246. "We’re drowning in debt, but bought another house"

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Now is the time for business owners to get ahead, not in January. So find out if you qualify at joingelt.com slash Ramit. That's join G-E-L-T dot com slash Ramit. How much debt are you guys in right now? $924,000. How's it feel to you to be in debt? It feels like we're never gonna get out of it. Tony didn't want to buy another property because he doesn't like real estate investments that much. I was like, no, let's buy this short sale. And then we bought it. It feels like I have a live paycheck to paycheck. I don't feel like I'm making any money. I can't even figure out what page anybody's on right now. It's like a kid wanting to buy a toy. I want this toy. No, I want that toy. You're talking about a million plus dollars here. I feel like I'm in the roller coaster again, trying to see what he's gonna say next. If we end this call right now, I suspect you will go the rest of your life getting into debt, making a little bit of money over here, paying it off, going into debt, doing it over and over until one day it's like you're in the ocean. And then you're like, oh, I'm in debt. I'm in debt. I'm in debt. And it just engulfs you. Do you know anybody who's done that? Our parents. They lost their houses 50. And now you're both repeating the same pattern. Today, I'm speaking with Melissa and Tony, a couple who immigrated from Mexico to the US in their early 20s. They didn't have a lot of money, but they were willing to work long hours to build a successful life together. And it worked. Eight years later, they've built a net worth of nearly $900,000. So in less than a decade, they're almost millionaires. On paper. But beneath their paper wealth, Melissa and Tony are overwhelmed. They're carrying massive real estate debt and they are misaligned on their financial goals. And with their second child due any day now, they really need to get all of their houses in order. That's right. They currently own three properties. I'm going to pull up their conscious spending plan, which is the exact system I use to see how someone earns, spends, saves, and invests. If you want help navigating your own CSP, join my money coaching program at iwt.com slash money coaching. Here's where they stand. Assets, $1.58 million. Investments, $190,000. Savings, $30,000. Debt, $899,000. Net worth, $899,000. Fixed costs, 68%. Investments, zero. Savings, 23%. And guilt-free spending, 9%. You can see how much is revealed once you look at the data. Look beneath those top-line numbers. Like from the outside, it might look like they are building serious wealth. But under the surface, they have created a system with very little safety net. No investments, very little cash. Basically, no room for error. So today I want to know, can Melissa and Tony stop chasing the next deal and start building a sustainable, rich life? Let's find out. Melissa, in your application, you wrote something that caught my eye You said, our new baby will be born this month. I would like my husband to understand financials, set up a plan with me and act on it, not just ignore the fact that we have debt and keep spending. Do you remember where you were, what you were doing when you wrote those words to me? It was a month ago and it was like a throwback from my first pregnancy. When I had my first child, I stopped working for two months. So Tony was coming to me saying like, Mel, what are we going to do? What's the plan? And then I'm like, oh my God, I cannot think about that. You said that the baby's going to be born this month, right? Yes, I'm 39 weeks right now. Oh my gosh. Okay, wait. So do you have a plan for your finances right now? No, I don't think we have a plan because everything is up in the air. We either have some investments, but we don't know where to put it. We don't have an emergency fund. And we just, we have debt and we don't know what to pay off first. So it's been really hard to set up a plan and really follow through. Sometimes Tony is like a roller coaster. Like sometimes he's like, that's a great idea. And then next week he's like, that's a terrible idea. So it makes me feel like, can we just set up a plan and just follow it through? How long has this been an issue between the two of you that you don't see money the same way? I think since we, we got married, we have a very hard start. My parents got divorced. So then I took care of my three brother siblings. So all of a sudden, like we had to grow up and just be like in survival mode for everybody. So then it was like, from being just girlfriend, boyfriend, to be like parents of my siblings. And I think that's where the problems start. Okay. Tony, do you agree that you and Melissa have, not been on the same page with money since you got together? Yeah. I think that we kind of have not be like a married couple. I guess everybody was like on their own with their finances. How long have you been married? Seven years. How come you didn't like combine money or talk about money together? Because my siblings were at my house. So I felt like I didn't want him to be like the dad. But it was hard for me because it was like, I want him to be my husband, but also I didn't want him to be the dad of my siblings. So I didn't want to put that responsibility on him. But still, I think that it was affecting us putting together like a plan. Now they're outside the house. It was very hard time. So it was like six years or five. Five, six years of taking care of them. You taking care of them. I want to know a little bit more about that. But first, I need to ask a few more questions about your money, if that's okay. I understand that you're in debt. It feels like we're never going to get out of it. Did you know how much debt you were in, Tony? Yeah, I always kind of look into, you know, the credit cards and I'm always kind of like on top of, of the numbers. Wait, you, you're on top of the numbers, but you're in debt. Why? That doesn't mean you're on top of the numbers. Well, I guess I know how much. How much money I have out. That's what I mean. All right. How long have you been in debt? Since 2023. Okay. Couple of years. What about before then? No debt at all. Oh. We just had money to invest or put it as a down payment for a new house or. Okay. So you had extra money before two years ago. What happened two years ago that put you into debt? We thought that. It was going to be a good idea to build a house. Okay. Our dream home. And then we bought the lot in Cabo at the same time. You were building a house and you bought a lot in Cabo at the same time. Yeah. And then we were over budget on the house. How many properties do you own now? Two. And the land in Cabo, but it's under contract. So hopefully you'll close. So you own one house, the one that you live in, you own another house. Do you rent that out? Yes. Okay. And then you have the lot, which. Sounds like you're trying to sell right now. Yes. Okay. All right. I want to jump in here quickly to acknowledge there are a lot of confusing layers here. So let me just cut through the noise. Here's what you need to know. Melissa and Tony have not created a shared system for their money. As Melissa explained, she and Tony became responsible for her three siblings after her parents divorced. And so they were thrust into this parental role before they were able to make that decision for themselves. Now, keep in mind, this all happened shortly after they. immigrated to the U.S. So they were suddenly caring for three teenagers kids while also navigating a completely different culture with language barriers and a new marriage. And I want you to remember that because if you were thrust into a new country with different cultural norms and expectations, having to suddenly take care of three teenagers, how would you handle it? I remember in my 20s when I was getting ready to move from San Francisco to New York, I was worried. I was like, how do I find somebody to cut my hair? And I'm an able-bodied, educated guy, and just the idea of finding new people to cut my hair or places to eat, that felt overwhelming. Now imagine moving to a different country and having to figure out everything for the first time. She had her young siblings to take care of. Where do they go to school? How do you shop for groceries when you don't know the language that well? How do you fill out forms to get healthcare in America? Damn, it's hard enough for Americans to even understand what a deductible is. Now imagine you're doing that in a second language. On top of that, when they immigrated, like many of us, they never took the time to have a series of conversations around their money. And now they are expecting their second child in just a few weeks, and they're panicking about paying down hundreds of thousands of dollars of debt, which they largely built up because of their decision to purchase a bunch of real estate. So far, they've mentioned owning two homes, one which they rent out, plus an undeveloped lot in Cabo. This actually sounds like a lot of people's American dream. Let's keep going. Tell me a little bit more exactly how did you get into debt? Well, I think we got into debt pretty quickly because when we first started building our dream home, everything went out of our budget. Melissa is an architect, so she likes to design and do cool things with the house. But it was right after COVID when the lumber was like three times more and things like that. All right. So you got into debt. You had the mortgage. What else? The $80,000 silver budget. 80. Okay. Not only that, we also had two new vehicles. Why did you do that? Well, first we needed an SUV for our kid. Hold on. Hold on. Hold on. Hold on. We have to do this. You had a little baby. How old was your kid when you bought the SUV? It was about to be born. Okay. So we have a not yet born baby. And you said, say the magic words for me, please. We need a new SUV. Why? Finish the sentence, please. So we could all fit. For the kids. This little baby that is. What do I even have in my room that's the size of a baby? I have nothing. This little baby needs an SUV. Okay. What kind of SUV did you get? It was a three-row Kia. Oh, no. I spoke to another couple that spent $62,000 on a Kia SUV. How much was yours? It was a lease. How much per month? $500. $500 a month. Okay. And then you had another car? And then we had a truck because since she works in construction, we needed a truck for supplies and stuff. All right. You still have the truck? We sold both of it. We took the loss and we paid our car cash. So that's what we share the car now. Just one car. Okay. I like that. I did not expect that. What kind of car did you get? We have a 2018 Expedition. Ford Expedition. Expedition? Yes. All right. I'm pleasantly surprised you took the loss and sold the car. Most people find that very difficult. All right. So you had a bunch of debt. Let's go back to the debt. How much debt did you rack up in 2023? Like $140,000. How about the mortgages, the loans, all that? Oh, the mortgage was $540,000. $540,000 plus $140,000. Starting to add up here. What else? I think that's all. Was there a point where you were like, this is too much? Like, something is wrong here. Yes, because at that time I lost my job. So then we're like, wow, we are in a real mess. I had to steal like three more projects to finish through my company. So I finished those. Then I got some cash. We paid off half of the $80,000. So then we just did like a payment plan with Amex for the remaining $40,000. Okay. And then I found a job and then I saved like $50,000. Now we are like, should we sell that house? Because it's worth like a million, a million, 100. And our mortgage is only $540,000. Okay. This can be the shortest call on the planet. We're in debt. We have a house that's worth a lot of money. Should we sell it? Yeah, I guess. Yes. I know I'm supposed to like understand more. I want to ask you a lot of questions, but like, did we just find the answer here? Like, why would you not sell a house when you owe? Oh, all this money in debt. Our vision was to live, um, older with rentals and things like that. One cousin, we have those side. One cousin. Okay. You have a cousin who bought a bunch of houses and rents them out. Yeah. Do you notice that they contradict each other and they contradict themselves? For example, Tony said they went over budget on building their dream home because of Melissa's architectural design. But then Melissa said, well, actually it's because lumber was more expensive during COVID. Melissa says, maybe we should sell this house. And in the next breath, our vision is to retire with a bunch of rental properties. It's very confusing. It's very contradictory. Watch as I asked them about how they decided to purchase their last property. You're going to see that they go back and forth. What do you notice in this exchange? Let's talk about the conversation regarding the latest property. So Tony didn't want to buy another property, of course, because he doesn't like real estate investments that much. much stress him out but I felt like if we were to sell that house I didn't want to be just like without any property at all and two kids and the rents were very expensive here in Florida so then I was like Tony we're gonna sell the house I want another house and he's like no we don't even know if he's gonna sell he's a pessimist like negative so then I was like no let's buy this short sale because it was like 60-70 thousand dollars less than the actual value and I was like Tony's close to work it's a smaller it's a lot smaller but I was like we don't need more and then we bought it so you you said we have this one house I want to get another house he said no and then you said no we're gonna do it anyway and then you bought the house well he's he said it was a good idea and then the next week it's a bad idea and then the following week was like no I think it's a good idea so that's what I mean when it's like are we doing it or not I don't know I see Tony is that true you go back and forth with your opinion at the beginning I didn't want to do it but then I guess she convinced me we should get the new house and just rent the other one out and the original thing was that it was closer to to our work what does that have to do with it would drive like 40 minutes to get to work so wait how does that I'm trying to understand what kind of food do you guys hate well I hate French I don't like cheese oh you hate all French food yeah my man Indians don't like French food either it's too bland for us freaking rosemary that's not a spice all right so let me put it this way hey Tony let's go spend sixty five thousand dollars on a French meal you're like no that sounds horrible but Tony it's close to your work would you do it no so how come you got this house just because it's close to your work because I wanted to make her happy oh so did it work she's pretty happy yeah but now we're stressed because we don't we have too much debt okay what's happening right now in this conversation does anyone feel like the energy is a little weird am I the only one I feel like I'm in the roller coaster again trying to see what he's gonna say next why do you feel that way because we talked about this and now he's saying he never wanted to buy it but I feel like sometimes he doesn't say or set up a plan so he doesn't get the blame he's like you decided that so then it's like not taking the responsibility of you know what I'm saying yeah I feel like I'm in the roller coaster again trying to see what he's like no I said no and then I said yes and they are we're in this mess together I see okay that's that's an interesting theory Tony you think that's true I don't know if if this I can't really say if this was a good idea or not to buy this house because we haven't sold it and we haven't made any money on it how much debt are you guys in right now 105 000 including oh no I mean 924 000 wait including the mortgages why why did you just give me two different numbers that are almost a million dollars apart because I don't I mean I don't count the mortgage why a mortgage is debt it's literally debt I know what's happening right now why do you not count a mortgage is debt because in her mind we're gonna make profit is that true yeah because I wanted to sell the other house in next year I don't think you guys are on the same page with money I can't even figure out what page anybody's on right now like was it a good idea or not a good idea it's very unclear do you have debt might might be 105k might be 824k don't know did one person agree not sure it's all very confusing to me do you feel the same way yes I think we contradict each other's yes and I think sometimes you both contradict yourselves as well yeah why do you think you do that like we don't have a like a real concept of what we're doing yeah we want to do a shift that's why i think we're here because there's other types of investments and we want to get out of real estate because it's not liquid at all so it just makes us go rounds of depth so we want to stop is that true you want to stop being involved in real estate i want to yeah okay and tony yes oh why didn't you say that at the beginning we knocked this out in 15 minutes is it true you really do you really want to be out of real estate because you just told me five minutes ago we don't want to be without a house we need a house for the kids and and on and on and on well i think at least we want to own a home that's why we bought this small house okay so because we don't we don't want to retire here in the united states but at least i think we're going to be able to live here in the united states we need a physical address in case something happens we can always come back but like we don't have to have like four properties or three properties i would like to have uh one house and be paid off okay that's my that's my goal that sounds pretty similar the two of you seem like that goal could work together right they say they want the same thing one house and to pay off debt but agreeing on that outcome doesn't actually mean they're on the same page i'm picking up on some big like here's what i noticed earlier tony told me he's quote always on top of the numbers that sounds responsible but in my opinion all he's really doing is monitoring problems not solving them just knowing your debt balance doesn't mean you're managing your money that's like someone who knows that their body fat percentage is high they've got their lab results they track it every week but they're still eating at dairy queen four times a week yeah you might be aware but that doesn't mean you are making money you're not making money you're not making money you're not making changes and then there's melissa she said their goal is to retire with rental income when i asked her why she said my cousin does it she's following someone else's playbook without really knowing the rules and i see this constantly especially in immigrant families in fact it happened in mine my dad was set to study petroleum engineering he got into a great school days before leaving a random family friend stopped by for dinner and asked my dad what does he plan to do and my dad told him and the guy goes not a good field there aren't that many jobs you shouldn't do it so my dad changed everything he changed his major he didn't even go to that school and he became a mechanical engineer instead he made a life-changing decision because of one offhand opinion from a guy at dinner even he admits i don't know why i did that but this is how so many major decisions get made real estate careers college even marriage from random comments we hear from people who don't know what they're doing and they're like i don't know what they're doing that we trust often without interrogating if their opinion is right for us i'm curious in the comments below have you ever made a major life decision because of what somebody else said to you leave a comment below i want to read it when we come back i want to dig into why melissa and tony are so emotionally attached to real estate i'm going to take a wild guess maybe you've been putting off seeing a doctor for a while for some unexplained condition hey why is my left eye blurry do i have toe fungus or is it just gross toenails whatever it is stop wondering if you should get it checked out go see someone right now you can use our sponsor zocdoc they make it really easy you don't even have to get on the phone to schedule an appointment zocdoc lets you search and compare local in-network doctors whether you're looking for primary care dentistry eye care or anything else you can easily search by specialty or symptoms and you can book in-network appointments with more than 150 000 providers across all 50 states getting an actual appointment is easy you just look through the real appointment openings 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therapy that works covered by insurance grow connects you to thousands of high quality licensed therapists across the u.s that work with your schedule virtual in-person sessions nights weekends they have an option that will work for you you can search by what matters by identity specialty availability insurance coverage you can find a therapist who's the right fit for you grow makes it easy to book an appointment in minutes and begin sessions in as little as two days see if you could pay as little as zero dollars for therapy in seconds at grow therapy.com slash ramit that's grow therapy.com slash ramit grow therapy.com slash ramit availability and coverage vary by state and insurance plan let's take it back a little bit why did you initially decide to buy and sell houses because we are in a growing area so we bought a lot for 70 000 and i knew we could sell that i built a house and sell it for a million so i was like let's do it how did you know that well i'm a realtor an architect and a gc so that's my work okay oh that's good all right so you you saw an opportunity and did you tell me the numbers correctly you can buy it for 70k and sell it for a million with a house in the land all right so the land was 70 the construction 540 plus the 80 000 over budget it was okay let's just say 700 to round up yeah yeah and and have you sold it yet no because we need to wait for 2026 what's the market looking like over there it's going down so that's why i think a million okay but you can't sell it until next year if we want the capital gain tax of the 500 000 so that's why you originally got into buying and selling houses because you said i see an opportunity i'm a realtor i'm a gc i'm an architect i can make this thing happen bought the house put money into it several hundred thousand dollars you're constrained right now because you can't sell it but hopefully you can sell it for about a million dollars so that's why i'm a realtor i'm a gc i'm an architect i can sell it for about a million bucks next year if you sell it for a million what will your profit be probably like 400 350 350 okay when did you buy this 70 000 lot oh in 2022 so four years for maybe like 300 350 400 000 of profit yes okay melissa you mentioned earlier that you want tony to take action around your debt what do you mean by that i feel like he feels like i'm the one renovating and building and so it's my responsibility to cover and set up a plan for it but when the profits come then it's our money oh so i feel like no like it's our plan like that's why i feel like he rather doesn't say anything so he doesn't get the blame but if things go right then he's like oh great you're so smart but i'm like you are also in this but i think sometimes he's scared that if he does something wrong i would be just blaming him or something what do you think tony i'm more of a i've always lived like in fear of what's gonna happen like if like i'm always more of a negative side like for example the house i mean what happens if it doesn't sell what happened if we you know lose it all and she's more of a risk taker so how do you fix it if we plan together and talk about it and just have a plan what's the plan not do any more risky investments what do you say melissa yes i think that's why when i lost my job i was like okay i don't want anything of this so little that's why we start selling the houses and the land and did they sell yeah the first house sold in five days how much did you make on that two hundred and eighty thousand dollars okay that's good what'd you do with the money i think we did some mistakes because we bought the land in cabo she just took all the money and put it into another piece of land from the 280 120 went to the land what about the rest we owe tony's mother 30 000 and then we invested in charlotte for the first time and then Once I didn't work, then we just used some of the money. And also when we returned the vehicles, we had to pay the negative equity. And we bought the car cash. Do you notice the cycle that you're in? Yes. What is it? Make money, then pay off debt, and then figure another way of how to make money. What about you, Melissa? What do you notice about the cycle that you're in? Yes, big purchases, big expenses. And like $280,000 is a lot of money to make. But where is it? Did it help you get ahead? Kind of, a little. You have this land. But like, what do I get? All this work, all this time, all this risk you took. Like, where is it? Yeah, I think we jump from one project to the other and then the other project. And it's like, too soon we don't let even the money grow. Yes. Why do you do that? Because I feel like we're running out of time. That's a very common thing. Whenever people say that, they almost always make really bad decisions. They'll say either we're running out of time or I feel like we're behind. And then they immediately start making really, really ultra risky decisions. But when you ask them, running out of time for what? What are you basing that on? They really have no idea. Do you enjoy this cycle that you're in? No, that's why I want to change. Tony? No, not at all. I mean, originally our plan was to retire by the age of 50. Oh, you're running out of time for an arbitrary deadline that you set. That's like me saying I'm running out of time to fly to space. And then you go, what? When do you need to go to space? I go, 45 years old. Why 45? I don't know. Just 45. I'm running out of time. Arbitrary. Can we do an example conversation, like a role play between the two of you on what your last conversation about paying off your debt went like? Who was the one who started the conversation? I think it was me. Okay, go ahead. Like, just as if you're having the conversation, I'll just observe. Have a conversation. Have that conversation again so I can listen, please. So, Mel, I think that when we are able to sell the house that is worth a million dollars, if it sells, I'm not sure if it's going to sell for that much, we should take the profits and pay off our current home where we live and the rest is put into a retirement account, put it into our kids' 529 plans, which we haven't done yet. And just keep working and saving money and try to avoid any more debt and also pay the credit cards. Do you really think we should spend 280 paying off the house? Yeah, because we're always going to be in this cycle where there's, you know, we're going to have the smart idea of what to do with the money and we're going to end up with not such a good investment and either we lose it all or it's finally going to be very bad for our family. I don't want to be worried about how we're going to make, what happens if you lose your job, like what happened the first time and I'm the only one paying all the bills, you know, we can't afford the lifestyle that we live. I think we should sit down and explore all our options. Hold on, is that how the conversation really goes? Yeah. Yes. Really? And then what happens? I mean, I think we'd never follow up and be like, what are all our options and what's best? Why don't you follow up? She thinks it's just words and now we're not going to, or at least I'm not going to follow through. I don't know, maybe she doesn't believe I can do it. Do you trust Melissa that Tony will follow through? Yes. I just feel like if we don't have savings either because we paid off a house, then I think we need to find something in the middle. I don't believe you right now. You're telling me that you both have this very pleasant conversation and you agree, let's sit down and then you just don't sit down. Why? I think that it's because then when I'm really like, okay, let's sit down, we just get distracted or. With what? The kid. Maybe we just try to avoid the conversation and we'll see what happens. Isn't one of the things you told me both today, you said you want a plan? Yes. Both of you said we want a plan that we can follow through on. You've been married for seven years. You never made a plan about money, right? No. So I don't think it's your kid that's distracting you. You all make a lot of money. You could hire a babysitter for an hour or two. There's a lot of ways to do it. I'm finding it hard to believe that you haven't had time to sit down for a couple of hours and make a plan. What's really behind it? When we sit down, I feel like we go in circles like again and again. Yeah, I feel like that's happening right now. I want to try to understand like how much debt? Who wants the debt? Do you both. Do you both want to change or do one of you want to keep it this way? And I'm still not sure what's going on here. Do you guys want to get real with me? Yes. Who wants to lay out what's going on right now? Put it all out on the table for me. Our plan is to settle down, not make any risky investments, not have all the debt that we are accumulating and just focus on our kids and our retirement. I want that. Okay, where do you disagree? So far sounds good. Sounds like you both agree. Well, we disagree because it's hard for us, for me to convince her that it's the best idea to sell the house, get the profits and pay off our mortgage and just live in one house. Okay, can we build more of our savings too? Yeah, with whatever's left. We can start with paying off our home. And another car? I think we're okay. With one car because our jobs are very close to each other and I don't see a way of us getting ahead if we pay another vehicle. I feel we need two vehicles. I mean, so far it's probably one of the best decisions we have done is to not have any debt as far as the cars and just share a vehicle for the last six months. That's like the best thing we have done. But we can discuss that when we have more money to talk about. Yeah, I just feel like, with an emergency or if one car breaks, then we need, it could be a cheap car. Okay, I can probably do that. How did that conversation compare to the normal conversations you have about money? We ended up agreeing with the decision. Most of your conversations, you don't make a decision by the end, do you? No. No. So did you make a decision in that conversation you just had? Yes. What was the conclusion? Pay off the house and probably buy another car. A cheap car. A cheap car. Okay. You both agree on that? Yes. I hope yes. If he doesn't change his mind next week. Why would he change his mind next week? Because sometimes he does. He then says like, actually, we're good with one car or things like that. And then I'm like, but we just decided that it was a good idea to have two cars. So that's what I mean with the roller coaster. That can't feel good. You know, you thought you agreed on something and then, a week later, your partner's changing his mind. Can I ask a question? This is a major decision with hundreds of thousands of dollars at stake. How did you just make that decision? I think we try to run the numbers on our minds if everything goes well. Come on. Nobody ran the numbers just now. Can anyone tell me one number you ran? No. There was not one number in that conversation. Did you notice? I think you both just decided randomly. I feel this. No, I feel that. Okay, fine. We'll sell the house and pay off this, but I want a car. Oh, I don't know about the car. No, I really want a car. Okay, fine. We'll get a car. Is that not how you pretty much made the decision just now? Yes. Do you think maybe that's how you've made a lot of decisions in the past? We're going to buy a house. We're going to buy land. We're going to sell a house. We're over budget. Like just, this is what I think. This is what I feel. And then try to convince my partner. What do you think? Does that sound familiar? Yes. How do you think other people make decisions? Big decisions like this? I really don't know. Okay. Melissa? Well, I think they run the numbers and really analyze everything and all the different possibilities. When was the last time the two of you did that? When we sat down to do the CSP. Okay. What about before that? Before that, we never really did it. Thank you. So here we have a couple who owns multiple properties. Is in? Hundreds of thousands of dollars of debt. Has never run the numbers. Melissa, you've heard this podcast before, right? Yes. You heard me say run the numbers like a thousand times? Yes. What did you think when I was saying it? To really sit down, understand where you are right now. Okay. But you didn't do that. How come? I think we really never sit down. Guys, can I tell you something straight? You got to stop saying this phrase, sit down. We're sitting. We're all literally sitting down right now. What does it mean? We're not sitting down. Tell me what that means. Both putting our 100% attention into it. I feel like that's not even happening right now. We're talking about what? $500,000 or something. Like a lot of money. This is a lot of money. You worked really hard for it. And the way that you're talking about what to do with it is just like, oh, I think we should do that. No, I think we should do that. All right, I'll do this. You do that. Okay, cool. There's not a single number being used. Do you see how that is probably what got you into this financial situation that you're in. The way that other couples would make this decision is they would know their numbers. They would have a CSP. They would know their interest rates. They would know what is our strategy. Are we trying to build three houses? How much do we have for a budget? Why are we using real estate as an investment? And they would be very, very careful to know when we buy this house, this is how much we plan to sell it for. If we sell it for more, this is what we're going to do with the money. If we sell it for less, we're going to do this with the money. Right now, the way you're talking about it is just like, it's like a kid wanting to buy a toy. I want this toy. No, I want that toy. Okay, like I'll get this toy. You get that toy. We need to be talking about it in a very different way. Most of the time, I don't care if someone makes a different financial decision than I would. You want to go buy a house instead of renting? All right, as long as you ran the numbers. You want to go to a French restaurant, spend $55 on poulet? All it has on top of it is black pepper. All right, fine. We're just not going to eat together. What drives me crazy, though, is when people make decisions out of fear. Like take the SUV example. People love to say, well, of course we need an SUV. We had kids. But is that really the reason? Deep down, are they thinking, well, I've carefully maximized safety of the family, as well as convenience. I ran several split analyses. No. A lot of times, we are. Thinking, that's what other people do. And what will people think of us if we don't have the biggest, safest car as well? When you make decisions based on only what other people are doing, when you are constantly reacting instead of being proactive, it's really hard to learn how to make good decisions for you. And that's a problem because money is a long game. If you don't learn how to make the right decisions for your vision, for your relationship now, then what happens when there's real money on the line? This is why I tell people to start investing early. Even if you've only got 20 or 50 bucks a month, the amounts don't matter. It's about getting that process right. It's about building those habits and becoming strong enough to deal with the market going up and down. Because when you do have $2,000 or $3,000 or $4,000 a month to invest, you're going to know exactly what to do. Now, we are going to take a look at the numbers right after this. I'm going to take a wild guess. Maybe you've been thinking, putting off seeing a doctor for a while for some unexplained condition. Hey, why is my left eye blurry? Do I have toe fungus or is it just gross toenails? Whatever it is, stop wondering if you should get it checked out. Go see someone right now. You can use our sponsor, ZocDoc. They make it really easy. You don't even have to get on the phone to schedule an appointment. ZocDoc lets you search and compare local in-network doctors. Whether you're looking for primary care, dentistry, eye care, or anything else, you can easily search by specialty or symptoms, and you can book in-network appointments with more than 150,000 providers across all 50 states. Getting an actual appointment is easy. 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That's why I recommend getting therapy so often on this podcast. And Grow Therapy can help you find the right therapist for you. Grow is therapy that works covered by insurance. Grow connects you to thousands of high-quality, licensed therapists across the U.S. that work with your health. They have an option that will work for you. You can search by what matters. By identity, specialty, availability, insurance coverage. You can find a therapist who's the right fit for you. Grow makes it easy to book an appointment in minutes and begin sessions in as little as two days. See if you could pay as little as $0 for therapy in seconds at GrowTherapy.com slash Ramit. That's GrowTherapy.com slash Ramit. GrowTherapy.com slash Ramit. Availability and coverage vary by state and insurance plan. What was it like to go through the CSP? Well, I think I was very surprised that we make good money, but I frankly never, I don't feel like I'm making anything at all. And Melissa? We realized we had more investments than we thought. We also had multiple. Bank accounts. So then we consolidate that into one bank. So that was good because then we could see how much more savings we have and how much debt too. So it helped us because at least we paid off $28,000 in the last couple of weeks. That's great. So it was like a good starting point. Yeah, that's great. Did you both? Did you both do the CSP together? Yes. Okay. All right. Let's take a look on screen here. Probably it's a little messy because. Okay. Whoa. What? So I'm going to describe what I see on screen. I see a lot of numbers. So there's a massive breakdown next to the net worth section. What are all these numbers? That was like when we were going through each account. Just so everybody knows the file name on this is called IWT Conscious Spending Plan Revision 03. First of all, I don't mind multiple revisions. That's totally fine. Usually the first time people do a CSP, it's all wrong anyway. But at least it's a good start. It's just like drawing it in pencil. And then they go back and they like fill in the colors and the lines. It's no problem. But now that we have this CSP with a lot of numbers, what are all these numbers I'm looking at? Just the different accounts or properties. So your assets, you broke them down by car. Rental house, primary house, and the land. All right. Let's go through it line by line. So, Melissa, can you read the word in bold and then the number in full next to each item all the way down for this box, please? Go ahead. Assets, $1,585,000. Investment, $190,344. Savings, $30,485. Debt, $899,776. Total net worth? $106,053. $906,000 in total net worth. All right. What do you think about that number? It looks good on paper. Is there something else? Sometimes we hear the term of like house poor. Are you house poor? I think after we sell one property, we will be better. Can I ask you to give me a direct answer? I noticed that this is a tendency you have. I ask you a question and then you tell me why it's going to be better later. How was it doing the CSP? Well, we paid off $28,000 of debt. So it was. Are you house poor? Well, we need to pay off a house and then we'll be positive. I'm just asking you to answer the question directly. Are you house poor? I think we are right now, yes. Okay. Do you find that sometimes you are always trying to look for the positive spin on something? Yes. How do you think that that affects your money? Hold on. I could tell this is hard to think about, right? Okay. Take a second. We're in no rush. This is a tough question. Take all the time you need. The question was, do you often find yourself trying to put a positive spin on things? And the second I asked that, I could see you started to cry. Why do you think that that was such a difficult question to hear? When we were taking care of my siblings, I couldn't go back to my parents for help. So I felt like we have to be strong. And I just realized I always try to tell my story like a positive way. I can understand why you do it. The idea that we can't even think about something negative. There's too much going on. We just have to focus on the positive. But I also noticed that in order to be able to fix our money problems, we actually have to be honest. Like, are we in a bad situation? Because we have $899,000 of debt. We need to be honest about that. Are we house poor? It doesn't mean you're a bad person if you're honest about the situation that you are in. But I can tell you it's very difficult to move ahead if you are always spinning something to be positive. What do you think? Yes, I think this is helping me try to be more realistic. Great. That's a good word, realistic. realistic doesn't mean good or bad realistic just means we accept reality and then we can decide if we want to keep it or change it i like that word okay so are you house poor yes all right so you have nine hundred and six thousand dollars of net worth in your 30s but you're house poor tony what do you think about these numbers the net worth number i think is uh it's a good good number i think if we focus on a plan that could take us a long way i feel like the years that we have worked so hard it's it's paid off all right is it good or bad nine hundred six thousand dollars net worth okay what do you say tony for me is amazing oh all right that's good let's keep going to the income this time tony i want to ask you if you can read off your combined gross monthly income what is that number fifteen thousand eight hundred and thirty dollars fifteen thousand eight hundred thirty dollars which means combined the two of you make one hundred eighty nine thousand dollars a year did you know that i knew my part i think tony's part is still wrong should we figure it out all right who makes nine thousand six thousand dollars a year i think tony's part is still wrong should we figure it out six hundred and thirty dollars a month i mean that's you okay and who makes sixty two hundred a month that's tony right yes all right tony is that number right or wrong it's correct what do you do for a living tony i manage a dental office okay all right melissa why do you think that number is wrong because he just showed me his pay stub today and it was more great get the pay stub tony i love to roll on this okay so gross pay for the last couple weeks was three thousand four hundred and eight dollars net pay two thousand one hundred ninety five i'm sorry to say melissa wins this one tony your numbers are wrong i don't know if you average it out it's probably a little less this was a good good paycheck oh it's you get extra sometimes yeah if i work more hours it's not that far off we're like 600 bucks off gross so you probably worked some extra hours all right and normally you'd get a little bit less fine melissa are you okay with that putting 6200 yeah all right i think the number is probably correct i stand corrected tony you're right you might have made a little bit of extra money but in general for just pure what we're going to assume 6200 a month gross fine do you combine your money or no no we haven't not currently no let me guess you haven't sat down to do it together never never why not out of curiosity i guess we just got used to the idea of you know you take some part of the bills and you pay the other half and then whatever let me guess without even looking let me just guess tony pays the um rent or the mortgage um tony pays car melissa pays everything for the kids groceries amazon how am i doing so far pretty accurate why is it that every man and woman breaks down their expenses the same way why and all of you are wrong like watch this you're about to have a second kid right yeah it's happening like in a matter of weeks who's gonna pay for all the kids stuff now still mom mom's expenses are going to go way up formula or food all kinds of clothes all gadgets everything child care but you're not going to adjust for it because you don't sit down and talk about your expenses is that fair it's obviously not fair no do you venmo money back and forth to each other it's a cell payment so we just really if if i'm running out of money i just tell her oh i need a thousand dollars you literally zell request her a thousand dollars and then what do you do melissa i'll transfer a thousand bucks all right how often do you do this on a given week every first of the month so the bills arrive at the same time wait a minute hold on maybe this is just my automation brain thinking because like i don't like doing work and i definitely hate logging into my bank if it's always a thousand dollars on the first of the month i don't like doing work and i definitely hate logging into my bank if it's always a thousand dollars on the first of the month wait a minute hold on maybe this is just my automation brain thinking because like i don't like doing work and i definitely hate logging into my bank if it's always a thousand dollars on the first of the month why not just set that up to do it automatically because some months i i could pay it and and if i don't need to ask for money i don't do it because i'd rather not you guys like this the asking for money transferred back and forth no because like the renters give me the money and i've been telling tony if you ask them to give you the money then you have the rent well and i mean we're trying to merge why are you trying to merge now because it has been very unorganized yeah and then when we realized we had even more investments that we thought and then when we realized we had four thousand dollars that we didn't even knew we had then it's like we need to put everything into one basket okay it's kind of funny to me that couples will have a baby together but they won't combine their money combining money into a checking account oh no no that's too intimate i go huh let's just put this together we live together we got a baby together we got 20 houses together but not combining income my goal by the end of our call today is to convince you both to show you a reason why it makes so much more sense to put your money together would you be open to that yes yes okay great let's continue down the list here by the way what do you think about that income is that good bad what very good yeah tony great yeah it's it's it's pretty high it's a lot of money 189 000 and you're in your early 30s yeah i mean we started working eight years ago really working three weeks three jobs a day yeah what the how did you do it how did you make 189 000 and i have these twitter commenters leaving me these rabid comments and then they're telling me all these reasons they can't succeed in life and blah blah blah meanwhile the two of you making almost 200 000 in eight years how did you do it uh we're very disciplined yes i would work in the morning and then at night i love it i wish every person watching this and listening to this understands what it's like to really work hard i really wish you know i i know i don't actually think everyone should have to work seven days a week i don't want that kind of life for everybody but i think there's a time and a place where you just say damn we gotta work oh it's saturday and we're going to work oh it's sunday okay maybe we'll go an hour later but we're going to work i wish everybody could see what it takes to work really hard and i honestly it's quite inspirational to see eight years and you're making 189 000 a year it's really impressive thank you can we just acknowledge the dangerous narrative in america right now around immigrants the idea that they're committing tons of crimes and they're taking our jobs and draining our resources not only is it wrong it's just stupid the truth is immigrants are the reason that this country continues to grow over the past decade nearly all job growth in the united states has come from immigrants and right now we are the country that has managed to keep growing not because we're special but because we are a country where immigrants are woven into our country's very origin until this administration americans views of immigrants were the highest on record and we actually have an amazing infrastructure to welcome immigrants from around the world do you know that other countries are not so lucky japan korea china they are facing serious demographic collapse their birth rates are falling their populations are aging and they're not getting the same treatment they used to get they're aging fast and without young workers to support them their economies are in serious trouble there are actually no easy solutions for those countries but america has been able to avoid that and thrive because of immigration so when someone complains about immigrants they either don't know the facts for example they don't know that immigrants commit less crime than native-born americans or maybe just maybe they're deeply uncomfortable with people who don't look like them i am pro-immigration we need far more immigration because immigrants are one of the main drivers that make america a thriving country i want to share that with you because this is not a show merely about someone's freaking conscious spending plan this is a show about living a rich life and you cannot ignore the context of how we talk about money and immigration and politics in this country after this we'll get back to the numbers i'm going to take a wild guess maybe you've been putting off seeing a doctor for a while for some unexplained condition hey why is my left eye blurry do i have toe fungus or is it just gross toenails whatever it is stop wondering if you should get it checked out out, go see someone right now. You can use our sponsor ZocDoc. Whether you're looking for primary care, dentistry, eye care, or anything else, you can easily search by specialty or symptoms and you can book in-network appointments with more than 150,000 providers across all 50 states. Your health matters and taking care of yourself should not be complicated. Can we continue on with the rest of the numbers here? I'm very curious to look at them. A couple making $189K, what does the rest of their CSP look like? We're about to find out. Your fixed costs are 68%. That's kind of high. It's not the worst, but I'd like to see that number below 60%. And I'm a bit alarmed because with such a high income, your fixed costs should not probably be 68%. So we'll dive into that. Your investments are zero. Oh God, that's not good. Savings are 23%. It says that you are saving $3,000 a month for vacations, but then next to it, it says not saving using credit cards. What does that mean? Why are you both smiling like that? Trying to say we spend that. You spend $3,000 a month on vacations. A year. A year. Oh, and then you put it in savings. Why did you do that? Yes, I think we were just very confused. All right, let's fix it. It's okay. Like I said, nobody gets it right the first time. It's no problem. So you're not spending $3,000 a month on vacations. You're spending $300 a month on vacations. Is that right? Yeah, if you're divided, yeah. Yeah. All right, that's good. That actually changes things a lot. So then that means you got zero going to savings and 32% going to guilt-free spending or $4,100 a month. I don't believe that number either. No. Where's the money? Well, I pay my credit card every month. How much? Pretty much my whole paycheck. So $4,000. Oh, so you basically take all the extra money and put it towards the credit cards. Yes. All right. What do you do with your extra money? Well, we've been trying to paying off the credit cards. If we look at your CSP, it says to me under debt payments, it says that Melissa is paying $1,405 per month towards credit cards. Is that right or wrong? That's one of them. And it's the one from the new construction, the remaining $40,000. $40,000 from 2023. Okay. So the $4,100 a month, roughly, you're putting it all towards credit card debt. Yes. All right. Let's take a look at the debt just so I understand it. So your debt of $899,000. I'm going to read off what it's broken down into. So you have Lowe's at $5,827. You have a mortgage at $520,000. Primary house at $278,000. Amex at $38,000. Bank of America at $45,000. And then it just says Tony at $12,000. What is that, a personal loan? Chase credit card. Okay. Credit cards in red, it says $101,776. You have $101,000 in credit card debt? Yes. It's really high. Melissa? Yes. What do you think? Extremely high. Not necessary. How did you get the debt so high on your credit cards? Everything is construction. So are these good investments? Well, if you look at it from having to pay credit card debt and interest, no. What do you say, Melissa? That's why we want to just get rid of real estate properties. Well, you have a lot in Cabo. You have a primary house and a rental house. The total of those is about $1.5 million. And if you have $899,000 of debt, could you not just technically just sell one or two or three things you own and then just pay off the debt and be debt-free? That's what I want, yes. That's what Tony wants. Melissa, what do you say? I mean, I think it's a good start to make that shift and don't plan any more projects. All right. This all seems a little too easy, doesn't it? Oh, no. We have all this debt. Hey, let's reach into our back pocket and pull out. One of our multiple properties and just sell it. Abracadabra, problem solved. All right. That was a little convenient. But let's consider how they got here and what that means for you. Melissa and Tony haven't ever agreed on what the next logical financial step is. In fact, Melissa will say that they've made a decision and then that next week, Tony will backtrack and change his mind. If I ended this call right now, I can guarantee nothing would change. That's because the debt is not actually their problem. Their individual relationships with money are. If you keep finding yourself in a similar pattern with your partner, you're constantly spinning in circles, you're making decisions only to have nothing change, then I want you to check out my money coaching program. It is frustrating to be stuck with money, but you can get unstuck. In money coaching, I'll help you learn the skills to figure out how to make a plan, how to talk about money, how to build a system that makes you move forward. Go to iwt.com slash money coaching to join now. Back to Melissa and Tony. Remember, they haven't even combined their money yet. Listen to how disproportionate their fixed costs are. A couple of things I want to note on your CSP. Tony, your fixed costs are at 97%. So what that means is, Tony, you're paying 97% of your take-home pay is going towards fixed costs. You take home 5,800. You're paying all of that. You're paying all the mortgage, 2,600. You're paying utilities, 730. You're paying all this stuff. So you have basically no money left over at all. Right. Basically, I just keep a couple hundred dollars in my checking account. What does that feel like? Okay. Melissa, what do you think about that? I think that's why we should have merged our finances. I agree. Daycare is $960 a month. Is that going to go up with the new baby? Yes. Double. It'll double. How are you going to pay for that? We haven't thought about that yet. Wait, what are you going to think about the baby's coming? Sometimes I talk to parents and they're like, yeah, we're going to have a baby in like five years. Sometimes I talk to them like, oh, we just found out we're pregnant. Oh, congratulations. This baby's coming. This baby's knocking on the door. Hello, world. Where's my daycare? Right now, we don't have to worry about that until like January. All right. How often do you think far ahead with your money? Like over one year? I never think about a year in advance. I always, you know, as soon as the money comes in, I just worry about paying the bills. And I don't even have time to make a plan or a strategy. Okay. Melissa? I think it's just when we had like life-changing events. Having a baby, siblings move out. That kind of thing. The reason I ask is that, like, if you are not planning for what to do about childcare and the baby's really coming soon, that to me is a big clue that you probably don't think about money down the road. If you're not even thinking about childcare for a baby, which is definitely going to affect your finances in a big way, then it's probably unlikely that you're thinking about things like retirement or putting money aside for an emergency. Fonder or vacation, things like that. And from what I'm hearing from you, that's probably true. Okay. So we probably need to change that because if we end this call right now, I suspect you will go the rest of your life just getting into debt, making a little bit of money over here, paying it off, going into debt and doing it over and over until one day it's like you're in the ocean and it just engulfs you. That's it. They just go their whole life just trying to pay off one thing. And fix another and make some money and then keep doing it forever. My mother. Our parents. Until they lost their houses at 50. We want to change. Okay. Tony, what do you remember about growing up with money? What did your family say about money when you were young? My dad was never around, so my mother took care of me and she always, you know, tried her best to provide. For me, pay for my education, spoil me when, whenever she could, you know, buy me gifts. There was no really knowledge of this is the money you can use. used to save there was always like almost leaving paycheck to paycheck and running out of money and then just working again to to make more what did she say about money what phrases did she use well i've never really talked about money with her she's still alive yes how is she doing with money now struggling she lives with um one of her friends they share a house so they just split the rent you ever talk to her about money now no because i know there's i mean if she lived her whole life like this why would she give me advice now right what message do you think you learned from your mom about money i think i just learned you know you gotta work and figure out a way of of you know surviving melissa what do you remember about your family saying about money when you were young we didn't talk about money but when we start like 11 years old every time my dad will sit us down and make this list why we don't have money and why we couldn't afford these things it was weird because like we never had any extra money but we went to good schools with scholarships but even if i asked for shoes it was like a big we're gonna get them next month because these are my expenses this month and kind of thing ah so he would tell you all the things that he had to spend money on for the family and that's why you can't get your shoes right now so was he using his explanations to teach you about money or was it a way to to not spend money that he didn't have what was it i mean at that time i was young like 11 12 so i felt like it was just the bottom line was you're not get not get the tennis until next month or we cannot afford that or it's your sister's turn or is that a good lesson or a bad lesson what do you think he could have teach me different things maybe that's why sometimes i didn't even ask him i start selling things like i would sell in high school accessories for the hair and then every day i run out of them so then i bought more and then sell them and then i could not ask for money that's pretty resourceful and then like the university was like he didn't want to pay for it but then i got a swimming scholarship like 80 percent so then i was like okay 80 percent like can i go i end up going and graduating did he pay the 20 percent yes okay that's interesting what happened then so then in mexico the pay was very low and that's when i met tony and he was moving to the united states and then i was like well i have a green card i can work there too and then we moved together when we move here it just seems so easy to make money uh-huh like in our countries you make five hundred dollars a month and then here is like we could be waitress and make that in three days yeah hold on here in this country you're making nine thousand six hundred and thirty dollars in a month that's a great lesson what else did you learn well i felt like maybe this is wrong but sitting down and running numbers with my dad was sometimes on my perspective pointless because it was more like so this is why i'm not going to make money i'm not going to make money i'm not going to do that right yes that's a very good insight so your dad was basically mr no he's saying no all the time so when you ask him for something you start to be like ah god he's going to get put me through this rigmarole of listening to all these numbers so i don't want to run the numbers and who is mr no in this relationship don't you yeah and so neither of you wants to run the numbers tony you're not actually talking about the numbers melissa you're like oh i want this it's going to be good tony's like no that feels bad and that's the extent of that conversation do you notice the thing that happened with your dad around college you asked him to pay for college he said no then you got a scholarship and you tried to persuade him to pay that last 20 i think you do the same thing with tony hey here's this project i'm going to make money i'm going to make money i'm going to i think we should do it it's going to be great we're going to make a lot of money tony's like no you're like ah mr no i don't care what he says let me just convince him finally he goes all right like i don't make as much money as you so fine and then the two of you are not actually connected with money is that accurate or not yes yes it also got me into this situation where i need to stop making all these projects because the way i show him is like i can work more too keep going you're on to something um but now we need to keep i don't want to keep working both of you are used to working a lot of hours oh we're short on money we're gonna go work that's what you do five days a week seven days a week that's what you do who cares if it destroys your body that's what you do you now have a second child coming and you're doing all these projects and it's actually unclear if these projects are making money or not when you factor in the credit card debt and the all this other stuff some might make money some might not but it's all locked up but this idea of just let's just grind and let's just hustle more it works until it doesn't work yes kind of interesting what do you both notice about your stories about childhood versus how you treat money today well i feel like she picked up this role of kind of being my parent yeah how would you describe like what's an example where she feels like the parent when it comes to the finances since she makes more money than me she kind of has the right to make the big decisions yeah i think that's one way and even transferring you money every month you have to ask her please can i have some extra money please and then she always does it so it's not that that's not the issue but just having to ask adult when both of you are making money it doesn't feel good melissa do you agree there's a parent-child dynamic here yes probably but i feel like i wanted to merge our finances a long time ago but then he doesn't do it really now i like it this is dramatic i didn't expect that what happened i think he procrastinates a lot okay like he could be yeah let's do it but then it's like a week have passed by uh then we just never end up doing it why is that tony i'm just comfortable and i don't like changes like if i have one bank account that's where the money's coming out from and i don't want to go through all the process i guess she's right just procrastination i mean if you don't want to change then i can't help you do it there's no magic abracadabra thing i can say that's going to make either of you want to change doesn't exist if you are comfortable and you like it what am i going to do if you want to change i can help if you're unsatisfied with the way money is working in your household i can help but if you can't open up an account that you yourself agreed to do there's nothing i can do about it yeah that's why i want to to make this change and and follow through and and just make it happen what's an example of a recent money change that you have made and followed through with on my end i haven't done anything so what why would we expect that you're going to do anything and follow through because i want to do what's right for our marriage and and our life together what do you think melissa feel like sometimes it's easy things that he just make it sound so difficult to change the auto payments the bills and like i think that it's just easier than what he thinks in his mind is so difficult to change yeah it makes a lot of sense so how do we get through this because truthfully i don't love lecturing people what do you think is really going on here if the two of you zoomed up and you looked at the two of you right there down there you're floating above yourselves and you looked at the two of you talking to each other and this conversation what would you notice about this conversation that we can come up with with an agreement and that i always think of ways to try to get out of it yep just to avoid the conversation and and just don't do it what about you melissa what do you notice things that could be fixed if we can just like really do it or follow the plan like even the bank accounts like i close all my bank accounts and just leave the one we're gonna merge so i feel like i do my part then I just need him to do his part to like merge that change your direct deposit I already did mine I already transfer everything to savings so then you do that setup too what if he doesn't do his part well then I'm alone with one checking what's going to happen to him if he doesn't do his part why would he change I mean it is going to avoid him asking every month he comes every month he goes hey can you transfer me a thousand dollars and then what do you do transfer him yeah what's problem yeah i don't know what else i could do ask him tony can you finish to set up your merch accounts and change your direct deposit yeah i actually want to to commit to doing what's right and and making the change and not thinking twice about things i don't find it very convincing you know why you've been married seven years you haven't even gotten around to combining your income come on this idea of like we need to sit down and commit it's just words and that's actually not really the problem there are people who are like i need to work harder you guys work harder if somebody asked you how do you work harder how do you motivate yourself to get up in the morning and go to work what would your answer be discipline obviously you're very disciplined i totally agree financially maybe not so disciplined right so if somebody asked you how do you get motivated to go to work every day you seem so disciplined how do you do it what would your answer be just do it exactly it's like if i were you i'd be like that's kind of a dumb question what do you mean how do you get up and go to work just go to work that's what you would do it's a weird question and so the same thing is true for money if you're here saying like oh i just need to finally buckle down and do my money um this is just weird words there's actually something much deeper going on here perhaps the idea that tony likes to avoid money melissa wants to be in charge because ever since she was a kid she felt like she had to be in charge of money now especially added on with the consideration that she earns more money than tony keeping money separate melissa has these big plans i need to do this deal and that deal and i always need to have something positive going on and we can't talk about the debt but let's just focus on the next gig and the next deal and tony uh i know you're gonna say no because you always say no you're the no guy but i'm gonna convince you anyway so just keep the money coming and i'll pay you the one thousand dollars to figure it out but like you know it's fine like this house is gonna sell and that land is gonna sell and then we're gonna be all fine how much of that's going on here everything is true melissa what do you notice about what i just said that everything is a good idea but it's not like it's on the air it's in the air yes there's no there's no um uh numbers guiding it it's just like oh i think we should do this i feel we should do that yes what else who's in charge i think neither of us that's an interesting comment what do you think tony yeah i think we just leave everything to we'll see what happens and nobody's in charge wow i i kind of would have guessed melissa's in charge but i actually think your answer was better melissa no one is really in charge melissa you persuade tony to do the things you want to do even when you get eighty thousand dollars over budget tony because you're kind of like oh whatever you want to do melissa whatever then when things go wrong you're like well i didn't i didn't even want to do it in the first place but the fact is neither of you are actually creating a vision and you are certainly not bringing the other person on board like it would actually be easier if one of you was just the boss and you're just like do these things employee i don't want that but that would actually at least be a little more logical right now it's like i don't know maybe we should do this but then if it goes bad i'm not involved etc the way we learn about money does not disappear just because we move to a new country what's interesting to me is that melissa and tony have managed to do quite well financially they have a high income and a solid net worth but in my opinion they have gotten here despite how they manage money they don't talk about money they don't run the numbers on these huge purchases of buying and flipping and selling with no clear plan there hasn't really been any strategy there's been a lot of hard work but also candidly they've also gotten lucky you know there's this phrase i would rather be lucky than good not me luck is nice but i never want to depend on luck for the important things in life like money so i think it's great that they've gotten lucky but luck doesn't last i need them to understand a simple way of looking at money and that's going to start with them understanding the risk that they have put themselves in if nothing changes for you in the next 90 days what will happen we will probably run out of savings and have no money for an emergency fund and then keep living paycheck to paycheck and run out of investments and hopefully we don't lose our jobs and if you do we'll lose the house we've just trashed eight years of work why would you let yourself get in this position i guess because we thought we were doing the right things making the right decisions yeah i think it was my positive like everything's gonna go as planned and not really seeing the risk yeah but now that i'm tired because i'm gonna have another kid then it's like this is not working like we need to sell and start over with a new plan i think the new plan has to involve both of you it has to involve serious numbers not just feelings and it has to be something that is sustainable it cannot be one hustle after another the hustle and the grinding that works when you're in your 20s you're single you can work extra no big deal we need to be smart now and not just count on working an extra 10 20 30 hours that does not scale it doesn't work after a certain point tony are you okay with that yes what would each of you need to change in your role with each other well i think my mentality is staying more positive and just follow through maybe not i'm gonna give you a little bit of suggestion i think one of the reasons that you go back and forth back and forth is that you're actually not really making a decision you're just arbitrarily being like yeah we should do that or no we should do that so when you just pick something based on how you feel based on where the sun is in the sky today then the next day you're going to feel differently about it maybe you slept poorly or maybe you drank a can of coke it doesn't matter real decisions for money are made based on numbers so if the person comes back and they start doubting you go well hey maybe you're right but let's take a look at the numbers we made this decision based on these numbers have the numbers changed is there something that's changed differently if not why would we keep changing our mind we already made a good decision based on the numbers that's how you make effective decisions so i think tony you're going to have to become proactive meaning not wait for melissa to come up with an idea you need to be an equal partner in this and you need to actually start using numbers have you read my book no so how could you be a partner if you haven't read my book well i want i want to now i'm going to have a i want to get involved good melissa how will your role have to change with tony i think i need to let him be more proactive and do these ideas to me instead of me trying to convince him of my ideas maybe just listen more of his side of view stop these real estate things yes and let him like really just take care of everything maybe be more involved not no one's taking care of everything both of you are going to be involved but he should take care of some of the things i agree yeah i guess more involved yes but in an active way not in a yeah we'll see if it sells no no no no i don't allow indecision in my financial relationship with my wife never never like like let me put it this way what's this phrase some there's some phrase about wealthy people touch once deal with once or something i don't know it the idea is basically if we're going to talk about something we're going to talk about it once and unless it's something really important it's done like hey do we need to wash this towel because we have some guests coming over talk about it once deal with it once it's over that's it we're not going to let string this thing out because we got more important things to deal with same thing with money oh we need to open up a separate account okay whose decision is it oh tony you're going to be the one in charge of it okay tony when's it going to be done tony says it's going to be done by next tuesday okay make sure you update the document we're not talking about it again and you make sure that the next time you talk about money you can check in on those things so you are monitoring but melissa i can see you getting a little nervous like how do i know he's going to do it do i trust him he never did it in the past etc tony how do you want to respond to that well i want to show her that i can do it and and i will do it cool maybe some good suggestions might be that each week you each put an hour on your calendar to work through the money items that you need to work on. And then during that time, at the last five minutes, you can update a little document for each other or you can even just sit next to each other and tell each other what you accomplished. Right now, you need to start with baby steps. Over time, you can expand your level of trust knowing that Tony has shown you he will follow through. And Melissa, same thing for you, knowing that you will follow through as well and show Tony that. How does that sound? Great, yeah. That sounds like a plan. All right. What's the Rich Life vision for the two of you for the next five years? What does a Rich Life look like? My idea is to travel at least once a year to a different country with my family. Okay. So I would like to not have any projects. And also, I want to optimize all these monthly like savings, investments. So it's automatic and we don't have to, I calibrate like every six months, but just itemize everything. Great. So you want to automate everything. You want to. Pay off the small house, this house. Oh, okay. If possible. All right. What about these babies? Anyone want to include them in the Rich Life? These babies are just sitting alone for the next five years. You're like, ah, they're more fun when they're five. I'll pick them up then. What about them? I mean, they're part of us. Yes. That's the way I see it. Like they'll go, I don't know, with us. Okay. That's actually a pretty good answer. Just so everybody knows, there's like a lot of cultural nuance in what Melissa just said. The idea that they are part of us. They come with us. There's a lot of cultures where the adults do what they're going to do and the kids come with the adults. Like the kids are going to fit into the adult's lifestyle. In America, it's like quite the opposite. The idea is, oh my God, we had a kid. Now we need to spend every week, taking our, entertaining them and doing what they want to do. We're going to go to all the kids' shops, etc. And no, we can't take them to an adult restaurant because that's not for kids. That's quite interesting. Is that how it is, Melissa, the way you think about your kids? Yeah. I just take them with me everywhere I go. It's easy for me to take care of the kids. Yeah. It was harder to raise teenagers than babies. Yeah. Okay, cool. I love that. I love the, sometimes just the subtle cultural differences that come out when people talk. I just love it. It's so, it's just a phrase you said, but it's so profound in the way that I am guessing that you relate to your kids. It's really cool to be able to share a little bit of that. All right. So you're going to bring your kids wherever you go, traveling, working, etc. Is there anything about the debt in this rich life? We don't want any debt. You want to pay off your debt? Within five years? Yes, if it's not sooner. Like I wish next year. Because we never had debt until we decided to build. All right. Should we take a look at the CSP? I'm going to ask you, now that you have both described your rich life to me, I'm going to ask you what changes you want to make on the conscious spending plan. So we want to pay off all credit cards, Lowe's, Okay. Amex, Bank of America, and Tony's. Okay. Okay, that's $101,000. Where's the money coming from? From Kabul. Okay, that's $240,000. Is that how much you're going to make? Yes. And you're going to have that soon, right? It's on the market now? We're closing this month. Great. All right, so you're going to walk away after all fees, taxes, everything, with $240,000? Yes. Great. All right, so you're going to pay off the credit cards. That's amazing. How much do you have left in debt after that? $800,000. Okay, $800,000. So what are you going to do with the extra $100,000 and however much $1,000 from your lot? Well, I would like to start an emergency fund. Good. Why? Just so Melissa knows. I want to see how the two of you talk about this money. Well, I want to start an emergency fund because anything could happen if you lose your job and I'm stuck with me being the only. You know, the head of a household. We need to have at least six months to be prepared and see what our next step is going to be. And now that we're going to be four in the family, we need to take care of our two sons. Wait, Tony, one of the things that happens with the two of you when you talk about money is each of you just says something and then you just stop talking. Like, it's not actually a conversation. Have you noticed it? Tony's just like, I want to have this because this, yeah. Yeah. And it's like very unclear what is supposed to happen next. Are you asking me a question? Are you telling me something? Am I supposed to cry? What the hell is happening right now? So I need you to continue and then like a conversation. What would you say on a first date? Oh, so what do you think? That's how I need you two to talk about money. Look at this. Look at the way that you're both sitting when it comes to money. Look. Hello, everybody. I am nervous about money. I need you both to sit up straight, lean forward and get in the. Game. Let's do this. Go ahead, Tony. Tell her what you want to do and then get her involved. Okay, I want to open an emergency fund for at least to have at least six months worth of expenses. And I want to not have any credit card debt and the rest of the money invested long term and not touch it. And not worry about if it's going up or down. And. And just be consistent with the monthly investments. What do you think? I agree because we don't know what's going to happen next year. Wow, good. Okay, I love it. I don't know why I'm getting so mad as I'm saying I love it, but I f***ing love it. That was really good. Do we all just agree on what to do with $140,000? That sounds pretty good to me. Yes. Damn. I think I'm just like. I think I'm shocked. I think I'm shocked right now. This is working. Okay, the debt's getting wiped. The credit card debt. All right, goodbye. The mortgages are still going to be there for roughly $800,000. In terms of the extra $140,000 that's going into savings, that's a lot of money, my friends. That's more than six months. Six months would be like $48,000. You're still going to have like $115,000 or something. On top of that, you could invest. You could keep a little extra money in the savings account. You go, hey, our jobs are volatile or, you know, who knows? We want a little extra. It doesn't have to be six months. Make it 12 if you want. That's fine. But you could also pay off your mortgage depending on your interest rates. You could invest it. There's lots of options, but it's good to really think about the entire gamut. What do you think? Yes, I would like to separate some of the savings. Like if we put $50,000 or $80,000 towards the mortgage, would it make a difference? I don't know. We can research that. I mean, anything would help. No, that's not how we talk about $50,000 decisions. No way. I like what you said, Melissa. We can research it. Tony, how come when she said we can research it, your answer was, oh, yeah, it actually sounds pretty good. Let's do it. Research, yes. Making random decisions for $80,000, no. We're not going to do that. Try that conversation again, please. Maybe we should research how. We can put like $80,000 or $50,000 towards the mortgage to see if it will help make a difference. We can research that because I don't know how it works. Yes, I think that's a good idea. I mean, I'm sure it will help us paying out the mortgage faster. So I think that's a great idea. Good job. Who's doing the research? Together. Together, both. Okay, cool. One thing that couples unconsciously do is. When they're not used to being decisive, they use we when they don't want to assign anyone to do it. I like we. When we're talking about we are making a decision together, that's great. But we, the grand we who doesn't actually do anything, we're not allowed to use that anymore. It's either you or I will do it. Pick one. I would like Tony to do it. Okay. Because he has the hard questions, and I feel like I don't think about the negative parts. Nice. So, okay. That's cool. So, Tony, are you cool with doing the initial research on what would happen if you put $50,000 extra towards one of your mortgages? Yes, I think that's a great idea. I'm going to research, and I'm going to go through all the details, and that will help us pay down the house, and we're going to make it happen. Good. All right. You know, I will say, if you didn't have this Cabo sale, how would you plan to pay off $101,000? $101,000 in credit card debt? We were willing to sell the other house earlier this year, even if we had to pay taxes. You know, the way you're currently paying it off just month by month, you would actually never pay it off. Did you know that? Yes, I realized that when it seems like nothing changed. Yeah. That's because interest on credit cards is really high. Even if you put an extra, $900 a month. towards that credit card debt, do you know how long it would take you to pay it off? Guess. 20 years? I was going to say eight or seven. It's almost 19 years. Oh, wow. And you would pay over $400,000 in interest. It really speaks to the idea like going and making these decisions without actually knowing your numbers, going $80,000 over budget. All of the work you've been doing for a decade. And actually for the next 20 years would just vanish because you did not sit down and run some basic calculations. When you make huge decisions just based on what you're feeling and just what you want today, trust me, somebody is making money and a lot of the time it's not you. You don't want that. You are so lucky that you bought this land and these houses when you did. But some of it seems like it's very good decisions and you're a GC and all that stuff is great. There's also a lot of luck and you cannot count on luck for the long term. I think we were really lucky and that's why we, you know, when we sat down and thought about the whole process of us for the past seven years, it was like an eye-opener that we were able to do this money. But what happens if it would have gone a different way? Yes. We probably would have been bankrupt. Bankrupt, to be honest. That's exactly the right lesson to take away is like, hold on. We got really lucky. We got lucky despite a series of questionable decisions. We are so lucky. We should exit this as quickly as possible and completely change our strategy because if you did this today, you would be broke, dead broke. So I think it's awesome that you have the opportunity to sell. This land. I think that's great. I think the question of, you know, what do you do with this rental house? That's something you should actually consider and run the numbers. You might choose to keep it. You should probably run your numbers more carefully. How much is it costing us every single month? How much profit are we making after all fees? Even the roof repair 12 years from now, all fees. Compare that to would we make more just putting it in the S&P 500? What would make us more? Within five years, 20 years, 30 years. Don't let the tail wag the dog. Meaning don't feel like just because you had this vision of having multiple properties that you have to. You might. A lot of people can do it. But I can tell you that if you choose to go the real estate route, you will need to become way more quantitative. Way more. Buying it just based on arbitrary decision or like I see a value, but I don't know my numbers, you'll get washed out one way or another. You don't want to be a landlord. You don't. Then why do you even have this rental property? Well, I realized that after renting it. So what are you going to do with this property? I would like to sell it next year. Okay, fine. How do you feel about that, Tony? Oh, yeah. A hundred percent want to get rid of it. All right. And then what are you going to do, Melissa? Oh, God. What are you going to do after you sell it? Invested on the S&P. Oh, I thought you're going to buy another property. No, I want to stop. You're out. All right. I learned in my business, I always modeled out like bad, medium, good. And then when my business went down, it was so bad. It went way below what I thought bad was. So my lesson was no matter how bad it gets, it can always get worse. That's like such a horrifying lesson in life, but it's actually a good lesson, too, because no matter what you think you can get, it might be 50% lower or 50% lower than that, which would be horrifying. So I say that not just as a joke, but something to consider. Timing matters, especially when you are selling. Keep it in mind. I would like for the two of you to read both of my books. One, start with I Will Teach You To Be Rich. I want you to do a book club where the two of you, each week, you alternate on who is in charge of the chapter. And you both read it, and you take notes, and then you discuss. That will help you set up your money. It will help you make sense of these numbers. And because you're going to be paying off your credit card debt, et cetera, you're actually going to have some extra money every single month. Well, you're also going to have some extra expenses like child care, but you actually have the money to cover it. You actually have the money, but you need to start using your money much more effectively. Because you're going to sell the lot, you're going to fill up your emergency fund, so you're not going to need to save more money for that. That's amazing. You will want to put some money aside for certain things. I want you to read my book and redo your conscious spending plan. Okay? The second thing I want you to read is Money For Couples. The new book I wrote for couples to talk about money. This is going to help you actually communicate about money much more clearly. You know how we talked about how you spin a lot? Like there's no decisions that get made? That's out the door. Now on, crystal clear. It tells you the exact words to say. And then you all can make it happen. Would you be willing to do that? Yes. I feel like a relationship will be better. Sometimes I feel like this is an important topic. And Tony will take some leadership. I love that too. Beautiful. Tony, how about you? Well, I feel like for the first time, we're a team. And I really want to hug my wife and go ahead. Tony, we got all the time in the world. So, yeah, I feel like we're a team and together we're going to get through this and we're going to move forward and actually being more comfortable talking about our finances and our future goals and family plans. I love that. I do think there is power in doing this together. Definitely. Tony never cries. Never. Wow. I really appreciate the two of you, you know, connecting over money. You have some things to fix. There's no doubt about that. Some debt, some decisions that were maybe a little bit sloppy. But you also have some stuff that's really good. High income, ability to pay stuff off. Most people would love to be in that situation. The thing is, you got to do it together. That changed the way that you talk about money. It's especially important to do it now as you go into this new chapter with the new baby. Think about what got you here. All the last eight years, hustling, working seven days a week, grinding it out. You actually accomplished some pretty amazing things. Was that the kind of life you want in this new chapter? No, I think we need to focus on our family. And that will require change. It will require talking about money differently, behaving with money differently, changing the way you feel about money. So that's why getting on the same page, reading some books together, sharing some of the work that you do is going to be a big, big difference. We're going to get to their follow-ups in just a second. But I first want to acknowledge the courage that it takes to be a part of your life. The courage that it takes for any couple to come on this show and speak publicly about these things. And it is incredibly intimidating for native English speakers. Melissa and Tony did it in their second language. So massive compliments to them. Now, I have to admit that this conversation was also hard for me. There are a lot of cultural differences that I'm not privy to. I don't know what it's like to grow up in Mexico. I don't know what it's like to grow up in the socioeconomic class that they did. I don't know what it's like to be a first-generation immigrant who's responsible caring for young siblings. So this is one of those conversations where we had a gap among all of us. But I'm still glad that we talked. It gives me a lot of empathy for what my guests experience. On this podcast, I don't want to pick the easiest conversations. I don't want to pick the ones that are just guaranteed to go viral on social media. I want to pick the most meaningful ones. And sometimes those conversations are really hard. They're messy. But I try to challenge myself. That's why I do live tours where I bring, on stage, not knowing what they're going to say in front of a thousand people. Or having conversations with couples where I don't fully understand their cultural context. Probably I'm getting 15% of the things that I said today wrong. That's okay. I accept that. I hope my couples do as well. Despite those challenges, Melissa and Tony made real progress today. They finally saw that hustling, the skill that got them here and got them new footing in the world. and every time it's easier to talk about money. So I just want to say that my biggest surprise during our conversation was that I really had these mixed feelings and it was very hard for me to look at the real numbers. And I always wanted to do like a next step, biggest plan and taking risk. So I'm going to stop. That's my takeaway. And Tony's going to take the leadership now, but we're also going to talk about our future goals without making new projects or crazy investments. Yeah, I think for me was that before it was very stressful and I had fear of talking about money because I didn't have a plan. But now that we have the CSP and we have something, a goal to work towards, I feel more comfortable. It's very, you know, it's very nice to talk with my wife, you know, after reading the book and we have our our goals for the future. And my biggest takeaway is I know you mentioned I needed to be more more proactive. And the first thing we did is actually opened up our joint checking account. So I don't feel any more like I'm, you know, not having any money on my accounts now that we both have. And we can use it. We can use, you know, the same account to set up the recurring payments for our investments, for our kids, our college fund, you know, retirement account and and savings. We're closing our lot in carbon 15 days, so we're going to pay off all debt. We did the new CSP, how it will look like and our fixed costs. It's at 49 percent and. Our free yield is 24 percent. So we have a remaining of five thousand five hundred that we're going to do. So we're doing five hundred towards our kids college. We put in a thousand dollars towards retirement combined and fifty hundred dollars towards stocks and five hundred dollars setting aside for vacation each month. We also were able to. To cut a thousand dollars from our fixed cost by cutting one hundred and thirty on phone. I post my gym membership of one hundred and seventy five and stop spending the clothes allowance of two hundred and groceries are needing out another five hundred. So I think we're on a good track. We hope next year we're going to sell the big house to pay off the small house. And. So. I think we're on a good track. I think we'll be in the next chapter next year. So this is very exciting. I don't feel stressed about having the baby anymore. And I think this has been great for our relationship, too. Yes, it's really very. It's more like couples therapy also. So, you know, like I said on the podcast, I feel like we're a team. We're working towards, you know, our mutual goal. And. And we're going to make it happen. So thank you again so much. It really changed my mindset moving forward. And we have your book here. So. We have homework still to do. Yeah, we still have some homework to do, but we appreciate all your help. Thank you. Bye bye. If you want my help with your specific money questions, you can apply to be on this podcast at IWT.com slash apply. Or you can become a member of my money coaching program instantly at IWT.com slash money coaching. In money coaching, you get access to monthly 90 minute group coaching calls with me. We go deep on a single money topic, one that has been transformative to me. And you have the chance to ask me questions in our live Q&A. Plus, you'll get access to a community of other people like you who will inspire you and push you to live your life. Check out money coaching at IWT.com slash money coaching.