Ramit Sethi of I Will Teach You To Be Rich talks to Natalie and Chris, married with two young kids and a net worth of $1.3 million. Despite their significant assets, money remains a constant source of conflict, especially when unexpected expenses arise. Chris tends to “freak out,” emotionally withdrawing and becoming zombie-like, leaving Natalie feeling alone. This pattern, which Chris describes as “catastrophizing,” has intensified since their kids’ expenses piled up.
Their therapist recommended they talk to Ramit, hoping to establish a financial game plan to prevent Chris’s emotional collapses. Currently, 81% of their income goes to fixed costs, with 0% to savings, leading to a feeling of constant stress and no margin for error. Can Ramit help them create a financial system that provides peace of mind and allows Chris to process financial challenges with less distress?
In this episode we uncover:
The unexpected source of Chris and Natalie’s referral to Ramit
How large, unexpected expenses trigger Chris’s emotional “shutdown”
Natalie’s experience of feeling isolated when Chris is financially stressed
Why having a $1.3 million net worth doesn’t alleviate their financial anxiety
The surprising reason for their elevated fixed costs and lack of savings
The emotional impact of feeling like there’s “nothing left over” at the end of the month
Chris’s pattern of “catastrophizing” and the fear of successive financial blows
The core question their therapist hopes Ramit can answer
How Chris’s upbringing influences his current financial anxieties
The challenges of discussing money when past traumas intertwine with current stresses
Chapters:
(00:00:00) “Your therapist…recommended that you speak to me”
(00:10:55) “Natalie, what’s your role in money?”
(00:25:43) The unexpected (and huge) financial blindspot
(00:36:18) Ramit discovers a massive amount of hidden money
(00:45:01) “You are financially set up for life”
(00:54:02) How “Red Bull wingsuit” leads to a Rich Life
(01:19:20) Finding an extra $1,360/month
(01:44:23) Natalie and Chris’s follow-up: “He’s at ease now”
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Transcript
Download the full transcript PDF
[00:00:00] Ramit: Your therapist is the one who recommended that you speak to me.
[00:00:04] Chris: I get really stressed out when unknown financial burdens come up. I start freaking out.
[00:00:11] Natalie: I felt like I was living with a stranger. It was such a huge impact on your psyche that we couldn’t live life as normal.
[00:00:19] Chris: I spend my mental energy thinking about is how I’m gonna fix the problem, and that gets me spiraling.
[00:00:25] What if one of the kids takes a big fall and has to go to the hospital? Or I have to go to the hospital?
[00:00:30] Ramit: You are spending $3,000 more than you make in approximately 10 months. You are out of money. That’s scary. That doesn’t sound good. You two are in a position you have never realized before because you are operating on the valuable lessons that your parents taught you that happen to not match your current financial reality.
[00:00:54] Imagine my surprise today when I discovered that a therapist recommended today’s guests come on my podcast. Their therapist told them, you don’t need another therapy session. You need this podcast. And I wanna say I’m honored. I have a lot of respect for all of the mental health professionals in America, therapists, psychologists, psychiatrists, social workers, addiction counselors, professors, and everyone else in the field.
[00:01:18] And that is why I constantly try to de-stigmatize getting help for mental health. And I constantly recommend that my guests work with these specialists. So for all the mental health professionals who listen to Money for couples, thank you. Now today I want to introduce my guests. I’m speaking to Natalie and Chris.
[00:01:35] They’re married with two young kids and they have a net worth of $1.3 million on paper. They’re doing well behind the scenes. Money keeps creating conflict in their relationship, especially when big, unexpected expenses come up. For example, when a big expense hits, Natalie tells me that Chris collapses emotionally.
[00:01:56] What’s actually happening here? Why would someone with a million dollar net worth react this way? So let’s take a look at their conscious spending plan, which covers a quick snapshot of their finances. Assets, $893,000 investments, $634,000 savings, $33,000 debt, $211,000 total net worth, $1.3 million, and their monthly spending breakdowns.
[00:02:21] Fixed costs, 81%. That’s high investments, 10% savings, 0%. That’s a red flag. Guilt-free spending 9%. Okay? They’re spending 81% of their income on fixed costs. They’re saving nothing, and they’ve got less than 10% going to guilt-free spending. These are some red flags. When money is that tight, even with a high income, it creates this constant feeling of stress.
[00:02:45] It means there’s no room for mistakes, no margin for unexpected expenses. Why does someone with a million dollar net worth need to cut it that close? Why would you set your money up to flow like this? Shouldn’t you feel good about money once you have seven figures? Well, here’s my question for you. Maybe you’ve got a solid income.
[00:03:04] Maybe you’ve got good savings, solid investments, but there’s still nothing left over at the end of the month. If this is you, tell me in the comments how does it feel? I wanna read what your feelings and experiences are feeling like there’s nothing left at the end of the month. Now let’s meet Natalie and Chris and figure out what’s really going on.
[00:03:24] Can you tell me what was going on in therapy where my name came up?
[00:03:30] Chris: I get really stressed out when unknown. Future financial burdens come up. So if a car breaks down and I don’t know how much it’s gonna cost to fix it, I start freaking out. And it affects me, not just when I find out, but for a long while after.
[00:03:50] And that definitely impacts my mood around everyone in the family. So we were talking about how it’s detrimental and that maybe it’s not even particularly rational.
[00:04:03] Natalie: This is a cyclical thing that happens in our relationship three or four times a year. Mm-hmm. And previously we’ve always tried to treat the symptoms, so to speak, instead of the the cause.
[00:04:14] So this is, when you say this,
[00:04:15] Ramit: you’re talking about Chris as he describes it, quote, freaking out about an unexpected cost.
[00:04:20] Natalie: Yes. Mm-hmm. Okay. And
[00:04:22] Ramit: you, you mentioned Natalie, that when one of these expenses comes up, Chris shuts everyone out. Do you have any examples of that?
[00:04:30] Natalie: My vehicle. My vehicle, the air conditioning went out.
[00:04:34] And one thing I admire so much about Chris is his not only willingness, but ability to fix things himself, to save money. So he attempted to fix the issue and because of circumstances that weren’t entirely his fault, it didn’t get fixed and actually made things worse with the vehicle. And there was a period of what, Chris, two or three days that I felt like I was living with a stranger, like alone.
[00:05:00] It was such a huge impact on your psyche that we couldn’t live life as normal.
[00:05:05] Chris: Tell me what happened. I just kind of become really blank, kind of zombie-like all I can really spend my mental energy thinking about is how I’m gonna fix the problem. And when it’s a problem that I can’t fix with my hands and my tools, then it’s just a, a money issue and that gets me, you know, just kind of spiraling.
[00:05:29] Natalie: So when the kids ask for something, um. He can’t respond effectively or can’t provide that for them. Or when I ask about a completely unrelated issue, he’s unable to think about that or address it. All he can do is like, go to work and come home very zombie-like and no emotion. And, um, shutting us out.
[00:05:50] Ramit: How long does it last for?
[00:05:51] Natalie: It depends on when he can get an answer as to how much the fix will be.
[00:05:56] Ramit: Okay. Yeah. And what did your therapist suggest would be a great outcome for our conversation today?
[00:06:03] Natalie: I brought up the question of how much money in our savings is an okay amount so that Chris does not react this way to an unforeseen expense.
[00:06:13] And that’s when she suggested that we listen to your podcast and start to think about financial fixes and being on the same page and getting a game plan together so that this doesn’t happen in the future.
[00:06:26] Ramit: Okay. Uh, you mentioned kids. How many kids and how old.
[00:06:30] Natalie: We have two, we have a 6-year-old boy and a 3-year-old girl.
[00:06:33] Ramit: Okay, great. How long has this dynamic around money existed? I’ve
[00:06:39] Chris: always kind of had that feeling around money. Um, I think it’s exacerbated by the fact that now that we do have two kids and there’s a lot of expenses associated with it. And so I would say that around the, the time that kid expenses really started piling up like daycare is when it got to the point it is now.
[00:07:00] Ramit: Okay, got it. And when these feelings come up for you, like when a large expense comes up, that with an uncertain amount, what’s going on for you? Do you have a voice that’s saying something? Do
[00:07:12] Chris: you have a feeling in your chest? It’s a feeling of being, you know, really concerned and it’s always the what if.
[00:07:20] It’s generally not that issue that I’m concerned with. It’s. This issue has come up and I know it’s gonna cost a few thousand dollars at least. I don’t know exactly how much, but what if we get in a crash with another vehicle and that’s gonna be a large expense? Or what if one of the kids takes a big fall and has to go to the hospital?
[00:07:40] Or I have to go to the hospital? And it’s that concern about maintaining that cushion and being able to reestablish it fast enough before the next thing comes along. You ever talk about catastrophizing in therapy?
[00:07:52] Natalie: No, but we will now
[00:07:54] Chris: specifically, but yeah, I mean, that’s kind of what it is, right? It’s, it’s the, I’m not particularly concerned about this one, but what happens if another one comes right behind it?
[00:08:03] Okay. Alright.
[00:08:04] Ramit: And, uh, Natalie, in your application you wrote, we’re doing just fine financially better than most. And so if you are truly doing better than most, why do you think money is such an issue in your relationship?
[00:08:21] Natalie: Chris and I have not yet established money flows to put money automatically in savings, filling out the, um, the spreadsheet that you sent us was a real eye-opener mm-hmm.
[00:08:33] To the amount that we have in investments mm-hmm. Which is factually better than most people our age. Right. Um, but having that cash on hand seems to be the issue with us. I don’t know, there’s just some kind of discrepancy between how you view things, Chris, and how I view things on how much money, cash on hand is a good amount for us to feel.
[00:08:56] Okay.
[00:08:56] Chris: I don’t particularly see it as the amount of money on hand in, like the checking and savings account that we can pull from. That’s the issue. It’s what’s the trend line look like? Is it generally going up or generally going down because when it’s going down, I just see it as like a, a burn rate and there’s a, a set deadline where we gotta fix something if it’s going up.
[00:09:20] I feel a whole lot better about a large expense coming because I know that, that within a certain amount of time we’ll be able to get back to square one. If the trend line is, you know, we’re, we’re spending more than we’re saving. Mm-hmm. I, I see that as like, there’s a timeline on how long we’re financially stable and, you know, that gets me nervous.
[00:09:46] And then so when a, a large financial unknown jumps in, it cuts the fuse shorter, if you will.
[00:09:55] Ramit: What’s the role that each of you plays in your relationship as it relates to money?
[00:09:58] Chris: I feel like I’m pretty financially savvy in terms of understanding different investment types and the market, but lately it’s mostly just going to work and bringing home steady paychecks and.
[00:10:16] And not as much active investment anymore. So if you had to put a name to that, what’s the role? I would say it’s the primary, um, money earner in the family. Ah, okay. Uh, and Natalie, what’s your role?
[00:10:31] Natalie: I handle the groceries and the clothes and the shopping. For the most part. Chris’s investments, I’m savings, but because I’m not the primary breadwinner, I move over money from my business.
[00:10:48] Checking when I can I move that over when I feel like it’s an okay thing to do when our checking has a good enough cushion.
[00:10:55] Ramit: Okay, that’s good. So if you had to put your role in a word or two, what would it be? The doer. Alright. And, uh, you mentioned investing is Chris’s thing. Are you privy to your family investments or not?
[00:11:10] Natalie: No, I would like to be. Mm-hmm. Um, not only involvement wise, but also I would love to increase my knowledge of investments in general because as of right now, it’s, it’s pretty minimal. Um, that wasn’t something I was exposed to growing up. He has had a financial advisor, the same one for how long Chris?
[00:11:32] Chris: Hey, he was my Grand’s financial advisor, and it’s been there, I don’t know, since I was a teenager or something.
[00:11:38] Natalie: His grandmother’s financial advisor. His parents’ financial advisor. Yeah. Really? Yeah. And so when we got married, what, eight years ago by marriage, he became my financial advisor as well.
[00:11:51] Ramit: He’s your financial advisor in law, right? What’s, what’s this guy’s name? Please don’t tell me it’s che.
[00:11:57] Natalie: Leonard
[00:11:57] Chris: Leonard.
[00:11:58] Ramit: Leonard. Leonard. Is that,
[00:12:00] Natalie: is that just as bad as Chad? Uh,
[00:12:02] Ramit: I’m about to find out. Is he independent or does he work for a firm? No, he’s Edward Jones. I know, right? Leonard, you piece of.
[00:12:13] Natalie: So I’ve tried to insert myself with, um, you know, being included on the accounts, getting a login, um, being a part of annual review meetings.
[00:12:23] But any emails or questions or updates or summaries are still never sent to me. They’re always sent to Chris. So I’m still
[00:12:31] Chris: Whoa, whoa, whoa. Why is that?
[00:12:33] Natalie: I don’t know,
[00:12:34] Chris: Chris. I, I haven’t dug in to see who’s on the, like notifications, automatic notifications on the accounts. But
[00:12:43] Natalie: he lives on the East Coast and he recently came to our state to visit some clients, including Chris’s parents.
[00:12:50] And Chris knew that he was coming in town. I didn’t know that he was coming in town. I’ve never met Leonard, so I feel, um, not included.
[00:12:58] Ramit: How else do you feel about this whole relationship?
[00:13:01] Natalie: Not, not positively at all. Um,
[00:13:03] Ramit: what, what do you feel
[00:13:06] Natalie: marginalized? Uh, disrespected, pushed aside? Not important.
[00:13:12] Ramit: Okay. I want to hear more about Leonard and the whole financial situation.
[00:13:18] I think it would help me to take a look at the numbers. Chris, you mentioned the net worth section, so I’m gonna ask you to read off the word in bold and then the number in full next to it for this entire first box, please.
[00:13:31] Chris: Okay, so we have assets at $893,500 investments, $634,624 savings, $33,850. Debt at $211,856 total net worth, $1,350,118.
[00:13:59] Ramit: Okay, $1.3 million in net worth. What do you think about all of those numbers, Chris?
[00:14:05] Chris: I don’t think very much about the investments and the assets because those aren’t. Liquid that we can tap into. And so what I tend to be a whole lot more focused on is the, the savings. And the savings is, you know, just the checking and savings account combined, which is thir roughly 33, 30 4,000 bucks.
[00:14:31] What do you think of that? Correct. It’s not the, the number in it that makes me nervous, it’s the, the burn rate. Okay. So do you feel good or bad? The, the number I think is good. That’s kind of like a goal. I would like it to be a stable number instead of a declining one. Alright. And what about you, Natalie?
[00:14:50] How do you feel about those numbers?
[00:14:52] Natalie: I feel positively.
[00:14:53] Ramit: Okay.
[00:14:53] Natalie: I know that after giving birth the first time, I, um, my work was set back a little bit and even more so after the second child. And I’ve just kind of accepted that that is a temporary part of life, um, that I cannot contribute financially. Kids cost money, especially when they’re younger.
[00:15:13] And so I feel just fine about the numbers. I’m not stressed out at all.
[00:15:17] Ramit: Alright, let’s take a look at the income this time. I’m gonna ask you, Natalie, to read off the combined gross monthly income please.
[00:15:25] Natalie: 13,696.
[00:15:28] Ramit: Okay, so that means that combined you make a household annual income of $164,000 per year. By a show of hands, who knew that number ish.
[00:15:42] Okay, hold on. Chris has his hand up immediately. Okay. Chris, you knew the number? 160 4K? Yep. And Natalie, what ish number did you think?
[00:15:50] Natalie: I was not aware until we filled out the CSP together. Um, how much Chris was making this, this current year,
[00:15:58] Ramit: what did you think that you made as a household together
[00:16:01] Natalie: closer to 180?
[00:16:04] Ramit: 180 and you make 1 64? I’m gonna count that as not knowing your income.
[00:16:09] Natalie: Okay. Deal.
[00:16:11] Ramit: Off by like 50 bucks. Alright. Even off by like 3000, 5,000. Okay fine. 15,000 is a lot of money.
[00:16:18] Natalie: I will take shared responsibility for that lack of knowledge.
[00:16:22] Ramit: That’s okay. I mean, again, like 50% of the people I talk to don’t even know their own household income.
[00:16:25] So you hit the statistic purely on the head. That’s fine. Who’s the one who makes 12,000 bucks a month? That’s you, Chris. Okay. And then Natalie, it shows you as making 960 a month, is that correct?
[00:16:40] Natalie: Yes. Up until this month? That’s correct.
[00:16:42] Ramit: Okay. So that’s like partially from your business, which you are doing part-time Is, is that accurate?
[00:16:48] Correct. Okay. Alright, great. So let’s look at the rest of the numbers. In the CSP, we have fixed costs at 81%. What do you think about that number? Too high and my way too high Opinion? High. Too high. Okay. I agree. It’s pretty high. Let’s take a look at the rest. Savings indeed are zero. Mm-hmm. And guilt-free spending indicates it’s 9% at $818, but I’m not sure.
[00:17:11] I believe that. Is it higher?
[00:17:13] Chris: Yeah. I, I wouldn’t say the guilt-free part is higher, but it’s the
[00:17:16] Ramit: spending’s higher, the spending part is higher. Okay. Yeah. It’s not guilt free. ’cause you are feeling guilty about it.
[00:17:21] Natalie: Correct.
[00:17:21] Ramit: So you are spending more than you make every single month. Yeah. Did you know that? I knew that.
[00:17:26] Natalie: I’ve had trouble believing it because in my occasional check-ins once or twice a month in our accounts, they seem steady to me.
[00:17:34] Ramit: And when you say accounts, do you mean checking account?
[00:17:36] Natalie: Checking and savings? Mm-hmm.
[00:17:38] Ramit: Ah, wait, savings.
[00:17:40] Natalie: We have a checking account and a savings account.
[00:17:43] Ramit: I, I get it. But why are you looking at your savings account?
[00:17:45] Natalie: Because I’m secretly hoping we, and trying to build up enough to have a comfortable cushion for Chris and or in the next several months. Get a different vehicle for myself.
[00:17:58] Ramit: But how would your savings account change? There’s $0 a month going towards your savings.
[00:18:02] Natalie: Occasionally I’ll put a hundred, $200 in there.
[00:18:06] Um, like once a quarter.
[00:18:09] Ramit: Sloppy.
[00:18:09] Natalie: It is sloppy.
[00:18:11] Ramit: Does the financial system feel sloppy? Like
[00:18:13] Natalie: Yes, absolutely.
[00:18:14] Ramit: All right. Like throwing a little bit here and a little bit there and like on a quarterly basis. Oh, I
[00:18:19] Natalie: hate that. It should be an automatic
[00:18:21] Ramit: Oh,
[00:18:22] Natalie: withdrawal from the checkings to the savings.
[00:18:25] Ramit: Okay. I agree.
[00:18:25] Why have you not automated money into your savings account?
[00:18:28] Chris: We had done that, um, a while back when, you know, we were trying to save up for a large purchase and then it got to the point where the checking account was getting down to like $5,000 and we could potentially, you know, not clear checks for, you know, daycare and mortgage and said, whoa, whoa, we need to, you know.
[00:18:53] Pull back on the rate, and I think we just ended up not putting anymore in savings on a regular basis.
[00:18:59] Ramit: Mm-hmm.
[00:19:00] Chris: Okay. So you
[00:19:00] Ramit: stopped it because it was getting too tight. Okay. I can understand that. And then what is this thing about Chris you didn’t use to see the value of a savings account?
[00:19:06] Chris: Why? Uh, well, with interest rates, what they were having it in checking versus savings is not a financial difference.
[00:19:15] Ramit: Hmm. The point of a savings account is not really to accumulate the interest. That’s not what it’s there for. The interest is nice, whatever. A lot of times you’re losing money to inflation. It’s just to have it symbolically and ideally physically separate because then it’s just not tapped. It’s like a junk drawer.
[00:19:31] Mm-hmm. You put stuff in a junk drawer, it’s just junk, it’s sloppy, but you have things in different drawers. Perfect. I know where all the knives are, et cetera. You know, it tells me a lot when I learned that Natalie and Chris are not contributing to their savings right now. They have about $34,000 saved, which is a good start, but they’re not building on it.
[00:19:49] There’s no system. There’s no regular habit of putting money aside. That’s how most people are. They literally say, oh, I’ll try to save more. We should try to save more. Try. What does that word mean? I never use that word in my life. Try either I’m gonna do it or I’m not. I’m not gonna try to brush my teeth.
[00:20:08] I’m not gonna try to breathe oxygen. Hey, Ramit, sayi. Remember to breathe oxygen tonight. Why? Why don’t you just do it? In fact, saving is actually easier than trying so many other things. ’cause you can set it up to happen automatically now when you are only spending and not saving even a decent cushion.
[00:20:25] Can feel like it is disappearing. It’s basically deac accumulating. And human beings hate seeing a number go down, especially men. And for someone like Chris who already feels anxious about money, that can create this constant feeling of scarcity. So when a big expense comes up, something like a home repair or medical bill, it doesn’t just feel bad, it feels like a threat.
[00:20:46] It’s like money is going away and there’s no plan. Ah. So yes, Chris’s reaction might seem extreme from the outside, but once you look at their financial system starts to make a little bit more sense. What I wanna know is why aren’t they saving anything? And that’s what we’re gonna get into next. Stay with me.
[00:21:06] So you have 4.7 months of living expenses in your emergency fund. What do you think about that?
[00:21:15] Natalie: I think having, um, three to four months of emergency living expenses in a separate account is a wonderful idea. Okay. My assumption is that the number that you’re seeing is also including your checking, which is, you know, what we use regularly for all of our bills.
[00:21:30] Right. Chris’s invisible comfortable number is $10,000 in the checking.
[00:21:34] Ramit: Okay. And do you, it seems like from your facial expression, you disagree with that?
[00:21:39] Natalie: Um, I don’t disagree or agree. Um, I’m guess I’m more so just making a point that I don’t know what makes $10,000 his comfort zone.
[00:21:48] Ramit: Why don’t you ask him?
[00:21:49] Natalie: How about you ask him, Chris, what makes $10,000 your comfort mark?
[00:21:56] Chris: Uh, well, with the combined fixed monthly expenses and um, what is coming in from my paycheck, I wanna make sure that there’s a sufficient cushion so that there’s no risk of any. Uh, overdraft. That cushion is about the size of a, a paycheck.
[00:22:16] Right. So 7,000 plus a two week paycheck after taxes is about that amount.
[00:22:22] Natalie: Okay. Well, next time, just explain that to me.
[00:22:26] Ramit: That was, that was a good explanation. I appreciate watching that. I’m curious. ’cause you know, I said, Hey, why don’t you ask him? And your response was, I’ve already asked him. Mm-hmm. But it seemed like you had not gotten that answer before.
[00:22:36] Why is that?
[00:22:36] Natalie: I don’t know. In fact, it’s, it’s something that we kind of joke about sometimes. Chris’s invisible $10,000 mark. You know,
[00:22:44] Ramit: I don’t think it’s invisible. It’s quite obvious to me. Like, to me, I would probably do similar thing.
[00:22:50] Natalie: No, it it, the rationale behind it makes complete sense.
[00:22:53] Ramit: You’ve never gotten that rationale before?
[00:22:54] Natalie: Correct.
[00:22:55] Ramit: What was the response you got back?
[00:22:57] Natalie: I don’t know.
[00:22:58] Chris: I might not have had the. Ability to verbalize the specific reason. I’ve always kind of just felt like you gotta have enough to cover plus a cushion, but, um, without looking at the numbers, like I guess it’s been harder for me to verbalize and explain that either of you use chat GPT?
[00:23:17] Ramit: Not really. No, not really. I’ve had experiences, whether it be using chat GPT or hiring somebody to clean my house or, or work at my company. And in my head I’m like, yeah, just like do this and do that. And like, yeah, it’ll like just make it look good and then they don’t do what I want because I never actually told them exactly what I want.
[00:23:40] It was just up here and I get back a result and I’m dissatisfied, but in part it’s my fault because I was not clear with what I was asking and I was not clear with what. Output I wanted. It was like a lot of swirled up feelings. One of the things that I want us to do is to be able to shine a light on these opaque feelings and these opaque beliefs we have about money.
[00:24:10] It’s actually okay if you wanna have 10 K in your checking, it’s okay if you wanna have 15 k, I don’t mind. But we have to be able to articulate why. Why? There’s gotta be a logic. The answer might even be, look rationally. It makes sense for us to have 10 K and I always want a buffer just in case, and my number is 25% fine, but we gotta be able to talk about it.
[00:24:36] How do you both feel about that principle? Definitely agree. That’s very logical. Okay, great, great. That’s part of what having these numbers in front of us helps us do. So let’s continue on. I noticed that your. Debt is $211,000. Is that just a mortgage? That’s it. Fantastic. Alright. And let’s take a look at the fixed costs because I’m curious about this.
[00:25:00] 81%. So you have a mortgage of 2000 bucks, which is pretty low. Daycare is relative. I mean that’s a big cost as it goes in your fixed cost, that’s $2,000. Looking at the rest. Insurance about a thousand. Okay. Car payment is 200. So what is that? Just gas? Yeah, that’s just gas. Alright, nice Groceries at $1,118.
[00:25:23] Okay, close at a hundred. Alright, phone one twenty seven. Subscriptions one sixty one. Nothing jumps out to me. It’s just that you have, um, daycare. If we drop it to zero, your fixed cost dropped to 58%.
[00:25:38] Natalie: Yeah. Yeah. So
[00:25:38] Ramit: there you go.
[00:25:39] Natalie: Yeah. It’s the daycare. It’s killing us.
[00:25:41] Ramit: Okay. You knew that Natalie, Chris, did you
[00:25:43] Chris: know
[00:25:43] Ramit: that?
[00:25:43] Chris: Yeah. I mean, when, when I see one daycare payment being equal to two weeks of my work after taxes, that just hurts. It hurts in what way? I always think about it as after you take into account fixed expenses, how many days of work does it take me to actually make a hundred dollars that I can spend guilt free?
[00:26:05] And when that number is, you know, many, many days that’s just like demoralizing. Do you remember when you were younger? Did you used
[00:26:14] Ramit: to. Count things by the number of quarters it would cost you or the number of hours of work at like an entry level job that it would cost you to afford this sandwich. Did you
[00:26:25] Chris: used to do anything like that?
[00:26:26] Sure. Back when I was younger I was mountain biking and climbing and that kind of stuff. And like how many days do I have to work in order to, you know, buy this new whitewater kayak that mm-hmm. You know, I need to get, ’cause I broke my last one.
[00:26:40] Ramit: I also did the thing based on quarters. ’cause you know, when I was a little kid it was like, how many arcade games would this be worth?
[00:26:48] And then I went to college and it was, how many loads of laundry is this taco at Jack in the box costing me? I stopped doing it because I found that it really was scarcity based thinking. It was the kind of thing a lot of people who work hourly jobs, they’ll, they think like this all the time and it really impedes their ability to ever enjoy anything where they’re not working.
[00:27:11] ’cause they’re like, oh, I’m at a picnic. In the park with my family, I could be earning $27. The other thing, um, when you tell me it hurts, that’s a very interesting word as it relates to money. I will say that I have tried to orient my finances in a way that very little hurts me. I would say it doesn’t feel good if I ever incur a late fee that I can’t get waived.
[00:27:41] I’m just like, God verit. That was really stupid. But especially when I think about kids and childcare, I almost think like what a gift. What a gift. To be able to pay for our kids to be safe and to learn from other kids and to be taken care of, and to be entertained, and then they come back to us safely and we can take care of them as well.
[00:28:05] How does that strike you? I mean, totally
[00:28:07] Chris: agree with that because that’s the exact. Rationale that we use to say, yeah, it’s gonna hurt financially, but it’s in the best interest of our kids and so we’re gonna do it anyways.
[00:28:20] Natalie: Ah, not only in the best interest of our kids, but also for, you know, my sanity and mentality.
[00:28:26] Chris: We knew full well what we were getting into and we just dove in. Okay. Alright. Finally,
[00:28:32] Ramit: I want to talk about the investments. $634,000 of investments. First of all, how’d you get that much? Because you’re not investing that much right now.
[00:28:46] Chris: My grandmother lived on a, a big farm and sold that farm when the nearby town was encroaching mm-hmm.
[00:28:55] To a developer and she set up, uh, accounts for the grandkids and extremely fortunate to have that. It allowed, uh, me to get through college without debt. It allowed us to. Put 40% down on our house and you know, there was still a lot of investments. And when I was a kid, if I got $20, 10 of it was gonna get put towards the investments.
[00:29:23] I invested and set aside money to an extreme degree when I was younger. Uh, hold on. How extreme? Whenever I wanna buy something, it’s, I sit and think about it and wait like a month to see like, do I really want this? Or is, is that gonna go away? So that often means I don’t buy a whole lot of stuff. And so I was just packing it away into savings.
[00:29:50] Ramit: Chris, I’m gonna put these numbers back up on screen. When you look at these numbers, do you feel safe? Do you feel anxious?
[00:29:57] Chris: What do you feel? Not so much anxious. I mean, I think they seem okay, but they also didn’t really align with. How I saw the, the changes in the accounts over the months, and so that’s why we went ahead and added a little bit of extra information off to the side there.
[00:30:18] Ramit: So here’s what Chris added some balances on the credit cards. 916 bucks for Chris, for Natalie, $5,555. There’s some bank stuff total spending 11,800 after tax income is 8,800. And so you are spending $3,000 more than you make. That’s a problem. What do you think about that, Natalie?
[00:30:42] Natalie: I look at the numbers and I hear what Chris is telling me, but I just think if that were actually the case, we’d be broke.
[00:30:47] We wouldn’t have any money in our checking or savings. Right?
[00:30:51] Ramit: It’s a little trickier than that. It’s a good question though. Okay. This is a very common thing. I’ll speak to people who are less than two months away from running out of money and they have no idea, and there are lots of reasons that this can happen.
[00:31:07] At the most complicated level, if you think about like population decline, you know, you’ve heard of countries like even the US or certainly Korea, China, like they’re having less babies. Mm-hmm. And so you can kind of project the future and you know the exact year where population will be declining in a way that is almost irre recoverable.
[00:31:28] Mm-hmm. You can see it happening decades away, but you go to the store, you go to the restaurant, it’s no different to you or me, but it’s still happening. It’s pure math. That’s the same thing on the personal finance level. You can be spending more than you make, but you have a bit of a buffer. Other countries have time and some population, you have a savings account, you have a checking account.
[00:31:55] You have money coming in and money going out, and sometimes those expenses are every six months or every 12 months, like your auto registration or whatever. Mm-hmm. So it kind, it’s like water in a river. It’s flowing. It’s not like it stops here and then it starts and it stops. It’s flowing, which makes it a little more difficult to see clear patterns.
[00:32:17] Okay. But if we look at the math, you are spending $3,000 more than you make. So by pure math in approximately 10 months, you are out of money in your checking and savings account. How do you both feel about that, Natalie?
[00:32:35] Natalie: Yeah, that’s scary. That doesn’t sound good.
[00:32:37] Ramit: Okay. First time you understood that?
[00:32:40] Natalie: Yes.
[00:32:41] Ramit: Okay. And Chris, did you know that before now?
[00:32:45] Chris: Oh
[00:32:45] Ramit: yeah.
[00:32:46] Chris: And so we, you know, pad that at the end of the year with, you know, end of year bonuses and then tax return and those come in and they boost the numbers back up. And then around, you know, October, November, um, I start getting nervous about how low it is and get on the horn about like, we gotta spend less, we gotta spend less kind of, you know, household austerity measures at that point.
[00:33:10] And how does that go over? It doesn’t go over that great, but, you know, Natalie can see it more easily because the number is low. Mm-hmm. And so I see the trend line and Natalie sees the number, and only when we get to the end of the year do both of our red flags are up. And then that one it, that’s when it becomes a lot easier to say, we really need to spend less.
[00:33:38] What do you both notice as you’re saying this out loud?
[00:33:40] Natalie: We’re understanding each other more.
[00:33:42] Ramit: I agree. Yeah. You’re both starting to see each other’s perspective. Chris, do you see why Natalie has been kind of surprised by your alarm around money?
[00:33:51] Chris: Yeah, and I’ve, I’ve said before that it’s, you know, it’s the burn rate, but I definitely understand her retorting with, but the numbers pretty high and it was kind of like that last year.
[00:34:05] What do you mean we Yep, we, how, how’s it changing Chris? I would say
[00:34:09] Ramit: Natalie intuitively understands burn rate, but probably not in the way that you do.
[00:34:14] Natalie: Correct.
[00:34:15] Ramit: So like Chris is like the burn rate and Natalie’s like, yeah, like burning. But like we also have a bunch of money in the checking account. Like Right.
[00:34:23] You’re not really connecting in part. ’cause there’s these technical terms and jargon that are being used and it’s not like let’s speak to each other in just plain English. Right. Obviously we wanna connect. Meet each other where we are. Yes. And I don’t think that’s been happening until now. That’s what I can help with.
[00:34:41] And then obviously also we want to be able to understand the basic language of personal finance because like anything, whether it be parenting or whether it be speaking Spanish, we have to learn the basic language in order to be conversant in it. Okay. So we’re gonna try to do both this investment number, I need to come back to it.
[00:35:02] So you have this money primarily from your grandmother. It’s $634,000. And let’s not forget that you are contributing 900 plus 900 post tax. So 1800 a month you are investing.
[00:35:13] Chris: There’s an additional there. The company that acquired my firm is an esop. Mm-hmm. And I’m not vested in that yet, but, um, they target and have been hitting about 12 to 15% of income, uh, a year into the ESOP account.
[00:35:28] And so that will come in later.
[00:35:30] Ramit: 12 to 15%.
[00:35:33] Chris: Yeah. That’s a lot. It’s. It’s been really good and we’re hitting our targets this year, so,
[00:35:39] Ramit: damn. 1500 bucks a month. Yeah. Yo, that’s a lot of money. I know.
[00:35:48] Natalie: That’s my man.
[00:35:49] Ramit: Real quick, if you’ve never heard of an ESOP before, it stands for an employee stock ownership plan.
[00:35:54] It’s essentially a program that allows employees to own shares in the company that they work for often as part of their compensation package. And now with any investment, there are pros and cons. The pros here include being a tax advantaged retirement plan. The risks are concentration risk, meaning you have too much of your financial life tied up in one company like your job and retirement, plus a lack of liquidity, which is typical of most retirement accounts.
[00:36:18] If this is you, if you are the rare person who has an esop, you can look up esop, ESOP online for more information. Let’s get back to the conversation. So you’re making like a lot more money than we originally saw here. You’re investing a lot more money. How come nobody’s happy? Y’all wanna fix it? That would be great.
[00:36:38] Nothing worse than a unhappy, rich person. I’m gonna fix this shit and you’re gonna be happier. And that’s the way it’s gonna be. Alright, love that Sounds good. Alright. Look at these freaking numbers. Leave aside the esop, leave aside all this other, if we just take the 634,000, which you have invested currently, okay.
[00:36:57] And we take your current trajectory of how much you’re investing today by the time you’re 65, how much are you gonna have? Chris, do you know?
[00:37:04] Chris: I
[00:37:04] Ramit: forget what
[00:37:05] Chris: the, the last numbers that I’ve seen were, but I know it was somewhere or near two. Two. Who did your math?
[00:37:14] Ramit: Leonard. Leonard, you suck at math. He’s, oh, you know what?
[00:37:20] He might be right after. He accounts for all well after his fees, his fees that he’s taking off the top Leonard. Well, um, let put it this way, when I calculate investment returns, I never calculate a 1% expense for a financial advisor because why? The, would I pay 1% a UM? How much are you paying?
[00:37:40] Chris: I don’t know the specific answer because he’s told me like $500 for a year, but I don’t, I imagine he’s, that’s hiding, uh, the ball a bit.
[00:37:51] Ramit: I always find it amazing that people will feel anxious about money, that you will use words like hurt and like it will be catastrophizing. But they will literally spend hundreds of thousands of dollars in fees and not even know how much they are paying. Be totally okay with it. Yep. The way we calculate it, once Leonard loses his job, which as far as I’m concerned, I can make a call right now.
[00:38:22] I love firing financial advisors. But anyway, we calculate that. When the time comes to for you to be 65, Chris, at your current trajectory, assuming no raises, you will have $6.3 million.
[00:38:37] Chris: What do you make of that? If we can get on that trajectory as opposed to the now, that would alleviate all of my long-term concerns.
[00:38:46] Great. And so that’s great. And now we’re just making sure that, you know, the, the burn rate isn’t too high on the checking and savings and that’s a whole lot easier of a problem to deal with. Agreed. Natalie, I wanna loop you in here.
[00:39:00] Ramit: What are you hearing right now?
[00:39:02] Natalie: That’s nice to see his face look a little more positive.
[00:39:05] That makes me happy. Mm-hmm.
[00:39:06] Ramit: Do you feel connected to these numbers at all?
[00:39:09] Natalie: The investment numbers? No.
[00:39:10] Ramit: Yeah. I could see you looked a bit withdrawn or maybe like, oh, this is like them talking about the investments.
[00:39:19] Natalie: Yeah.
[00:39:19] Ramit: Not me. Am I reading that correctly?
[00:39:22] Natalie: Correct.
[00:39:22] Ramit: Okay. And and is that because this is from his grandma and he’s got the relationship with the advisor and you’re not particularly involved?
[00:39:30] Natalie: Yes.
[00:39:31] Ramit: Mm-hmm. Do you wanna be involved?
[00:39:33] Natalie: Absolutely.
[00:39:34] Ramit: Okay. Okay. How long have you two been married?
[00:39:37] Natalie: Eight and a half years.
[00:39:38] Ramit: Okay. Is there a prenup in place?
[00:39:40] Natalie: No.
[00:39:41] Ramit: So there, is there any objection to talking about the money sharing the money, discussing all details of the money? The investment specifically? Yeah. No concern.
[00:39:52] Okay. It just has not happened.
[00:39:54] Natalie: Correct.
[00:39:55] Ramit: I can see why that would be a major problem.
[00:39:58] Natalie: Chris is really busy, right? He puts a lot of time and energy into work for us.
[00:40:05] Ramit: Are you, are you now defending him?
[00:40:08] Natalie: I guess I just wanna acknowledge, take a minute to acknowledge how much I appreciate you.
[00:40:14] Ramit: I appreciate that we are talking about millions and millions of dollars.
[00:40:18] Natalie: I know about a year ago we had the conversation of switching how we do our investments, not having Leonard, right? Mm-hmm. And, um, correct me if I’m wrong, Chris, your response was, um, it would take a lot of time and energy to change things over.
[00:40:36] Ramit: Hold on. I’m feeling hurt now. Now I’m feeling pain. The amount of lock-in that financial companies have over everyday people blows my mind.
[00:40:47] I’ll talk to people, I’ll talk to a black couple. They’ll be like, oh, I have this. Wells Fargo. Wells Fargo hates minorities. They actively discriminate. They have been cited. And they’re like, I’m like, why the are you with this bank? And they go, well, you know, I’ve had it since I was a kid. I go, what the, I don’t mind if you have a teddy bear as a 45-year-old, but your old Wells Fargo account.
[00:41:09] And then meanwhile they’re getting gouged for freeze every fees every single month. Then they have a financial advisor, che, or in this case, Leonard comes around once every two years, like one of those galloping salesmen. Does nothing, doesn’t talk to the wife, won’t involve her, not even clear how much you’re paying.
[00:41:28] And people go, well, it would be a lot of work. Damn, if I was a multimillionaire, I would pay somebody to come in and just do this for me. There’s so many ways of doing it. Here’s the point. I’m trying to get you to get aggressive. This time thing doesn’t work on me. It just doesn’t. ’cause this stuff is not that hard.
[00:41:45] You can knock it out in a couple of weeks. We’re talking about millions of dollars. What could be more worth it? Alright. And more importantly, we’re talking about the two of you actually being unified. For the next 40 years.
[00:41:57] Natalie: So the sooner we start, the better.
[00:41:59] Ramit: Yes. Let’s not rush. Let’s try to figure out what’s happened here.
[00:42:02] But I would like to understand how we got here and where do we want to go. Notice the communication issues. Chris is fluent in the language of finance. He can talk asset allocation, financial planners, year-end cash flow. To him, that feels like being responsible, but Natalie does not speak that language.
[00:42:21] She’s smart and she cares. She wants to be involved, but she doesn’t have the same financial background. So when Chris starts rattling off numbers, they don’t connect with her. When he talks to their financial advisor without her, she feels excluded in money and relationships. Being excluded is a huge no-no.
[00:42:41] It is an instant red flag. Stop everything. Fix it. And you can actually see the effect of their communication style when you look at their checking account. Think about it. They spend it down all year. They refill it then, but they never actually talk about how it works and what it means. This is happening right in front of them, but because they don’t have a shared language around money, they’re experiencing the same situation in completely different ways.
[00:43:10] Now, I do wanna say that this is one of the most common dynamics I see. One partner handles the finances and they assume if there’s a problem, I’ll bring it up. The other assumes, if I don’t hear anything, we’re fine. But all of this is shrouded in darkness. Neither of them has ever talked openly about what they want and what they need.
[00:43:29] You know, most of the time people don’t even know what they want with money because they don’t know the basics of personal finance. If you wanna get good with money, you need to know the basics. This is actually pretty easy. I can help you do it fast. I have a program called Money Coaching. It’s gonna help you understand the basics of your money, and if you’re in a couple, get on the same page with your partner.
[00:43:50] You could stop just worrying about money and start actually using money to live your rich life. Sign up for money coaching at iwt.com/money coaching. As for Natalie and Chris, a lot of their fights about money are around the lack of shared expectations. So I’m wondering what would it take to get on the same page with how they talk about money and make decisions about money and even dream about their rich life.
[00:44:15] Next, we’re gonna dig into that. Whatcha gonna do with 6 million bucks at 65.
[00:44:22] Chris: Part of, of that amount is, you know, the, the kids’ college funds, um, say probably about 80 k of that is the kids college funds right now. Okay? So that’s definitely gonna be a big expense. My knees aren’t getting any better and so the sooner I, I can retire and, you know, enjoy that the better.
[00:44:43] Ramit: Natalie, what about you? What are gonna do with six? $0.3 million at age 65.
[00:44:49] Natalie: At 65, our kids will be more than taken care of. That’s not a, that’s not a concern for me. I wanna do things that are solely focused on the two of us.
[00:45:01] Ramit: Most people do not simply lock their money up and let it sit there and spend nothing until 65.
[00:45:07] That’s not the way human beings work. Okay. What I am trying to just understand is like, have either of you ever dealt with $6 million?
[00:45:16] Natalie: No.
[00:45:17] Ramit: That’s a tremendous amount of money. So right now, day-to-day existence is focused on questions like, do we need to transfer a thousand dollars over from this, et cetera, right?
[00:45:30] Mm-hmm. And I get that it’s, it’s prime time parenting. Childcare is expensive. Uh, one primary earner that’s totally normal at this age. But you also have to realize like you got a Turkey in the oven. That is gonna turn into $6.3 million approximately. So we have to put things in perspective that if we are arguing over a thousand dollars, like what are we actually doing here?
[00:45:56] Does it kind of sound absurd? I never think
[00:45:57] Natalie: about that larger picture.
[00:45:58] Ramit: Yes, very few people do because we are so comfortable playing small. Hey, I want 10,000 in the checking account. No, I don’t. I think 8,000 and you go 10, 15 years arguing about two grand.
[00:46:13] Natalie: I don’t like playing small at some at most times.
[00:46:16] I feel like it’s a necessity.
[00:46:18] Ramit: Is it a necessity to play small now
[00:46:20] Natalie: and until we put a game plan in place to boost our savings and have more cash on hand so we’re not losing $3,000 every month?
[00:46:31] Ramit: That’s a good answer. I agree with that. And if you’ve done that
[00:46:35] Natalie: when that’s in place, I would love to think big.
[00:46:39] Chris: Love it. That’s a fair request. Chris, how do you feel? I mean, I kind of feel the same way and a lot of that is because, you know, a lot of that net worth is, you know, locked up in our house that has doubled in value but was built in the 1970s. So I have to pull out of the checking and savings to fix all the stuff that breaks constantly in this house that’s now worth twice as much as we paid for it.
[00:47:07] It, it all feels like that’s cool. That’s money over there that doesn’t exist right now. I’m working with this, which is a whole lot less.
[00:47:16] Ramit: Yeah. You, y’all are living the plight of many Americans. You, you happen to be in a much better position than many Americans, but many Americans have paper wealth.
[00:47:27] They’re in a house that’s worth like five times more than they bought it for in whatever year. Yeah. They may be wealthy on paper, but when it comes to. Buying groceries or taking a trip, they’re like, where’s the cash? Right. And I can see that is the case for you, although you have options that many others do not.
[00:47:45] Yeah. When you look at the CSP, did anything surprise you in going over these numbers on our first glance,
[00:47:52] Natalie: besides the $0 to savings? I mean, it’s really just those, the high fixed costs at 81%, that in general, that jolts me.
[00:48:01] Ramit: Yeah. You know that many parents have unusually high costs when their kids are young.
[00:48:06] I mean, that makes sense. What we need to do when we look at this, at least the way I interpret it, is, hey, we’re gonna have high structural fixed costs for X number of years. That is life. We have to accept it. What? What is the trade-offs? It means we’re probably gonna save less. We’re probably gonna have to adjust our investments for a while.
[00:48:25] Probably gonna have to cut back on guilt-free spending. But we know that it is a temporary thing financially. We’re putting more here. But we know it is a finite amount of time
[00:48:37] Chris: and we’re already working on that. Natalie has just started doing substitute teaching and has, you know, just what it’s been like two weeks now.
[00:48:44] So, I mean, we’re, we’re putting in an action. We know that we have to do something.
[00:48:48] Ramit: Cool. Alright. If we end our conversation right now, and you go back right to the way you were, what do you think your kids would learn about money as the years go on from the two of you?
[00:49:01] Chris: For me, I think they would get the idea that it’s something to be, uh, stashed away.
[00:49:06] Okay.
[00:49:07] Natalie: I suppose the example that I would be setting is be frugal as possible in all areas as possible, in as many areas as possible because of the constant reiteration of spend less or make more that continually comes from Chris.
[00:49:24] Ramit: And maybe investing is something that Dad does not. Mom, yes, Chris? I’m very curious about what you remember your family saying about money when you were younger.
[00:49:35] Chris: I don’t remember a whole lot specifically, but you know, we were there getting our wonderful advice from Leonard, right? Um, and I really took to heart the concept of, um, I would say I want to spend money on something. And my parents would say, do you really want that? And it’s a fair question to ask. And I was just like, do I want that?
[00:50:00] I don’t, I don’t know. And so maybe that’s probably a lot of the reason why I will spend a long time researching things before I buy them and then maybe not buy them at all because that, that is a pretty core tenant of how I view spending money. What age did they say, do you really need that? It was probably, you know, like when I wanted to buy something dumb in middle school, and it’s a lot fair of a question then, but it just hasn’t left me.
[00:50:32] Ramit: You ever get really into certain things talking about like video games, musical instruments,
[00:50:37] Chris: skateboards? Oh yeah. I mean, I, my hobby is collecting hobbies. Mm-hmm. And so I would just get really into one thing. Mm-hmm. And then I’d shift and get really into the next thing. And I just went through the whole gambit of extreme sports.
[00:50:51] Yep. When you look
[00:50:53] Ramit: back, like, do you still do all of those sports?
[00:50:56] Chris: No, I still have toes in them. You know, I still have a kayaks and, you know, it’s nice to go kayaking every once in a while. Less waterfalls, more relaxing stuff, still do some climbing, mountain biking. It’s just all to the, uh, on the safer side of things.
[00:51:10] And I sold all my parachutes and wingsuits. Mm-hmm. That’s out
[00:51:15] Ramit: wing suits. Like you would jump off the mountain like that.
[00:51:18] Chris: Yep. Mountains and middle of the night off of antenna towers.
[00:51:22] Ramit: Wow. Yeah. That’s crazy. The reason I’m asking about these hobbies and if you still keep a toe in them, I had a hunch this idea that something just clicked for you when your parents said, do you really need it?
[00:51:37] My antenna go up when I hear that because you know a lot of parents say that to their kids. Some 14-year-old kid wants some bike or something. Do you really need it? Yes, I need it, mom. But the fact that you like dove into it, double, triple, quadruple down, and that story is one that you still have here.
[00:51:55] Yeah. Even though you make a very high income, that tells me that perhaps this is, uh, systemic across different parts of life, that you get really into something and importantly, you don’t actually stop doing it. You keep a toe there and you add something else on, which tells me. You’re probably keeping some of that 14-year-old Chris views on money, even though your financial situation has drastically changed.
[00:52:24] How does that strike you? I don’t disagree with that. And Natalie, I always like to ask the partner ’cause they always know best. What do you think, Natalie?
[00:52:32] Natalie: That makes total sense to me. He’s always been a very methodical, planning, calculated person when it comes to large financial purchases.
[00:52:43] Ramit: How, how did your grandmother
[00:52:45] Chris: get so wealthy?
[00:52:46] My, um, grandpa was, uh, he was an accountant and had his own firm and, you know, they did pretty well. Was this in Colorado as well? No, this was back east. Okay. Um, and my grandfather passed away when I was like five years old, Uhhuh and uh, and grandma’s still kicking. Wow. Still? Yeah, she’s 95. And Chris.
[00:53:14] Natalie: She will be 98 in February.
[00:53:18] Ramit: Love you Granny. Great job with the investments.
[00:53:20] Natalie: She’s the best.
[00:53:22] Ramit: Alright. Um, does she ever talk to you about money? Sure. I wanna know what somebody from that generation says about
[00:53:29] Chris: money. When she gave us, uh, the grandkids, you know, a nice pool of money to have from the sale of the farm. It was, you can use this for three things.
[00:53:42] You can buy a house, start a business, or go to college with it. And or any combination of those three things. It was talked about as like, you know, this is not just screwing around money, this is, do something positive with it and turn it into something. And as, as
[00:54:02] Ramit: grandma’s saying that, Chris. Like is looking depressed at the floor and he slowly starts unpeeling his Red Bull wingsuit.
[00:54:10] He’s like, alright granny,
[00:54:14] Natalie: you watched that YouTube video. Dang, he’s on it
[00:54:19] Ramit: now. Did your grandmother know that she was wealthy?
[00:54:24] Chris: Yeah,
[00:54:25] Ramit: she knew. Okay. Yeah. And did your parents know, I assume they inherited a bunch of money to, did they know they were wealthy? The inheritance hasn’t come through yet. ’cause luckily grandma’s still alive.
[00:54:39] Right. But, uh, oh, so your grandma has not passed over that money to your parents?
[00:54:46] Chris: Uh, no. Um, so I mean, there was a, an account that was established for the grandkids, but not for her kids because they were in a solvent and stable financial situation. Then wait, you’re,
[00:55:01] Ramit: isn’t your parents like 70 years old now?
[00:55:03] Yeah. Does your family talk about wealth as a wealthy family would? I would
[00:55:08] Chris: say that we do not, the conversations were a lot more focused on, you know, make sure you have a, a good job and, you know, when you go to school, make sure you go to school for something that is, you know, a good career path. And it was all conversations that would indicate to an outside listener that we’re not talking about people that have money, we’re talking about people who, you know, are starting trying to start from, um, a lower level.
[00:55:40] Ramit: There you go. Bingo. I agree with that. Okay. So it’s so interesting to, to contextualize the messaging that you have received, which is great messaging, but also a bit off kilter with your actual financial position. Natalie, what do you remember about your family saying about money when you were younger?
[00:56:00] Natalie: I grew up with a.
[00:56:03] Single mom. So, um, she was incredibly frugal. She had a credit card only for emergencies and would save up how, you know, to buy something. We never went out to eat before school started. We went to the outlet mall, you know, a few towns away to get, you know, cheap clothes. There was never fussing or a lot of conversation, you know, comparing to other people or families.
[00:56:33] I just, uh, picked up on the example that we live within our means and always try to do your best to, to, um, get whatever you can.
[00:56:44] Ramit: Would you describe your socioeconomic status growing up as middle class, lower middle class poor? I would
[00:56:50] Natalie: say lower middle class.
[00:56:52] Ramit: Mm-hmm. And how did you feel about that?
[00:56:55] Natalie: I didn’t feel embarrassed.
[00:56:56] I didn’t feel uncomfortable. I didn’t feel like I was wanting either. Okay. Um, my mom made sure that we had everything we needed.
[00:57:04] Ramit: Okay. I appreciate that. Is your mom still alive? Yep. How is she doing with money?
[00:57:09] Natalie: Good.
[00:57:09] Ramit: Wow.
[00:57:10] Natalie: Um, yeah, she was in the public school system her entire career, so she worked really hard to put money into savings, huh.
[00:57:19] For her retirement account so that she quote, does not have to be a burden on her children when she is older.
[00:57:25] Ramit: What verbal messages did your mom give you about money? Did she say save? Did she say we can’t afford it? What, what kind of stuff did she say?
[00:57:33] Natalie: Both.
[00:57:34] Ramit: Mm-hmm.
[00:57:35] Natalie: Um, it’s important to save money to purchase things that you know you’re gonna need plan ahead.
[00:57:39] Ramit: Mm-hmm.
[00:57:40] Natalie: There were many times when she said, we can’t afford X, Y, or z. Did
[00:57:44] Ramit: you say anything about men and money? A man is not a financial plan. Always saved for a rainy day. You never know what will happen in a marriage, that kind of thing.
[00:57:53] Natalie: Yes, she has always wanted me to be, um, financially stable and independent.
[00:57:58] Ramit: Are you independent financially?
[00:57:59] Natalie: If Chris were to disappear, like there’s no, Chris and I have two children, no. I would not be able to financially take care of the kids.
[00:58:06] Ramit: You guys have a will?
[00:58:07] Natalie: Yes.
[00:58:08] Ramit: Yep. Okay, and will life insurance policies, you have a li oh, you have life insurance. Is that through Leonard?
[00:58:14] Sure is. Okay. All right. But you’re a dependent on those policies and in the will, Natalie?
[00:58:20] Chris: Yes. Everything goes to Natalie and contingent is, you know, to the kids. Great.
[00:58:27] Ramit: When was the first time the two of you substantively talked about money?
[00:58:32] Natalie: Did we have that conversation at all before we got married?
[00:58:36] Chris: I think we did.
[00:58:38] And it like, I just wanted to. Made sure that it wasn’t going to like surprise you, because I think at that time there was, it was still a pretty large sum. What did you say, Chris? How’d you bring that up? I, I, I imagine I would’ve, you know, said something like, you know, Hey, this is, this is not like money that we have to tap into, but just so you know, there’s, you know, like 300 something thousand dollars in this account.
[00:59:10] What would your reaction have been, Natalie?
[00:59:12] Natalie: Surprised. Slightly relieved? Mm-hmm. Uh, in the sense of having a stable future.
[00:59:19] Ramit: Now, having known each other for 10 years and having grown up in different socioeconomic upbringings, have you discovered any surprising ways that the two of you treat money?
[00:59:31] Natalie: From my perspective, surprisingly, no.
[00:59:33] Chris: We come at it from very, very different angles, but. She comes at it as the, you know, be frugal ’cause we, you know, really need to, and I come at it as the be frugal because that means you can save more. Is that not the same thing? It is, but you know, for me it wasn’t like an a necessity. Necessity or out necessity requirement.
[00:59:57] It was a voluntary thing. You know,
[01:00:00] Ramit: this is very interesting.
[01:00:02] Chris: You
[01:00:02] Ramit: both are frugal, kind of for similar reasons. And I guess my question is, is it working?
[01:00:10] Natalie: Obviously not. ’cause we’re burning through, the burn rate is three grand a month.
[01:00:17] Ramit: If we fix that, is everything else fixed? Very much. Yeah.
[01:00:22] Chris: I mean, we gotta deal with Leonard Grant.
[01:00:24] Yeah. We’ll talk about letter two. Should we
[01:00:25] Ramit: just fix those two things and then we’re good? Yes, please. Okay. The inheritance Chris got from his grandmother was life changing. I love that for him, and I applaud her generosity, but I think there was a missed opportunity. No one ever taught him how to use that money.
[01:00:41] And this is where I have a bone to pick with old, rich people. Well, I have several bones. You NIMBYs preventing housing from being built in every city in America. But that’s for another conversation. As for you giving a fat check to your grandkids, what the hell is wrong with you? Oh, wow. You wrote your grandkids a check.
[01:01:00] That’s so not, I appreciate it. Seriously. But how about teaching them how money actually works? Anyone can write a check, but actually teaching kids how money works is how true generational wealth really functions. My parents gave me generational wealth. They didn’t gimme a check. But they modeled how money works.
[01:01:22] My mom showed me how creative you can be without a lot of money. My dad helped me open up an investment account as a 14-year-old, and he encouraged me to learn how investing works. That was far more valuable than my parents giving me a check for $5,000 or even $50,000. Oh, now I know what you’re thinking.
[01:01:37] Ramit must be nice. You made a bunch of money and now you’re just saying your parents could have given you a hug and it’s all fine. If somebody gave you $50,000 right now, would you know exactly what to do with it? Would it cure your feelings of scarcity, a feeling like you’re behind? No. If we’ve learned anything from over 200 episodes on this podcast, the way you feel about money is highly uncorrelated with the amount in your bank account.
[01:02:01] Most people don’t magically learn how to manage money just because they inherited some. They just stumble around like everybody else. They just have a little extra money in their checking account. I try to model this in my own life, like some of my author friends will call me up, they’ll ask me for a blurb as a matter of personal policy.
[01:02:17] I don’t do book blurbs, but I will offer them something way more valuable. I’ll get on an unlimited number of calls with them and I will help them with their marketing strategy. I’ll help them promote their book. Or my nephews, they’re 16 years old. I recently took ’em on a tour of Stanford and I talked with them for days about why it makes sense to work really hard in high school, and I took them out to eat and I took ’em on a flying lesson.
[01:02:40] When they were late for one of our events, I gave them some tough love. They don’t just need a check. They need time. They need to see what’s possible. And right now, I think Chris and Natalie are at that exact turning point. They’re on track to have millions, but they are still treating money with a scarcity mindset.
[01:02:59] If you wanna know how to change your mindset with money, that’s coming up next. Before we do the numbers, what patterns do you notice that you have brought from your childhood into this relationship with money? Chris? I
[01:03:15] Chris: think I brought, um, a little too much reluctance and skepticism on spending money.
[01:03:23] Okay, great. Natalie,
[01:03:26] Natalie: be conscious of the cash that you have and be frugal with what you have. Save up for what you need and be creative with what you do. Have to make it stretch further.
[01:03:35] Ramit: You know, it’s interesting hearing your lessons. I agree with everything you just said. I think that. Those are definitely messages you’ve brought in.
[01:03:42] I think some of those are good. Some of those maybe not, not as good. Can you see the difference in your financial situation versus your childhood upbringing?
[01:03:53] Natalie: Yes, absolutely.
[01:03:54] Ramit: Let’s name ’em your expenses. Are they higher or lower than your parents?
[01:03:59] Natalie: Higher.
[01:04:00] Ramit: Way Higher. Childcare costs were not the same. Your house is a nice price, but I’m sure it was more expensive than what they paid.
[01:04:07] And on and on and on. Mm-hmm. Salaries also probably way higher.
[01:04:12] Natalie: Yes.
[01:04:13] Ramit: Okay. Saving matters, there’s no doubt about that. We live in a world where investing is much easier. You know, there’s like low cost index funds, there’s robo-advisors, all kinds of stuff. But what I notice is we could essentially lift the way that you both treat money, plop it back 35 years ago and it might slot.
[01:04:40] Somewhat similarly into how you were raised. Save money. Like, let’s not get anything we don’t need. Chris, I see you nodding your head. What do you notice? I
[01:04:49] Chris: absolutely, it, it, it feels the same to me and I think it would take a lot to break that free for my brain.
[01:05:00] Ramit: Mm. I mean, you’re even using the same advisor.
[01:05:03] Chris: I know. Yeah.
[01:05:05] Ramit: So like literally pick it, shift it, change a couple things and here we are. Yeah. I don’t mind a little bit of continuity. I love it. I love taking what the past generation had and, and keeping the best of it. I love that. And I like adapting to current scenario. So let’s, let’s try to do that. Um, I want to understand how you deal with money as it stands, Chris feels.
[01:05:32] Tighter when there is an unexpected expense and it causes you Chris to, to stop and to not be able to respond in, in multiple ways and that causes conflict. Yeah. And um, Natalie, you said that when Chris shuts down, it feels like losing your partner.
[01:05:50] Natalie: Oh yeah. It takes our relationship down so many notches.
[01:05:54] Ramit: Mm-hmm.
[01:05:55] Natalie: We have to work to build it back up again and it’s so draining and depleting from our relationship. We work back and get there because we love each other, but it’s a lot of work.
[01:06:05] Ramit: The metaphor you just shared is really powerful. And you even used your hand, you said, it takes our relationship down notches and then we have to work back up.
[01:06:15] It’s almost like I can see water draining from a bucket and then you have to refill it over and over. And that reminds me of what happens by the end of the year with your finances. The money gets drained and then hopefully we get this bonus or something and then we can make it another year. Yep. And along the way, when it’s draining, it’s causing conflict, it’s causing a wedge, it’s causing tension.
[01:06:42] I would rather have that bucket stay steady or even just increase a little bit every single month.
[01:06:47] Natalie: Me too. Ramit. Okay.
[01:06:50] Chris: Natalie’s on
[01:06:50] Ramit: board.
[01:06:51] Chris: Chris, how about you? Yeah, that’s my goal. I always say it’s not the number, it’s the trend.
[01:06:56] Ramit: Okay. I hear you on that. I’m going to guess that phrase does not connect with Natalie.
[01:07:01] Natalie, am I right or wrong?
[01:07:02] Natalie: Correct.
[01:07:03] Ramit: It doesn’t connect with, for me it’s,
[01:07:04] Natalie: it’s the number and the trend, I suppose.
[01:07:07] Ramit: Is it, is it any of those or is it like, I wanna feel connected to my partner?
[01:07:11] Natalie: It’s more so I wanna feel connected to my partner. Yeah. When, when one of us feels, um, emotionally. Unstable.
[01:07:21] Ramit: Mm-hmm.
[01:07:22] Natalie: The other feels unstable as well. And our kids.
[01:07:25] Ramit: Yeah. Especially as they get older, after one of these things happens where there’s an unexpected expense and then there’s a conflict and a retreat, how do you both build, build it back up the relationship?
[01:07:38] Natalie: I’ve tried many different things, right? Um, the thing that works currently is I don’t engage because even words of support, you know, verbalizing, I’m here to talk.
[01:07:52] Would you like to talk? Tell me what you’re thinking, what you’re feeling. That currently does not even help. He’s so fixated on what’s wrong. So my current strategy is to be neutral and supportive from the background, making sure. I’m helping with quote, you know, his duties or his chores, or making sure that he feels supported in other ways without like talking or trying to get him to open up and talk.
[01:08:24] So waiting for him to come to that mental, um, slow down so that we can work towards a positive arch again. Okay.
[01:08:35] Ramit: Chris, do you see this as a problem? Yeah. Okay. What kind of stuff have you done to try to improve your responses to these unexpected expenses?
[01:08:47] Chris: I’ve tried to bring myself back from the, you know, what’s the worst case scenario that really, that catastrophizing?
[01:08:56] Mm-hmm. Right? Where if I don’t know what’s wrong, then I need to just, you know, try to get more information. But it’s hard. I’ve always seen it as just a math problem. Inverses out. And when the big expenses come along, that’s why we need to have more coming in than going out. And that just makes me think that these issues are gonna come up no matter what.
[01:09:22] So you really need to fix the money issue. And so it becomes about the large expense and what could come after that. But then it also just shines a light on the, uh, the burn rate. Right. And that gets me concerned. It all leads back
[01:09:39] Ramit: to catastrophe.
[01:09:42] Chris: Yep.
[01:09:42] Ramit: This isn’t like a minor problem, right? Oh, it’s like, this is kind of annoying.
[01:09:45] Somebody’s leaving candy wrappers somewhere. That’s annoying, but whatever. This is a big problem. It’s affecting your wife, it’s affecting your kids, and it’s creating a wedge in your relationship. And each time that bucket goes down, it becomes a little harder to refill.
[01:09:58] Chris: Yeah.
[01:09:59] Ramit: So the kind of answer I might be looking for would be, uh, I’m seeing an individual therapist.
[01:10:05] Uh, I’m working on inoculating myself by trying to deal with this unexpected expense, which is only like 50 bucks, and then I’m working on that exposure therapy and then I’m gonna increase it to the next $200 expense, et cetera. All these things that a great therapist can help you with a coach, a book, but it’s the strategic approach.
[01:10:28] If you recognize this is an issue and I need to really improve it, would you be open to trying some of those things?
[01:10:35] Chris: I, I think that engineering science spreadsheets, part of me is just like, okay, that’s cool, but it’s not gonna solve a math problem.
[01:10:46] Ramit: I, I hear you loud and clear and because I have so many friends that are engineers, they’re in cs, like, I grew up with these guys.
[01:10:54] I love these guys. I totally get that mindset and we’re gonna look at the math. No doubt. But I can tell you that this is not just a math problem. It’s actually here, psychology and mindset, and actually here feelings about money, which started almost certainly back in childhood, and I am willing to bet back with your grandmother and grandfather.
[01:11:22] So we’ll tackle the math, but it goes way deeper than numbers.
[01:11:27] Natalie: That was really encouraging. Thank you. I think it, especially in this day and age, it’s important for adult males to know that not only is it acceptable, but it’s so helpful not just for themselves, but for their entire family to think that way, you know?
[01:11:43] Ramit: Yeah. I so appreciate you saying that. I was just thinking yesterday, I was thinking about. Masculinity in 2025 and 2026 and how different it is. When I think about masculinity, the way that I grew up, it was like big muscles and you know, cursing and just this sort of bro type stuff that we all kind of imagine.
[01:12:04] And when I think of it now, it’s like, yeah, like if you wanna work out, that’s awesome. And mental health and relationships with friends, like all of it. All this stuff that would’ve been seen as like a little soft. I think we can all be very powerful, especially as a husband and a father when you’re like, yeah, like I’m gonna crush this math, I’m going to dominate these numbers.
[01:12:30] And also we go to therapy and maybe I even go to therapy and I can do all of these things. Mm-hmm. And so that’s my approach with this as well. Have the two of you talked about what your rich life is.
[01:12:43] Natalie: We’ve floated around ideas, but never set down and wrote a list together. Do
[01:12:47] Ramit: you wanna do it right now?
[01:12:49] Natalie: Heck yeah. Uh, the first thing I have on my list is being able to hire a fix it person.
[01:12:54] Chris: Alright, I love that Chris. I would much rather, you know, go camping and biking with the kids. Beautiful. Love that. Okay,
[01:13:03] Ramit: that’s awesome. Let me hear one individual one from each of you now.
[01:13:08] Chris: I’d love to have a, an old project car to work on.
[01:13:12] You know, my buddies send me pictures of all their project cars that they’re tearing apart and fixing. I’d love to do that too.
[01:13:19] Ramit: Okay. I love that. That’s cool. Thank you for sharing that. And Natalie, what about for you?
[01:13:24] Natalie: I would love a kiln in our garage.
[01:13:27] Ramit: Guys, I’m loving this so far. So the reason I ask this is, one, I love to see people think of money as a source of possibility because we have to be able to live a life that is bigger than simply paying our bills.
[01:13:42] Even if you have a hundred thousand dollars in credit card debt, there has to be a future that is bigger than today. Uh, the other thing is I just like to see people smile. I like to see what gets you pumped, tells me a lot about you. And more often than people think, there’s actually a way to get some version of that.
[01:13:58] I want to look at some numbers. Okay. And I wanna start off with the investments. So first of all, uh, it’s important that these investments become shared. They become collaborative. Right now, the way that I see it, it’s almost like Natalie moved into Chris’s apartment and there’s no drawers for Natalie. It feels like we’re living in Chris’s apartment.
[01:14:25] But actually, that’s not the intention. Both of you have said you’re more than willing to, to share and combine space and do everything together. I, I see the love, it’s very obvious, but the investments have not been properly communicated and. The way I see it is this Leonard person is one symbolic representation of the old, the old approach to investments.
[01:14:52] Would you agree? I’m seeing nods from both of you. Yes. It’s not just Leonard. I’m sure he is a very nice person, but it’s that Leonard has been involved with the family finances and he hasn’t properly communicated with both and on and on. And also he charges a crazy amount of money. Mm-hmm. So why One of the best things that a couple can do is to do something tangible that is also symbolic, saying we are now doing this together.
[01:15:16] We are not gonna keep things the way they were. Let’s look at some numbers. How much do you think that Leonard is costing you in fees? Let’s assume he charges 1%. We’ll just assume. Keep the math easy. Over the next 20 years, how much will you pay in fees? About half a million. Good. Guess Natalie? Natalie’s eyes just went very bug-eyed.
[01:15:39] How much did you think Natalie, before you heard that number? He’s, he just guessed
[01:15:43] Natalie: maybe 200 K.
[01:15:44] Ramit: So 200 K to 500 k. Actually, great range. ’cause the number as we calculate it is you’d pay about $397,000. Let’s round to $400,000. Just to put that in perspective. That’s $1,666 per month. Let’s put it up on screen just so you can see how much you all making every month.
[01:16:04] Now, I will admit I’m playing a bit of mathematical magic here. Let me admit that before everybody comes after me, most of that money is back end loaded. You pay the higher fees as your investments grow. Okay, so if you’re paying 1% on like millions, that is a tremendous amount and it’s really focused on the end part of those 20 years, like the last five years, even the last two years.
[01:16:31] So when I just divide it out, that’s actually not really true. True. I’m just showing you the point that if you literally do nothing, that is approximately how much you will pay in, uh, fees and opportunity costs. And that number goes up if instead of 20 years. We do 30 years. How much do you think you’ll pay in fees by 30 years?
[01:16:57] Over a million.
[01:16:58] Natalie: That’s exactly what I was thinking.
[01:17:00] Ramit: 1.1 million as we calculate it. Yeah. Now we are really talking, and this is what financial advisors love to have an older, wealthier person because they’ve had decades. For their capital to accumulate. I don’t mind if people want to hire a financial advisor, if they have a large portfolio, a particularly complex situation.
[01:17:24] Okay. I just would never pay a percentage. I would never hire somebody from Edward Jones. I’d prefer you keep most of the money for yourself. Okay. That’s my take. How do you both feel hearing those numbers, Chris? Not
[01:17:39] Chris: surprising. And I had looked into the, into moving things over, what was it like a year or two ago, and uh, I guess I just stalled out because there was some uncertainty about, you know, what, how do I do it?
[01:18:02] How do you feel hearing it, Natalie,
[01:18:04] Ramit: those numbers?
[01:18:05] Natalie: Oh, that pisses me off. Especially considering the current state that we’re in and trying to figure out our short term needs. Good.
[01:18:13] Ramit: I like couples getting angry sometimes I like it. Especially if it’s focused not at each other, but at like, Hey, it’s us as a team against the world.
[01:18:21] Natalie: Right, exactly.
[01:18:22] Ramit: Let’s, let’s get this, we have our rich life vision. We got more work to do on that, but we know we want time with the kids. We probably wanna spend less time fixing the house as long as we can comfortably afford it. Mm-hmm. And why are we paying all this money that’s being invisibly, siphoned a way that we didn’t even know.
[01:18:38] Right. That kind of anger is very constructive when you make a change and then you, it reflects on your CSP. Okay. Should we take a look at the CSP?
[01:18:48] Natalie: Sounds good.
[01:18:49] Ramit: Alright. So our goal is to make some changes that are going to allow you to feel more comfortable and to go from a receding bucket to something much more steady with that lens in mind.
[01:19:04] What do each of you see on this CSP?
[01:19:09] Natalie: My substitute teaching, I’m starting out at two days a week at 170 per day. So that’s an extra 1360 a month
[01:19:20] Ramit: extra. 1360 gross.
[01:19:23] Natalie: Correct.
[01:19:24] Ramit: Okay. You wanna just tell me the net amount?
[01:19:26] Natalie: I don’t know what that’s gonna be yet. I haven’t gotten a paycheck yet.
[01:19:29] Ramit: Uh, let’s just estimate it.
[01:19:31] If it’s 1360, what do we think? 900.
[01:19:34] Natalie: Just to be on the conservative side. Sure.
[01:19:36] Ramit: Watch what happens to this number here. Your fixed costs ready. What just happened?
[01:19:41] Natalie: Hey, that’s great. It went down several points.
[01:19:44] Ramit: It dropped from 81 to 73. That’s a big drop. Do wanna point out your gross income? Look at that number.
[01:19:52] $180,000 and actually more when you factor in the bonus at the end. That’s a lot of money. Yeah. How do you both feel about that?
[01:20:02] Natalie: Wonderful. Do you feel better, honey?
[01:20:04] Chris: I feel positive about it and I think it’s the fact that, you know, it’s not just, um, you know, raises that are keeping up with inflation. It’s like a real different because it’s a a different income source coming in.
[01:20:23] Ramit: We’re not done, but it’s a good step in the right direction. How about we turn to Chris? What do you notice with the new lenses that we’ve put on? What do you see in this conscious spending plan?
[01:20:35] Chris: And there’s not much that can come out besides the daycare and we kinda weigh that as like a cost now, but benefit long run.
[01:20:46] And when both kids are in school and we don’t have that, it’s gonna be great. And we’ve kind of thought about it as get through this part and when that comes along it, it’s gonna be a huge relief. Guys, can
[01:21:03] Ramit: I suggest to you that I see a way for you to actually feel great right now without, even, without even Natalie’s substitute teaching money.
[01:21:16] The first thing you have to believe is that it is possible. I’m not trying to be woo woo. I know I live in LA for part of the year. I don’t buy those crystals. I’m not talking about okay, wearing a wide brim hat going around in Venice. It’s never gonna be me. I’m talking about just simply saying, as a couple, making between 160 and $180,000 a year, we are simply never going to feel bad about money again.
[01:21:42] Did you know that you can do that? Sounds great. You can, but you have to set the intention. This is my personal rule. I think there’s a certain amount of money where when you make it, I actually don’t think you should be allowed to complain about the price of anything anymore. I’m not allowed to complain about the price of gummy bears.
[01:22:01] I’m just not. It is, and I would not, because I am very grateful to be able to go and buy the things that I wanna buy. And so I simply have made a choice. Even a rule, I am never going to complain about the price of something I, I am too fortunate and I make too much money to do that. Is there some way you could adapt that intention?
[01:22:28] It’s a very bold, aggressive intention. Like, I’m not allowed to complain. That’s very bold. Is there a way you could do that? ’cause you make 160 to $180,000 a year, maybe you could use some boldness. Go ahead.
[01:22:43] Natalie: I’m not gonna complain about the cost of childcare. Thank
[01:22:47] Ramit: you.
[01:22:48] Natalie: That’s huge.
[01:22:49] Ramit: I love that. What a gift.
[01:22:52] To be able to do it. Every dollar I spend on our awesome childcare, we feel so lucky. We drop our kid off with a big smile and we feel grateful. Amazing. I come
[01:23:05] Natalie: at that from a different perspective because I started postpartum depression therapy after my first child, and I’ve worked really, really hard to be in a positive mental state for myself and my family.
[01:23:18] And daycare is one of those things that truly helps me as an individual.
[01:23:23] Ramit: I love that. I love that. Chris, this is what I mean. We are simultaneously working the numbers, but this is such an important lesson, especially for you. Yes, we are working the lessons, uh, the numbers, but also we can get these numbers perfect.
[01:23:39] I guarantee you, you will still feel scarce around money. It is not purely a math equation here. There’s something much deeper and in my opinion, much more meaningful here. Okay, let’s, let’s continue on. As it stands, we are 15,000 a month gross, which is 180 k. Maybe a little extra, but we’re not even gonna count that right now.
[01:24:01] We’re at 73% fixed costs. You can’t change the daycare fine. Keep it as is 2000 bucks a month. We’re grateful. Probably a couple things. You could cut a bit if you want to. You know, you could probably cut your groceries a bit, whatever, but I’m not the grocery Grinch today. It’s fine. What else do you notice on this CSP back of putting money in savings?
[01:24:25] You’re right, there is no money going into savings. So what would be a good solution to that?
[01:24:29] Chris: If we were in a position where we had the amount that would keep our checking at that, you know, logical 10,000 number, let’s say. Mm-hmm. And beyond that, it gets put into the savings then. If that checking number can stay steady and we can pull from the savings for those, um, larger expenses, that would make me feel a lot better that the fixed costs are going to be covered and we’re in good shape.
[01:25:04] I love it.
[01:25:06] Ramit: Natalie. I’m on board. So let me give you some kind of like systems building, checking 10,000 Sounds fine. That’s your number that’s in your checking. Keep it there. So that means right now in your savings account you have $23,000, alright? Which is 1, 2, 3 months of savings. Okay? Savings should not be getting dipped into regularly.
[01:25:31] If it’s getting dipped into regularly, you have like a larger problem. But in, I’m speaking, just in a general average month, you should not be dipping into your savings. You need to actually be putting money one direction in not pulling out. Okay, where’s the money coming from to put into savings? Because right now, three months is not enough.
[01:25:50] Natalie: Over the past couple of years, the only source for the savings has been my occasional, uh, transfer from, which is like a hundred
[01:25:58] Ramit: bucks a quarter.
[01:25:59] Natalie: Yeah.
[01:25:59] Ramit: Something like that. It’s no surprise. It’s no surprise that you’re in the situation, you’re in feeling scarce. There’s very, very little money going in and money coming out ’cause of housing and car and this and that.
[01:26:09] All the clues are here. Mm-hmm. Can I ask you guys a question? Yeah. Why are you investing $1,800 a month? Don’t ask me. Well hold on to that. Whoa. Wow. Whoa. Who, who just saw that dynamic happen? Chris, what just happened right there? It’s an on me thing. It’s an on you thing. And actually the dynamic that you have created, that you have allowed to permeate your family is, is your wife is literally jumping back with her hands up saying, that’s not me.
[01:26:44] I wish it were me be, I wish I could be involved, talk about it, but she’s saying that’s not me. So we need to fix that. ’cause that’s a culture problem. But for now, I’m gonna come to you, Chris, why are you investing 1800 bucks a month?
[01:26:59] Chris: Part of that is the esop. Right. And that’s not something that I can reduce for a current financial benefit.
[01:27:07] Right. It is. It’s just baked in. Mm-hmm. The other part is that the way my company does the um, 401k matching now is, it used to be straight match, um, up to 3%. Now it’s, um, half match up to their contribution or 3%. So I feel like I’ve gotta put that 6% in to get the full match or else I’m leaving money on the table and that doesn’t make sense.
[01:27:33] And when do you get that money? That would be a, a long time from now. And if. You know, the things work out with the investment account. Then, you know, when is that money gonna help me more an hour or later? Can you answer the question? It would be now,
[01:27:50] Ramit: yes. You two are in a position you have never realized before because you are operating on the valuable lessons that your parents taught you that happen to not match your current financial reality.
[01:28:05] Huh? The fact of the matter is you are already on track to have millions and millions of dollars. What is the difference between the two of you having 6.3 or 5.8 or 6.7 or 5.5? It makes no difference in the grand scheme of things,
[01:28:24] Natalie: right?
[01:28:25] Ramit: Yeah. And wouldn’t that money. A few hundred dollars extra per month be much more valuable right now.
[01:28:33] Yeah. Especially for the next three years.
[01:28:36] Natalie: I think so.
[01:28:37] Ramit: Right?
[01:28:38] Natalie: Yeah. Maybe in three years demo lying when our daughter’s in public school and not daycare, then we can circle back around to that.
[01:28:45] Ramit: That’s exactly right. Now here’s my question for you. So Natalie is, is praising the Lord. Now here’s my question for you.
[01:28:53] Now I’m praising
[01:28:53] Natalie: Ramit.
[01:28:57] Ramit: The real question is, why did you not see it? We’re all looking at the same numbers, literally the same numbers in front of all of our faces. What do you think stopped you from seeing that you have hundreds and hundreds of dollars per month that you could redirect
[01:29:18] Chris: Chris? Uh, for me it’s. Kind of a silly thing to say, given what we’ve talked about with Leonard and his fees, but like the opportunity cost loss, right?
[01:29:29] Where, you know, if I don’t contribute that 3%, then I, or that 6%, then I’m missing out on 3%. And, you know, if I put that in now and it’s allowed to grow, then it’ll be a whole lot more later down the road. But I’m, I’m just making myself suffer now so that there’s a bigger pool and, and a timeline when it’s not going to be significant.
[01:29:59] So I, I’d never really thought about it that way because it was never an option to leave, take that money off the table in my mind.
[01:30:08] Ramit: You just nailed it. I, I’m very proud of the way you described that was picture perfect. You are suffering. And that vision that you have carried for your entire life of, I need to save, I need to invest.
[01:30:23] It’s a very valuable lesson. 99.999% of us should follow that advice. We still save and invest, even though we could stop and, and also as you become more advanced, which you both are, you have accumulated, thankfully because of your grandparents, a considerable amount of money at this young age. We have to adapt and we have to start to ask these questions that, that are almost kind of counterculture to what we were taught.
[01:30:55] Am I gonna leave free money from a 401k? Maybe? ’cause maybe there’s something better than free. And maybe that is connection. That’s the two of us actually feeling really good and. Yeah, we’re actually gonna lose out on $180,000 in gains, but we are gonna feel so good right now and that’s what’s important.
[01:31:23] What do you think, Natalie?
[01:31:25] Natalie: That sounds wonderful. I was, um, thinking about your question to both of us, which Chris answered first, why did you not see it sooner? And I was thinking to myself, why did I not see it when we went through the CSP together? It’s because of my ignorance about investments and, um, geez.
[01:31:44] Even like financial nomenclature, you know?
[01:31:47] Ramit: Yeah, you’re exactly right. I appreciate the candor. While Chris has created a culture in the family where, you know, it’s him and Leonard and you feel a bit left out, and I think that Natalie, you have allowed yourself to remain on the outside and is really important that you also be allowed in.
[01:32:09] You need to, and. You gotta advocate for yourself because you deserve a seat at the table. It is the two of you. You are partners in this. And so you’ve gotta be able to talk about it together, understand it, use the same terminology, and if one of you doesn’t understand what the other’s saying, simplify, simplify, simplify until you both are on the same page.
[01:32:28] Here’s what I saw the minute we started talking about this. I said, let me get this straight. The two of them are on track to have millions and millions of dollars and actually more when they get rid of this financial advisor charging a UM. So this number’s great and we haven’t even talked about investing.
[01:32:46] You know, 50% of all the extra money that comes in at the end of the year bonus, like whatever, there’s so much we can do here, then why are they investing 900 bucks a month up here and 900 bucks a month down here? Why that money would be really valuable right now in savings and fill that savings account up.
[01:33:09] Then once you fill up that emergency fund, get that six months maybe, ideally 12, then you put together a little house fund, fill that freaking thing up, put that in your fixed cost, keep that money there. ’cause you know that house is gonna break down. It’s old. So on average every year it’s gonna cost you 1% of the purchase price.
[01:33:26] Maybe two, maybe even three. ’cause it’s old. Who knows? But you, that money is flowing. So you are now moving forward, not looking backwards. That’s how you do it. Natalie, what surprised you about today’s conversation?
[01:33:40] Natalie: I think Chris and I were both feeling pretty stuck on like, well I guess Natalie just has to start working more, you know?
[01:33:47] Ramit: Yeah.
[01:33:48] Natalie: Um, which is true, but I didn’t know that there was another way to affect that, that number. So love it.
[01:33:55] Ramit: Awesome insight. Chris, what about you? What surprised you in today’s conversation?
[01:33:59] Chris: Uh, I did not expect financial advice to be, uh, save less. And in this particular situation, it makes a lot of sense. I wouldn’t want that to be the, that’s the, the fix for forever.
[01:34:18] I’d like to be able to return to that 401k contribution and everything when it’s more comfortable and there’s not the stress around the money, but it makes a lot of sense. There was no way I would’ve would’ve thought, oh, stop saving. It’s
[01:34:34] Ramit: like someone telling you not to breathe. How can I not breathe?
[01:34:39] That’s who I am. Yeah. When you become more adept with money, then you start to see it less as a series of black and white rules and more as a fluid, beautiful art form. Hmm. Yes. There is some science, and of course there’s some math. It’s very simple arithmetic, but there’s also an art to it. If I’m you, I’m going, we make a hundred.
[01:35:04] $75,000 a year. We cannot be stressed out about money. We just can’t. I am not going to allow that to be a part of our household. So if we know that, if we know that we are calm, cool, collected a team, then what decisions would we make? Well, maybe one of us goes to work, maybe we get a cheaper apartment, or maybe we don’t need $7.5 million, 35 years from now and like we can just take some of that and put it in our savings account.
[01:35:37] Let’s actually do it real quick just to see what the math looks like. Let’s just say 700 bucks a month. Going towards savings. How’s that feel? That feels a lot better. Well, I wanna point out that because we dropped your amount, that leaves you both with a thousand dollars a month in guilt-free spending, you probably are gonna have to cut a bit on your guilt-free spending for a while.
[01:36:02] The reason is you are because of your job and your esop. You’re like very heavily paper. You’re getting paper wealthier.
[01:36:12] Natalie: Sure,
[01:36:12] Ramit: it’s fine. It’s great. I mean, you’re making a ton of money, but it’s just illiquid, right? You have an illiquid house, you have illiquid esop, you have all this stuff. Fine. So then your goal is just to scrape as much liquidity as possible, and you all know you can do it for three years.
[01:36:33] Mm-hmm. Like, it’s not hard. You’re accumulating a huge amount of money. You’re also saving money on investor fees, and then after three years, you’re gonna, I mean, I’ll show you. Look what’s gonna happen. We just dropped this to zero, just for simplicity’s sake. Watch what happens to the fixed cost number.
[01:36:48] Yeah. From 73 to 53%, it’s massive. How do you feel seeing that?
[01:36:55] Chris: We, we know it’s coming. It’s just, I like the idea of being able to reduce the stress about money in the short term with a creative fix like the 401k, because we know that, that, that big change is coming and, and that’s gonna just, I’ll be huge.
[01:37:18] I feel positive and hopeful. Cool.
[01:37:23] Ramit: Natalie,
[01:37:24] Natalie: I feel motivated.
[01:37:25] Ramit: I love hearing both of those. I love that. I suspect the two of you have a few hundred bucks a month easily that can be found, that can be optimized. Whatever savings you institute. Like just make sure that you set up the automatic transfer into savings.
[01:37:43] Mm-hmm. What you’re gonna see is after a month, especially after three months, that savings account’s gonna be growing and growing in a way that it has not grown in years. And you’re gonna see it and you’re gonna go, oh my God. Like we didn’t do it. We just set it up once and it’s just automatically rolling.
[01:38:02] And that is very motivating. And you can start to see, oh my God, we’re gonna have this much after six months and on on, and you’re both gonna feel unified. That’s a beautiful thing. I’m really glad Chris is seeing a therapist because so much of our relationship with money is mediated by our mental health.
[01:38:17] It’s why I talk to so many people of tons of money who still feel scarce about their finances. Natalie and Chris are looking at the same exact spreadsheet. And they’re seeing two completely different things, which actually reminded me of one of my favorite examples from psychology. This famous study where Harvard and Yale students watched footage of a football game between their schools.
[01:38:36] Both sides saw the exact same plays, but each side insisted the other team was playing dirty, same footage. Completely different interpretations. Why? Because we don’t see facts. We don’t see an objective reality. What we see is mediated by our experience, by our psychology, by so many things from our history.
[01:38:58] It’s almost like we’re wearing a set of lenses and we are seeing the world like this, and your lenses are different. So when people ask, what’s the fix? Well, it’s not just therapy. It’s not just one book or podcast. Real change is actually messy. It takes multiple attempts. You’re not just gonna go linearly up and to the right.
[01:39:14] You’re gonna do all kinds of things go backwards. You’re gonna try multiple approaches. You’re gonna have to get a little bit lucky. But when it clicks, when people finally see each other and realize, I have control over my money, it is beautiful. I also wanna say something personal here. It means a lot to me when professionals, like therapists, doctors, professors, recommend this show.
[01:39:34] Personally in my culture, we are raised to revere teachers in my culture. Will you never touch a book with your feet? It has knowledge. Teachers are almost treated like Gods. So when a therapist says You should talk to Ramit, it is actually especially meaningful to me, and I take it very seriously. I know my area of competence and when things stray outside, I always recommend people go and speak to a specialist.
[01:39:59] In fact, you don’t know this, but I’ve ended calls, which you never heard when there were serious mental health issues at play. And I told them, I’m not equipped to help you. And I try to learn from them as well. Sometimes I ask therapists on social media, what do you think of the show? What would you do differently?
[01:40:13] And their feedback is incredibly helpful. I wanna remind you, when it comes to these professionals, you should know that they do a lot of the quiet work behind the scenes. I speak to couples once therapists speak to them for months, even years, they are doing the hard work. So are the people who show up and seek out help.
[01:40:31] That’s quiet work. That’s often unacknowledged. But I see it here and I wanna recognize everybody who takes part in that. Natalie and Chris. They have a long road ahead, but I think they have the love and the financial resources and the willingness to change. So let’s see what’s happened in their follow-ups.
[01:40:49] Chris: Hey, we’re meeting and team, this is Chris. Biggest surprise for me was that I don’t always have to be saving uh, everything all the time. And given our financial situation, it’s okay to not be putting money into an IRA as long as that’s meeting our long-term goals. ’cause it’s helping us so much in the short term.
[01:41:13] I never would’ve come to that conclusion on my own. So thank you and, uh, really appreciate it. Biggest takeaway is that we’re really doing a whole lot financially better than I had thought thinking about, uh, the investments and that yes, we don’t have a whole lot of cash on hand, but that. We can pull some away from stashing away into investments to help out with that situation of not having quite enough cash on hand because there was already enough in the investments that really kind of opened my mind, uh, up to thinking about money a little bit differently.
[01:41:57] And so I’ve made the reduction to my IRA contribution. I was actually at 7%, not just 6%. So that’s like $900 plus a month. That’s huge. And, and we’re also making the switch from uh, Edward Jones and I am committed to making sure that gets done by the end of the year. So thank you again. Really appreciate it.
[01:42:22] Natalie: Hey guys, Natalie year checking in with my post interview homework. The biggest surprise that I got out of our conversation with Ramit was definitely how much money our investments will. Accrue to by the age that we retire. I think when Ramit asked me, what would you guys do with $6 million? I can’t even fathom that much money.
[01:42:48] So I didn’t really have a response. Um, but because of that information, uh, Chris is incredibly motivated to not invest as much at the moment, and he has already cut his 401k investment from his paycheck from 6% to zero actually, which is even better than 3%. We’ve calculated how much money we can auto deposit into a savings account each month to hopefully purchase the vehicle that we want to purchase in June.
[01:43:25] We had our biweekly meeting with our therapist yesterday, and she commented on. How much lighter we seem, how much more easygoing we seem. I even spoke about letting my in-laws babysit because it doesn’t cost any money, which is huge for me. So I guess that says something. I wanted to thank you guys again so much for your help.
[01:43:55] I’ve never seen Chris this optimistic about finances and the fact that he’s at ease now has just made a night and day difference in our relationship, so it works. Thank you so much, will you appreciate it. Talk to you soon.
[01:44:11] Ramit: If you wanna stop feeling like money is this thing that you don’t have control over and you wanna get control, get it fast, and then start using your money to live your rich life together.
[01:44:23] Don’t miss the next episode of Money for Couples Real Conversations, real Numbers, and what it actually takes to get on the same page.
