282. "We spend 154% of what we make. Will we ever stop drowning?"

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And a little painful in that I was finding out the debt that James has is just way more than I could have ever anticipated. It was very foolish. You can't plan a life on vibes. I never met a couple in $400,000 of debt that went to a beer garden once a week with tacos. We overvalue the almighty convenience. You said, We will likely divorce if things continue on as they have. I am supporting his career. I am the safety net. And I am taking care of everything. I'm just done with the defensiveness and the excuses and the reasons why I can't literally keep doing this anymore. Guys, we can't get any further if you're not honest about what's going on. 154%, it's not about cutting your phone bill down by $20 a month. If you want to make radical change, you have to admit some deep things about yourself that might be quite uncomfortable. You ever feel a little nosy? I do. And recently I started having couples on my podcast connect all of their accounts to Monarch so that I could see every transaction. Monarch is a platform that puts all of your accounts, your income, even those individual transactions in one place. Today I'm speaking to Addison and James. They're 39 and 43, newly married. And Addison says they will likely divorce if things continue as they have. Listen to this line from the application. I've had to actually take on more work and student loan debt to subsidize his career growth and financial stability at the least. literal expense of my own. If we don't nip this in the bud now, we will retire homeless. From their application, you can see that the stakes are as high as they come. Okay, let's take a look here. We have, whoa, $2,690 earned, but $7,889 spent. Where's the savings? Where's the investments? What's going on here? All right, I'm starting to develop some suspicions. You know what? Let's go back a month and see what happened the month before. I'm back here in July. Fixed costs now at $14,659. Whoa, that's 154% of take-home pay. Well, that's the ballgame right there. You are spending more than you make every single month just in fixed costs and not even at 100%, 154%. I mean, take a look here. I can see pets that month at $2,669. $2,669. Notice another thing. Their groceries, the amount they planned to spend in one month, $3,363 for two people. The fact that they are planning to have that much money spent on groceries in a month tells me that they're probably not looking at the big picture, nor are they particularly in touch with where their money should go. Also notice that the amount they have planned to spend on debt every month, $798. If you're spending almost $2,000 a month to pay off debt, you probably have a huge amount of debt. The question is, where does it show up here? I'm not seeing any particular debt. I'm seeing $4,882 on credit cards, which is a somewhat reasonable amount, but there's got to be a large amount, tens of thousands of dollars of debt somewhere that's not showing up here. I want to find out where it is. We have a lot of work to do. Let's talk to Addison and James. Addison, when you applied to speak to me, you wrote something in your application. I'd like to read it back to you. You said, one of the first things James said to me when we first started seeing each other six years ago was, I'm not good with finances. I now know what he meant, and I didn't know it was this bad. We will likely divorce if things continue on as they have. Where were you and what was happening when you wrote, this application? It was probably 4 a.m. on my computer at a moment of desperation. We had been trying to have more conversations around money and just having transparency about our lives, what we want, how we're going to move forward, challenges with being able to pay rent on time. In the past, it was just flat out, I will talk about it until I feel confident, until I have money. The burden's been on me to manage that. And also to be the project manager of the rest of our house and everything. And I just got to a point where I felt like I was putting myself on hold and feeling responsible for everything while not moving forward with my own career. And I was just really nervous about how things were going to look moving forward. Do I really have a partner or am I a caretaker? And I'm not caring for myself. So out of desperation, I sat down and typed up a very, very long application and sent it your way. Okay. I'd like to ask just a couple of questions about your relationship. And then James, I'd love to hear your thoughts. How long have you been married? A little over a year. Okay. And how long have you known each other before you got married? A long time. So we knew each other, at least we're running in the same circles and kind of in adjacent friend groups for 20 years before we got together. Okay. Any children? No. No, just the two dogs. What do you both do for a living? I work in garage door sales and service. Academic, scholarship, researcher, consultant. Great. Okay. Now, James, hearing Addison's application, some pretty strong words. How does that strike you? I mean, it made me feel guilty and, it kind of forced me to confront the realization that I had been getting by on a lot of wishful thinking financially and making promises based on that. And that it was gutting and deteriorating like some of the foundations of our relationship. When did you first hear about the application? Was it just now or was it weeks ago? Weeks ago. She read it to me. We had both, you know, watched the podcast. She read it to me. She read it to me. She read it to me. And I was like, "Oh, I've read the podcast and read the books and been aware of you and this program and everything for a couple of years, I think, for a good while." How were you aware of it, but you were not making changes in your own financial life? I, at that time, had been working in, you know, commission-only door-to-door solar sales and relying on feast or famine, windfalls, was kind of how my income was. came in. The big wins were always just around the corner, you know? And so as Addison mentioned, I was reluctant to talk about it until, you know, I had closed enough deals to have enough in the coffer to be comfortable talking about how to use finances. Looking back now, what do you think about that approach? It was very foolish. Why? Because you can't plan a life on vibes. You know? I was just sort of relying on Addison's steady income. Once Addison told you this application, what did you do? Took a deep breath. I thought it was very fair. I think I apologized. And then what'd you do? I guess we talked about it and I agreed that change needs to happen. What changes have you made since you had that conversation with Addison? At the time that it happened, I just started a new job. And basically, you know, the changes that I think needed to be made that were led up to that letter was working jobs for several years that were with no base, you know? So, I mean, one big change I did make was getting a job that has steady income. Great. I guess. I guess that had occurred right around the same time. And I jumped into these 60-hour weeks and I felt like that was kind of my contribution is like I'm bringing something more steady and reliable to the table. Okay. Addison, has your combined relationship with money changed significantly since you wrote that application or not? I wouldn't say significantly. I think initially, following the application and the discussion about it, I started putting together some spreadsheets and a CSP and calling for money meetings. And we were having those every week. And that was new. Being able to talk about it and look at our spending on both of our parts and just be like, oh my gosh, we're like taken aback by what we're seeing here. Because neither of us up until that point had really been tracking things. We're just kind of getting through life and it's happening as it's happening and hope we're out of money. So we're finally looking at things, being more conscious about spending on the grocery store or on other things. Sorry, what does it mean when you say being more conscious about spending at the grocery store specifically? That week we put ourselves on a challenge to do under $150. We just wanted to see if we can do it and we did it. But it also took hours of being by hours, about two to three hours. And I just don't have that kind of time. So that wasn't something we were able to realistically keep up on a weekly basis. What happened the next week with groceries? How much did you spend? Probably up to $500. We'll go to a Costco brand. We'll go to Target. We'll go to TJ's. We'll do all the things. What do you notice about that? You know, going like we're going to do $150 in a week, which is quite lean. And then, hey, this is not sustainable. So we kind of really loosen it and go back to $600 a week. It's a trend. It's like we make a commitment to do something, but we've gone about it in a completely unsustainable way. So we're not going to be able to keep up with it. We're not going to be able to do it in a completely unsustainable way. And so kind of same thing with like, let's dial back our restaurants and going out to eat or going down to the beer garden with the dogs because I'm not home all the time. I need to get out of my four walls here. He's working 60 hours. We're tired. So we'll make the excuse and justify to ourselves that we deserve this. We can do this because we're tired. We don't have time. This isn't sustainable. So we're going for the convenience that we simply can't afford. You like it? I don't like where it's leading us. That's for sure. Well, we are doing our CSP together. There's all of those fixed costs. And we're like, well, what do we do with our beer garden and entertainment and going down to get wings? That should probably go with that last line at the very bottom, right? After we signed up for Monarch, it sent me a notification regarding my recurring costs and that being the beer garden. So it's a fixed cost. And I don't see my life we go to the dog park and the beer garden and we go to get wings. I'd rather use my money for anything else besides that. What do you say, James? What was your reaction when you got that alert? I mean, I like that aspect of our life. If it needs to be dialed back, I understand. I accept that. If you're getting alerts that you spend so much so consistently that it is a fixed cost, that tells me you love it. Now, you might say, hey, this is out of alignment with what I want our life to be or looking at it, we can't afford this. So I like it, but like we need to make a change. But I'm not hearing that. I'm hearing like, well, you know, we spend a lot of time apart, so we need to spend some time together. Do you love it or do you not? I enjoy it. But to your point, like the spending is out of control on those areas of our life. We have no savings. And we can't just do all the things we love all the time. We don't have unlimited time or resources to do that. Like, I don't want to take that part of our life away. It's important for us. Our own socialization. So I wouldn't want to just stop doing it because I do enjoy those things. We just can't do it as much as we have been doing it to the point where I'm on our say, hey, this is the recurring cost. I don't love that. What do you want to get out of today? Like 10 out of 10, we have an awesome conversation. James, what would you walk out of here with? A newly established framework and understanding of money and personal finance that I, we can use together to build a future. That we want. Okay. Addison? I want to understand how we got here. And I'm really interested in our psychology around money because I feel like I've read books. We've watched the episodes. We have conversations and nothing is changing. I love that Addison is asking this question because she already knows that just learning more about money is not enough. That tells me something important. Addison and do not have an information problem. They have a behavior problem. They can recognize what they're doing. They can agree that it needs to change. They can even make a plan. But when real life happens, they keep falling right back into the same old habits. So before I give them yet another plan, I want to understand what happens between them when money gets hard. When I started I Will Teach You To Be Rich over 20 years ago, business organization platforms were not really a thing, especially for small businesses. Massive companies had big bespoke CRM software, but I was just a college kid trying to get to Taco Tuesday. Now, if you already have a business, you don't need to cobble together random tools like I did way back then. Instead, make things easier on yourself and harness the power of AI using NetSuite, this episode's sponsor. NetSuite is the AI-powered business management suite that securely connects all of your data. And now you get extra advantages with NetSuite Next, which lets you automatically surface custom insights, use AI agents for routine tasks, and get answers to complex questions in plain language, just like talking to a knowledgeable colleague. 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Can you think of a time in the last few months where the two of you really disagreed about money? So when I started this new job, I had plans to work a bunch of extra shifts in the first call. And there were some concert tickets that came up, and there was a week in the way that Addison had suggested we plan. And I said yes to those things. And once I got out of training and started a new job, it turned out it's a lot more, you know, than I expected. And we learned it didn't make sense for me to pick up the extra. And therefore, I didn't have, you know, I didn't have the money I said I would. And we got in a number of hidden arguments. Okay, okay. Take me back there. In fact, just role play it with each other. I just want to watch you have that conversation again. Hi, James. Hey, how's, how's, how are things in Phoenix? You know, they're, they're busy, but, but good. So I'm really excited for you to come home. Do you want to go to Mount Princeton and go to the hot springs maybe to celebrate when you get back? It's going to be like $600 probably. Is that going to be okay? Yeah, absolutely. I'm, you know, I'm going to be working like super hard when I get back. I'm picking up all these extra shifts. So I can definitely, you know, we can, we should definitely do that. Sounds great. Okay, well, I will go ahead and get all that book today. A couple other things, some camping, found a couple of really rad camping spots. So that's not going to cost as much, probably like 50 bucks for the weekend, and then tickets to a concert. But with the concert, the transportation situation is really weird. So I would recommend that we stay at the lakeside camping. But it's going to be like $800 for the lodging. Yeah, perfect. Let's do it. I'll be, I'll be good. Like I'm crushing it. Okay, awesome. So I'm going to go ahead and get all of that booked here today. Just keep me like posted on how things are going. I'm so excited to see you and then let me know about your flight and I'll get, I'll pick you up and then we could just head to head of the springs. Okay, great job. Great job. Thank you. That was very good. Very enlightening for me. I was following along, noting some things. And then what's the, the tension part? What happened on the next conversation? Go ahead. I really wanted us to start splitting those costs a little bit. more instead of it all being on me. So called, got the permission, was told that he was going to be able to pay for this trip. We go on set trip and I pay for it all. And it is back to the beginning of our relationship where I am supporting his career and I am the safety net and I'm taking care of everything and I'll get you back for that. And then it never happened. It's about $30,000 of trips and things and rent and bills over the years that I've just been covering. And it's why I work full time. I teach two classes every quarter. I'm a PhD student. Being in a relationship, it's really expensive, especially when you have to bear the burden of all the finances on your own. And so we fought a lot on that trip about my frustrations of taking on all the project management and the household, all the financial responsibility, the detriment to my career. And when you had this argument, was the dynamic, you sharing these things, all of the debt that you have put yourself into to support his career, all the work, all the labor, emotional labor, all of this stuff, and James agreeing and saying, I will do better? Yes. And with some defensiveness, understandably, I'm just done with the defensiveness and the excuses and the reasons why we need to make changes. And I can't literally keep doing this anymore. Okay. I want to ask another question as well. So you brought up to him, can we go to the concert and this place and that place, and it's going to cost this much and that much. And James was quite agreeable in this role play. Yeah, let's do it. I'm killing it at work. It's going to be good. Did you believe him? Maybe that's about Bali. This is not the first, second, third, or fourth time this has happened, but it was a new job and things were going well. And he was even getting paid during training. So I really did believe in this time. I should have known better because James does tend to be a little bit more optimistic than what reality presents itself. But I also want to be able to trust my partner at the same time. Yes. Nobody wants to be in a relationship where you can't take your partner at their word. If they say something, by default, we want to believe it. I get that. Of course, that's where we want to go. James, when you answered that question, it kind of rolled off the tongue. Yeah, let's go. At the time, I had planned on. Just picking up any extra work necessary. So no. Why'd you say yes? I was feeling confident that I wouldn't have the money. How often do you feel confident about money? Too often. I project that confidence, even if I don't feel that confidence. I don't know why that is, but that's not healthy at all. I think part of it is it's always worked out because I've been there as a safety net. So there's been no actual consequences really for anything. And he's really confident until the shoe drops. And I'm picking things up and then getting upset about it. I think he dreads those conversations and the disappointment that comes along with the expectations weren't met. Do you both like this dynamic? No. Okay. Because I hate it. I see it all the time. We have the dreamer here. James, you're the dreamer. Success is right around the corner. If I just close this deal, if I just get this job, I could pay off all the debt and actually build up our savings and we're going to be good. Sound familiar, right? Yeah. Yeah. And the dreamer is almost always only able to exist because they are subsidized by somebody else. James, if you did not have Addison picking up the pieces, what would happen to you? I would radically change everything. My spending habits and what I'm able to do with the money that I make. I agree. Addison, any thoughts on that? I feel like if I would stop, but then if I stop helping, then we might get evicted. We're not going to get our bills paid. So where are my credits going to take? Because I'm not taking care of the things that we mutually should be taking care of. What do both of you think needs to happen for you to change? I need to radically. Transform and establish a understanding of money and how it works. In particular, the word afford. Wow. I don't think I know what that means. I think I've been using that word wrong my whole life. Wow. Okay. Wow. That may have been one of the best answers I've ever heard. Well, let me just ask you, when she said, can we go to this concert? It's going to be 500 bucks. And you said, yeah, sounds great. What was the sentence you said after that? We can afford it. Yeah. And then after that? We got this. We can, you know. No, you said, I'm working hard. Oh, yeah. So what does that mean? That I am betting on money that's not there yet. Bingo. Did you know that? I think deep down. It's hard to admit to myself, but yes. This is just one of them. So I appreciate that. I think that was really, really insightful. Addison, what do you think needs to change here? I really need to get a grasp on what I want my life to look like and really come to terms with the consequences of not making better choices today that are in line with that. I just need to be thinking a little bit more about safety, security, and the long-term consequences if we don't change. Otherwise, I'm going to see the monies in the account and probably be very tempted to spend it on the things I want now for instant gratification versus my long-term stability and quality of life. It's easy for me to just forget and want to live in the moment because I've had a really stressful day, a really stressful week, and I feel like I deserve to treat myself. I appreciate you admitting that you have a, a role in this dynamic, that you have co-created it, that you spend money too, that you both don't have. James is nodding. Addison, I can tell that you've been frustrated at the way James spends and manages money. James, have you ever been frustrated at Addison for the same thing? Yes. Really? Tell me. Every quarter there is student loan money or other loan money. Most recently, $35,000 loan that came out a couple months ago. And we adopted a dog and I was, I pushed back pretty hard on whether that was a smart move. And the folks promised that it's not going to be that much. And I found out after the dog was here, after the thing else was there, that she spent $6,000. And that's money she took out. That's loan money. But I guess it frustrates me a little that Addison sort of feels like almost like a car blanched to just. Go hard wild because there's a bunch of loan money in the account, which isn't really that's not an income, you know? Did you say this to her? I did not. It's frustration now. And can I guess why? I'm going to guess that because you feel so guilty about the way you spend, you feel you don't really have a leg to stand on. And anyway, if you bring up money, then she's going to turn it back on you and say, well, what about this? What about that? What about this? So you say, better just not talk about it. Nailed it. Yeah. Like, you know, those signs at workplaces, however many days since the accident, it's an accident. I feel like I haven't met one of those for when my past transgressions gets brought up in an argument. And so anything I can do to avoid that sign going back to zero? It's very difficult to escape from the quicksand money dynamic that the two of you, you have willingly entered into. There have been legitimate, bad financial decisions made on both sides. And because of the particular way that you have enacted this relationship and this dynamic, it's really touchy. So everybody kind of tiptoes around it and the roles are set. Can we change this? We have to. Yes, we have to. I believe we can. Good answer. I think couples often, revert to the very American idea of y'all just need to talk it out. You need to communicate. We love it. We love saying communicate. It never works. Just communicating alone is not an effective strategy. Right now you are communicating about each other. You're not even communicating about money. You're just communicating about each other like two boxers. But what are you communicating towards? Is there a vision? We don't have a shared vision. We are just wantly spending on things that may or may not be aligned with the life that we want to have. You're right. Talking about money when it's just like, here's a crisis, or I'm upset about this, or there's a problem we need to solve right now. It's not enjoyable. I'd like talking about money to be fun and exciting. And perhaps if we had this plan that brings us excitement about things that we're not going to go to the beer garden this week two times, and we're going to put that towards something else that we're really looking forward to. We're going to put that towards something that we're going to really want to spend our time on, would be, I think, way more enjoyable. But we're definitely not there. We're trying to figure out crisis. how are we going to pay this bill? It's not fun. Let's take a look at your numbers. All right. What was it like doing the conscious spending plan together? Like, oh my God, this is out of control. And a little painful in that I was finding out new information. The debt that James has is just way, way more than I could have ever anticipated. I knew he took out a personal loan, didn't know he had three credit cards, didn't know he had $50,000 in federal back taxes, which is not even in the CSP because I found that out the day after I submitted it. Like, I'm just finding out about all of these skeletons. So that was just frustrating. You rightfully are upset about all these, what you put skeletons in the closet, but you kind of glossed right over the $6,000 on the dog. How do you think he feels about that? Do you think he feels similarly? Yeah. Definitely has shared that. And I honestly was shocked that it was at that amount too. I was not out there going, this is my budget for the dog. The dog was free. It was a very emotional purchase. He is the dad of our first dog. He died a couple of years ago from cancer and nobody wanted to adopt him because he was old. It's pretty interesting that Addison is sure the problem is James. She brings up multiple ways that James has been guilty of being irresponsible with money. And I agree. The way that he behaves with money is not great. However, she is also part of the mix here. And it's very tempting when she paints the picture of James being absent with money, not picking up on the labor to suddenly say, oh, I recognize this pattern. We have the man here who doesn't talk about money. He's irresponsible with money. And we have the beleaguered wife who's here. Please talk to me about money. Please connect with me. We've seen that pattern many, many times, but we can't just accept the caricature of a pattern. When I dig in, I find out that she's also spending a lot of money. Both of them actually have a dynamic where they love to spend money today and not think about tomorrow. So that is what I'm starting to pick up on. The question I have is where is this pattern coming from? That's my job. 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And then there was back taxes? Yes. And that would be the rebating amount plus 22. James, do you know how much you owe in back tax taxes? $40,000. All right. How much are you going to make when you graduate? Between $150,000 and $200,000 realistically. How are you going to pay off $350,000 of loans? It's a long-term. It's a 30-year repayment plan. I've already calculated my payment will be about $1,000 a month. Does it get forgiven at all? Yes. In 30 years? Yep. Okay. Let's look at income. James, can you read off your combined gross monthly income, please? Gross monthly income, $11,550. Okay. So y'all make $138,000 per year. Did you know that? Silence suggests no. Okay. What'd you think you made? I thought it was a little closer to two. 200. Between the two of us when she's working full-time. Okay. And Addison, how much did you think you made? Honestly, I had really no idea. I knew how much I was bringing in. I did not know what to expect from James when he started his new job, how much we realistically could be expecting because it's still a commissions-based job. So I had no idea. I just knew my own stuff. What do you think about making $138,600 a year? Is that a lot or no? No, not. It's not. Okay. Both say no. Okay. Let's just go down and look at the fixed costs here because this number really caught my eye. Fixed costs, 154%. What does that mean? Things are out of control. You are spending far more than you make and you have no savings. So you are going into debt every month. And it means that it's literally just a matter of time until you lose everything. There are moments where it becomes irrecoverable. And right now that's obscured because you have a humongous student loan. So you go, ah, that's just a big thing. It doesn't really count. But you are actually incurring serious debt. The credit cards are very high interest. Personal loans I'm willing to bet are. Back taxes is a huge amount. There's a lot. And every month you're going further and further into debt. And you're going to have to pay back taxes. And you're going into the red. Let's take a look at the rest of the fixed costs. We have utilities at $700, insurance at $500, car payment $1,353. That's a lot. What do you think about that? It will go down soon. That includes my car payment, which is about $638, Uber's. We need to be taking less Uber's and then also the train. Why do you take Uber? To get around town and get to shows, not deal with parking, not deal with DUIs if we want to have drinks at a show. So it's convenient because we can also take the train. But Uber is a lot faster. One time I had a couple on this show and they were in a lot of debt. And I asked them, you know, they had some car payment or something. It was pretty high. I was like, why do you pay so much for this car? They go, it's not a car, it's a truck. I go, okay, why do you buy this expensive truck? And he looked at me like I'm crazy. He goes, so I can pull my trailer. Do you see any similarities to what you just said? We take Uber's so that we can pull my trailer. And I'm like, we can go out to shows and have drinks. And PS, we are spending 154 percent of net income on fixed costs. We overvalue the almighty convenience, I think pretty clearly. Okay. What do you see, Addison? We shouldn't be going to these shows in the first place. That's right. Let alone the Uber's. We're spending money to spend money that we don't have. That's correct. It's like people saying like, you know, I actually decided to go to a cheaper casino, even though I'm in $75,000 of credit card debt. I went to Circus Circus because it's actually cheaper slots there. It's like, you shouldn't be in that casino. You shouldn't even be in Nevada right now. So when you both talk about radical change, we're not even scratching the surface yet. But I want to share this with you because I need you to know the truth, the reality of what it will take. That's going to do nothing. It's a complete inside-out lifestyle change, complete inside-out way of looking at the world that has to change. Again, you don't have to. I'm just telling you, we're only on the fifth line of the fixed cost. But this is what I'm observing. We absolutely have to come to terms with these numbers. It's not even about alignment at this point with our rich life and how we want to be living. We're not going to be able to live if we keep living like this. That's correct. James? We've known this is coming. Like, we know this is not sustainable. If you've known this and changed nothing, then maybe knowing actually is not the key here. Y'all have had this spreadsheet and had access to all this information. You didn't do anything with it. Knowing is highly overrated for many parts of behavioral change. Everybody knows they should probably eat more vegetables. They don't do it. So we actually need to stop this endless search for knowing and take a much deeper look at what is the way that we are looking at the world? What are our deeply held beliefs that I call invisible scripts? And what kind of behavioral changes can I make? Maybe I don't actually need to know anything different. Maybe I need to literally create a rule that says, we're not ever going to the beer garden again. Or a more positive one would be, every single week we are putting $200 into a savings account. That's what we're talking about. We're not talking about knowing, although I will show you some stuff. Let's go through the rest. Clothes and personal care are $1,066 per month. What kind of clothes? I redid my entire wardrobe. When we moved from where we were living before to here across the country, we got rid of everything. So those numbers will definitely not be the norm. What about the other self-care? All new hair products, getting all of those things. I get my nails done. Okay, got it. Let's go to pet expenses. $1,029 a month. Food, treat, toys, vet, et cetera. Yep, that's what that is. Definitely a little bit overboard with to eat. This is a great opportunity for me because I've had a lot of parents here in severe debt and they go, our kids deserve the best this or the best that. And I'm like, no, they don't. I point blank will be like, your kids don't deserve that. How can they? Your kids deserve to have a safe household, not to be homeless, to have parents that are not stressed out about money. But I've never gotten the chance to say that about a dog. So allow me to be the first. I'm sorry, but your dog does not deserve $1,029 of food, treat, and toys per month. America, hear my voice. Your dog does not deserve it. I'm sorry. If you are at $1,029, 154% fixed costs, your dog doesn't deserve it. What's your reaction, Addison? They'll live. Should we get that dog on camera? Where is that dog? There's both of them. They're out there. Bring them. Wait, are they close? Yeah, they're close. Okay, bring that dog. I want to tell him or her. It's a him and a her. Okay, bring them both. I'm going to tell them. This is the greatest day of my life. Oh, they're like literally right there. Oh, she's gesturing. They're well-trained. She's gesturing to them. Oh my God. This dog came right. Oh, wait. Are these Bernese Mountain Dogs? Yeah. They're huge. They're beautiful dogs. Okay, what are their names? Baka is in Chewbacca and Rainbow. Baka? I assume that's Baka? Yeah. I need to tell you something. You and your sister are lovely dogs, but y'all are going on a very, very, very strict diet. And I'm talking about toys too. It's been a nice run, but that's it. It's time to batten down the hatches. And mom and dad are going to be extremely strict with you. All right. Thank you for that. Let's continue on. Subscriptions and entertainment, $1,754. All right. We're going to dig into this in a minute. Miscellaneous, fine. Just scrolling down, looking at the CSP, I noticed that after we get to the fixed costs, which are $14,659 a month, then we have $0 on investments, $0 on savings, and negative $5,000. And then we have $0 on guilt-free spending, which of course we know cannot be true. Before I go on, I want to drill into some of these actual spending. Like, what does it tell you about you? We're living in the here and now and not taking a mode of common time to think about tomorrow, let alone the secure and stable future we want for retirement. It comes in, it goes out. What we need today, we get. Great. James? I don't know if the kids still say YOLO, but that's, I think, what we've adopted for our, financial decisions. In fact, I don't even know if I would call them financial decisions because I don't think enough, I don't think enough thought when I'm doing to qualify them as decisions. That's very good. That's a very good catch on your language. Most people say like, oh, I have goals or we're not living up to our goals or we're not making the right decisions. You're actually not making any decisions at all. It's literally whatever's in front of us, toys, nails, clothes, beer garden, shows. It's just like swipe, swipe, swipe, swipe, swipe. There's no decision at all. I think that is honest. Okay, I would like to look at the actual spending. This is going into your Monarch account and we're going to do a little drill down here. So I want to look at, for example, your debt payments. So we have Bureau of Tax. This is your back tax. Is that right, James? Yeah, that's a state taxes for this last year. Have you called them and tried to negotiate that? No, no, it's just what I took that. Call them and negotiate. Sometimes they will be, they will be able to do that here. Let's go back a month ago. Let's look at transportation. Ah, on one day, July 20th, we have Ubers for $111, four trips. A couple of days before, we have $106. We have a gas station and parking, et cetera. Lots of Ubers here. You notice that? Mm-hmm. Do you think that couples who have $400,000 of debt take Uber? No. We do. Well, yeah. Yeah, both of you, both of you are correct. No, they typically don't, but we do. And that needs to change. Let's keep looking. Grocery is always very interesting. Let's look at the actual spending on groceries. So we have King Soopers. Interestingly, that's $11.56. Who shops for $11.56 at a grocery store? Like, what'd you get? For James, that might, like, maybe he popped in and got a sandwich while you were out. Yeah, that's likely what that was. Because I, my job, I'm driving. All day. All right, let's look. Circle K, 7-Eleven, Circle K, Murphy USA, and Maverick. Lots of gas stations and convenience stores. Mm-hmm. Lots. Look at how many. What do you make of that? Just, you know, a quick break for me to go in and grab a snack or a electrolyte beverage or something cold to drink because I'm working outside. I mean, there's no excuse for it, but that's what that is. What do you get at the gas station? Gatorade. Water, energy drinks, probably 90%. Occasionally a slice of pizza or a snack. You get a hot dog? Occasionally a hot dog. Usually it's beverages because I'm working outside, you know, a lot. Out of curiosity, why not just buy the beverages from, like, Costco or something and take them in your car with you? We do, and we have. I bring it, and then it's not enough. I feel like I want another one. Why not bring two or three or five? I just need to get that bigger cooler. What do you think's behind your answer? Like, why do you think you really don't pack enough water or something for a long day out on the road? I think I enjoy the break in the AC. Yes. I feel like I deserve it. Yeah. Yeah. Why do you deserve it? I feel like I earned it. I earned this little treat, whatever it happens to be. I've been driving out in the sun. I've been talking to a lot of people. Maybe I closed a deal, or I'm going to close a deal tomorrow. Like, we're talking about a $4 Rice Krispie treat. Like, I deserve this. I've been working hard. That's the thing, right? Mm-hmm. Okay. Addison, what else? What do you notice? I do hear and understand James' need to get out of the van, and I do similar things. I have a pound of green tea here, my favorite kind, but I still go down to the coffee shop to go get it from the coffee shop. Because? Because I want to get it from the coffee shop. I want to get out of the house. I like getting out of the house and socializing with other people. Sorry, how do you think people who like to get out of the house, but they don't go into debt, how do they do it? I am not sure what they are doing. I am only sure what we are doing, and it's spending money on things we shouldn't be spending money on. What's striking to me is the lack of curiosity about how other people do it. I don't think you've really thought about anybody except for what you two want. That's fair. Because there are millions and millions of families who don't spend $3,000 a month on groceries and food and beverage. You all put in your CSP $3,363 a month for groceries, food, and beverage. And this is two people. We're not talking about a family of six. Even still, I would tell them it's too much. All right. Let's look at a couple of things. other things in Monarch. Pets? You planned for $1,029. I see $2,667. This is in one month. Somebody gets sick this month? Yes, we had an early vet bill. Yeah, there's a lot. I can tell. I mean, one vet bill is $1,500. I then see Chewy for $114, $60, and a lot more. What do you think about spending thousands of dollars on dogs when you're in this much debt? Doesn't seem to make any sense. And we can't afford to continue spending on the dogs like we have been. And we probably couldn't afford this second dog, but we didn't crunch any numbers. I think I realistically said, oh, it's just going to be an extra bag of food and maybe a couple of vet bills here and there for wellness checks. Why did you say that? I think I wanted this dog, and I needed to reassure ourselves we could afford it, but we really couldn't. How much of the decisions you make around money are, I want this, and I'm going to come up with a reason that sounds logical to justify it. The majority, and we'll justify it to each other and support each other in our justifications. How do other people make decisions like this? They look at the pre-planned budget and base decisions off of that. Yeah. You have that, though. I mean, you have a CSP. All right. Let's look at a couple more expenses. I want to see what's going on with, dining out, one of my favorites. Let's read off some of these, shall we? Wendy's, Mexican Place, beer, some beer garden, and Tavern, the same day. What's this one for $300? Birthday anniversary dinner. Was it good? Absolute. It was. That's a good answer. Yeah, it was good, Ramit. Okay, I like that. Can I ask you a question? Like, when a birthday or an anniversary or holidays coming up, how do you decide, like, what you're going to do and how much you're going to spend? The decision is based on the menu and never on the price. Yeah. Yeah. What does it feel like to even imagine a future where you have to make many, maybe most of the decisions based on price? It feels like, I mean, if you're responsible. Who wants to be responsible? I'd rather have fun. Yeah. But look where fun got us. To me, it sounds depressing. Yeah. If I'm being honest. Yeah. It sounds horrible. You're telling me that I got to do all this fun stuff and like, look, we got a pretty nice place we live in and now you're suggesting that I have to look at price for everything. So that means what? We have to go to Wendy's for our anniversary? Sounds like it sucks. Yeah. What do you think? Said that way, it sounds like it sucks, but having had the opportunity to review all of our finances and our spending, I think it kind of sucks to spend money on mid-tier restaurants or go to the beer garden as often as we were. I'd rather once a quarter go to a really nice, awesome restaurant if we can afford it versus just spending hundreds and hundreds of dollars on mid. Wow. That is a great response. I happen to agree. I would rather have one memorable experience than five forgettable experiences. So I love that reframe. Because if you go through life saying, oh my God, we have to look at price as the first thing and basically we have to get the cheapest thing always, it's going to suck. Your entire life is just going to feel depressing and you cannot win when you feel depressed about something. You have to find a way to find joy and purpose and meaning and you can do that simultaneously while cutting expenses and saving and investing more. Okay, I'm getting on board. Shopping. Yes, Amazon, Macy's, Costco, Rocket. Is that what I think it is? They're a gas station. Oh, okay, that's a gas station. All right. Shop at a lot of gas stations. Home Depot, I hate that place. Okay, Costco, love that place. Ikea. So looking at this spending is quite interesting. I mean, how would you describe the spending in a word or two? Unconscious. Reckless. I agree with both of those. What strikes me is that there's a huge volume of spending. I mean, we are talking about. I'm talking about 50 plus dollars a day, essentially, on gas stations and random things, purchases, food for the dog, like random, random stuff. I don't see a lot of focus. Like if you were to have one expensive sushi place or one expensive dinner place per year, or even every six months, I'd be like, oh, wow, they're foodies or they love this or they love that with their dogs. I don't see that. I just see a lot of random stuff. Also, I'm surprised that. It's not all James' spending. Addison, you contribute a lot to this spending. I absolutely do. I do most of the spending in our household, but we don't need all the things that I bring. Why did you just tell me that? What's the point? To justify it to myself and to everyone in this room. The two of you talk a lot when it comes to your spending. And when you talk, you are justifying. You are explaining. And you do it to each other. I don't even think you might even hear the words sometimes. It's just spending and then blah, blah, blah, blah, blah, blah, blah. And whatever's being said in there is sort of irrelevant. It's just, here's why I need a way to justify it to me or to you or to us. We need this for the dog. We need this for us. We need to take a trip. I need to go outside. I've been inside all day. You've been inside. And so I need a thermos and on and on and on. I don't talk like this with money. If I buy it, I don't need to explain it and justify it because I made a good decision. I made a good decision months or years ago. I planned for it. There's money set aside. You're explaining because you realize you probably shouldn't be doing it. So that's a good cue for yourself. If you find yourself already launching into this thing, you've probably taken a wrong turn. James, I want to understand about how you grew up with money. What do you remember your family saying about money when you were a kid? Remember money being. A source of stress, although my folks were pretty good with the money they made. My dad did really well. He was a top salesman for a Fortune 500 pharmaceutical company, same company for 42 years. But growing up, which for me was in the 90s, all these pharmaceutical mergers happened. We had food on the table. We were able to take vacations and everything else. It wasn't scary. It wasn't scary. It wasn't scarcity. But seeing my dad, very frustrated, occasionally pounding his fist on the table or my parents going over their budgets, it was a really, I guess, tough time in that industry. Did they teach you how money worked? My dad tried once I got out of the house and started making money mistakes almost immediately. My parents were very generous, very good with money. I remember my weight teens, maybe early 20s, they got me this little organizational thing where I'm supposed to put money in envelopes and this is how you budget. And I got it and I sort of paid attention to it for a bit and then I just reverted right back to basically how I've always lived my life. Do you see any connection between that and then what Addison did recently where she brought you all the files and we need to really buckle down and you did it for about a week and then you stopped? Yeah. Yeah. What does it tell you? Maybe determined for some reason to avoid digging into money organization. I think I just remember the stress, seeing my parents stressed about it when I was a kid and maybe just subconsciously or consciously connecting that where if I just make enough to get by and then I can breathe easy. Which, you know, sounds insane. Are both your parents still alive? Yeah. Are they still together? Yeah. How are they doing financially? Fine. My dad retired. They're doing great. Do you talk to them about money? No. How come? I think I'm an extra of pride and shame. Tell me. I mean, I'm in my mid-40s, Dan. I kind of want to admit again that I, you know, messed it all up and I don't want to ask for advice this late in the game because I feel like I've probably pretended like I knew what I was doing so long that I have to admit that I don't. And that just, you know, I only have so much time to spend with them. I don't want to spend time on that. Finish the sentence. I don't want to spend time on that, meaning money, because? Afraid of their reaction. Which will be? Disappointment. Yeah. Another similarity to when you don't bring up topics with Addison. Do you notice that? Yeah. I don't want to disappoint her or hurt her far worse than if I would have just ripped the freaking band-aid off, you know? Yes. Interesting choice of words, even. The idea that in order to communicate about uncomfortable things, you have to rip the band-aid off, implying pain, implying a wound. Maybe there's a different way to describe it. different ways, such as, gosh, I've been uncomfortable talking about money for pretty much my entire adult life and I've realized it's caused me a lot it's caused a lot of pain to my wife and my family and I realized that I don't want I'm not that person anymore and it's going to take me a lot of retraining I'm going to have to have uncomfortable conversations I don't even know if I have the skills to do it but I'll tell you what I'm going to build the skills I'm going to do it on my own through books through watching videos I'm also going to get help through a therapist a coach and my commitment is that I'm going to talk to you at least every Saturday 11 to 12 a.m. I'm making the agenda I'm going to bring it up and I think it's going to be hard it's going to be uncomfortable right now but my hope is that within six months it's actually going to start to feel fun it's going to start to feel pleasurable that's a different way to look at it what do you think about that James it sounds like when I've I've said to myself in my head many times over the years never out loud though no yeah your your response is very common I mean from for a lot of people and especially for men the idea of like I don't want to disappoint a lot of men will basically say I don't want to burden my wife with these kind of things look at the nodding in your head it's a very kind of toxic idea that I can take it on I can take on the pain but my wife I don't want to burden her with it and in a way it actually is quite insulting to your wife to treat her like a delicate little flower that can't take tough conversations women are smart they can handle a lot it's quite demeaning to assume that they can and actually the people who then take on the burden themselves are often not even good at it so we need to share and we need to maybe reframe it as it's not a burden it's just something that I'm not particularly good at yet but we've got to both get good at it Addison do you want to add anything to what James told me about his upbringing with money he shared with me a number of times a situation where they were on a hunting trip he was with his father and they stopped in at a gas station I guess gas stations stops are generational here and he asked dad hey can I go in and get a soda bag of chips and his dad said no we can't afford it and James what what was your reaction I remember saying like what do you mean we can't afford it I saw one of my dad's paychecks sitting there it was like it was you know some couple thousand dollars or something like that and I and to me as a little kid I was like oh my gosh it's like so much money you know it's like I remember like not being able to wrap my head around how you couldn't afford something when you had that much money and I don't know if I ever figured that out did you tell your dad that no okay that's interesting what do you make of it now the very um tight and very like to the dollar budget that they kept meant that there wasn't any room for buying stuff from gas stations that month is my my guess I would agree because they had a shared plan and they stuck to it they were able to retire and buy a home on a beautiful lake that we visit often and get to and we are not taking a note out of their playbook at all and we are not going to be able to enjoy those things because we're not going to be able to enjoy those things because we're not going to you know it's interesting I see this a little differently I think you might both be right I don't necessarily think that you can say they were good with money because they may have done very well for themselves but isn't one of the ultimate signs of being good with money that if you have children you actually teach them which they have failed to do and another example of that is saying we can't afford it which leaves kids feeling very confused what do you mean we can't afford it we just went hunting we just went fishing we just stayed in a lodge for two days and now I can't get a bag of chips it doesn't make sense mixed messages and so kids are left defenseless not knowing what that means and then they just go into the world and in your case you just were like affordability is just made up I don't really care if I have money or I even think I'm going to have money sounds good I think a different approach would have been for your parents and for both of you to say that's not what I want to do I don't want to do that that's not part of our plan had your parents said that you might have been like wait a minute what's a plan what do you mean by plan who made the plan can we change the plan because I really want these Doritos but instead it was just blanket we can't afford it kid left to figure out what that means let this be a lesson for every parent soon to be parent maybe parent or kid of a parent on this show stop using the phrase we can't afford it please that phrase causes often lifelong dysfunction with money all because you want the kid to stop asking you some annoying question about money which if you really trace it back is that you yourself are not good with money so you want to shut the conversation down by saying we can't afford it it will cost you and your children dearly here's what happens kids hear you saying we can't afford it not once not 10 times a thousand times over their childhood and they start to associate feeling bad with money then they experience mixed messages wait a second we can't afford it but we're also eating out of cheesecake factory huh and so they just start to believe money is just made up whatever somebody says whatever oh we can't afford it but then we actually can so I'm just going to do the same thing with my money throw my hands up spend on whatever I see in front of me and boom we'll figure it out later you can see how the toxicity becomes layered and essentially intractable over time we don't want that I would rather a parent say we're not going to buy that because in this family we don't care about $300 shoes or we're not going to buy that because I love it too but it's not on plan right now however we can start saving for it and three years from now we'll be able to do it love that but you've got to go beyond we can't afford it also if you grew up with your parents saying we can't afford that you can't change how your parents raised you you can learn from it you can adapt you can start to zoom up and say hey they were probably trying their best they maybe didn't know about money but today what can I do to get better with money I'm listening to this podcast I'm listening to this podcast I'm listening to this podcast I can join Ramit's rich life program I can start to apply these principles differently but I can't constantly live in the past because of something that my parents did to me I'm now an adult it's time for me to take responsibility for my rich life and we're going to hear about the surprising way that Addison 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nd wi ll.com slash Ramit I want to thank our new partners at monarch for to thank our new partners at monarch for to thank our new partners at monarch for setting up our couples on their platform setting up our couples on their platform setting up our couples on their platform to see their exact conscious spending to see their exact conscious spending to see their exact conscious spending plan categories monarch is a private plan categories monarch is a private plan categories monarch is a private personal finance app that brings all of personal finance app that brings all of personal finance app that brings all of the household's accounts checking credit the household's accounts checking credit the household's accounts checking credit cards loans and investments into one cards loans and investments into one cards loans and investments into one clean dashboard on your phone or clean dashboard on your phone or clean dashboard on your phone or computer if you're trying to pay off 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monarch to your plan each month that's monarch comm slash Ramit with code Ramit Addison comm slash Ramit with code Ramit Addison comm slash Ramit Addison what do you remember about growing up what do you remember about growing up what do you remember about growing up with money what did your family say about with money what did your family say about with money what did your family say about it I grew up incredibly poor it I grew up incredibly poor it I grew up incredibly poor lots of hand-me-downs lots of arguments lots of hand-me-downs lots of arguments lots of hand-me-downs lots of arguments between my parents about finances kind between my parents about finances kind between my parents about finances kind of this mentality like we can't take it of this mentality like we can't take it of this mentality like we can't take it with us and we're going to die poor with us and we're going to die poor with us and we're going to die poor so it was a very heavy topic and I knew so it was a very heavy topic and I knew so it was a very heavy topic and I knew I was poor it was embarrassing yet my I was poor it was embarrassing yet my I was poor it was embarrassing yet my mom you know she would put things on mom you know she would put things on mom you know she would put things on credit card and lay away and got to kind credit card and lay away and got to kind credit card and lay away and got to kind of keep up with the Joneses and we need of keep up with the Joneses and we need of keep up with the Joneses and we need to have very similar patterns I see in to have very similar patterns I see in to have very similar patterns I see in myself where I want this thing so I'm myself where I want this thing so I'm myself where I want this thing so I'm going to buy it we're gonna finance it's Christmas if we have to because the kids really deserve to have a nice Christmas. I'm going to take on additional debt for vehicles. Eventually, it went back to school and changed our family situation, but the spending continues. They do not communicate really about finances anymore. My mom just handles everything. My dad is very secretive about things, has a lot of pride, and that's caused a lot of problems. And I talked to my mom about our own financial situation for guidance. And she's like, I can't, I can't really help you when your dad's the same way. If you figure out how to work with, you know, James, you let me know. So not a lot of guidance, not having a plan, not really having anything to plan with. It was really hard. That sounds like really tough. I have a couple of questions for you. You mentioned you knew you were poor. How did you know? Just kind of a comparison to other people. Also, my parents literally saying we're poor and we don't have any money. And based off the food, we're not having food. You went sometimes without food? Very little food at times. That's tough. That's really difficult. How do you think that colors your view of money? I was resentful of growing up poor and made a commitment to myself and very proudly and boldly shared with my parents. I'm going to college and I'm going to have all these things in a different life. I'm not going to live my life like this, trapped on a farm in poverty. I'm going to break out of this. And while I've left home and gone to college, I'm really not doing anything different. It's the same stuff in a different place, maybe fancier stuff. And I have more things, but it's also old. It's quite profound. The idea that you said, I'm going to college. Were you the first to go to college? Yeah. Very impressive. Not only did you go to college, you're now a PhD student, teaching as well. Extremely impressive for anyone, but especially considering your background. Made a huge amount of change in terms of education and yet still find yourself repeating the same patterns as before. Just as you put it, just in a different place, maybe a little bit nicer stuff. Yep. It's the same patterns and trends. It's like my mother following right in her footsteps. I have very little in my 401k and have cashed out several 401ks to finance moves across the country for school. The future is there for me. There's no plan to get there whatsoever. I feel like I know better, but I'm definitely not doing better, but perhaps I don't even know better as well. Do you find yourself confused by your own behavior? Not necessarily confused, disappointed, frustrated with myself, or not making better decisions on a day-to-day basis. That's interesting, but I don't get the sense that you feel frustrated when you buy something for the dogs or clothes or you go out to the beer garden or a concert. When does the frustration come, if at all? Pulling our numbers and seeing why are our numbers like this? How often does that happen when you pull the numbers? Maybe three times in a year. So you feel frustrated. Think about it. You feel frustrated for what? Three minutes times three, nine minutes a year. And the rest of the time, you get to eat out and do all this cool stuff. Sounds like a pretty good deal to me. And then when things are running low and they're tight and there's concerns about being able to actually cover costs like rent, our own health care, that's another point of frustration and disappointment. We had those funds at one point and they got spent frivolously on things we didn't need because we weren't planning for a rainy day or things that we actually do need to live and thrive. Yeah. Neither of you plan. No. You don't plan for retirement. You don't plan for going out and driving for eight hours enough to take enough drinks for the day. Like there's a systemic lack of planning. Now, I'm going to tell you, most Americans do not plan. They don't plan for their retirement. They don't plan more than a month ahead with their money. So when you have all these financial people going on TV and talking about, look at this compound interest chart. And if you do 40 years from now, might as well speak to these people. They're not thinking beyond a month later. And I'm not saying that to make you all feel like, oh, it's okay not to plan. I want you to know that it's quite normal that most people don't plan ahead with their money for the exact reasons that you are as well. One of the things I love about this show is I get to speak to people from all over the socioeconomic spectrum. It is really hard to escape the social class and the structure that you grew up with. As the phrase goes, I'm not going to plan for retirement. I'm going to speak to people from all over the socioeconomic spectrum. As the phrase goes, wherever you go, there you are. So here we have Addison getting her PhD, but still essentially spending the same way her mom did decades ago. Just because you make more money, just because you get a PhD does not mean that you are going to change your psychology around money or relationship. And that's what this show is about. The numbers here are outrageous. I mean, 154% for fixed costs, one of the highest numbers I've ever seen on this show. If they want to get out of this, it's possible, but they will have to make severe radical changes. And I wonder if they are willing to do that. James, you have a magic wand. What do you think our approach should be together right now? Wave it and be good with cutting back on everything. Okay, cool. Addison, what's your magic wand? What would you do? Similar. I want to get our CSP dialed in and based in reality. What we have to work with, I want more going towards savings and investments. And we need to reallocate this whole thing. We need to get a plan that we can commit to here together and then start implementing, knowing that if we don't commit to this and implement this, the future is looking pretty darn bleak. Why? How bleak is it? I don't want to get a divorce. I don't want to be homeless. I don't want to have to move in back with either of our parents. And I definitely am not going to be able to work for the rest of my life. I'm not going to be able to work for the rest of my life. I don't want to be able to retire. Okay. James, what about you? Why make the changes of cutting back? That sounds like a lot of work. Because the pattern of feast or famine and uncertainty and embarrassment coming from not knowing which way is up with my finances has had horrible outcomes many times repeatedly before I was born. And I'm not going to be able to do anything about it. I'm not going to be able to do anything about it. I'm not going to be able to do anything What do you think of that? It's a lot of spending. And as we're going through it, I'm like, what was that for? What'd you get? Put your hand out like this. Palm up to the sky. What did we get? It feels empty because I don't recall what we got for some of those transactions. It leaves me feeling empty because it's not something I needed. Thank you. This is so much of how we spend money unconsciously. I'm not opposed to spending money. I'm not even opposed to spending a lot of money. But I want it to be meaningful. And it could be a physical item. I love a beautiful thing. It could be an experience. It could be a food. But something where you look back, you go, wow, that was awesome. But right now, just looking at this, Amazon, Etsy, random stuff. What did we get? Nothing. We just bought what was in front of us. So here's what we're going to do. We're going to throw these. We're going to throw this CSP up on screen. And we're going to make some changes here. You're at 154% fixed cost. The goal is to get down to 60%. It's going to be really challenging. I'm going to be honest. But we are going to make some changes. Now, here are the rules because I've done this many times with couples. They inevitably end up fixating on should we cut $20 or $40 off of our cell phone? I'm just going to show you right now. If we go from $1,029 to $800, I'm just cutting off like $200. Look at this number up here, the 154%. It drops down 2%. So what does that tell you? Got to go big. More drastic. Exactly. We're talking massive changes. So we're going to go one at a time. And I want you to remember, we're trying to actually change your entire lifestyle. So before we jump into all this, tell me your philosophy on money in our relationships. we what james treat money with respect yes damn that is great we treat money with respect okay addison we recognize it's a finite resource just like our time and other resources so we have to treat with respect we treat it with respect we recognize it's a finite resource which is exactly what the csp allows you to do it's finite you have this much money to distribute okay great and do we have any rules here like in in in our family it might be we are a debt-free family or we save at least 10 or 20 or whatever what kind of rules might you have delaying or putting a hard stop on any excess spending until we have any savings or an emergency front of x amount why don't you just pick one ten thousand dollars great so what is excess spending me uh we cut off on you know cut out going out to eat and like a lot of gas station trips yep unnecessary subscriptions gas station convenient ubers all of the things that basically we don't require to live but also giving ourselves a small amount of like we need to enjoy ourselves a little bit it's i don't think we can go completely down to zero um so maybe it's like we go to the gear garden on one night and the music's there and the talk is you know we don't need to go 20 times i like the principle i think that it will be important to know what does unnecessary mean because what james thinks is unnecessary is different than what addison is certainly different than what i think i never met a couple in four hundred thousand dollars of debt that went to a beer garden once a week with tacos it's quite interesting we should talk about it though let's see how the numbers play out so the rule is we are at least the rule you're proposing is we do not spend unnecessarily until we have ten thousand dollars in a savings account is that right all right let's let's give it a go james make a change first then toss it to addison what do you want to do i think groceries food and beverage can be slashed to eight hundred dollars a month eight hundred dollars a month okay so you're going from three thousand three hundred bucks to eight hundred dollars a month how are you going to do it specifically meal prep on sundays okay what time sunday we we do brunch a lot on sunday so maybe on sunday for brunch time we can do some meal prep together very good you know it's funny every minute that you are fulfilling one of the guidelines of your money rules like prepping food on a sunday is a minute you are not out spending money so that is a way to look at it like oh this this meal prep is doing us double good number one we're gonna get prepped food for the whole week it's gonna be awesome number two every minute i'm doing this is a minute i'm not outside spending money at the gas station at home depot at any of these places double whammy awesome okay let's keep going i love that you're gonna meal and eight hundred dollars a month uh addison are you cool because you're the one who does grocery shopping yeah i feel like that's a good amount because that whole category also includes weed and beverage so that's all the restaurants that's the beer gardens that's the brunch that's everything so cutting all of that as an unnecessary expense out that's realistic for groceries okay and eating out that sort of implies you're eating out like not much at all yeah that would be not much at all like can we go cold turkey on this i know that we we need to and this is something we have to commit to and having a savings goal um could help us with that i don't know james like can we never go out until we hit 10 000 do you think that is realistic i just think it's going to be hard i think we should leave a little bit in the budget for like when we had friends that are visiting our families are in town yeah uh that's like it goes back to that crash diet thing mike i guess it sounds really great can we do it though you're not thinking about it the right way okay both of you are expressing a fear of having to change your lifestyle and the way that you are articulating this is by saying what about when our family visits now notice what is in that example number one what about it's this sporadic thing we don't know when it's going to happen so we can't even plan for it it's just whenever and second it's family and in your case you use family dogs and your own need to be outside as political shields because nobody can argue against the importance of family and the importance of recuperation and the importance of your beautiful dogs we have to change this entire way of operating first of all we're not going to plan for a random sporadic might happen thing of other people visiting us we are planning what we are going to do we are the family that matters right now and so we're not going to plan for a random second if they come great but we can't spend money with them we don't have the ability to spend money so they want to go out to dinner i'm sorry that's just not in our plan a phrase i wish your parents would have shared with you james we can't oh what about this can't do it oh we really want to do this i'm sorry we'd love to but you know we have a nice patch of grass outside let's take 10 000 steps in that patch of grass let's have some fun that's how you do it yeah that's feasible and we have role models that are also modeling this behavior we can easily do things like that with our current amenities good good and i like that i like you said modeling we have to remodel who you have been modeling after of course it's so easy these days to just oh let's go out to let's order something in whatever that that can't happen under this so all right while i am sensitive to the fact of going cold turkey is very difficult i am not trying to make allowances for random family to come over it's you simply do not have the money to be able to provide for that so i'm right now you're at 127 fixed costs addison you're next uh let's go ahead and take a look at subscriptions that's a fun category subscriptions it is here we are let's read them off we have monarch for 210 every guest on this show gets a free subscription to monarch youtube open ai spotify amazon google one uber paramount plus new york times apple doodle prime video what do you want to cut addison everything but chat gpt youtube adobe and uh the doodle all right so everything else is gone uh what the it went from 1754 to 55 dollars no we got to look at what else is for entertainment here what's surf house uh surf house is uh tickets to a show okay and the movie's meow wolf what's that uh interactive art exhibit okay geocaching axs what's that tickets all right so it's a lot of like shows and concerts what do you want to do about that we gotta stop uh there is a lot of free entertainment options in our city we do not need to spend hundreds and hundreds of dollars going to shows when we can see it for free all right fine so what we have decided is that there are no more shows yeah that's it all right i'm down let's keep moving i like it uh back to you james let's do uh pet pet expenses okay 1029 dollars we got pet smart rover chewy vet and on and on and on what do you want to do i think just uh just dog dog food and uh treats for trip for training purposes so how much each bag's 110 um and we go through two of those for the two so that's 220 for food and then the dog food and then the dog food and then the dog food and then the dog food and then the dog food per month yep okay so i like the change you're at 101 but you know a lot of those expenses came from your dog being sick so what do you want to do about that i think we also need to allocate a little bit of money every month into a pet emergency account to help cover those because it's you know the teeth got clean every three years they have to get cleaned would you rather allocate money towards your retirement or towards your dog's upcoming health expenses can we do both no you told me that one of your money rules is that money is a finite resource yeah notice your initial reaction is to try to find a way to wiggle out of the rules that you yourself set what would you rather put money aside for your retirement or your dog's upcoming health expenses it's a really difficult call i want to make both work by cutting drastically in other areas where we can because those are two really important things like i want to retire but these dogs are like they're like our children so okay the one option is that you cut so drastically that you then have extra money to put towards both we can see if that's possible but it will reflect on your lifestyle let's take a look what's next to cut the car payment can come down a little bit because we will be paying things off so i think we can get that to about a thousand dollars uh so we're not going to be taking our ubers okay done 98 what's addison notice what you're doing the over explaining what i'm looking for from the two of you is concise answers so we can move on if you were spending a ton of time explaining decisions when we already made it we're living in the past we got to save that and focus on the future let's move on yep uh we could do clothes and personal care that's mostly my category we can bring that down to 300 that way haircuts are still possible okay we're at 89 what else let's do clothes and personal care that's mostly my category we're at 89 what else let's have four phones between the have four phones between the have four phones between the the two of us we could get that down to five the two of us we could get that down to five the two of us we could get that down to five 500 it is okay yeah fine you're at 87 500 it is okay yeah fine you're at 87 500 it is okay yeah fine you're at 87 just want to point out at 87 percent you're still spending more than you make every single month what about this miscellaneous let's take a look here miscellaneous we have upstart ivy and well it's like interest payment for the loan there's quite a bit of uncategorized and sloppy spending that needs to be corrected i will not cut this down to zero but i'll keep it at 300 which means you all need to be looking transaction by transaction until you really smooth out your spending you're down to 83 all right i'm going up to income what do you got um i'm going to be resuming full-time and so my income is going to go from 4 000 a month to 7100 great what's the take-home do you know that's that's going to be the net that's the oh wow 7100 net that's great all right watch what happens to the numbers here wow 63 percent your fixed costs that's not bad that's really impressive great job so far very very impressive you cut your expenses down by over half great job we need to go one step further are you building savings if we end the call right now we are not currently but we need to okay so let's do that right now one thing that people often do is they will over they'll focus on expenses which is great but then they don't go the final step of saying like what do we do with the extra money now and they just let it sit there and then it gets spent because it's sitting there and you two know that's not going to happen so i'm going to go one step at a time and i'm going to go one step at a time and i'm going to go one step at a time and i'm going to go one step at a time and i'm going to go one step at a time and i'm going to go one step at a time if the money is in your account you will spend it yeah but look at this you have four thousand six hundred ninety seven dollars a month left what do you want to do with that we got hit 10k uh for that savings account that we talked about as our first rule no other spending until that's built up so that's gonna need to primarily go towards that but i feel like we also need to be putting some towards uh retirement and i that's where i don't know do we build up our emergency account first and then start contributing you do both first of all right now you have zero dollars in savings you're at extreme risk if one of you gets in an accident or something happens you're in real trouble so there is no perfect answer here this is really about making a decision based on risk age all kinds of stuff but if it were me i would put more of the money available towards savings because i need to build a moat in case something happens technically if you all stuck to this at eight thousand dollars a month you're going to be able to save a lot of money and you're going to be able to save a lot you know you should have like fifty thousand dollars minimum in a savings account for like roughly six months of expenses okay that would be eight thousand times six but we can start with less than that and we can build up over years so let's take a look here we can put i don't know maybe three thousand dollars a month towards savings what's up with the debt what's your debt payoff date so other than my student loans uh i will have everything paid off in 2031 but i have a lot of stuff falling off in 2026 and 2027 and 2029 nice in 2026 and the other 2020s how much is the payment that you're going to now have about a thousand dollars will be off all right so like what would you do with that thousand dollars once it gets paid do not say the brewery no no buy one no um i would say like i really i'm worried about retirement i feel incredibly behind and so i need to figure i need to calculate what do we need or want for retirement and how much do i need to start putting towards i think a thousand dollars is going to be a really healthy amount to get caught up since we're starting so late it's a good start you're going to need to get even more aggressive with that much more first of all i love that you know your numbers i'm so impressed that is less than five percent of people know their debt payoff plan extremely impressive james did you know that no okay you got to know it from now on the idea of letting addison know this stuff and carry these numbers is not okay for the two of you as partners so i have to redo that relationship where the two of you know these key numbers and you know what they mean okay yeah if that is the case then here's what i propose we are putting let's just say 500 bucks a month away for retirement not bad not bad not bad hair and clothes what's 300 bucks a month because i don't know too many people with this much debt who spend three hundred dollars a month on self-care that's fair i think that could probably go down to three hundred dollars a month because i don't know too many people with this much debt how often do you need your haircut james every five to six weeks how much you pay for a haircut james uh 60 bucks how much you tip 20 okay so 70 bucks for a haircut like here's what i'm proposing i don't care if you get if you cut your hair at home or that that's up to you but i am proposing like there are so many things that you both take for granted like of course we gotta like go to a show of course we have to have this and go to uber and get a haircut every four weeks how does a couple that does not go into debt what do they do i'll tell you right now they don't get their haircut for 80 70 to 80 dollars every four weeks they stretch it out they go to a cheaper place where they do it at home up to you what you want to do but i'm trying to show you some of the things you just take for granted are actually just assumptions and there are much cheaper ways to do them what do you want to do for the amount of three hundred dollars a month for self-care i'd be willing to not do my nails and my other stuff what's the number so i'd leave it at seventy dollars a month can you stretch that james yeah i can go elsewhere love it forty bucks it is that includes the tip so make it thirty super cuts here we come all right next up oh call and negotiate your back taxes and even your credit card see if you can do it you might not be able to but at least try okay all right we're at four percent on investments that can come up over time right now might be the best you can do savings at 24 which is quite good uh you know what y'all have 12 left or 1457 for you spending that's too much what are you gonna do with fourteen hundred dollars i know you'll spend it but i think that money would rather be allocated somewhere else you all want to take care of your dogs all right well here's where it comes from how much you need to put aside for your dogs i'd say a hundred dollars a month what is happening right now i saw the transactions where you spent fifteen hundred dollars and then two hundred dollars and on and on that happened last month how much do you think on a yearly basis you're going to spend on medical or unexpected expenses for these dogs probably two grand two grand okay i'll put it there if you want but i'm gonna try to show you a different way of thinking about it yeah when i plan for uncapped expenses first of all i'm very wary of anything where there's a potential limitless amount that i will have to spend i'm talking about houses cars but if sometimes we have to have things that are just going to potentially cost money and we don't know how much or how that's okay in those cases i always am conservative so for example if i have a dog and i have a dog and i have a dog and i have a dog and i when people buy a house the typical guideline is you assume one to three percent of the purchase price in maintenance every single year i always assume three percent why because i don't want to be caught surprising with a ten thousand or a hundred thousand dollar expense same thing here assume it's going to be bad and save for that so how much you want to save let's say for the year five thousand um considering when we have insurance i think we get 90 coverage so five five and cash is going to go a long way so i'm going to say five thousand and i'm going to say five thousand anyways all right so i'm going to save dog health all right we're going to call it 400 bucks a month and that's going to sit in a sub savings account or a special savings account called dog health and that's where you pull from okay damn you still have a thousand fifty seven dollars left how much you want to have for like quote fun most times people i recommend they have 20 to 35 percent okay you all are at eight percent right now so you're well below but you also have a high income okay and you're in a lot of debt with pretty poor habits and your habits have shown that when you give yourself an inch you take a mile so sometimes it's easier just cut it off completely and not to think about it therefore i would recommend you bring that number down even though it seems crazy i rarely recommend somebody go this aggressive but you actually need to be aggressive so you can send a signal to yourselves our lifestyle is totally different now therefore what percent do you think you should have in guilt-free spending i almost want to say zero um because i feel like we've lived like our fun life for so long and i'm not going to say zero because i feel like we've lived so long yeah and i'm feeling pretty guilty about that so i don't know if we deserve that right now we've kind of sped that in advance of now i love the way you are you are thinking that's awesome i i don't want this to be punitive we're not doing the whole like you have sinned that's not what this is okay instead i would like you to look at it this way we are taking our finite amount of relentless force towards the things that are important to us you told me we respect money in this family i see that because you are saving a huge amount of money every month 27 percent and you need it because you have zero savings that shows me respect hey we made a mistake in our past but we are fixing it and we are fixing it with overwhelming focus and force now that's respect i see investments it's small but it's a start i like that that's respect hey we'll do more once the other car is paid off and once we have the credit card that's money's going to go directly towards investments great i think you should give yourself a little bit of grace if it were me i might take 800 bucks and put it towards investments so that's a very healthy investment rate to start with but i think could you do 257 dollars on fun for the entire month now think about it fun includes gatorade from now on we're drinking water oh i need hydration fault. Goodbye. Next, no more shows. We already talked about that. no more brewery you could go once a month but you all have to plan ahead and say we are going to get one beer and no pretzels or whatever else what do you all think the great thing about our plan is like we set the rule we're not spending anything until you know we get our savings built up it's like a huge goal and an accomplishment and then maybe at that point we can reward ourselves with just a little bit more everything else yeah i love that and can i add something else i love you you mentioned earlier addison that you know you looked at your transactions and you're like what do we even get for it like just a bunch of random stuff but if you have 257 per month and that is it for fun stuff then i bet you the two of you are going to plan and talk about it it's actually going to be meaningful so maybe you do decide to go to the brewery it's on the calendar and then you can talk about it hey you i think you should do january i'll do february you do march i'll do april what are we going to do well let's do this oh let's do that well this is how much we have including tax tip all of it do we want to take an uber there i don't know that would cut it that would cut into like 40 of our thing so you become actually hyper focused and when you get there whether it's a movie restaurant whatever you've you've looked at the menu you're salivating you're ready to go and you actually appreciate it even more that's how you do it what surprised you about the changes that you have made today although there was a pushback and apprehension and explaining um less of it than i thought that it would be why do you think that is the 20 26 years of adulthood that have viscerally punished me for all the decisions i've made uh the potential relief from these decisions is looking feeling pretty good right now love that addison what surprised you we actually have a concrete plan to move forward with and it's not as painful as i thought it was going to be am i going to be really excited for some safety and security financially but we have an emergency account heck yeah am i excited about having retirement yeah so this was actually more fun and exciting than i thought it was going to be because i was very nervous and i had to dig through a lot of things and feel a lot of shame perhaps but i'm leaving feeling excited and i'm surprised i feel that way i love that i love both of your receptivity to these changes these are really big changes they're not to be taken lightly some of the biggest changes that we have made on this podcast and it's actually really hard because what you are seeing is the lifestyle that you knew being systematically removed one thing after another and that if that's the way you look at it it's like i'm cutting off one finger after another it's just increasingly depressing sad hopeless but what i notice is that the two of you actually started to move towards something and so it's like you have a philosophy you have rules you have a goal of having ten thousand dollars in a savings account and feeling more secure and you i kind of love that you push back on me with the dogs you go hey we're gonna these dogs are part of our family we are going to find a way to do it amazing that means you can't do this or that and you both said fine that's priorities i love that addison you came on asking to learn a little bit more about your psychology a few things i want to observe um first a lot of explaining and over explaining is kind of a tip off as you two of you go forward if you find yourself over explaining maybe just pause make a joke of it but it's really important to be honest when we think about comfort and double talk you know yeah we love we like comfort but actually it's not that important it's because there was a new job and then this happened and that happened important to be honest hey in our past chapter we loved comfort in fact it was the overriding thing that guided us and when we take a look at it from perspective yeah it was nice in the moment but it didn't really leave us with anything of lasting meaning and so we've decided to change to being a little bit more planful a little bit more deliberate and then when things come up which they will like your family visiting or dog needs something special then you go okay great we already planned for it or hey uh we're not able to do this because that's not part of our plan so that's a really uh savvy way to look at your money and then the two of you coming together will be the most important thing this plan can work or fail based on the two of you right now we're going to talk about the two of you coming together and then we're going to there is still a disconnect between how both of you engage with money it's a very common dynamic you know he kind of goes and goes to work and then comes home and is disconnected from the finances she is managing the money but managing to her means you know making a bunch of spreadsheets but not really having a clear distribution of money and then they fight and she asks what's happening and he retreats we don't want that anymore we need to be teammates when you do that as partners it's going to be very very connected to each other and it's going to be a very very connective the way it has been today this has been so helpful like we clearly we wanted to make changes we got started we just couldn't do it on our own so we we needed this firm intervention and it's been really great so like thank you is not enough to say it's absolutely my pleasure to see the way that you both came here asked for help with a little probing you were honest which i love and as i said from the beginning i'm not here to judge i'm here to help you be honest with yourself and i'm here to help you be honest with yourself and i'm here to help you be honest with yourself and with me and then make changes and also it is especially meaningful to me to help you because of the lack of financial education that you got growing up and i don't mind if people did not learn this stuff i never mind that as long as you're willing to change which you are i love to lavish my time and attention on you so thank you both stay in touch we will thank you i really like addison and james at the beginning of our conversation today i think it was a little bit combative i personally will take some responsibility for that i was trying to pull out what's really going on here feeling a little resistance but i noticed this inflection point where they started to be more into it they started to actually think about the future james came along addison too both taking responsibility i like that and you could see my energy shift too when they are open to change i lean in i get excited will they follow through i actually think they're going to be the ones that are going to be the ones that are going to change i think they will make some serious changes i think some of the examples that i shared with them today they had simply never experienced them in their entire life for example the idea that if family comes around you don't have to go out to eat with them if you've never heard that that might seem radical it might seem like wait i can just not go out to eat with them and so i think they will make dramatic changes cutting down their spending i also think that they will find their childhood lessons in the future i think they will make dramatic changes cutting down their spending i think they will make dramatic changes cutting down their spending and they will start to reason away their plan they will start to say you know i think we deserve it we worked hard we saved 8 000 that's pretty close to 10 000 let's go out and celebrate those kinds of things and i hope that they acknowledge those voices in the back of their head and they say hey that was the voice from yesterday but today we are a different couple if they can do that they have a good shot at sticking with this plan what surprised me most is the amount of studying we've had a couple of big spending periods like our wedding and moving across the country but in looking at the details there's also been a shocking amount of mindless unnecessary spending with very little to show for it through all of this my biggest takeaway is that we do not need to spend money to experience comfort and joy and in fact our out of control spending has resulted in less comfort and joy due to stress and arguments over money thankfully through this process we have learned a lot about our relationship with finances more about our financial reality and we've begun to take some steps to do better it's not sexy or groundbreaking but for the first time ever we are taking it upon ourselves to actually manage our money we've taken some measures to reduce our fixed costs and we are committed to not spending beyond our fixed costs so we can focus on our savings goals as well as aggressively paying down our debt now we've cut a lot but we're still alive and kicking it really has not felt like a sacrifice because for the first time ever we are on the same page and we are actually investing in a future that we truly want i'd say my biggest surprise was just how far apart my perception was from reality when it came to all those little purchases the convenience store and going out for beers and just seeing it all laid out and how much it add up it was shocking how much we spent on convenience and when ramit had asked addison about that uh it really made me think a lot about how much we spent on convenience um the biggest takeaway uh well frankly it was a pretty humbling realization that we've both lived with more of a sense of entitlement than i really care to admit um you know we work hard we feel like we deserve these little treats the beers after a long day going out to eat etc but seeing the financial impact of that made me realize we need to dig deeper into the why of why we're doing those things instead of just trying to treat those choices and change things on a surface level uh that said we've made some big changes you know no more convenience store treats we're not eating out uh and we've started meal planning and planning a grocery budget so you know we're also looking beyond immediate changes allocating money towards the emergency fund paying down our credit cards getting out of debt um and starting an ira setting aside money for things uh to help plan for the future instead of just hoping that we'll get there hey guys it's addison and james here checking in with our one month update we have been busier than ever but we have some exciting progress updates to share with y'all yeah so we've been able to put a lot of the information and the tools that we received into practice our monarch is more dialed in and categorized than it's ever been and our csp we actually do that monthly now to account for our variable income to track all this we've been consistent with our weekly money meetings and getting all that uh dialed in and then for some of the gnarlier stuff like the back taxes and uh and such we actually retained a cpa so we will be working with them uh to help us navigate these challenges moving forward and reflecting on our session with remy and how we were approaching money and our relationship with money we've really begun to both respect and manage all of our finite resources so not just money but also our time and our energy realizing as was highlighted in our meeting our reliance on convenience so to counter that and to stay on track we've been working intentionally to budget all of our resources and yeah we've been doing that i mean really working together as a team more so than we ever have we've been working on a lot of things and we've been working on a lot of things and we've been working on a lot of things and we've been working on a lot of things and we've we have a shared vision and shared goals now we've we've really mapped all that out where before i feel like we're just kind of shooting from the hip which was clearly not uh working but now we have a much clearer understanding or shared understanding of what's necessary versus what's unnecessary and what we deemed uh you know what we deem as such we've supported accountability and you know discussing the consequences for purchases of as a factor as well um to kind of help us understand what's necessary and what's not necessary and what's to kind of help with that we also opened up a couple of joint accounts and so we have those everything's on the table it's a lot more uh it's a lot easier now that it's all transparent and it helps us with our joint decision making yeah so we're just really grateful for the opportunity and the experience we've had the information and tools at our disposal but i really think without this opportunity we wouldn't be putting those into practice like we have been and we wouldn't be on the path we've taken so we're just really grateful for the opportunity we are now which gives us a lot of hope for the future so we're just getting started but we're really excited for the future and really grateful for remit and team and for everyone else who's also been along on this journey so thanks a ton thank you guys