I Will Teach You To Be Rich - 185. “My fiancé has no savings at 43. Should we get married?”

Episode Date: December 3, 2024

Dawn is 48, Richard is 43, and they’re living paycheck to paycheck. Although they're engaged, they’re struggling to combine their finances because of their varied pasts. Dawn is overspending on kids and grandkids, and Richard has deep scars from a financially devastating breakup. Can they move beyond their past money stories and get aggressive about investing for retirement? This episode is brought to you by: Aura Frames | Save on the perfect gift by visiting https://auraframes.com to get $35-off Aura’s best-selling Carver Mat frames by using promo code RAMIT at checkout.  Netsuite | Get visibility to everything in your business in one place. Sign up and defer payments, with no interest, for six months at https://iwt.com/netsuite. LegalZoom | Launch, run, and protect your business to make it official today at https://legalzoom.com and use promo code RICHLIFE to get 10% off any LegalZoom business formation product excluding subscriptions and renewals. Rocket Money | Stop throwing your money away. Cancel unwanted subscriptions – and manage your expenses the easy way – by going to https://rocketmoney.com/ramit. DeleteMe | If you want to get your personal information removed from the web, go to https://joindeleteme.com/ramit for 20% off. Links mentioned in this episode • Sign up to attend a live event on my book tour Connect with Ramit • Pre-order my upcoming book: Money for Couples • Get the Podcast Newsletter and exclusive Q&A about the show • Get Money Coaching with Ramit  • Download the Conscious Spending Plan • Listen to my book—now on Audible • Get my New York Times best-selling book • Get my no-numbers journal • Other episodes • Instagram • Twitter • YouTube If you and your partner have a money issue and you want my help, I occasionally select a couple to work with, free of charge. Apply for my help here. Produced by Crate Media.

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And we're just not doing any saving or anything. We have no emergency fund. We have nothing. I know I'm behind. You need a 401k. You need finances in the bank. In today's episode, meet Dawn and Richard. We're not really sure how to get to the goals that we have with

what we have. I also don't know if my expectations are a little too high. Don is 48. Richard is 43. And they live paycheck to paycheck. When I get his money, the 200 or 250, I feel better. Like I can breathe. They're engaged, but they're struggling to combine their finances.

We almost broke up. I have children and grandchildren. So I have my money goes many places where he doesn't have the children. Dawn wants financial stability, but she overspends on her family. We went on vacation. I brought the whole family. I'd say probably $6,000. Richard has deep scars from a financially devastating breakup.

Lost the home, lost the money, sold off a camera equipment, and I'm almost afraid to spend money. And he isn't sure how to contribute to their household devastating breakup. Lost the home, lost the money, sold off a camera equipment, and I'm almost afraid to spend money. And he isn't sure how to contribute to their household and his retirement with his current income. I haven't made this amount in a year since I was in my early 20s. Can they create a financial plan,

move beyond their money past, and start getting aggressive about investing? You're losing tons of money every single month by not investing. I don't want to be 70 years old and working a second job. Now let's meet Dawn and Richard. Okay, let's take a look here. Dawn is 48, Richard is 43.

They live in upstate New York. They want to buy a house in the next one to two years. One of them has three kids, live in a house they're renting to own. They struggle to put their finances together because of past financial trauma. I have trouble saying no to my children, but I also want to save for vacations and I want to buy the house. for vacations and I want to buy the house. Rich does not have any retirement and I claimed bankruptcy eight years ago after my divorce. We stress about money constantly and it has caused us to almost break up.

Rich has no children, I'd spend more than I should and my son has no concept of money. We've postponed our wedding because of money. I make three times what Rich does so his go-to answer is he does not make enough money except he hardly has any bills. This is my third marriage, Dawn says. We'd love to have a budget together and both feel we are contributing to our future. All right, well, let's take a look. Assets of $28,500. Investments of $24,900.

Savings of $58,000. Wow. And debt of $14,000. Total net worth of $97,000. Okay. So this is troubling. It's not necessarily an issue to have a small amount of assets. I don't mind that.

But to only have about $25,000 of investments around the age of 43 and 48, that is a problem. To also have more savings than investments probably suggests to me that this couple has not been particularly educated about money because why would you have more in savings than in investments around the age of 50? That makes no sense. You're leaving so much money on the table and time is against you.

The debt at least is nominal. $15,000. We can knock that out if necessary, but we need to take a look at the incomes to understand more. Okay. We have one partner making $6,000. Another making $3,000 for a total of about $10,000. So they make six figures gross. I'm curious why one partner is making $3,000. That's pretty low. $3,000 a month as a 43-year-old. So I want to find that out. Going down to the fixed costs.

Fixed costs are at 74%. That's too high. Way too high. Housing costs are fine. 21%, 22%. That's not bad. Car payment is $766. Okay. It's not horrible. Debt payment is $5.57 per month. That's a lot of money.

Phone is $2.75. Also, why? Subscription is $2.99. Okay. So, we see some sloppiness here. Just out of curiosity, if I drop that subscription down to like $50, and I drop that phone down to let's just say 150, what would happen? Well, their fixed cost would drop down to 68%. Still high but moving in the right direction.

Let me tell you why I did that. What that tells me is there is sloppiness in their spending. If you're at 74% and I just simulate using the CSP and get you down to 68% with a couple of clicks. You could do it. I bet you there's some other various expenses that we'll get to in guilt-free spending. Overall, that's slightly reassuring. Let's keep going.

Investments are at zero. Huge problem. Savings are at zero. Huge problem. What the hell? Guilt-free spending is at 32%. I don't even really believe this number. According to the CSP, it says their guilt-free spending is at 32% or $2,200 a month. I don't believe this.

I think they're spending discretionary money on eating out, travel, etc. But I don't think this properly reflects it. In any case, this tells me they have money to use. So we could redirect this money. We could invest it aggressively. We can save it. We could pay off that debt. There's a lot we can do, which gets me excited.

But I suspect that this goes a lot deeper. In Dawn's application, she mentioned that she spends too much on her son who, quote, has no concept of money. She mentioned resentment about how Don and Rich spend money together. She mentioned that they'd even put off getting married because of money. So we have a lot to unpack here. I'm excited to get a chance to speak to them. I have a family. My money goes to supporting my children, my home, my house. Financial

stability is number one on my list of what I need. And we're engaged. And so I think part of me, we haven't gone to the next level, one, for money, but for two, I need to feel secure. So we're not on the same page many times. I'd say back in February was one of the times that we were really. Last year. What happened in February? He moved in. And that was when it really became more of a struggle

that we're not kind of on the same page where how much money he should give to the household. She would give me just a relative number. Give me 200 a week that will at least help me. But then you talked about you didn't want to be without money for yourself. We moved into a house that had a lot of love to be put into it. Just a fixer-upper. It wasn't moving ready.

So inconsistently, I would give money. I'd give money here and here, but I took money that I would have and put it into the house as far as fixing it. Okay. So you're putting money in sporadically in different ways, not necessarily handing over 200 a week, but contributing in other ways. Yes. Okay. So I'm struggling to pay the mortgage and things like that. And so I'm struggling to pay, you know, the mortgage and things like that. And so I'm not seeing consistent money coming into me. Like the 200 I wasn't seeing every week. It was like one week it'd be 100, the next week it'd be 200.

Were you struggling before he moved in? I was struggling before he moved in, but things were different economy wise. My daughter had lived, we redid the basement, so she had an apartment down there. So she lived down there and was giving me money towards that. She has since moved out. It was kind of perfect timing. He moved in, so I was like, okay, well, that will help. But then it was very inconsistent. So I never knew if I was getting money from him. So that was definitely that's been our fight, how to put our money together. Because I feel like he's paying me rent.

He's not really into putting our finances together because of some of his past stuff. So I didn't know how to do it. I've never done that before. I've never had anyone move in with me and I was married. So it was different. How many times were you married before? Twice. Twice.

Okay. So you've never had somebody move in, not married and figure out how to deal with the money together. Correct. Okay. And when you said it feels like he's paying rent, is that a good or bad feeling? That's a bad feeling because it just feels like all the financial... I pay all the bills in the house.

I pay the household bills. He pays his bills, but I pay all the household bills. So if I'm late on something or can't make rent, that stress is all on me. Out of curiosity, if Richard were not here, how would you be dealing financially? I'd be struggling. What would you do? financially? I'd be struggling. What would you do get a second job? so you began these conversations and You said I'm putting money here. I'm putting money there

How did you resolve it? We almost broke up. It was very you know talking about him leaving But I said I just need consistency at least. I need you at least to show me consistency. Let's start with that. I've been more consistent as far as like funding and money dispersed in the house. About $250 a week? $225, $250? Yeah, anywhere from $200 to $250 a week he's been giving.

Okay. So does that work? Is the problem solved? No. Yeah, no. Oh. Wait, what? This was the problem. You asked for the solution. It sounds like you got the solution you wanted. Is the problem solved? No. Yeah, no. Oh. Wait, what? This was the problem.

You asked for the solution. It sounds like you got the solution you wanted. Yes. Why are we here? Because I guess I thought we would have extra money that we could like, because that was our plan. Like, oh, we'll each put like $50 into a savings for this and we'll have an emergency fund. But then I realized when he gives me the 200 it it still just pays the bills there's still not a

lot of extra and we're just not doing any saving or anything we have we have no emergency fund we have nothing is this a problem for you Richard it is at the end of the day we just want structure okay I have the ability to pay like to put money aside but it's now where do I put it? You want you said you wanted structure. Did you have structure in your finances before you met dawn I? Would say yes, there's Okay, so met dawn I had an ex-girlfriend Before that there was an ex-fiance, a home, finances, and just the whole thing was a structure

yes. Who ran the finances in that relationship? We had joint finances, but we had a number of different, I would say, accounts that one paid the bills, one for the cars, one for like fun money. Like it all just went in. We had money. It was good. We had money. It was good. We were good financially. But then after a while, she lost her job. And for me, like

she wanted to take over the finances and sure, she did that. And then just ultimately in the long run, it didn't end well. She wasn't paying anything and things went into her own accounts and in the end, when it almost like a fallout, a breakup, lost the home, lost the money, sold off a camera equipment and a lot of different things. Shut down your business. Yeah, shut down my business and there was a lot of things that happened. I was in a rebuilding process for a long time before I met Dawn.

I've been through a lot and yeah, if you want to join finances, because I know her good heart, you know what I mean? Good person, beautiful, amazing, you know what I mean? Like I know there's no wrong to be had there in the end. Are you saying you are open to joining finances? Absolutely. Absolutely. Just out of curiosity, how long have you two been together?

Three years. Three years. And how come you haven't joined it yet? I'm just out of curiosity. How long have you two been together? Three years. Three years. And how come you haven't joined it yet? I think a lot of it is his last girlfriend that he lived with was asking him for a lot of money and he was like always like I gave her everything. He had no money for himself. Yeah.

So he's worried. I didn't make a lot because I had from my previous experience I had a lot of debt, a lot of wage garnishments and everything like this. Like everything in my past, I've already kind of paid my dues. Why were the wages garnished? Just ran up credit cards and... Why? No fault of mine.

Fiance, the ex-fiance. Yeah, no fault of mine. It was just, yeah. Like for what? Just random things. I don't know to this day. Would you say that you're on top of your finances? I would say yes.

It's very minimal. It's very, very minimal. Listening to Richard talk about his past experience with finances, did anything surprise you? No. What do you make of the journey that he's been on? I guess a couple things come to mind. I do think he needs to be a little more aware.

Because when one happened when we were together, his wages were being garnished. And I was like, well, do you know what it's for? He's like, no. And I'm like, fight it. I'm a little different, you know? Like, I will call and be like, what's this for? And find out and fight it.

And you know, like, if there's a late fee, I'll call them and say, this happened. Can I not get that? I'm a little more aggressive in that sense. Richard, how does your journey with money affect your relationship with it today? A lot of stress. There's not one day that goes by where I'm just punching mathematics, doing problems in my head, moving things around, just bills and numbers. And yeah, because I have the feeling that one day you could lose it. There's been times

I will go to the store and like, I'm almost afraid to spend money. Have you always thought I could lose it all? No, absolutely. I've always had a pretty good income. Pretty good. Well, single mostly. I mean, I've had my relationships, but yeah, I've always had just... It was a lot more simple.

When you were single, did you get ahead with money? There's been some times in my life where yes, I didn't know was pretty, pretty ahead with money. What was money like for you then? What did you do with it? Invested in my business as far as like gear and camera equipment and things like this upgrade. Clothes. Did you save? I did. Where did you put the money?

I had a 401k. I had a savings. Paid the principal on my car and everything like this. But then what happened to me is just lost it all. There was a lot that happened in a short period of time where I just needed money. You cash out the 401k? Yes. What was that for?

There was a house in foreclosure. My car got repossessed. Credit card debt. Yeah. Just a lotk? Yes. What was that for? It was a house in foreclosure. My car got repossessed. I had credit card debt. Yeah. Just a lot of different things. She didn't pay anything. Yeah. She just took the money.

Took the money. That sucks. In the long run, it was almost bittersweet because it just, all of it's paid. It's in the past. Not really, as far as like trauma and things you carry. But as far as like everyday life, it almost started me out on a blank slate. I know I'm behind 43 you need a 401k you need think you need finances in the bank and Yeah, I have like a pension with the New York State. So I was like, so what are you gonna do in 20 years?

Like I'm not paying for your retirement meaning you are not going to pay if the two of you are married. You're not gonna pay for him. My amount isn't gonna cover mine and his. I don't have that big of a 401k. I don't want him to have to work. Like I want to travel some or enjoy our retirement. Not that I'm not gonna pay for a home and stuff with my retirement. But I mean he's gonna need money. Like I'm not gonna to pay for the home and stuff with my retirement, but I mean, he's going to need money. Like I'm not going to have enough to give him. I get a lot of requests to speak to couples with different income, especially lower incomes.

Well, today we have Dawn and Richard. And as you listen, you're going to hear how money lessons are passed from one generation to another. And at times today's conversation is going to be really frustrating. I know it was for me, but I want to encourage you to keep listening. Let's recap. Dawn has been married twice. Richard moved in and she asked him to pay and he did, but now she feels like he's paying

rent, which again he is. Yet that didn't even make her financial situation improve. When I asked what Dawn would be doing if Richard wasn't paying, she admitted she would be struggling. She also acknowledges that Richard helps in non-financial ways around the house. Now Richard has a complex financial background.

As he tells it, his previous fiance caused his wages to get garnished and destroyed his finances. Now I don't know the details. I can only take his word for it. What I can see is that he's afraid to spend money today and candidly, he's not in a good financial place. What really stands out to me is the total lack of a shared vision between the two of them.

In fact, you'll notice that Dawn uses her finances almost as a weapon saying, I have a pension. What are you going to do in 20 years? I'm going to probe on the kind of vision they have together. But first, let's take a quick break to support our sponsors. If you have kids, you probably have five thousand photos of them from just the last few months. And whenever you open up your phone, you scroll down, you smile. But how nice would it be to actually have those photos displayed around the house?

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Terms and conditions apply. I don't mind surprises on my audience, so get yours now in time for the holiday, terms and conditions apply. I don't mind surprises on my birthday, but I do not like surprises in my business. I wanna know how much we're gonna make, I wanna know if we have a problem and what we are doing to take care of it. Now we can't predict the future, not with our investments, not with our business,

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giving you the visibility and control you need to make quick decisions. With real-time insights and forecasting, you can start to go on offense with your data and look ahead. If I needed a platform that integrated accounting, financial management, inventory, and HR into one place, this is what I would use to be able to see the opportunities

in front of me. Speaking of opportunity, download the CFO's guide to AI and machine learning at iwt.com slash netsuite. The guide is free to you at iwt.com slash netsuite. N-E-T-S-U-I-T-E. Now back to our conversation. What's the vision of the together thing that you want to build? I'd like to do our finances together so I don't pay all the bills myself and all the stresses on me. I would like to, you know, once a week we sit down and say, okay, this is what we need to pay this week. And he'll be like, okay, I'll take this and go pay that.

So share the responsibilities of bill pay. Okay, got it. What else? I'd like to have some joint savings that we're each putting some money into. I don't want to just have me put money in. I make more than him. So that's where we struggle a little bit.

I want us both to put some money in. So I feel like when we go on vacation or we have an emergency fund, it's not just on me because then I feel like in time I'm going to build resentments against that. What else? Get married. Yeah. Get married. Purchase the house.

Purchase the house. Have something you own. Number wise, the house, when you look at it on paper, it's a really good deal. But it's not hers yet. It's a house that you're renting to own you could own it or not It's up to you. I could walk away. Yes, how much have you? Put into it. I'd say probably ten to twelve thousand because we read at the base math and If you were to buy it, how much would it cost?

It's my ex-husband. He takes $1,000 a month off of the house like sale price. So he was selling it to me for $330,000. Now I think we're about $317,000, $315,000. So the longer I wait, the longer it goes down. So I'm assuming like 300,000. How much would a house like that cost if you were to buy it? Right now it's about 495,000.

Wow. So that's a good deal. It's a huge deal. And it's because he's financially in a horrible position and he wants me to have it because it's for our children. I thought about getting out of it. Yeah. And I looked around to see because I want to stay in the same school district for my son. And I can't find anything under 250 to 300,000.

There's nothing close to what we would buy that for. If you were to buy that, how much would it cost you per month? At least 2,000. So a little bit more than you're paying right now? Yeah. Okay. And if you were to rent? Two bedrooms where we are are about $2,000, somewhere in there. This makes sense.

In certain low cost of living cities, it can be more expensive to rent or as expensive as it is to own. Right. I'm in a better financial position like monthly. I'm going to pay more when I get a mortgage. How would you afford this house? How would you buy it? I have a house savings.

I have $68,000. What? You have $68,000 in a house savings account? Yeah, to buy the house. It was $100,000 when I started the process, but that's slowly dwindling down. We used it for the basement, for my daughter to have a place down there. What do you think of that decision? Yeah, financially not the best.

Both my daughters are in stable positions at this point. They both have children. So it's like it's kind of a spot for them to come back. There's a lot of things with that house because it's very family oriented where it has a pool, has the backyard, a patio. There's 10 grandchildren. I do have 10 grandchildren. There's a lot of get togethers, a lot of parties.

It's always at my house. The house totally fits the bill when it comes to that lifestyle. I appreciate that. And I know that parents, grandparents, it feels amazing to be able to have the house that everybody comes back to. Yes. I am amazing to be able to have the house that everybody comes back to. Yes. I am trying to understand the financial side. How much did it cost to renovate the basement?

I'd say $9,000. Okay. So you renovated for $9,000. Yep. In a house that you're renting. Right. Which I don't mind. I've put money into rentals I've had because I want to live in a nice place. Right.

But I could afford it. Right. How did you decide if I could afford it. Right. How did you decide if you could afford that or not? Well, at the time I'm just looking at, oh, I have a hundred thousand. Like, you know, that's not something I normally have in my bank account. So it was like, it's not that big of a deal. So a hundred thousand and how much is it now? Sixty-eight thousand. Ah, what happened to the rest?

I mean, we went on vacation. Oh, where'd you go? Outer Banks. Okay. So that wasn't a huge, but it was, I brought the whole family. What happened to the rest? I mean we went on vacation. Oh, where'd you go? Outer Banks. Okay. So that wasn't a huge, but it was, I brought the whole family. How much? I'd say probably $6,000.

Okay, $6,000. What else? This was really great that year. Yeah, I just kind of spent. Not on anything for like myself. I mean house things. I paid off my car. What car was that?

It's 2015 Infiniti. I owed like $12,000. So I paid that off to put me in a better financial place monthly. It was a high interest. It was 9%. I claimed bankruptcy eight years ago. What? And when I got divorced the second time, I was in a home and we had a ton of credit card

debt because he had stopped working and wasn't paying any bills. I wasn't making a lot of money, so we lived on credit cards. I did have a prenup, so when he left, he left with nothing, but then it's all on me. I could not afford the bills. I couldn't afford my car payment. So I claimed bankruptcy. What did it feel like to make the decision to declare bankruptcy?

It was a hard decision for me. In the long run after, it felt good. Just because everything, it was like a clean slate. I had my car and my house, but all the credit card debt and all that was gone. Do you notice the similarity in your journeys? Yes, it is what brought us kind of together. A lot of this is hard for me to hear. When I ask about what they want to build together, I hear, I want us to split the bills, I want us to talk about money, and eventually I want us to split the bills. I want us to talk about money. And eventually, I want us to own a home because you should own something of your own.

It's a simple set of goals, even simplistic. Then I hear Dawn had $100,000, but tapped into it for vacations and a car and a basement renovation. This is after declaring bankruptcy, which is just another reminder of how hard it is to actually change your financial behavior. Then Dawn says that she and Richard came together

after their respective financial history. And that is a huge red flag because people who bond over trauma can often solidify and weave that trauma into their own relationship dynamic. Let's hear from Dawn about how growing up with money impacted her money psychology today. What do you remember hearing about money in your household?

Only the fighting. Okay. It was always, we don't have enough. Money was fought about in my house all the time. My dad owned a business and my mom worked two jobs and he never could pay the bills. I was just constant fighting back and forth about not having enough, not having enough, which I understand as a mom, like how that would be if she's working two jobs.

Yeah. And he was like, well, I am paying the bills. Does that sound familiar to you? Yeah. In what way? It sounds like me. Yeah. And whatever happened with your parents and money?

They divorced. What else do you remember your family discussing about money? Just we'd never had enough. It was always we never had enough. Like we'd go grocery shopping and we'd always have to watch what we would buy per se. I mean, I never went without my parents, but my mother did what I do. She never said no. Wow.

Yeah. I was bratty. And if I wanted something, a new Barbie house or something like that, I would get it even if they didn't have money. Very similar situation to now. What lessons do you take away from that looking back? have money. Very similar situation to now. What lessons do you take away from that? Looking back? I wish my parents taught me more about money and how to be financially stable. I wish I

did that to my children because they're in different situations. They had children younger. But I wish there was more talk about it in a positive way. What would that have looked like? Instead of fighting about it and me hearing about the fighting, maybe sitting down and like actually knowing what was going on. Looking at where you are now and looking back at your journey from growing up to these two marriages, where would you have thought that you would be financially speaking? I'm much better than I thought I would be because I didn't have a degree.

I went to college. I went and got my substance abuse counselor after that. And now I'm an investigator. So I make more money now than I ever thought I would ever make. And it's still not compared to some people. It's not a lot, but for me, it's a ton. When you look at me like as a single mom and I've never been without a home. I've never been without a job, a car.

My kids don't go without. Works very hard. Wow. Very, very ambitious. I appreciate the gratitude. I really do. That's really cool. Yeah.

I try to think of that sometimes, but it's hard. Because I still struggle. And I'm like, I make this much money. Why am I still struggling? But it's because I live still struggle and I'm like I make this much money. Why am I still struggling? But it's because I Live above my means in some ways. I mean I spend too much you do. Yeah, am I on my kids? Yeah, okay. How old are your kids? 25 and 22 are my girls

And they have they have children So my one daughter my 25 year old has one daughter and then her fiance has five kids My 22 year old is pregnant with her third child And then her fiance has one so they have four and let's talk about your son. How old is he? My son is 12. He's with my second husband. He's tough. He's tough. He wants a lot Every day there's Something he wants. I mean, just yesterday he sent me three things he wants. And I'm like, well, maybe for Christmas.

There are $125 jackets that he wants. Can we see? Well, he has very good taste. He sends a Nike Tech Men's full zip Windrunner hoodie. It looks pretty cool. I have to say it looks pretty cool. Mm-hmm. So he doesn't even say like, can I have this mom?

No. He just sends the picture and the link. Yep. What's your reaction when you get a text like this? Typically I get upset with him. Which is that doesn't help our relationship. I'll be like, I don't have that kind of money. So if that's something you want for Christmas, I'll add that to your list. Sometimes it's okay, but most of the time it's a meltdown.

And sometimes I give in because I just don't want to deal with the reaction. What's your ex-husband's take on this as well? My ex-husband doesn't spend money on him like that. He knows if he reacts poorly that I'm going to give in. When I had my girls, I was in my 20s. I had a lot more, yeah, that's the word, tolerance. Now I'm tired. And I also work and I didn't work with them.

So I'm working hard. I have the house. I have the grandkids that I'm... Yeah. So sometimes I just don't want to deal with it. And I think he knows that so it's just sometimes I just don't want to deal with it. And I think... And he knows that. That's a good explanation. Can you go beyond the explanation and tell me what will happen as this continues?

Oh, I'm creating a monster because he wants what everyone else has. And in a way, I struggled with that for a very long time. You did? I really, really struggled with comparing myself. And I still do in some sorts. Facebook's horrible because I see all these vacations and people are in Italy and Spain and Caribbean and I'm like, I want to go. I work really hard.

I want to go. And that's where I go back and forth with some days. I'm like, I need to save and have a future. And then other days, I'm like, can't bring it with you. You know, so that I do struggle with that sometimes. Let's trace the pattern here. You were young. You wanted a Barbie house. Mom said fine. Even though they were fighting about money and never had enough.

You wanted X. You wanted Y. You got it. Your 12 year old wants a Nike tracksuit. It's probably going to get the tracksuit. What, so what happens? What do you see in this story? Well, it's going to be a repeat. I mean, I know that's part of his issue with combining our incomes.

And I don't blame him because he's going to give me all his money and then I'm going to spend it all on my kid. And I get that. I do get that. But I'm hoping if I, if we're doing it together at that point, I want to change my son's outlook on money. So you believe that when you have more money at your disposal, you're going to stop saying yes to your son?

Yeah. Doesn't strike me as true. We are seeing how easily we can replicate past family patterns right on to the next generation. Dawn's 25 year old daughter has six kids with her fiance. Her 22-year-old daughter has four kids with her fiance. Her 12-year-old son is extremely spoiled, and Dawn admits that she is creating, quote, a monster.

I was honestly shocked when I saw those text messages. He just sent links of things he wanted. He did not say please. He did not even ask. He just sent links of things he wanted. He did not say please. He did not even ask. He just added links of what he wanted. And Dawn knows she's a pushover. She tells me that her ex-husband doesn't buy those things for her son and he wouldn't ask him. Go back to her childhood and her mom bought her everything she wanted. Now she's replicating that for her son. Meanwhile, she directs her worries about

money towards Richard. I want to get into their specific numbers and we're going to open up their conscious spending plan after this break for our sponsors. I have a lot of entrepreneurs who follow me and want to grow their business. And when you start to grow your business, you're going to want to set up the right corporate structure LLC, S corp, etc. Now you could hire an attorney to do that for you. That's what I did. But I recognize that that can be expensive for small businesses just starting out. And that's where this episode sponsor LegalZoom can help you.

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LegalZoom.com and use promo code Rich Life. Disclaimer, LegalZoom provides access to independent attorneys and self-service tools. LegalZoom is not a law firm and does not provide legal advice except we're authorized through its subsidiary law firm, LZ Legal Services, LLC. What would it mean if you looked under your couch cushions and you found $1,200 just sitting there? You would be overjoyed. But how many of us are spending hundreds of dollars per month on subscriptions without even realizing it?

I see it all the time in people's CSPs. $100, $150 a month on subscriptions, which easily adds up to 1200 bucks a year on things they often don't even remember signing up for. Let's get rid of those subscriptions so you can pay for the things you actually care about using this episode's sponsor, Rocket Money. Rocket Money is a personal finance app that helps you find and cancel your unwanted subscriptions. It helps you monitor your spending and helps you lower your bills so you can grow your savings.

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slash Ramit rocketmoney.com slash remit. Now let's dig into Dawn and Richard's CSP. Go ahead and read off the word in bold and then the full number next to it. Okay. Assets, 28,500. Investments 24,985. Savings, $58,484. And debt, $14,895. Total net worth, $97,074.

Okay. What do you all think of the numbers? I wish assets was higher, but I don't own a home, so that's why that's so low. Investments is not very big. I would like them all to be bigger. Pretty much the same. That definitely could be, it could be worse. I mean it's manageable.

I like the assets higher. As well as the investments. What does this number mean to you? $97,000. So low. But I guess I never thought of a net worth. What did you think about? Just what I owed, I guess.

Meaning how much do I owe every month for my car? How much do I need to pay my bills every month? And that's why you talk about weekly, Richard. Pay me 200 a week. I don't talk to anybody about week, ever. Week is... That's kind of like saying, let's go for a walk. Let's walk 2,520 inches. Right.

Why would I talk in that term of measure? Right. It's very small. Yeah. Yes. But often people who are not taught about money, they shrink their world down to the month or in your case even the week. And what is the effect of that when you talk about things on a weekly basis? I don't think it allows us to look towards a future at all.

It's just paying what you pay. It's almost like going into a car salesman and saying, I don't want my payment to be over 500 instead of actually looking at the numbers. That's right. It shrinks your bubble. It shrinks your world. It's almost like it distorts your vision to look out into the future and like the big picture.

Right. So out of curiosity, how come you haven't looked at the big picture of money? Both of you. I've been single in a sense of living alone for almost 12 years. So I've never had to talk about it with anybody. I would say my case was just adapting to it. Like I'm big on adapting and fitting in. When you say that you adapt, so when Dawn comes to you and says, I want 200 or 250 a

week, your method of adapting is to kind of do the fence, etc. but then eventually say like, okay, here's $2.25 a week, right? Did you say to her, this is how much I can afford? Not really. Just that I don't really make a lot of money. So my money only stretches so far. Do you know how much you can afford? We did it together. Yeah.

Like I sat down and I said, let's sit down and figure out. So I wanted to make sure he still had money for himself because that was a big thing. I'm like, so if we do your bills and what you get paid and you give me $200 a week, that leaves you enough for what you need. How much do you have left over every week? $150. Okay. And what do you do with that $150?

Gas. I'm a smoker. Do you notice that the way that both of you talk, there is no discussion about savings rate, that it's, I have 150, it's enough to pay my gas to smoke? Right. It's very, very weakly. It's just getting by. Is that okay with you?

No. No. We have the dream. I've tried to do budgets. I tried to do apps. I don't know if I just don't follow through. Do you think it's a budget that's the problem? That you don't have the right spreadsheet set up? I don't think it is. Probably not. What is it? I guess I don't really know. I mean saying no and actually taking control like you said of my

finances and being like, no, this is going to go in here and being disciplined. Okay. What about for you, Richard? Why haven't you gone beyond the weekly basis? It's been 40 plus years. In my case, that's what I make. I haven't made this amount in a year since I was in my early 20s. With what I make a year, like my ability to put money in, save money. How far can it actually stretch?

You're right. Maybe your income isn't high enough. We're going to get to that in a second. But if I were in your situation and I were talking to a partner who said, hey, I want you to contribute something to the household, I would definitely have that conversation. But if I can't afford to save any money every month, then I can't afford to contribute. I need to be paying myself first.

Meaning I need to be saving 20 bucks a week, 50 bucks a week, 50 bucks a month, whatever the number is. That's how I would think about it. Okay. Anybody teach you that ever? Not really. No. I'm really glad that I get the chance to talk to Don and Richard because I want you to understand how most

people in America grow up with money. Most people have never heard the word investment in their household ever. Their parents don't talk about it because they don't even know what investments are. What's the savings rate? How does retirement work? Parents don't know so kids don't know so their kids don't know and the cycle simply continues The truth is most people grow up with simple money messages very simple save money Make your own coffee at home buy a. And then they enter into a complex world with words like mortgages and deductibles and expense ratios. It's almost unfair.

Almost. You'll notice that Don and Richard have not made a serious effort to learn about money. This is why I say that we can simultaneously call for systemic reform while encouraging personal responsibility. Pick up a book, listen to podcasts, start to focus time at least an hour a week at the beginning on your personal finances. It's one of the most important uses of your time in your entire life. Dawn and Richard are focused on paying weekly bills while the real problems are much, much bigger,

but they don't even realize it. Dawn, that urge you have to combine finances so that you can pay the bills. What do you notice about that? It's me. Probably because I've had to do things on my own. So it's just, I take control. I do it in the house too. Everything needs to be planned. If there's anything going on, I just kind of... Why didn't you plan more investments? I never really thought about it. Growing up, it was just the bills. It was always the bills. It was never investments. It was never, like I said, go to college to get a better job. I try to instill that in my children.

You instill the saving investing part in them? I think I try to, but not with the **** I don't. What's going to end up with his financial situation when he becomes an adult? He's going to struggle. I mean, because if he wants $100, there's $100, that every day, he better make a lot of money. You come accustomed to getting what you want. Which I was. And now he will, and probably his kids will.

Probably. Which I'd like to stop that. Really? I would like to make a plan and do it. I have been putting my foot down more like with that. I was like, you're not getting it. I don't have the money. You said that?

Yes. And how did that go? A couple weeks ago, I had a surprise bill taken out. So my bank account was like, nothing. And I'm like, I literally have like $8 in my bank account. I don't have it. And then he's like, oh, well, you should have told me. What has happened with the fact that he asks you for things all the time and he doesn't ask your ex? I think because his father wasn't around and I overcompensated.

First I wish it wasn't guilt. I wish it was caring and I wish you had that same care for yourself. The reason I wish you had that care for yourself is that by prioritizing yourself, you actually create a model for everyone in your family. To see what it's like to have healthy boundaries. To see what it's like to prioritize things that are important for you. Still be generous, but to prioritize a healthy rich life. Let's look at the income.

Richard, can you read off the combined current monthly income? 10,251. I know you two have not combined your income, but just for simplicity, if you did, your household income would be $123,000. Did you know that? Not really. Richard? No.

It took a long time for him to even tell me what he made. Why? I'm not comfortable with what I make. Okay. So, the income split here is 6,700 is for you, Dawn. Yes. 35 is for you, Richard. All right. And you net about $7,000 a month.

Again, combined. If you look at that, we make $123,000. What do you say? I don't think it's terrible. Of course, I'd want to make more. I'd say it's almost average. I don't know too many small towns that make $123,000 average. That's a lot of money.

You want me to look it up right now? Sure. The median income in New York City is $57,000. What does that tell you? That we're not doing poorly for where we live. So we might live above our means. What do you make of it, Richard? The fact that the two of you combined make double the median income in your town. Very eye-opening.

It's good. Good news. For me, if I had just sat down and discovered that I make twice the median household income as what I thought, I would feel a lot of gratitude. We should give ourselves a pat on the back. We should appreciate how far we've come, how hard we've worked. And sometimes people become addicted to the feeling of struggle. It is all they know. And when I ask them them like what if you didn't worry about money?

What would you do? They go? I have no idea the second thing. I would feel is anger anger at why do we Feel so behind if we make more than a lot of people in our area What are we doing and I would start to get bad. If I make that much, where's it going? What are we doing wrong? Because it shouldn't be like this if we're making double what other people are making. Right. Yeah. Absolutely.

Shall we take a look at the fixed costs? Alright. What was that laugh? Because mine are 100%. Wow. Your fixed costs are 100%. Okay. What does that laugh? Because mine are 100%. Wow. Your fixed costs are 100%. Mm-hmm. Okay. What does that tell you right there?

That I have too much for what I make. Yeah. It tells me you're broke. You are literally spending more than you make every month. Absolutely. That's where the money from your $100,000 is going. It will go away and you will be left in extreme peril. It scares me and I think that's where my stress comes up and maybe that's where I portray it onto him.

Like I need more money. Yeah, that is. You'll also see that stress manifesting in other ways in your financial life. How many times a week do you log into your accounts, look at the numbers, run calculations? I have it on my phone right on the screen. Does it get you anything? No. I mean, stress.

That's what it gets me. Why do you do it then? Maybe have it. Remember when your kids were young, they have a blankie. That's your blankie. You log in, feel this intensity, click the button, you see this the same familiar numbers, but there's this, there's that, it's a bit of stress and then what do you feel at the end?

Still stress. Still stressed, but. Well, a little relief that I've done it. I can make it this week. Correct. Correct. I have a little calendar that I have everything that comes out and I look at it almost daily of, okay, this comes out today.

Making $123,000 but talking about making calendars like a child would make them to make sure they did their homework. Correct. I think there's a different way. One of the reasons I wanted to get a chance to speak to you was that sometimes we're just not taught this. And we are passed down conscious and unconscious messages from our family. And we've talked about them. Mom did this.

I do this. Now my kids do this. In your case, Richard, things happen to you in your relationships. You were not in control of your money. It almost was like you were a passenger for some of this. Oddly enough, the journey you went through brought you two together, but you haven't rewritten the chapter of your life that you're in now. And you're just continuing the same trends.

Being passive with money, mistaking, observing your finances for being in control of your finances. And so I see this and I get alarmed. I look at your fixed cost, Dawn, I see a hundred percent. I look at yours, Richard. Is this right? Dawn, are you paying less than Richard pays? Well, I pay all the other bills. So I guess when it comes to just rent. The money I give her, I don't know where it goes. I'll just say bills. No, that's not acceptable to just say, she wants 250.

So I gave her 250 and as long as she's okay, that's okay with no, you're in your 40s. You have to prioritize yourself first. You're not married. And similarly, Dawn, it's not acceptable to just say, I need 250 to cover my weekly bills because you'll be covering your weekly bills until one day you can't work anymore and now you're screwed. So this isn't acceptable. $723 a month for rent is what Don is paying. Richard is paying $1,000 a month. All right. That doesn't make sense to me, but let's keep going down the list.

Utilities Dawn is paying all of them. $486 a month. Okay. So you're picking up more of the housing proportionally. I get it. Insurance, you're paying $238. Dawn. Car payments, $260 is what Dawn is paying per month.

So I assume you have a paid off car. This is just your guess. And then Richard, you've got $506. You have a car payment still Yes, what kind of car? It's a 2015 Jeep Cherokee. Does it think break down a lot? I'm pretty good. It's starting to break down and we want a truck. Wait, hold on. Just explain the logic We need a truck because we own what's the connection? Well, I own a camper Explain these words to me. What's a camper? An RV that you pull behind a truck.

Oh my God. Is this a joke? How many couples do I talk to that tell me they own a truck? I go, why do you own a truck? They go, I got to pull the boat. Okay. So you currently tow it behind what? I have to pay somebody to tow it.

Okay. Where do you? So I have a membership to a campground. So we camp for free. We go camping for a couple of weeks in the summer. Okay. Where do you... So I have a membership to a campground. So we camp for free. We go camping for a couple of weeks in the summer. Okay. And that's kind of our vacation. And how much does this camper cost in maintenance fees?

I pay $500 a season to have it towed. And then you want to get a truck because you want to stop paying someone to tow it for you? Some of it, yes. And then just household, like when we're doing household things, we have no way to get stuff to our lumber and things like that. Okay. Can I just say without even looking at the rest of the numbers, don't buy a truck.

Okay? Do not buy a freaking truck right now. Okay. All right. $517 a month in debt payments for Dawn. What is that for? Credit cards. What?

How many? How much in debt? I have a loan on my 401k because I needed the money back before my bankruptcy. OK. I tried to do it that way first. Pay things. OK. And then I took out the rest

for the camper. Why did you do that? Because I wanted a camper. What she grew up with. I had this membership. What was I going to do with it? So I grew up eating Indian food five times a week. It doesn't mean I do a camper. What she grew up with. I had this membership. What was I going to do with it? So, I grew up eating Indian food five times a week. It doesn't mean I do it now.

Well, that's my spoiledness of that part. Okay. I wanted the Barbie house. I got the Barbie house. Correct. I wanted a camper. I got the camper. Right.

Okay. Well, I will say that was a horrible decision, but a lot of people who take loans out don't even pay themselves back. So the fact that you're paying yourself back is better than most. And you have 40 bucks a month. Richard in debt. What's that? I have a personal loan. Yeah.

How much is it for? Right now the debt, the total is about 800, 850. Alright. Around there. Groceries are 800 a month. That's for the three of you. I would love to get that down. Groceries are 800 a month. That's for the three of you. I would love to get that down. Groceries are not the problem.

That's fine. I have no comments. 800 bucks a month? Fine. I'll take it all day. Okay. Yeah, that's the three of us. And if the kids come over, I'll make dinner. Phone is 150 for you and 125 for you, Richard. That's 275 total. Why is it so much? I pay for my children and then they pay me We're on one together and do they actually pay you well, they didn't used to but I just took on my other daughter So they said let me know when you get it and I'll pay it So it's more me having to ask for it. How many text messages are you sending?

Pay time to pay me. How many mess meetings are you having with Richard time to pay me? you sending? Time to pay me. How many meetings are you having with Richard? Time to pay me. It's a lot. I would love to not do that ever because it makes me feel like I'm like a debt collector. You are a debt collector. Yeah. That's the role you've given yourself. Remember when I told you that the way you feel about money, that stress will manifest itself in certain ways? What is this? More stress. Yeah. But what are you getting out of it?

You go around to everyone. You knock on the town's doors, including your fiance. Hey, it's time to pay me again. I feel horrible doing this. But in the end, what happens? I feel better once I get it. Yeah. Ah, let that temporary sense of money wash over me and give me control.

That's absolutely right. When I do get like, when I get his money, the 200 or 250, it just like... I feel better. Yeah. Like I can breathe. Richard, I can see you are very observant about what's going on in the studio. Love it. How long has it been since you've been in the photography business?

For five years. What if you just never start the business? If I never start the business, then I'd have to kind of dive into something that made a little more money. What do you do? I do assets protection and logistics. And there are 12-hour days, Saturday, Sunday, Monday, Tuesday through Friday have open all that's open to start a business.

What do you currently do during that time? Just the housework. Organization, renovations, that's kind of nothing. I always say that's nothing for me. Well, it's something for me. I don't know how to do any of that stuff. If somebody was doing that, that's worth a lot of money. You know what I mean? Yeah. He works very hard at the house. Yeah. I don't know how to do any of that stuff. If somebody was doing that, that's worth a lot of money. You know what I mean?

Yeah. He works very hard at the house. Yeah, I don't stop. Is there value in that? Oh, absolutely. I save money. Yeah, there's money saved. Is there financial value besides just the money saved?

I've told him when we first talked about him starting his business, I'm like, why don't you get something like part-time? And he's like, well, I couldn't pay the bills. I'm like, all you need to do is pay your bills and just kind of help out a little. But what you do in the house is so much more to me than like financially. But at the same time, I don't want to struggle. What's the balance that you've decided on? I work now in the struggles there, even though I'm giving the money.

But I'm told to work part time. Grind my business but we all know when you're starting out it's up and down. What if Richard told you that looking at his finances he can't contribute $250 a week. He can contribute $100 a week because he needs to prioritize his own retirement. I would be okay with that if I could get my finances under control more. You can see that a lot of Dawn's financial struggles are due to her own decisions. She took out a loan on her 401k for a camper. When I asked her why, she said, because I wanted a camper.

Now of course, I'm getting frustrated listening. And I know a lot of you want me to scream at Dawn and Richard, but this isn't a zoo. I'm not here to create a spectacle with my guests. It might feel good to you, but I'm not here to scream at them. I'm here to try to help them live a rich life. This is why I'm asking them lots of questions and I'm going slowly. I'm letting them hear their own responses. When we get back from this short break, I'm going to talk to Richard about what he wants.

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Oh. My family owns a duplex apartment. Oh. And I can move in there rent free. How long can you do that for? Ever. But that's not what I want. Okay. Very interesting. You want to live together and you're willing to contribute that for? However. But that's not what I want. Okay. Very interesting.

You want to live together and you're willing to contribute in some way financial, logistical, all the above so that you two can do that. Yes. Okay. Hear you loud and clear. Let's keep going down the numbers here. So we are currently at 74% fixed costs, which is a lot. Well, it's 77% for Don, which is high, but fixable.

And 69% for Richard, which is also high, but we can work with that. Okay. 74% joint fixed costs, although again, you're not joint expenses. Your subscriptions, by the way, are $161 and $138 per month. Let's go down to the investments. Investments are zero. Zero dollars being invested. I have a 401k, but it's pre-tax.

All right. So how much are you putting in that 401k? It's about $120 a check. So like $3,000 a year, So like three thousand a year. Ballpark. Okay, fine. And what about you Richard? Investments?

Nothing. How come? Trying to... Just trying to rebuild after things. Okay. Savings are at zero for everybody. Besides my house savings, which needs to go to buy the house. That's all there's no savings. Mm-hmm Down from a hundred to fifty eight. Mm-hmm. Okay and going down every month probably. Okay. Let's look at guilt-free spending. Whoa

So first of all, I don't believe these numbers. I know you're spending more than 993 a month on eating out travel Etc stuff for the. What happens at Christmas? Last Christmas, I probably took out of my savings. Was there that at credit cards? It's very stressful. A lot of kids, a lot of family members. What I took away from that was, life happens to me.

Not I decide what happens at Christmas. Another couple I could speak to could be making half of what you make. Even a third of what you make and they could say something like this, you know what? We talked about it and we save up for the whole year and each child gets one gift and we really spend Christmas together. We all watch a movie. Fraction of what I'm sure you pay, but they decided the world didn't decide.

I also noticed that you said, I don't know what's going to happen this Christmas. What's that saying to me? So by saying, I don't know what happens. Life is out of control for me. I don't know. Other people are going to tell me what happened. Life is out of control for me. I don't know. Other people are going to tell me what happens. Exactly. And why is it that you're so afraid to decide what happens with your own money?

I don't want to disappoint my children maybe and other people. What would be disappointing to them? I don't know with my girls if they would be disappointed really because they're older and they're like, don't buy for me this year. Buy for the kids instead like I think they'd be okay if I really said I don't have money my son it depends with him he might he might be disappointed it's the guilt it's that overcompensating if guilt is the primary driver for your financial behavior you're going to guilt yourself right into running out of money. Which I've done. Yeah. Look at this number.

You're down from 100K to 58K. It's going down. Yeah. I don't know about you. I would not want to live my life based on reactive guilt. It just seems like you're always one step behind. No matter what you do, it's never enough. That's exactly how I feel.

If we were to speak about money in a combined sense, you have $123,000. It's a good salary. It's particularly relative to the median salary in your area. You have an enviable housing situation. Like unbelievable. And in your case, Richard, if you need to, you could always go and live back for free. So you both have an enviable situation housing wise. Correct.

But you have only $24,000 in investments and you're investing very little. And if we run a calculation on how much you will have, I can show you, but it's going to be very little. You have a pension? Yes. How much is a calculation on how much you will have, I can show you, but it's going to be very little. You have a pension? Yes. How much is a pension going to pay you? Maybe $1,100 a month. $1,200 a month.

Just so everybody knows, you're currently making $6,700 a month gross. So to go from that to $1,100, what would you do? I wouldn't be able to afford to live or get a job. So right now you don't have enough money to retire. Correct. You're not on track to have enough money. Right. So I guess I'm, I feel like from the reactions you're both giving me, I feel more alarmed

for your situation than you are. Why is that? I've never had to really think about the future much. It's more like you said, living the day. Here we are. What do you want to do? This is your chance. We want help. Okay.

Tell me what you want to do. I want to be 70 years old and working a second job. Right now you're on track to do that. Yes. So I need to start putting more money into my 401k investments. How are you going to do that? I need to get some of my fixed costs down so I have the money to put in there. If I didn't have the debt payments, but I do, so I don't know how to get those down

besides just paying them off. Well, you could pay that off today if you wanted. With my $58,000. Mm-hmm. Yes. Which is what I did with my car. I don't think I can be in a better spot rent-wise, mortgage-wise, financially. I agree.

Even if you were to downsize to a two or three bedroom, you'd pretty much be paying the same. Right. But what about the basement that you spent $9,000 on? Is there an opportunity there? There is an opportunity there. It's just finding some way to utilize that with somebody. Yeah. Somebody you trust.

I totally hear you on that. But getting aggressive, putting the word out. But if somebody were to come in, how much rent would they pay you? 800? Let's even say 700. Okay. That changes the whole game. Absolutely it does. Okay. So that's a huge lever you have to pull as long as it is safe for your family. Right. Yeah. I have no problem with that. Okay. What else? Not safe for your family. Right. Yeah. I have no problem with that. Okay.

What else? Not pay for my kids' phone. Agreed. Every bit helps just to show you instead of $150, if we take it down to $80, that drops you from 77% fixed cost to 75%. So it actually is meaningful. Right. But what's more important about that?

Can you imagine sending a text message to your kids and letting them know they're going to be responsible for covering their own phone? Try to help them out because to be on mine, it's cheaper than that if they went on their own. Look, it's your money. You could do what you choose. It's your family. But the way you are currently managing your money, you will run out of money. This is the easiest decision you will make out of the things that we're going to talk about. Right.

So would you be willing to do it? Yes, I would be willing to do it. Are you ready to turn the page on that chapter of them being little kids and you helping them with everything? Yes, I think it would be good for them. Can we do it right now? Can you send the text? Oh boy. Um

I mean I will Tell me what you're going to say in this text message, um Looking at my finances It would be financially in my favor If everyone has their own Phone plan and paper. Okay. Was that difficult? It's very difficult. Now I'm going to cry.

It's okay to cry. I just want to help my kids. And I don't have a lot of money to help them. And that's really like small amount and I do ask them for the money and they pay but I just at least feel like I'm being a little. Every mom wants to take care of her kids and that changes over time. Seems like you are providing a place for the whole family to come. That's kind of what the house is. That's kind of what that place everybody gathers grandkids, everybody pool yard, anything like

that. That's the hub. So you are living that dream with this house? My house right now is my, I would say is my dream. In order to keep that dream, would you be willing to make other changes? Yes. Which ones? Like sell the camper, things like that. Okay.

I can sell the camper. How much would you get? Somewhere between $10,000 and $12,000. Let's say $10,000. $10,000, what do you do with the money? That's where I'm not sure if I would put it into the house fund to make my mortgage go lower when I do buy it or put it into 401k. Is anyone looking at the credit card debt here?

Oh, definitely get rid of the credit cards and pay back my 401k. Yeah, that would be good. And then the rest put into my savings. I think that you should probably be investing more and a lot more. And I think that you probably don't understand how investments work. And I'm going to be willing to bet both of you, you haven't read a book, my book or anyone's book on personal finance, stuff like that, right?

I've read the book. Yeah? Yeah. Oh, what'd it tell you? Well, it told me a lot of things, but I have to put it into play. This isn't a hypothetical life. This is your life. Either I want that and I'm going to do it or I'm not.

You can also say I'm not. I like the way it is. I don't want to make any changes. I want to pay the cell phone and keep the camper. I will respect that. No, I want to do it and I will do it. I want savings. I want to get married.

You guys talk a lot about what you want, but you don't talk about what you're willing to do it and I will do it. I want savings. I want to get married. You guys talk a lot about what you want, but you don't talk about what you're willing to do. True. And I have a lot of compassion for both of the things that you've gone through in your journeys. I feel for that because not everyone grows up learning about this stuff when you're a kid. But at a certain point,

you have made decisions that have kept you here. And even when we have this time together, which I want to help you, you're reliving the past and you are telling me what you want. But kids want unicorns. That doesn't mean they're going to get them. And kids want everything. That's not a plan. So I'm begging you to tell me what changes specifically are you willing to make.

Let's start with Richard now. So the camper, 10, 10, 5, 11 at most, pay your 401k, but you look at the money you're already putting into the camper. As far as like towing it, the expenses, the money that you would spend doing that, put it where you want. Oh wow. Okay, so normally during summer, let's just say you would spend, I'm going to make it up, $300 a month on XYZ assorted expenses. So that's three months, that's $900 you would have normally spent. You take that $300 a month and you what?

Put it in your 401k, put it towards your wedding, put it in an emergency. Right. It's either one of two things. Save it or invest it in your case because you are starting later than most, but you still have time. Forty eight years old and forty three. So you have time. You have, you know, 15 to 20 years to let money compound and grow. That's a long time before potentially you retire.

For me, if I'm looking at I'm investing aggressively, I'm finding an extra 5,000, 6,000 or more per year to be investing. And that's right there. I love what you said. 900, pull it, put it in there. Okay, what's next? Let's go back and forth. I need to stop buying stuff for my family.

How? Well, the phones, like you said. Is that a done deal or no? If you are serious about making these changes, you're probably going to make a series of changes to recalibrate the financial relationship between you and your loved ones. Correct. It's not just about the cell phone. Correct. So, this is a great opportunity to let them know that you're going to recalibrate it.

It's not just about the cell phone because if it's just about the cell phone, then it's going to be just about this and this and they're just going to feel like she's constantly just stabbing me. Yes. So, let's set the tone. Hey, I'm in New York. I'm meeting with this guy. I've realized I need to make some big changes with my finances. The first thing that I'm going to do is I'd like for each of you to be responsible for

your own phone plan. And I'd like for you to switch over to your own plans by the end of the month. Okay. I'm in New York. I'm meeting with Remy and I need to make some big financial changes. I would like you both to switch to your own phone plans. Before you send it at the very end, put this. This is important to me.

I love you. Like I'm crying. Are you sending it? Yeah. Good work. You think I'm taking away their dog or something? It goes a lot deeper than just a cell phone bill doesn't it? What is it to you?

Being there for them. It was just me and them for a long time think 11 years yeah I went through a lot with the divorce like emotionally if it wasn't for them I don't know how I would have got through it you know you're still there for them you're there physically you're there emotionally yeah I have a great relationship with them. Mom is mom. You're going to be there.

But you're going to change the dynamics. It's the same way every parent has done when they were little kids. You used to feed them. You don't feed them anymore. Right? Same way that you used to pay for them to go back to school shopping. You don't do that anymore.

This is just another evolution of that. What feels big to you, I get it. It feels big because you're just closing the door on one more chapter of parenting, but you are actually giving them the keys to start their own chapter. They're going to figure things out now with their spouses and fiancees. They've got to figure it out just as you're doing it right now. Not everybody has a chance to come to New York and talk to me and others. You had that chance.

Now you're passing that gift along to them. Yes, it's going to be tough for them. It is. There's no doubt, especially with the incomes they make, the number of kids, it's going to be tough for them. It is. There's no doubt. Especially with the incomes they make, the number of kids, it's going to be tough. Let's remember. They have a house that they can go to where mom, where grandma is there. They're loved.

And a cell phone bill, they will figure out a way to make it work. Yeah. All right. Richard, what do you say? I noticed you were holding her hand during that process. That's a really big deal. Like I know what family is to her. It's everything.

Yeah. I kind of love watching the two of you. I love that you reached over and comforted her. And Dawn, I love that. I think when we were talking about the numbers, you were quite stoic. Even though I was becoming alarmed. But this really tells me so much about you. It is family. And just the fact that it is so challenging for you to send this text message.

Yeah. I've never realized that that would be so hard. Yeah. It's like kind of standing up. It's like me first. Yeah. That's right. I don't do that. That conversation was really hard for me, but it was 10 times harder for Dawn. Truthfully, looking back on the recording, I don't know if it was the right call. Think about it. Her daughters are engaged. They seem to be responsible. They have big families. They don't make a lot of money.

Why are they being penalized? Let me tell you why I decided for Dawn to start with her daughters. They're grown up. They have their own families, and Dawn is my guest. Dawn, she's my focus today along with Richard. Without making a change, it is a certainty that Dawn will run out of money. She doesn't have enough saved, she doesn't own a house, she is at extreme risk of living in poverty when she gets older. And I know that her saving $50 a month on cell phone bills

will not materially change her financial situation, but I need her to take an action, a hard one to show herself that she can put herself first. Also, I intentionally did not tackle her relationship with her son. The fact that she spoils him, that a 12-year-old essentially orders her around, that she spoils him, that a 12 year old essentially orders her around, that she has allowed him to control the financial dynamic at home,

that goes much deeper than the scope of this show and that needs the help of a therapist. Back to Dawn standing up for herself. What could be a new definition for you of who Dawn is going to be? Somebody that takes control of my own life, but is still there for my children and still a good mom. It's not a but. You're taking control of your life and you're going to continue to be there, but in a different way.

You'll be there to hug them, you'll be there to talk to them, you're not going to be there to pay their bills. Right. And you're not probably going to be there with your son when it comes to what? Things that he wants every day. Yeah. That's going to be really challenging, right? It's going to be challenging, but I think it's going to be easier than sending that

text. I think it's just the bond with my girls and like they they're in college and trying so hard and I do feel like I financially failed them. I wasn't able to pay for their colleges. You know I look at like my brother's situation and he's done so well. His house is paid off, he paid for his kids to go to college, he's got a ton of money and savings and all in one income. I just wasn't able to give them any of that and I could have if I did things differently. Don't you think that's what we're doing right now?

You can give them cell phone payment and you can do that for the rest of your life and put yourself into complete debt. Or you can actually give them something even more valuable than 50 bucks a month. You can give them what I think is the opposite of a doormat is being a role model with money. Can you imagine they look and say, wow, mom took total control of her money. Mom went through so much and look at now her retirement account is growing. She feels confident. And believe it or not, I guarantee your family will respect you when you start to have very clear boundaries of what you will and will not do.

With your son, I think that that's probably outside of the scope of what we could talk about today. But I noticed that there is no therapy on this as well. Is that something that the two of you have done before? Oh, yes. We're very big into mental health. Love it. I'm so happy. If you haven't already, although I assume you have, talking about the financial relationship

with your son, is that something you could bring up comfortably in therapy? Yes. Highly encourage you to do that because you'll get some great tools to have conversations with him and I think that will be fantastic. Yes. What about you, Richard? If you want to live together, then that makes it difficult for you to start a business or have the financial security in order to. You're investing zero, you're saving zero.

So what's the plan? God, I can almost say like not even pursue the business. Really? It's time. That's the balance issue with me. Where do you fit it all in? As far as like house care and renovations and grinding a business. Maybe what's the point of the renovations?

What if you stop doing that? What would you do instead? Probably that. What? The business. Taking pictures, creating content, doing things for myself. Alright. And if you do that, how long will you give it and how much do you need to make to know

if it's the right financial decision or not? That I don't know. Let's pick it. Enough to pay bills, obviously. I'd have to pay my bills first and foremost. If I were going to start a business, let's forget video, audio, it doesn't matter. It's just a business at a certain level. You currently make $3,500 a month.

Yes. Okay. So that's like roughly $40K a year. Thing is that we can start to make some choices about finances by just looking at the high level. We go making roughly $40K a year, you can make $20 an hour and I don't know what places around you pay for minimum wage and things like that. Probably what?

$18. So that's close to it. That's right there. You can make minimum wage and make similar to what you're making. No grinding, no nothing. Just go to work and after work is done, you're over. But you're working full time. The real reason that I think there's so much confusion in your mind about what to choose

is that there's no clear end goal. The two of you haven't talked about what is the actual lifestyle we want. Do we actually want to buy this house? If so, how much is it actually going to cost us and when are we going to do it? That means you need to make this much and I need to make this much. That means we need to be contributing this much every month. Right now it's a lot of, you know, like I'd like to do this and travel. You guys are in your 40s.

So either you decide now or you just coast into the rest of your life and close off lots of doors. Right. Which I don't want. Richard, for you, if I were in your situation, I would say, I have six months to be making more than I currently make at my job. Right now I make $3,500 a month. I need to be making $3,500 a month within six months.

Otherwise, close the business down. It's not working. And if you can make $3,500, you could probably make $5,000 and on and on and on. Set a time limit and an income goal because that forces me to be really specific about what I'm doing in my business. Otherwise, I'm just like doing random stuff and hoping one day it will take off. I don't have time for that. I'm getting aggressive with my business.

I'm getting aggressive with my finances. What do you all notice about the way I'm talking? Confident. Aggressive. I'm going to do this and hey, it won't always work, but if it doesn't work, here's my plan. Close it down or change approach, etc. Tim. Numbers. If you look back over the last 10 years, you know, financially speaking, what's changed? It sounds like you've gone through a lot of relationship changes and things like that. Yes, but I want the next 10 years, I want you to be able to live this amazing life. Now amazing might be different than what you envision when you were 20.

Now, amazing might be different than what you envision when you were 20. But it might be, look, being able to be in your dream house and have your family over XYZ times per year. Maybe it's not fighting about money. Maybe it's taking a camping trip. Fine. But you got to be intentional about it. If it were me with the numbers, I would not combine my finances until I got married. I would not get married financially speaking until I had a shared vision about what we're going to do.

And the fact that you can't afford a wedding right now, I mean, this is where I think you need to start talking about compromises. I would never let the cost of a wedding get in the way of getting married. A wedding is a wedding. If I didn't have money when I got wedding get in the way of getting married. A wedding is a wedding. If I didn't have money when I got married, I still would have gotten married. I should have done it in a courthouse. If having a wedding in your fashion is important to you, fine. What choices are you willing to make to do it?

So I would make the changes to cut this number down to roughly 60%. That would be difficult. That would involve raising incomes. In your case, Dawn, you mentioned that if you didn't have Richard, you would get a second job. I would hate to see a 48-year-old mom have to get a second job simply because of her inability to say no. It's like, let me just take on more and more and more so that I can just give, give, give to others. And then what happens to you? I get lost in it.

You are lost in it. Nobody can get you out except you. Not even me. I would increase my savings and my investments. I would take this house payment and I would say, look, I don't know if we're going to get a house or not. But right now what's more important is we have an emergency fund. That emergency fund is going to be roughly $30K because that is six months of expenses. Again, I'm speaking jointly. I know you'd have to divide it for the two of you. Right.

Richard, since you don't have any savings, that would be first priority for you is to build up those savings. And that is why you cannot afford to be paying $1,000 a month. There are a lot of things here that need to change if you too want to be financially secure. A lot. And it's difficult. We saw the text message, difficult. It's difficult.

It's going to be for your son. It's going to be really difficult for you. This is where the two of you can actually show that you are partners. It's like, hey, I know this is so tough for you to say this. Let me help role play with you, what you're going to say to your kids before they come over. Hey, I know it's tough for you to quit smoking. How can I help?

How can I support? This is where partners can step up and you can do it together. But what's important is you've got to have a vision together. If we're going to get married, this is what it's going to take. If I were in your position, I would be putting a lot more money towards investments than savings. Why? Because savings make you very little. You need time for these investments to compound. Typically, historically, these numbers have returned roughly 7% per year after inflation and all that stuff. That doesn't sound like a lot, but it adds up to a lot.

In your case, you're 48, presuming you retire at 65, 68, that number could turn out to be quite a bit. Would you like to see? Sure. I'd love to see that. I'm going to show you the math really quickly here. You have $25,000. You are putting in, let's say, $6,000. You want to retire at 65?

That would be my goal, but I don't know if that's doable. All right. So, you'll currently have $276,000. That means you will have $11,000 a year in income plus your extra $12,000. We're talking about $22,000 a year in income. It'd be hard to live on that. You can't live on that. You can't.

What's going through your mind right now? I'm in a really bad place. You see why I've been in such a hurry. You can't live on this. It's not a good life. Can we make some changes? Instead of $6,000 a year, you put $12,000 a year. That's a thousand dollars a month. Okay, that's pre-tax. It's extra money you have. All of it to your 401k. Let's just say keep it simple. 17 years. You're now at $474,000. It's growing. you have all of it to your 401k. Let's just say keep it simple 17 years. You're now at 474,000 It's growing still not enough right? What else could we do?

Let's assume for the moment that you are not going to buy a house Okay, so we take 30k out of here and put it into the investments Watch what happens you're now at 569. All right What else? Like put more money in. Yes. $18,000 a year. We're now at $767,000, which means you could have $30,000 of income plus your pension plus

Social Security. It's doable. I can live. You can live. You know what else you can do? You can stay working for a couple more years. Why don't we do that? Watch what happens instead of seven sixty seven thousand a Million bucks you see what just happened. It grew a lot in three years You're up to forty thousand a year in income say plus all that other stuff now. Why because we're in a hurry Compounding needs time. It's like cooking a turkey.

You can't just do it in five minutes. That's why I'm getting so passionate about like, oh, are we talking about sending a text message? Send the text. We got bigger things to worry about. We need to be putting well over a thousand dollars a month into investments. We need to be decisive and making big moves with our money needs to become a regular thing. And these conversations that feel so existential right now,

they're actually the tiniest conversations in the grand scheme of what's important. What are you all taking away from this, Dawn? I just need to be more aggressive with what I do with my money and take control of it. I have to not make impulse decisions when it comes to my family and buying. Even buying for myself and the house. I love to buy things for the house. But I just have to look at my future more. Richard?

Know about your money. Be more aware where you want it to go. Yes. Be more aggressive. I like that you said be aware of where you want to go. Because it's not enough to just be aware of what's going on today. We have to be aware of where we want to go.

And in your case, because you have 20 plus years to do it, you have a chance to actually build a pretty healthy financial life. In this calculation, I didn't even combine the two of you. If you were to combine, it makes things even better. Oh, absolutely. But you can't combine it until you each get control of your money right now. The real issue with Don and Richard is that they don't believe they have agency or control over their lives.

This is very common with people who grow up low income, who often see the world as happening to them, not as something they can influence. And this explains so much of some people's passive behavior with money. You'll hear them talking about their decisions and you'll say, why don't you just do X or Y? And they'll have an answer for everything. You're basically playing financial whack-a-mole. And after a while you realize there's a deep lack of agency.

And it goes something like this. Nothing I ever did made any difference. So why bother? It's haunting really when you think about it. And these messages are passed down generationally. So even when you get someone trying to make a change, they often lack the basic fundamentals. Sometimes they try to make a change,

but they end up fixating on how much money they're spending on groceries that week. This is where we really have to have compassion for the different ways that we grew up. I grew up knowing that I could make an impact on the world. It was an expectation. My parents told us, of course you're going to college. Of course you're going to get a good job. Of course you're going to get A's. That's an expectation. I knew that I could work and that I could get results, But that was taught to me from my parents, whose parents taught them and on and on and on.

And we have to remember that not everybody grew up the same way. In this conversation, I also wish I'd gotten to the retirement numbers earlier. It was only at the last minute that I showed Dawn these numbers and did you see her reaction? She looked alarmed. All that talk about their

situation, but it was only when she realized she'd have to live on a fraction of what she makes now that she sat up and realized she was in trouble. I want to thank Dawn and Richard for asking for help. I truly hope they're able to make the changes they need to. Time is not on their side. And if they want to live comfortably as they get older, they will need to make aggressive, sweeping changes very quickly. Let's hear what they have to say, starting with Dawn's follow-up. I guess Rich and I came into it thinking that it would be more of like a plan of what we're due to move forward, more like an idea or blueprint of what we're due to move forward more like a idea or Blueprint of what we are to put our finances together So it doesn't feel like I'm paying all the house bills and he's just giving me money

We did come up with a solution He is going to actually pay certain bills because the money he gives me doesn't go solely to rent I does have to go to food and Electricity things like that. So he is going to actually take on some of those bills and be responsible for those. So that takes a little weight off me. I don't have to ask him for the money. So that did make us open up a conversation about that.

And we were happy with the outcome of that. When it comes to my retirement, I did look into that. And I actually have a New York State pension pension which is so much better than I thought. I am going to be putting into a 401k but I get a pretty high percent of my top three years that I work for New York State. So looking at that now I know how to actually navigate that. Rich has started putting money into his 401k and so we are well on our way. So thank

you. Bye. Unfortunately, we never got a follow up from Richard, even after my team reached out several times. And I have to tell you, I am very, very disappointed to hear that. Don and Richard, I'm wishing you the best. I would love to stay in touch and I would love for you to keep me updated. Thank you again'm wishing you the best. I would love to stay in touch and I would love for you to keep me updated. Thank you again for coming understand the economy. We find the people at the center of the story. Garbage in New York, that was like a controlled substance.

We show you how money influences everything. Tell me what you like by telling me how you spend your money. And we dig until we get answers. I had a bad feeling you were going to bring that up. Planet Money Finds Out. All you have to do is listen. The Planet Money Podcast from NPR.