Christine, I want you to understand your own behavior right now. There have been several occasions where Thad has not pushed back. He’s like, “Take the NFL. I don’t care. You refused at first.

[01:30:13] Christine: Right.

[01:30:13] Ramit: You are being drowned financially. It’s not fair. And you never asked for it because of a story you created in your head. Now he hears it. He goes, “Yeah, fine.” Are you willing to take the help? 

[01:30:25] Christine: Yeah. 

[01:30:26] Ramit: She says yes. Okay, love it. Great. This is what making decisions is about. This is hard. But this is also what I meant by we have to walk through the fire. We have to do this stuff. There’s no other way around it.

[01:30:41] Look at what happens when I change the numbers in the CSP. Christine’s going to pay 40%. Thad is going to pay 60%. And you’re going to see these numbers dramatically change. Take a look. Let’s see here, 1,290 for your portion of the rent. That’s down from 1600 bucks.

[01:30:58] Christine: Right.

[01:31:00] Ramit: What does that mean to you, Christine?

[01:31:02] Christine: That I might have more money to pay my credit cards.

[01:31:05] Ramit: Exactly. You’re going to have more money. That’s proportionality. Look at these numbers starting to adjust already. In your fixed costs, each of your individual costs are becoming a lot more rational. Christine, your fixed cost, which used to be, what, 78%?

[01:31:21] Christine: Yeah.

[01:31:22] Ramit: They’re down to 64%. What does that mean for you?

[01:31:26] Christine: I think it just feels better. There’s more money available. I was feeling really pinched.

[01:31:34] Ramit: Yeah. Because the lifestyle the two of you have is unsustainable. Thad, I want to check in with you. This means you’re going to be paying a lot more.

[01:31:45] Thad: As long as I have money to pay for my daughter’s stuff and give me 40 bucks a paycheck so I can have fun, that’s all I got to do. I don’t need any money for anything else. I don’t do anything else. I don’t have any other activities that I do that cost money.

[01:32:01] Ramit: That’s awesome. I’ll take the win, and I think we can make proportionality work. What I actually want to hear, and what I think Christine wants to hear is a deeper level of engagement. So this idea of like, whatever, as long as I have a bill, that’s not the level that I need you to be operating at with your money.

[01:32:21] You actually need to understand, oh my God, this now means I’m going to be paying X hundred dollars extra a month towards fixed costs, which means I’m not going to be able to have this much for guilt free spending, etc. That is the level of fluency that you need to have with your money at age 57 with almost nothing in retirement.

[01:32:43] Thad: Right. That’s what I just did though, right? Is that what I just did?

[01:32:49] Ramit: No, that’s not what you did.

[01:32:50] Thad: Okay.

[01:32:55] Ramit: I did promise to talk about what would happen if things don’t change. Because this is a lot of changes. A lot of things have to go right in order for this to work.

[01:33:06] Christine: Right.

[01:33:06] Ramit: So what if it doesn’t?

[01:33:10] Christine: Clearly, I think we’d have to– we already probably do have to move somewhere that’s less expensive, a lot less expensive.

[01:33:19] Ramit: Thad, what if you get laid off?

[01:33:22] Thad: I’ll get another job as a teacher.

[01:33:28] Ramit: Okay. Let’s say that you can’t get another job that pays what you’re making. You only get two thirds of what you’re making.

[01:33:35] Christine: Mm-hmm.

[01:33:37] Thad: High cost, you try to survive. Worst case scenario is homeless shelter. That’s probably the worst-case scenario

[01:33:50] Ramit: Have you been in a homeless shelter before?

[01:33:53] Thad: I have.

[01:33:56] Ramit: Okay. You never talked about worst case, did you?

[01:34:04] Christine: No.

[01:34:04] Thad: When you talk about moving back and breaking it, you have to move back to Cleveland, [Inaudible].

[01:34:08] Christine: Yeah. We have discussed it just in passing, but of course you hope it doesn’t come to fruition. But sure, I think that’s just what would happen. I would have to move back home with my dad and my brother. I’ve already been laid off a number of times and have consistently gotten jobs with lower pay. So we’ve made it, but it was tough.

[01:34:32] Ramit: What about if we end this call and things look good for a week, you make some changes, and then Thad, you stop following up? Things go back. Christine is chasing after you. You’re avoiding. What would you do then?

[01:34:54] Christine: I don’t know what I would do. I think I would just keep pressing forward with doing what I could with my own finances, trying to increase my retirement account, try and find some extra money for savings. Even just do the best I could.

[01:35:08] Ramit: Thad, what would you do if you weren’t making progress on the things we talked about? Christine felt like she was trying to control you by asking every day. What would you do?

[01:35:18] Thad: If we weren’t making it together, if we decided that we weren’t going to be able to move forward with this shared dream, we’ve talked about breaking it up.

[01:35:29] Ramit: You two are not married.

[01:35:33] Christine: Mm-hmm.

[01:35:34] Ramit: You have different financial situations, although both are extremely concerning. And if I am each of you, I am saying, “Look, this is what I need in this relationship, financially speaking, in order to be comfortable, in order to be comfortable to stay, in order to be comfortable, to be married.

[01:36:01] And it’s cut and dry. It’s decisive. If both of you really dedicated yourself to earning more, and I think it’s extremely possible, not only could you save money, not only could you invest for retirement. I think you could make a pretty serious dent in your debt, but it would require extreme focus, and it would require doing it as a team.

[01:36:27] Christine: Mm-hmm.

[01:36:32] Ramit: So that becomes the overriding goal. Less about work-life balance, just being very honest. And every additional dollar that you make, you would have a plan for how much goes into it. In part because I don’t want you to end up in poverty in your old age. If you can do all of those things and you can both do it together, I think you have a pretty good shot.

[01:36:55] Christine: Mm-hmm.

[01:36:57] Ramit: I feel nervous, really nervous, because I know that you have a lot of changes to make. And I know what your future could hold. And trust me, I want the absolute best for you. My dream for you is that the two of you actually do this as a team that you both see, oh my God, we have a lot of changes to make with our money.

[01:37:26] We are going to do this as a mission. We’re going to get our daughter involved. We are going to talk about this, and this is actually going to become something that is fun. Yes, it’s going to be hard. Yeah, we have no cable anymore. That sucks. But we are doing this as a family unit. And I am not sure if you two want that.

[01:37:50] Christine: Yeah. I do want that. Of course, I want to have financial stability. That’s been my goal the whole time, and I just am not sure we’re going to get there.

[01:38:11] Thad: I feel nervous about being able to remain committed to the things I’ve talked about tonight. I struggle with being honest, and if I’m not 100% in, then no matter it’s not going to work. And I know that.

[01:38:36] Ramit: Mm-hmm.

[01:38:37] Christine: It’s really hard.

[01:38:40] Thad: I have to come to that conclusion. I have to change that mentality. Do I want to walk this journey with my partner and end up in old age where we can live together. And if it’s going to work, then I’m willing to put that in. It’s going to be hard though, but I’m willing to put that effort in.

[Narration]

[01:38:59] Ramit: We’re going to get to their follow-ups in just a second, but first I’d like to share a couple of thoughts. Here’s what I suspect will happen. I think Christine and Thad will be motivated for a couple of weeks. I think they’ll cut the NFL spending and they’ll make some small easy changes. But I suspect when it comes to the harder stuff like redirecting, guilt-free spending, and consistently saving and investing, that’s where most people find it much harder.

[01:39:23] It’s easy to nibble at the edges. You can open up an account, transfer 50 bucks, but the moment that something gets hard, a lot of people find it easy for the entire thing to derail. Now, I hope I’m wrong. My real dream is that they follow up next week and next month, and they surprise all of us. They make massive changes. They build huge momentum.

[01:39:44] They realize they can actually go faster, and they get into this upward spiral with higher paying jobs and attacking their debt. It’s possible. I’ve seen it happen, and I would love if it happened here. Now let’s take a look at their follow-ups.

[01:39:59] Christine: So it’s been three weeks since we talked to Ramit, and I just wanted to check in and let you know how Thad and I are doing. I would say that one of the biggest changes I’ve seen is that Thad is more engaged with our finances and is taking on a lot of responsibility for improving his own financial situation, which has gone a long way, I think, toward relieving some of the stress from me and also for making it seem like we’re more equal partners in the finance conversation rather than me leading the way 100% of the time.

[01:40:37] So we’ve been able to increase our emergency savings account by diverting money from canceled subscriptions and adding 90% of any extra money we earn from jobs or bonuses or things like that to the account. Also, we have agreed to restart our money talks soon. So I think probably next weekend we’ll have our first conversation in the new post-Ramit world. And so I’m looking forward to that and continuing our work through this financial journey together. So thank you, Ramit. I appreciate all your help, and it’s looking up for us, so yay.

[01:41:22] Thad: My biggest takeaway from our interview with Ramit is just how critical my retirement situation is in regards to the lack of money that I’ve saved for that. I think Ramit termed it as a crisis situation, and I’m inclined to believe him. I’ve changed that mentality and have realized that I have to go with intentionality moving forward, saving for retirement, saving for the future.

[01:41:47] Some of the action steps that we’ve taken since then, or I’ve taken since then is that I have upped my retirement funds in for my paycheck. I have created a savings fund for taxes and for house emergencies, and I’ve increased the amount of savings I’ve put into our house. Also, in investigating my situation, I was able to find retirement fund from a previous job, my previous job of $45,000.

[01:42:14] So that added to what I currently have. So that’s been a benefit. We’ve cut about $80 in subscriptions, about five subscriptions, and that’s been a proactive move. And to this date, we have not yet subscribed to the NFL package. And then just going forward, Christine and I are having conversations that are positive. It’s been a great experience, and I want to continue.