Money For Couples with Ramit Sethi - 121. “He wasn’t supposed to have student loans. Now he has $157k.”

Episode Date: September 12, 2023

Alana and Sam, 37 and 36, have two kids and $157,000 in student loans—loans which his mother assured would be paid. They haven’t been. Instead, the debt has tripled since he left school. Their home life has suffered as a result, as the family currently lives with Sam’s mom to save money. This episode is brought to you by: LMNT | Right now, LMNT is offering 8 single serving packets FREE with any LMNT order. This is a great way to try all 8 flavors. Get yours at https://drinklmnt.com/RAMIT. Fabric by Gerber Life | Protect your family today with Fabric by Gerber Life. Apply today in just 10 minutes at https://www.meetfabric.com/ramit. DoorDash | Go to https://www.doordash.com and use promo code RAMIT to get 50% off (up to $10) when you spend $15 or more at convenience, grocery or retail stores on DoorDash. BetterHelp | Visit https://betterhelp.com/ramit today to get 10% off your first month. Links mentioned in this episode • Download the Conscious Spending Plan • Get my New York Times best-selling book Connect with Ramit • Get the Podcast Newsletter and exclusive Q&A about the show • Get Money Coaching with Ramit  • Get my no-numbers journal • Other episodes • Instagram • Twitter • YouTube • Submit a question for the newsletter iwt.com/askramit  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.

Let me share some of the coolest ways that my community has recently used money to live a rich life. One member did a month-long honeymoon in Europe after deciding she didn't want a big wedding. Another member bought a VW SUV that was their dream car that they've wanted for years. And another member made a rule that any time she buys a ticket for an event, she always buys a second so that she can bring a friend. These are just a few examples of how my money coaching members have built systems to use their money. Notice that there's no more anxiety, that they have a smooth running system.

They know when their debt's going to be paid off. They can feel comfortable spending on the things they love. They can actually spend less time on their finances while living an amazing life. In my money coaching program, members also get access to live events every month, including topics like money with aging parents and how to create amazing vacations.

That was one of my favorites where I shared how I saw, spend my money on travel, plus Q&A directly from me. If you want to start building your rich life today, join us and get instant access to our back catalog of years of live calls. Check out IWT.com slash money coaching to join now. That's IWT.com slash money coaching to join the program right now. My decisions aren't always based in reality. Sometimes they're based in anxiety.

Things that discuss finances, really, really, really stress me out. Is that the word you associate with money? Yeah, yep. Stress. Yep. I shut down, but I was on the phone with my student loan provider today, and I got stressed and Elena can vouch.

I was sort of just dejected and almost disassociated for the rest of the night. I usually avoid, avoid, avoid avoid. It's just the number is so big. You're just like, ugh. It's pretty insurmountable. So it's very over. mine for sure. It tripled since it was originally taken out. There's 130,000 of it is just interest alone. He would have to pay a little over $2,000 a month to go on any sort of downward

trajectory of that loan. I hate this. For a public school teacher. What would you do if you had a cloud of debt hanging over you? And what if that debt felt completely unfair? Today I'd like you to meet Elena and Sam. She's a 37-year-old hairdresser. He's a 36-year-old high school teacher, and they're facing a huge student loan that's left them paralyzed. As you listen, notice the dynamics around their living situation, their children, but most of all, how this debt came about. You know, money is never just a series of numbers on a page. Money has context, money has meaning, Money even has politics. That's what we will explore today.

I loved the Netflix show. I felt like it was really relatable. It was about people that I didn't think were represented very often on financial things. I got some help out of it. I felt empowered to talk about our finances and do something. But I also knew that this show was something Sam couldn't watch. And I found that intriguing. Sam, is that true? You couldn't watch the show?

Yeah, things that discuss finances really, really, really stress me out. So, I mean, there's been time. I had to shut off the movie The Big Short, even. Okay. Because it totally unrelated to me, but it was stressing me out too much watching these stockbrokers take advantage of the subprime housing market. So what money is stressful to you? Is that the word you associate with money? Yeah, yep. Stress. Yep.

And when I say stress, what comes to mind for you? I shut down, but I was on the phone with my student loan provider today. And I got stressed and Elena can vouch. I was sort of just dejected and almost disassociated for the rest of the night up until like dinner time. because I was just like, ugh. That was today? Yeah, it was today. Yeah.

Oh, my gosh. If he knows he has to call, it's a whole day stress affair. But no, he talks about it all day and he has to work himself up. Last of the month, I had to talk to him. How often do you talk to your student loan company? Lately, once a week, but we're working on trying to come up with a settlement. So it's been more frequent. It's usually not that frequent.

I usually avoid, avoid, avoid. How do you feel right now talking about money? Okay. Okay. Yeah. If it gets uncomfortable today, tell me. Take a break. I'm okay.

Yeah, I'm okay with being uncomfortable. Okay. That's good to hear. I like that. Yeah. All right. Wait a second. So you decided to invite both of you on to here where millions of people watch.

What? I was trying to find the text where she. told me about it, but it was like, please don't kill me. I'm sorry. Something along those lines. Well, I'm glad you're here, both of you. Cool. Me too. So Sam, tell me in a sentence or two, when it comes to money in your relationship, what is the primary challenge? I think we probably overspend a lot. That's the primary challenge? Well, aside from, we're not paying my student loans right now. So like...

How much are those student loans, Sam? $157,000. Sam, that seems like the primary issue, right? Yeah, it is. It is. But when I, you know, I put it on the back burner and that's not good. Okay. So you have $157,000 of loans.

You put it on the back burner means you avoid talking about it. Sure. And then what's the overspending part? too much takeout too much takeout I think too much takeout in comparison to the $157,000 is probably low on the

totem pole it is quite interesting that when I ask like what's the primary challenge you said we overspent I think it's kind of interesting yeah I think there's there might even be some

projection there because I know that I have this huge I don't know Camel on my back. What's the phrase? I don't know. There's a phrase. Rocks in your backpack. Yeah, yeah. I like that one. Is that the student loan? Yeah. Okay. How does this student loan debt affect your relationship? In most of the ways, I think. He had a hard time marrying me because he was nervous about me taking that on as a partnership. It's informed the amount of children we have.

That was really hard for him to have two. And I would have picked three. And how about day to day? Yeah, like conversation-wise, I have to choose how to, you know, we have to choose how to have our conversations. I remember having a conversation. with him about the rental car, like how expensive that was.

I felt like I was sort of slow rolling him when at the end of the day I should have felt justified, I guess. Slow rolling him means what? Like, trying not to be as direct about how much it was right out of the gate. Okay. Did you do that a lot?

Yeah, I have a hard time being honest with how much things cost. because I don't want to get in an argument about it. If I feel like it's needed for the family, then I will do it. Okay. Does it work? No. No, I'll end up with like, you know, tomorrow Elena has a bigger issue.

That vacation we just went on was really hard to visually plan out and mentally plan out because I felt like I had to do it all on my own. because if you asked Sam for his input, what would happen? It would just make him anxious, stress them out, remind them of that loan. Okay. I love you. And Sam, how about for you? How does the debt affect your relationship?

I would say mostly in my mood. I don't think it affects us a lot. But on the days that it does affect me, it affects me a lot. just in the sense that today I could, I was not super talkative because I didn't even really, I was sort of, you know, despondent because I had gotten off the phone with them.

And it didn't go great. It didn't go bad. But I was just so emotionally exhausted from working myself up to that, that I wasn't maybe the most available partner for the rest of the day. It's just the number is so big. You're just like, yeah, it's pretty insurmountable. So it's,

it's very overwhelming. for sure. Why do you think, Elena, that you're the one who filled out the application and not Sam? I guess I see a future in that. Like, I'm optimistic. Okay. Hopeful. All right.

I think I'm the opposite. So that probably has something to do it. Do with it. I'm pretty pessimistic about it. One of the things I find so fascinating about people is we will do the same thing every day for 50 years. And we will openly admit it doesn't work and will just keep doing. doing it. Notice I said we because I do this too. We all do it. We avoid things. We pick fights.

We talk around issues. We make up stories about why something won't work for us. And again, we openly admit that our approach does not work for us because sometimes the alternative is too scary to contemplate. I found that most of us would rather keep doing what is failing then change our approach and possibly risk failure. This to me is one of the most fascinating peculiarities of human behavior that there is. We'll be right back. Now back to the episode.

Well, I want to know about this debt. First of all, how did you get into this debt? What degree was it for? Walk me through it. All right. So when I was in high school, my basic, like family and guidance counselors or school counselors were like, you go to whatever, the best school you get into and will figure it out after the, you know, you will figure it out how to pay for it. So I got into a pretty expensive school, which is?

Northeastern. Okay. but my grandmother at the time was also in a financial position where she was like don't worry about it go you're it's all set it'll be taken care of and then i would say my third year um is when my grandmother got Alzheimer's and so we had a couple options she could go into like a care facility or she could do hospice at my mom's house and so we decided to have her live here but that included building a huge addition to my mom's house and that's where a lot of my money, or not my money, a lot of her money, some of which was allocated for my student loan debt

or my student or college costs. You missed the part where she didn't tell you that. Oh, I didn't know that all of her money was basically disappearing, yeah. That was not something that was made aware to me. So I dropped out of Northeastern at that time when my grandmother moved in with my mom to reassess what I wanted to do. I was a psych major at the time at Northeastern. And I took a few years off and then went to UNH and graduated from there two years later.

How much did you have in the end? debt. I don't remember, if I'm being honest. When did you realize at what age, how large this private loan was? 26. 26 years old. What'd you do when you realize? How did you realize it? How did you do? I shut down. I asked my mom what we were going to do or if there was a plan. And basically, the answer was, well, when I sell the house, we can pay it off. Okay. I felt a little brushed aside, It sounded like a good option, but the house is still not sold. And we're here at the house. That's the house you're living in right now?

Yeah, yeah, yeah. Okay. So does your mom live there as well? Yeah. Ah. And okay, now I'm starting to understand. So we moved in with our investment. Right.

Why didn't she sell the house? It's a good question. Well, her spouse died. How long ago, Elena, four years? Right before the pandemic, like a few months before. So this house is her security? Yeah. I think she toggles back and forth on wanting to keep it and leave it to us when she passes

versus selling it and doing something with it. I think she gets overwhelmed. Just out of curiosity, what would you prefer? I don't think we know for sure. I get the challenge. In a dream world, I love the multi-generational living, but without the thing over our head, I feel like it's sort of turned our relationship conditional

because we're just keeping, you know, minding our peace and cues, making sure that that deal is, you know, goes through. But it's not a good relationship I want with a loved one. It's kind of morbid, too. Yes. It gets, yeah, yeah, yeah. I mean, I love a good morbid joke, but I feel like this is beyond any

remit joke. We can all imagine it in our heads. Thank you. Thank you, Sam, for not making me joke right. So can I ask, does your mom have an income? Yeah. Oh, she works? Yeah, yeah.

Oh, okay. Is she avoidant with money? You can answer. Go ahead. I think I would say yes. Sam? Yeah. I mean, just even this, the specific situation, when we talk about it,

it's usually like, oh, we'll figure it out. Yeah. Who else did you hear that from in your family? your guidance counselor Oh right yeah yeah They told you we'll figure it out Anybody else in your family tell you that phrase We'll figure it out

Your grandma Elena sometimes Uh huh Elena I do do that Yeah you do But no my grandmother never said that She was always just like Well I guess she never said we'll figure it out

But she just said you'll be fine It'll be fine That's the same thing Yeah I suppose And Sam Are you fine? No No.

Yeah. And 12 years ago, it was probably about half of what it is now, would be my guess. You asked, and I don't know the exact number. It tripled since it was originally taken out. There's 130,000 of it is just interest alone. You would have to pay a little over $2,000 a month to go on any sort of downward trajectory of that loan for a public school teacher. Yeah, I hate that this is what students go through in America. I hate it.

I don't mind that some people take out debt. Okay. I don't mind that they have to pay their debt back. Okay. But to have it increasing at these rates to not be dischargeable in bankruptcy, to compound faster than you could get in the stock market, in saying, Sam, what's the interest rate on your loan? It's a few different ones.

but the highest one is like 12.5. Jesus. I can't even get 12% returns in my investments. Wow. Okay. You're a public school teacher, Sam? Yeah. What do you teach?

High school math. There's a joke there too, I'm sure. Let me summarize. Sam's family and guidance counselor told him to go to the best college he could get into and they would figure out the money. When he got into an expensive college, his grandmother said she would pay for it. Halfway through she got sick, she needed expensive care, those expenses drained his tuition money without his knowledge,

expenses which were then poured into his mom's house, which is where they live now under a new promise that one day she will sell the house and pay off the loans. Ask yourself, if you were in this situation, how would you feel? Personally, I would feel betrayed. I would feel hopeless. I would feel like life isn't fair. and I can completely understand why Sam would decide to avoid debt or even money altogether.

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you love today. That's Zoc, doc, dot com slash remit. Zokdoch.com slash remit. And I want to thank Zokdoch for sponsoring this message. Did you make payments on your loan? For a little while, yeah. Okay. And then what happened? I couldn't keep up with it. So, like, you know, I was paying it out of my savings. I wasn't paying it out of money that I actually was making. So I just couldn't keep up with it.

I think I went on forbearance for like a year, which my servicer actually got in trouble with. They let too many people go on forbearance without telling them what the, you know, you're still accruing interest. You're still all that bad stuff is still happening. And then for a while, I would go off and on reduced interest programs, which were great, but they, you know, they would let me max out at six months. And then I went back to having to pay $1,700 a month or something like that, which was not sustainable for me at all. And then after the, after this cycle of paying and pausing and paying and pausing, what happened after several years of this? I got married and I had a family, I realized that that unsustainability was actually unsustainable. Because I'm thinking about my children's future.

You know, when you're in your 20s or mid-20s, whatever, I wasn't necessarily thinking about my future. So then when I met Elena, got married, started a family, then I started thinking about my future and realized that this was no way to make my future better and make my family's future better. What made you switch from ignoring it and this sort of passive cycle to saying, like, I'm going to call them and try to figure something out? Elena talked to a lot of people about it. She did the legwork for me, and it sounded like it made sense. Okay.

Elena, what was that like for you? I was going through a really tough time because of it. Moving in with his mom was like all part of that. I'll be it. You know, I had my dream. I definitely have my dreams of like that intergenerational living and it is a nice house. But that is why we moved in was to get the ball rolling on things and then at a really hard time mentally. Living around that conditional situation, every time we'd have an argument, I felt like I had to, you know, suck it up.

it's $150,000. It's your whole life. Like, don't value your mental health. This is more important. This is a very complex situation. As a reminder, this is not a therapy session, and I'm not a therapist. Fortunately, I checked with Elena and Sam. They are going to a couple's counselor to help them through these complicated family dynamics.

So, let's zoom in on their finances. How often does money come up for the two of you? like four times a week one of us will question the other one about a debit purchase occasionally or we'll talk about a bill coming through or like maybe some of the things that we manage manually like when to pay what

okay first of all do you use a debit card or do you use a credit card debit card mostly you have credit card debt yes okay yeah who's the one in charge of the bills um you are

mostly yeah there's some that you're in charge of but yeah mostly mostly i am okay got it what else what was this thing about taking vacation do you ever talk about like how are we going to pay for this

or like this thing's coming up every once in a while we'll have a this thing's coming up and we have $1,000 in our bank in our checking account. So do we want to pull from savings? Can we pull from savings? What are we going to do? But we never, we never hit zero.

But I get real once I hit $1,000 in my checking account, I go into like panic mode. And usually it's the beginning of the month when all of our bills come out and I haven't gotten paid yet or something like that. But that does put me into panic mode. What do you do when you're in panic mode? Text Elena at O-M-G. We have $1,000 in our checking account. Don't spend any money because all of our bills are about to come out.

How do you deal with an upcoming purchase, like one that maybe you didn't expect? Maybe it's a holiday. Maybe it's braces or whatever it may be. you know, how would you have that conversation? I'd probably text you first to prepare you on your own before we talk about it in person and then I'll like undersell it or oversell the importance of it. Like I kind of have to think about what sort of energy I want to come into the room with, like more commanding or more emotional.

Who's making the decision? I give Sam all, I don't know, I think I give Sam more decision like in chargeness. Yeah, because it seems like you've taken on the role of trying to convince him. Yeah. Let me put on a presentation for Sam. Uh-huh. I definitely grew up in like that patriarchal side that I fall back to. Yeah.

I don't agree with, but I fall back on a lot. Okay. And I don't think it's her trying to convince me on a personal level, right? Like, it's more from a unrealistic financial level from my perspective. What does that mean? So, like, let's say Elena is like, hey, we need to go on this family vacation and the rental car is going to cost $2,000. I would immediately say, no. of that. But that's not because we couldn't get access to $2,000 to pay for a rental car if we absolutely needed to. It's more trying to talk me off of that ledge than it is like, yeah, of course we'll need a rental car. But where are we going to find the money crazy? Where it doesn't exist. But it does exist and we can find it. And we did. So your instinctive reaction, Sam, is to say no to expenses. Yes. And Elena, your instinctive reaction is to undersell how much something is really going to cost

so you can, quote, convince Sam to say yes. Am I getting this right? Yes. Is this dynamic healthy? Probably not. I don't think it is. Can you imagine a different dynamic? How do you think other couples talk about my?

many decisions. As a team, I would hope. Yeah, but like how? I don't know. They probably just say something like, hey, we need to rent a car for this vacation, right? What do you think we, what should we value? I don't know.

No, yeah, not laughing. I just want to say that sounded so unrealistic. Like, even halfway through all of us, every single one of us on this call, we're like, this is bullshit. There's no way. I have no idea how they would do that. That's actually quite interesting, don't you think, Elena?

Like, we're speaking totally hypothetically and you're really struggling to find out how another couple might talk about something like this. Yeah. Sam, how do you think other couples talk about decisions like this? I don't know. I don't know. You all ever heard a healthy conversation about money? Maybe I haven't. Have you ever listened to the I Will Teach You To Be Rich podcast?

You know I have. I feel like there's just a lot of like anxious avoidance that we both do. Like we're just trying to avoid it so then we're not making positive or healthy decisions or understanding how to make them. We'll be right back. Why is it that people who tell me I'm stupid on social media always have the profile picture of a jar of mustard. You think I'm going to take your advice about investing when your username is Pontiac Plummer 48? No, thank you. Instead, I trust professionals when I need

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If your revenues are at least in the seven figures, get our free business guide, demystifying AI at net suite.com slash remit. That's net suite.com slash remit. Now back to the episode. Okay, I'm having a little fun with them, but this is actually serious. Let me tell you what I'm noticing. First, it's actually really important to keep things light, especially, as I'm getting to know a couple.

So these jokes, these random asides, all of that stuff is absolutely critical to connecting with my guests. It's not an accident. I had someone on YouTube recently asked, Ramit, have you ever considered releasing a version of the podcast without all the fluff? I just wrote back, no,

and they deleted their comment. People who think that small talk is merely fluff missed the entire point of money. That money is not. just a series of spreadsheets, but it's deeply psychological. And you can see how this plays out with Sam and Elena. They admit they've never had a healthy conversation about money. They can't even pretend in the hypothetical that I give them. Most of us are problem oriented. We know that we have a problem. We love to talk about our problems. But very few of us move to the next step, which is

being solution oriented. This is why you had that friend in your 20s who was always stuck in horrible relationships. You'd try to give them advice and they would just start repeating what that guy or that girl did and can you believe it? They're such an asshole. People with problems love to talk about their problems. In fact, if you rewind just a few seconds, I joked about listening to the IWT podcast, but it wasn't really a joke.

I wanted to see how they responded. And true to form, Elena went right to. back into talking about her problems. What this shows you is that until someone is ready for a solution, I can't really help them. Nobody can. My decisions aren't always based in reality. Sometimes they're based in anxiety.

You think it's possible for you to feel good about money? I do. Tell me. I think these decisions would be a lot easier. I'm looking at the next four weeks or five weeks, what's coming out, what's happening, how much money is in the checking account. So I think the decision-making process would be a lot easier if we were more healthy financially because I could say, hey, look, no, we don't have enough for this.

Or, hey, we definitely do. Or, hey, we don't quite have enough for this. maybe we can dial it back on some other things to make this car, I'm saying car rental, but make this whatever happen. Sam, it's interesting that when I asked you, what would it look like and feel like if you felt good about money,

you gave me a series of like tactical processes. Now listen, I love a good tactic. I love it. But, you know, you're actually quite adept at describing how you feel about things. Can you just try to connect on the positive?

side from it. Think about something that you feel really positive about and connect that to money. Even hypothetically, what would it look like and feel like if you felt good about money? I would feel like such a weight was off my shoulders. I would feel so much less stressed out. It's my main source of stress. I would be able to be more present in my family and my children's lives. When you feel stressed about money, where do you feel it? Like in my gut. Yeah. Like the acid in your stomach?

Yeah, it just starts. Yep. Okay. Yeah. So that wouldn't be there. And when you feel really good, like when you're watching your four-year-old and your two-year-old play and they're giving each other a hug, you know, those moments, where do you feel that? Indescribable everywhere.

Everywhere. All over my body, my head, my face, my heart, all those places. I would love for you to be able to feel that way even once with money when talking to Elena. Same. Yeah. Okay. Yeah. Well, I believe you can do that.

I believe that. And I believe you can even do that even while having this debt that currently sits on your shoulders. I don't think you have to wait 20 whatever years to pay it off and then feel good. That's not my philosophy. I don't want anyone to wait some indeterminate day in the future to finally live their life. I want you to start living a rich life today and a richer life tomorrow, even if you have a ton of debt. Okay? But that is my goal for you to have a plan and for you, Sam, to feel good about money.

Okay? Great. Elena, hearing that, anything surprise you when you heard Sam's answer to my questions? It sounded worse coming from his own lips. That was kind of hard to hear. Yeah. Makes me sad. Yeah.

Why does it make you sad? I don't want him to feel that way. I don't think our life is like that. So for him to feel like that it is like that for him in his head. Right. Right. I'm good at hiding it a lot of the time. You're good at it means you don't show it to other people.

Right. I'm not saying that's a positive thing. Hey, listen, as a guy, I completely understand that. I get it. And I also get that that might not always be the healthiest thing. I think what we should do is we should look at the numbers. And then I have many more questions. But until we look at the numbers, it just sounds like a big, scary amount of debt. but I don't understand things like the cash flows and the investments and things like that.

So would you mind if we take a look at that? Not at all. Yeah. All right. Let's pop it up here. Sam, read me off the word in bold. So assets and then read me the number next to it. Assets is $22,000.

Okay. Next. Investments is $2,000. Savings. is also $2,000. And debt is $205,000. All right. Total net worth?

Negative $179,000. All right. What do you think of that? It's scary. It's overwhelming. All right. Let's go on to the income section. This time, Elena, I'd love it if you could read off the bold and then the number on the right side.

10,000. 74. Great. So combined you to make $120,000 a year. Did you know that? Mm-mm. No. I don't look at gross too frequently.

So, yeah, no, I didn't know that. Elena, does this surprise you to learn that you and Sam make $120,000? Yeah, I thought we made $80,000. We should be able to afford a life worth living. Let's take a close look at their numbers to paint an even more detailed picture. Their rent is $450, daycare, $1,600, groceries, $650, clothes, $200, and phones, $260. Do any number stand out to you here? For me, it's the rent. Paying only $450 is absolutely amazing. But then this happened. But right now, how much are you paying towards debt?

I think it's like $500 or $600. Yeah, so I pay those down when I think I've made a little, like when I've had busier weeks, I try to pay more. We're not going to do this anymore. Yeah, I have no idea how to do that. I have no idea how to talk to Sam about when, how to pay those off when we're holding balances. Elena, you never read my book, right?

No, but a client recommended it. And Sam, I know you haven't read my book, right? Nope. Okay. All right. I'm keeping nearly a 100% record of people who come on this show and never read my book. Oh, no. How long until this credit card debt is paid off?

I don't know. What the hell? How much is on the credit card? I don't know. What? Didn't you guys do that? I don't know exactly, but like eight, probably. $8,000 on the credit card?

Yeah. It's like a couple different cards right now. But yeah. What did you spend on to get $8,000 of credit card debt? Little things here and there. Mostly grocery store and Target runs. A couple big things, like the flights for our vacation. And then honestly, it's like literally a couple, a few thousand dollars just from not knowing how to talk about.

about like I like it's one conversation to use the credit card and then another conversation to pay the bill and the pay the bill conversation is like way harder to have for some reason. Because you know it's going to make him uncomfortable and then you want to undersell it, etc. Yeah. Yeah. And then you, I feel really crappy that like I'm in. I've added to our debt because I like can't figure out how to talk to my husband.

It doesn't feel great. What is the minimum payment, by the way? I have to ask Elena. Elena. Oh, I don't know. We never paid that low. So my new rule for Elena and Sam is you have to know the details of your debt. Because what is the one thing that's dragging you down right now?

That's your debt. And there's only really two things you have to know about your debt. It's the balance and the interest rate. That tells you everything. I already know the interest rate for your credit cards, probably like 24.99 to 26%. It's high, really high. I don't know the balance.

What did you say it was? 6K, 10K, something like that? 8, she said. 8K? Yes. You want to just show you how to calculate this right now? Sure. All right.

Check it out. So we got a balance of 8,000, correct? Yeah. 6%. And your monthly payment is 600. It's going to take you 17 months to pay it off. What do you think about that? I can see that.

Yeah, 17 months. That's cool, actually. Want me to show you something even cooler? I thought this was going to stress me out. No, listen, it's actually It's stressed me out a little. I have to tell you, there's a massive light at the end of the tunnel. Even when people see, oh my God, I have to pay this debt off for 28 years.

Even then, they go, ah, at least I know. Yeah. Let's look at this. So this number here, your fixed cost number. Elena, what number do you see here? 76. Yeah, that's 76%. of your take home pay. Do you know what that number should be?

No. Okay. Sam, do you know? I thought it was anywhere from like 60 to 70. 50 to 60. Okay. 50 to 60. So at 76 it's it's well above the recommend my recommended range. What do you think that means that it's 76 instead of say 55? Daycare's expensive and we need to make more money. Okay, but what does it mean for you?

currently on a day-to-day basis. That money is tight. What it means is because you have so much spend in your fixed costs, that's why you feel so stressed out over target purchases. And it's not, you know, you think, oh, like, am I a bad person because I bought these tomatoes and actually has nothing to do with the tomatoes at all? It has to do with the amount of infrastructure that you are spending on for fixed costs with your current salaries.

What do you think about what I just told you? It sounds like sticky. Like I can either, I don't know exactly. It just sounds like a little like you're stuck in a rut. I don't know. It doesn't feel good. Okay. That's a fair assessment.

Yeah. Sam, what about you? I was going to say the exact same thing. And if you couldn't describe sticky, I was going to explain how it also. made me feel sticky and what that meant. Thicky, yeah. So you both feel stuck. Yeah, no, it makes me feel stuck for sure. They feel stuck, but they don't really understand why. And this is really common with money.

You have to remember that most people do not break all their expenses down into four tidy categories and then calculate a debt payoff plan. Most of the people who come on the show don't even read my book. No wonder they feel this overwhelming sense of dread about their finances. It's just one big ball of bad. One of the things, that the conscious spending plan lets you do is break down your expenses into manageable categories. Use it, and you will suddenly be able to see

where something is going wrong and how to fix it. You can get the CSP for free from my website. I'll throw in a link in the show notes as well. Just guess the average wait time to see a doctor in the United States. I'm not talking about a specialist, just a regular standard family doctor.

You think it's a week, two weeks? Nope, it's over 30 days. So a lot of times whatever symptoms you have are going to be gone or maybe worse by the time you get to that appointment. I don't want you to have to wait weeks to see a doctor. I want you to get seen faster by an in-network doctor using Zocdoc. Zocdog is a free app and website that helps you find and book high-quality in-network doctors so you can find someone you love. They have over 150,000 doctors across all 50 states in 200-plus specialties, including mental health, dental, primary care, whatever you need.

Just filter for doctors based on insurance, location, ratings, even virtual care options. And Zoc Doc appointments happen fast, usually within 24 to 72 hours. You can look through your options, book an appointment, and you are done. If I needed to find a new doctor today, Zocdoc is what I would use. Stop putting off those doctors appointments and go to Zocdoc.com slash Rameet to find and instantly book a doctor you like. of today. That's Z-O-C-D-O-C.com slash Rameet. Zoc-D-C-com slash Rameet. And I want to thank Zocdoch for sponsoring this message. This episode of Money for Couples is brought to you by Wild Grail. Do you have someone in your

life who always tries to one-up you? Like if you bake a cake, they'll ask, hey, have you tried using hand-milled flour because it just tastes so much better? You know, I prioritize my help. Hand-milled flour. Do you think I have time for that? Amanda, no. Thankfully, we don't need to because any of us can still have delicious baked goods and pastas without the hassle using wild grain. Wild grain is the first bake-from-frozen subscription box for artisanal breads, seasonal pastries, and fresh pastas all conveniently baked in 25 minutes or less. You just take it out of the freezer, put it straight in the oven, no thawing, no prep, no stress. You can even customize the box, picking between classic, gluten-free, or plant-based. My colleague recently went gluten-free and tried one of their boxes.

They sent her gluten-free tortellini, brioche rolls, and giant chocolate chip cookies that her family loves and bakes every week. For a limited time, Wild Grain is offering our listeners $30 off your first box, plus free croissants in every box when you go to wildgrain.com slash Rameet to start your subscription. That's right, free croissants in every box and $30 off your first box when you go to wildgrained.com slash remit. That's wildgrain.com slash remit or you can use promo code remit at checkout. Let's play a little hypothetical game. Is there anything that we can dramatically cut under fixed costs?

What would it be? I'm close. Okay. What's the number now? I could cut that in half. All right. Easily. Okay, watch the numbers.

So I'm going to cut $100 off your clothes. All right. What just happened? One down, one percent. Yeah, it went from 76 to 75. Well, directionly, we're in the right direction. Let's take the win. All right, round of applause.

We're going in the right direction. All right, what else you want to do? I mean, there's nothing else we can do. Nothing, really? You gave up after one category? Are you kidding me? Are there any other easy wins you can pick? up. Let's get a little momentum here.

I think groceries. I mean, we definitely do the, you know, we don't always buy, like we buy marinated meats and stuff. What? What? Yeah. You buy marinated meat? Oh my gosh. Yes. They're so expensive. Are you guys kidding me right now? Let me get off. Hold on. Let me just, I'm not really a stickler for groceries. You know, I'm not like Mr. Grocery Man. I had a national news organization and they were like, Rameith, we want to put you on air. This is like big feature. And I was like, oh, okay, let's get on the phone. And then they were like,

we want you to give us tips on how to save it to grocery store. I was like, what the hell do I know about saving money at the grocery store? Well, I know one thing. My immigrant mom and dad never, ever, ever in our life bought us marinated meats. All right. I mean, I'm just, if you're telling me that, then you're telling me you have a bunch of other expenses that could be cut from the grocery store. Fair?

Yeah. So we went from 652 to like 426. Is that work? Yeah. Wow. Okay. Great, great, great. Look at the number at the top.

What does that number say? Getting closer. 71%. Nice job. Take the win. All right. What else you got? So Elena's not going to like this one.

In theory, we could cut $400 from daycare. How? One of our kids goes an extra day. So Elena's still home watching the one kid. So it is for her mental health. So she gets one day with only one child. Okay, here's how I want you to think about this. You've clearly discussed the mental health part of it.

And I think that's awesome. You absolutely should. You cannot only make decisions based on some random number. But I guarantee the two of you have never looked at the effect of making this change on your money. So would you be willing to entertain just me playing with the numbers for a second, and that way you understand both the mental health portion and the numerical part. Can we look at that? Yeah.

All right. This is how we make big decisions. Okay. Write down how we feel about it. Awesome. And we also want to look at the numerical ramifications. All right. Daycare.

Instead of 1636, you're saying take away $400 a month. Is that correct? Yeah. All right. Wow. What do you just see? What just changed? It says 65%.

We're within striking distance. I'm not asking you make a commitment to this right now. I just want you to think about it. And neither am I, just to be clear. I'm not going to be like, Ramit said, sorry. So now you see why I am in such a rush to get you to make big changes, like with a machete.

Even $100 or $200 a month can often make a massive change. So you see, you know, I think it's really important to acknowledge the mental health aspect. But I also want to show you like, gosh, two, three, four hundred bucks a month towards debt would be game changing. What do you think? So I have two thoughts. All right. Love it. Tell me.

We could probably change the cell phone bill a little bit. I agree. But that was probably about a hundred. We have his mom on the plan. I imagine there's probably about $100 we could finagle through. Amazing. Also talk to her about what we give her in rent and utilities. You could give her less?

If, I mean, if she's open to it, I initially think that sounds. Terrifying. Yeah. Here, let me just tell you how I would say. I love what you just said. That's just great. I'm going to give you a couple tools. you can use. You can say, look, you know that we appreciate living here. We know that you're

charging us, less rent that we would pay somewhere else. That means so much to us. It allows us to raise our family here and to have a stable house. That means so much to us. We have been taking our finances really seriously. And we've made it a mission. We want to pay off our debt because we want to have a healthier relationship with money and we want to show our kids how to to have a healthy relationship with money. We have a question to ask you. If you say no, we totally understand. We currently pay $450 a month.

If we were able to pay $200 a month in rent, that would allow us to shave off X months from our credit card debt and be credit card debt free by blank month of blank year, would you be open to letting us change the rent that we pay from 450 to 200 a month? Oh, and then you'll go back to 450 when we're done. Or maybe I'll sell the house.

Yeah, you're like, and then maybe you'll sell the house and give us a fat stack of cash like was promised to us 18 years ago. No, don't say that. That's for another day. Atlanta definitely shouldn't say that. I might be able to get away with that. One step at a time. I think she'd be open to it.

Sam. My thought isn't she'll immediately say no. So that sounds better than anything. Listen, great work, even thinking about this. And when you have this conversation, practice it,

record it. Because all that stuff I said at the beginning, that's the kind of stuff that you want to connect. You know that stuff about your kids? Drop that in there. Yeah. Get those kids in. Put a little cute little picture of your kids.

Have them dress up and do a little dance or something. Whatever. It's really important. Okay, it's important. This is serious stuff, right? $200 a month or $250 a month is a huge deal for you right now. And you're also respectful enough to say, look, if you decide not to do this, we totally understand. You're giving her an out.

She's already giving you a very nice deal. So, no, that's how you go. All right. Great find Elena. Great suggestion. Should we assume that it's going to happen? Should we model it? Let's model it.

All right. Love it. Damn, are we at 59%? Yeah. That's a round of applause. Great job. Those suggestions came from you. That was lovely. Whoa. Remember, when you speak to your mom, it's all about how you're getting financially healthy. It's not, I want you to pay for your cell phone and you to take less rent. It's not that. It's about how you're building a healthy financial future for your family. Okay? Great. Yeah. Yeah, like got me excited.

And I felt like I just, we had just discussed at dinner whether we should add the other kid to three days a week and pay even more daycare, but then have Tuesday where I can start working more. Okay. And I feel like that is that, like I know how to have that conversation now because I know what I'm weighing. So if I can add a day at work, probably looking at $300 more a week. Okay, so $1,200 a month. Okay, great. That's amazing. Okay, watch the number change, okay?

So, hold on. 4567. Oh, my God. I'm excited. Are you guys excited? Yeah. I'm excited. Okay, watch this number.

It currently says 59%. Okay. We're increasing your income. One, two, Oh, shit, I missed it up. Hold on. Oh, God. 4567.

All right. 4567. One, two, three. Whoa. Whoa. Holy, do you see this? Daycare goes up by 400, though. Okay, let's fix it.

Let's fix it. 818. Adjust it over here. I'm raising your daycare. Look at that number. That's good. Damn. Yeah, that's great.

You guys, this is amazing. Cool. Okay. High fives. all around. That was like, I seriously did not expect to get to that. I didn't. I definitely didn't. This is a very, very healthy number. Fifty-five percent, right down the middle. Okay, first of all, how do you both feel just looking at that number? Great. Yeah. This may be the first time Elena and Sam have felt good about money in years, years.

Now, of course, this isn't the whole story. There are a lot of changes to be made, even down to the level of meat that they buy at the grocery store. But what I'm showing them here is hope. And this is real hope, backed by real numbers. This kind of positive vision is something that tens of millions of Americans lack. When it comes to money, we've been taught to save, to hoard, to worry about money, never to actually enjoy it. If you notice with Sam and Elena, they have debt, they have a lot of debt, and they can still

take control of their money. This is the power of feeling good about your finances. You have to remember, we're not robots. If we feel bad about something, we're not going to want to keep coming back and keep improving. It's going to be really hard to want to make changes. But on the other hand, if we feel good, if we feel even a small sense of control, you will find people coming back, wanting to make changes, sticking with it, and being more creative and resourceful than you ever thought possible. Now I want to make sure that I'm honest about these numbers, because there's a bit of like shrouding that we've done. And I want to make sure you know it. Okay. So first off, the reason that you're able to do 55% is that you're basically paying nothing in rent.

If you were on the open market, your numbers, it would not work. You'd be way above that. So let's just acknowledge that. Obviously, if you can pay two, three, four hundred bucks a month in rent, you take it. All right, fine. I think we're very grateful. Yeah. The next thing, which is like the thing, is row 24, the student loan payment, which you are currently not paying. Now, once that kicks in, which is going to kick in fairly soon, that becomes an issue, correct? Yep.

All right. So, Sam, what's the latest with this company? What's going to happen with your conversations? So as of today, they offered me a 60% settlement. That's good to know. Hey, 60%. So just so everybody knows, the reason that they're doing that is they want to recover what they can. And they know that you are so burdened that right now, they're like, look, we got to take what we can get. Even though they could milk it for the next 50 years, if they get 60% now, that works for them. Yep.

All right. We're also thinking about making a counteroff. We've been going back and forth. So I've been considering. We're hoping to get 75. All right, fine. It's worth you negotiating. That's great.

Yeah. It's just a business to them. That's it. But one way or another, payments are going to start at some point, correct? Yeah. Yeah. All right. So while I think it's awesome that you're going to pay off your credit card debt in a

approximately a year. Once that's paid off, that's $600 a month that's going to suddenly free up for the two of you to redirect towards student loans, which will be fantastic. But those student loans are still going to be $1,400 or so dollars, maybe a little less depending on what you settle on. There's still a lot of money, right? Yeah. So how do you want to deal with that? Sam's consulting work. How much you make him from that, Sam? Well, so I just started it. It's like a little side hustle. Love it.

So I am making $100 an hour right now. My man. And they're loving his work. I have a question. So I hope, first of all, I think it's amazing you're doing this. That's awesome. That's extra money. You know, math teachers are in demand.

People hire math teachers as tutors, like, all the time. And they pay very well. Have you ever considered it? I've tutored. How much you charge? $100 an hour. Could you do it again? Yeah.

Okay. Can you just do it? I don't care how you make $100 an hour. Can you just do it? Yeah. Okay. Thank you. Thank you.

I'm going to show you why. I don't know. What should I put here for the net increase? So let's save $400 a week. Okay. So $1,600 a month? Great. And net that net that out to what?

Like $1,200? Yes. All right. 8771. Watch the numbers, please. We're at 48%. That's amazing. I think we have a hard time believing it. I'm not changing. I'm not doing any magic. It's just math. It's literally your numbers. It's not that we don't believe you.

It's that we've been so financial, just so down on ourselves. that it's like just seeing it as like shocking. Basically, the entire world you've been living in is about feeling horrible with money. Yeah. Every time you talk about money, it's bad.

And I'm like, yeah, okay, you have a lot of debt. That's messed up. But we can also do a lot of stuff to go on offense with that debt. It's kind of different

because for the first time, you're going to have to find a way to start feeling hopeful about money and maybe eventually even feel good about money. That'd be nice. I know you can get there. I know, I see it. Look at this.

I'm just going to show you one more time. The numbers don't lie. These are the numbers you gave me. You told me you can negotiate your rent down some amount, hopefully $200 to $200. Okay, great. You told me that you're going to pay a little bit more towards your debt payments, shave that off in approximately a year. Fantastic.

And after that, that's $600 a month in cash flow, that can go right towards debt, savings, et cetera. You're tightening up your groceries, your clothes you're going to get a little tighter on, your phone, and then you're going to earn more. Both of you are going to earn more. Now, here's the thing.

What are you both going to get? Our lives back, I guess. specific? We can live and plan for now. Each of you go back and forth. Ask each other. I don't think you actually know the answer to this question. What do we get? If we make all these changes, which actually are going to require you to think differently, talk differently, behave differently about money, what do we get? This should be a primary question you're asking. Ask each other. Well, I don't even know what to ask. What do we get? What do we get. Freedom. Freedom. Accuracy in our relationships with our family members. I want to be able to

have a good relationship with your mom that isn't based on that hurdle. I'm looking forward to not having to think about it when we think about family and emotions. I 100% agree. Give me the positive word. A sense of when I think about family. family and I think about our new vision for money, I feel a sense of. Hope for the future. Pride. What was that? Elena.

I said pride. Pride. I love this. Now we're getting somewhere. We feel pride. We feel hopeful. What else do we get? We get things.

I'm going to put things on the walls. I'm going to have a house that was worth decorating. Wow. We get to surround ourselves with a little beauty. Yeah. I love that. Very inspiring. Something every day you wake up and you look at you say, that's beautiful.

I love that. Okay, Sam, I want to hear from you. What do we get? I get to enjoy time with my kids without having to think about all the negative things in my brain. Love it. Love it. You said that earlier. Four-year-olds are smart.

Six-year-olds are even smarter. They really pick up on dynamics. If you were to continue the way that you had been going, by the time your oldest got a little older, what do you think they would have intuited about the way that the two of you handle money? Yeah. They hate money.

They don't talk about money. Yes. Money and daddy hate money. Yes, they're always tiptoeing around. And then boy, learns that Daddy doesn't talk about money and

Mommy is the one who has to bring up money when there's something to be discussed and then Daddy usually says no. And what do you think happens in his future relationships? The exact same thing. Yes. And then as for your younger, the girl, what does she learn? She learns that it's her job

to ask men for money. Oh, wow. She has to validate her self even being in that room. What are you thinking, Elena? A lot. Like, I'm just doing the opposite of everything I stand for. I want for my daughter.

I want her to do whatever she wants herself and not feel like she needs to ask a man for money. Yes. And when she thinks about money, when she gets a little older, she starts earning a little bit of money. How do you want her to feel about money? Empowered.

Yeah. Informed. Yes. Keep going. Like a means to her life, like what she wants in her life. Like it's a tool. Love it. How about for your son? Same. Yeah, I want him to feel empowered and not feel like there's that it means angry

that you have to tiptoe around yeah so you can be chatty about it yeah it's actually fun can I point something out that is what you get kids model their parents' relationships

with money whether you give them an allowance is irrelevant whether you send them to this camp or buy them that phone irrelevant they watch how mommy and daddy talk about money for the first 18 years of their lives.

Are they stressed? Do they say we can't afford that? Do they get in fights behind closed doors? Or do they say, don't tell daddy we bought that? Or don't tell mommy we bought that. By building a healthy relationship with money, you naturally teach your kids that. You don't even have to create artificial constructs like an allowance.

Although if you want to, you can. You simply live as you would talking about money, regularly discussing tradeoffs in front of the children and even asking them to get involved as part of the family. For Sam and Elena, I'm excited that they are feeling good about money for the first time in a long time. Let's listen to their follow-ups. Hi, Ramit. Hey, Ramit. So your questions were what surprised you about our conversation? What surprised you? The fact that, oh, I actually, we we can increase our income a lot more. I think we've been scared of that,

but it shocked me how much we could increase our income, or how much we could increase our income by just working a little bit more. Yeah, that was actually surprising too. Yeah. I found it surprising how much our relationship was affected by our inability to talk about money. And now that I feel more confident about it,

it gives me excitement about our relationship, which is really cool. What were your takeaways, is the next question. I would say our takeaways is understanding how to talk to each other about money without being afraid. That's the biggest one. Well, that's not your takeaway. Yeah, that's my takeaway.

But yeah, no, we've been talking about money. Yeah, a lot better. And tell me what specific changes you're making. We specifically changed our daycare auto pay out of our credit card so we could focus exclusively on lowering that to zero. And we can't wait to do more. Thanks for me. Bye.

Thank you, Sam and Elena, for coming on the podcast and sharing your story. If you have enjoyed this, two favors to ask. Number one, go on Apple podcast and please leave a written review about this podcast. It really helps us grow the podcast. Second, get on IWT.com slash podcast newsletter. Every Saturday, I send out a new email on money psychology that I want you to read. That's at IWT.com slash podcast newsletter. Thanks for listening to I Will Teach You to Be Rich.

I'm Ramit Sati. Please follow the show on Apple, Spotify, or wherever you listen to podcasts. If you haven't read I Will Teach You to Be Rich, my book, pick up a copy. You can get it at any bookstore or any lifestyle. library and it will show you the specific tactics for how to build the I Will Teach You to be rich system into your personal finances.