Money For Couples with Ramit Sethi - 24. “I’ve saved $0 for my upcoming unpaid maternity leave”

Episode Date: January 4, 2022

On paper, saving for maternity leave shouldn’t be an issue for Hannia and Alex. She earns $100,000 a year, but she likes to spend her money as soon as payday arrives. She plays many subconscious tricks (I call it the “Innocent Doe” technique) to justify a $300 drop at Target and her Old Navy credit card debt.  Let’s disregard the distractions. What’s the real reason why Hannia cannot save money? And how is her humble childhood in Costa Rica playing out in her everyday money decisions? Sometimes, advanced financial concepts have to take a backseat to get honest with the numbers—and ourselves. It’s time to get real.  Connect with Ramit Website Instagram Twitter Facebook YouTube Linkedin 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 a lot. amazing vacations. That was one of my favorites where I shared how I 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. I buy what I want and I never look at the prices. That's really. really making my hands clammy at the thought of being at the store and, like, adding the numbers. If it was in my wallet, it needed to be a spend because I wasn't used to having it. I'm Rabeet Seity, and this is the I Will Teach You to Be Rich podcast. Today I'll be talking to Anya and Alex. Combined, they make $125,000, but they can't seem to save any money. How do you handle your money if one partner overspends? Well, when I ask why, Ania says she has no idea.

She tells me that whenever she has money, she feels like she has to spend it. Now, in reality, she's using something I call the innocent dough technique, which I'll explain in the episode. Since Anya says she's not good with money, Alex is the one who handles their finances. The reason they came to me is that Anya has maternity leave coming up, and she needs to start saving money now so they can cover their costs when the time comes. In the episode, heads up that I'm going to go deep with Anya to understand her relationship with money. So you're not going to hear as much from Alex. And what I discover about Anya makes a lot more sense once you hear it. My maternity leaves that is coming up in six months.

I own my business and if I'm not working, I'm not getting pay. So we are fine financially. Alex started his own business about a year and a half ago, and his income goes up and down. And he's, like I said, he's always been, he keeps our finances good. And he's like a rock financially. He saves and I spend. So now the roles have switched and I need to save for us, especially for the maternity leave. That's like my biggest thing right now. I would love to not work for four months.

We have employees. We have a nanny. And Alex has an assistant. And for me not working for months, there's a lot of money not coming in. And so I don't have that money saved up. I'm trying to come up with the money. I'm trying to learn. I think the biggest thing is I make enough money that I should be able to save it.

So why am I not saving it? Where am I going wrong with this? Alex has always saved. And there were times where he makes less than I did or less than I do. And he still puts money outside. What am I missing? Is somebody stealing money from me? If you had to answer your own question, what do you think the answer is?

I honestly, I don't know. I'm not going to let you off with that. That's too easy of an answer. Try it again. Okay. If you had to answer your own question, what do you think the answer would be? I'm spending too much? on what?

Food? I don't know. I really don't know. Anya's using a technique, I call the innocent dough technique. That's D-O-E, innocent dough. This is an unconscious script that many people automatically use to try to get out of answering uncomfortable questions. The people who use this technique don't even consciously realize what they're doing.

but they've found that over time, it works to stop these awkward, uncomfortable questions. And almost always, the people who use this technique have others surrounding them that have allowed them to get away with it. Let me show you how it works. People who use this technique effectively say, me, little old me, why can't I stop spending money? I just don't know. I do everything right. I just don't know. Do you know? Because I don't know. It's the innocent dough routine with innocent eyes. That's historically worked for this person in the past. They look at their partner or their parents or the people around them

and they slowly enmesh them in their problems. So suddenly the other person becomes the helper. They start offering solutions like this. Well, have you tried this? Well, that didn't work. How about that? And this and that? And suddenly the topic has shifted away from the innocent dough.

those problems to something totally separate. Fortunately, I have a heart of coal and zero interest in being wooed by the innocent dough routine. This is about as intoxicating as eating mild salsa for me. So I decided to end this old routine here and now. I just balanced my books. I have my money on... Hold on, hold on. I can already tell you're going into your pre-rehearsed answer.

Stick with it. Okay. What have you spent money on in the last... two weeks for food? I bought groceries and I really don't know. This is why. Well, that's why I'm here. I'm helping you figure it out. Okay, stick with me. Stick with me. All right. Trust me. The answer is here. It's not a mystery. We're going to find it out. Do you order takeout or delivery? In the last two weeks, no. In the past, yes. And when you order, takeout, or delivery, how much is the average bill?

Maybe $45. Okay, including everything, delivery fee, all that stuff? Yeah. Okay, great. And groceries, how much are we talking about? Maybe $200 a week. Great. Okay, fine. Anything else on food? Do you ever go out to restaurants? No, we don't eat that. We don't eat out, but I eat my lunch. I buy my lunch every day. And it goes between $9 and $15 every day. Okay, great.

And what else besides food? Toys for my baby boy. How much? Ballpark. 100 bucks, maybe 150 a month. Okay. What else? I pay credit card bills.

I had a lot of department store cards, but I'm getting rid of those. Let me guess. What were the stores that you had for these department stores? Old Navy, old time. I knew you were going to say Old Navy first. Why did you? Oh my God. I could already see what happened here.

Here you are. You have 150 bucks. You have a big purchase at Old Navy. And you hear the person in front of you going, man, would you like to open up an account? You get 10% off your first purchase. You go, ooh, that sounds like a good deal. I think I'm going to do that.

And you open it up. And fast forward a few years and suddenly you have $9,000 of credit card debt. Does any of that sound accurate? No, luckily, no. I'd never go, I've never gone over maybe two, three hundred dollars with old Navy. How much do you have in credit card debt? I think it's about $13,000, including. So the only part of that story that was wrong was the amount of old Navy goods that you bought at once. Yes, yes. Okay, thanks for correcting me. Thank you.

Yes. All right. I have one main credit card that I use a lot. $13,000 of credit card debt. What did you spend on those credit cards? What do I have on that credit card? Random stuff, like, except from Amazon, I have, you know, groceries. I have maybe gas. Oh, there are so many subtle things going on in that last 20 seconds of audio. Anya likes to be in control. That's why she tried to correct me on the old Navy.

That's why she continues to play the innocent dough routine with this whole I don't know what I'm spending money on routine. Rewind. Notice her tone of voice when she said random stuff. That's just about 20 seconds ago. Listen to what she said and you'll hear it. Deep down, she's unconsciously trying to evade the real answers here, even though she's the one who called me.

This sounds illogical, but it's very common. Most of us have something in our lives that we claim we want to change, but deep down, we don't really want to. The most common categories are our food, our money, and our relationships with our spouse and children. That's why I'm becoming a little bit more aggressive with my questions now. I don't want to let her off the hook because it would be a disservice to her. Notice that I talked over her a few seconds ago.

That was intentional. And now you're going to hear me ask her even more pointed questions. I'm going to discard her digressions and keep her focused on the real issues. How did it get to $13,000? Portugal. When we went on our vacation, I put a lot of stuff in there, and I just haven't paid off.

How much did you put on there? $7,000. Why are we going through the amount of bananas you bought? This is irrelevant. But this doesn't happen all the time. This is like once a year that we go in here. And the truth is I could pay it off immediately, but I like having a little cush on my checking account. So I don't want to pay it off.

Actually, that's a lie. I could not pay it off right now because I don't have $13,000 in my account. But I have $7,000 in my checking. So I could make a big payment. But I don't want to put it all there and then not have a mess. No, you're not a mess. but you don't take this seriously. And you let yourself get away with a lot.

Okay. Did you notice what just happened in that entire conversation we just had? No. My question to you was, where do you spend money? And what was your first answer to me? Food. Yeah, that's not how you ring up $13,000 of credit card debt. It was only after unpealing and unpealing that you finally said,

oh yeah, by the way, I put $7,000 for Portugal. But Portugal doesn't happen all the time. And Portugal was awful. And we spent a lot of money at a pharmacy and a bunch of things. And that's not the usual spending. This is another deflection technique. The trip to Portugal was a one-off expenditure. So Anya has mentally separated it from her other spending.

but in her words, they go on a vacation like this maybe once a year. So she's just using a mental trick to maintain the status quo. People in financial trouble do this a lot. They see each expenditure as some special situation, some one-off exception. But when I see their spending, zoomed out at the 50,000 foot level, I can usually see that it's not an exception at all. Remember what I say about a rich life. part of a rich life is being honest, honest with yourself and honest with the people around you.

If something keeps happening consistently, it's probably not an exception. There's a pretty cool TikTok trend going around right now that I really love. It's called admin nights. Basically, you get your friends together, you get some snacks, maybe some drinks, and you do all the infrastructure stuff in life that most of us skip over. If you're going to set up an admin night, here's my suggestion for you. Use Zoc Doc to book your health appointments and you will be done fast. ZocDoc is a free app and website that helps you find and book high quality in network doctors

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instantly book a doctor you love today. That's Z-O-C-D-C-com slash Rameh. Zock-D-com slash Rameh. And I want to thank Zok-D-D-O-C-R-M-Eth. for sponsoring this message. 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 Zoc Doc. 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 Zocdoc appointments happen fast, usually within 24 to 72 hours. You can look through your office. You can look through your options, book an appointment, and you are done. If I needed to find a new doctor today, Zoc-D-D-O-C-T-K is what I would use. Stop putting off those doctors' appointments and go to Zoc-D-C-com slash Rameet to find and instantly book a doctor you love today. That's Z-O-C-D-C-com slash Rameh. Zok-D-C-R-Met. And I want to thank Zok-D-D-K-T for sponsoring this message. Like before Portugal, and since I go back, obviously, I've put some, some, some, money on my credit card. But before that, my credit card was maybe three, four thousand.

So where did the rest of your spending before Portugal occur? Little things. And that I do know. Like that's, that's my biggest thing. I know that. It's the little things. I don't have anything big. I'm not buying myself big bags or, you know, expensive shoes. I don't shop like that. But I do buy like, oh, it's only $80. Or maybe I go to Target. And I spend $200, $300 at Target. Another example right there.

First, Anya said Portugal was a one-off, so that doesn't count. Her new story is, oh, it's a lot of small things. It's easy to tell ourselves that we don't overspend on something if we do it in small increments. Oh, I'd never buy a $500 handbag. That's outrageous. I'll just buy $10.50 handbags. They're all cheap. It doesn't matter. Again, this is just another mental trick we can use to justify our behavior. And personally, I hate this. I don't like lying to myself. I would rather you simply said, hey, I love handbags. I'm going to set up a

conscious spending plan using Chapter 4 of I Will Teach You to be rich, and then I'm going to buy a new handbag every Christmas. Just do it. But be honest with yourself. honest with the numbers. Speaking of the numbers, to know what we're really dealing with here, we need to get into Anya's income. So let's break that down. I know your household income is 125, but how much do you make? Between 90 and 100.

All right. And when that money comes in, how is it distributed? Is it put in a joint account? How does it work? No, it goes straight into my checking account. Okay. And from there, is any money sent to savings or investment accounts? No.

Okay. No. Okay. You had mentioned earlier that you have $15,000 in your joint savings. How did you come to that amount? Alex, out of Alex's income, we have those savings put aside because I buy everything for the house and for us as a family. So when his money comes in, he pays the rent and one utility and then everything else pretty much goes to savings. And I buy everything.

I buy whatever we need. How does that work? Because he is making about $20,000 a year, $25,000 a year right now. You're making about $100. So how does that work? His income only switched this year. Before, our income was way higher. Alex was making $70,000 a year.

So since he started his own business, we've taken a pay cut. His business is growing. What do you think about the state of your finances today? I don't think it's bad. I mean, if the worst dead we have is my credit car, it's not bad at all. I think we're doing really good. And I do have to say we're doing good because of my husband. He's done great.

We're good. I mean, we just took a great vacation to Portugal. Yeah. Do you think a good vacation means you're doing well with your finances? Maybe. Yeah, for me. Talk about that. If I didn't have money, I wouldn't go on vacation.

For me. How would you know if you didn't have money? If there's no money in my account, I don't have money. Which account? In my checking. Yeah. Yeah, that's what I thought. You just heard two huge clues.

Did you catch him? First, she said, we're doing well because if we weren't, we wouldn't have gone on vacation. That's an interesting tautology. Second, when I asked how she'd know if they were low on money, she said there wouldn't be any money in our checking account. that tells you a ton. If I stop this episode right now and said to you, what do you think is going on with Anya? Do you know what the answer is?

And as you think about your answer, make sure you're incorporating these two clues into your answer. Let me dig and show you exactly what I'm talking about. I'd like to know how you grew up with money. You mentioned that you were poor. Yes, we didn't have any money. There was just never enough money. Where were you growing up?

Costa Rica. Yeah, I mean, I had a great, great childhood. But I grew up seeing my mom and my sisters worked really hard. And then when they got paid, literally that same day, everything was paid and the money was gone. What did that teach you? It's funny because it taught me that you can go and make more, of course. but there was a time in my life where if it was in my wallet, it needed to be a spend because I wasn't used to having it. So when we first moved to this country, I personally went through this where, you know, I started making money.

And if I had $500, I mean, I used to go to Walmart and spend every cent I had because I could, you know. What did you get at Walmart? Oh, snake boots for five days. Oh, I get it. What else? What else? Tell me, I love hearing this. Everything. I mean, I got their clothes. I got makeup, you know, huts and belts and like things that I could never even dream of buying in Costa Rica. So walking out of Walmart there with these bags, what did that feel like to you? Amazing. Oh, my God. I was like, I made it. I mean, I have a right, you know.

I hear that money is exciting to you. It makes you feel good. I love that. Very positive. I'd like to flip it for just a second. So you mentioned those positive messages that you received growing up. Now, if you had to take a little critical analysis, what might be some of the messages you learned growing up that are not serving you anymore? But I didn't learn to save. Because why? I mean, because there was no money to save. But we were never prepared for the future. I mean, our electricity got shut down all the time.

When people got paid. The money was gone immediately. Yeah. And do you think that that's a message that serves you anymore? No. You mentioned to me just a few minutes ago that the way that you would know you're out of money is if you didn't have money. Yeah. I guess.

Oh, yeah. Do you know who thinks like that? For people. Yes. That's right. People who never had any money. Yeah. And so what they see in front of them is what they have.

Now, I want to point something out to you. I'm not stigmatizing. I'm not insulting anybody. I mean, that's the belief that served you at the time. Yeah. The fact of the matter is you make over $100,000. And when Alex was working his full, time job. He was making over $100,000. The two of you have $350,000 in investments. Now, of course, yes,

you have some debt, maybe not as much savings as you should have. We can talk about that. But people who are earning the kind of money you do do not think that way. How do you think they think instead? I don't know. This is why I'm here. Okay, let's do an experiment. Let's do an experiment. Pretend it's me. How would I know if there was no money? Maybe if your savings were under a certain number, under a certain number? Yeah. Pick a number. What would the number be? Is it 200 bucks? What's the number? I mean, if it was you, probably 100,000? Okay, fine. Fine. So it's a fairly large amount. Yeah.

If my savings dipped below a certain number, or you might even say for a more sophisticated person, if I didn't invest as much as I normally invest every month. Yes, which is funny to you say that because that had never been part of my thought process investing. I mean, who invests? Only very wealthy people could invest, you know? Guess what? You are wealthy.

I know. It's crazy. I know I am. I know we are. And yet, finish the sentence for me. You are wealthy. And yet...

I'm having trouble with money. I don't know. And yet I don't save enough. That is true. And yet you are still behaving like you don't have any. Yeah. Spending arbitrarily on little things you can't even remember. They provide no memories.

They're just knickknacks, random things. You can't even remember when I ask you. I know. Spending as quickly as you can make it. Because deep down, what do you believe about the money? That I can just go and make more? Yeah. That you can go and make more.

and also maybe a little bit of it's not going to be here tomorrow. So I better just go spend it and have some fun today. Yes, like when I really want something that I think is going to bring me happiness, it's easy for me to justify it. Exactly. Let me ask you a question. When was the last time you saved for something big for over 12 months? Never. Never, exactly.

Turning the page from how you grew up with money, it takes a lot of changes. But it's going to require changing not only your psychology, but also what you do with your money. Okay. Okay. Are you open to that? Yes, 100%. Yes.

So, Anya, you know, you have this other deep invisible script, this belief that you can always earn more if you need to. Now, I think that's a double-edged sword. I love that belief because it's very abundant. Oh, if we want a better life or a richer life or we want to live in this type of place, yeah, let's just work hard and we can earn more. I love that energy. On the other hand, if you have four months of maternity leave, that's a perfect example where sometimes you just can't work harder. I know. It could be medical.

It could be disability. It could just be recession or bad luck. So do you see how that belief can be both positive and negative? Yeah. I mean, of course, I see it and I know and I want to do better. That's why we're here. That's why we did our budget. That's why I'm looking for ways to change and learn better habits about this.

Because I know I have the potential, like financial potential, I mean. What do you think the answer is for how you can change? I need to stop spending. Okay, how? I thought you were going to tell me how. Oh, I'm going to reach into my bag of tricks and give you the answer. Yeah, yeah, yeah. There's only two people that have the answer here.

And it's not me. It's me and myself. It's you and Alex. Yeah. I mean, I'm just cutting back. maybe following the budget, better respecting the budget. As you said that, did you believe? Yes, I have been.

I have been. In the last September, I've been very aware of my spending. Awesome. But I just want to point out, as you said, respect the budget. Yeah, I know. I know. It doesn't come from the heart. No.

No. Why are we bullshitting ourselves on this call? And you know, no. And you know why? it's because I still have that part of me that it's like, damn it, don't pride yourself if you want something. You know, if you want the burger, go get the burger. Because you don't know if you're going to be able to get it tomorrow. So I think I'm trying to work my way to those things through it's okay. Money's going to be there. It's not going anywhere. You need to save it. And at the same time,

not pride myself of the things that I really want. Can I reframe the way you think about money for you? Yes, please. You make $100 or $125,000. Do you want to shop at Old Navy for the rest of your life? No. No. Okay, well, the way you're going right now, you will. If you could shop anywhere, where would it be? Nostroms all the time. Why Nordstrom? I like their stuff. It's a little bit nicer. Yeah. And when you're in there, the service is a little bit better. Yeah, the quality is a little bit better. It's just a better feeling to know that you can go to whatever store you want and not have to worry or put it on a credit card.

And now that, see, the thing is that that's not the life I have. I can go whatever I want and buy whatever I want. The problem is I don't have savings because I'm spending it as it's coming in. So I go to Nostrom and buy, you know, the dress, whatever I want. I'm home and it's fine, but I know that I'm not, that I shouldn't be doing it because I don't have savings. But, Anya, how can it be fine? You have $13,000 in credit card debt.

Yeah, right now it's not fine. And right now I'm not doing it. I didn't have credit cards or any debt for a long time because I didn't grow up with credit. So I never had credit. So I've always been just what's in the checking. That's it. So credit cards are a new thing in my life, but usually it's just what's in my checking. That's it.

If I have it there, I can spend it. If it's not there, I don't spend it. I think you have a couple of options here. Right now, you have a very simple view of money. And I understand why. The way you were raised, a lot of these things that we take for granted here were not a part of your reality. credit, credit cards, retirement accounts, different sub-savings accounts. It's all like, it makes no sense from the worldview of how you grew up. So your view is, if it's in my checking,

I have money, and if it's not, then I don't. Black and white. Okay. If you want to keep living that, you can. Okay. We can talk about strategies. where that will work for you. And it will be very simple, very straightforward, but it will cost you. It will cost you because you're probably not going to be using credit. You certainly wouldn't have gone to Portugal. Your retirement account is going to be probably with Alex managing it.

Yeah. And I don't love that. I'll tell you that. I'll tell you that option. I don't love it. Because one day, Alex, Alex might get hit by a bus. Okay?

And this isn't morbid. This is just real talk. One day, Alex will die. And I hope it's a long time from now, but he's older than you. Okay? And one day he might not be here. And I really hate the idea of you being defenseless in the world and having this simple, simplistic view of money.

Okay. The other option is that you start to change the way you look at money, the way way you think about money and the way you spend money. But it requires you really going deep. The thing you just mentioned, well, I do go to Nordstrom, you know, because I can. Actually, you can't. Right now you can't. You have $13,000 in debt. You don't have enough for your maternity leave. You have effectively very little savings. So actually, you can't. But would you be willing to say that. I can't shop at Nordstrom right now. Oh yeah, I can shop on Nostrom right now. Okay. That's great. I'm surprised. I'm pleasantly surprised. So which of those two options is more

appealing to you? What's the area of life that you want to spend more on this year? A lot of people will say health or relationships. Some people will say travel. Let's talk about food and health for just a second. For example, in my life, my wife and I both decided we're going to spend more on health. And that means having a personal trainer. It means having someone make meals tailored to our macros so that we don't have to think about it. But you don't have to pay for a private chef to do that. One great option is to make healthy eating convenient by getting meals from Factor. They take the work out of healthy, macro-dense meals so you can start eating better now. Factor is a chef-crafted, dietitian-approved meal delivery service that fits into your goals and schedule.

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Offers only valid for new factor customers with code and qualifying auto renewal subscription purchase. Make healthier eating easy with Factor. This episode of Money for Couples is brought to you by Wild Graeme. 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.

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plus free croissants in every box when you go to wildgrain.com slash remit to start your subscription. That's right, free croissants in every box and $30 off your first box when you go to wildgrain.com slash remit. That's wildgrained.com slash remit, or you can use promo code remit at checkout. You'll notice that I gave Anya two options. These are pretty unusual for me, but in Anya's case, she grew up in such a radically different environment than you and I did. I need to meet her where she is.

It's not fair to expect her to have the same financial worldview as someone who was raised in, say, Chicago. The first option I gave her was to have Alex manage the money. I don't really like this option, but it is an option for her to just take a backseat and let Alex manage everything. The second option was for her to change her money psychology and money behavior. Now, if she chooses this option, it's going to be extremely difficult. It's really hard. She's basically changing everything from the inside out.

But if she succeeds, it's going to be longer lasting and life changing. please notice that I'm not trying to push Anya into either of these choices. That decision has to be hers, not mine, because she's going to be the one who has to do the work. Which of those two options is more appealing to you? The second one, 100%. I want to learn how to do this better. It's harder, though. I can do it.

Okay. I believe you. Yeah. I love hearing that. I'm glad you said that. Okay. How much do you need for your maternity leave? And how much do you have?

250. Let's just say zero. Let's just say zero. That's good. That's a nice little bonus, but let's just make the math easy, okay? So you have zero. You need, how much again? 12,000.

You have your work cut out for you. Yeah. How much do you need to put aside every month? Two grand, $2,500. $2,500. Yeah. Let's do that. Another key principle of people who make the kind of money you do,

leave yourself a buffer. Okay. So right now, if we just calculate it out, you actually need $2,400. Okay. Okay. If it were me, I would leave myself a buffer and say, you know what, I'm going to put $3,000 a month aside. Why? Because I may not be able to work the full amount up until I have the baby. An unexpected expense might come up and our car breaks down. Who knows? Okay. Okay. How much do you pay towards your credit card debt. Around 700 a month. Is that the minimum? No. I use my credit card for everything because I was obsessed with getting points and blah, blah, blah. So that's like the minimum I will pay on a credit car a month. But sometimes I just do like two or $3,000 payments. So how long until you pay your credit card off? I don't know. I don't know because I pay it and I use it and I pay it and I use it.

Have you thought about not putting money on your credit card anymore? No. I'm being completely honest with you, but I will think about it. I can make the change if that will help me. Let's think about it right now. What if you stopped spending on your credit card? What would happen? Nothing, because you have to remember the stupid credit card is what got me all in this position

before I didn't use a credit card. So I just spent what I had in the bank. So if I stop using it, nothing is going to change. For me, I just don't get points. But you're not in the position to worry about points right now. Exactly. I have to stop right here for just a second. First of all, is anyone else reminded of that line from Indiana Jones in the Temple of Doom

where that guy says, you are not in a position to make demands. God, I love Indiana Jones. I'm pausing here because a lot of you try to be 40 before. you're 40. That means you try optimizing for stuff you have no business worrying about. Anya wants credit card points when she's $13,000 in debt. Forget about points. Pay off the debt. There's only one worse example I've heard in my entire life. And that was a guy on my email newsletter. He read something I wrote about politics and proceeded to reply with this very long, rambling email response about how raising taxes on the ridge is terrible and horrible and it's going to cause

the destruction of this entire country and nobody should have to pay more, blah, blah, blah. I just wrote back one line. I said, how much money do you make? He goes, $14 an hour. This guy living in Texas making $14 an hour is lecturing me about taxes being raised on the rich. I said, buddy, they're trying to raise my taxes, not yours. And by the way, they should raise my taxes and all the taxes for other rich people. If you remember nothing else from anything I've ever written, please stop trying to be 40 before you're 40. Please stop trying to worry about raising taxes on the ultra wealthy

when you make $14 an hour and getting credit card points when you have $13,000 of debt. Okay, I got to stop because I'm about to lose it. Let's just get back to this episode. Yeah. The more you spend on this credit card, the longer it's going to go on. The debt will grow faster than you can pay it off,

at least in the short term. Okay. So if I were you, I would create a plan, which we're going to talk about, and I would stop spending on this credit card. And I would pay it off, almost like you're trying to remove the oxygen. You have your hands around the throat of this credit card

and you're going to hold that neck until it stops breathing. I know this is a very vivid example, but I want you to think about it. Okay. I'm going to make this credit card stop breathing by paying off every last bit of it and depriving it of any oxygen. Okay. And every time you spend on it, you're giving it oxygen to breathe and live longer in your life.

I don't want that. I'm going to propose that for the things like Amazon, put those on your debit card. This is very unusual. I hardly ever recommend anyone use their debit card. I don't like debit cards in general, but you have a credit card debt problem. And I want you to get that paid off. Okay. So I'm going to suggest for things like Amazon, you use your debit card, which is going to come straight out of your checking. Okay. And you're going to know exactly how much is left. There's going to be no doubt about it. In fact, which day of the week are you going to log into your checking account and look at it?

I check my bank account every day. Okay, great. Great. Fine. So every day you're monitoring what's going on. Now, let's talk about the other stuff, the lunches, the takeout, the kind of stuff that I suspect you're actually spending more on than you realize. For that, I want you to come up with a cash number that you are willing to spend every month.

And this includes everything that's. It's not Amazon diapers related. It's takeout. It's food at work, lunch. What else? Groceries. Okay. What else?

Clothes. It's all of that. How much do you want to put aside each month for that? Again, ballpark it for me. You can find the exact number later. $1,000. 2000. That's a lot.

Well, you said food, too. Like groceries. So, okay. How much is food every week? It's like 150 to 200 a week. Okay, if you think that's a lot, then what do you think is maybe 1,500? If food is 800 a month? It's up to you.

Not me. You know your numbers. With everything in the house, I think 1,500. Fine. Great. That's a good place. Just, you know, benchmark. market there. Of course, afterwards, you can go and look at how much you've spent.

Yeah. The point of this, what's the point of putting $1,500 in cash in a little drawer somewhere, and every month, that's all you have? What is the point of doing this? To teach me how to stay with it? I mean, actually, you just said that, and I think that would really help me. I think I'm just the kind of person that if I was to just take at the first of the month, the $1,500, and put an envelope, you know, that that. that's all I have, then that's all I have. That's right. Yeah, exactly.

You know, I'm not really comfortable giving Anya this long list of tactics. That almost never works. Most of the time on this podcast, I help people uncover their own solutions. But in this case, Anya needs more help. I want you to notice that as we're going through these tactics, she's starting to try them on, almost like you try on a jacket, see if it fits. That shows me that she's really taking this seriously. In fact, listen to this.

You know, that's so funny because that's triggering my childhood. And that's why maybe I am where I am right now, because that's how I grew up. And it gives me the hebi-jeevies to have, I love going to the store and not having, I buy what I want. And I never look at the prices. I come from a childhood when you put things back. Oh, my God.

You know, you're looking at the number. is 98, 105, and you're like, oh, my God, I only have 110. I can't, you know, what are you going to put back? So that's, that's, I could do it. Of course, I could do it because we have, we have something that we're saving for. But that's really making my hands clammy at the thought of being at the store and, like, adding the numbers. Alex is going to have to go grocery shopping by himself.

And he will do great. He'll probably only spend $80 and get everything. thing we need. Hold, I know exactly how you feel. And I hate the idea of having to check the prices at the grocery store. I hate it. When I grew up, we also would look at things, put it back. We knew never to get brand names of certain things. We knew that, of course. And my mom was shopping for a big family on one income. So I totally get it. Back or even looking, just even looking. It's like, Yeah. Yeah. So I hear what you're saying. I also want to tell you that you probably have to do that at this stage. To get to achieve the goal I want to achieve. Yeah. Yes. You won't have to do it forever.

Yeah. But right now, if you do it, it's going to teach you some very, very advanced concepts right at the grocery store. What's it going to teach you? To be more mindful, maybe, with the money? Yes. Yes. I'm making some unusual recommendations for Anya. I'm suggesting that she use a debit card, that she implement the envelope system for food, etc. The vast majority of people earning $125,000

should not have to compare the price of crackers at the grocery store. But Anya does. For now. That's because her upbringing and worldview have only given her very, very limited exposure to financial concepts beyond spend everything you make as soon as you make it. I hope as you're listening to this, you realize how many financial concepts you take for granted. Think about all the things you just intuitively know about, credit, and even the concept of investing and creating a financial goal and putting money towards

it for 12 months. That might seem obvious to you. But if you were raised, raised in another country or even in America poor, these concepts are not obvious. In my work with Anya today, I'm adjusting my advice so she can build more skills. Then she can get on to more advanced topics later. 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 help with my business like you can do using Gelt

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As part of this community, you'll even get to skip the wait list because this year it's not about catching up, it's about getting ahead. One of the most shocking things I've learned from this podcast is that almost all of the couples who come on my show with, 10 out of 10 money problems have never read a single book about personal finance. Not just my book, they never read any book about money. You'll note that when people talk about money, it is very easy to dream about what they want. And actually, I like dreaming. It's good. We should dream. We should come up with our rich life vision. But we don't just need dreams. We need a plan. So you can create that plan yourself and figure out how compounding works and when you'll be able to withdraw this money and on and on. or if you need help building a specific plan for you,

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Facet is an SEC registered investment advisor. I'm not a member of Facet, and I have an incentive to endorse Facet as I have an ongoing fee-based contract for cash compensation based on this endorsement. All opinions are my own and not a guarantee of a similar outcome. It's going to teach you that when you go to a place like a grocery store, you have this much money, and it's going to realign your mind that I have a limit on how much I can spend here. Here's the key. You set the limit. I did not set the limit. Nobody is setting the limit. Your parents are not setting it. You are setting it. There's only one thing you have to do. Obey the limits that you yourself set. Okay. You've done some pretty incredible things. You've changed in terms of being minimalist. You're aware of the numbers, even though they may not be where you are. You have an abundant mentality about money. So you're, you're You're making a lot of these changes. It's very impressive.

Well, thank you. I've learned a lot from Alex, and he knows that. I didn't come into, I came into the relationship with no dead, zero dead, but just not very good money habits. And he's taught me so much. Okay. You've mentioned a couple times that you're not good with money and that you are the spender. I would like you to reframe. that now. I want you to fast forward six months from now, 12 months from now, right? Here we are. It's a year from now. How do you describe yourself today? Gray with money. I'm great at saving. I have a very healthy relationship with money and I'm free from my childhood financial demons. I like that.

Very good. Do you believe that that's possible? Yes, of course. I do. Especially from looking at the habits I had when I was 18, where I am today. You know, I know it's very possible. I know it is too. Thanks for listening to I Will Teach You to Be Rich. I'm Rameet Sati.

Please follow the show on Apple, Spotify, or wherever you listen to podcasts. You can find some of my best. advice on money, psychology, business, and careers at IWT.com. Sign up for my newsletter there. Here's what you'll find next week on the I Will Teach to Be Rich podcast. I would rather die than pay somebody for $3,000 to move three blocks. What if I told you you could afford it? Oh, no, I know we can.

Wait, what? No, no, no. I know we can't. We're still both kind of contributing similar amounts to the other fixed expenses. How can that be if you make two or three times what Jack makes?