I Will Teach You To Be Rich - 261. "We’re in our 40s with nothing saved. Will we be ok?"

Episode Date: May 19, 2026

Ramit Sethi of I Will Teach You To Be Rich talks to Sebastien and Hope, a married couple in their forties who have been together for 20 years, married for 16, and have a nine-year-old son. They earn around $195,000 a year, have $674,000 in assets, $129,000 invested, just $11,000 in savings, and $437,000 in debt. On paper, they are not broke, but emotionally, Sebastien still feels like they are constantly scrambling, while Hope believes their personal finances are in the best place they have ever been. Both recently became business owners, with Hope running an architecture firm and Sebastien running a wine importing business, but the risk of entrepreneurship, debt, low emergency savings, and under-investing for retirement has left them stuck between optimism, fear, and avoidance.   In this episode we uncover: • Why Sebastien still feels broke, even though their finances are stronger than they used to be • How Hope’s optimism clashes with Sebastien’s fear about the future • Their combined income of around $195,000 a year • Their assets of $674,000, investments of $129,000, savings of $11,000, and debt of $437,000 • Why having only one month of emergency savings puts them in a risky position • How both Hope and Sebastien became business owners after buying existing companies • Hope’s architecture business and Sebastien’s wine importing business • Why Ramit says they are talking around the numbers instead of confronting them directly • How their current retirement projection could give them only around $35,000 a year • Why Hope’s $130,000 retirement dream requires a much more aggressive investing plan • Why their guilt-free spending and fixed costs are squeezing savings and investments • How one final credit card payment could drop their fixed costs from 67% to 52% • Why their grocery spending becomes one of the first practical areas to tighten • Ramit’s math mistake in the episode and why the overall lesson still stands • Sebastien’s need for a clear business runway and decision point • Hope’s realization that she was not being fully honest with herself about their finances ⏩ CHAPTERS (00:00:53) Introduction: is it too late to be successful with money? (00:02:40) Sebastien and Hope’s financial snapshot (00:04:11) Their annual “executive household planning retreat” (00:06:01) Ramit asks if their planning system is actually working (00:08:02) Sebastien’s fear about his wine importing business (00:11:31) How they each became business owners (00:15:31) Feeling broke vs actually being broke (00:16:47) Ramit reads Sebastien’s application back to Hope (00:20:08) Assets, investments, savings, debt, and net worth (00:21:21) Ramit pushes them to say: “It’s not enough” (00:23:20) Their projected retirement number (00:25:31) Ramit points out they only have one month of emergency savings (00:33:31) Their CSP: fixed costs, investments, savings, and guilt-free spending (00:34:24) Breaking down their $437,000 debt (01:01:22) The $45,500-a-year investment target (01:15:59) Sebastien’s business plan and runway (01:24:20) Ramit’s final advice: redo the CSP and lock in the numbers (01:25:46) Hope’s follow-up (01:27:40) Sebastien’s follow-up (01:29:22) Their updates: increased IRA contributions and Vanguard investing This episode is brought to you by: Netsuite | Get the free guide “Demystifying AI” at https://netsuite.com/ramit LMNT | Get a free LMNT Sample Pack with any order at https://drinklmnt.com/RAMIT Factor | Head to https://factormeals.com/ramit50off and use code ramit50off to get 50 percent off and free daily greens per box, with new subscription only, while supplies last until 09/27/2026. (See website for more details). DeleteMe | Get 20% off all consumer plans when you go to https://joindeleteme.com/ramit and use promo code RAMIT at checkout Get 25% off my programs until Friday May 15th at iwt.com/programs with code RESET26. Connect with Ramit • Get my new book, Money For Couples • 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 Calling LA couples: Apply to be coached for free on this podcast at https://iwt.com/apply

Calling couples from L.A. I want to talk to you. On the upcoming season of money for couples, I am excited to be recording episodes in person live in studio. So if you are struggling with debt, retirement, supporting aging family members, overspending, or talking to your partner about money, apply to the podcast right now. I've done some podcast episodes in person before. Honestly, I love them. So if you are L.A. based and you essentially want a free three-hour coaching session with me, you can apply right now at IWT.com slash apply. Again, to be on the podcast, it's IWT.com slash apply. I'm in my 40s and we've felt broke for a long time.

We're constantly trying to make things work. I feel like our personal finances are in a better place than they ever have been. Guys, these are two different universes. Talk about being on a different page. What's the deal? Maybe sometimes we're overreaching and it just never feels comfortable. If you cannot build up a reserve, you are already in a very dangerous zone. I would love $130,000 a year to retire.

I think it could probably be like 80 to 90. Guys, that's like wildly off. To get to $130,000, you need $2.35 million at retirement. That means you need to increase your investments to $45,500 per year. If nothing changes in the next five years, what happens to you? We still are not able to retire. Is it too late for you to be successful with money? Maybe you didn't get started in your 20s.

Maybe you woke up one day worried about money asking yourself, am I screwed in retirement? Well, today we're getting a look into that very question that tens of millions of people ask themselves because I'm speaking with Sebastian, who's 42, and Hope, who's 48. They've been married for 16 years. They have a nine-year-old son, and they recently both became business owners. Listen to this line from Sebastian's application.

Quote, we both made a choice to become business owners, but now we are locked into these choices for the foreseeable future. Raising a kid, running businesses, and paying down debt leaves us with barely any money to invest and has us questioning every purchase. We mostly ignore it and pretend that it is a problem will solve later. Unfortunately, this is a story I hear all the time. A couple will come up against some financial challenge, maybe it's debt, maybe it's high cost of living, and they will simply say, I'll deal with that later. Human beings do not like pain, especially when it's not acute.

It's much easier to tell ourselves, I'll just deal with that later. Some dull, throbbing thing on your wrist, ah, that's fine. I'm actually curious to hear from you. Have you ever kicked a can down the road until you just couldn't ignore it anymore? What was that moment where it finally broke, like the straw that broke the camel's back? Head over to YouTube or Spotify and let me know in the comments. I read every one of your comments. Now, I'm looking at their conscious spending plan, which breaks down how much they make and where they spend their money. If you want my help with your own conscious spending plan, join my money coaching program at IWT.com slash money coaching. Their assets, $674,000.

investments, $129,000, savings $11,000, debt $437,000 for a total net worth of $376,000. I have a lot of questions, so let's get started with Sebastian and Hope. You said something in your application. You said, Sebastian, we've been together for 20 years, married for 16, and have only recently started talking about investing for retirement. I'm curious, why did it take you so long to talk about investing? It never occurred to us before. I wasn't taught that as a kid. You guys don't talk about investing strategy on date number one or two? No. We talked about a lot of other stuff on date one or two, but yeah. We were too busy thinking about adventures and what we wanted to do with our lives right

then. When was the first time you did have a substantive conversation? about money. Well, the first big time was we were living in another city and before moving, we kind of wanted to put together a plan and what we were going to do next. I wanted to change careers and we needed to plan what the next, you know, 10 months to a year look like in that transition. And it was the first time we kind of actually sat down for a whole day and like mapped out what we wanted to do, what it would take, what we were, able to do. How'd it feel? Good. It's actually a tradition that we've maintained for the last 15 years every, every January, we take a retreat together and spend a day or two talking about money

and what we want to do. Wait, what? That's quite advanced. Hold on. It's become more sophisticated over the years, for sure. This is amazing. What did you talk about in these annual money meetings? They're not just money meetings. They're really a look at, it's called our executive household planning retreat. And so we talk about things that we want to do more of during the year. Friends, we want to have more of in our lives, things that we should really focus on in the coming year. And then also looking back at what have we accomplished in the past year. What role does money play in these conversation. Sadly, it only started to play a role probably five years ago. Got it. Okay. You have kids? One child. He's nine. And now, how often do you talk about money? Probably, you know, on a weekly

basis, there's a sort of small check-in, a more serious check-in once every six weeks. And then every six months because we do a, now we do a bi-annual head of household like check-in. And that's a half-day thing. And so we check in then as well just to see how we're doing on our projections. I mean, I love what I'm hearing. I freaking love it. It's all dialed in. You got the six weeks, six months, one year.

I love it. It's very structured. Yeah. Is it working? I would say it's working pretty well, yes. Okay. We're fairly on the same page, honestly, about money and doing these planning retreats really helps us align what we want to do because we, you know, we say, okay, this year we're really going to focus on our debt. Or this year, we really want to make some moves in terms of invent.

But I still think that we're just at this precipice right now where our lives have been changing for the better. And our finances have been changing for the better. And we're still just having a hard time conceiving that our finances are better and that we are about to make some steps ahead, I think. What do you mean? I don't understand. So I purchased a business five years ago. So now I'm the sole owner. I am still paying off the former owner for the next two years.

There is some leeway now for an increase in wages, but once I finish the purchase, there will be more leeway for an increase in wages. Sebastian just purchased his business last October, a year ago today, actually. Oh, congrats. Which is so cool. And so I think that we're so used to being broke that we're still kind of living in that kind of way. I guess I'm surprised because from reading your application, Sebastian, what you wrote is quite different than what hope is telling me. Yeah.

We have a different approach or a different outlook on how things are going. I purchase this business and I'm super thrilled. I made it through a year. That feels like a really big accomplishment to stay on top of my bills and, you know, be paying down the loan. And I also feel like it's very precarious because there's all sorts of stuff that I can't control. you know, tariffs are affecting my businesses. I import, so I pay my bills in another currency, and, you know, the currency markets have changed. Like, the dollar is a lot weaker than it was a

year ago. So this is quite surprising. Hope, you just spent a couple of minutes telling me, like, we're about to have more money, we're about to be in a better position than we ever have. We can't seem to get our heads around the fact that we're doing really well. Sebastian, in your application, you wrote, quote, just can't seem to get ahead. We are both small business owners who wanted to direct our future and have control of our time, but are constantly stressed about whether our businesses are sustainable and what could happen if one of us or both doesn't make it. Guys, these are two different universes. Talk about being on a different page. What's the deal? Yeah, I mean, I, like,

my business does feel really shaken up this year with everything. that's going on with trade. How do you feel about hope saying we're in a great place and we're about to have more success than we've ever had? I mean, that was the hope when we, you know, when she became a business owner, the idea was that she would have not just more control over her career, but also that, you know, eventually she would be able to, like,

financially see some return on it. She took over her business in January of 2020 and, you know, six weeks later had to set. and everybody to work from home. And working through the pandemic was like a huge trial. Sebastian, I guess my question is about the fact that the two of you just a minute ago said you're on the same page, but to my mind, you are not. Yeah, I mean, I think we're on the same page in terms of like how we allocate our money,

how we choose to manage it and what priorities we choose to make about it. I think we're on a different page in terms of how we feel about our businesses are going. How do you feel about it in a sentence? Like our personal finances are headed on the right track. If I can make it through the next six months of my business, that would mean things are going in the right direction. But I'm really nervous that they might not be able to continue. Okay. And Hope?

How about you? I feel like our personal finances are in a better place. than they ever have been. We're on more solid ground in terms of our finances currently. I do absolutely worry about Sebastian's business mostly just because it is so new and things are so precarious. And the tariffs and people not drinking as much have really affected wine consumption

and importing, my business is pretty steady right now. Now, you both own businesses separately, correct? Yes. Okay, and how did you wind up owning them? Are you both founders? No. Both of us purchased from a founder. Oh, separately, you each purchased a business.

Wow. Okay, and how did you decide to purchase businesses? It's somewhat unusual. Oh, you're going to hate this, Remed. Sorry. I have always been a little bit nervous about owning a business. I'm an architect and was just nervous about the prospect of being in charge of all those people. Yeah. But then I heard that my former employer was going to sell to someone else. And so I put my hand up because. because I was in my favorite job that I've ever been in. Why do I hate that? Because it was very spontaneous.

I mean, he went out for Happy Hour with these other people, and I wrote him an email right then. Even though I'd been saying for years, like, I do not, I'm not going to get licensed because you have to be licensed to become an firm owner. I'm not going to get licensed. I'm not going to purchase this firm, even though I knew he,

he felt as though I would do a good job, but it was a very spontaneous spur of the moment decision. Okay, all right. So you're an architect. Is that the business, architect? I'm an architect. I'm an architect, yeah. Cool. All right. Sebastian, what about you? How'd you come to buy this business? I was working for a guy that I really enjoyed working for, and it's a really interesting business. I like hope, I love my job. You know, the former owner actually lives out of the country, and he realized he wanted to kind of make a transition and we had long conversations about it. And you know, after a long process, I came to realize like things are going to change whether I like it or not. And either I can be in control of where that goes and continue to do something that I really

love or go find something else. This is a wine business? Yeah, it's a wine importer. So now that you both run your own businesses, why do you say in the application that it feels like you're not getting ahead? I knew this from the get-go that the first year or two was going to be hard. There was a lot of startup cost. I'm still paying down some of that business debt for the startup cost. I think part of it's the feeling of, you know, I'm in my 40s. And as Hope said, it's like we've felt broke for a long time. We're constantly trying to make things work, make things a little bit better, and maybe sometimes we're overreaching.

And it just never feels comfortable. Are you broke? I mean, we pay our bills. There's money in a savings account, so no. I'm kind of confused about what I'm even doing here. Like Hope tells me they're doing better than ever, but Sebastian's application is full of fear. They say they're on the same page, but if you listen to them, they're clearly not. They have executive planning retreats where they meet every six weeks with all this structure,

and yet one of them says they're thriving, the other says they feel broke. Very confusing, mixed messages. It's like they've built this force field around themselves, and no matter how bad it gets, they can always say, well, we're better off than we used to be. I don't think they would be here if there wasn't a real problem, but I can't help them if we can't even agree on what that problem is. So I'm going to get direct. Before we can fix anything,

I need to cut through some of this and see what's actually going on. We'll get to that right after this. If you got hit by a bus tomorrow, do you know what expenses your kids would need covered so that they could at least stay financially safe? For things that are this important, you have to, so that your loved ones are taken care of financially

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minutes. Go to Lisa.com for 30% off mattresses plus get an extra $50 off with promo code remit exclusive for my listeners. That's L-E-E-E-S-A.com promo code Remit for 30% off mattresses plus an extra $50 off. Support our show and let them know we sent you after checkout. Lisa.com promo code Remete. So you feel broke but you're not broke. Why? It feels like there's always something. There's always something that comes up. There's always something that needs to be taken care of. We're always scrambling to put the pieces together.

Like what? We had to replace three appliances this year already, two refrigerators and a dishwasher. And wasn't something we planned on. I'm kind of surprised because you have these planning sessions multiple times a year. Why not plan ahead for the expected and the unexpected? We'll add that for this coming January. I'm sure you will. But why have you not?

We've been trying to pay off debt. We've been trying to get some of the fundamentals taken care of. Hope, do you find yourself feeling like you're not getting ahead? I would like to be more prepared for the future. I actually feel good about where we are, actually. Okay. I am happy that when these things have come up, we have had the resources to buy them. even when it feels more tight, we have been able to buy them. Have you seen what Sebastian wrote in his application? I don't think so.

Do you mind if I read it, Sebastian? No, go ahead. Okay, the reason I'm, because I'm kind of struck by the differences in the application. Sebastian, what you're telling me, and then hope what you're saying. Like, these are three different things. And I want to try to get us on the same page before we proceed. As I mentioned, Sebastian wrote, we just can't seem to get ahead. we are constantly stressed about whether our businesses are sustainable.

We have been supportive of each other's choices, but we are now locked in to these choices for the foreseeable future. Running our businesses and paying down debt leave us barely any money to invest and has us questioning every purchase. Does anybody hear a difference in the way this conversation is going in this application? I'm an eternal optimist. Your name is hope. Is there something to that?

Probably. Like the way you're talking, it's like, oh, we're doing great. We're doing better than ever. And we just don't know how to spend our money. Like, we're crushing it. Sometimes when I hear Sebastian talk about these things, I think that it's a little overblown. Okay.

Tell me about that. I mean, I agree. I can definitely be a little bit of a doom and gloom, you know, response to these things. You're the pessimist? Yes. And then you're the optimist, hope the optimist. Yes.

Is there any realism in the conversation about money? I mean, I think that's why we meet and have these discussions because we're trying to keep it real. We've been able to do planning in our past for moves or for planning to purchase a house. Who brings up the topic of money in the conversation? Usually Sebastian, because he's more in it, but we both discuss it. Sebastian, when you bring up money, what is the tone of these conversations about money? Probably not very cheerful. It's probably coming from a place of worry. I think there's a block in my thinking about, as Hope is said, we're doing better in our personal finances than we ever have.

And it feels to me like that could all go away. everything that we've built over the last few years, like, yes, we have investments. Yes, we have an emergency fund. And it all feels so small and so much like a placeholder. Like, oh, okay, we've started an emergency fund, but it's not that much. Like, if I have to close the doors with my business, like, there's very little runway for us. Or if something happens to Hope's business, there's very little runway there. I agree with that.

That's the first time I've heard you describe it like that, and hope you agree with that. Yeah, that's why I want to plan more for the future. I think Sebastian will be successful in his business. He's really good at what he does. I think that the tariff things are going to even out, but it is a very weird situation that we're in right now, and I would rather be in a place of preparedness. then not so that we can feel more free.

Okay, let's take a look at the numbers. Sebastian, can you read the words in bold and then the numbers in full next to it for this entire box, please? Assets, 674,300. Investments, 129,000. Savings, 11,125. Debt, 4377. 7,732. And then total net worth, 376,693. All right, cool. What do you think about those numbers?

Not bad, not great. Like I said, some of those numbers feel kind of like a placeholder rather than real. What? Hold on. What does that mean? They feel like a placeholder. Those are real numbers. Yeah. I mean, if we look at like where our investments would be when we're ready to retire, it doesn't feel like enough. Our savings doesn't. feel like enough of emergency funds? Why are we talking about feelings? I'm just curious. Like, we're looking at cold, hard numbers. Why does it not feel like enough?

It's either enough or it's not. I mean, it's not enough. Our investments and savings aren't where we would want them to be. Okay, they're not where. Nobody's are where they want them to be. Almost nobody I talked to. Even the ones who have more than they thought, they even say they're not where we want them to be.

Nobody knows what they want. But candidly, being 42 and 48, if you extrapolate the numbers and project it retirement, blah, blah, blah, would it be fair to say those numbers are not where they need to be? Yes. Would it be fair to say they are not enough? Yes. Have you ever said that exact phrase, the amount we have is not enough? Yes. Really?

We said it the other night. What did you say? Because the way you just said it was it doesn't feel like it's enough. they're better than they've ever been but we'd like them to be better, et cetera, et cetera, et cetera. What did you say the other night? Well, we actually looked at it like an investment calculator

to see, okay, what are the possibilities like if you can get a raise, if I can give myself a raise, as soon as we're done paying off our credit card debt, like if we can put more money away in our investments, what? Like how does that affect, you know, where our retirement would be in 20,

25 years. What about just how much do we have and how much is it going to be? What about just that? You guys see what I'm getting at? I feel like there's a lot of avoiding the actual numbers in front of us. Can I just put them back up on screen? You have $129,000 invested. We need more. Yeah, I agree with hope. Like, we need more. Why has it been so difficult to confront the reality of where you are financially? I think for me it feels like I should have been doing this 10, 15 years ago. It feels like I haven't been doing the work that I should have been doing. Same. I have had a long time that I've been working and was just making, making it through for so long.

Should have also been investing more. Okay. Do you know how much you will currently, on your current trajectory, you will have at retirement? Probably about $750,000. Yeah, ballpark. We calculate $885,000, but within the margin. We do a 4% calculation. You will be able to safely withdraw $35,000 per year in income.

Yeah, that's low. Here are some of the things that I have noticed you describing. I feel like we could be doing better. I feel like we are doing better than we have done in the past. I feel like it's not enough. but there are other people who are doing worse, so we're actually doing okay, and this doesn't include our business value.

What do you notice about all those things I'm saying? They're all hedging bets. Yeah, just excuses for not dealing with the numbers directly. Yeah, there is no confrontation of what are the numbers, point blank, and what do they mean? Guys, just run a calculation. And without adding in a mythical raise and selling the business, Is that enough for us? Obviously no.

What should we do? I'm not trying to berate anybody. I'm just trying to talk in terms of pure numbers. There is a time and a place for feelings and there is a time in a place to talk about the numbers and run a calculation. Do you find that this is a recurring pattern when the two of you talk about money?

Minimizing, hedging, talking about the future, but not confronting the numbers directly? Yeah. I mean, there's always a contingency or, you know, what if? that we talk about. I think we're driven a lot by thinking big and dreaming about our goals

and being creative about how to make those things happen. And it bleeds into that sense of not just talking about this is the number, but how can we get what we want? Is that why we're here today? Because I don't think we're here to talk tariffs. I don't think

we're here to talk about how you're in a better position than you've ever been. and you don't know how to spend money. Guys, you have one month of emergency savings. Yeah. This is directly at odds with what you told me. We have more money than we know what to do with. I don't see that.

Let's take a look at the rest of the numbers on the CSP. This time I will ask, hope to read off your combined gross monthly income, please. Combined gross monthly income is $16,260. Great. So your household income is $195,000 a year. By a show of hands, who here knew that? Mostly, yeah. Why is everybody's hand going kind of up?

What the hell's happening right now? That's not the number that I expected to see, actually. What did you think? $158,000. Oh, only $40,000 off. Okay, now that you have $40,000 more than you thought, what does that tell you? I mean, it tells me that we need to think about putting our, you know, our money where we say we need it.

Okay. And Hope? Did you know it was 195K? I also thought that we were up near 160 because that's... How did both of you raise your hand, but both of you were $40,000 off? Remember, you filled this out. This is literally your CSP. I'll show you right now. I'm going to show you. Look, I took the two gross incomes. Uh-huh. They add up together to 16,260 a month, and then I multiplied it by 12. So what did we do wrong, Sebastian?

I'm not sure. I think we're including the rental income in my income column. Yeah. Okay. Okay, did you see what just happened? They both raised their hands and told me they know their household income. And then they were $40,000 off. Now, most couples would say, see, we're not on the same page.

But Hope and Sebastian insist that they are on the same page. And I think that's actually more concerning. I talk about being on the same page in my new book, Money for Couples. Like when I ask couples, what's the problem with money in your relationship? Almost everyone says, we're just not on the same page. But that's vague. That's generic. It's what people say when they don't really want to look at what's truly going on.

When couples insist they are aligned, even though obviously their words are telling completely different stories, to me that's almost worse because they don't even realize they're reading totally different books. Hope says, we're doing better than ever. Sebastian says, we can't get ahead. You can't be on the same page when you don't even know what page you're on. So if you and your partner need help getting on the same page, actually on the same page, not just feeling one way about it, then that's exactly what my money coaching program does. You're going to get personalized help from me and from our community members to see the patterns that you might just be missing on your own. You can sign up at IWT.com slash money coaching. Now listen as I challenged them on these answers and I'll see if I can

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That's ZOC, doc, dot com slash Rameet. Zokdoch.com slash Rameet. And I want to thank Zok doc doc for sponsoring this message. Here's what's interesting to me, and I think this is a big pattern I'm seeing over and over already. I don't mind that you don't know what your household income is. 50% of people I talk to don't know their household income. No problem. I mean, it's a problem, but everybody does it. The real problem is that I asked you,

did you know this number? Both of you put your hands up saying yes, and it turns out you were $40,000 off. So not only did you not know it, but you told me yes, I actually knew it. And I think this is a recurring pattern. You both are struggling to give me straight answers. Guys, I'm not here to like trick you. I'm not here to judge you. That's not my role. I'm actually here to help you. You called me. I really want to help you. I don't think you have a candid assessment of what is going on with your finances. Like on one hand, you're saying we're in a better place than ever. On another hand, we are now realizing we are not in a position to be able to retire. And what are we working for? We're taking on all this stress and risk and like we have one month of emergency fund. That would be

my assessment. If you disagree, tell me. I'm wide open to it. But I want to hear your take because I am struggling to get straight answers from both of you. I think what you're saying is rings true to me is why am I taking on all of this stress if it's not resulting in the life that we want and the, you know, being able to reach the goals that we want? What am I not seeing about what we're doing that I have blind spots to or I have blocks to that I can't get there? I have done the projection many times and I know. that we're not where we need to be, we need to get in a better place. So that is why we're here. Okay. Let's keep continuing along. Fixed costs are at 67%. What do you think about that number?

It's high. Yep. It's high. We typically like to see that 50 to 60%. And if you are getting older and you do not have enough saved for retirement, that number needs to be even lower. So that's challenging. We'll come back to that. Investments are at 2%. Okay, what does that tell you? Low. Low. And even though you are contributing an additional $400 a month to your 401k, which brings the total up to approximately 4 or 5%, and that actually explains why you don't have enough in investments. Yeah. Savings are at 5%. Okay, interesting here. We have vacations at $400 a month, gifts at 200 a month, and then zero for a long-term emergency fund. What's that?

Not putting our money where we should be putting it. Okay. I agree. Why, out of curiosity, like, okay, you love to travel. I get that. Gifts, where are the gifts going? Birthday presents, you know, saving for Christmas. I think it's more, it's gifts and big dinners.

It's not dinners out. It's we host a solstice party every year. Okay. So you put money aside for that. It's in the gifts. I mean, it's all, it's kind of, we're not crazy about buying a lot of things, but we do like food and experiences. Okay. What's this guilt-free spending at 26% or $3,237 a month?

So all of the discretionary stuff that we choose to do, music lessons for our son, you know, eating. out, you know, those sorts of things. What else? $3,000 is so much money. It seems like more than we're actually spending. I think some of that includes like if our son has a school break, we'll book a camp for him. How much? Summer camps will be $300, $400, $400 for weeks. So sometimes we're, you know, we're paying those over a few months. What happens is these one-time expenses. we'll spend it in December or we'll spread it out for camp for eight months, not 12, etc.

And our mind does not properly amortize those costs. The only way to know is to actually put it in here and track it. And it's no shame. Like, you want to send your kid to camp, great. We just need to know it because otherwise you're like $3,000 is crazy. It's actually not that crazy when we just go through it in five seconds. And over the course of two more minutes,

you could probably get 85% of the way there. Yeah. Okay. So now that we look at the entire picture, you have 67% going to fixed costs. You have 2% going to investments, 5% going to savings, and 26% going to guilt-free spending. What do you notice about these numbers? How would you assess these numbers? We have too much going to guilt-free spending. Agreed? And our fixed costs are too high. Agreed? Agreed. Agreed on both. And accordingly, too little going to savings and investing. Yeah. Perfect. The puzzle piece is all fit. Makes perfect sense. So the good news is there's no mystery here. It totally explains why things are the way they are. Now what I want to do is I want to dive in a little bit more to the fixed cost to understand what's going on there. All right, your mortgage is $2,100.100. That's pretty low. That's great. Stay there. Don't move. Your insurance $9.90. All right, fine. Car payment is $100. What is that? Just gas? Gas. Amazing. What the fuck? Debt payments, $2,770. Okay, I guess it's time to dig into that. Tell me about your debt of $437,000. What do you have? So that's the mortgage. How much?

$338, I believe. Okay. Student loans. How much? I have about $5,500. Mm-hmm. I'm at $32,000. Okay. What else on the debt? We have a helock that is $57,000. And then? There is a balance of $1,800 on one of the credit cards. What the f***? What's with the credit card balance? A couple making $195,000 has credit card debt?

Why? That is leftover from a bathroom remodel. What's the he lock? Why'd you take that? For some home improvements. So, I mean, about half of that is for, the bathroom remodel that we did. You know, we used some of that to convert our garage into an ADU, which is a rental property. How much you make from that? About 24 to 27,000 a year.

That's great. Okay. Amazing. It feels to me like their choices we made at one point and we said, oh, this is good or we want this and those choices have carried over, you know, and it's hard, I think for us to every month, like, make a conscious choice about what we're, what we're spending our money on. Stay with that first idea. We've made choices long ago. Those choices have carried over. Keep going on that. And they're just on autopilot now. We say this is part of our life. So we're just going to keep on doing this. Like what? Like the gym. Like I try to, I try to go, you know, as often as I can. And there are sometimes where it doesn't make sense for us to have a, you know, a gym membership. I think this idea that Sebastian has brought up is really

interesting, this idea of like, we made choices years ago and we are now, quote, locked in. Either we are locked in committed to them, like a business, or we are locked in in a sense that they've just become second nature to us. This is really common. A gym membership is the obvious one. I'm looking at them right now. Camp, that is essentially locked in. Doesn't have to be the case. Solstice dinner locked in. Doesn't have to be the case. I know these are uncomfortable here. I'm just raising the question. What do you think about that? Yeah, that is fair. I mean, I do think that these are things that we value in our lives. Totally. I value a lot of things as well. I think the reason we're here is we're working hard. We have these businesses, but we don't have enough money for retirement.

Yes. So it's very interesting, especially talking to two business owners. because you know what business owners are really good at? Adapting to Marketplace realities. If your business takes a 50% cut, you're laying people off. Business owners are very good at this. They move extremely quickly. You know who sucks at doing this? Individuals.

Literally, one of them will lose their job. They will not change a single thing. They'll buy the same at the grocery store. It's crazy. So in many ways, I actually encourage people, act like a business. If it hits the fan, you already have a plan in place and you adapt immediately. That is why the CSP makes it so easy.

Something bad happens. You literally go down to the last box. Here, I'll show you. You go down to the last box, you go time to pull out a freaking machete and chop it up. All this stuff, goodbye. I don't even have to think about it. That's how it works. Now, that's the philosophy.

What do you say we adapted to your situation? Sounds good. How much is enough? How much money do you need? On a monthly basis? Sure. What would we need for just our lives? How much do you need to retire?

Oh, to retire. I would love even $100,000 or $130,000 a year. In income? In income. Because we won't be paying a mortgage at that time, too. Okay. And what do you say, Sabat? I think it could probably be a little bit less like 80,000 a year of income.

Guys, that's like wildly off. Do you ever talk about this before? No. No. What? Well, I'm glad we're talking about it now. Wait a minute. I'm very surprised I need to understand.

You both have a more sophisticated rhythm of meeting and talking about your relationship and about money than almost any other couple I've spoken to. That part is awesome. and yet you have not said how much money do we need in a relatively short amount of time. How is that possible? We were in a habit of thinking about what's happening this year. You know, those annual conversations were, hey, what's going to happen in the next 12 months? What are our goals for that?

And I think it's only been in the last couple of years that we started to have to consider what's going to happen in the next five years. And certainly taking on a business, for me, it opened my eyes to say, well, what's going to happen in the next 10 years? And shifting my mentality from that short-term thinking to long-term thinking has been really hard. It's never something I ever considered. And so to think about retirement is 25 years off, you know, like, I can't think about that. I just need to get through the next week. I need to get through the next month.

I want to get through the next year, you know, with my business. And then if I'm doing things right, like things will fall into place. But I have struggled to even consider like a five-year plan. It feels daunting to me to think about. You said so many interesting things. You said if I just do the right things, the rest of it will fall into place. You've been at this for 20 years. Has it worked?

In the bigger sense, no. Like, I'm not, like, I'm not, you know, I have $21,000 in my Roth account. Like, that doesn't feel like it's worked. I feel a little bit, like there's a false sense of security and like, oh, I've got a good credit score. And I'm, you know, I'm able to pay my bills. But, but yeah, I mean, if I project all of that out, like, it's, it's too little. I believe most people deep down, they have an intuitive understanding of at least where they are in the universe of money. They may not know their income.

They may not know what a 26.99% interest rate means. But deep down, they know, am I doing poorly, okay, or great? That at least. And I think part of my job is to take a chisel and chisel around the, stories and the narratives that we have created for ourselves and just help people get in touch with reality. And then when we actually confront that like you're both doing right now, which I really appreciate, then we can start to reflect on certain things. Wow, it's been the last two years that you've really focused on money. Great. In the last two years, you've made a lot of progress.

Great. So what if we did more of that for the next 10 to 15 years? Where could we be? But in order to do that, have to get rid of these old stories, these ones that are minimizing and making excuses and like just distracting us. We've seen the numbers, $195,000 income, one month of emergency savings, 67% fixed costs and almost nothing invested. But the numbers only tell you what's happening. They don't tell you why. And it's very important if you want to truly understand somebody to understand why these

things are happening. Because people don't avoid their money for no reason. They don't stay stuck in dysfunctional patterns that don't serve them because they're lazy or stupid. There's a reason. And we have to figure out what that reason is. There's often a story they're telling themselves, a belief they picked up a long time ago. Until we find that story and tackle it, then all the spreadsheets and retreats in the world don't mean a thing. Sebastian, I want to understand how you grew up with money. What do you remember your family saying about money when you were young? Not much. My mom is French and it's not talked about culturally. You know, there was a big kind of turning point in my childhood around money, you know, from age zero to 10. We were like

solidly middle class. My dad was a business owner, single income in the house, doing really well. And then when I was about 10, he went through bankruptcy. And we had to sell our house. They actually lost money on it. You know, there was a big life change. We actually moved. My dad started a new career. And the seven years after that were really tight.

And, you know, I saw my parents struggle, but they didn't really talk about it. They kept it to themselves, you know? Like, tried to handle it and give the best life they could to me and my brother. and sister. Where did you grow up? Southern California. And then we moved to Oregon when I was, when I was 10. What age were you when your dad went bankrupt? About 10. And why did he go bankrupt? He had a print shop. It was a family business. And things were changing in the 90s, desktop publishing. He was a small shop. And so he was just kind of couldn't compete with larger. They used to do all the yellow pages.

Yeah. Okay. Wow, that's pretty interesting. So here your dad is running a small business. Times change around him. Sort of structurally causes the business to fail. There's nothing he can really do. Maybe he tries to keep up, doesn't work, shuts the business down, affects his family finances. What messages do you take away now as a business owner yourself? I am terrified of that same thing happening to me. And I thought about it a lot, getting ready to buy the business. and it's come up a lot. And like I said, I'm still terrified of it.

But I also, I know I made a choice to engage with this for a lot of reasons, not just financially. If you had to shut the business down, how would you feel? Like, I'm letting a lot of people down. Your employees, your colleagues? The guy I bought the business from, my family.

myself. Does your dad's experience make it more or less likely for you to take a rational approach to the business? I think of myself as a pretty rational operator. So I don't, yeah, I don't know. Hope, what do you think? I think that Sebastian is terrified of losing the business. I mean, you're down from last year, which is understanding. And I think that you're doing a great job and headed in the right direction. But do I think that it makes him more or less rational? I think probably a little bit less rational because he's so terrified of that. By being terrified of tariffs, et cetera, that makes you do what, Sebastian?

It's made it harder to make decisions. It's made it harder for me to feel like I'm making the right decisions, and it's paralyzing in some cases. That's what I was going to say is I feel like it makes you freeze. Yeah. That's very helpful. Thank you. Hope, how did you grow up with money? What do you remember your family saying?

My mom was a single mom from the time that I was very small. She owned a big house, and she rented out units, so she always... said be a landlord, which we are, because she was a schoolteacher. And so she wanted us to have more passive income coming in. So we didn't have a lot of money growing up. But in my town where we lived, we had a lot more money than a lot of people. And my dad had had money. He had been an attorney. He was sick my whole childhood, so he didn't have any money. And so he was selling jackets and things like that from bar to bar, like to bar owners. Okay.

Because he could do that and be kind of flexible with being in and out of the hospital. Sorry. That's okay. Take your time. I know this is difficult sometimes going back. So he didn't have any money. He was also a gambler. It's not funny, but I think that's also why he didn't have any money.

Can I ask, it's difficult for you to talk about your dad. Why is that? I think just because he died when I was 14. That's a tough age. And I just wish I could have had these. conversations with him more. What would you have said to him? Well, we, I mean, we actually did have a lot of these conversations.

I was pretty precocious. So he had a lot of regrets about a lot of things, including money. Even though he didn't have money, he wanted to be able to spend what he had on me. and it always made me feel guilty. That your dad was spending money on you. Yeah, because he would, I mean, I remember the stupid, it was a stupid junky little wall hanging that it was so dumb. It was just a little piece of wood that had a picture of a dog,

probably from a magazine or something that was glued on it. And I really wanted it. and it was probably $20 or something ridiculous. And of course he bought it for me. And then it just made me feel so sad when I would look at it. Sad. Sad because I felt guilty for taking his money. It's interesting because I haven't heard you use the word guilt before today.

Not once. Yeah. I've kind of gotten over that. How'd you do that? It took some work. It took some work. Yeah, it's taken therapy. I used to have a real problem spending any money on myself.

And I no longer do. Like, I want more money to spend on myself. Very refreshing, honestly. I don't hear that from a lot of people, rarely from women. Oh, no. definitely do. I love that. Can I ask you, Hope, what lessons do you think you took away from your upbringing with money that you bring into today's relationship? I'm very independent. I am super capable. I'm very resilient. I could tell you have gone through a lot. Very few of us lose a

parent at that age. It's a really tough age. Very few of us raised by a single mom in the manner that you were. And I kind of love the way you described yourself. I think it's really cool. You said, I want more money. I'm independent. I'm resilient. I overcame guilt. A word I never heard you use today, which is extremely rare. Yeah. I love it. It's refreshing, so thank you. Sebastian, how about you?

What lessons did you bring from your upbringing to today's relationship with money? You know, I'm pretty much the same age. My dad was when he went through the bankruptcy and to see him decide to change careers, go back and get a master's of education, work at the same time while he was going through graduate at school. My mom, who, I mean, she didn't even complete her high school education, much less college. Like, she worked to support us while my dad was in school. Like that work ethic, you know, was instilled in me. And I've had a job since I was 13 in one way or another. I know that I am also capable and hardworking and don't shy away from engaging with the process. As much as I'm terrified of

a bankruptcy. Like, I take comfort in knowing, like, oh, like, my dad had, you know, there were three kids. It was super uncertain, and yet he was able to make a big change in his life. And are you two able to make a big change in yours? Yeah. I think if we, if we want something and we, you know, if we have a goal in mind, I know that we can make a big change. Do you need to? Yes. I mean, the numbers say yes. It's an interesting response. Hope, very resolute saying yes. Just crisp, yes, not even an extra syllable.

Sebastian's saying a bit of a softer, the numbers tell us so. Not that I agree, not that I think we should, not yes, just the numbers suggest. So what do you think is the difference in that response? Now I'm the one hedging. Yeah. It's quite a role reversal. Why is that? I feel overwhelmed. Like, it's a lot to run a business. It's a lot to raise a kid, and it's hard to see the right answer in front of me.

Okay. Now it's starting to make sense. Sebastian watched his dad's business fail. He watched his family lose their house, move states, and struggle for years. And now he's a business owner himself, paralyzed by the fear that history will repeat itself. Hope grew up, feeling guilty every year. time her sick father spent money on her. So what did she do? She learned not to want things. She had to do years of therapy just to be able to say, I want more money. These stories are real, but they're also keeping them stuck. Notice that they have these planning retreats where they talk about their dreams and what they want and where they want to go. But I'm not particularly impressed by that. Like in a way, it's the equivalent of people who spend hours budgeting, but don't actually make changes in their spending. Unless you actually change your behavior, this is all just play acting. Like, let's say your four-year-old gets one of those little kitchens, you know,

when he puts a fake cupcake in there. Is he really cooking? Of course not. Oh, sure, we'll lie to him and say, good job, you're such a good little chef, but that little kid can't cook shit. Now, how is this any different? Going on these retreats, but you don't know your income within $40,000, it's just not real. A rich life is not just about dreaming, although dreaming is important. It is knowing your numbers and using your money to make those dreams reality. If you need to make more money, could you? Yes. How easily?

Sounds like you answer that pretty quickly, Hope. We were talking about this last week. I think I could give myself a raise in, well, when we have our next project come into the office because we'll be more financially in a good. place. Okay, cool. How much of a raise could you give yourself? A thousand dollars a month, I think would be fine and pretty easy actually right now. I still have two more years before I'm paid off on my loan. So once that happens, there's more flexibility. Cool. And then Sebastian, could you make more money? In the next couple of months, some of my expenses are going to go down. I could give myself a raise.

What if one of your businesses went under? How would that affect your family finances? Dramatically. I mean, we would have to just get another job immediately. Yeah, I mean, it would be slash and burn to the monthly budget and, yeah, scramble. Okay, I'm going to just be very direct. You all need the money.

If the business doesn't work, you've got to have a plan B. The plan B, shut it down, figure out the debt. I don't know if you declare bankruptcy or not. It would certainly be poignant. You know, you've been through that with your family. But in my opinion, you got to treat the business like a rational investor would. And that's why as CEOs, we are not rational, especially like CEOs that are in the business. It's our name, blah, blah, blah. That's why sometimes we need somebody from the outside to be like, dude, if I was an investor, I would never invest in this business. Or this is great. You're undervalued. You should keep going. That is what has been so challenging for me is the unsubstantial.

of, okay, I can do this this month and it's working this month and I've paid all the bills this month. The cycle of how these tariffs are going to play out, the consumer confidence is going to play out, that level of uncertainty of, is it going to work in three months? Is part of what is paralyzing to me? Do you want me to unparalyze you? Because I'll f-b-do it right now. I'm telling you, it sucks to be in it. I know it because I've done it. I've been there. like totally paralyzed by what to do. My business was declining for a while as well.

And it really helps to just have somebody from the outside be like, look, here's what I would do. You don't have to take the feedback, but let me just tell you what I would do. You have business savings or no? No. Okay. You need it. The fact that you have no business savings is what is paralyzing you. That is why you're on a thin razor's edge every single month.

So that's a problem. I like to have three to six months of business savings. that would obviously take you a long time. It's almost inconceivable to build savings while you're talking about downsizing, but if you cannot build up a reserve, you are already in like a very dangerous zone. Second, you set up a timeline

and you say, look, I'm spending all day and night working on this freaking business. Here's the amount I need to be making. Here's the margin I need to be making. I'll give myself six months to make it work. But if at the end of that, am not, it's time to pack it up. Again, you can adjust the margin and the timeline for what you want, but I would recommend you probably do it in less than a year because it's kind of like they used

to tell you in the test. If you haven't done it by the time the test ends, you're not going to get it at all. Just pick a timeline. And then stick to it. Two of you as entrepreneurs should probably be talking to each other, giving advice as appropriate, but we need constraints. Otherwise, we just drag on in this uncertainty forever. It's that that kills us. Entrepreneurals. know, look, if I have to shut this thing down, fine. I'll start something else. I'll buy something else. I'll find a job. But just this paralyzing uncertainty is death. So make a plan, execute it, even if it means you shut it down, there's a better future for you ahead. Or it means you turn the business around and crush it. Also great. What do you think about that?

Yeah, I mean, it's not something I've laid out yet. It's been very like month to month for me. I hate month to month. I hate it. I mean, if you have profit at the end of the month. Instead of paying yourself more, can you set up a savings? Yeah. That's how you do it. Beautiful. More importantly, eventually you need to shift beyond month to month. Entrepreneurs should not be thinking month to month. That's part of the reason you feel so scarce and behind. It's like, this month good, this month bad. We can't do that. We can't drive only planning 10 feet ahead each time. We need to be talking about miles, right? That hundreds of miles. That's the way we need to think. Okay, can we talk about your personal finances? If nothing changes

in the next five years, what happens to you? We still are not able to retire. Agreed. What else? We wouldn't be able to do other big goals that we have in our life. I suspect because of the dynamic you have that you would probably still take some trips, probably still spend on your son who will be, you know, in his teenage years at the time. I suspect you'd probably still do those annual and six-month meetings dreaming. I don't know, guys. It just sounds kind of like dim to me, especially when you're making almost $200,000 a year. It's cheap to dream, but putting numbers to it,

the hard part. That's the whole point, yes. So some quick numbers to give you. To get to your goals of between $90,000 a year to $130,000 a year of safe withdrawal during retirement, here's what needs to happen. We're going to assume like $35,000, $36,000 a year in Social Security. It could be more.

Who knows? We're just going to make an assumption. To have $90,000, you need $1.35 million at retirement. That requires increasing your investments to $21,000 per year. To get to $130,000 of income, you need $2.35 million at retirement. That means you need to increase your investments to $45,500 per year. $45,000 a year? $45,000.

Wow. Okay. What do you take away from that? I mean, that's a big number. Yeah. That's a big change. Yes. Let's go back to the CSP and you're going to tell me what you want to do.

All right. Here we are. your fixed cost, 67%. Where would you like to start? So the debt payment, we have one more payment on our credit card. It's going to go down by 1800. We've been aggressive with the credit card. Okay, your fixed cost just dropped down to 52%. That's more like it for a couple making almost $200,000 with a low mortgage. That is great. All right, your debt payments are now at $970. Now tell me again, is this going towards

it's student loans and helock 7% and roughly 6% and is this the minimum on the helock yes and the student loans yeah it's I mean it's whatever we've been paying you know the reason I'm asking it's a relatively high interest loan

so like paying an extra $100 a month could shave off years of payment that's why I'm asking you're paying the minimum fine we could pay more But right now, you're at 52%. To me, this is great because it means you have margin to play with. These groceries, come on.

Well, you like food. You said it, right? We do, but we could shop every other week at a cheaper store. Great. How much you want to drop it? Let's drop it $200. Yeah. Okay, 9, 10.

Damn, we're at 50%. This is what I'm talking about. And then the subscriptions, keep or change. change? Keep. All right, cool. Investments? No, we're going to fix this. This is where the real wealth is created. What do you want to do? So that post-tax retirement, that's my Roth IRA, we can put it at 550 or whatever the max is, 580. 583. Uh-huh. So where is my? Yours is probably up here at $400 a month for 401k. Yes, okay. Want to put more? Yeah. I would love to put $1,200 extra. Extra. So 1,600 total. Yeah. Great. Love it. Okay. Holy shit. I just want to point out,

the question is like, do we have enough? And the answer is always down here in the guilt-free spending number. Because whatever number, you know, you reduced your groceries and all that stuff, that number flows directly down to guilt-free spending. It's sort of like a bucket. It just collects all the rainwater. And now you can use that money. You have four-th $4,600 a month still to allocate. Where do you want to allocate that money? A long-term emergency fund. Yeah, I agree with that. How much you want to put? I hope. 500 a month? More? Well, I think more because... Why don't we try it and see what happens? Watch this number here. This right now tells you have $4,654 per month to play with. Okay, watch. 500 bucks a month. What happened to that number?

Barely anything. Barely anything. You still have 4,154, and now you're accumulating about $6,000 a year in your emergency fund. What does that tell you? It's not aggressive.

And we can do better? Yes. Yes. How much? So if we put in 1,200, then we would have $14,000 for a year or per year

that we're putting toward it. You want to put in $1,200 instead of $500? Yeah. All right. Cool. Okay, so I'll tell you what I noticed here. First of all, you still have $3,400 a month. That's a lot of money. Second, I noticed that your savings has gone up to 15%, which is great. I'm not so sure about these gifts and vacations at $600 because you could keep it if you want, but it's going to affect you down the road. $600 right now would be, in my opinion, much more valuable in another place. I'm not trying to pressure anybody into

not doing the stuff they want to do. It's up to you how you want to allocate your money. I do want to remind you that in order to get to 130K of retirement income, you need $45,500 a year in investments. So instead of 500, let's freaking go for 800. Yeah. Watch what happens. Watch this number down here in guilt-free spending, okay? 800 in Vanguard per month. Uh-huh. You usually, still have 2654 per month. Yeah. What do you notice about this so far? We've just had it misallocated and been spending with a lot of fat. Yes. And the real question is why. Why do you think you've been doing that? Maybe because I feel so comfortable. Yes. Keep going. Sebastian, What about you?

We've always had a reason to spend more and say, oh, this is for our kid or, you know, don't we deserve this? I agree with all these. In my opinion, two things here. One, you had dreams, but no actual plan on how to get there. There was no connection between money and your vision. Okay, that's number one. And number two, you had a lot of narratives surrounding you. We're doing better than we used to.

Well, if we're doing better than we used to, all we should do is give ourselves a pat on the back, not actually make dramatic changes. By piercing through those narratives, now it feels like this is so easy. It's like a hot butter through, a hot knife through butter. We're just like cruising.

That took cutting through those narratives and realizing, oh, we should not only be complimenting ourselves. We should actually be making rapid change to get where we want to go. Let's keep going. We're not done yet. We're doing great. Okay. So I'm looking at the four.

key numbers. 50% in your fixed cost, amazing, because that gives you lots of margin to play with. Usually we like that number between 50 to 60%. You're at the lower end of that. That's amazing. If it's me, I might be putting an extra like 100 or 200 bucks towards the debt just because you could shave off years from that payment. So I'm just going to go ahead and do that. It's up to you on this, but I'll just show you. We're now at 52%. Totally fine. You can run the math to decide what is the sweet spot for you. But truthfully, once you set that up to be automatically paid, you will not even miss it. Your life will get so much better. Next up, investments at 14%. While I agree that you probably will have enough, when I think about a couple

who's like kind of seriously starting their investment journey in their 40s and they are making almost $200,000 per year, just intuitively, I go, okay, like we got a we got a really, double down on this. What does that mean for something? For me, I might be talking about like 16, 18 percent, basically getting really aggressive. Let's remember, there's a point where in the next 20 years, one or both of you might be unemployed for a while. Yeah. So when the going's good, I would rather have you investing an extra two, three, four percent than burning it on whatever. So if it's me, I'm just going to go ahead and increase this number. I'll just randomly put it in one of these boxes. Let's just see what happens if we do 400. Oh, 400 bucks a month, which you're not even

going to miss and it increased your number to 17%. That's pretty cool. I'm going to leave it. Savings down at 15%. What do you guys want to do about the gifts and the vacations? That's $600 a month or like $7,000 a year or prox. I want to leave the vacation money. Okay. Gifts, I feel like we could reduce a little bit, but we have to... It's up to you. 150. 150. All right.

Sebastian, what do you think? Yeah, and I would say we could probably trim the vacation budget by a little bit as well. Like 350. Okay. Okay, cool. So there we go. We're at 14% for savings. 17% for guilt-free spending.

So I like to see that number 20 to 35%. You are starting aggressively investing late. I mean, vacations and gifts feel like guilt-free anyway. I agree. You're actually just actively saving. So let's reduce some of this. What do you think? You want to move it somewhere or no?

Ouch, but sure. Yeah. Let's try it. You tell me, watch this, watch this. You tell me if you want to do it or not. Let's take an extra $400. I put $400 in investing. That leaves you with $1,754 per month.

Keep in mind, that does not include vacations or gifts. Yeah. I don't know. I feel like you could do it. What do you think? Tell me. Yeah, it feels dramatic. Like, there's definitely changes.

But I know we can do that. Yeah. The thing that you both talk about a lot is travel. Yeah. That's important to you. Notice that I do not pressure you to cut back on the thing that is important to you. In fact, if you decide after six to eight months of this, we want to actually add 50 bucks or 100 bucks a month into that.

You go ahead. You have the margin. But what I'm trying to do is to actually chop this. unconscious spending. Yeah. Well, I think if we are taking this amount of money out and just putting it where it needs to go without us seeing it, it won't hurt as much. You won't even notice it.

Yeah. How much long-term emergency fund would you recommend that we have, like six months? Yeah, maybe more, but at least six months. So if we calculate that, it's like 38,000. You currently have 11,000. So we need 27,000. So that's two more years of saving. Okay.

Yeah, a little less than two years. Yeah. So keep it up. If we are able to hit that mark, can we take all that money that's going there and put it into vacations? Excellent question. I wish more people ask me questions like this.

Yeah. Currently, you have sketched out saving 1,200 bucks a month towards your emergency fund. First of all, you could do whatever you want. It's your money. And if it were me, I would probably take, like, at least $400 a month of that $1,200, and put it towards travel, which is a massive upgrade for what you have been saving. It more than doubles your vacation. I would take some of it at least.

and put it towards investing. Okay. Especially because investing is a primary goal. So in my opinion, that means you take at least half, 600, put it towards investing, and then you all can decide what to do. Probably take 200 and pay that freaking debt off faster. Yeah.

That's how we think about it. And that is true for the next student loan that you pay off, you take that payment, you allocate it, just do it by percentages. Okay. Boom. So like in like in our relationship, you know, we might take whatever extra money we have coming in, like 70, 75% of it goes towards

investments. In your case, it may be 50 because you have a little bit of debt, so you're going to put some more towards that. That's how you do it. God, I got so excited about that question. That was an awesome, awesome question. And I can see, the reason I'm so excited about that is I can see you now looking forward. You're like, once we hit this, then what about that, then what about that? And you can see it's starting to snowball. It accelerates. Great. Okay, I need to stop here for a second because I made a mistake on this episode. I made a math error and it really affected the rest of what I told this couple. Here's what happened.

When we updated Hope's 401K contribution, I forgot to recalculate her net income. And then on top of that, I transposed a number from their savings line when I was calculating their retirement contribution. Both of these things threw off the totals. I'm the guy who tells millions of people, you got to know your numbers, you've got to get your numbers right. And I got these numbers wrong. On camera. I want to apologize.

And I'm flagging this and I'm leaving this episode up because I have promised to always be honest with you. I got this one wrong. I'm sorry. Now let's talk about what it means for Sebastian and Hope. Even with my math errors, plural, they're still in a strong position. Their income is solid, their fixed costs are relatively low, and once their emergency fund is fully funded and their debt is paid off, this plan becomes much easier to execute. The mistake does not change the big picture. It means, though, that the exact contributions numbers need a small adjustment in the short term.

All right, let's keep moving on. Sebastian, your business. What's the plan? because right now, if we look at the effect on the personal finances, you're bringing in roughly half approximately, maybe a little less depending on the ADU and all that stuff, but it's a considerable amount. None of this plan works if your income is not the same.

What's your plan for the business? So I have a contract with another company that has another year on its term that I have to service. That feels like a good finish line or milestone to consider, like, hey, am I succeeding or do I need to pivot? I think, like, number one, like startup business savings so that I can start to build a little bit of a buffer. You know, I'm planning out the next kind of 90-day cycle right now that's I'm kind of looking forward to what's happening at the start of the year. and January is always kind of a slow time for me, so that gives me time to kind of examine what are the measures of success that I want to see.

Like, hey, am I... I feel like we're in the weeds. Just conceptually, what do you need to be doing as a business owner as it relates to your family finances? I mean, high level, like, do everything that I can to make it succeed. And if it does, that means what? if it does succeed, you know, in a year from now, I will be able to give myself a raise. Great. What would the raise that you would be targeting?

Probably another $1,000 a month, gross. And then if it's not succeeding? Then have a conversation with hope, you know, about this shutting down. I would say that having that conversation happens well before 12 months from now. Yeah. like in my opinion 12 months is already a long time off those conversations start happening now and sometimes those conversations those people can actually help you they're like have you tried this let me introduce you to that try this whatever but if you start having conversations 12 months

from now that's another 12 months and y'all are going to be burning cash he has been um trying new things with his business which i'm very happy about so that he can explain expand his face. Rameh, do you want a wine newsletter? Or a house? Yeah, that's great. First of all, I love that the two of you talking about this.

That's great. In a way, it's easy for me to say this. It's much harder for you to receive because if the roles were reversed, I would not want somebody being like, look, either make it work or shut the thing down. Like, yeah, easy for you to say, bro. Yeah.

but also that's the kind of advice that entrepreneurs need because if you're making like 38,000 or 40,000 then the question is like you're putting in a lot of hours,

a lot of work. Might it be better to simply if it's not pulling its weight, shut that thing down, get a job, do something else, etc. Again, you have to think as an investor would

and that's tough for any entrepreneur to hear. Yeah, I, I never imagined myself as a business owner. Like I got into the wine business because I loved wine and it, you know, there was a lot of things that I was attracted to. I never thought about running my own business. And this was an opportunity that came up and it seemed like it played to a lot of my strengths.

And like my degree is in architecture. Right? Like not business. Like there's so many things that I've had to learn over the last. year and it's been a great education and I've taken a lot away from it and I like there's so much that I don't know and to get back to your question like what's the what is my plan like I think one of the things that I need to do is reach out to another mentor who can give that more cold-hearted advice to say this is not working you need to do this or you know whatever yes it may be

treat it like a cold-hearted business. It's numbers. It needs to pull its weight. Otherwise, get rid of it. Got to be Darwinian about this. That's my opinion. Of course, I know that you are going to take half of that advice, and then every entrepreneur loves their baby and wants to nurture.

I get that. That's normal. If somebody told me this, I'd be like, but then at night when I was sleeping, I was like, wait, maybe I should listen to part of that. Yeah. But it is giving us what is on the CSP right now. It is bringing in enough profit that he's paying himself.

Yes. It is, right? I see those things as success. Agree. Agree. I want your business to be successful. And I see that success as being, you're able to pay yourself and and take care of your business loans.

And so I think that that's where the answer lies is where are we not able to pay you or where do you run into trouble with saving money in your business? And so to be able to not give you a raise, we'll give, you know, I'll get a raise. and you take that money and save it so that then you can have a raise later when you're more profitable. That's pretty cool. I love the teamwork.

I really, really love that. This idea that we're both teammates, we're playing different sports fine, different companies, but sometimes one of the teammates is injured, so the other one takes on a little bit more of the work. sometimes the other one is in a development phase so the other one takes on a little bit more. I love this.

This is what a team is. And sometimes it doesn't work out. And that's also okay too. Lots of different ways to get to your rich life. What I especially notice is teamwork, which is awesome. I notice that you are being both realistic. That is the ultimate lesson. And then I notice that you're saving and investing a ton of money.

That's great. What surprised you about? today's conversation. Hope? I really wasn't trying to be obtuse earlier but maybe I have been just kind of glossing over things. I guess that was surprising.

Cool. Sebastian, what surprised you? I think seeing the numbers in such an aggressive way and what a dramatic difference that can make. You know, like when we have played around with this, it always felt like small measures, like little tweak here, little tweak there.

And it felt like that incremental progress where we could pat ourselves on the back. And, you know, your comment about like, that's fine, but like we need to be thinking about ourselves in the future looking back at us now and how we can pat ourselves on the back 20 years from now. Great, great, great insight. If you had to finish this sentence in full, I feel what, just give me that full sentence, Sebastian. I feel more optimistic. Cool. Hope? I feel taken care of.

Amazing. I appreciate that. Is there any question that either of you has that you did not get answered? I just want to make sure you have a chance. Yes. And I know that you've answered this before on the podcast, so I'm sorry to make you do it. I'm just blanking. But if we if we have take home, but this is measured in gross, right? What the CSP is is our gross pay. Yeah?

Wrong. The CSP is based off of your take home. I'll show you exactly what I mean. I want you to understand it. So this is a great question. Yeah. Here we have your gross. This number here, 16-260, but all the other numbers are based on this, 12-370. which is your net. That makes me feel much better. Yeah. Great question. That was an awesome question.

So I would encourage you to redo your CSP and really lock it in. Make sure you calculate the actual numbers. How much are we going to have? Because we were a bit, we were close, but I want you to get tighter, knowing your exact retirement age, knowing exactly how much you're going to be contributing, pre-tax, post-tax. Get a little dialed in. I'm looking forward to hearing more from you. Yeah.

You bet. Thank you. Hope and Sebastian have this. this peculiar verbal tick where they keep measuring themselves against their past. They'll say, we're doing better than we've ever done. We used to be broke, but now we're not. Can I be blunt? Yes, it's important to understand where you came from.

But what I really care about is what you are doing now. A rich life is lived today and tomorrow, not 30 years ago. So if Hope and Sebastian keep looking backwards instead of planning forwards and changing behaviorally, well, just try to imagine riding a bike 10 miles backwards. You're never going to get where you want to go. The good news is they can change this today. They have a plan, and most importantly, they understand why they have been stuck. If they can shift from look how far we've come to look where we get the opportunity to go, they can actually build something incredible. Now, let's check out their follow-ups.

First of all, I want to say big thank you to Rameith and his staff for having us on the podcast. It was such a great learning experience and also really challenging. But we had a lot of takeaways. My biggest surprise is that one of my biggest goals in life is to live as a genuine open, an honest person, and I did not realize I wasn't communicating to myself about my finances in that same way. One of the biggest takeaways was that Sebastian and I do tend to look toward the past, and in fact, we had looked at our numbers on our taxes from last year for our yearly numbers, and And that's where a lot of the confusion came because we knew our numbers pretty well, but

apparently our big yearly number was from last year. Obviously, we need more savings in retirement. That was kind of drilled in. I have already worked with Sebastian to figure out some money to go into savings and some money to go into investments. We're going to make, we're going to increase those numbers short. shortly, but also I do most of the grocery shopping, and I've committed to staying to within $900, including pet food. And I went shopping for the week yesterday and spent $155

on the week's food. And so I'm well on track for that. And if we go over, then it's beans and rice for the next week. Hi, Rame. Thanks again for having us on the podcast. My biggest surprise was to hear our story reflected back to us, how much we were looking at our past selves and not thinking about our future selves. Our biggest takeaway was that as much as we like to talk about our dreams and our rich life, that we actually need to fund those. And in fact, if we're aggressive and conscientious about the choices that we're making, that we can reach our goals. and be aggressive with saving for retirement and building up an emergency fund. Hope and I actually had a really interesting conversation after the podcast about what success would look like in my business. And she really reminded me that the metrics that I set out for myself when starting the business was to be able to pay down the debt, to pay my bills, pay my taxes, and pay myself. And I've been able to do that for the past year. And I'm feeling

confident that I can continue to do that. But I also know that I need to have a plan about making sure that when those metrics aren't being met, that I move on. The other plan that we have is to really sit down and talk about our retirement goals and get on the same page so that the number that we want to achieve is actually kind of jives since we had such a big disparity when we had a conversation with you. So we're going to have a money meeting where we really talk about our retirement goals and get on the same pitch. Hi, Rameith. Since we last spoke, Sebastian and I have actually not really been in the same place. But we have made a few. updates. He went to Europe for a couple weeks for work. I think that he is feeling better about his

position with this company. I increased my simple IRA by $1,000 a month. I feel really good about that. Thank you again for this opportunity. Take care. Bye. Since our conversation a few weeks ago, I hope and I have really focused hard on our investment. investments. So I have fully funded my Roth IRA, and we've also set up a reoccurring investment in our Vanguard account for $1,000 a month. We had an unexpected expense come up around our kids' orthodontia. So we've made a little bit of adjustment to how much we're investing, saving in our long-term savings so that we can accommodate that. But otherwise, still putting a lot more money towards our emergency fund. And the biggest change has been that we're thinking a lot less about how far we've

come and a lot more about how far we want to go. Listen up. If you want my help with your specific money questions, there are only two ways to get it. First, you can apply to be on this podcast at IWT.com slash apply. Or second, you can join my money coaching program instantly at IWT.com slash money coaching. In that program, you get access to live virtual events, monthly group coaching calls, live Q&As, and an amazing, huge community of other people like you. Check it out at IWT.com slash money coaching.