Episode #156: "We have 2 kids, 3 cars...but only 1 month of savings" (Part 2)

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[00:00:00] Ramit: What happens if it doesn’t last?

[00:00:07] Paul: We’d fall more into debt or have a bigger issue.

[00:00:12] Ramit: And then?

[00:00:14] Paul: Then have to make emergency drastic decisions.

[00:00:19] Morgan: Yeah, it affects our family.

[00:00:20] Paul: It affects our family.

[00:00:21] Morgan: Yeah.

[00:00:21] Ramit: Like what?

[00:00:22] Paul: I guess selling the house or foreclosing on your house, not having a place, bankruptcy, I guess. I don’t know.

[00:00:31] Morgan: Our lifestyle would change drastically. I can’t carry the weight of this anymore, and our relationship would probably crumble apart. I want big changes.

[00:00:44] Ramit: Tell him.

[00:00:45] Morgan: I want big changes.

[00:00:46] Paul: Okay. So something–

[00:00:49] Morgan: I don’t want it to be on me.

[00:00:51] Ramit: Okay.

[Narration]

[00:00:52] Ramit: Welcome back to my conversation with Paul and Morgan. Paul’s 37. Morgan is 33. This is part two of our conversation. Last week we learned that Morgan is the chaser and Paul is the avoider when it comes to money. Interestingly, Paul also constantly reassures Morgan everything’s going to be okay without ever really knowing how their finances work.

[00:01:15] Now, I want to point something out about today’s conversation. It is striking that we’re about to spend so much time talking about how they need three cars, but when I finally actually look at the numbers, it becomes clear how severe their situation really is. What do you think the psychology is behind debating some random purchase for hours when your financial house is on fire?

[00:01:40] Well, that’s a very common thing. And we’re going to explore that in today’s conversation. If you’re listening, check out the YouTube video, especially today, because we shot this in person in New York. Now to today’s conversation, I started by asking them to imagine a different dynamic, one where they’re not chasing and avoiding each other.

[Interview]

[00:02:00] Ramit: What would it look like?

[00:02:01] Morgan: I think Paul and I both having more discussions and having a clear idea of and being more intentional about what we’re spending and what we’re buying.

[00:02:14] Paul: Both talking things out and having goals, what we want and how we’re going to get there.

[00:02:20] Ramit: What would it look like and feel like to you if you actually felt good about money?

[00:02:26] Morgan: Feeling like I didn’t have to carry the weight of all of it.

[00:02:29] Ramit: Like you do now.

[00:02:30] Morgan: Mm-hmm.

[00:02:31] Ramit: And that weight you’re carrying, where do you feel it?

[00:02:34] Morgan: In my chest, in my back, in my stomach.

[00:02:39] Ramit: And you feel that weight because what?

[00:02:43] Morgan: Because it feels like it’s on me to restrict. Or I could say, all right, whatever, let’s go to Florida. Let’s do it. And then we have a lot of fun. Then in the back of my head, okay, now we’re in this much debt. I don’t even know what it is because I can’t see the credit card, and we’ll just figure it out.

[00:03:00] Ramit: Are you both carrying the weight equally?

[00:03:02] Morgan: No.

[00:03:03] Ramit: You’re carrying more of it?

[00:03:04] Morgan: Yeah.

[00:03:04] Ramit: All of it?

[00:03:06] Morgan: Probably.

[00:03:10] Ramit: That can’t feel good.

[00:03:11] Morgan: No.

[00:03:13] Ramit: You carry all the weight of parenting?

[00:03:15] Morgan: Not all of it. I carry the emotional weight, I think. Yeah.

[00:03:20] Ramit: You talk about how you spread out the weight of household tasks, parenting, things like that?

[00:03:27] Morgan: Yeah, I think we’ve gotten–

[00:03:28] Ramit: Wow, both nods. Look at that.

[00:03:29] Paul: Yeah, we–

[00:03:31] Ramit: Talk about it a lot.

[00:03:31] Paul: We do. We have a lot of coordination.

[00:03:33] Ramit: Wow.

[00:03:34] Paul: Two kids. Morgan has to be at work at 7:30, the kids are out at the door 6:45 AM.

[00:03:41] Ramit: Got to do it.

[00:03:42] Paul: I am in New York City sometimes 7:00AM. We’re back.

[00:03:47] Ramit: And if one of them gets sick, that throws everything off, right?

[00:03:49] Paul: Yeah, but we talk about it, and one of us has to take off, and–

[00:03:52] Morgan: We’ve gotten–

[00:03:53] Ramit: Hold on. How come you just came to life, Paul? That was really cool. The coordination in your nods was in complete unison. What do you think? How come you came to life on that when I asked about do you two coordinate and share the weight with household tasks?

[00:04:11] Paul: I think because I’m confident that we have that down.

[00:04:16] Ramit: Yeah. Did y’all just naturally become good parents who share coordination?

[00:04:22] Morgan: No, I think we’ve had to have a lot of conversations about it and sharing load and different responses. It’s a lot.

[00:04:31] Paul: And making a lot of mistakes, too.

[00:04:34] Morgan: Having arguments.

[00:04:35] Paul: Having arguments.

[00:04:35] Ramit: And adapting and improving.

[00:04:37] Morgan: Yeah. And adapting.

[00:04:38] Paul: Definitely.

[00:04:39] Ramit: Hmm. I wonder what it would be like if you were to apply that to money. What do you think?

[00:04:43] Paul: It would be less uncertainty and more maybe logistical or goal-oriented.

[00:04:57] Ramit: Talk to me about the specifics just the same way you talk to me about all the parenting specifics that you do. The kids out the house at this time and that and this and that. Tell me the same thing for money. What would it look like?

[00:05:09] Paul: Morgan, there’s this much in the account right now. This is going to this. That is going to that. We’re going to have this left over for our vacation. We’re going to have this in savings.

[00:05:18] Ramit: Okay. I fucking love that. I’m curious how come you just got very, almost like a caricature. Why? Did it feel cartoonish to you to say that?

[00:05:28] Paul: No, I would love to be like that.

[00:05:34] Ramit: Yeah, I like the way you created that vision. That’s basically right. What do you think, Morgan? What would it look like if the two of you were the same with money as you are with parenting and household tasks?

[00:05:47] Morgan: I think we’d have to talk about it a lot more. For us to have gotten to the point where we are now with those tasks, we had to have a lot of hard conversations and really be intentional about divvying it up.

[00:06:00] Ramit: Right. Would you only talk about money at 10:00PM at night?

[00:06:05] Morgan: No. We’d find time.

[00:06:08] Ramit: And would you be the only one bringing it up?

[00:06:11] Morgan: No.

[00:06:13] Ramit: What do y’all make of this, this analogy between how you handle your household tasks and how you’re currently handling money? Find that interesting?

[00:06:22] Morgan: Yeah.

[Narration]

[00:06:23] Ramit: I thought that moment when I asked Paul to take the parenting skills that they’ve developed and apply it to money was really fascinating. Did you notice how he unconsciously shifted into that cartoonish voice? Almost like he couldn’t truly accept the role that he might be someone who is skilled with money, sitting down, and calmly, confidently talking about money. So he just unconsciously made it a joke.

[00:06:50] Of course, I could be wrong, but I thought it was fascinating. What I noticed more generally is that every couple has at least one area of life where they are really good. They’re totally dialed in. And for two working parents, it’s often child care. They touch base frequently. They know what’s going on. They’ve developed contingency plans if something goes wrong.

[00:07:10] In my role, the simplest thing I can do is help them connect the dots between their area of competence and money. Because money is just skill, like any other skill. And if you work at it, you can get better at it. We’ll be right back after this short break. Before we get back to their numbers, I want you to see something.

[Interview]

[00:07:31] Ramit: Paul, you went through the CSP and you sent a little update to me on how humbling it was to go through this process. You almost looked a little struck after doing the CSP. Do you remember that?

[00:07:46] Paul: Yeah. When putting the numbers into the current spending plan and seeing all our fixed costs, how it’s 89% of our income was pretty eye-opening. I don’t think we’ve put that all on paper in a long time. We’re in just this equilibrium, at least in our minds.

[00:08:03] Seeing that all into perspective was definitely eye-opening, nerve-wracking, stressful. When Morgan and I were doing this together, there were a lot of definitely the two of us being overwhelmed. Coming to hitting walls where we feel like there’s not much we can do on these fixed costs.

[00:08:23] Ramit: What did you feel after you got to the end?

[00:08:28] Paul: Stressed about money.

[00:08:33] Ramit: Really?

[00:08:34] Paul: A little bit.

[00:08:35] Ramit: Is that the first time you felt stressed about it?

[00:08:37] Paul: The times feeling more stressed about money was after completing this.

[00:08:46] Ramit: Hmm. Seems like a tough way to live.

[00:08:49] Morgan: Yeah.

[00:08:50] Ramit: One partner constantly feeling stressed out by money, trying to use random opportunities to bring up the importance of money to the other partner. Partner number two feeling like, we’re good. I don’t really want to talk about this. In fact, we’re fine. It used to be worse. Now we’re fine. And then never really getting anywhere.

[00:09:13] Morgan: Yeah.

[00:09:14] Paul: Yeah.

[00:09:15] Ramit: That seems like it can go on for decades, but it’s not really healthy.

[00:09:21] Morgan: No.

[00:09:22] Paul: Totally.

[00:09:23] Ramit: Do you think that it’s possible to feel good about money?

[00:09:26] Morgan: I think so. It feels, I guess, scary. Just thinking about how, for me, to get to the point of feeling good about money feels scary.

[00:09:38] Ramit: Because?

[00:09:39] Morgan: I think there’s going to be a lot of changes and steps involved.

[Narration]

[00:09:43] Ramit: This is why I always ask couples about their experience doing the CSP. Yes, the numbers help me understand their situation. But I really want to see if you did it together with your partner. I want to see if one partner had to drag the other one to do it, or if one person simply typed all the numbers, and the other rolled their eyes and said, okay, whatever, trying to get out of there as soon as they could.

[00:10:05] There’s this phrase, “The way you do anything is the way you do everything.” And I have started to see this more and more across my life. In fact, when I mentor young people, I share this advice. I tell them, “Someone is always watching.” If you’re running cross country, your partner’s noticing if you cut corners at practice.

[00:10:25] If you’re at work, your boss is noticing when you volunteer for a project. They’re noticing how communicative you are. And if you deliver excellence, especially if you deliver it early, and later, in some closed meeting, that boss will use that moment and 100 others to make decisions about your promotion.

[00:10:44] You may never know, but she was watching. Ultimately, though, the person watching who really matters is you. Are you performing at your best? When you show up to do the CSP, are you simply going to relive the same pattern that you and your partner always have around money?

[00:11:03] Or are you going to show up fresh, ready to make a change, and focus on connecting over money together? Someone is always watching. And we see that because the way you do anything is the way you do everything. That shows up with your CSP, and it shows up throughout your financial life.

[Interview]

[00:11:22] Ramit: What’s the number on investments?

[00:11:27] Morgan: 1%.

[00:11:27] Ramit: Okay, so you’re investing 1%. All right. And your savings?

[00:11:31] Morgan: 6%.

[00:11:32] Ramit: 6%, which is going towards home improvements.

[00:11:35] Morgan: Basically.

[00:11:36] Ramit: Whatever. Let’s not even get into it. Let’s go back to your fixed costs, which are at 84%. Shall we go line by line here?

[00:11:42] Paul: Sure.

[00:11:42] Ramit: All right. Your housing is pretty low, 1800s. That’s 15 or 16%. Really good.

[00:11:49] Paul: That’s with taxes.

[00:11:50] Ramit: That’s taxes and mortgage. We have a low mortgage.

[00:11:52] Paul: We got a good rate.

[00:11:53] Ramit: It’s way higher than that.

[00:11:54] Morgan: Yeah.

[00:11:55] Ramit: Do you notice that with the renovations, and maintenance, and all that?

[00:11:58] Morgan: Yeah.

[00:11:59] Ramit: It’s probably more like 30% if we were to actually factor in how much you’ve spent in the last 12 months on renovations. Could you ballpark it for me? 10,000?

[00:12:09] Morgan: Yeah, probably 10,000.

[00:12:11] Ramit: So this number here is not fully accurate, your mortgage amount. If you were to actually factor in all the other phantom costs, it would be at least 2,800.

[00:12:24] Morgan: Yeah.

[00:12:25] Ramit: So do you now see that you’re basically spending every dollar you make on your fixed?

[00:12:29] Morgan: Yeah.

[00:12:30] Ramit: That’s the haunting reality.

[00:12:37] Paul: We bought this house with plans to do stuff to it, and we’re in it four years now, and we’re not where we want to be. So saying, okay, we need to, not fix the finances, fix the house now and start moving it in the direction that we want it.

[00:12:57] Ramit: Because fixing the house will mean what?

[00:12:59] Paul: Gratification, I guess.

[00:13:03] Ramit: Will it?

[00:13:05] Paul: In my head, maybe.

[00:13:07] Ramit: Have you ever walked in your house and felt gratified?

[00:13:10] Morgan: Mm.

[00:13:12] Paul: I do.

[00:13:14] Morgan: Yeah, sometimes.

[00:13:15] Ramit: What kind of answer is that? More gratification?

[00:13:20] Morgan: I don’t know. I feel overwhelmed in our house because it is not a very functional home.

[00:13:26] Ramit: Yeah. So when you walk in and when you look around, what do you feel?

[00:13:30] Morgan: Overwhelmed and stressed.

[00:13:32] Ramit: Paul, what do you think? I would think you feel a little pride. You were able to save up a lot of money.

[00:13:41] Paul: It is a functional house. We’ve lived in it for four years. It’s our home. It’s safe, and it works.

[00:13:50] Morgan: There are moments of like– I feel like I’m being negative. There’s moments of appreciation. We live in a really beautiful place. Our kids are outside. We have this lake near our house, and it has the potential to be something really great, but I’ve been holding on to the potential of what it could be.

[00:14:12] Paul: Yeah.

[00:14:12] Morgan: Versus appreciating what–

[00:14:14] Paul: Like fantasizing. When we bought the house, we’re like, okay, great, we’re going to do this. We’re going to do that. It’s going to be like this. And not being there yet.

[00:14:23] Morgan: And even how we bought the house was really impulsive. We had the money saved, but it was not, like, okay, we found a realtor. We’re going house hunting. It was like Saturday night, we’re hanging out. I’m on like Redfin or something, and I see it like, oh, look at this house. It’s in this area on a lake. Let’s go look at it. We went to look at this house. The realtor was sharky and was like–

[00:14:49] Ramit: Hold on. Is there any other kind of realtor?

[00:14:51] Morgan: No. But she was very much like, let me take you to these other houses. And then all of a sudden it was like, oh, we’re house hunting.

[Narration]

[00:14:57] Ramit: Yet again, I am shocked at how casually people make life-changing decisions with their money. On this podcast, people routinely go out for a casual weekend looky loo around the neighborhood, and then suddenly, it’s like they trip and fall and buy a house.

[00:15:12] Do you know how many fucking years I’ve been tracking real estate prices and calculating TCO of ownership in multiple cities? Yet people will agonize over the extra $30 they spent at Safeway last week. I simply do not get it.

[Interview]

[00:15:27] Ramit: Let’s take a look here. You have car payments of 775 bucks.

[00:15:33] Morgan: That’s gas.

[00:15:34] Paul: That’s gas. We don’t have car payment.

[00:15:36] Ramit: That’s your truck? Gas?

[00:15:38] Morgan: Yeah.

[00:15:38] Paul: Well, we have three cars.

[00:15:42] Morgan: I know.

[00:15:45] Ramit: How many driving adults in your household?

[00:15:47] Paul: Just two.

[00:15:48] Ramit: Two adults. Three cars. What am I missing?

[00:15:53] Paul: Morgan, she got a new car. 

[00:15:58] Ramit: What car?

[00:15:59] Morgan: A Supra.

[00:16:00] Paul: How much?

[00:16:02] Morgan: 35.

[00:16:03] Paul: Okay.

[00:16:04] Morgan: Yeah.

[00:16:05] Ramit: All right.

[00:16:05] Paul: Her old car, I took it as 270,000 miles on it. It’s an Acura. I use it because I commute with it. So it’s the beater car. If something big goes on it, we’ll trash it.

[00:16:20] Ramit: Okay. What’s number three?

[00:16:21] Paul: The Toyota Tacoma, which was my primary car. There’s nothing owed on that. It has 175,000 miles. I just want to use it as needed. Getting rid of the beater, it’s worth–

[00:16:36] Morgan: But it’s costing money to upkeep. We just had to take it in. It feels like it’s just money.

[00:16:42] Paul: We’ll probably get 1,000, $2,000.

[00:16:43] Ramit: We’re talking about the Acura?

[00:16:44] Morgan: Yeah.

[00:16:45] Paul: $2,000.

[00:16:46] Morgan: And it takes premium gas.

[00:16:47] Ramit: So what’s the conclusion? What are you doing with it?

[00:16:51] Paul: I use it to commute.

[00:16:53] Morgan: I want to get rid of it.

[00:16:55] Ramit: How do you make this decision?

[00:16:58] Morgan: Even when we were making this, this conversation came up, this exact one, and I think Paul speaks in very extreme, like, no, I need this. I need this other car. And it doesn’t feel like there’s room for negotiation.

[00:17:13] Ramit: Paul?

[00:17:13] Paul: The truck has a small cabinet. We have two kids, so ideally, commuting and bringing the kids around, it has a full backseat, so have the two car seats in there.

[00:17:28] Ramit: For the truck?

[00:17:29] Morgan: For the Acura.

[00:17:30] Paul: The Acura.

[00:17:31] Ramit: Okay.

[00:17:31] Morgan: He wants the truck for work.

[00:17:33] Paul: No. The truck. There’s stuff I pick up. We go camping a lot and holds a lot of stuff.

[00:17:44] Ramit: You guys realize you have three cars for two adults?

[00:17:46] Morgan: Yeah. We spin the wheels in frustration.

[00:17:50] Paul: But there was no discussion on getting rid of the car until we started going through these numbers. That’s when it came up.

[Narration]

[00:17:57] Ramit: In general, people don’t understand that owning things, especially expensive things, costs you in lots of ways that don’t immediately show up on your monthly spending. Think about it. If you have an extra car, you have to maintain it. You have to pay for gas, registration.

[00:18:12] You also have the mental load of deciding which car to take, and, oh no, we got to go to the junkyard to get that extra part because it’s about to break on the car. You also have the opportunity cost of using that money for something else, like paying off debt.

[00:18:28] Now, in this conversation, I hear two things. I hear a lot of stories, and I hear a lot of sloppiness. They both admit that the $750 in the spreadsheet for debt payments is inaccurate. Instead, they both randomly throw money at the debt, along with kids and renovation, and that’s why the balance never really seems to change.

[00:18:49] Then groceries. On the CSP, they put 1,500 a month. Morgan admits that it’s not correct. Stories and sloppiness. We also got into a bunch of details about their cats, which I’m going to spare you including in today’s conversation. They wrote 300 bucks a month, but as you can imagine, like most people, they are spending a lot more on their pets than they realize.

[00:19:11] Overall, they’re not being honest with themselves about where the money’s really going. And one critical thing to living a Rich Life is you’ve got to be honest, honest with yourself, and honest with the people around you.

[00:19:21] Hold that thought, we’ll be right back.

[00:19:24] Now, back to Paul and Morgan.

[Interview]

[00:19:26] Ramit: Can I show you what it would look like if we actually added in $1,000 a month to your mortgage?

[00:19:32] Morgan: Mm- hmm.

[00:19:35] Ramit: I’m going to add it right here. I want you to look at the fixed cost number. What just happened?

[00:19:46] Morgan: It went up to 93%.

[00:19:48] Ramit: Yeah. From 84% to 93%. So that’s a lot. Now, who knows? Are you actually spending an extra 1, 000 a month? Is it 800? 500? Who knows? But I know for a fact it’s at least 500 a month because you told me you spent 5,000 on the renovation so far.

[00:20:06] Morgan: Yeah.

[00:20:06] Ramit: And then child care is big, $1,440 per month. That’s for one?

[00:20:13] Morgan: The cost is 1,996 per month.

[00:20:16] Ramit: 2,000 a month?

[00:20:17] Morgan: Mm-hmm.

[00:20:17] Ramit: Okay.

[00:20:18] Morgan: So one child is in child care, and then we pay 180 for before care for the older daughter. And then there’s a camp. You have to pay for camp for her now. So 1,996 is camp and all the child care.

[00:20:33] Ramit: There’s nothing in here for miscellaneous expenses that you haven’t counted, which we know–

[00:20:38] Morgan: There’s a lot.

[00:20:39] Ramit: When it comes to pets, cars, home–

[00:20:42] Morgan: Kids.

[00:20:43] Ramit: Kids. We’re talking hundreds and hundreds of dollars a month in here. If we added an extra, can we say 500 bucks a month?

[00:20:52] Morgan: Yeah.

[00:20:52] Ramit: Would that be fair? I’m just going to add it right here under blank. I want you to look at the fixed cost number. What just happened?

[00:21:01] Paul: It’s everything.

[00:21:02] Morgan: That’s all our money.

[00:21:03] Ramit: 98% of your take home pay is going to fixed costs. Makes sense that there’s nothing being invested. There’s essentially nothing being saved, because that money is just going to–

[00:21:16] Morgan: Yeah, to the other thing.

[00:21:18] Ramit: Home stuff. You did account for here, so we could take out a little bit here. Let’s drop this down to 400. All right, you’re back down to 92%. Fine. And then you have 1% or $60 on guilt-free spending. I don’t think so. No, we all know that. That’s just what’s left over in the spreadsheet.

[00:21:35] Morgan: Right.

[00:21:35] Ramit: All right. I just want to zoom out for a second. How would you describe the state of your finances right now? Paul?

[00:21:45] Paul: Drastically in bad shape.

[00:21:53] Ramit: Morgan? 

[00:21:54] Morgan: Yeah, it’s a mess. 

[00:21:56] Ramit: It just sounds like there’s no urgency to change at all. Why would you? You have three cars. You have a house. You’re renovating it. You’re taking trips. Why change?

[00:22:12] Paul: Because it’s not going to last.

[00:22:15] Morgan: Yeah.

[00:22:16] Ramit: What happens if it doesn’t last?

[00:22:19] Morgan: I think I worry.

[00:22:22] Ramit: Let me ask it again. What happens if it doesn’t last?

[00:22:26] Paul: We fall more into debt or have a bigger issue.

[00:22:33] Ramit: And then?

[00:22:35] Paul: Then have to make emergency drastic decisions.

[00:22:42] Morgan: Yeah, it affects our family.

[00:22:43] Paul: It affects our family.

[00:22:44] Ramit: Like what?

[00:22:46] Paul: I don’t know if super drastic would be like, I guess selling the house or foreclosing on your house, not having a place to live.

[00:22:57] Ramit: It’s not that far.

[00:22:57] Paul: Not being able–

[00:22:58] Morgan: No. Yeah.

[00:22:59] Ramit: Did you know that?

[00:23:00] Paul: From what?

[00:23:00] Ramit: From where you are today?

[00:23:03] Paul: No. I didn’t know that.

[00:23:04] Ramit: One of you loses your job, how long do you have with the amount of cash you have in savings?

[00:23:10] Morgan: No.

[00:23:11] Paul: A month.

[00:23:13] Morgan: On my salary, I don’t think we can afford to live.

[00:23:18] Ramit: Did you hear what Paul just said?

[00:23:20] Morgan: Less than a month.

[00:23:21] Paul: Less than a month.

[00:23:23] Ramit: So you can see why it’s striking to me that we’re over here having a 10-minute discussion about three cars, when I’m sitting here saying, if one of you loses your job for any reason, you have less than one month of money in savings. And the whole let’s spin and spin and not make decisions, you can keep doing it, just skating closer to the edge. And hopefully things don’t go bad, but if they do, they go really bad really fast.

[00:23:52] Morgan: Yeah.

[00:23:55] Paul: Yeah.

[00:23:57] Morgan: Our lifestyle would change drastically. And I can’t carry the weight of this anymore, and our relationship would probably crumble apart.

[Narration]

[00:24:13] Ramit: I just want to pause here to reflect on the difference between what their concern was when they walked in versus now. Remember that on our last episode, part one of this conversation, we spent a ton of time talking about some random 12-dollar a month music subscription. And now in today’s conversation, we realize they are essentially spending everything they make on every single month.

[00:24:37] Most couples I speak to who are in financial trouble do exactly the same thing. They fixate on one random expense because, frankly, it’s easier than facing the truth of their real financial troubles. My wish for everyone who listens to this podcast is that you have the courage to get honest– honest about how much money you’re making, honest about where the money is going, honest about what your Rich Life is. If you know those things, then you can redo your puzzle and make sure the pieces are going exactly where you want.

[Interview]

[00:25:10] Ramit: Can we talk about your accounts? The way you have your accounts set up, how does it work?

[00:25:16] Paul: It was Morgan’s original account, and the way she describes it, and I agree, is her responsibility was daycare, and that money would be in there, and she wanted to make sure it was always there to pay daycare on time and was worried that if we co-mingled both accounts, there would be times where daycare couldn’t get paid on time.

[00:25:43] Ramit: So reading back what I just heard, Morgan, you were concerned that you needed to split out an account just for child care because you decided to take responsibility for that. And if you had left all the money in one account, like a checking account, you thought it just would have gotten spent.

[00:26:02] Morgan: Yeah, the joint checking feels very volatile.

[00:26:06] Paul: And up until this past year, we had two kids in daycare, so the cost was double that.

[00:26:14] Ramit: Yeah, that’s a lot. What do you make of that? The fact that you had to create a separate account for child care because you were worried that the money in your checking account would all get spent.

[00:26:26] Morgan: Part of it feels validating of why I’m stressed about money. But I wish it didn’t have to be that way.

[00:26:36] Ramit: Yeah. Does it have to be that way?

[00:26:38] Morgan: No.

[00:26:40] Ramit: Why is it?

[00:26:41] Morgan: I think because there hasn’t been conversations or behavior change to have that– I had to adapt to what was happening versus us adapt to our life, if that makes sense.

[00:26:56] Ramit: Yeah, it makes sense. It sounds like it’s been pretty tough to have to basically set up a whole separate account and squirrel money away so that you know your kids are taken care of instead of having a series of real conversations with your adult partner. What do you think, Paul?

[00:27:18] Paul: Yeah, agree.

[Narration]

[00:27:21] Why is childcare Morgan’s responsibility? Why do couples split their money up by random expenses? And why does childcare and kids’ clothes always fall to women? I’m so sick of this shit. I’m going to tell you exactly why this is such a bad idea. Most couples simply slide into combining their financial lives together.

[00:27:41] They actually don’t have a serious, single conversation about money. So what happens is one person starts to say, oh, I’ll take care of the groceries. The other person says, oh, I’ll take care of the rent. One person pays for childcare, etc. But as things change, instead of having one kid in childcare, they have two, or they get another car, they have higher car payments, they never talk about it. They simply struggle more and more with one person paying a disproportionate amount, the other not paying enough, and then one day they just blow up. What if, instead, you actually combined your income and you could have a single bird’s eye view of your finances?

[00:28:19] Wouldn’t that make it easier? And wouldn’t it make it easier for both of you to be able to handle life’s inevitable changes together instead of separately? You have to remember that most people are not bad people. They’re good. But when you set your accounts up to be separate, you will handle your finances separately. Change your accounts to be combined, and you will be structurally aligned, financially aligned, and in fact, even much more intimately aligned too.

[Interview]

[00:28:48] Ramit: It suggests two things. First of all, lack of communication about the fact that you’re not talking about this in a healthy way. And second, it also suggests to me that, wow, you really put your kids first because you knew child care needs to get covered. So I’m going to move heaven and earth to make that happen. You ever missed child care payment?

[00:29:10] Morgan: No. We haven’t missed payments, but we’re just at that point. Like my student loan debt, I just pretend it doesn’t exist. That’s how I’ve lived the last 10, 15 years of like, this doesn’t exist.

[00:29:28] Paul: But on the flip side, mortgage and taxes have always been my responsibility out of my paycheck also.

[00:29:37] Ramit: Mm-hmm. Why do y’all have different responsibilities? Why don’t you just combine your money?

[00:29:43] Morgan: I think it was an evolution of like, we’re not married. We had a kid, earlier in our– we were together like four years, and it just evolved. Again, adapting to the situation, not us adapting–

[00:30:02] Paul: And I think it was just passed from years ago that that’s just what we were doing. Morgan made X. She covered this, this, and that from that paycheck.

[00:30:15] Ramit: Yeah.

[00:30:15] Paul: And I covered this, this, and that from that paycheck.

[00:30:18] Ramit: You see why that doesn’t work in the long-term. One person makes more money or less money. You have expenses that come, that go, and you never really adapt it. I guarantee you never sat down and said, oh, wow, we have extra renovation costs, therefore we should talk about how to apportion that. Or childcare has changed. Let’s talk about it.

[00:30:35] Morgan: Right, no.

[00:30:36] Paul: Mm-hmm.

[00:30:37] Ramit: It doesn’t scale. It’s not a healthy way of doing things. One person paying for groceries, one person paying for childcare. It seems like it makes sense in that instant moment, but it never makes sense over the long-term. Is either of you passive in real life, like in day-to-day life, at work, things like that?

[00:31:00] Paul: No. As a manager, I’m in charge of people, so I have to be direct. I think sometimes I try to put a line between work and personal, and then I regress when I get into my personal life, because that’s my job to do that.

[00:31:19] Morgan: He manages the budget at work.

[00:31:21] Ramit: Really?

[00:31:22] Morgan: He manages projects. It’s his job.

[00:31:24] Ramit: Okay. It’s funny because usually when I talk to project managers, they’re the ones who are really proud to show me their conscious spending plan. They totally took my conscious spending plan and made it into a Frankenstein monster. It has 500 categories. I’m like, that’s not the point of the CSP.

[00:31:38] My point is to protect you from you. But in this case, opposite. You’re saying, I make a ton of decisions at work. When I come home, I don’t want to have to make all those decisions. Therefore, Morgan, she’s good with money.

[00:31:51] Morgan: I’m not good with money, though. That’s where I constantly feel like I’m sounding alarms. Like, I’m not good with money.

[00:31:59] Ramit: And have you told him that?

[00:32:00] Morgan: Yeah.

[00:32:01] Ramit: And have you received that?

[00:32:05] Paul: Yeah, I think I’m aware of that.

[00:32:08] Ramit: But then how come your response is, we’re going to be okay? We’ll figure it out.

[00:32:15] Paul: Because I’ll have to figure it out, I guess. Not I guess. I will have to figure it out.

[00:32:21] Ramit: When? It’s been a decade.

[00:32:24] Morgan: Yeah, we’re just reacting to what we’ve made versus being proactive.

[00:32:31] Ramit: Yes. Let’s buy a house impulsively. Then let’s react to all these expenses that come up. Let’s get a car, and then let’s react.

[00:32:40] Morgan: Let’s have a kid. Let’s everything.

[00:32:43] Ramit: Yeah. Right. You think it’s possible to make big, big changes with your money and get on top of it?

[00:32:55] Morgan: I do.

[00:32:56] Paul: Yeah.

[00:32:57] Ramit: What would it look like?

[00:32:58] Morgan: There would have to be a fundamental shift in how we’re communicating, the conversations we’re having, and where we’re prioritizing it.

[00:33:07] Paul: And staying on top of it, taking the initiative.

[00:33:12] Morgan: Yeah. We could easily slip back into, well, I wanted that, so let’s do that.

[00:33:18] Ramit: Yeah. Do you think you’d be willing to make big changes right now in order to get in a healthier position with your money?

[00:33:28] Morgan: I would.

[00:33:29] Ramit: Okay.

[00:33:31] Paul: I would be open to that.

[00:33:33] Ramit: We can do that. It’s your money. I’m simply here to help. I can’t drive you anywhere you don’t want to go. This is your Rich Life. So why don’t we make some small changes, and then let’s see what happens.

[00:33:46] Morgan: Okay.

[00:33:47] Ramit: Here we are at your fixed costs, which are at 92%. What would you like to change?

[00:33:58] Morgan: Groceries.

[00:34:00] Paul: Groceries.

[00:34:00] Ramit: Okay. Right now it’s 1,500.

[00:34:04] Morgan: I would love for it to be 700.

[00:34:09] Ramit: This isn’t fantasy world.

[00:34:11] Morgan: No, I know.

[00:34:11] Ramit: A realistic number that you can actually hit.

[00:34:15] Morgan: I think 800.

[00:34:17] Ramit: That’s basically half of what you’re spending right now. Can you do that?

[00:34:25] Paul: In the conscious spending plan, we calculated it. We calculated how much we would spend at the farmer’s market, how much we would spend at Trader Joe’s to supplement, and we came to 1,000 a month.

[00:34:42] Ramit: Can I just ask, y’all are spending 100 percent of what you make, basically, and you’re talking about shopping at the farmer’s market.

[00:34:50] Morgan: I know.

[00:34:54] Paul: Just for produce in the summer, spring.

[00:34:59] Morgan: I know.

[00:35:01] Ramit: You want to change it to 1,000 bucks, I’ll change it to 1,000 bucks. I’m just telling you–

[00:35:05] Paul: It’s not going to do much.

[00:35:06] Ramit: Watch the numbers. Fixed costs are currently 92%. I just changed it. You drop 500 bucks a month. You’re at 88%. Okay, we’re moving in the right direction. What do you want to change next?

[00:35:17] Paul: I want to take some cash that we have and pay off the debt, so after a couple of months, to be debt free, so we won’t need debt payments anymore.

[00:35:27] Ramit: Let’s talk about that. Where is the money coming from?

[00:35:30] Paul: It would come from savings, and in May, I would get about $3,000 commission.

[00:35:42] Ramit: Okay, 3,000.

[00:35:44] Paul: Plus another 3,000 from savings puts debt at 500.

[00:35:53] Morgan: I think that’s going back to what we’ve been doing versus making real changes.

[00:36:01] Paul: But I’m saying after a couple months, the 750 debt payment wouldn’t be on there.

[00:36:08] Morgan: Well, yeah, but we have a choice right now to make changes. The behavior has to change, which it’s not. We’re not doing that in this conversation. We’re just spinning the wheels, it feels like, right now.

[00:36:22] Ramit: Ask him what you want him to do. You’re totally right. You are spinning. Tell him what you want.

[00:36:28] Morgan: I want big changes.

[00:36:30] Ramit: Tell him.

[00:36:31] Morgan: I want big changes.

[00:36:32] Paul: Okay, so something–

[00:36:35] Morgan: I don’t want it to be on me.

[00:36:37] Ramit: Okay. Paul, it’s up to you now.

[00:37:01] Paul: Can you go down?

[00:37:09] Ramit: Let’s pause. Let’s get you a tissue. Do you need to take a break?

[00:37:18] Paul: No.

[00:37:22] Ramit: Thank you. How’re you doing?

[00:37:49] Morgan: I’m okay.

[00:37:51] Ramit: Let me know anytime you need–

[00:37:52] Morgan: Thank you.

[00:37:56] Ramit: I can see it’s difficult for you looking at these numbers. It is difficult. But if I’m here as an observer, and I know Morgan is here, she’s trying to get inside your head and understand what’s going on. It’s difficult if we can’t get anything from you, so do us a favor. Talk out loud. She’s dropped 500 bucks a month off groceries. What do you want to do?

[00:38:27] Paul: I guess we have the gas expense, insurance expense of three cars. We can get rid of one of the cars, recoup that money. I’m not sure how much it would go down.

[00:38:48] Ramit: I’m taking your car payment down by 300 bucks a month. Look at the fixed cost number. What just happened?

[00:38:58] Paul: Not much.

[00:38:59] Ramit: Dropped from 88 to 85.

[00:39:00] Morgan: Yeah.

[00:39:02] Paul: I’m avoidant on wanting to change the mortgage or child care cost. Those are the big numbers.

[00:39:10] Morgan: It doesn’t feel like how.

[00:39:11] Ramit: What?

[00:39:11] Paul: I don’t feel like I could. And those are the big expenses. Right?

[00:39:24] Ramit: What would you do at work? Take off your home hat and put on your work hat where you’re a project manager managing people. I come to you, I go, I got this problem. I’m spending 85% of my budget on blank, blank, blank. Manage me. Drive it like you would drive it at work.

[00:39:43] Paul: Well, we’d see what the total cost is of the job, and we would have to make changes to get to that cost.

[00:39:58] Ramit: You wouldn’t just wait.

[00:40:00] Paul: No, you can’t.

[00:40:00] Ramit: Why not?

[00:40:01] Paul: You’d have to do it, and you’d have to forecast in advance what the changes are going to be.

[00:40:08] Ramit: What the fuck’s happening right now? I like this. I like this. Okay, tell me more. So how does that apply here?

[00:40:16] Paul: We have to make drastic decisions.

[00:40:19] Ramit: What? All it took was me asking what do you do at work? And suddenly you turn into this fucking killer? What is happening? All right, what do you call yourself at work? I feel like you have a nickname at work. Killer Paul. Don’t fuck with me. I fucking PM this shit all day long. What is it?

[00:40:35] Paul: No, I don’t know.

[00:40:37] Ramit: Well, now that’s your name, Killer Paul. Tell everyone at work. Send them an email. Killer Paul’s on the case. All right, tell us. What are we going to do, Paul?

[00:40:45] Paul: We’re going to make bigger changes.

[00:40:49] Morgan: Wow.

[00:40:49] Ramit: Tell her.

[00:40:50] Paul: Yeah, so I’m going to tell you right now what to do.

[00:40:53] Ramit: Okay.

[00:40:53] Paul: I just want to run a scenario.

[00:40:58] Ramit: Mm-hmm.

[00:40:59] Paul: Take out the 400 at the house.

[00:41:01] Ramit: The 400 for the rent and mortgage.

[00:41:03] Paul: Just take it out.

[00:41:04] Ramit: All right, zeroed it out.

[00:41:06] Paul: Take out the 500 for miscellaneous.

[00:41:08] Ramit: Okay. 500’s gone.

[00:41:10] Paul: 500’s gone. And hypothetically, take out the 700 debt payment. I want to see what it looks like.

[00:41:17] Ramit: All right. Zeroed out.

[00:41:18] Paul: We took out, what? We took out $1,600.

[00:41:22] Ramit: All right. Tell us what the fixed cost number was–

[00:41:24] Paul: 69.

[00:41:25] Ramit: It was at 88%. Now what is it at?

[00:41:27] Paul: It’s at 69.

[00:41:28] Ramit: All right.

[00:41:29] Paul: It went somewhere.

[00:41:30] Ramit: It definitely went somewhere. Tell us what you just did.

[00:41:33] Paul: I ran a scenario.

[00:41:35] Ramit: All right, what was the scenario?

[00:41:37] Paul: I wanted to see, hypothetically, if the debt was paid off, and we didn’t have to make a debt payment. The 500 that’s in there, it was thrown in as miscellaneous, but it’s a number assuming that there’s a cost in there.

[00:41:53] Ramit: Fine, we took it out. And what was this rent, 400 bucks you took off, the mortgage?

[00:41:59] Paul: That was for maintenance for the house.

[00:42:02] Ramit: Okay, tell us. Why did you make that? I like what you’re doing.

[00:42:05] Paul: Right now it’s a hypothetical cost. Yes, there’s maintenance within the house. The home improvement right now has been on a credit card. That’s not even in this cost. We’re associating it with debt right now.

[00:42:25] Ramit: Say it in plain English, and say it to the person who actually cares about home renovations. Look at her.

[00:42:33] That 400 that was put in this spreadsheet was already accounted for in our debt, so we’re double counting it right now.

[00:42:48] Ramit: Okay. That was good. And what does it mean for the next two or three years of your life that you just made that change, as it relates to your home renovations?

[00:43:01] Paul: We’re not going to be able to renovate the home in the time frame that we want to.

[00:43:10] Ramit: Ask her what she thinks about that. Toss the ball back to her.

[00:43:13] Paul: Are you okay with that?

[00:43:15] Morgan: I have to be.

[00:43:17] Ramit: Okay. Ask her again. That’s an interesting answer. This is where you have to be honest about how you feel.

[00:43:24] Morgan: Yeah.

[00:43:25] Ramit: Ask her again.

[00:43:27] Paul: Are you okay with not renovating the house?

[00:43:30] Ramit: Because. Tell her why.

[00:43:32] Paul: Because it’s a cost right now that we cannot afford.

[00:43:37] Ramit: Tell her more. You care about it, right?

[00:43:41] Morgan: Right now, I care about it.

[00:43:43] Ramit: Tell him.

[00:43:43] Morgan: Yeah. I do care about it. I want to prioritize the house, but I want to plan forward. I don’t want to just do it.

[00:43:50] Paul: No, we’re not spending money on renovating.

[00:43:52] Morgan: We’re not.

[00:43:52] Paul: There is 600–

[00:43:54] Morgan: There’s no money to spend on it.

[00:43:57] Paul: There’s no money to spend on renovating. We’re not going to renovate right now. We will use–

[00:44:02] Ramit: Oh, look at her.

[00:44:03] Paul: The $600 for one month will go to a toilet. So there’s the toilet there. And then we’re not renovating the house until we have money associated for it. I have to buy a toilet.

[00:44:22] Ramit: You do?

[00:44:23] Paul: I have to put one toilet.

[00:44:24] Ramit: You have to?

[00:44:25] Paul: Yes.

[00:44:25] Ramit: Have to?

[00:44:26] Morgan: We don’t have to.

[00:44:28] Ramit: You have to buy a toilet. You have to shop at the farmers’ market. You have to buy specialty food for your cats. You have to have three cars. How much stuff do you have to do?

[00:44:41] Morgan: We really don’t have to do anything.

[00:44:46] Paul: Well, we have to do some things that are necessities.

[00:44:50] Ramit: Paul, did you hear what she just said?

[00:44:52] Paul: We don’t have to do anything.

[00:44:54] Ramit: Take that and run with it. Don’t just naturally be adversarial with her.

[00:44:58] Paul: Okay.

[00:44:59] Ramit: What she’s saying is, I might be open to not renovating the toilet.

[00:45:03] Paul: Okay. We will not renovate–

[00:45:05] Ramit: Ask her, ask her. Don’t tell her.

[00:45:06] Paul: Are you okay with leaving the bathroom the way it is until we get our fixed costs down and we have more of a plan to renovate the bathroom and the remainder of the house?

[00:45:18] Morgan: It feels stressful because we’re in the middle of a renovation, so that’s where the hesitation was.

[00:45:22] Ramit: So?

[00:45:23] Paul: It is what it is.

[00:45:25] Ramit: If you were going to get really aggressive about it, you could take your guilt-free spending, which is about $1,100 a month, and you could say, right now we need to buckle down.

[00:45:38] Morgan: Yeah.

[00:45:39] Ramit: We need to not eat out. We need to not travel for a while, and we need to go pretty bare bones as a family.

[00:45:48] Morgan: Right.

[00:45:49] Ramit: That’s it. That’s reality. There’s no more easy decisions to make. You got the groceries down. You knocked a number off, great. All other decisions are now difficult.

[Narration]

[00:45:58] Ramit: First of all, what the hell? Have you ever seen a transformation like that? I asked Paul to pretend this was work, and it was like he kicked over a table and started using words like forecast and scenario. I have literally never seen anything like this. Is anyone else impressed?

[00:46:13] What I like is how he suddenly took control. Now, obviously, one exercise is not going to change anything, but for me, it was quite revealing that he can exert that kind of agency.

[00:46:27] Let’s take a quick break to support our sponsors.

[00:46:30] Thanks for your patience. Let’s get back into it.

[00:46:33] Reality means you can’t just zero out debt, especially considering that Morgan has 15,000 in student loan debt that we haven’t even talked about. So to make sure they leave this conversation with a rock solid picture of the truth, I reverted the CSP back to its usual state. Let’s keep going from there.

[Interview]

[00:46:51] Ramit: Can I just say these clothes at 180 bucks a month–

[00:46:53] Morgan: We can get rid of that.

[00:46:54] Ramit: No fucking way.

[00:46:55] Paul: I haven’t bought clothes in four or five years.

[00:46:57] Ramit: Zero.

[00:46:58] Paul: I don’t know what that’s coming from.

[00:46:59] Ramit: We’re taking that away. We’re at 82%. All right.

[00:47:01] Morgan: I think we were trying to account for what we have been spending.

[00:47:04] Paul: Because we have kids and stuff.

[00:47:05] Ramit: How about just no clothes?

[00:47:06] Morgan: No clothes.

[00:47:06] Ramit: Can you find some free clothes for the kids?

[00:47:08] Morgan: Yeah, we can figure it out.

[00:47:09] Ramit: Okay. This is the kind of attitude. It’s like, yeah, we can fucking figure this out.

[00:47:14] Paul: The grandparents.

[00:47:15] Ramit: Yes.

[00:47:16] Paul: They love buying.

[00:47:17] Ramit: Bingo. Done. And you’re like, by the way, can you also–

[00:47:20] Morgan: Take a cat.

[00:47:20] Ramit: Make our car payment. Yeah, take a cat.

[00:47:25] Morgan: Please, take them.

[00:47:26] Ramit: Okay. I don’t know, guys. You’re still at 82% here.

[00:47:30] Morgan: I know.

[00:47:34] Ramit: If you were at 71, 72, 73, even I’d be like, okay, because you have childcare, but you’re at 82%, and the debt’s not going away. You’re going to pay off your credit card debt, but now you have student loans. I can just tell you that 82% is not sustainable, and right now we’re being pretty charitable here. There’s no miscellaneous costs.

[00:47:58] Morgan: Yeah.

[00:47:59] Paul: Yeah.

[00:47:59] Ramit: I don’t know. What do you think?

[00:48:14] Paul: Based on what we’ve done here, we’re going to have to live with the high fixed cost temporarily until we can drop some of those items like the debt, and then that line item would come out, and that’s what we have to do.

[00:48:36] Ramit: You know what’s amazing? Each of you has had a moment of brilliance with your money. You realize that? Each of you.

[00:48:43] Morgan: No.

[00:48:44] Ramit: Paul, what was yours? When were you at your best with money?

[00:48:50] Paul: Right before we had a kid.

[00:48:52] Ramit: What was happening then?

[00:48:54] Paul: I was putting a lot more away. And I also made a decision financially once Morgan got pregnant like, we need to save money, and we moved in with our parents to get rid of rent altogether.

[00:49:11] Ramit: That was a big change.

[00:49:12] Morgan: That was hard. That was hard. We did the max we could do there until we were like, we’re losing our mind. We got to leave.

[00:49:19] Ramit: You saved up enough for a 20% down payment, very impressive. Your moment of brilliance, Morgan, was when you said, I need to set up a separate account for child care because I’m concerned that everything else is going to get spent.

[00:49:32] You moved heaven and earth to make that happen. You never missed a payment. What that tells me is that the two of you have the ability to make huge changes when it is important. Would you be both aligned with that?

[00:49:47] Paul: Yeah, we have to.

[00:49:50] Morgan: Yeah.

[00:49:51] Ramit: Nice. What if one of you comes and says like, I really want to go to this concert?

[00:49:54] Paul: Then we call a grandparent and cry to them.

[00:49:58] Morgan: I hate that. I think we need to change our behavior.

[00:50:01] Paul: Say it. What would you do? He comes to you, he says, let’s go to Fish.

[00:50:04] Morgan: We’d have to say no.

[00:50:05] Paul: You’d have to say no.

[00:50:07] Ramit: Truthfully, for the next 18 to 24 months, not really. Life is what it is for the next couple of years while you pay this debt off. And the only thing I can do here today is to show you what will happen if you continue down this path. I can’t make the changes for you. I can’t shop at the grocery store for you. I can’t do any of that. What I can show you is that if one of you loses your job for one month, that’s it.

[00:50:35] Morgan: We’re done.

[00:50:35] Paul: Totally.

[00:50:37] Ramit: It’s end of story. You lose the house. Car’s gone. Move in with family, if you’re so lucky. Cats are gone, all of it. That’s one month.

[00:50:44] Morgan: Yeah.

[00:50:45] Paul: Right.

[00:50:46] Ramit: And let’s not even talk about what your kids pick up from that experience when they’re talking to me 30 years from now on this podcast. I don’t want that.

[00:50:56] Morgan: Sounds good.

[00:50:57] Paul: Right.

[00:50:58] Ramit: You think you can make these changes? They are quite large.

[00:51:03] Morgan: I worry that we can’t.

[00:51:04] Ramit: Mm-hmm.

[00:51:05] Morgan: But we have to create it, so there’s no choice.

[00:51:08] Paul: Yeah. We don’t have another choice.

[Narration]

[00:51:14] Ramit: This was a tough conversation, and there weren’t any easy answers. But that’s actually to be expected. When you don’t talk about money for years, you often leave yourself with your back against the wall. No easy answers are available.

[00:51:29] Now, this podcast is not about finding a magic solution to problems. Sometimes I see comments saying, it doesn’t seem like Ramit was able to help them. I’m not a magician. I’m here to help couples talk about money, sometimes for the first time ever. I’m here to help them find the truth.

[00:51:46] The truth is, some things just take a lot of hard work and a lot of time. Paul and Morgan can make a change, but it will take both of them talking about money in a totally different way. It means they have to talk about money regularly, positively, and proactively together. Now if the biggest thing that I did for them was to help them realize the severity of their situation, I’ll be satisfied.

[00:52:13] Let’s take a listen to their follow-ups, starting with Paul.

[00:52:16] Paul: The most surprising thing about the conversation with Ramit was that Morgan and I are way more removed from each other’s finances than I had imagined. Neither one of us knows what transactions are taking place and when they’re taking place, or when they’re anticipated take place within each other’s accounts.

[00:52:39] The biggest takeaway from this is for Morgan and I to have regular conversations about our finances. Whether they’re difficult conversations, they’re still positive conversations if we’re working toward a goal and trying to correct our finances in the short-term and the long-term.

[00:53:04] Changes we will be making to our conscious spending plan, definitely tightening up the fixed costs as much as we can, taking out anything additional for what we’re trying to save toward home improvements and house maintenance, and really trying to put that stuff toward the debt and get the debt paid off as quick as possible. I would love to be out of credit card debt by this summer and Morgan student loan debt by beginning of next year.

[00:53:33] Ramit: And now Morgan’s follow-up.

[00:53:34] Morgan: What surprised me most was just how difficult the conversation was for me. I knew it was going to be challenging. I didn’t realize it was going to be as emotional for me. Ramit was really good at being very direct and getting to the root causes of everything very quickly, and he was able to really facilitate a really important and hard conversation between Paul and I.

[00:53:59] I left the meeting feeling very defeated and the next day feeling pretty hopeless. But after really sitting and reflecting, I’m feeling more positive and hopeful that with these conversations and with time, Paul and I can really turn it around. And I think our Rich Life is definitely within reach.

[00:54:18] Some changes that we’re going to make, we talked about meeting more regularly, especially in these beginning stages, weekly, twice a week. We also talked about selling the Acura, making some more lifestyle changes to get these fixed costs down. We’re both working hard on finishing the book, changing our bank accounts around, changing our weird banking situation, and being more united as a team.

[00:54:44] Ramit: They have some difficult changes to make, but I do have confidence that if they stick with it and they do it together that they can radically transform their relationship with money. Thanks for listening to today’s conversation, and stay tuned for next week.

[00:55:00] Paul: Working with Ramit was very intense. It’s definitely very intentional and genuine, but he definitely got to the bottom of what the issues were and definitely put us out of our comfort zone to speak about certain issues and what needed to change.

[00:55:21] Morgan: Working with Ramit, it was really hard. I’m feeling exhausted, but it’s almost like, I don’t know, trying to think of a good analogy where you know it’s going to be hard, but I’m hoping that the payoff is really good. I really enjoyed his approach. It was no bullshit, and he held us accountable for what we needed to be held accountable for.

[00:55:43] Paul: Knowing what the issues were and that there’s no way to hide them, a third party looking at, they’re going to pop out to that person, and he’s going to call us out on it and hold us accountable. And that’s exactly what he did.