Money For Couples with Ramit Sethi - 171. “I got into a PhD program! But he’s only worrying about the cost”

Episode Date: August 27, 2024

Katy and David are both 32. She just got into a PhD program—one she’s very excited about! But David replied by peppering her on possible outcomes, timing, and most of all, cost. It’s just one stark demonstration of how they’re misaligned on money, but many more examples come to light. This episode is brought to you by: Fabric by Gerber Life | Protect your family today with Fabric by Gerber Life. Apply today in just 10 minutes at https://meetfabric.com/ramit. 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. Masterclass | For unlimited access to every class and 15% off an annual membership, go to https://masterclass.com/ramit. ZocDoc | Download the ZocDoc app for FREE at https://zocdoc.com/ramit then find and book a top-rated doctor today. Trade | Right now, Trade is offering our audience a free bag of coffee with any subscription at https://drinktrade.com/ramit. Links mentioned in this episode • Pre-order my upcoming book: Money for Couples Connect with Ramit • Get the Podcast Newsletter and exclusive Q&A about the show • Get Money Coaching with Ramit  • Download the Conscious Spending Plan • Listen to my book—now on Audible • Get my New York Times best-selling book • Get my no-numbers journal • Other episodes • Instagram • Twitter • YouTube If you and your partner have a money issue and you want my help, I occasionally select a couple to work with, free of charge. Apply for my help here. Produced by Crate Media.

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.

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to join the program right now. Today we meet David and Katie. Money conversations just make me uncomfortable. I don't want to be the technician or the leader. I want to be a partner. Katie admits she avoids money and she likes that David will take care of it for her. David handles all the finances. David takes care of all of it and I just sit back and let him. David worries about money.

He wants to know where it's coming from, how much it's going to cost. He thinks logistics first. It was all about like becoming the provider, having a good career to make enough money to support a family. They're recently married and sometimes it's hard for partners to shift, thinking as a single person to a joint way of thinking. For me, it was a lot of like, come on, let's go. And for Katie, she was like, I'm not sure, I don't know. When we merged, it was very hard for me to kind of get over that hurdle of my money is

your money, your money is my money. This is just one example over a deep disconnect that they have around money. Hey, I got accepted to the USFP PhD program. It was my choice to go back to school. And so there was still that little bit. bit of, this is mine. Once I started asking for details about like, what does that mean for career? What does that mean for cost right now?

She didn't have a lot of answers. Katie wanted to do something. And David met her news with a bunch of dream crushing questions. All of the questions that David was asking me was overwhelming me. I just shut it down. David, were you frustrated by the responses? Yeah. Yes.

I sent her a loom. No, you did not. Yes, you did. Absolutely good. Let's meet Katie and David. I found out in March. Hey, I got accepted to the USFP PhD program. And I think I'm going to do it.

We'll figure out how to pay for it. But I really want to do it. I'm really excited about it. What did David say? You were like, how are we going to pay for it? Well, I think you mentioned right away there was a scholarship. I was curious about that. I was like, wow, that's really cool.

They gave you a fellowship or there was a scholarship on the table. What does that mean? What are you going to do with the degree? What's the dream? Like, what's the P.A., what is that even, like, you know, what's the name of the degree? What can you do with a PhD? Where are we going? Like, what's, yeah, like, what does that mean for, like, career opportunities?

Yeah, what does it cost for the university? Like, you know, how do we plan for this? How long is it? going to take? How long did it go for? I don't really recall it being very long because all of the questions that David was asking me was overwhelming me and I think and I kind of just shut it down. How did you respond when he asked you those questions? Over. I just was like, well, we're going to figure it out. I'm going to figure it out. Just really kind of like mentally shut down because there were just all these questions why that like how why what and I was like just be excited

for a minute but there were all these like follow-up questions I don't think I had really thought through or had thought through but like in that moment didn't really have like the mental capacity to answer I wanted to focus on what was the dream what was the vision why go back to grad school I mean, it's a lot of work. And yeah, I do think she was pretty overwhelmed by all those questions. I also think that the timeline was pretty quick. You had to give a decision in a week or two. And I think as that deadline approached, I felt more anxious about what that commitment was going to be.

I mean, Katie's a full-time counselor at the high school. She also is the head coach of Junior Varsity Cheer program that is very successful. which takes up a lot of time. And then we had just sort of set up our budget or conscious spending. We were focusing on saving quite a bit for vacation. We were saving some for like an emergency fund. And, you know, every dollar was accounted for. So I was just more focused. Well, how much is it going to cost to save? Not cost, but how much are we going to have to save? What are we going to have to reallocate. You know, we just finished that and I thought we got to a good place, but now we got a pivot, which dollars are we taking away from where, the mechanics of how

we were going to do that, which is why I think I wanted to focus on the dream, because at least in my personality, when I know why I want to do something, the obstacles or the process to get there, is justified or make sense or, you know, in terms of the brass tax of it. What was your reaction after the first conversation? You had a few days to make a decision. What did you do? Well, I did my research. I looked at how much it was going to cost for the whole program with the scholarship

money and without the scholarship money. I made the decision. I mean, truthfully, I made the decision to accept the scholarship. money without talking to David first. With that came a lot of questions. And David was very much like, well, if you're going to do this, then I need you to explain X, Y, and Z and gave me basically a list of questions that I had to answer. And I wrote it in an email. I wrote it in a very detailed email of this is how much it's going to cost. This is how much I'm getting from the school. This is how much time it's going to take. Can I pause? Can I see that email? Sure. The questions,

That I was asked was a lot for me to process all at once because each one of the questions involved such detailed responses and, like, were conversations in and of themselves. So you made a decision before this email? No, no, no, no. Well, then you didn't make a decision without talking to me first. We talked about it, but telling the school that I was going to accept the fellow. I did it and I did it and then I told you afterwards, which is when that email was sent. Let's take a look at the email that Katie sent. So David asks approximately how much will the total

program cost to us? Parentheses, we already know the answer to this, 16K. And then Katie writes, I hate to sound dumb, but I'm confused by this question. The answer is $13,645 after the waived classes and 10K fellowship money. Okay. So a little bit of disagreement on cost. What are your future job opportunities and their projected salary ranges by the time you finish your degree?

You mentioned wanting to contribute more. Give me the vision of that with numbers and titles if you can. Katie writes back, I could work at the college level with a salary ranging anywhere from 80 to 145K depending on job and location. Okay, that was actually very helpful to see. David, you're laughing.

Yeah, because it was worded. It was worded like it was to a client. It was like I was trying to get information. I think it was on the heels of not having a concise in-person conversation. So I put on my producer hat. I'm taking it at face value. I'm just giving him facts. Is that good or bad?

To me, it's good. But I know he wants more. He wants to see my dream. in the future in my answers. Hmm. I was frustrated that I was even writing that email in the first place. Yes, and by the end, I was kind of over it. So I didn't give the specifics of exactly what the question was asking.

What was the question actually asking? What can you do with your PhD? Like, what can you do? And I didn't really answer. Yeah, what can I do? Yeah, I just humbled by that. that awareness. I think in my mind, it's one thing and out of my mouth, it's another. Well, it's a phrase I like to say a lot, especially with business owners I teach in my

earnable program. I say, put your hand out and ask yourself, what do I get? If I'm devoting all this time and learning all this stuff and speaking to customers, what do I get? I better get paid more or have a flexible life. I better get something out of this. What I see is David trying to push for specificity. And Katie, I see you trying to squirrel away. Evade. It's a chase, avoid. You know, I don't think David necessarily worded it.

Like, this doesn't strike me as dreaming at all to say, what are your future job opportunities and their projected salary ranges? But this is also not a good answer, Katie. I could work at the college level with their salary range of 80 to 145K. Okay. I could be a professional boxer or a professional skydiver. I mean, I understand my answer was not good, like, at all. And David, were you frustrated by the responses?

Yeah. Yes. Okay. All right. So what happened after this email exchange? I just love that you're all deciding like a life-changing decision via email. This is like, I love it. So what happened after this email?

There was a follow-up. I mean, I went to work. Oh. Yeah. I went to work. She's like, I clicked send and then I rolled out. I went to work. Okay.

What happened next, Katie? I sent her a loom. I sent her a video message. No, you did not. Yes, he did. Absolutely did. Mm-hmm. A f*** loom.

You all think it's nerdy for people to use my journal and talk about money together or to use my agenda or a CSP? No, David created a loom video for Katie. And yes, I did ask to see the video. I just want to lay this out for you. So first of all, we're going to have to increase our savings rate. You were saying to not have any personal spending. I mean, I think that's pretty unrealistic, to be honest with you. You can't just, like, forego living your own personal life for, you know, five years.

Because you have to take six credit hours, assuming all the classes are three credit hours just for easy math, six credit hours, two, you said two classes a semester, six credit hours times 450 is $2,700 a semester, $5,400 a year. This is, of course, assuming that you don't do anything in the summer, which I think you have to consider because I want to be able to travel with you, and we're also going to be saving for travel in parallel with this. That's important to me, and I want to be able to do that with you. So I'm trying to figure out how to do this, you know, with the resources that we have. I think the conclusion from this is you can go ahead and get started financially. It's going to work, and you have quite a few years if we're able to just do this savings rate starting now to, like, make this happen. And then we can figure out some other stuff here. I wonder if there's other scholarships that you can look for or just ways of.

to find extra cash. But yeah, this lays it out for me in a way that makes sense and says that it's doable. David, you did the model. And Katie, what was your response to that model? Surprise that put all that effort into making it work. Why? Because at first I wasn't convinced by his reaction that he was excited for me or happy for me. all I heard were like how is this going to work what is this going to cost money money money

money where then when I saw him make the video of how it was actually going to work I was like okay so he actually does care that this is important and we're going to make it work and you left a timestamp comment you're like at 209 I think you really got this calculation wrong so we're going to definitely have to discuss that we'll be right back 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. Do you think it's a week, two weeks? Nope, it's over 30 days.

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Ramith to find and instantly book a doctor you love today. That's Z-O-C-D-O-C dot com slash remit. Zok-D-D-C-com slash remit. And I want to thank Zock-Doc for sponsoring this message. Now back to Katie and David. What did you end up deciding? I took the fellowship. I took the scholarship money.

Okay. It's pretty impressive to get into a PhD program. Obviously, we know it takes a lot of. of time. Did you think it was a big deal worth spending time on the financial discussions and the relational discussions? Not in the moment, no. Why is that? Because I was really focused on me. It's my education. It was my choice to go back to school. And so, yes, David is my husband. But there was still that little bit of, but this is mine, which is, which is, that stopped me from involving him as much as I should have.

After the spreadsheet and we were like, okay, this will work. We can make this work. It allowed for that, I'm so proud of you. This is awesome. This is so cool. A PhD, like, let's talk about it. But I think that obstacle or that step for me was really important because it wasn't just about the PhD. it was about us working together.

I think shortly after this is when I maybe applied to the podcast because hearing stories of others on the podcast, I did not want to step into a role. I did not want to create a dynamic. Katie and I just got married a little over six months ago. And so I was like, this is all fresh. This is all new. Maybe I have my strengths and she has her strengths, but we're ultimately, I want to work together as a team.

That's what I said about being connected earlier. Hold on, hold on. So what kind of dynamic were you afraid that you might be creating? David handles all the finances. David takes care of all of it and I just sit back and let him. And I'm not involved in any of it. I'm hands off. Right?

Yeah. I don't want to be the technician or the leader. I want to be a partner. Katie, were you concerned about the dynamic at all? Yes and no. I mean, honestly, money has always been a very, like, taboo conversation for me in general. The money conversations just make me uncomfortable in general, whether it's personal or in the,

in my profession. Having to have some sort of responsibility freaked me out a little bit. On one hand, I can see that they approached this decision different. Katie wanted David to be excited, to approve, to encourage. David wanted to know the details, affordability, timeline, outcomes, and then he could get excited. But on a deeper level, Katie is not being a partner in this massive decision. See, they're recently married, and sometimes it's hard for partners to shift from thinking as a single person to a unified joint way of thinking. But interestingly, I noticed this more in men than in women. In fact,

I experienced this myself. Before I was married, I made all my financial decisions on my own. So for me, it took a lot of recalibration to get married and to communicate and collaborate about money. It felt restrictive sometimes, especially early on. But it was also an important recalibration so that my wife and I could grow a healthy relationship with money together. I didn't hear that from Katie. She got in, she decided to go to the PhD program and she doesn't want to hear anything else. Sure, David should have replied in a different way, but being a good partner means collaborating on major financial decisions. I wanted to ask Katie about how she grew up with money now.

We didn't really talk about money. My parents made a great living. My father had a wonderful job that allowed my mom to stay home and raise three kids. And then when we grew up, she went back to work. My father was like the provider for the family. My father was very good with money. How do you know? Because he was able to provide all of the things that we needed.

I don't say we were spoiled, but we definitely went all through all. I have two siblings, so we all three went to private school, K through 12. We all went through college. Would you call yourself wealthy? Upper middle class. Wealthy. All right. But I don't really ever remember sitting down and having financial conversations with my parents.

about like my finances. What phrases did your parents say about money around the house? You do need to get an education and you do need to get a job because you need to be able to take care of yourself because, God forbid, if something were to happen to whoever you were with, you need to be able to take care of yourself. That is something I vividly remember. Hello? How did this just come out right now?

Because you just asked, I don't know. Do you think maybe that phrase has anything to do with the people? The rush. Of course it does. How does that phrase relate to the decision you made probably 20 years later? Make the connection for me. I'm going to continue my education so that I can eventually make more money because if something happens to David, I'm able to take care of myself financially. By the way, was it your mom or your dad who passed that chestnut down to you? My mom. Would you say that maybe your decision making about the PhD was related to what you heard back 20 years ago?

Oh, 100%. Yes. I don't ever want anything to happen to David. And so I still think as much as I try and push it back, I still need to be able to take care of myself financially. I can't rely on him if he's not here. Wouldn't that imply that you would become highly knowledgeable about money and build the skills to invest and all that stuff? Yes, you would think. Yeah, I avoid it. Yeah.

How do you reconcile those two? It's very opposite thinking, but it's very nice to have someone like David who does take charge and initiative doing those things, because in my head, and this is very like gender role, but like he's taking care of the family financially in that capacity, it is my responsibility as well because it's a partnership, but David can take care of it. Just like your dad took care of it. Just like my dad took care of it.

Yeah. Okay. Boy, I'm really glad I'm talking to you now and not 20 years from now. Oh, me too. David, let's talk about you growing up with money. What do you remember your parents saying or your family saying about money? A penny saved is a penny earned. My mom was not very proud of where we lived.

My dad had his own business and he did pretty well for it for the era. We were pretty middle, middle class. You know, I had like private tennis lessons, private violin lessons. Those are like, you know, not things that someone would do with the narratives I heard growing up, which I'm embarrassed that we live here or I wish we could move here. My mom was talking about that a lot. I think my dad was relatively content with where we were. Hold on.

Violin and private lessons for violin. What else did you have? That's middle, middle class. What else do you do? Well, he goes private equestrian lessons. That's middle class. What's the problem? What the hell?

Homeschooled. I was homeschooled. I was on the swim team. I did private tennis lessons and I did private violin lessons. Music was the thing that kind of stuck. I kind of deviated from sports in my early teens. I was very academically focused growing up. Education was huge and my mom was Cuban.

So education was big for both of your families and for both of you. I assumed that that came up early when you were dating. That's like a core value. I can totally understand that. It was all about like becoming the provider. having a good career to make enough money to support a family so that my wife didn't have to work and could raise that. That was the, you know, that was the household in which I grew up and that was the model. That's quite traditional. Yeah, it was, yeah, very, very conservative, you know,

like traditional roles in that sense. So you guys both grew up in traditional households. You both have naturally adopted a traditional outlook where David takes care of the money and Katie is she'll ask once in a while that's the sort of more traditional perspective. Not saying it's right or wrong. It's just more traditional. But yet you're both here. Why?

Because we want to break the cycle. I don't want that. Yeah. Why not though? Both your parents seem to have worked for them. Well. Well, in conversations when money was brought up, growing up, It was always, there was a looming sense and it caused me to feel uncomfortable.

And so as an adult, I don't want that in my marriage. I don't want that for our kids later on down the road. Traditions are one thing. And yes, I mean, growing up with that and yes, my dad took care of it. So David should take care of it. Like that's absolutely like that's cookie cutter generational. but we don't necessarily want all of it. And it's not as fun.

We don't get to dream together. We don't get to like, you know, there's also that traditional role thing that happens where, oh, you spent too much, I manage the money, you don't know. Like, you know, how can you entrust somebody with like a financial resource if they don't know what's going on? They go to the store. They don't know how much they have to spend, you know, for both parties. It's like the choices are all about being very aware and in touch and like tapped in.

Not like, how much money did you spend going out? You know, or the dynamic is, it's not a fun one to have. Well, I have to say, I really respect both of you for having this vision. Both of you. It would be really easy for you to just model what each of your parents did. They did it. The way they did it was sort of similar. traditional pattern you could replicate it i think that the path you're choosing is a little bit harder

up front and we're seeing this right with these conversations trying to break old patterns and you find yourself behaving in peculiar ways it's a little harder up front but once you get the right model once you start seeing the benefits of like oh my gosh i have transparency i have control we both have control. We're in this, not because I'm trying to tell you to spend less or control you, but because we both get to make our vision a reality. It's extremely fascinating that they both grew up in these traditional households. Both of them want to change it, but they're still finding it so difficult to make that change. That is how influential our culture is. Look, I'll show you what I mean. Let's say your middle school kid came home from school. They got an A plus on

their math test. What would you do? to celebrate. I would say 90% of Americans will probably say, I'd take her to ice cream. Now imagine a culture where you don't use food as a reward. There are lots of cultures like that, but we would struggle to even imagine that from an American perspective. So here, we see David and Katie both wanting a non-traditional relationship, but then Katie admits she avoids money and she likes that David will take care of it for her. Let's go into an example because I want to know a little bit more about how you think. So I understand that you recently took a trip to Japan,

or there was some trip planning involved? We didn't make it to Japan. We wanted to go. We did not make it to Japan. What happened? Cost. It was a half-baked idea, truthfully. It was a conversation half-baked.

I looked online, found the ticket, said this is how much they're going to be. And he was like, oh, my God, we're not doing that. I'm not spending that much money on flights. And I was like, all right, fine, we're just not going to do this anymore. Let's take a quick pause to support our sponsors. I talk a lot about the $3 versus $30,000 questions that so many of us are obsessed with. And that same principle applies to kids too.

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Now, back to the show. So we had, okay, we got married legally like in December of last year. And then we had a wedding reception party in February. there was not some clear communication about what was going to be gifted or not. So we just assumed the whole thing wasn't going to be gifted. And in the end, there were gifts. Well, is that our honeymoon money? Is that our emergency savings money?

Like, what do we do? And flights were like 80% of the budget we had to Japan. I was like, how are we going to do anything in Japan? I just don't think we can do that right now. I think we've got to save a little bit more and plan for that so that we can go. and enjoy a really nice time and do what we want, like exactly what we want. So then, yeah, so then Katie's reaction was like, okay, well, then we're not going. It's a, it's a reallocation of resources for what you can use to kind of get the thing that you want for what's available to you now.

That's kind of how I see it. I just said, all right, fine, then we won't go. And I just totally fond and backed out and was like, then we're not going to do it. Wait a minute. Hold on. You said, let's take the $8,000 and go to Japan. David's like, no way we can't. afford it and then you said fine we're not going to japan yeah i did essentially because i was like i'm not having this conversation with you because this just it's not worth the energy this isn't worth it notice the two different approaches to this money okay katy's like we have money in the bank let's go to japan even though financially speaking it makes no sense right those tickets are too expensive. You can't only go to Japan with $2,000 for 11 days on a honeymoon.

Like, none of, and you already have debt. It makes no sense. So then David like starts raising all these things like, hey, what about this? And David's approach is like talking, using words like reallocation of resources. Okay. When you're talking to someone who goes, I see money in our bank. I want to spend it. And then David goes, reallocation resource. And Katie goes, I'm taking my ball and I'm going home. Like, it's a simple. is that. You two are speaking two different languages. Look, I don't know if I'm reading too much into this or no. What I see is how even at the beginning of their marriage, Katie wanted to use their money. And David became the person who had to run the numbers, or to put it another way,

he became the dream crusher. Now, fast forward 30 years, and you have a very typical traditional relationship where the wife wants to take a trip to Disneyland and the dad is grumpy. He spends his entire time crossing his arms and saying, oh my God, she's just going to cost us. We've heard this exact scenario, specifically around Disneyland, many times on this podcast. This Japan trip also provides more context for how that PhD conversation unfolded. Katie wanted to do something, because after all, her mom told her, be sure you can provide for yourself in case something happens to your spouse, and David met her news with a bunch of dream-crushing questions. No wonder she ignored them, but also no wonder he got frustrated at

her lack of answers to his increasingly specific and increasingly frantic questions. Do you all combine your finances? We do. Yes. Yeah, that's... Wow. Yeah. I think that's part of what in the earliness of having done that resulted in that earnestness to ask those questions. Your earnestness.

Yes, yeah. Yeah, because we were Venmoing money back and forth or zealing money back and forth. I was like, this is too hard. You know, we had just gotten married. We got married in December. We combined our finances after I legally changed my name. And who took the lead on that? David.

Yeah, me after reading your book. Okay. And Katie, do you avoid money? Yes. How many chapters of my book have you read? I haven't read any of your book. You're an avoider. I'm a voyder.

Yeah. I will pay attention on our money dates for maybe about 15 minutes and then I go and grab my phone and I have just tapped out. How often do you bring up money topics with David? The only time I think I'll ever bring up money is if I want something, like for myself. And I'll say like, can I get this? Like I'll ask him permission. Why do you do that? I hate that question. And I also say that tongue in cheek too because he's like, you don't have to ask me permission.

You can just log into the budget and see if we have the money for it. I think it's a habit of asking if I can get that because I think, no, I don't think. I know, I'm sorry, mom and dad, but growing up, if I were to buy something for myself, that was not what they thought was something I should have purchased. I should have just saved that money instead of buying. it for myself. So that's why asking permission, like, I'm going to ask my husband if it's okay, you know, if I can do that because now it's our money. Does David ever say no? No. He'll just say, just make sure he's like, check the budget. Do we have the money for it?

Kind of a vaguely unsatisfying answer to you, isn't it, when he says that? Yes, because I want him to say yes. And Katie, what if occasionally he said no? probably give him a pout and be like, okay. And would that answer also be satisfying in a different way? Yeah. Yeah. Yeah. Okay.

For sure. David, what do you make of her answers? I think they're very honest. Like she said, now it's kind of turned more humorous. But initially, oh, can I do this? Can I get, it's like, I don't know, you tell me. Like, I don't want to, I don't want to hold the purse strings. I don't want to be responsible for that.

You see the dynamic that's going on here? There's multiple dynamics overlapping here. So Katie adopting the dynamic of parent-child, she's asking a parental figure. She calls you her husband, but in this case she's asking a parental figure, can I buy this? And we might as well say,

can I have this candy? Okay. And we all know as kids, you ask for a lot of stuff. Of course you want them to say yes, but also sometimes it's good to hear no once in a while, right?

But the most unsatisfying answer from a parent would be, I don't know, why don't you look at your conscious spending plan, break it down, how much you got your guilt-free spending? It's like, what? You want crystal clear answers. And primarily you want to hear yes, but even a no is satisfying.

So it doesn't mean you're bad people. This is super common. I actually love how, honest you are about it. Okay? That's refreshing. I would say it's turned more into, um, just let me know. Like, let's let each other know if we're going to spend money that we think should be noted, but like more of a like, I'm informing you or like, hey, I'm going to do this if you see this charge come up. That would work in a different relationship. But right now, I would say you two don't have the bonds yet because you know what's going to happen? David's going

to be informing Katie about all these random things. And Katie's like, I'm not reading this stupid email, I don't care, or this loom. And then Katie's not going to inform you about anything, because she's like, I'm not telling you, like, I'm doing this. It's my money. Katie, am I reading you right? Yeah. Yeah. David, am I reading you right? Yes. Yeah, I guess I'm approaching it from like, you know, how I would think of it kind of a thing. I probably would not recommend just let me know. Maybe later, when you all have a super tight connection and you can read each other's like mines, yes. But right now, I think that there's probably more active work to be done. All right, here are their numbers. Assets, 97,400. Investments 31,000. Savings 14,600. Debt, 34,000,

for a total net worth of $109,000. Katie, let's talk about your combined gross monthly income. What is this number? 9,700. Okay. So that's the two of you. And that is $116,400. Did you know that's how much you make? I focused more on the net, so I was more aware of what we made because of, hold on.

Let me ask that question again and get a yes or no answer. Did you know that's how much you made? Katie? No. David? No. Can I just say this, though? about my business. It's fluctuated in revenue over the past several years. I wanted to pick

the lowest possible number that I know that I could sustain as part of having a consistent CSP. Okay. It is confusing for me with how much I pay myself. You should have a target in your business of how much money you want to keep in a savings account. Typically, you know, three to six months, would be good. Ballpark. I'm ballpark. It depends on your business. And then anything above that, take a quarterly distribution. You know, in an S-Corp,

I had the same salary for like 10 years. Okay. Yeah, normal salary, just stable, something I could live on. It's the distributions that give you more control. Okay. So if you have extra money, don't give yourself a raise, because what if your business takes?

Right. Now you have to still pay yourself, it's a big problem. Pay yourself a reasonable salary. okay and then any extra money quarterly distribution gotcha let's take a look at your fixed costs 61% all right is that good or bad i think that's good yeah 50 to 60% is what i advise and 61% is within striking distance so pretty pretty good your insurance is 400 bucks car payment is 1500 bucks what is that? It's a Bronco Sport. Ford Broncos sport. What is that? What is that? A truck? Yes. No, it's a, it's a, no, it's not a truck. It's an SUV. It's a medium-sized SUV.

Wow. That includes gas for her car and my car and the car payment. What is the car payment? 1167. What the fuck. It's a 36-term finance with a 1.98% interest rate. Yeah, that's good, except for the part about the 1167. Yeah, I know. I know. It'll be done in a year. How come David didn't ask Katie, can I buy this Bronco? And then Katie was like, no.

And then that was the end of it. How come that conversation didn't happen? Because David bought the Bronco before we got married and we were. We had just started dating. So he could get whatever car he wanted. It wasn't my money. That's true. My money.

I own my car. So I don't. What kind of car do you have, Katie? Honda Civic. I love it. Great car. It's great car. All right.

Katie makes a pretty good point. I couldn't really counter it. He bought the car before they got married. But as I shared, the hypothetical conversation of David asking Katie, if it's okay to buy something and her gruffly saying no, we all kind of saw how absurd it was to say that out loud. Didn't we all hear that? That's how deeply money and gender and power dynamics affect us. us all. In general, I have to tell you, putting gender issues aside, I don't think people should be

asking permission from their partners for most financial decisions. But I especially don't think that relationship should be as one-sided as they so often are, often with women asking permission from men. David, what do you think about your car payment? Well, I'm proud of the interest rate, but I'm aware of the opportunity costs of the car payment. And I learned about that after reading your book. Katie and I discussed whether or not it was worth selling or, you know, kind of figuring out a different option. But, you know, she likes the car too. I like the car. Yeah, I'm like two-thirds of the way through paying it. Cars are one of those decisions. Once you make it, it's very difficult to, if you sell it,

you still have to get something else, blah, blah, blah. The point is, if I were making $122,000, I would not be buying a car. with a $1,000 plus payment. That's bonkers. Don't do that again, okay? No, I plan on keeping that car. We'll be right back after this short break. Entrepreneurs, let's talk about systems.

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Welcome back. Let's keep going. All right, let's look at the rest of this. Groceries, $700. a month, whatever. Clothes, $200 a month. Is that true? Well, our clothes really kind of goes into our guilt-free spending mostly. So you could just put all of clothes in guilt-free. That would be the easiest. I dropped $200 off of clothes from fixed cost. It dropped it to 59%. Yeah, that's about right. Fantastic. Honestly, the fact that you're at 59% with that crazy car payment is actually impressive. If you didn't have that car payment, just to show you how insane this is, let's knock this down to like 300 bucks a month for gas, okay? Just to show you what would happen.

Damn, you guys would be a 45% on $122,000 income. That is outstanding. Yeah. All right? So look, you bought the car and you're still within your parameters. I don't love it, but you're still hitting your numbers. So it's not my rich life. It's yours.

Your savings. What the hell? Oh, here's where all the money is. Your investments are at 6%, which is $582 a month. Then we discovered that it's actually, you know, a little bit more. So $7,500 a year. Great. Your savings have a lot of money.

Let's see. Vacations, $600 a month. Gifts, $50, emergency fund, $400. And just a random line item in savings, unlabeled, is $350 a month for a total savings of $1,400 a month. Just sitting there. Yeah. So that's what it is. it really is you guys are living from a fixed cost perspective you're not going crazy on food

clothes phone is at zero subscriptions are at $30 so it's leaving you a lot of extra money your investments okay we could talk about that your savings you're saving $1,400 a month which we can also discuss that but the fact is you have margin to play with I'm impressed. I'm especially impressed because look at that last line. Guilt-free spending. What's that number? David? 19%. That's good. I mean, we can knock that number down a little bit if you want to. I can show you what happens if you all keep going on this path. The question is, what kind of life do you want to lead? I can show you what the future looks like if you keep this up. Okay. Let's not even talk about the PhD or anything like that. Let's not talk about income changes. Let's just talk about where you're. You know,

you are today. And I can show you what the future looks like. Okay. So what's, how old are you both again? 33. 33. So that's how much you currently have, right? Invested. Okay. Let's say that you're currently investing $7,500 per year. And what do we say? 32 years for it to grow. And what number should we put here for the interest rate? Can we be conservative with 6%? Um, you can. Is that too low? Yeah. Okay.

Yes, it is, I think it's too low. Although you should, let's model it out with six and then I'll show you. I personally would do seven. That in and of itself is already conservative. It already accounts for inflation. But let's start at six and see. So what do you all think? I'm just going to say by the time you're 65, how much you're going to have?

Katie, what do you guess? A million dollars. Okay. David? Uh, seven. $150,000. All right. At $6%, $922,000.

What do you think about that? Katie takes the jelly beans home. And let's go to 7%. I want to show you the difference between a 6% compounded rate versus 7%. Again, I think 7% is quite realistic and conservative. Okay. $1.15 million. Yeah, I'm going to be honest.

I have no scale for it for how long I need to live beyond retirement. Yeah, I don't have a concept. Katie, do you? Truthfully, I don't think I have a concept either. I know that I will be working until I am 65, 70. In order for me in the profession I'm in to receive that number, that dollar amount. So I don't, yeah, I don't really know, honestly. Good guideline is you can take this big number, 1 million, roughly, you know, 1.1 million,

multiply it by 4%. And that will tell you how much you can take out every year. So in your case, it's like about $40,000 a year or roughly $3,500 a month. That would be your income in retirement. How would you feel if you both made combined $3,500 a month right now? No, I mean, that's a third of our life. We wouldn't be able to do it.

Lifestyle. That would suck. Yeah. Okay, especially because you don't own a house. You may. It's possible we could talk. about that if that's one of your goals. But that's, you know, if you owned a house outright and you had like no car expenses, et cetera, plus if you want to factor in Social Security, it starts to be okay.

But it's not great. It's not the kind of retirement you have in mind. No. Would you like me to show you some different options? Yes. All right. Yeah. Let's let's take the, I would personally like to invest more because you're young. Okay. And at this stage, making a few changes, literally a few changes in this spreadsheet can yield you hundreds of thousands of dollars. Let me show you. I don't know who you're giving these gifts to, but sorry, uncle and auntie can't give any more gifts. Fifty bucks goes into your retirement. We're putting that into investments. Okay. That's per month, by the way. Long-term emergency fund, let me see. Your savings are at 14-6. That's about two,

three months. Yeah, fine. All right, leave it there. But soon you're not going to need to put more in your emergency fund, right? Because you're going to have like four months of emergency fund. So I'm just going to fast forward like a month or two or a little bit. I'm going to take that 400 and I'm going to invest it. You're currently, at least this is what you have in your guilt-free spending, $1,738.

Is this true? Yeah. Yeah, we're pretty conscious about that part. Let's take 400 bucks off. I'm just going to show you what happened. You don't have to do it. I'm just showing you. So this is going to become 850 in your investments. So I basically added another $10,200 per year that you are investing. Yeah. Just a few minor changes.

Yeah. All right. Now, now, all right, 10,200. That sounds like a lot. Again, a lot of people go, there's no way I can invest more, Rameith. You're so out of touch. All right. $10,200 I found under your couch cushions. So I'm going to drop that in here. Instead of you investing $7,500 per year, which gets you to about $1.1 million by the time you retire, I'm going to have you invest $17,700.

From $7,700 to $17.7. Katie, what's that look on your face? What did you just say? I just said, wow. Because I'm so green with this. And it's, I envisioned this being so hard. And it's really not as hard as. as I envisioned it or thought it was.

I love that. Yeah. Oh, I'm so happy. That's a huge compliment. My whole goal is to show you this is not some mystical thing. It's literally as simple as like Tetris. Like I can do this. This is this I can do.

Katie, you can definitely do this. I can do this. We're going, hey, what's, why is this over here? Let's actually moved over here. Let's see. Let's simulate what that would look like. And then we'll decide. All right.

So here we go. current 31,000, currently invested, annual addition, 17,700, 32 years to grow at 7%. Boom. $2.35 million. That is powerful. Now, I'm not even accounting for any quarterly distributions, which David could make. And if those turned out to be, let's be conservative, $4,000 a year. which seems like there's it's way more than that 10,000 extra per year that's super conservative

I mean that's yeah that's super conservative you want to make it 20 sure make it 20 all right 20 again consider because some years you're going to take none and then some years is going to be big averaging it out right so instead of 17,700 we're going to make it 37,700 per year uh guys this is starting to become pretty interesting Boom, 4.7 million. Right. Whoa. And that does not factor in any additional raises.

Uh-huh. Because if Katie were to go and get that job in college and she were to increase her salary to 140K, which she kind of, Katie, remember you just kind of flippantly responded to that email in red? Remember that? Yeah. But this is where it matters. Watch this. So if you were to take that job. and go from Loughfree $60K to some number.

I'm going to increase this by just to be conservative, $10,000 per year. That's like super conservative. So now we're at $47,000 per year. Okay? We're now at $5.8 million. It's like simple math almost. Like it's not, we're not making like these grandiose, like lifestyle changes. We just move some money here and there.

and it just makes a huge difference, obviously, down the road. And for, you know, our family and our kids, hopefully that we'll set them up for success, financially with help. Do you know why it's so easy to do this right now? Like it almost seems effortless, right? I'm just moving from here. Why does it seem so easy right now? Do you know?

Because we're starting it together. I mean, I don't really know why. This is so easy because you are young and you have over 30 years for your investments to compound. That's why. Okay. It's not because of a particularly high salary. Okay. I'm not even factoring in major salary increases here.

You have 32 years to compound and your expenses are relatively low. This conversation would be completely. different if your housing costs were at 38% locked in, you couldn't really sell. They would be completely different if you had hundreds of thousands of dollars of debt. They would also be completely different if you were both 48 years old. You're two young professionals, no children, you're just married, and you have this opportunity to set yourself up to be multi-millionaires. Now you might decide, hey, we don't need $6 million by the time we're 65.

What the fuck we're going to do with $6 million then, which will then keep compounding? Instead of investing $47,000 per year, let's invest $40 and take the seven and have a great time. Perfectly respectable. You could choose to do that. Maybe you go, I'd rather end up with 5.3 instead of 5.8. Fine. It makes no difference at that time. But that money might be much more valuable for you now,

but you can make these decisions because you're young and you have low expenses. The best part is that you can do it together. That's what makes me really excited for your future. If both of you are rowing in the same direction, it's actually incredibly easy for you to be set for life. Now, I'll tell you what will happen three or four years from me. now. Okay? You're going to have a rich life review. You're going to look back at your year.

You're going to start by saying like, what do we do? That was amazing. You're going to pull out amazing photos. This is going to happen over a period of several days. And you're going to relive the moments and just like, it'll be awesome. What did we do that was so awesome that we want to do more of it. You're also going to say like, what do we want to do less of? What do we want to change? Travel. Well, we said we want to spend more money traveling. Okay, let's allocate an extra $3,000 to traveling. Cool. So now all that infrastructure work is done. Katie will never bring up something like, hey, let's just take a bunch of money sitting in a checking account and go spend it. Because Katie was a partner in this Rich Life Review, as was David. You both were. And you both

created a vision. And I don't blame you for that conversation you had about Japan. It was like a first crack. It was like, we just got married. We have some money left over. Like, let's do something cool, that's what people do. I get it. Fast forward a few years. You have to build some infrastructure, meaning the Rich Life Review, the CSP, both of you need to be active in your regular money meetings.

But it just becomes a lot smoother and a lot more fun because you can really get into the nuances. Sounds lovely. Yeah. Yeah, like I want to get good at it. And it's going to take practice. And you said the word skill, which innately means trial and error.

practice, you know, doing better. Yeah. Yeah. What surprised you so far about seeing these numbers? Katie? That when you reallocated some of the money, it really didn't, it really didn't make a difference or like a huge dent in like our current lifestyle. In my head, I've always envisioned like, okay, well, if we're going to save more, then our lifestyle will have to change, but in reality, it really didn't, like at all. Like, this is enough for where we're at and we can grow just like we've talked about skill and getting better. Yes.

This is someplace we can do that. It, you know, just being together in it is what's most important to me. Exactly. That's it. Right. I really had no idea, like, if we were doing it right. And with moving some stuff around, I, guess I just feel a level of confidence.

I really enjoyed speaking to David and Katie. Let's listen to their follow-ups. First off, Katie. One of the things that I learned is that talking about money and working on the budget is not as scary as I thought it was going to be or has been in the past. The simpler it is, I guess the easier it is for me to understand. And it's not as hard as I thought. But what surprised me was with the small changes that we made with reallocating money and putting it into our investment, how drastically the number changed. And that made we feel really good that our future is said and could be said, especially for our future kids.

And some changes that we are going to make is just separating the logistics from. the celebrations. One change I'm going to make is not be so avoidant when it comes to finances or money talk, but really put forth the effort to be more open and forthcoming and, you know, maybe even lead one of our money dates instead of David. Katie shared what so many of us believe that we think money is supposed to be hard, that it's supposed to make us feel bad, restricted. but I don't think that at all. If you're willing to make changes, most people can easily find thousands of dollars per year to invest.

If you set that money up to be automatically invested, you can predictably turn that money into hundreds of thousands of dollars over time. This isn't magic, it's not mystical, and I wish more people would shift their perspective, from, I feel overwhelmed, or how can I get ahead ever, to asking a radically different question. What would money look like

if this were easy. That's one of the reasons I started this podcast. It's one of the reasons I'm writing my new book, Money for Couples. Now, let's check out David's follow-up video. Hey, Rameet, thanks so much for having us on the podcast. There were many things that I learned, but one of the most important to me is that in my dynamic with Katie, it's pretty important to keep conversations about celebration and logistics completely separate from each other. Also, while she might not necessarily share the same technical interests in personal finance, it surprised me to see her still light up when she did understand the power of investing and playing with those numbers and what that meant for the impact of our future, of our family.

That's something we can now connect over. Ways that we're going to specifically make changes, for now, we're going to shave $200 off of our current savings rate, $200 from our fixed costs. and invest that into Katie's IRA. Whatever my business, whatever distributions I'm able to take on top of that, depending on the amount, might go more into her IRA or a solo 401K. Thank you so much for helping us understand these concepts, for chatting with us. Really appreciate your time.

Peace. Thanks for listening to I Will Teach You to Be Rich. I'm Rameet Satie. 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 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.