Money For Couples with Ramit Sethi - 58. “If we want to retire, we’d have to live on $36k”

Episode Date: August 30, 2022

This week’s conversation brings a slightly different perspective to the table. Michelle and Eric are in their fifties and are terrified that they’ve waited too long to invest for retirement. They���ve bickered about money for twenty-five years, narrowing their window of opportunity and adding a ton of personal baggage into the equation. Usually, part of the solution for most people is long-term investing. But with Michelle and Eric, time is not on their side. To complicate things, Michelle is defensive and triggered by even talking about money. She prefers to keep things focused on the math… but it’s much deeper than that. What would you do to overcome the very real hopelessness that many people of their age experience? Let’s see what happens. 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 don't feel safe and secure with my financial life. We're both 50 and 52 years old. I feel like we've kind of fucked up over the years. Just the whole thing about money is triggering. I was supposed to get married and have a husband who took care of me, who took care of my finances, who invested for us. I'm angry at him for not being responsible, for not taking care of me. My parents helping me didn't really help me.

I wanted this. Mommy gave me much. So it was a pattern and why not? Mommy gave me money. I needed it. I wanted it. So I took it. I don't think it helped me grow up or be responsible with money.

We live like we're 25 years old. We sat down with the guy from Fidelity and when we, you know, set up our accounts. And what did you walk away remembering from that? That were fucked. No, I mean, that we had, I mean, that we wouldn't be able to. to retire, probably till her like in our 70s. Michelle grew up wealthy, and to this day, she expects her husband to provide for her. Eric makes $55,000 and feels like he can't provide the lifestyle she wants.

This dynamic has been causing conflict for the past 20 years. And now, in their 50s, the stakes are even higher. They both feel that they've missed their time to invest and retire comfortably, and that they might have to keep working until they die. You can get a free copy of the conscious spending plan at IWT.com slash episode 58. I'm Rameet Seity, and this is I Will Teach You to Be Rich. So Eric and Michelle, you made a comment

that I should have seen you as you were filling out your conscious spending plan. What happened when you were filling out your conscious spending plan before you got on this call? what always happens we always start bickering about stuff yeah we basically i mean it's it's almost comical if you ever saw a Seinfeld that's like georgia's parents like the castanzas going back and forth like bickering like two little kids at each other like no we have how much do you have in your raw thyroid i don't know it might be 60 it might be 80 well how much exactly is it i don't know i think so it's always like

I think I feel maybe. It's just, you know, so we go back and forth. It was actually quite hilarious. It sounds like you guys enjoyed it. And we, well, you know, it's hard. I don't enjoy it. It's no, I mean, it's very triggering. Yeah, it is triggering for, for both of us, actually.

It's just like 25 years, 27 years of, you know, we try to do something with our finances. And then I'm the one that. it basically takes care of everything and I know everything. And then when Eric starts to try to get involved, it's like, no, I have it handled. But it might not be exactly the way he wants it handled. But he's never been a part of it for 25 years. So then I'm like, leave me alone.

I know what I'm doing. Don't try to change my systems. We're both, you know, 50 and 52 years old. I feel like we've kind of fucked up over the years. and we haven't really been, I mean, at least I haven't been adult-like about money when it comes to money. I don't feel safe and secure with my financial life. I mean, since COVID, you know, we've actually started saving money, and we both put money in our IRA for two years in a row.

But like we should have been, we live like we're 25 years old. Just the whole thing about money is triggering. I was supposed to get married. have a husband who took care of me, who took care of my finances, who invested for us. I didn't think I'd be 52 years old with like very little savings, living like 25, like when something happens, like, oh my God, how are we going to pay for that? You know, where'd that story come from? That that was how it was supposed to be. When did you start telling yourself that story? My parents helping me didn't really help me. Tell me more about that.

Yeah, so they always helped me. Even when I moved away for a little bit, I lived in North Carolina and I wanted to get a one-bedroom apartment. But my mom's like, nope, you need a two-bedroom apartment. So she paid for the two-bedroom apartment. She's just always like, you know, I wanted to go on a trip. Mommy gave me money. I wanted this. Mommy gave me money.

So it was a pattern. And why not? Mommy gave me money. I needed it. I wanted it. So I took it. And looking back, what lessons do you think you took away from your parents always helping you? Maybe gratitude and generosity, how people are generous with money and grateful for their financial support. Anything else? I mean, I don't think it helped me grow up or be responsible with money. I never had. It's a budget my whole life. I never, I mean, I never knew anything about money. We never talked about it in my house either.

I mean, it was my upbringing. I'm Jewish. So you marry a doctor. The doctor takes care of you. My dad took care of my mom. I mean, it's generational, I think, for us. And when you were meeting Eric, do you have those conversations? No, I don't think so. It was a lot of assumptions. I don't think we ever talked about money. I mean, I assumed we both grew up in the same town. We both grew up, you know, upper middle class. No, we never discussed money when we, before we got married, ever. And how does money come up in your relationship? It comes up with a lot of feelings and anger. Oh, like what?

like anger. I'm angry at him for not being responsible, for not taking care of me, for not talking about it, for not being involved in the savings or any bills, all of that. Okay. Eric, when's the last time you remember talking about money with Michelle? It comes up occasionally, but it's very surface. We don't go deep. Every time I tried to do that with Michelle, she's just, pushes me away. She's like, I've got this. Stop messing everything up. That is so not true. You've never verbally said to me, let's sit down and do this or else you do it for like 30 seconds, one month and then it doesn't come up for like three more years. It's not true. You never asked me to do that. So you see what I'm dealing with now. So when we first started, you mentioned that you

are like a bickering old couple, the Costanza's parents. I mean, look at your face. You're laughing right now. Immediately a smile comes to your face. I can tell it's kind of funny, but it's less funny when the two of you are pointing fingers

and almost antagonizing each other. I think we're just comfortable bickering. For me, this is where I'm coming. It makes me feel not as bad about what happened in the past, maybe or makes me feel right. I don't know. Makes you feel right.

Okay. Tell me more about that. So that's a good one. So for me, it's more like I want to do things differently because what we're doing isn't working. I mean, it's kind of gotten us by up until the last two years and like, you know, last years have been great. But I mean, it's the same thing.

Like I didn't grow up upper middle class. I grew up very middle, middle class. We didn't, I mean, we didn't go on extravagant vacations like Michelle's parents took them on. We didn't get expensive cars. We didn't go on extravagant vacations. Ski trips out west. Oh, I forgot about that. Yeah.

What do you get out of the bickering with each other? I don't know. Two of you curious about your own patterns? Yeah. I've never really dealt with it. I mean, like, I've never really dealt with this deep with, you know, like the psychology. We're not even, we're not even below the surface yet. We're not.

Oh, shit. No. Oh, man. We're in the kiddie pool right now. We haven't even gotten ready to get into the deep end. Okay. You know, like I feel like I'm getting just justification. I'm getting acknowledgement.

You're not getting acknowledgement, but you are getting justification. your own justification. When you poke and prod, and you might be right, you might be wrong, I don't know, it's sort of irrelevant because it doesn't get you anywhere,

does it? In fact, if anything, it causes Michelle to put up her defenses, which I would, if I were in her position, because I don't want someone saying, you knew, and just poking at me.

And then Michelle turns around and seems to say other words, but with the same goal. You never do this. You always do this, which allows, Michelle allows you to affirm your story about what has happened with your money. I think he's just legitimately asking to, like, sit down and do it together. But he never follows through with stuff.

Like he'll start one thing and then change and then start another thing. It's like a pattern. Notice that pivot. Michelle immediately jumps into her grievance without even letting the point. without even letting the point settle, the point that they both feel right and justified when they bicker with each other. Just so I understand,

your husband never follows through with anything. Is that what you're saying? Not never, ever. But when he starts something new, it's very hard to create a new habit with it. Okay. I think that's probably true for a lot of us. It's hard for me to create a new habit.

So sometimes, when I ask, hey, will you do this with me? I would like your help. Sometimes, if I were to say that to my wife, what do you think that I would be hoping she would respond with? Sure. Okay. Do you think that that might apply to your relationship? Probably. But it's hard for you. Yeah, it's hard. Why? Because it's just never changes. Nothing ever changes. 25 years later, nothing ever changes. It's frustrating. So then why are you on the call today? Because he asked me to be on the call and there's always hope.

There's something so sad and yet beautiful about what Michelle just said. Sad because it doesn't actually sound like she believes anything can change. and beautiful because that's what a loving spouse does. She's saying, I don't really think this will work, but you asked me to be here, so I'll come because I love you. There's a lifetime of work for a therapist to work through, but I'm not a therapist. I want to shift our conversation to talk about money.

So I asked them if they've ever worked with anyone like me to talk about money before. 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.

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We sat down with the guy from Fidelity. And when we, you know, set up our accounts about, what was about three years ago, Michelle, before? And he basically, you know, did all this. And what did you walk away remembering from that? That were fucked. No, I mean that we, I mean, that we wouldn't be able to retire probably until we're like in our 70s. Okay.

And Michelle, you mentioned that you track the family's finances, but you also mentioned that you're frustrated with the family's finances. I'm curious about that. I track them. I try to save money. and then there's always like an emergency that comes up. So the savings, stuff that I have in savings never really goes to savings. It goes to like the emergency.

And how do you think that other families do that? I have no idea. So it's been 25 years. I'm sure you've thought like, ah, it feels like one step forward, two steps back. Over 25 years, have you asked other people, have you looked into how others manage their money? No. What do you think about that now that you're talking about it?

I think I grew up in a house where you didn't talk about money, so I don't feel like comfortable going up to someone and asking them about how they talk about money. I mean, I do think it's something between the husband and wife, and they, I don't know. I just never asked anybody. What might be the other ways to learn about how to manage money? Programs, online. What else?

Reading articles. I don't know. Books, events, financial advisor. There's a million different things. I don't mind that you haven't done it. We all start from someplace. There are a lot of things I should have been doing 20 years ago. Fine.

I wish I had. But all I can do is deal with where I'm. am today. What I want to understand is your frustration around money because Michelle, you are frustrated with money. I can hear, you told me, but you're also the one who has been managing the family finances for 25 years. So help me understand that. Well, I think it started because I was doing it alone, right? And then I don't know. It's just frustrating. I don't want to have to do it. I don't, I didn't, I didn't grow up in a house where they budgeted. They just had like magical amount of money and spent it on whatever. And it's a lot of work and a lot of mindset

shift to have to budget every month. Yeah. I can see that. I don't like budgeting myself. Did you know that? I don't know much about you. So I didn't know that. Okay. What do you expect coming into this call. I'm curious. What do you expect me to tell you on today's call? I don't know. Eric asked me to be on this call with you. I agreed and here I am. I have no expectations. Okay. Well, you're playing along, which I appreciate. The way for this to go well is both partners have to be engaged. And I'm happy to see that both of you are doing it. Even though, you know, Michelle, some of the questions I'm asking you, it might seem a little tough. I appreciate that you are, playing ball. My antenna are going up right now. You can hear that Michelle is getting defensive

about some of my questions. So when I ask her what she expected, she tells me she doesn't know much about me and that she doesn't really have any expectations. Now that can be okay. I don't mind talking to someone with no expectations. But you can also understand why Michelle might be caught off guard by some of what I'm asking her. She shows up to have a conversation about money and suddenly she's getting questions about why she's been managing money that way for 25 years. I don't mean to ambush her.

I'm just trying to understand the situation here. The one Eric called me about and Michelle agreed to talk about. Again, I can understand their defensiveness. But with that said, it's not giving me a lot to work with. When we start honing in on something, Michelle turns the attention right back to Eric. There has been a lot of baggage with money on Eric's part.

So you can ask him about that and why I'm so angry about it. I had a lot of credit card debt that I racked up, which I knocked out over the last five years. How much debt? Like 60,000. 50 to 60, yeah. What was the, what did you spend it on? Just like off like business programs, business development things,

equipment for the office, medical equipment, things like that. Okay. And you, so you wrecked up 50, 60K of debt. You paid it off. Yes. All right. Michelle, how did you feel when you saw him paying that debt off? Well, it's his business.

So I didn't know how much. You didn't know about it? Not really. Michelle, you knew. I knew about the debt. I didn't know how much it was. And I didn't know how he's working on paying it off. Eric?

Yeah, I mean, there's been a lot of, I've made a lot of business mistakes over the years and it caused bankruptcy in 2008, 2009 when the economy went down. I mean, there was a, there is a lot of stuff in the past. But like, my philosophy right now is we don't like, why go back there and why still be angry about it? Like, get over it. Let's move forward and be a team. Like, Michelle has every right to be, you know, have had be angry what happened in the past. But that was. you know, situation that happened 20 years ago and another one that happened about 12 years ago. And it's like she still hasn't gotten over that. And it's affecting her, you know, where we're going. That's why ever, you know, like she says, always, never. I mean, that, to me, that gets me so frustrated because I'm not, I never do this. You always do that. And so for me, like, it, that doesn't work. And it gets, you know, it gets us, that's why we go into that spiral. all and just get frustrated. Eric, I mean, if you declared bankruptcy, which you never mentioned in any of the documents

you sent over, I can understand why she would be upset. That's a serious thing. Right. And that doesn't just heal over time. That doesn't even heal over 12 years later. It takes talking and it takes changing the way you deal with money. The more I try to understand Michelle and Eric, the more I get lost in their history of resentments.

each of them has valid reasons to be angry and defensive, but nobody can solve this on a single call. That's not what I'm here for either. I'm going to try to zoom up and recalibrate. What do you think is the real problem here? Us. Communication. Yeah.

Lack of having a plan. Trust. Trust. You don't trust each other. Yes. Keep going. You're nailing all these. What else?

Expectations. Yes. Anything else? Strategy, know-how. What am I doing here? So you're actually quite savvy at knowing the problems here. But putting them all together eludes you. Well, fixing them alludes us.

Yeah. In part because I'm not sure you actually want to fix them. I think you actually enjoy the bickering. I think it gets you to feel a temporary sugar high where you go, I'm right. you're wrong. No, I'm right. You're wrong. And what about that thing that happened two years ago, two months ago, 10 years ago? And then you get back into this comfortable relationship and then you both get mad and come back the next day and pretend it didn't happen until the next time.

That's true. I feel like we have the daily spending under control. I think we need more money to generate more income so we can invest more and no investment strategies. Because neither of us know how to do anything like that. Okay. Okay. Now we're talking. So you need a higher income. You want to invest more. I'm with you so far. And what else? Yeah, those two things. Strategy, know how, what to do, how to invest. So let's say that we accomplished that and you start investing $25,000 a year. Okay, great. What then? Just growing, I guess. I don't know. And then what? growing so that we can buy our house up north so we can travel. I don't know. Seems a little

vague. I don't know. I don't have a big rich life. We want to buy a house up north, Michigan, and move up north to northern Michigan. I personally want to have real health insurance and long-term care insurance because we had a tragedy in our family. And it scares the bejibis out of me that if I had to go a group home, like how would that get paid for? You know, I don't want to burden my family or my kids. So I need that security to know that I'll be safe. Like really, for me, it's all about security and not burdening my kids. Like, I really don't have these crazy dreams of things I want. I mean, I'll travel. I love to travel and I want a house up north. But besides that, I'm pretty simple. Michelle, one of the reasons that people don't enjoy managing their money and they don't aggressively save and invest is that they never take the time to create a vision of what their rich life is.

So, of course, you want insurance. Okay, great. You should definitely get insurance. But I'm not excited by hearing you talk about long-term care insurance. Are you? Either was Eric. Are you really? Yes, I really am.

You wake up in the morning and you go, yes, long-term care insurance. No, to me, it's like, okay, you're being a responsible adult. The problem is that the idea of being a responsible adult is not inspiring. Nobody wakes up and says, yes, I want to change my entire way of thinking about money and managing money because I want to be a responsible adult. It never happens. And if it would have worked, they would have been doing it for the last 25 years. So my opinion is if it hasn't worked your way, why don't we try it my way?

My way involves starting with a vision of a rich life. It involves being honest about what excites you with money. And if you can't find that excitement, that's okay. Some people have lost it over the decades. Let's go through my process. And I want to watch both Michelle and Eric build this vision together. Unfortunately, many of us have lost the ability to dream. So we go back to these seemingly logical things we want.

When I talk to people and ask them, what's your rich life? And there's a very small minority of people who say, I want health insurance. I want to make sure that I can take care of myself. I know two things. Number one, there's probably something that happened in their family that makes them prioritize that above everything else. And number two, they have no real vision of a rich life. Because wanting health insurance is not a rich life.

It's something you should have. but it's not going to inspire you to change the way you treat money. And that, among other reasons, is why Michelle has not made a change in the last 25 years. What I want for my rich life is to have a cottage up north, a three-bedroom cottage on a lake or near the lake. I want to have the ability to travel and go away for, let's say two weeks twice a year.

or a one week four times a year to like really cool places and be able to you know see amazing things and eating great restaurants and to be able to like take our kids with us if they want to come with us um i want to leave them a legacy so that you know that and teach them strategies as far as to so they can live their rich life and not fight with their spouses so that they can have great times with their families too. To be able to afford, I mean, though, like, cars aren't that important, I want to be able to drive a car that I feel proud of.

I mean, my car's fine. It gets me from A to B, but it's a 12-year-old, you know, SUV. Like, I'd like to have, like, a newer car that's reliable. You know, like a new, you know, a 2012, 2017 Ford Explorer. I'd be happy with that. But, you know, like, it doesn't have to be fancy,

but like a good, you know, a good, reliable newer car. So those are just some of the things off the top of my head. I know all that. So I don't know. I'm like very worked up right now. I know those things. He's told me those things before. Wow.

So how do you think he feels when he just opened up about the things he wants? And your answer is, yeah, I already know those things. I'm sure not good. So do you want to change it or do you want to just, repeat the same pattern for the last 25 years. I do want to change that. When you talk to your partner about money, it is inevitable that you're going to have disagreements.

Remember, most of us are not even confident about money with ourselves, much less having a conversation with our partner. There's baggage, there's history, there's invisible scripts in the way that we grew up with money. So here are a few suggestions. Start with curiosity. You can even create simple rules for yourself. Like each person has to ask at least one probing question.

Oh, you want to travel more? Wow, that sounds interesting. Where would you want to go if we could travel anywhere? Another rule, you don't have to solve the how today. What is the goal of your first conversation with money? It's literally just to get excited about money. That's it. And finally, another rule, there's something new to learn.

always. Here we have a couple that's been together over 20 years, and I think they still have more to learn about each other. I find that exciting. I spent over 20 years fine-tuning my core message from I will teach you to be rich of living your rich life, which is why I was so thrilled when Masterclass reached out and asked me to teach a class because I've spent so many years helping people define their rich life. My financial wellness class is now available on Masterclass, where I cover how to automate your finances so your money works for you in your sleep, how to break free from financial anxiety, and how to create a financial system to live your own true rich life. With Masterclass, you learn from the best to become your best. Plans started just $10 a month and you get unlimited access

to over 200 classes taught by the world's best business leaders, writers, chefs, and now me. Plus, there's no risk. Every new membership comes with a 30-day money-back guarantee, so you can try it out before you commit. I've used Masterclass myself. I've paid for it on my own, and I loved it. And a big part of my rich life is learning from the best.

So Masterclass makes perfect sense for me, and I think it will make a lot of sense for you. Right now, our listeners get an additional 15% off any annual membership at Masterclass.com slash Ramith. That's 15% off at Masterclass. Masterclass.com slash remit. Masterclass.com slash remit. 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, 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, our partners at Facet can help. Facet charges a flat membership fee for financial planning, never a percentage of your portfolio. You get access to a team of CFP professionals, always a CFP, always a fiduciary, who help you create a personalized financial plan for your company.

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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. How savvy would you say you are with money? Scale of one to ten. Three to five. Not especially savvy, I'm guessing.

Is that fair? Yeah. Okay. So I can understand why it must be stressful to talk about this. Not only is it the money part of it, it's the fact that you're in your 50s, it's the fact that he asked you to be here and you've got a history with bankruptcies and debt and earning and expectation and parents. Are all those fair? True. Yes.

So all of those can be true. I'm not going to change all of that today on one call. You know that and I know that. You can do a lot more with your money. But yeah, I'll show you some investment stuff you can do. And yeah, I'll show you how to allocate your money. I'll talk about that. But if the two of you can't have a conversation

where one of you is sharing his rich life and your answer is, okay, yeah, I already know. that, then none of the numbers are going to matter at all. I heard a lot of pride from both of you over what you have accomplished financially in the last two years. We had someone in the house staying who gave us, whatever, 600 bucks a month, and we just put that right into savings. And he was with us for about a year. So there was that. We don't really, we're not like extravagant. I love Michelle because she's not, like she doesn't want jewelry. She doesn't want a fancy. car, she just wants security.

Like, one of her things was, like, I want long-term care insurance because I want to make sure that, you know, God forbid something happens that our kids aren't burdened by us. So, you know, but like the last years, we didn't go out for, you know, quite a long period of time when we saved a lot of that money and we just kept it really lean and mean. Michelle, what's your perspective in the last two years? Well, I got excited when I saw that the money kept building up

And then I set kind of goals like, all right, by the end of this year, I want to have this much money. I want to, you know, so. Tell me the numbers. I want to hear them. How much we've saved? Yeah, how much have you saved? We went from zero to $0 to $42,000 in two years. Great.

And what was the goal by the end of the year? Well, the goal by the end of this year is $50. Okay. And what does that mean to you? If you were to have $50,000 in savings, what does that mean to you? I don't know. It's just a little. little like, okay, I can do this. I can do it. And if you were to get to 50, what would you do next?

Make a higher goal for the next year? Like what? Maybe 70. Okay. So I could see you incrementally move that number up. 70, soon 100, maybe 120. Okay. All great. And when would you get to feel good about money, Michelle? When would I get to feel good? Well, I'm starting to feel good about it now. I want to feel good now about it. I don't want to wait. Okay, I like that. So can we just flip a switch and you start feeling good about money today?

Sure. Really? Yeah. I don't know if I believe that. I mean, it's the first time I've seen you smile on our entire call. I love it. What is that? It seems like you felt bad about money for a very long.

time. I have. I have. Yep. So it feels good to be responsible about it. I mean, it didn't feel good for 30-something years to be given everything, even though I took it. And then it feels good to, like, create your own money. Yes, it does. Thank you for saying that. I think that's very powerful. you said, it doesn't feel good to have been given everything even though I took it. Being given everything, you're referring to your parents? Yes. When did they stop giving you money? Probably when they, I mean, they still buy things for my kids, but they don't give me money monthly anymore.

I mean, a birthday present. When did it stop? Maybe five years ago. So in your mid-40s? Maybe 40s, 10 years ago, maybe. 40 years old. Okay. Do you see how you ended up frustrated with money in part because it was being given to you

and you weren't taking your own responsibility? Yep. And the minute you started really taking responsibility with Eric, during COVID, what happened? It grew. We like have, yeah, we have money in our account. And how do you both feel about money from those last two years? Feel like an adult now. More, you know, like we're actually like acting our age, not like we're 25 years old or 20 years old again.

Yeah. So what does it tell you about the next 10 years? You two did it for two years. What does it tell you for the next 10 years? Yeah, that we just got to stay on the plan. Yeah. Well, also, you don't even really have a plan. Right.

You accumulated $42,000 and not even knowing what you're doing. Just think if we actually had some strategy from you or me. Yeah. Holy shit. I mean, it's like you got in a car and you just started driving and you finally put on cruise control and you're like, oh my God, we drove 1,500 miles. And now we're actually going to look at a map and we're going to go the right direction.

Imagine where we could be in another two years, much less 10 years. I don't know, does it get either of you excited about where you could be in 10 years? Yeah. Okay. That's what I'm talking about. This money has all been sitting in savings.

It wasn't even invested. So imagine if you could start to really grow your money, if you could start to do it together and if you could be on the same page and not fight about money. This is a win. But I think it's just a start. That money right now is just sitting there.

And this is where I invited them to open up their conscious spending plan and lay the groundwork for their numbers. Unfortunately, it just turned into more bickering. But if you want to do this for yourself, you can get the CSP at IWT.com slash episode 58. Now I'm looking at the conscious spending plan, which is very helpful to get a bird's eye view on how you're spending stacks up. I recommend fixed costs be 50 to 60% of take home.

Yours are 62% right in that parameter. So that part, I would say generally well done. Okay. Your investments should be roughly 10% of take home, roughly. How much do you each invest per month? 500. Okay. It says that you are each, that you're spending $1,000 a month on guilt-free spending. Is that true? I don't think so. I mean, that includes like dining out, right? clothes, hats, that stuff. Travel.

Traveling. Right now Michelle is shaking her head vigorously saying no. Michelle, do you think that number's too low or too high? I honestly don't know the answer to that. It's like I do all the bills and I know when they come out, but I don't know the answer to that other question without looking at it. I never added it up. It was really enlightening for me to like pull up the last three months.

of their credit cards and they actually look at like what we actually spend. What did it tell you? A lot. I mean, I didn't realize how, you know, we, we spend more than I anticipated on traveling and going out. I mean, we don't go out for extravagant dinners, but like, you know, we do go out and, you know, buy clothes for the kids, gets, you know, we give our son 600 bucks a month for, you know, college, like, you know, spending money for him to buy food and stuff.

I mean, it adds up quickly. That's good. Yeah. That's what most people find out when they actually track their spending for one month. They discovered that they were dramatically overspending compared to what they thought. And they also forget to include all those things they do only once or twice a year. Oh, we went to Disneyland. Oh, we went for this holiday trip.

We did this quick vacation. They forget you actually have to spread that expense out over the entire year. Michelle? What do you think? So I don't understand how conscious spending plan is not the same as a budget. I mean, in my mind, it's exactly the same thing. This is a common question I get from people on the internet. Let me explain.

With a budget, you track every last line item. How much do we spend eating out? How much do we spend on Airbnb? How much do we spend on Netflix and Kiwis at the grocery store, everything? And then at the end of the month, you go, okay. I have all this information, what am I supposed to do with it? A conscious spending plan is different. It looks forward. It says, of the money we make next month, how do we want to allocate it? Some of it should go to our fixed costs. Some of it should go to

our savings automatically. Some of it should automatically go to our investments, and the rest should be left for us to spend guilt-free. You know what this reminds me of? We did Amago relationship therapy, which is really like about kind of like what you're saying. It's like, let's move forward. Like we're not going to talk about all the shit from the past. Like we're going to talk about moving forward and develop a new strategy of communication. It's like having a new language. A CSP is definitely a new language, a conscious spending plan.

I do think that the way that the two of you communicate, I'm glad you took some therapy sessions and I would encourage you to do more. I think it's amazing. I'm not making a joke. It's not personal. No, I completely agree. I try to destigmatize therapy for everybody. And there's only so much that I can do on one call.

And a therapist has other tools and skills that they can bring. I don't need to tell you that. I think it would be very helpful. But few therapists can talk about money like we are talking about right now. I think you both tell yourself a story. I've heard both of you say it that you're not fancy. You don't need fancy things. You're not spending on a lot of stuff.

But actually, you are spending on a lot of stuff. And you're not saving or investing nearly as aggressively as you need to. How does that strike you? Well, I don't think we're spending on a lot of stuff. I mean, I buy the dogs. I mean, I don't think we're spending on a lot of stuff. But I do think we need to be more aggressive. You two in your 50s with not as much investments as you could have had are spending $1,300 a month on your son's college expenses and other services for your children, not to mention car repairs, et cetera, for them.

intention for me. And I'm not really expressed it, but I, I really feel that our kids need to have more skin in the game. Again, it's like that pattern of like buying them everything, paying for everything. And Michelle goes to me, like, why are you so selfish?

Like, why, you know, don't you want to like support your kids? I'm like, absolutely, I want to support them, but I want to, I want them to learn. I want them to have skin in the game. I don't want them ending up like this. Do you see any connection between how your parents treated you with money and how you treat your children? A little, but when I was growing up,

if I wanted to go on an extravagant trip, I was always like given a check. I want to be generous, but I'm not overly generous because we don't have the money to be overly generous. I'm not here to tell you how to raise your kids or what to spend on them. That's up to the two of you. It's your rich life. It's your money. I will say right now, you don't have enough. to invest and save at the rate you need to. For 25 years, you've been managing the money, making sure the bills get paid, and that's amazing. That needs to happen. That's table stakes. But we also now need to add on a way to grow your money. That's investments. That's automatic saving. That's where real wealth is created. You've got $200,000 invested. How much are you contributing?

total per year to your investments? 13.5. Great. Okay. And what age do we want to do this until? You want to see what happens in 10 years? 65. 65.

Okay, great. 15 years. And what interest rate should we assume that you're going to get on your investments? I don't know. You tell us. I don't know. 8. 10. Michelle, what do you guess? Eight.

Okay. At least you're in the ballpark. Some people say 8,000. I go, oh, shit. I use 7% because I like to be conservative. There's a whole section in my book talking about where does this number come from and how do you derive it and all that stuff. But let's just say seven to be conservative. Okay, maybe you get eight. Great. So by the age of 65, you've turned that into $914,000. Okay, here's my question for you. Does this number mean anything to you? I don't think it seems like enough money.

It's just a number and it doesn't feel like enough. That's most people. Eric, what does this number mean to you? I always thought like, okay, I want to be like, you know, like I don't know why that number is so like significant, but like a million dollars just seems like, significant to me. First of all, if you have $914,000, you are millionaires because you have like $75,000 in savings.

Big whoop-de-do. It's just a number. It doesn't mean anything. I'm going to show you an example of how to figure out what to do with it. There's a simple rule called the 4% rule. Some people can debate it, whether it's 3% or whatever. We're going to use 4% for this calculation. And what this means is you can safely withdraw 4%.

of that amount every year for 30 years. There's more complexity to the 4% rule, which you can research online. But it's a really beautiful back-of-the-napkin calculation you can make that tells you how much income you can eventually get from your investments. So if you live from 65 to 95, you could safely take 4% of that. So why don't we figure out what that is? 4% means you could withdraw $36,000 per year. What do you think of that?

That sucks. Correct. That's a number that you can more easily grasp because you can compare it to your current income, which is what? 100. This is a very stark moment for people, especially people in their 40s,

and especially 50s and 60s. For many people in this situation, they suddenly realize that the money they've saved is not enough. And now the dreams they have of their future life, their retired life, might not be possible. Now, Eric and Michelle still have a chance to make a change, but I want them to understand how serious this is. I asked if they wanted to go from $100,000 in income

to $36,000 in income. In our culture, it is excruciating to imagine taking a forced downward socioeconomic step. 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

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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. Their meals arrive fresh, not frozen, and they're ready to eat in two minutes. No prep, no cleanup, just heat it and go. There are over 100 meals to choose from every week. High protein, calorie smart, Mediterranean, even GLP 1 support options.

And unlike most meal prep, there's a lot of variety. So you're not locked into the same boring meals every single time. If you're looking to eat healthier starting right now, this is exactly what I would use. Head to factor meals.com slash remit 50 off and use code remit 50 off to get 50% off your first factor box plus free breakfast for one year. Offers only valid for new factor customers with code and qualifying auto renewal subscription purchase. make healthier eating easy with factor. Yeah. So you want to go from 100K to 36,000?

No. How do we triple that? Okay. So what do you want to do? Now we have some decisions to make. What are your levers here? Well, the annual edition. What number would you like to change it to?

25. 25. Okay. So from $13,500 to $25,000. And just give me a sense. Where would that money come from? More earnings. More earnings is one way.

What else? I mean, like you said, we're, you know, $1,300 a month for like kids stuff. I think we just cut the kids off. Okay. Cutting kids off. Always going to be

one of my favorite levers to pull. Don't come from me, parents. I don't need to hear from you right now. Just save it. Send your emails to Ramith will never read this at I Will Teachyber Rich.com. But in all actuality, they do need to take a very conscious look at their expenses.

And this is a lot of money that they're spending on their children. I do recognize that making big decisions about expenses, especially family expenses, takes time. Nobody decides on a call like this, we're not going to spend any more money on our kids. But my job here is to simply raise the question for them so that they can start thinking about all their options. I also want to pull on another lever here. Time. Let's just even see if this is exciting. So we're raising it from $13,500 a year investments to $25,000 a year. And suddenly, instead of $914,000, you have $1.2 million. If we take 4% of that, $48,000 a year.

How do you feel about that? I think it's better, but it still doesn't seem like a lot. Okay. What else? Made more years to grow. Okay. So instead of 65, what number would you like to put? 70.

So 20 years. Okay. Now we're talking. Instead of 1.2 million, we have 1.87 million. Whoa, that's a big jump. What does that tell you? I'm counting it. I mean, it just the more.

I hate to, like my first thought was like, we should have started doing this 10 years ago. But like that extra five years that grows significantly. Yes. And now you have $74,000, almost $75,000 a year. That's impressive. I think we could do that. I am loving this. Suddenly I'm showing them different scenarios with their money.

And they're starting to connect what they do today with what they will have. tomorrow. Honestly, this is pretty advanced for most people. Most of us cannot make the connection between what we spend on our rent or mortgage today and what our income is going to be at retirement. But there is a direct connection. This is how tools like my conscious spending plan can help you. That is why I mention it so often on the podcast. Buying a truck can directly affect how much you have later. How much you spend on maintenance for your house can direct. directly affect how much you have later, and on and on and on. Now, I want to direct them to the money sitting in their savings account.

You got the $42,000 that's sitting in savings. You're in a great position having that, but we might be able to put $20,000 of that to work. Let's just take a look. Instead of $200,000, $200,000, $220,000, we turn that into $1.9 million. so that money would grow, grow, grow, grow. But you know what of your biggest levers is? It's really this number. It's the annual edition and it's your time.

Earlier you start investing, the better. You're 50 years old. You don't have time to wait. Even one year costs you dearly. And the second thing is the amount that you contribute every single month. What do you take away from those examples that I just gave you? Shal? Let's do it. Tell me how. Where do I put the money? Okay. And then. You seem like very motivated right now. Tell me about that. Well, I think I can see the numbers and I can see what we have to do. So having like the math, it took the emotion out of it and it's just math. Wow. But are emotions bad? Of course they're not bad. But if you had just had,

the numbers, then Eric and I follow the numbers and don't get involved with the emotions. I'm very confused by Michelle right now. She's been defensive for most of the call, but suddenly she's lit up. And she's saying, okay, I'm in. Tell me what to do. I don't know if I buy it. I honestly think this call would go a lot better if I just shared some basic investing tips and gave them some handy rules to follow and sent them on them. their way. But that's not really what I do. And if that's what they really wanted, why haven't they just read my book or anyone's book? I think money psychology and emotions are the thing in this relationship. Their investing situation is not that complicated. But why they haven't talked about money

and invested money and been aligned for 25 years, that is incredibly complicated. I guess my perspective would be that I'm going to show you how to do this. I will show you, you will walk away with a plan. I will also suggest to you that emotions, expectations, communication are part of the reason you didn't do this 25 years ago. To see that number, like, you know, from 1.2 up to like, you know, 1.9 mil, just by increasing the amount that we're putting away and adding five years to it, It's just to me that's amazing.

And I wish we would have done this 25 years ago. Everybody wishes they would have done it 25 years ago. The only thing they can do is do it today and do it aggressively. The two of you rowing in the same direction will get you there. You cannot achieve this with how short your time frame is if one of you is not on board. That is the bottom line. The only way the two of you get to have enough for retirement is by, investing aggressive. That's the truth. And I mean aggressively. Now, how aggressive you want to be is up

to you. But that's just the math. There's a lot left unsaid in today's call. First, Eric and Michelle realized it is possible for them to change the way they treat their money. Once we focus specifically on their conscious spending plan and on their investments, they really took to it. They seem on board making these changes, but what I think is missing is a deeper analysis of why they haven't been able to connect about money for 25 years. I don't expect to be able to get to everyone in one phone call, but when it doesn't happen, I am frustrated. And I know this is just one call. Can't change everything overnight, but I wish we had been able to go a little deeper. I hope Eric and Michelle continue to focus on aggressive investments.

They're 50 and 52 years old. They do not have time. And I also hope that they find other tools and resources, whether it be a therapist, a coach, or whoever, so that they can connect more deeply and talk about money regularly. To understand what your numbers really mean, you can plug them into my free conscious spending plan template. You can download that at IWT.com

slash episode 58. Thanks for listening to I Will Teach You to Be Rich. I'm Rameit Sati. Please follow the show on Apple, Spotify, or wherever you listen to podcasts. If you haven't read I Will Teach You to be rich, my book, pick up a copy. You can get it at any bookstore or any 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.